Adam Smith: The Grandfather Of Economics
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This is Adam Smith. Adam Smith was a Scottish philosopher and author who is probably best known for writing a book titled “An Inquiry Into the Nature and Causes of … The Wealth of Nations!”
This book effectively marked the beginning of economics as an academic discipline as Adam Amith, (now heralded as the father of economics) laid the foundation for economic rules and principles that guide decision making the world over.
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📚 If you want to learn more about this topic, be sure to check out the book "The Wealth of Nations" by Adam Smith 👉 amzn.to/38jZpBW (note: as an Amazon associate, EE earns from qualifying purchases. Thanks for supporting our show!)
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#AdamSmith #WealthOfNations #Economics
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Would you recommend any economic book
Please, do a video on the economy of Ireland.
@@jijov.j1545 Freakonomics ... its not theoretically accurate but its a lot of fun if you are an econ nerd
Probably a bit too late to ask, but I think that a video on the economics of Alexander Hamilton would be perfect for right now, considering that the Hamilton recorded movie comes out on the 3rd.
Hey man, I've been watching your videos since you began. I believe if you want to reach that next tier of UA-camr, you're going to need to work on custom graphics, charts, and visualizations, rather than just having 100% stock footage. This will mean videos will take much longer to produce, but quality > quantity.
Just my 2 cents, love your videos regardless.
He really used stock footage of a Jack Russel Terrier when he said “jack-of-all-trades”
Even better at 13:30 he uses a picture of a large level when he says "on a larger level"
Or he has an AI that is working with him to help create content and it didn’t know which jack
at 14:45 he says the word "stay" and it shows a video of a dog staying
Because the best way to teach people about economics is through the best bois.
The amazing stock-photo montages coupled with the hard unforgiving yet enticing "BAT!" is why I keep returning...
"It's is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." .... The quote is still so powerful ! If you stop for a moment and just try to comprehend how incredibly complicated the modern economic machine we have built , it almost feels unreal. That things work in this way in a massive dance of coordination between billions of people who don't know each other is frankly incredible to think about. It almost seems too complicated for humans to have built such a system ! ! !
Love your channel EE !! You are an inspiration !
And v important to remember that Adam Smith got his dinner (and most everything else) provided to him through the benevolence and unpaid labour of his mother. So much economic thought completely ignores that huge portions of the population are providing 'invisible' unpaid labour, which is not 'counted'. www.thecut.com/2016/06/katrine-marcal-adam-smith-dinner-interview.html
Yet there are still people who think the world is a zero-sum game. It's been 250 years since Adam Smith's book
@@1queijocas That's a real problem. By thinking this way, people assume that If someone is rich (a person or even a state) is because he has taken something away from others, (which is rarely the case) thus it's a bad thing.
APC 219 The problem is in some countries corruption is so rife that some rich people (those you probably won’t see publicly listed on Forbes or other international sites) actually made their money by stealing from everyone else. The rational model of economics indicates that corruption will be taken if one believes they can get away from it which leads to things like that Harvard economics professor who attempted to bribe a farmer with $200 to not call the cops after getting caught steeling about $100 worth of manure (for use as fertilizer). The professor ended up being arrested, upon in which he was shocked since he thought the farmer was not acting rationally by turning down $200 for $100 worth of manure.
@@WellBattle6 your example seems more like a trade than like corruption.
Basically, the Harvard guy had accepted to buy the manure for a higher price since he had been caught.
So the decision of the farmer really is illogical
For some reason my concentration span tenfolds when watching an Economics Explained video.
cuz of the stock images lol.
That's an improvement for a millenial
@@AwesomeHairo *Gen Z
And then my brain wants to go back and resummarize in a very precise/specific excessively so, dumb way that is distracting tbh.
Cartoon economics!
I have his book called ‘The Wealth of Nations’. I didn’t realise it’s 1100 pages + until it got delivered lol. I’m scared to even start reading it
Saif Madni Makes sense bro, might give it a read soon 👍
same bro
That is very good book you will like it. if you would like some other books you should also try : Das Kapital
by Karl Marx
Would you rather read a 1200+ page book? 1100 is nothing in comparison. :P hope that helps lol
I hope you like sheep. Smith talks about sheep. A lot.
“The disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition is the great and most universal cause of the corruption of our moral sentiments.”
-ADAM SMITH
, SCOTTISH POLITICAL ECONOMIST (1723-1790)
Capitalism with good welfare state (mixed economy) is the best system for long term prosperity and growth.
