Adam Smith Essay, Research Paper

8Adam Smith wrote that commerce in Europe, but more specifically Great Britain, went

from a system where the producers changed to adapt to what the consumers needed, to a

system where the producers would try their hardest to corner the market, and in that,

would leave the consumers with a mediocre product. In response to tightened importation

laws, he wrote that a strong foreign trade system would be the only way to provide good

products to the English public. Adam Smith was accurately seeing the future of the

world s commerce. He saw that as producers tried to make more and more money, they

were forced to cut corners. This resulted in products that were worse than they could be.

He knew that the way to improve product quality in Great Britain was to import goods

from other counties. When looking at almost any first-world country, you can see that

the country is not a producing country, but rather a servicing country. Production of

goods in the United States has dropped tremendously since the 1950 s, and services have

taken over. A perfect example is in the production of televisions. In the early days of

television, GE made all of the US s televisions in the US itself. Now, there is not one

television made anywhere but Japan. Now, in the US, the main product is not a television,

but rather a service, what is broadcast on that television. Adam Smith predicted that with

local products getting worse, foreign products would be necessary, and that if Britain did

not start abolishing the prohibitions on importation, those products definitely would get

worse. It discourages the exportation of the materials of manufacture, and of the

instruments of trade, in order to give our own workmen an advantage, and to enable them

to undersell those of other nations in all foreign markets; and by restraining, in this

manner, the exportation of a few commodities, of no great price, it proposes to occasion a

much greater and more valuable exportation of others. It encourages the importation of

the materials of manufacture, in order that our own people may be enabled to work them

up more cheaply, and thereby prevent a greater and more valuable importation of the

manufactured commodities Smith, Adam; The Wealth of Nations 1776 In this paragraph,

it is the Mercantile System, a system recommended by Smith to fix the problems in British

commerce. In the Mercantile system, foreign trade is highly encouraged because it helps

benefit the consumers, and helps lower cost for the consumer. It is a very consumer based

system. It limits the exportation of goods, for the benefit of the local workmen , and

welcomes the importation of foreign goods, to benefit of local consumers. This is

unfortunately not how the Mercantile System actually worked. Smith believed that

commerce had been warped in the minds of greedy consumers. Unfortunately, with

prohibitions on import in Great Britain, the Mercantile System could only work half way.

The key aspect to the Mercantile System is that it allows goods from other countries to be

imported. When importation is blocked, the Mercantile System can no longer be effective,

and it leads commerce in a new direction. Consumption is the sole end and purpose of all

production; and the interest of the producer ought to be attended to, only so far as it may

be necessary for promoting that of the consumer. The maxim is so perfectly self-evident,

that it would be absurd to attempt to prove it. But in the mercantile system, the interest of

the consumer is almost constantly sacrificed to that of the producer; and it seems to

consider production, and not consumption, as the ultimate end and object of all industry

and commerce Smith, Adam; The Wealth of nations. 1776. It was obvious to Smith that

the consumer should be the most important aspect of commerce, but in the British

Mercantile System, the most important aspect became the producer. Adam Smith s was

trying to preserve the old fashioned way of life. In Britain, in the past, producers were

only there to earn what they needed to live. They were now trying to make a profit. In

Shakespeare s time the object of life for the ordinary citizen, for everbody, in fact, except

the gentility, was not to advance his station in life, but to maintain it. The Economic

Revolution p.25 Times in Britain had changed. The object of life was no longer to

maintain one s station in life, but rather to advance it as much as possible. Smith was quite

apparently against this idea. He wanted things to stay the way they were. Smith was trying

to preserve a way of life where only royalty could be extravagant; a merchant could never

earn enough to build a castle. This was, of course, during and after the feudal system had

managed to expand Europe s population enormously. With an increasing population,

comes the need for some sort of change in society. The change from a society with little

personal gain, to the British Mercantile System, may have been that change. Smith may

have been trying to preserve the old way of life, but that isn t to say that he just wanted

things the way they used to be. His profession was an economist; he knew what he was

talking about. He saw where things were going, provided commerce continued in this

fashion. And he was right. You can look at any European country, or the US (which could

be considered an extension of Europe), and you can see that commerce is a very warped

business. If you go to a store now, you will find products that have been made in the

absolute worst conditions, by people who get an outrageously small amount of money,

and with materials that are the cheapest you can find. Is any of this to benefit the

consumer? No, because the prices are still high, it is only so that the producer can make

more money.