What is Adam Smith's economic theory?

Adam Smith put forward his conclusion that everyone will be "guided by an invisible hand to achieve a goal that is not his intention" when pursuing his own interests. Based on this basic viewpoint, his economic theory analyzes the economic process.

1. In microeconomics, Smith's axiology regards labor as the only source of value and the amount of labor contained in each commodity as the measure of exchange value.

On this basis, by investigating the relationship between natural price and market price. This paper analyzes the function form of competition to restrain individual self-interest behavior and the movement process of price mechanism to allocate social resources.

His distribution theory analyzes the decisions of wages, profits and land rent, and examines the relationship between them.

2. On the macro level, Smith paid attention to the essence and dynamic change process of economic growth, and he came to the conclusion that "the market mechanism itself promoted the economic development of modern society".

According to his analysis, this is partly due to the market mechanism itself. Because, in the process of encouraging people to pursue their own interests, the market will naturally trigger people's diligence, thrift and creativity, and through the power of competition, guide people to invest resources in the most productive economic fields, thus promoting the optimal allocation of social resources.

In addition, there are other basic forces, namely, the improvement of labor productivity based on division of labor and the increase of productive employment driven by capital accumulation. Therefore, on the one hand, he analyzed in detail how the division of labor leads to the improvement of workers' skills, the saving of time and the progress of technology, and then investigated the conditions for the development of the division of labor, and put forward the argument that "the division of labor is limited by the size of the market".

Extended data:

1, division of labor theory

Adam Smith believes that the origin of division of labor is that there are natural differences in human talents, which is due to the unique exchange and barter tendency of human beings. Exchange and barter are selfish behaviors, and their interests depend on the division of labor, assuming that individuals are willing to specialize and improve productivity.

Encourage individuals to increase their wealth through the exchange of surplus products. These processes will expand social production, promote social prosperity and achieve harmony between self-interest and public welfare. ?

2. Monetary theory

The primary function of money is the means of circulation, and the holder holds money to buy other goods. When barter develops to the exchange with money as the medium, the value of goods is measured by money. At this time, another function of money-the value scale came into being. Adam Smith also talked about the storage function and payment function of money.

3. axiology

When talking about value, Adam Smith pointed out that value includes use value and exchange value. The former indicates the utility of a specific financial commodity, while the latter indicates the purchasing power of one financial commodity to another. It is further pointed out that wealth goods with the greatest use value often have no exchange value, and water and diamonds are famous examples.

Baidu Encyclopedia-Adam Smith