@@PistonIgniter nope. capital allways acumulates to the point it starts buying politicians and destroying welfare.
socialism. not comunism - where companies are owned by government; but socialism - where companies are owned by their workers and *only* their workers.
w o k e
@@majacovic5141 Is that why the Nordic nations rank lowest in corruption in the world and have some of the most extensive welfare systems while operating under these parameters? We have had this system for nearly a century and if anything the welfare systems have only been expanded while wealth has skyrocketed. There is no socialist system on the face of the earth that isn't festering with corruption. www.transparency.org/en/cpi/2018/results
@@excuseyou1526 Facts. The only "Socialist" country that officially relates to such ideology is China, and they are Communist in the way they act socially and it's basically the name of their Party. Everyone's already know how corrupt and inhuman they are.
What amazes me about "Wealth Of Nations" is how well it's aged. I remember how, reading it as a teenager, it was easily understandable and relevant. Sure it misses a lot of the modern and more nuanced concepts, but for a basic understanding of how capitalism works it is still an excellent book.
It also taught me how to argue from evidence, and thus to write good essay responses on my Advanced Placement tests back in high school, saving me a good chunk of tuition fees in college.
@@erikjohnson9223 "…the empire of the Caliphs seems to have been the first state under which the world enjoyed that degree of tranquility which the cultivation of the sciences requires. It was under the protection of those generous and magnificent princes, that the ancient philosophy and astronomy of the Greeks were restored and established in the East; that tranquility, which their mild, just and religious government diffused over their vast empire, revived the curiosity of mankind, to inquire into the connecting principles of nature."
*Adam Smith, Essays: Philosophical and Literary (London: Ward, Lock and Co, 1880), 353.*
... , . .
I feel like a "last time I was this early" would just be a small brain move on this video...
I didn't see this comment before I commented , I guess I have a small brain.
Last time I was this early economics explained hadn't posted the comment "I feel like a "last time I was this early" would just be a small brain move on this video...") anyways great video as always
Oh shi-
I was never this early, so does this mean i have no brain at all?
@@user-nf9xc7ww7m last time I was this early no one had reacted to "I feel like a "last time I was this early" would just be a small brain move on this video.." which I reacted to then got reacted to by a guy saying "last time I was this early, no one had commented on someone else making a comment about a possible comment to pre-empt another comment."
The theory that industrialization is just the result of costs of opportunity "no farm land, let's do industries", it's extremely simplistic.
The reasons for why the industrial revolution started in Britian are complex and many, like the existence of universities and a scientific mindset early on (the works of physics by Isaac Newtoon for example), the existence of a bank system who could offer cheap capital to entrepeunerships, the existence of roads and easy navigable rivers, political stability, the availabilty of cheap coal and wool to open industries, liberal scholars, etc...
It also ignores the fact that profitable plantations can be really expensive and capital intesive in itself.
And the existence of colonies to take materials from.
@@FavoriteCentaurMoe Colonies are irrelevant. It would not matter whether India was dominated by the Mughal Empire or the British East India Company, Industrialisation and Modern Economic Growth would have occured in Britain.
Return The 9.184 Trillion pounds the British took from India then, oh wait you can't repay that figure back.
@@adilakram3550 ohoh, triggered indian
Yes, it is a simplistic explanation of a complex process. I would like to contribute the following points:
1) I agree with your point of the financial sector moving surplus resources to where there is a demand, and that's what happened back then. The video is a bit misleading by suggesting that farmers switched from farming to factories; that was not the typical case. What happened was that surplus wealth accumulated from farming was being used as capital invested in factories because they generated higher returns. That movement of capital was facilitated by the financial sector just like you stated.
2) There is no intention to say that farming is cheap, it's just cheaper to start a farm than to start a factory at comparable scales. In other words, industry is more capital intensive than farming.
3) The farm to industry explanation was more of a proxy for the more fundamental natural progression that is to go from a labor intensive economy to a capital intensive economy. A labor intensive economy has lower barriers to entry but lower returns. So the natural progression is to start with labor intensive endeavors, accumulate wealth, and then reinvest that wealth to overcome the higher barriers to entry of capital intensive endeavors which provide higher returns. Keep in mind that this video is about Adam Smith and the 950 page book he started writing years before it was published in 1776 which means that the industrial revolution was at it's infancy; technological advances had just started. Before that, everything was labor intensive economies; there was no capital intensive anything. Capital intensive economies started in those years. China and India are more modern examples of the transition from labor intensive to capital intensive.
"Farming is easy" * nervous laughing in Dutch *
P Schlösser but they are good at it and it is one of their main exports in Europe...
Um, we are the second largest food exporter in the world, farming is a huge industry here.
STIKSTOF EMISSIE JONGUH
Someone Silence wow... who would have thought. So not planting many Tulips anymore? 🌷
@@someonesilence3731 I was commenting on the fact that farming in NL isn't *easy* because it is heavily mechanised and overengineered, which wasn't meant as a criticism
"Capitalism is democracy with dollars"
Wow. Oversimplified, but soooo true. 👏👏👏 Big Bravo for EE.
