Compare And Contrast Adam Smith The Father Of Modern Economics

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Adam Smith is often considered to be the father of modern economics or the first world’s free market capitalist and. As Smith was living in the middle/late 18th century his works were written in the early stage of industrialization in Great Britain. Because of the development of a factory system there was a demand for more sophisticated capital investment planning and distribution, organization of production process and management of employee performance. Smith was interested in new producing system and he noticed that the expanding market and labor specialization plays a major role in increasing the life standards of citizens. Therefore, he has developed a model in which the user 's material well-being has been defined as a goal; assets are …show more content…

Also, David Ricardo continued the idea that the economy commonly tend to move towards the halt. He based his analysis on Adam Smith labor theory of value. He believed that the amount of property society can get depends on the amount of labor required to support the farmers who own "the most barren land that can still maintain agriculture". Depending on land fertility rates, the amount of rent received varies: the more fertile is the land the higher the rent, while the poorest land gets almost no rent, because it is used to cover cost of labor and capital. As the population grows, less fertile land has to be cultivated in order to satisfy increasing demand and according to Ricardo the agricultural land has no other use. The prices for renting a worthy land increases. Ricardo suggests that when capital accumulates rents tend to rise but profits fall. As profits lead to reinvestment and consequently growth rising rent costs indirectly prevent economic progress. According to Ricardo another obstacle to economic growth are Corn Laws, since the trade barriers made food prices artificially high. Here he shared the same opinion with Smith: interference of government prevents economy from self-regulation and the market is the best when it is left untouched, even if it is imperfect. Even though Ricardo was not fully

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