Smiths Contribution in Study of Economics

Adam Smith's main contributions to the field of

economics were to lay the conceptual foundations
for measuring a nation's wealth not by its gold or
silver reserves but by its levels of production, and
also to champion free-market capitalism as the most
effective economic system. Smith was very much in
favour of a laissez-faire approach to economies, wherein
governments intervene as little as possible in business
practices and trade.
In other words, Smith was in opposition to government
policies that impacted upon the freedom of business, and
therefore upon a country's economic health.
Although he advocated self-interest as a driving force in
capitalist economies, Smith was against the poor treatment of workers despite many
unscrupulous employers appealing to his work as justification of child labor, long hours
and unsafe working conditions. In fact, according to one of his students, John Millar,
Smith much preferred to lecture on ethics and theology than he did on economics.
Adam Smith's most important work was his 1776 book, "An Inquiry into the Nature and
Causes of the Wealth of Nations." More commonly known as "The Wealth of Nations,"
this text has been hugely influential, not only during his own time but right up to present
day studies of political economics.
Adam Smith Biography
Philosopher, Political Scientist, Journalist, Educator, Scholar, Economist (c. 17231790)
Scottish social philosopher and political economist Adam Smith wrote The Wealth of
Nations and achieved the first comprehensive system of political economy.
Adam Smith is known as the father of modern economics. Born in Scotland in 1723, he
embarked on an academic career at the age of 15. Educated primarily in European
literature, he was awarded a position as chair of logic in 1751 and then chair of moral
philosophy the following year at Glasgow University.
In 1764, Smith became the tutor of the young Duke of Buccleuch. This career change
had lasting effects on Smith's philosophy. While he traveled with the Duke, he visited
places like Switzerland and France and became aware of the ideas of thinkers such
as Voltaire, Rousseau, Quesnay, and Turgot.

Importantly, his employment with the Duke gave him a life-long pension. This granted
him the freedom to retire and write his work Theory of Moral Sentiments, which was
published in 1759. He continued to write afterwards and produced The Wealth of
Nations in 1776. The philosophy he advocated in these works continues to influence
economic thought today.
According to Smith, people have a capacity for reasonable judgment that is often
underestimated and should not allow politicians or philosophers to impose unreasonable
government regulations on them. He was an advocate of laissez-faire thinking, which
was a policy of minimal government intervention in the economy. According to Smith,
free markets allowed the natural laws of supply and demand to function properly. Smith
remained a life-long bachelor and died in Scotland in 1790.

Professional Life
In 1748, Adam Smith began giving a series of public lectures at the University of Edinburgh.
Through these lectures, in 1750 he met and became lifelong friends with Scottish philosopher
and economist David Hume. This relationship led to Smith's appointment to the Glasgow
University faculty in 1751.
In 1759 Smith published The Theory of Moral Sentiments, a book whose main contention is that
human morality depends on sympathy between the individual and other members of society. On
the heels of the book, he became the tutor of the future Duke of Buccleuch (17631766) and
traveled with him to France, where Smith met with other eminent thinkers of his day, such as
Benjamin Franklin and French economist Turgot.

The Wealth of Nations

After toiling for nine years, in 1776 Smith published An Inquiry into the Nature and Causes of the Wealth of Nations (usually
shortened to The Wealth of Nations), which is thought of as the first work dedicated to the study of political economy. Economics
of the time were dominated by the idea that a countrys wealth was best measured by its store of gold and silver. Smith proposed
that a nations wealth should be judged not by this metric but by the total of its production and commercetoday known as gross
domestic product (GDP). He also explored theories of the division of labor, an idea dating back to Plato, through which
specialization would lead to a qualitative increase in productivity.

Smiths ideas are a reflection on economics in light of the beginning of the Industrial Revolution, and he states that free-market
economies (i.e., capitalist ones) are the most productive and beneficial to their societies. He goes on to argue for an economic
system based on individual self-interest led by an invisible hand, which would achieve the greatest good for all.

In time, The Wealth of Nations won Smith a far-reaching reputation, and the work, considered a foundational work of classical
economics, is one of the most influential books ever written.

In 1787, Smith was named rector of the University of Glasgow, and he died just three years later,
at the age of 67.