In short it's a plutocracy.... power of the rich.
@@jmitterii2 Not agree mate. This is not a race for power.
Your work and effort give the means to live better, increase your savings and do with that gain whatever you wish. Consume or invest. There is only one way to get rich.
Voting rights were dependent on property. You had to own a certain amount of property before you could vote.
@@rfmckean right! More than a century ago ?? We've come a long way from that. Universal suffrage is old as capitalism. However it took long time to be implemented and accepted all around the world.
@LaMortEtLamour not sure you understood the point from the video, that consumer capitalsim democratically selects the products that consumers want.
I actually read WON, and this quote floored me (something for the hardcore to think about): "Whenever the legislature attempts to regulate the differences between masters and their workmen, its
counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is
always just and equitable; but it is sometimes otherwise when in favour of the masters."
I thought he was the grandfather of capitalism not economics as a whole but I guess your video made a fair enough argument. Love your videos, keep up the awe-inspiring work
Considering capitalism is the most obvious and practical application of his ideas and socialism tends to go against his ideas, its easier to see his role in the formation of capitalism then of other forms of economic thinking.
Adam Smith is one of the most militant critics of capitalism. Reminder that markets are not the same as capitalism, and free markets cannot exist under capitalism.
"All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind."
Adam smith also read his Plato and knew that when a corrupt oligarchy formed they would take everything, from private to public wealth, for themselves. He knew that if the free market is deregulated too far that it would also stop functioning properly as is happening today in the Western countries and that could lead to unrest, or revolution.
Really good video to sum up everything in a simple and understandable way. Really helped writing my paper :)) thanks!!
This is one of your best videos, good job!
The Theory of Moral Sentiments by Adam Smith is probs in my top ten favorite books. I only read the Wealth of Nations because I had to for school so I didn't really end up with an emotional connection to it or anything.
People today still don't understand the genius of Adam Smith's insights.
I am from Bolivia and here the academics still thinking in a mercantilism brain, this video goes directly to my best #1
Adam Smith's groundbreaking ideas paved the way for modern economics - a must-watch for anyone interested in economic history!
This channel just keeps getting better. The new series is looking up to be a great one.
I think a video or series about human economic history analyzing the real wealth of individuals in each stage, from hunter-gatherers to the modern information age would also be interesting. In my humble understanding, hunter-gatherer societies were richer than neolithic ones and the industrial revolution was really a kind of singularity event because we achieved massive productivity increases never seen before. At least this is my understanding, would be interesting to see what @EE has to say about it
"…the empire of the Caliphs seems to have been the first state under which the world enjoyed that degree of tranquility which the cultivation of the sciences requires. It was under the protection of those generous and magnificent princes, that the ancient philosophy and astronomy of the Greeks were restored and established in the East; that tranquility, which their mild, just and religious government diffused over their vast empire, revived the curiosity of mankind, to inquire into the connecting principles of nature."
Adam Smith, Essays: Philosophical and Literary (London: Ward, Lock and Co, 1880), 353...
,.,,'''..,.,''.;
Any discussion of "The Wealth of Nations' should also reference "The Theory of Moral Sentiments". The books should be both considered in order to get a good understanding of Smith's political philosophy. Unfortunately, unlike "Wealth of Nations", IMO "Sentiments" is a difficult read.
I've had theory of moral sentiments for a year now. I feel guilty that I've not read it 😂😂
What does it say?
@@joecurran2811 I found it a bit impenetrable but IMO the book talks about what the pursuit of happiness is all about. "Happiness" is not just wealth accumulation but family, friends and community. Wealth may make you more able to do things but the things you will want to do, do not make you wealthier. But then I may not have understood what was intended. The book is not widely discussed.
This is a really insightful video to watch and digest. I took almost an hour to think and take notes while watching.
It leads to me thinking how AI in the future may again change our views on concepts like capital and wealth.
Thanks for the great video.
I want to applaud how you always have a non-demeaning intro. Not "I bet you stupid views can't grasp the impact of Adam Smith" instead "the impact of Adam Smith is truly hard to grasp." Excellent!
I come here for that soothing Australian to say “THIS IS....”
Borrowing the Wealth of Nations from my public library sparked my interest in economics and me to several places in life that I would never have gone to without it, such as this youtube channel, wallstreetbets, starting to plan and save for an early retirement, making a video game with a detailed economic simulation as a hobby, becoming a libertarian, and laying plans to start my own business.
Land, Labour, Capital (& Entrepreneurship)...and ENERGY. The fact that this continues to be omitted as a factor of production is absolutely crazy.
