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Adam Smith on Wages

This research examines Adam Smith's position on wages and the influence of that position on economic theorists who followed him. All aspects of Smith's position on wages, including the determinants of wage level differences are reviewed.

Adam Smith was born in 1923 in Kirkcaldy, Scotland, across the Firth of Fourth from Edinburgh. Eventually, he became the world's first political economist. Smith studied at Oxford, where his interest in the ideas of another Scot, David Hume, caused him some problems with the dons of Oxford.

Smith was a student and later a professor of moral philosophy. It was within the context of moral philosophy that he developed his ideas about political economy. His work An Inquiry into the Nature and Causes of the Wealth of Nations published in 1776 established him as the creator of modern economic thought ("Adam Smith" 3).

One of the many theories with which Smith is associated in the labor theory of value. The labor theory approach to the analysis of value postulates that value reflects the cost of production, as that cost is measured in terms of absorbed labor. The labor theory approach to the analysis of value is the approach of classical economics. Smith's ideas on wages emanated from his labor theory of value (Blaug 42).

The three key aspects of Smith's economic analysis were the division of labor, the analysis of price and allocation, and the nature of economic growth (Ekelund and Hebert 90). The interaction of the division of labor, price, and resource allocation led to economic growth, which, in turn, created wealth.

Human nature played a major role in Smith's concept of economic activity. While he did not attempt to mask the deficiencies of a capitalist economic system, and while he recognized the danger to a society of unchecked selfishness, he held that self-interest, as opposed to selfishness, was a necessary ingredient for economic growth. Smith made a point of distinguishin...

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Adam Smith on Wages. (1969, December 31). In Retrieved 15:50, December 07, 2021, from