David Hume and economic refinement
Topic: David Hume and economic refinement
Subject area: Economics
Number of pages: 1
Writing style: MLA
Type of document: Article
Academic level: Undergraduate
Number of sources/references: 0
Details: The readings for this discussion are primarily Reading 6-3, as well as Smith’s writing in Readings 6-4, 6-5, 6-6.
Adam Smith lived and wrote (Theory of Moral Sentiments and The Wealth of Nations) at the beginning of the Industrial Revolution, certainly a revolutionary movement in commerce. We can see that he looked at the world through a very optimistic lens – the economy was charged, there was excitement and a belief that everything would get better, as long as the economy was just left alone. Jim Black notes: “Smith sees the influence of the invisible hand harmonizing disparate interests to universally beneficial outcomes, and fostering a ‘natural progress of opulence.’ By opulence, Smith means not only the increase of production and goods (a nation’s stock), but also a general betterment of life.” (Black, Reading 6-3, p. 11). (Note that ‘invisible hand’ means the forces of the market, with little government interference).
In other words Smith believed that leaving the economy to the forces of the market and self-interest will result in only good things for the economy, and everyone will benefit and live well. Smith also suggests that the richest people cannot use up everything they could buy with all their money. Thus, in the process of spending, they will cause many folks to be employed, resulting in a trickle down effect. (Black, Reading 6-3, p. 2)
In the first few days this week please go over Reading 6-3 (and Smith’s writing in the other readings listed above) keeping Smith’s ideas of optimism, self-interest, and universal opulence in mind. Think about and discuss these questions:
Why was Smith optimistic at that time?
Do you think that his theory can work well for a country and, more particularly, for its people?
Is his theory relevant in today’s economy?
How would you define opulence? Do we experience universal opulence today?