Adam smith's views is one of the best thing ever happened to the world..
.
Because of adam's policy West has improved a lot people’s life improved
Tbh I wasn't expecting this history based video to be very interesting
I stand corrected though, this was fantastic, great video ❤️🎉
These videos are always rly well made, informative and interesting, but I love the background videos and images used, the jokes and sarcasm behind some of them are priceless
Last time I was this late, i was a time traveler who went to warn Franz Ferdinand in 1919
Missed it by that much...
@@rembrandt972ify By five years.
This is actually extremely helpful as I need to study all of this for my econ exams, thx for the vid mate!👏🏽
Best of luck, Glad we could help!
Wow since when did they teach Adam Smith??
Wasn’t it always Keynes and more Keynes
The GOAT of all GOATs. Hands down the greatest influence in my economic and political ideology.
Been reading his book def will give you a different perspective on reality. An interesting read
One of your most helpful videos
Absolutely amazing video! thanks for making!
That book was life changing, felt a million times smarter after reading it.
EE: Farming can be as simple as plowing some dirt and throwing some seeds
Africa: Write that down, write that down
That's not a farmer that will live long i can assure you
I could have bet money that you'd do a video on Adam Smith eventually, nice job! :)
haha well it had to be done. Mark my words I actually don't think it will be a particularly popular video but I think it is an important one to have in the library nonetheless.
@@EconomicsExplained I agree, you can't talk about economics and not talk about big old smithy
Next video about economists could very well be: Keynes vs Hayek
@@EconomicsExplained Will you make one on John Maynard Keynes?
Better than investing in bitcoins
Always interesting, thank you.
just finished reading parts of book I: division of labour and principles that gave rise to division of labour. What i found surprising or rather intriguing was the idea of delegating certain duties to certain someone or a group of people. Pretty much where we are now, I'd like to think that that has been considered somewhat as a natural flow of process when you're involved with large and heavy projects. You create plan, divide it among people and have each do their own task. Such a thought did not occur or perhaps wasn't considered a norm at all back in the days. People just like to do their own thing. It tells me just how much we have taken things for granted, so much to the point we considered it as normal, when it took one man's book written in 1700s to create things. Adam smith is indeed a great man. I haven't even finished reading book I and here i am just marvelling at the brains of adam smith 😂😅😂
Division of labor existed ever since hunter-gatherer societies. Prior to Adam smith, we had farmers, blacksmiths, bakers, fishermen etc. it’s just that we grew more specialized. Instead of a farmer, we have livestock farmers, veterinarians, mechanics, horticulturalists, chemists/biologists, that all specialize in a particular aspect of a field
Please do a video on the economy of chaz, or “chazian economic theory” it would be amazing, you could talk about the fall of societies and how economies change in anarchy, it could be really informative and interesting
Edit also jake tran just shouted you out, I’m a huge fan of both of you so that’s awesome! Y’all should collaborate!
Yeah I don’t think I would have that much extra to add beyond what jake has already done so I would just say go and watch that video 😂
11:35 Funny, the same thing happened in sports. It was believed that there was a perfect bodytype for all sports. But all sports at once. Later on it became apparent that different body types are better/worse on different sports.
I guess they didn't try to imagine a sumo wrestler in Olympic swimming
Yes. The perfect example are sumo wrestlers.
My favorite EE video yet
The pin maker example was in the first chapter, of the first book. He used it to make the point that the division of labor was more efficient than artisanal production. In no way is the person selling the pin a part of this equation, he is not necessary in its production and Adam Smith never considered the “seller” in his example. Also, Adam Smith talked about the “Invisible Hand” one time in his entire volumes of books. It’s in Chapter 2 of Book 4, the context it is used in is to retort the idea that as every individual endeavors to employ his capital in support of domestic industry, to direct that industry in support of its greatest value annually to increase his own capital, he will have no reason and incentive to better his society materially. However, Adam Smith said that the individual will have a “home bias” if you will, and as if “led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.”
There are other interpretations that are way off in this video than what Adam Smith really believed. You have the very surface information correct, but your understanding lacks depth.
I click on your videos to see the "last time I was this early" comments. Last time I was this early, Adam Smith was still writing Wealth
Please do a video on Marx and Keynes... as their views & theories on economics is as different as Newton vs Einstein in physics.
The difference is that in physics Both Newton and Einstein were correct, in economics well...
Einstein was a socialist
Better yet, make a Keynes versus Mises video.
Why should they do a video about Marx, he knew nothing about Economics. His idea was based on the idea as the rich become richer the poor become poorer. Written in the 1850s and yet we are all richer, why because Marx had no idea what he was writing about, basically he thought along the zero sum theory. That there was a limited number of jobs and limited amount of money, total tripe, and 100% wrong.
