Why in the News
The famous economics book An Inquiry into the Nature and Causes of the Wealth of Nations completed 250 years on March 9, 2026. The work by Adam Smith continues to influence debates on free trade, taxation, monopolies, and economic inequality.
About The Wealth of Nations
- Published in 1776, during the Scottish Enlightenment.
- Considered the foundational text of classical economics.
- Analyses the sources of national wealth, labour productivity, trade, and markets.
- Smith is often called the “father of modern economics”.
Key Economic Ideas of Adam Smith
- Division of Labour: Specialisation improves productivity.
- Example used by Smith: pin factory, where each worker performs a specific task to increase output.
- Free Markets: Economic activity works best when individuals pursue self-interest within competitive markets.
- The “Invisible Hand”: Individuals pursuing their own interest can unintentionally benefit society as a whole. Markets allocate resources efficiently without heavy government intervention.
- Free Trade: Smith criticised mercantilism, the idea that countries should maximise exports and minimise imports.
- He argued that:
- Trade allows nations to specialise in what they produce efficiently.
- Greater trade leads to mutual prosperity.
| [2011] What does the term “economic liberalization” refer to in the context of the Indian economy? (a) Expansion of the public sector (b) Restriction of foreign investment (c) Removal of restrictions on private sector and encouragement of free market policies (d) Increase in trade barriers |
