European Union

The European Union is a family of democratic European countries, committed to working together for peace and prosperity. It is not a state intended to replace exiting states, but it is more than any other international organization. Its Member States have set up common institutions to which they delegate some of their sovereignty so that decisions on specific matters of joint interest can be made democratically at European level. Initially the EU consisted of just six countries: Belgium, Germany, France, Italy, Luxemburg and Netherlands Denmark. Ireland and the United Kingdom joined in 1973. Greece in 1981. Spain and Portugal in 1986. Austria, Finland and Sweden in 1995.The entry new countries into the EU is a historic achievement ending countries of division. Europe reunited means a stronger, democratic and more stable continent with a single market providing economic benefits for all its 450 million citizens. The present enlargement from 15 to 25, is the biggest in Union history. It has its roots in the collapse of communism, symbolized in the full of the Berlin Wall in 1989, which offered an opportunity to extend European integration into central and eastern Europe. The ten newcomers Cyprus the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia, join formally on 1 May 2004. The economic impact of enlargement will be significant as a bigger and more integrated market boosts economic growth for new and current members alike. The newcomers stand to benefit from investments from firms based to western Europe and from access to EU funding for their regional and social development. Integration of their economics with the rest of the EU is already under way, as trade agreements, negotiated and applied in advance of membership, have already removed virtually all tariff and quota barriers on their exports to current member states.

The Treaty on EU says that any European state which respects the principles of liberty, democracy, human rights and fundamental freedoms and the rule of law may apply to join the Union.

The Union has a number of specific pre-accession programmes to help the candidates prepare for membership. The best-known and longest-running one providing the financial and technical cooperation to the candidates is Phare. There are also programmes to fight corruption and organized crime. The experience of previous EU enlargements has shown how well the EU integration process works. Bulgaria and Romania joined the EU in 2007. The EU is commited to providing maximum support in this process. A third candidate, Turkey, has not yet been given a firm date for accession negotiations. EU relations with Ukraine are to a large extent based on the Partnership and Co-operation Agreement which entered into force in 1998. Both sides have clarified their position towards each other in internal political strategies.

Adam Smith

Adam Smith (baptised 16 June 1723 – died 17 July 1790) was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. It earned him an enormous reputation and would become one of the most influential works on economics ever published. Smith is widely cited as the father of modern economics and capitalism.

Smith studied social philosophy at the University of Glasgow and the University of Oxford. After graduating, he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time he wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day. Smith returned home and spent the next ten years writing The Wealth of Nations, publishing it in 1776. He died in 1790.

The Wealth of Nations, published as a five-book series, sought to reveal the nature and cause of a nation’s prosperity. Smith saw the main cause of prosperity as increasing division of labor. Using the famous example of pins, Smith asserted that ten workers could produce 48,000 pins per day if each of eighteen specialized tasks was assigned to particular workers. Average productivity: 4,800 pins per worker per day. But absent the division of labor, a worker would be lucky to produce even one pin per day.

Just how individuals can best apply their own labor or any other resource is a central subject in the first book of the series. Smith claimed that an individual would invest a resource—for example, land or labor—so as to earn the highest possible return on it. Consequently, all uses of the resource must yield an equal rate of return (adjusted for the relative riskiness of each enterprise). Otherwise reallocation would result. George Stigler called this idea the central proposition of economic theory. Not surprisingly, and consistent with another Stigler claim that the originator of an idea in economics almost never gets the credit, Smith’s idea was not original.