Adam Smith is known as one of the most influential thinkers in the modern field of economics. His idea about gold investment, wealth, and markets was radical for his time but offered insight that no one had offered before. At the time of his work his ideas were directly opposite the current markets, which lead to some controversy, but he argued his ideas well which is why he is known as a premiere figure of economics today.
Who Was Adam Smith?
Adam Smith was born in June of 1723, he was a pioneer of the political economic markets as well as a Scottish Moral Philosopher. In addition to writing An Inquiry into the Nature and Causes of the Wealth of Nations in 1776, which is also known as The Wealth of Nations, he also wrote The Theory of Moral Sentiments in 1759. His works made him a key figure during the Scottish Enlightenment. His works expanded upon the ideas that competition and rational self-interest could lead to greater economic prosperity. His book, the Wealth of Nations was deemed one of the 100 Best Scottish Books of all time. Although for the time controversial, today many of Smith’s theories are still discussed with regard to gold investments and wealth.
His Most Important Work
Some argue that Smith’s work The Wealth of Nations was one of the most important documents ever published. Some believe it had a more global impact than even the declaration of independence. This book upended the mercantilism system. During his time Mercantilism only featured wealth that was finite and fixed and the only way to prosper in such a system was by hoarding gold and tariff products from other markets. This system meant that nations were selling their goods to other countries, but were not buying goods in return. This type of economics lead to tariffs that stunted international trade. Adam Smith saw what this type of system was doing to the wealth of markets and offered a solution.
The “Invisible Hand”
The center of Smith’s thesis, which still garners much controversy, is the idea of the “invisible hand”. Smith believed that man’s natural tendency towards self interest could also result in prosperity. He argued that by giving everyone the ability to produce and exchange their goods as they wanted, free trade, it would then open the market to competition. This competition would be domestic and international. He further argued that self-interest would be able to bring universal wealth with little to no effort from the government. At the time it was very radical thinking because the market was dominated by government chartered monopolies.
Thoughts About Gold Investment
One of the most important aspects of Smith’s theories, were his ideas regarding gold investment and wealth. He believed that solid currency worked well with free market principals. He proposed backing currency with hard metals in a strategy to curtail the government from being able to depreciate the currency by just circulating more of it to pay for wasteful expenditures or wars. He believed that hard currency such as gold would actually act as a check and balance system for spending. He wanted governments to follow free-market principles. This could be done by keeping the taxes low while also allowing for free trade across international borders. This in turn meant eliminating tariffs. Smith believed that taxes and tariffs only made life for expensive for the people in addition to stifling trade and industry abroad.
When it comes to Adam Smith’s ideas on wealth and gold investment, he believed without a doubt that investing in gold and other metals would lead to wealth for both an individual and a nation. He argued that gold and other metals would act as a check and balance system for the government to curb spending. He believed that the free market principles in conjunction with gold investment would lead to a higher standard of living and a much wealthier nation.
3 Fundamental Things Which Should Increase A Nations Wealth
The three ideas that Smith expanded upon in his work included
- enlightened self-interest
- limited government
- solid currency for a free market.
Smith believed that by accomplishing these three things, a nations wealth could greatly increase. Smith basically wanted people to indulge in hard word, thrift, and enlightened self-interest. He believed that if people practiced self-interest then the market would be a better place. He argued that if people worked hard to produce good services and goods, then they would continue to prosper as they received more customers, thus leading to a better market. He believed if people thought more long term about the effects of their goods and services it would prevent them from abusing customers for short interest gain. He also argued that the government should enforce laws expanding upon self-interest in order to keep the market good.
Savings And Thrift
Smith also thought that savings and thrift were important values to instill in the market. He believed that savings could them be invested further and that eventually savings and investments could lead to more capital that would be able to purchase labor saving machines to encourage further development and return on investment. All in all he believed that a higher work ethic in regards to self-interest would lead to a better and increased standard of living.
Adam Smith proposed that the government be a limited one. Only focusing on national issues such as defense, infrastructure, and laws. He believed that the government should enforce laws related to self-interest in the market to prevent the abuse of customers. His most poignant statement indicated that nothing hurt the people and wealth more than draining of their pockets.