Adam Smith ; a brilliant economist of the world
Adam Smith was a brilliant economist who has proposed various theories comprises of human behavior after critically studying the aspects of human . He has spread a lot of wisdom to the world concerning the study of human wants and their interaction with nature. He was known as the father of economics. He has made different economic theories easy to the common people by properly explaining them. Economics is basically a difficult subject that proposes various theories after considering many points such as variable and constant factors, relationships between two or more factors, human behavior and their interaction with nature etc.
Adam Smith's theory of wealth creation
Adam Smith has a laid a popular theory in the year 1776 known as the An Inquiry into natures and Causes for Wealth for the nations. In this theory he can traced different points on wealth creation. He has stated in his theory of wealth creation that wealth is not calculated by the sum total of gold and silver that an individual possesses but calculates the total goods and services rendered by them. He has emphasized on the intangible terms that create wealth rather than the possessions or the inherited property of an individual. When he proposed his theory of wealth creation, he has considered various factors that lead to wealth creation. The important points he has considered for the theory is
1. Scarcity of resources
2. unlimited wants of human beings
3. Strategic utilization.
Unlimited wants and scarcity of resources
Explaining in detail about his theory he has stated that the natural resources available in nature are limited but the human wants are unlimited. Human beings cannot fulfill all their needs because the resources are not available in abundant when compared to their needs. But a particular need of an individual can be satisfied. For eg. If a person wants to sip tea, he can satisfy his need for a shorter period. But he cannot fulfill his unlimited needs.
Solving the problem of limited resources with unlimited wants
Although the sources are limited in quantity, and cannot equate with the human wants, certain steps can be taken to satisfy human wants. The resources that are available in nature must be ly utilized and more goods should be produced to satisfy human wants.
How to increase the productivity of the goods to satisfy the human wants
Adam Smith has also stated the ways to increase the productivity to increase the level of satisfaction of human beings. He has stated that the resources should be deployed effectively by employing suitable labor and distribution of labour among the workers to increase productivity. He has also proposed a theory on combined effective labor to attain the necessary results. The productivity should be increased day by day by retaining skilled labor and deploying more experienced workers. the employer should have adequate knowledge about how much to produce and when to produce.