@@johnashtone7167 I don't think you read Marx ^^
And no matter what you think of him (I'm no communism at all), there is intesting things to understand in what he wrote down. Just like Keynes and Friedman both explained and understood very important mecanics of economy, while being in total opposition.
For instance, the fact that work specialisation is often felt as less "enjoyable" than generalist work by the worker, even if it is more productive.
Or the indeniable fact that inequialities are indeed a factor of destabilisation of a society. And that inequalities are growing with our GDP.
Take a look at the World Inequality Database, a site founded by the 2019 Nobel Price of Economics, Ahbeet Banerjee (among others), if you wanna see the evolution of inequalities in the world. According to the MIT, the 1% of richest people in the US represent 24% of the total income, while the 50% at the bottom represent 13%. Inequalities have never, ever, been so high in modern history. Sure, poor people are richer, but rich people now own insane amount of wealth. And inequalities, not overhaul wealth, is a factor of social unstability.
wid.world/country/usa/
clear and concise adam smith would approv
I've read the wealth of nations i want a cookie for that
🍪
💩
Hearing how economists often talk about farmers, I have to really wonder if they actually read it all the way through. Smith has some very high praise for farmers in that book, and talked extensively of the misguided know-nothings that specialization produces in the towns.
Have a apple instead 🍎
11:53 "Jack of all trades"
Shows adorable little Jack Russell.
You sir are a MASTER of stock video clips
Thanks sir..very interesting and highly informative video.
"As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce." - Adam Smith
Funny that right libertarians love Adam Smith so much, when a lot of his opinions, especially on landlords, would nowadays fit on the left.
Rent is theft.
@@frocco7125 My landlord pays the repairs, the renovations, the maintenance, the cleaning, the water bill, the security & the insect exterminator. & I pay him not to worry about any of it.
No theft there. Just two consenting adults.
@@sirmount2636 No, but the phrasing "rent" is a bit wrong. It is about land leasing where the owner doesn't do any of that, except for collecting the lease.
Lookup "Land value Tax" (or "The perfect tax") on wikipedia for an interesting read on this topic.
@@sirmount2636 He's still a unnecessary middleman, all of this can be done by an hired concierge, and is usually done by one hired by the landlord. So, why not replace the landlord by a collective of the people living in the building?
Menno van Lavieren I’m not really interested in more taxes. I think there should be fewer.
You may have heard of Adam Smith - yeah, I know like 20 Adam Smiths , all claiming my iPhone has a virus
He do be changing the economy. By giving him money. Close enough
Last time I was this early, Adam Smith didn't have capitalisation in the description.
Read The Wealth of Nations. A surprisingly large percentage of it is still valid today.
Understanding a few of this book's concepts will help you understand when politicians and business folk are saying one thing and doing another.
The last comment, 'people are dumb is a limitation of Adam smith's theories' is very true and a principle for deep research
The last time I was this early the universe didn't exist ( I've never been this early)
same
Guess you have a small brain.
@@josephjoestar275 I guess I do
Last time I was this early mercantilism was still a thing.
Nice can't wait for the next video
I think he is arguably the greatest mind in history. He is undoubtedly the most misrepresented thinker in history.
Hi, I am a medieval historian, and your representation of how economies worked in the medieval era is about fifty years out of date. I would recommend reading some recent historical scholarship on economic history, such as Chris Wickham or David Abulafia.
the constant problem with people who are engaged with economics nowadays is that they dont have a legitimate knowledge about History, Social Anthropology and Archeology.
Elaborate, what did he get wrong?
Welcome to the field of economics
Arburgill H basically, everything that Smith and most economists characterize as beginning after “feudal” economies collapsed had already been going on for centuries under nominally feudal political regimes. Markets and investment economies had existed in Christian Europe since, well, the Roman Empire, really. Calling feudalism an economic system in itself is a fraught endeavor, but calling medieval Europe a command economy is absolutely wrong.
@@baladonian He made a video about marcus aurelius and Roman economy and how Marcus Aurelius used early kind of central bank system to fund the Roman banks because of crisises. I think he know what you are talking about.
14:55 - when I first learned of people like Milton Friedman and FA Hayek, I always thought they were a bit dramatic with proposing that government expansion would turn us into slaves and overstated how important the free market is to maintaining human freedom. Of course, a deeper dive in history showed that actually that was pretty much how most of civilization has been run. In history we always learn about battles but not about the economy or the average life of people.
They sound dramatic because Friedman and Hayek were polemists not academics and their goal was to find a path to rollback the equilisation of wealth that had been occurring since Keynsian economics took root.
Smith himelf warned about the dangers of unregulated markets and was a strong interventionist. But then he was basing his work on science and empiricism not polemics.
