The Economic Revolution

 

A picture depicting the Economic Revolution

Man has always been a socially cooperative creature, despite being strongly endowed with a self-centered nature. He has always faced the problem of survival, not as an individual, but as a member of a social group. If the interdependence of human workers should fail at any vital point in the economy, the world would suffer. 

To prevent societal collapse, traditions and customs are strictly preserved, a Central Authoritarian Rule was established, and the market system was also presented. 

The Market System- Also known as “Capitalism” is a system where buyers and sellers, motivated by self-gain, freely conduct business with the goal of making profits.

Causes of the Economic Revolution: 

● The breakup of the manorial system 

● The decline of guilds 

● The acceptance of the concepts of land, labor, and capital 

● The effects of the Renaissance 

● Scientific advancement 

● European voyages of discovery and exploration 

● The emergence of modern nation-states 

● The Protestant Reformation which sanctioned the concept of profit.

Adam Smith (1723-1790) 

A quiet, nervous, scholarly Scottish bachelor, taught first at Oxford University and then at the University of Glasgow. He gained fame as a moral philosopher, and during his lifetime, his book The Theory of Moral Sentiments earned the critics' appraisal as his best work. Consequently, he was already well known before publishing his enduring masterpiece, An Inquiry into the Nature and Causes of the Wealth of Nations.

He founded the school of Classical Economists, whose chief spokesmen were David Ricardo and Thomas Malthus. 

Adam Smith's Economic Laws: 

The First law of the market is self-interest, or the profit motive- self-interest, or profit, motivates people to perform necessary tasks for which society is willing to pay 

The second law of the market is competition- The individual who overcharges for products soon learns that competitors will take away business by offering more reasonable prices 

The law of accumulation- Refers to the accumulation of profits, which are put back into production 

The law of population- As the law of accumulation increases wages for workers, the numbers of the working class will increase