Adam Smith or Ibn Khaldun - The Father of Modern Economics?
Summary
TLDRThis video explores the contributions of Adam Smith, known as the father of modern economics, and Ibn Khaldun, a 14th-century scholar whose work predates Smith's. Smith's 'The Wealth of Nations' emphasizes the free market's self-correcting nature, the division of labor, and the 'Invisible Hand' theory. Ibn Khaldun's 'Muqaddimah' similarly discusses labor as the source of wealth and the division of labor. The video ponders whether Khaldun should be recognized as the true father of modern economics, considering his influence on Smith and the broader economic discourse.
Takeaways
- đ Adam Smith, known as the father of modern economics, was a Scottish economist born in 1723.
- đ His most famous work, 'The Wealth of Nations,' critiques mechanist economies and advocates for free markets.
- đ Smith introduced the concept of the 'Invisible Hand' to describe how markets self-correct without state intervention.
- đ He emphasized that self-interest and competition drive wealth creation more effectively than government control.
- đš Smith promoted the division of labor, using the example of a pin factory to illustrate its efficiency.
- đ He believed in capital saving and investment as key drivers of economic development.
- đ 'The Wealth of Nations' was influential, selling out its first edition within six months and shaping economic thought.
- đ§ Ibn Khaldun, born in 1332, was a historian, sociologist, and demographer whose work 'The Muqaddimah' touched on similar economic ideas.
- đŸ Like Smith, Khaldun pointed to labor as the source of wealth and supported the division of labor.
- đĄ Khaldun discussed supply and demand, noting how scarcity and abundance affect prices.
- đ€ There are striking similarities between Smith's and Khaldun's economic theories, despite the centuries between them.
Q & A
Who is Adam Smith and why is he significant in the field of economics?
-Adam Smith, born in 1723 in Scotland, is known as the father of modern economics. His most famous work, 'The Wealth of Nations,' critiques mechanist economies and advocates for the power of the free market, suggesting that minimal state intervention leads to economic prosperity.
What is a mechanist economy as described by Adam Smith?
-A mechanist economy is one where the state heavily intervenes in the business of its citizens, restricting trade with other nations, monopolizing companies, heavily subsidizing businesses, and encouraging colonial expansion.
What is the concept of the 'Invisible Hand' in the context of Adam Smith's economic theories?
-The 'Invisible Hand' is a metaphor used by Adam Smith to describe how a market, if left to its own devices, corrects itself and leads to economic growth. It suggests that individual self-interest drives wealth creation more effectively than state intervention.
What role does the division of labor play in Adam Smith's economic philosophy?
-Adam Smith advocated for the division of labor, arguing that it increases productivity. He used the example of a pin factory to illustrate how breaking down the production process into specialized tasks could significantly increase output.
How does Leonard Reed's essay 'I Pencil' relate to Adam Smith's economic theories?
-Leonard Reed's essay 'I Pencil' similarly argues for the free market, using the example of a pencil to show how the collaboration of various specialized skills and resources from around the world creates a simple product, highlighting the miracle of the free market.
What is the significance of capital saving and investment in Adam Smith's view of economic development?
-Adam Smith commended the saving of capital to invest in new ventures, seeing it as a driving force of economic development. He believed that reinvesting profits into the economy leads to growth and innovation.
Who is Ibn Khaldun and how does his work relate to Adam Smith's?
-Ibn Khaldun, born in 1332 in Tunis, was a historian, sociologist, and demographer. His work, 'The Muqaddimah,' covers various fields including economics. Like Smith, Khaldun points to labor as the source of wealth and advocates for the division of labor, showing striking similarities between their economic philosophies.
What is the concept of supply and demand as explained by Ibn Khaldun?
-Ibn Khaldun discussed supply and demand, stating that when goods are scarce, their prices increase, but when goods are abundant and transportation is easy, their prices decrease due to increased supply.
How might Adam Smith have been exposed to Ibn Khaldun's ideas?
-Adam Smith could have been exposed to Ibn Khaldun's ideas indirectly through the rise of the Ottoman Empire and the exchange of ideas that occurred through increased business and merchant travel between Europe, North Africa, and the Middle East.