David Ricardo Contribution in Study of Economics

He used a numerical example to illustrate

what he meant and this is shown below:
Wine Cloth England 3 2 Portugal 9 4 The
figures represent hours per man and as
you can see it would appear that Portugal
has absolute advantage in both industries
and so would not need to trade with
England. However if you look at the
relative costs you can see that England
have a comparative advantage in cloth as
to produce 1 unit of cloth, England
sacrifice 11/2 units of wine, whereas
Portugal would sacrifice 21/4 units of wine.
This means that it is in the interest of both countries to produce the good
that they have a comparative advantage in and then trade with each other.
This empirical evidence is still valid today, and this theory is arguably
Ricardo's most famous. To sum up everything that David Ricardo has
contributed to economics would a huge challenge, he directly influenced
government policy both domestic and foreign during his life and he was the
founding member of the most influential school of the 19th century. His
theories have influenced Karl Marx, John Keynes and even Milton Friedman
and today his economic theories although some time adapted still remain
true today. It can therefore be conclude with absolute certainty that David
Ricardo has contributed to economics on a level that very few others have or
will ever.
David Ricardo Biography
The English economist David Ricardo (1772-1823) was a founder of
political economy. His economics armed reformers attacking the
agricultural aristocracy's political, social, and economic privileges.
David Ricardo was born in London on April 19, 1772, the son of a Jewish
merchant-banker migr from Holland. Ricardo joined his father as a
stockbroker at the age of 14. When he married a Quaker, his orthodox father
cut him off. Ricardo became a Unitarian, and at 22, with a capital of 800
and support from the financial community, he became an independent
stockbroker. At 42 he retired with a fortune of about 1 million and
established himself as a landed proprietor.

Ricardo was an independent member of Parliament for the pocket borough of

Portarlington from 1819 until his death. He supported a tax on capital to pay
off the national debt; currency reform; abolition of the Corn Laws protecting
British wheat; parliamentary, poor-law, legal, and military reform; a secret
ballot; and Catholic emancipation; he also condemned political repression.
Ricardo's reputation rests upon On the Principles of Political Economy and
Taxation (1817; rev. 3d ed. 1821), an analysis of the distribution of a fixed
amount of wealth among three classes: the owner of land who receives rent,
the owner of capital who earns profits, and the laborer who gets wages.
Ricardo set out to "determine the laws which regulate this distribution" in
relation to both the rate of capital growth and the yield of wheat per acre.
Although the analysis is abstract, often ambiguous, and disorganized, seven
related economic laws can be extracted.

Malthus Contribution in Study of Economics

His main contribution was to highlight the

relationship between food supply and
population. Humans do not overpopulate to the
point of starvation, he contended,
only because people change their behavior in
the face of economic incentives. People can
increase food production, Malthus thought, only
by slow, difficult methods such as reclaiming
unused land or intensive farming; but they can
check population growth more effectively by
marrying late, using contraceptives, emigrating, or, in more extreme
circumstances, resorting to reduced HEALTH CARE, tolerating vicious social
diseases or impoverished living conditions, warfare, or even infanticide.
Malthus was fascinated not with the inevitability of human demise, but with
why humans donot die off in the face of such overwhelming odds. As an
economist, he studied responses to incentives. When his hypothesis was first
stated in his best-selling An Essay on the Principle of Population (1798),
the uproar it caused among noneconomists overshadowed the instant
respect it inspired among his fellow economists. So irrefutable and simple
was his illustrative side-by-side comparison of an arithmetic and a geometric
seriesfood increases more slowly than populationthat it was often taken
out of context and highlighted as his main observation. The observation is,
indeed, so stark that it is still easy to lose sight of Malthuss actual
conclusion: that because humans have not all starved, economic choices
must be at work, and it is the job of an economist to study those choices.
His Principles of Political Economy (1820) was the first text to describe
aDEMAND schedule as separate from the quantity demanded at a given price.
His exposition of demand curves clarified the debate on SAYs law and gluts
(to which he objected in the long run on the grounds that markets selfadjust). His work centered on contrasting the long run, as exemplified by
population growth, with the short run, reflected by cyclical events such as
those affecting agriculture. Writing before theINDUSTRIAL REVOLUTION,

Malthus did not fully appreciate the impact of technology (i.e., pesticides,
refrigeration, mechanized farm equipment, and increased crop yields) on
food production.

Thomas Malthus Biography

Reverend Thomas Malthus was born on February 13, 1766 in England. He has had an
enduring effect on economics and even the work of Charles Darwin. In his
autobiography, Darwin cited Malthus' Essay on the Principle of Population as inspiration
for his theory of natural selection. In this work, Malthus wrote that, man, if left
unchecked, was capable of producing far more offspring than the world resources could
handle.
His conclusion was that if offspring were not regulated, eventually famine would become
a global problem. Using these ideas, Darwin came to the conclusion that offspring with
certain qualities would be better equipped to survive than others. In 1876 Darwin wrote:
'In October 1838, that is, fifteen months after I had begun my systematic inquiry, I
happened to read for amusement Malthus on Population, and being well prepared to
appreciate the struggle for existence which everywhere goes on from long- continued
observation of the habits of animals and plants, it at once struck me that under these
circumstances favorable variations would tend to be preserved, and unfavorable ones to
be destroyed.'