Q 1.

"Alongside Smith's rigorous analysis of the growth process

was a deep awareness of the internal contradictions of that same
process" [Nolan, . !""#$ %%&. 'ased on the literature on the
su()ect, descri(e the manner in which Adam Smith articulated his
theory of growth including the nature of contradiction that this
process would lead to.
Answer -- Adam Smith mostly talks about free market. Adam smiths model
primary deal with capitalists economies and the process of economic growth. Adam
smith did two key works on the economic growththe theory of moral sentiments
(171! and the wealth of nations (177!. "e said that if any country want to become
a de#eloped country then $rst de#elop free market because the free market is #ery
important for de#elopment. According to Adam smith% economic growth depends on
the two dri#ers- the di#ision of labour and the accumulation of capital. &i#ision of
labour is rooted of economic growth. "e said that di#ision of labour as the main
source of society which increase the producti#ity. "e said that Skill% de'terity and
(udgment also help to di#ision of labour for impro#ing to producti#ity. )he capital
accumulation only focus on pro$ts. So its focus on industry. Smith said that capital
accumulation depended on in#estment then in#estment depended on sa#ing. *f
more sa#ing then more in#estment and get more pro$t. )hese principals are #ery
important or economic de#elopment or wealth of nations. "e assumed that e#ery
person born with the same set of skills and e+ciency but after its skills and
e+ciency depended on their social en#ironment% especially their work en#ironment
not to other inherited di,erences. )he di,erence between dissimilar character
between a philosopher and a common street porter is arise from custom% education
and habits not to nature. *ndustrial more help to increase the di#ision of labour
compare to agriculture. *n agriculture we could not $nd more di#ision of labour.
&i#ision of labour help to increase work intensity and worker e+ciency and reduce
the time lost go to one work to other work. *t allows intensi$ed application of
mechani-ation to speciali-ed tasks% pro#iding opportunities for technical progress in
the production of new types of machines by specialist machine-makers. &i#ision of
labour help to increase the wages of labour. Adam smith said that skilled labour is
#ery important for e#ery impro#ed and ci#il society but they are poor and do not get
good facilities. )his is main parts of e#ery economy. *f the go#ernment takes some
responsibility to impro#e labours life like if go#ernment open small school in e#ery
district on cheaper #alues because skilled labours do not able pay the high fees of
school. *f we pro#ide these types of facilities then we get good skilled labours for
future who help to impro#e our economy. &i,erent type of labors try to pro#ide
good products but the greater part is poor and miserable. Adam Smith belie#ed on
social strati$cation was a necessary condition of economic progress because the
rich or powerful people and poor man% both to maintain the distinct of society and
the order of society% in that situation% the great and most uni#ersal cause of the
corruption of our moral sentiments. .apital accumulation% mostly focus on pro$t.
/rowth is related to in#estment because if you done sa#ing then you more
in#estment after you get more pro$t. According to Adam Smith% capital
accumulation will stop when the rate of interest falls to rate of pro$t. Smith
enumerates the dramatic e,ects of the application of this industry% impelled by the
deception of the pursuit of wealth and greatness. )he pursuit of wealth and
greatness is a deception because% beyond a certain modest le#el of consumption%
additional consumption brings no increase in happiness% and often brings
unhappiness. According to Adam smith fri#olous consumption cannot increase our
happiness but our social goal was the pursuit our happiness. *f person has power or
money then we do not say that this person is happy. "appiness consists in
tran0uility and en(oyment. 1ithout tran0uility we cannot en(oy. Smith say about
society that good society where people get happiness through basic needs not to
unlimited demands. Adam Smith said that human psychology re0uired social
cohesion as the foundation of a good society in which all citi-ens could achie#e
happiness. )he foundation of social cohesion was bene#olence. Smith assumed that
today world economy faces fundamental issues. )he large number of labour belong
to the non - farm sector in de#eloping countries and doing work outside but they do
not get enough wages. 2ost of de#eloped belong to the ser#ice sector with better
technology. *ts create a good in#estment en#ironment. )hose countries undergoing
de#eloping them trying to mo#e in ser#ice sector% so they focus on capital
accumulation most.