Adam Smith Biography and Brief Summary of Wealth of Nations

Lesson 2 Part 1 Economic theories

1. Answer the questions:

a) What do you remember about Adam Smith?

b) What economic theories do you know except Classical School?

Economics Word bank

2. Find the synonyms (+) and the opposites (–) in the box above:

a) to become rich (+)

b) cost (+)

c) sky (–)

d) sharing work (+)

e) money (+)

f) crime (–)

g) agreement (+)

h) salary (+)

3. Choose the correct word or expression from the box above:

1. This organization can … for inventions.

2. … was very important for industrial development of the country.

3. He is a very good economist. He sees … in everything.

4. If a country uses only natural resources, it will never … .

5. Here you have got a lot of … for increasing your profits.

6. I can not build my own house – the … is very expensive.

7. The … is money laborers get for their work at the factory.

8. … for many products usually fall after the New Year.

9. I am protected by the … because I have a … .

10. To start your own business you need to have a starting … .

World building

1. a) Try to guess the meanings of the following international words. Find “false friends”.

B) Pay attention to the word stress. Read the words aloud.

C) Look at the endings of the words in the box above and put them into the correct column. Some words can belong to more than one part of speech.

Reading.

1. Read the text quickly and find what happened in the following years:

a) 1723 b) 1759 c) 1764 d) 1776 e) 1790

2. Read the text and answer the following questions:

1. What was Adam Smith’s character?

2. What is the name of his first book?

3. What is the main idea of the Wealth of Nations?

4. What is the role of government according to Adam Smith?

5. Why is the Wealth of Nations so important?

Tell if the following sentences true or false.

1. Adam Smith was a successful business man.

2. Adam Smith published many books on economics.

3. His most famous book was published when he was 53.

4. Prices will change if other people enter the market.

5. Adam Smith’s theory influenced European countries most of all.

Adam Smith Biography and Brief Summary of Wealth of Nations

Adam Smith (1723-1790), the world's most famous economist, was born in the small town of Kirkcaldy in Scotland. He studied at Glasgow University and later at Oxford. He made his career in Glasgow, first as a professor of logic and then of moral philosophy.

Though shy and retiring, Smith was an excellent lecturer beloved by his students. In 1759, he published the first of his only two books, The Theory of Moral Sentiments. Smith always believed that man's self-interest was not in conflict with his desire to help others and that this sympathy between people was a fundamental part of human nature.

In 1764, Smith left off teaching and spent several years, as a tutor to a duke's son, on the continent, particularly France, where he met many of the most well-known French thinkers of the day.

His most famous work, still the standard work in the classical school of economics, An Inquiry into the Nature and Causes of the Wealth of Nations, was published in 1776.

According to Smith, nations attain wealth and function best where individuals are completely free to use their skills and capital (money, land, etc.) in their own self-interest. Such freedom will benefit everyone with new markets, better products, and opportunities for greater wealth all around. Here are some other points of his theory:

Ø Prices and wages will automatically reach optimal levels (guided by an "invisible hand") in the market. For example, when new products appear, prices will initially be high until others see the profit potential and enter the field - then prices will go down.

Ø The role of government should be to protect contracts under the law, grant patents and copyrights, and provide public works such as roads that would benefit everyone.

Ø Division of labor in production, a guiding principle of the industrial revolution, is very beneficial.

In short, most of the ideas we have today about how our economy does or should work come from Adam Smith's Wealth of Nations. This absent-minded, reserved and quiet Scotsman left a legacy that shaped the world, particularly America, and left an enduring mark on our thought, economy and politics.

Adapted from www.heartoscotland.com