Adam Smith's Economic Ideas and the Wealth of Nations

One of the main ideas is what Adam Smith's economy is based on, and it is the division of labour. He keeps the idea that people work because it is good for them. Adam Smith focused on liberal ideas, which is a free-market, where the government doesn't interfere with the market (laissez-faire). He supported that competition kept everyone honest. Smith is also a big supporter of government favoring war-related industries, so that they would be prepared in case of war. He thought about the importance of the risk. His beliefs were related to the relation between interests and rewards, and risk. If the reward is big, investors tend to forget about the risk. But Smith thought that the danger (real) was big capitalism or entrepreneurs cheating on the government into doing them favors. The Wealth of Nations was the first complete examination of the capitalist market system. He saw the link between the expansion of the market (because of the rapid market exchange) and the division of labour. Specialization eliminates the self-sufficient, making market exchange necessary to have more efficiency and economic growth. As mentioned before, Smith is a big supporter of laissez-faire economy. It doesn't mean that he thought that the government didn't have importance, it was more or less the opposite. Smith believed that the government is already worried and focused on other things like defending a nation. Therefore, focusing on other tasks is distracting them. That is why for him, a free market is better. Adam Smith distinguished two different types of prices, natural prices which are exactly the cost of production, and the market price, which is determined by deficiency and the balance of supply and demand at any point in time. Smith's book, The Wealth of Nations, is one of the most cited and important books in economic history. Many authors have criticized him, but many others support his ideas, even Karl Marx. His greatest critic agreed that the division of labour, competition, and trade were responsible for the expansion of human welfare.