Vocabulary notes
capstone
overarching
allusion
moral sentiments
wealth
treatise
didactic
exhortative
invisible
renown
mercantile
woven
conscious
preach
deficiencies
drive
constraint
preach
deficiencies
drive
constraint
weathering
sanguine
Text 4A.
World of money of Adam Smith
After two centuries, Adam Smith remains a towering figure in the history of economic thought. Known primarily for a single work, An Inquiry into the nature an causes of the Wealth of Nations (1776), the first comprehensive system of political writings constitute only the capstone to an overarching view of political and social evolution. If his masterwork is viewed in relation to his earlier lectures on moral philosophy and government, as well as to allusions in The Theory of Moral Sentiments (1759) to a work he hoped to write on "the general principles of law and government, and of the different revolutions they have undergone in the different ages and periods of society", then The Wealth of Nations may be seen not merely as a treatise on economics but as a partial exposition of a much larger scheme of historical evolution.
1. The Theory of Moral Sentiments
In 1759 Smith Published his first work, The Theory of Moral Sentiments. Didactic, exhortative, and analytic by turns, The Theory lays the psychological foundation on which The Wealth of Nations was later to be built. In it Smith described the principles of "human nature", which, together with the leading philosophers of his time, he took as a universal and unchanging datum from which social institutions, as well as social behavior, could be deduced.
One question in particular interested Smith in The Theory of Moral Sentiments. This was a problem that had attracted a number of Scottish philosophers before him. The question was the source of the ability to form moral judgments, including judgments on one's own behavior. He wrote in his Moral Sentiments the famous observation that he was to repeat later in The Wealth of Nations: that self-seeking men are often "led by an invisible hand... without knowing it, without intending it, to advance the interest of the society".
2. The Wealth of Nations
The Wealth of Nations was finally completed and published in 1776. Despite its renown as the first great work in political economy. The Wealth of Nations is in fact a continuation of the philosophical theme begun in The Theory of Moral Sentiments. The book discusses the relationship between freedom and order, analyses economic processes, and attacks the British mercantile system's limits on free trade. All three aspects are woven together to create a unified social theory.
The book dealt with the basic problem of how social order and human progress can be possible in a society where individuals follow their own self-interests. Smith argued that this individualism led to order and progress. In order to make money, people produce things that other people are willing to buy. Buyers spend money for those things that they need or want most. When buyers and sellers meet in the market, a pattern of production develops that results in social harmony. Smith said that all this would happen without any conscious control or direction, "as if by an invisible hand".
Exercise
1. Find English equivalents in the text 4A.
Exercise 3. Which one describes the money you pay: salary, wages, charge, fees, fare, commission, tip.
to thank someone for their services (for example, a waiter or waitress)?
to an agent or salesperson?
for a service (for example, electricity, postage)?
for a professional service (for example, to a lawyer)?
for travelling?
to your staff every week?
to your staff every month?
Now use the same seven words to complete these sentences.
The taxi was $ 18 and I gave the driver a $4 .
On orders of over 2,000 pieces delivery is free of .
The builders receive their weekly in cash.
In addition to your basic you will receive a 25% on all goods sold.
She's a good accountant but her are high.
Exercise 4. Check that you know the meaning and pronunciation of the words in the boxes. Use a dictionary where necessary.
A
a cheque (book) a cashpoint machine to withdraw a current account economical a deposit account interest a bank statement to be overdrawn an exchange rate the economy
B
cash a coin a £10 note change
a mortgage to earn a wage a salary
overtime commission a tip to gamble
a casino a charity to afford well-of
hard up
c
to be in debt to owe to lend to borrow the stock market to invest shares profit loss tax inflation insurance a fine a pension a sale a bargain to inherit an heir
Exercise 5. Discuss the following questions.
What do you enjoy spending money on?
How do you feel about borrowing money? Would you worry about being in debt?
Do you think pocket money is a good idea? Why?/Why not?
What do you think about people who deliberately avoid paying tax?
Do you have a bank account? Do you get interest?
When do you tip and how much?
Are you cautious with money or do you tend to spend it when you have it?
Have you ever gambled? When? What happened?
Do you ever give money to charity?
10. Do you like looking for bargains in the sales?
Text 4B.
Smith also believed that labor - not land or money - was both the source and the final measure of value. He said that wages depended on the basic needs of workers, and rent on the productivity of land. Profits, he said, were the difference between selling prices and the cost of labor and rent. Smith said profits would be used to expand production. This expansion would in turn create more jobs, and the national income would grow.
Smith believed that free trade and a self-regulating economy would result in social progress. He criticized the British government's tariffs and other limits on individual freedom in trade. He preached that government need only preserve law and order, enforce justice, defend the nation, and provide for a few social needs that could not be met through the market. Smith's argument for a "hands off" government policy business, along with his analysis of economic forces, formed the basic ideals of economic liberalism.
Smith outlined he four main stages of organization through which society is impelled, unless blocked by deficiencies of resources, wars, or bad policies of government: the original "rude" state of hinters, a second stage of nomadic agriculture, a third stage of feudal of manorial "farming", and a fourth and final stage of commercial interdependence.
3. Society and "the invisible hand"
The theory of historical evolution, although it is perhaps the binding conception of The Wealth of Nations, is subordinated to a detailed description of how the "invisible hand" actually operates within the commercial, or final, stage of society. Smith explains two questions. The first is how a system of perfect liberty, operating under the drives and constraints of human nature and intelligently designed institutions, will five rise to an orderly society. The question, which had already been explained by earlier writers, required an explanation of the "laws" that regulated the division of the entire "wealth" of the nation among the three great claimant classes - laborers, landlords, and manufacturers.
Over the years, Smith's luster as a social philosopher has escaped much of the weathering that has affected the reputations of other first-rate political economists. Although he was writing for his generation, the breadth of his knowledge, the boldness of his vision, have never ceased to attract the admiration of all social scientists, and in particular economists. The Wealth of Nations projects a sanguine but practical, always respectful of the classical past but ultimately dedicated to the great discovery of his age - progress.
Exercise 6. Explain and comment the following proverbs. Try to find Russian equivalents.
Money is the root of all evil.
Money makes money.
Time is money.
Take the care of the pence and the pounds will take care of themselves.
A penny saved is a penny gained.
Who will not keep a penny never shall have any.
Money spent on brain is never spent in vain.
Text 4C.
Read the text and point out:
what objects did the people use in their history as money;
in what countries of the world the use of money can be traced?
Who could issue money or objects replacing them in human history?