@@dairallan Really? Smith was a strong interventionist? any evidence to support this assertion?
@@aminuabdulmanaf4434 "The interest of the dealers [referring to stock owners, manufacturers, and merchants], however, in any particular branch of trade or manufacture, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, and absurd tax upon the rest of their fellow-citizens."
Smith warned about the dangers of monopolization and the corruption of the public interest by, well, corporations.
machineryofpolitics.wordpress.com/2012/01/04/adam-smith-on-the-crisis-of-capitalism-2/#:~:text=Adam%20Smith's%20greatest%20statement%20regarding,of%20the%20Wealth%20of%20Nations.&text=Monopolies%20hurt%20capitalism.,to%20break%20into%20their%20market.
@@industrious2807 So add to "Free Market", "Fair Market". Governments need to be an impartial referee.
The value of government is as a strong ready quick temporary force to manage the worst problems, but freedom and the market provide more economical long-term solutions, assuming people are rational, which is not always the case.
Love your vids!
One part of Adam Smith's writing that, while extremely important, is largely ignored. This is his analysis of how the private ownership of nature (which political economists referred to as "land") effects the production and distribution of tangible wealth (as distinct from the financial claim on tangible wealth). Smith's analysis followed that of the French school of political economists, the physiocrats. The physiocrats offered an entry level analysis of land markets, an entry level analysis because they were writing during a period when commercial agriculture dominated the French economy. Thus, they spent no real time analyzing the same land market dynamics that existed in town and cities.
Here is what they all understood to be the case. Every parcel or tract of land has some potential annual rental value as determined by demand (i.e., market forces) directed by whatever restriction on use are imposed by government. With regard to agricultural land, they described the process by which rental value is based on fertility and other factors that make it possible for the same input of labor and capital goods to produce greater output of agricultural commodities. The difference between output on the best land versus the next base land is defined by the political economists as "rent." Less and less rent arises as land quality falls. At some point, land cannot be worked to produce enough output to justify the required labor and capital goods. The land market has then reached its "margin of production".
Later political economists began to apply the Smith-Physiocrat analysis to other land markets, to land that holds timber or subsurface mineral deposits. All sorts of locational advantages or disadvantages determine how much, if any, rent comes from locational advantage. Some, most prominently Henry George in the late 19th century, argued that as rent arises based on natural advantage or advantage created by privilege under law, rent rightfully belongs to society. George argued that rent should be publicly collected. And, once one turned over whatever rent was due, the individual (or business entity) had met any financial obligation to society. The taxation of earned income flows, of tangible assets and of commerce is by definition an unjust confiscation of private property.
"Adam Smith wasnt perfect"
Libertarians hated that
Do you mean liberals?
Hassan Tahan why liberals? Don’t liberals want more government regulations and market controls? Most liberals seem to be against capitalism
Libertarians criticize Adam Smith on a daily basis as they don't think security or anything really should be in the hands of the state, ever.
I guess you confused libertarian with liberals, but even them know well that somebody living in XVIII century will not be right about everything.
@@shawnspann6844 by the modern way, sure, but classic liberalism is basically Adam Smith. Look it up on wikipedia.
@@shawnspann6844 That's the american version of Liberal and is completely at odds with the globally recognised verison.
The foundation of the 'invisible' hand for classical economics is indeed good for his time, however, market failures such as externalities, and the Keynesian approach, shows how there are still much to be explored in this field.
I agree
Adam only really knew about perfect competition. If he were alive today I don't think we would like the capitalism we have installed
well said
The people of the United States need something like this. An inquiry into the nature and causes the wealth of peoples.
Adam Smith's theory thrived the most in the us and is the reason for the US' capital markets/industrialism. You're about 200 years late.
This guy makes information soo easy to grasp , thanks for being on UA-cam
"The role of government was only to make sure that markets were maintained"
Good ol' government just observing the markets and not getting involved with it....yeah right.
yeah but adam smith talked about the whole thing in terms of pure profit . govt. not intervening leads to stuff like monopolies, unethical treatment of employees/customers etc.
@@muralibhat8776 Is not black and white. On the other hand you can see countries like South Korea that are ruled in the underground by local business cartels like Samsung and Hyundai, that with the help of the local government help to industrialize one of the poorest nations of the world into the rank of the top developed countries (which is basically corporativism). It can be done (get out of extreme poverty) and not all countries need to follow the same economic policies to develop and grow.
No you are wrong, he said there should not be major intervention, but that the Laws should be there to maintain fair governance.
@@johnashtone7167 Exactly. You could argue that breaking up trusts and monopolies is one of the justified uses of government. And protecting against anti-competitive practices.
@@johnashtone7167 Yea you are right.
