Term Paper on "Adam Smith: Wealth of Nations Government"

Term Paper 6 pages (1872 words) Sources: 0

[EXCERPT] . . . .

Adam Smith: Wealth of Nations

Government is the name of the system that manages and coordinates the activities towards addressing the need of its people. The needs of people vary from location to location, rather its not much location dependent, needs are dependent upon the class of an individual, objectives that one has gathered, avenues that one intend to explore, society, culture, past. However the commonality that persists in spite of difference is that, all the needs are mainly desired and contributing towards the social and economic well being of an individual and society. The local people demand nothing but a quality of living that is periodically revised and upgraded.

Social implications are webbed in between economic woes of a society. The government that is successful in offering credible economic and social sustainability is people's favorite. The question that strikes up is that why economic and social stability is paramount to the human quest towards satisfaction and comfort. Lets look into the offerings of economic and social harmony, it provides the society with an opportunity to progress well if social and economic progress is synchronized. Dynamism is the result of economic and social growth. The activities results into expansion and flourished opportunities, such progress can never remain self-centered (concentric), the incentives and offerings are scattered and available for all as it requires active involvement of each and every segment of the society.

The economic growth is subjected to the availability of investment, labour, technology, raw material, transportation, logistics and land. Once the venture has been launched it employs many other co-related activities in parallel. For example lets over view following generalized projects;

Large-Dam, building of a massive reservoir requires construction, operation, maintenance operations at parallel. The construction of Dam will bring in opportunity for investors and labors to join-in and play their respective parts. Dam is normally constructed in remote mountainous region, an area with rough terrain; this requires firstly the establishment of transportation network i.e. road and railways. Once the transportation phase is completed, construction phase begins, which requires huge capital and participation of labor in bulk. After construction, the continuous expertise of technical staffs is required to ensure proper maintenance and smooth functioning of the reservoir. On sidelines, the laid transportation networks bring in more opportunities for people to invest around Dam region, where electricity can now be easily transmitted. Thus construction of single Dam unit has brought in investment incentives, industrialization and improved living standards for local people.

In short the gains of launching economic activities at large scale are vast and rich, offering substantial and improved incentives to the local people; bringing in stable economic and social society.

It's mainly the government who has to look into options that are feasible towards attaining the economic and social well being of its people. Such a state of government promises desirable and long-term political stability. Political stability is principal requisite for the progress of the nation; it reflects the continuity of governmental policies in long run and also reflects peoples trust and support for its government.

ADAMS THEORY: ECONOMIC, SOCIAL, POLITICAL CO-RELATION

In light of Adam Smith philosophy, "it's the economic impact that nurtures social and political progress." If an investment is made by local business group inside his geographical territory, it gives space for the encouragement towards the launch of the product. The benefits of such an investment are scattered irrespective of geographical constrains, and are available more or less to all those who have been involved in the dealings; and consequently gave some encouragement and motivation to the industry and improvement of all. Trader or merchant is usually employing his capital money predominantly in profitable projects, whereas a plain country professional (not having a business aptitude) is accustomed to employ it chiefly in expenditure. Former often sees his money go from him and return to him again with multiple gains; latter, when once he invests, very seldom expects to see any more of it returning. Those different habits naturally affect their plans and temperament in every kind of business. Former is commonly bold; latter is a professional who's a timid undertaker. The one is not reluctant towards investing a large capital upon the improvement and growth of his land when he has an apparent prospect of raising the value of it in proportion to the initial invested capital. The other, if he has any capital, which is rare, seldom ventures to employ it in the similar manner; he is more steadfast towards his capital. If he improves and expands at all, it is normally not with a capital, but with his saving out of his annual revenue. Such difference in aptitude however restrict and adversely affects the growth of economic conditions of the investor in particular and the people at large.

Such an involvement by the investors assures many other things in parallel, which further encourages other investors to join in the business as an independent or dependent unit. Investors gradually introduce order and good government, and with them, and safe guard the liberty, interests and security of individuals, who had before lived almost in a continual state of servile dependency upon their superiors. In this case the government contributes its role significantly. An investor can't introduce social reforms on his own if the government backs off. However for a government an investor brings in economic opportunities, therefore she supports the notion of the investors which supports the social harmony. The economic and investment activities offer social progress in form of quality education institutes, vocational training, health care facility, community setup, either introduce be the local investor or government.

Looking into the political harmony discussed by Adam Smith, "the political stability is co-related by the politics and economics employed by the government." It covers two distinct objectives: firstly government is employed to provide large revenue for people, or enable them to generate revenue for themselves; and secondly: to provide the state with enough revenue for contributing towards public services, it proposes to enrich both the people and the sovereign. Adam suggests that the political economy is derivative of two different economies, i.e. system of commerce and system of agriculture.

SYSTEM of COMMERCE

System of Commerce states that possession of wealth enables an individual to invest and purchase readily any of the commodities. According to Adam Smith, "such a system evaluates an individual solely on the basis of his wealth," i.e. we say for a rich man that he is worth a great deal, and of a poor man that he is worth very little money. A frugal man, or a man eager to be rich, is said to love money; and a careless, a generous, or a profuse man, is said to be indifferent about it.

A rich country, in the same manner as a rich man, is supposed to be a country flourishing in money; and possessing heavy and bulk gold and saver in any country is supposed to be the readiest way to enrich it. Thus rich country is a country full of financial resources to explore the investment opportunities. Country sufficient in finances, wealth can contribute significantly towards social and public welfare by initiating public-sponsored projects. The revenue of the country can be further increased as high tax returns are expected once economic activities are set in motion.

SYSTEM of AGRICULTURE

System of Agriculture measures the richness of a country not on the grounds of its wealth, piles of gold or other valuables. it's purely judged on the grounds of production emerging out of land. The system according to Smith "is considered to be very ingenious system." The different orders of the people who have contributed towards the production of land are segmented into three classes. The first is the class of the proprietors of land. The second is the class of the cultivators, of farmers and country laborers, honored with the odd appellation of the productive class. The third is the class of artificers, manufacturers, and merchants, whom they endeavor to disrespect by the humiliating appellation of the barren or unproductive class. The first class contributes towards annual land production, at the cost of improvement of the land; improvement of land includes buildings, drains, enclosures, and other ameliorations, which are either constructed or maintained.

In parallel the economics activities should also be encouraging the social reforms in following manner, the economic system must settle, not only the expenses towards defending the society and of respecting the authority and prestige of the chief magistrate, but all the other necessary expenses of government for which the constitution of the state has not allocated any fixed or particular revenue.

The funds or sources of revenue owned by the state must be either in form of stocks or in land. The state, like any stock-owner can explore revenues from it, either by employing it himself, or by lending it. The invested revenue is in the one case profit, in the other interest. Profit; if it's self invested by the state, Interest; if it's lent to local… READ MORE

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