the theory of Adam Smith

Adam Smith made many different points about the economy.

Which one are you referring to?

(I think in general most of his arguments are still relevant.)

First, a little English lesson for you:

Does the theory of Adam Smith still apply in the 21st century?

Or

Is the theory of Adam Smith still applicable in the 21st century.

******************************************************

I don't know that it is correct to describe Smith's economic treatise as a theory. Rather, it should be seen as descriptive of the economic system in operation in Great Britain in the 18th century. Many modern capitalists who are both literate and willing to read, and who have read Smith (apparently, a very tiny minority), would recognize that he was not an unqualified supporter of laissez-faire capitalism. Long before Parliament began to inquire into working conditions and wage scales, Smith considered that to be a reasonable activity of government. He also believed that the activities of government could and should be supported by taxation, and that people ought reasonably to be taxed based on the extent to which they benefited from that activities of government, especailly the regulation of the economy. (Look up the Corn Laws as an example of an economic activity regulated largely to benefit large producers.)

So Smith's discussion is still valid today, even though the economy is far more complex now than it was 250 years ago. The propaganda, especially during the Reagan administration in the United States, to suggest that Smith was a "supply side economist" and would have applauded lowering taxes on the high end earners is just that--propaganda. Don't think of his economic treatise as a theory--it is the first detailed explanation of how the dominant economic model of his world worked.

************************************************

Now, if you are referring to Smith's moral philosophy, i cannot help you.

Thanks for the Lesson and your contribution. I am grateful

as newtons laws are limted now due to einstein theory of relativity
simth's theories are limited now due to keynes theories

Hi,

Yes, the theory of Adam Smith is still applicable in 21stcentury. However, in 18th and 19th century it is very popularly relevant. Now it is mostly apposite in USA.

Regards,
David

The quintessential Adam Smith, which features in every introductory text on economics and in countless op-eds using laissez faire philosophy to argue against government regulation of international trade, is his famous "invisible hand" concept.

Ironically, this is based on the presumption that nationalism is so obviously in the individual interest that the tariffs, subsidies and other protectionist measures that were common practice by all developed nations of Smith's day (and indeed well into the twentieth century) were superfluous:

" As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."

Smith's main thesis, depending as it does on this and so many other psychological assumptions that no longer apply (if they ever did) can be judged irrelevant in an era when the support of domestic industry is widely regarded as the quaint province of paleoconservatives and the pathetic remnants of American unions (and their liberal throwback supporters).

On the other hand, Smith did assert that the interests of businesses are often at odds with those of the public; also warning against political systems dominated by business, both of which observations seem quite applicable today.