"this is Adam Smith" *zooms in to confused look of horror*
This is a video rendering of a picture of Adams smith doesn’t have the same ring to it
@@EconomicsExplained Oh I just meant Adam Smith looks confused and horrified in the picture. Thanks for the video.
Well, he actually was that ugly and nerdy that the ladies did not want to do "serious business" with him.
adam smith is responsible for the rich world we are living in today. change my mind.
Lol i think the change of laws in the brithish island were more responsible
On the idea of Nation specializing their production...
That works as long as there is "logistical safety".
As soon as that breaks down, the "execution" of such concept evaporate.
In economics theory, you could say that "logistical safety" improve the "efficiency" of transport cost &, hence, improve the "viability" of the "specialization" of nations.
Now, the question is how do you ensure this "logistical safety" requirement?
Would wealth of nation be good read for a UG student ?
I´d love to hear you adress the fact we´re running into the reality of endless resources again. In other words, economy is returning to a zero-sum game as the planetary boundaries that life depends on were not an aspect of consideration in the mercantilist economies of the past. Fossil fuels are being replaced by biofuels, which require wood, which require a single type of tree in order to be efficiently produced, which lowers biodiveristy, which is a very important aspect of the future economy if life matters at all. There´s a billion other examples but you get the point. How can we ever keep a growing, win-win type economy when the fundaments of life itself are running out? Migration to other planets? Please no appeal to the ingenuity of man thank you!
We can't. Capitalism as a social-institution has outlived its usefulness and is now hindering further progress. Our society, at present state, is wholly incapable of handling a crises like climate change, unless we change the way resources are owned, managed, and distributed. If we're to survive as a species, we need to transition to a society where the economic sphere, (that is, the very thing that keeps us alive) is actually owned collectively and managed according to scientific principles. With the advent of modern digital computing, planning entire economies could be easily done. Economist/Computer Scientist Paul Cockshott has good works on this concept.
@@MrFerrell55 as much as i agree capitalism is doneso, markets are not. Planning could for sure take more space if it is done decentralised and directly democratic, but full on planning the allocation of resources seems very problematic (although I havent read you source so cant respond to that).
I think a UBI, a change towards democraticly owned businesses in conjunction with ecocide law and high extraction taxes could be the systematic reform neccesary.
fun fact: "invisible hand" appears exactly once throughout all 5 books of wealth of nations and the context in which is appears is an argument for why masters and industry leaders do not invest in foreign markets.
> Chapter 2: Of Restraints upon the Importation from foreign Countries of such Goods as can be produced at Home
> By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
Also, I do not think that Smith argued that nations should specialise, that was Ricardo, and Ricardo was wrong. Taking the US as an example, its economic success is in the fact that it was a jack of all trades, and it utilised state power to protect its developing economy, and then export subsidised goods to other countries.
I'm a bit disappointed in this video. I do not think you've actually read any of wealth of nations. Smith was a realist, his ideals were a market free from almost all government intervention, but he knew the reality of power structures, and how "the masters" would always use "the legislature" to get what they wanted. Therefore, he said, any wage control in favour of the workers was "always just".
I think that the video may gloss over that the path of least resistance can also depend on other factors than the availability of free land. Other factors could be. Who is allowed to earn money besides the ruling elite and also the availability of information for the general public.
Last time i was this early, i actually had a joke.
Sorry to say mate but its an overused joke.
Last time I was this early I did not break someone's heart.
@@themongolsarecoming_9437 last time i was this early, EE's comment section wasn't filled with these jokes
Can you do Karl Marx? :D
Yes its in the plan :)
@@EconomicsExplained nice
@@EconomicsExplained If you do Karl Marx please remember to point out how he entirely missed "cost of capital" in his thesis and therefore making it wrong.
@@EconomicsExplained Please talk about the problems caused by the Labour Theory of Value
He's the best comedian that ever existed.
"Communism is a good idea...". XD
This video is one of your best because of the way you explain what economics is and its progression that a layman could understand, well done
Great content! What is the title of the next video about behavioural economics? Can't find it....
The economics of economics explained
Implodes
Why didn't you say that in Spanish .YE SHALL FACE THE WRATH OF DUO LINGO!
I second this
You mean, the economics of economics explained explained?
"The rate of profit is always highest in the countries which are going fastest to ruin." Adam Smith ......... "To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of nature." Adam Smith
Smith knew people were selfish, and spent much energy on trying to goad employers into honoring their employees, to little effect. And, the founding fathers embedded the inescapable characteristic of selfishness in the constitution, constructing a separation of powers (because of it,) in an attempt to prolong the union. Smith's work is as much an unwitting prediction of inequality in America as it is a path to that state.
