SOCB42H3 Lecture Notes - Barter, Factor Price, Capital Accumulation
Document Summary
Why are some countries/nations are wealthy while others aren"t. He challenged two assumptions that really prevailed in his day: natural resources and stored treasure guarantee a country"s wealth. First thing he challenged: natural resources guarantee a country"s wealth. Smith talks about how the countries that have access to water advanced faster than other countries. Smith recognizes that there"s an advantage to having good natural resources; quantity and quality. Smith recognized that we had people (smith used the term savages) who can hunt, fish, take care of their elders/sick/children, mend clothes and they sometimes went hungry. There was never abundance for them no matter how hard they worked. This was a clue to smith that resources that weren"t enough. Second thing he challenged was the idea of stored treasure (stock of cash in a country). We tend to think that if a country has a lot of cash; it"s wealthy, which isn"t true because there are more factors to consider.