What is the classical school of economics and how did it evolve?
-The classical school of economics was started by Adam Smith and later evolved into the neoclassical school. It emphasizes the importance of supply and demand, labor, and the minimal role of the state in economic affairs.
What is the significance of 'The Wealth of Nations' and how did it impact economic thought?
-The first edition of 'The Wealth of Nations' sold out within six months and has significantly shaped the decisions of politicians and economists. It laid the foundation for the classical school of economics and influenced economic thought for centuries.
Outlines
đ Adam Smith: The Father of Modern Economics
This paragraph introduces Adam Smith, known as the father of modern economics, and his influential work 'The Wealth of Nations.' Born in 1723 in Scotland, Smith criticized the mechanist economies of his time, which involved heavy state intervention in business, trade restrictions, monopolies, and colonial expansion. Instead, he advocated for the free market and the 'Invisible Hand' metaphor, suggesting that markets self-correct and lead to economic growth driven by scarcity, need, self-interest, and drive. Smith also championed the division of labor, exemplified by a pin factory's ability to produce 48,000 pins per day with specialized tasks, versus only 10-20 if done individually. He further encouraged capital saving for investment in new ventures as a force for economic development. The paragraph also draws a parallel between Smith's ideas and those of Ibn Khaldun, a 14th-century scholar, suggesting a possible influence on Smith's economic philosophy.
đ Ibn Khaldun: A Possible Predecessor in Economic Thought
The second paragraph discusses Ibn Khaldun, a 14th-century historian, sociologist, and demographer, who is considered one of the most influential scholars of the Middle Ages. His work 'The Muqaddimah' is highlighted as an ambitious text that some regard as the first attempt at a philosophy of history, covering Islamic theology, science, history, sociology, and economics. Khaldun's views on labor as the source of wealth and the division of labor mirror Smith's, emphasizing the increased productivity through specialization. He also touched on supply and demand dynamics, noting how scarcity and abundance affect prices. The paragraph raises the question of whether Khaldun should be considered the father of modern economics, given the similarities in their economic theories and the possibility of Smith being exposed to Khaldun's ideas indirectly through the rise of the Ottoman Empire and increased intellectual exchange.
Mindmap
Keywords
đĄAdam Smith
đĄThe Wealth of Nations
đĄInvisible Hand
đĄDivision of Labor
đĄMechanist Economy
đĄLeonard Reed
đĄIbn Khaldun
đĄSupply and Demand
đĄCapital
đĄClassical School of Economics
đĄNeoclassical School
Highlights
Adam Smith, known as the father of modern economics, was born in 1723 in Scotland.
Smith's most famous work, 'The Wealth of Nations,' critiques mechanist economies and advocates for free markets.
In a mechanist economy, the state heavily intervenes in business, restricting trade and monopolizing companies.
Smith argues that state intervention is unnecessary and detrimental to economic growth.
The 'Invisible Hand' metaphor illustrates how markets self-correct and lead to growth without state interference.
Smith emphasizes that wealth creation is driven by scarcity, need, self-interest, and drive.
He advocates for a laissez-faire approach to business, stating that individuals act in their own interest, not out of benevolence.
Smith uses the example of a pin factory to demonstrate the efficiency of the division of labor.
Leonard Reed's essay 'I Pencil' echoes Smith's argument for the free market, showing the complexity of a simple pencil's production.
Smith commends capital saving and investment as the driving force of economic development.
'The Wealth of Nations' sold out its first edition within six months and has influenced politicians and economists.
Smith's work initiated the classical school of economics, which evolved into the neoclassical school.
Ibn Khaldun, born in 1332, was a historian, sociologist, and demographer, and his work 'Muqaddimah' is considered a philosophy of history.
Khaldun and Smith both point to labor as the source of wealth and advocate for the division of labor.
Khaldun discusses supply and demand, noting how prices change with the scarcity or abundance of goods.
Khaldun's work reached the Western World in 1697, potentially influencing Smith through the exchange of ideas during increased trade.