"Selfishness" is the ONE HUGE FLAW that completely destroys every argument of free market supporters and constitutionalists. And, they ALL ignore it when espousing their tripe.
America is a nation of contradictions this much is indeed true. We talk about freedom and equality yet one need only go to one of its poorest states or its wealthiest cities and see the striking economic disparity.
I’m not much for libertarianism but I can understand and even support much of Adam Smith’s ideas. However I believe we should inevitably abolish the market systems however that would take centuries and will take a lot of reversal of social thinking. I mean Americans believe in the market system is almost dogmatic. Fanatical as well.
@@barryallen5448 My personal view is that America is great, almost as is. Capitalism is greed. America is phenomenal at greed and selfishness. The problem is that all the "controls" are weak, allowing egregious abuse without repercussion. Corporations probably need help in the beginning, or for special circumstances, i.e. tax breaks/incentives. When they flourish, they don't want to give back to the system that made them so successful. In my county, commissioners refuse to clawback money (from property tax incentives) when companies blatantly violate the terms of the deal. Apathy of the electorate allows corporations to run the country. And, elected representatives of all stripes are selfish, and will not implement the necessary counter-measures.
Great explanation of Adam Smith's Economics. Totally looking forward to behavioral economics! I find it one of the most fascinating studies right now
best channel on youtube
"Capitalism is democracy with dollars" That's a bar
When I was ready to go bed at night during my university years... I'd start reading some wealth of nations. Takes about 5 or 6 pages of that to put you to sleep.
This was one of your most inspiring videos to me yet, keep it up 👍
Better Video Than 800 i have already watched on the same topic
2 views 6 comments bruh love u guys u guys got me interested in economics
It's a very important thing to know the ins and outs of. Unfortunately it can be very dry if not approached correctly!
Yes that’s right it was pretty boring untill o started watching u and also I took it at school
It’s funny how free market types idolize him but his actual policy proposals had a lot of state involvement in the economy.
Karl Marx didn't advocate Stalinism, but here we are
Because he just wants the appropriate approach from government. Not todays nanny state that feeds Amazon and Google and the such.
@@evrensaygn1017 Lack of state control gave you monoply corporations like Amazon and Google. Let go of your inaccurate nanny state nonsense.
Could you please tell me where he advocated for state intervention in his book again.
Thank you for making these videos. I encourage you to keep on producing this wonderful content. Just one word of advice. I am a visual learner, and I noticed that it was hard for me to pay attention to your videos because there are so many clips of every keyword during your script. This was very distracting. Maybe you could combine small clips, with charts and small clips of yourself. Also, illustrations seem to distract less. I think this would help me comprehend a deep subject without being distracted so much. Good luck.
Economics is so interesting. Its human behavour quantified in numbers
Adam Smith the father of capitalism
The whole specialization thing sounds so inhuman. Being able to dedicate your life to one skill like building a pin from scratch may be extremely rewarding, being able to do a variety of things with a diverse set of skills (toiling in the fields, building a house as mentioned in this video) sounds much more fulfilling than specializing in one tiny robotic part of the production line
but that only de economic value of your labor, you can achieve several very diferent skills over your life, you just need that one of it is economically profitable, becouse thats efective. Althought evolution and nature is not about improvment itslef, it follows the logic which living beings helds a competition of who can survive and pass it's genes ahead, similarly capitalism work because it's allways trying to improve itself to see who is more competitive in the market, and due to this specialization fit perfectly in this cenario, and thus i think it's very natural representation of nature itself.
and sorry for my bad english xD
MsJeffreyF well consumers aren’t concerned with the fulfillment of your occupation, and rightfully so. It’s through lowering costs, improving efficiencies and innovation that development continues. Those mundane, repetitive jobs will be done by machines anyway.
Interestingly, in the "alienation passage" of the Wealth of Nations Smith actually acknowledges this tendency of the division of labour to reduce workers to unthinking slaves - saying it makes them "stupid and ignorant". There is a notable clash throughout much of Smith's writings between what he deduces to be beneficial based on his theories, and his observations of the real world.
Great documentary, unexpected!!!
This video is amazing, a real eye opener for an economics newbie
Great summary. Thanks for the content
I wrote a sci-fi short story where smith transferred to the modern day Britain and saw him trash the modern neo liberal economics and central banking.
Let it be known that Adam Smith didn't believe in high concentrations of wealth and thought that profits should decline over time in prosperous societies. He also believed in government regulation so long as it favored the worker and not the corporation, and condoned high taxation so long as it was equitable.
one of the best video on UA-cam ! Thank You for sharing !
John Bezpiaty writing--Have you considered a video on economist Wilfredo Pareto? I believe his ideas were among the hampers to the economies of such places as Cleveland, Akron, Pittsburgh and Detroit.