The Father Of Modern Economics
For an even broader understanding of economic trends, we can can go back even further. Adam Smith is widely considered to be the father of modern economics. He wrote his signature work, "An Inquiry into the Nature and Causes of the Wealth of Nations" or simply "Wealth of Nations" in 1776 where he described how rational self interest and competition can lead to prosperity. He describes how an individual working to produce what is of the greatest value and intending only his own gain is guided by an invisible hand to produce what is best for society even if that was not his original intention. The invisible hand of the market, or law of supply and demand, insures that the right number of people produce the right number of goods. When demand rises, prices rise and more people find it profitable to produce those goods until supply meets demand.
Adam Smith also talked about the law of accumulation which refers to the accumulation of profits. Profits accumulate which are put back into production, increasing worker demand and leading to higher wages. This leads to a higher standard of living for owners and workers.
He saw society go from a nation of hunters, to shepherds, to farmers and then to a commercial society and believed there was an underlying engine causing society to continuously improve. In the 250 years since he published his work, we have seen society improve through the industrial revolution, electricity, automobiles, airplanes, computers and the information age all the while standards of living have been increasing in aggregate.
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