The debate on whether Smith or Khaldun should be considered the father of modern economics is raised.
The video encourages viewers to support the creator through social media and financial contributions.
Transcripts
[Music]
if you study history economics politics
sociology or philosophy one of the first
names you likely to hear is that of Adam
Smith The Man known as the father of
modern economics born in 1723 in
Scotland Smith's most famous work The
Wealth of Nations reflects on the power
of the free market over the mechanist
economies that many countries opted for
at the time in a mechanist economy a
country takes a strong hand in the
business of their citizens restricting
trading with other nations monopolizing
companies and heavily subsidizing
business and encouraging Colonial
expansion Adam Smith said that such
widespread intervention at the state
level was not only unnecessary but
hurtful to country's economies and in
The Wealth of Nations Smith uses the
metaphor of the Invisible Hand of the
market to show how left to its own
devices a market corrects itself leading
to growth that it was scarcity need
self-interest and drive that were the
forces that drove wealth creation and so
government should have a lay Fair
attitude towards business in one of his
most famous lines he said that it is not
from the benevolence of the butcher the
Brewer or the baker that we expect our
dinner but from their regard to their
own interest he advocated for the
division of labor and used the example
of a pin Factory showing that making a
pin can be divided into 14 steps that
could enable 10 men to make 48,000 pins
per day whereas if they did it all
themselves they could only make 10 or 20
per day 200 years later Leonard Reed
would make a similar argument for the
free market in his essay I pencil Reed
said that the simple pencil was a
miracle of Freedom not a single person
on the face of this Earth knows how to
make me the pencil says in the essay
written in the first person the wood is
from cedar trees in California which
take the knowledge of Souls and axes and
motors to Mill the graphite is min
somewhere else with totally different
skills the brass that holds the rubber
in place somewhere else and the paint
somewhere else and finally the rubber
extracted from rapes seed oil that come
from the other side of the world yet all
of this comes together to build a pencil
for 20 cents on top of this Smith
commended the saving of capital to
invest in new Ventures citing this as
the driving force of Economic
Development the first edition of The
Wealth of Nations was sold out within 6
months and has shaped the decisions of
politicians and economists ever since it
started the classical school of
Economics which today has has evolved
into the neoclassical
school ibin calun was born in Tunis
modern-day Tunisia in
1332 some 400 years before Smith as a
historian sociologist and demographer
calun was one of the most respected and
influential Scholars of the Middle Ages
cun's most well-known work the madema is
an ambitious text that some says the
first attempt at a philosophy of History
it deals with Islamic theology Science
History sociology and like Smith
economics and the similarities between
Smith and cun's work are striking like
Smith cun points to labor not gold or
silver as the source of wealth and
advocates for the division of labor in
the same way Smith did he said that when
six or 10 persons including a Smith and
a carpenter to make the tools and others
who are in charge of the oxen plowing of
the soil the harvesting of the ripe
grain and all the other agricultural
activities undertake to obtain their
food and work toward that purpose either
separately or collectively and thus
obtain through their labor a certain
amount of food that amount will be food
for a number of people many times their
own the combined labor produces more
than the needs and necessities of the
workers talking about supply and demand
calun said that when goods are few and
rare their prices go up on the other
hand when the country is near and the
road safe for traveling there will be
many to transport the goods thus they
will be found in large quantities and
the prices will go down C dun's work
didn't reach the Western World until
1697 and even then it was a simple
biography of him in a French
orientalists work bibliotek Oriental
Smith could have been exposed to cun's
ideas if not directly then through the
rise of the Ottoman Empire and the
travel chatter and exchange of ideas
proliferated by increased business and
Merchant travel between Europe North
Africa and the Middle East so while it's
Smith that has been more widely read and
more widely remembered should it not be
iin calun that should take the title of
the father of modern
economics if you like these videos and
would like to support me making more you
can follow me on Twitter Instagram and
Facebook by clicking the links in the
description below you can like this
video And subscribe to the then and now
channel to see more and if you're
feeling really generous you can pledge
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creation of each new video you can click
here to find out more thank
[Music]
you
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