Economics: Historical Perspectives
| Author | Roger Luft |
| Pages | 227-229 |
Page 227
Economics has been around since the beginning of time, but the study of economics dates back only a few hundred years. Since the beginning of human history, people have had to confront the problem of scarce resources and unlimited wants. The study of economics will continue until the end of time because each day uncovers new evidence that supports or revolutionizes economic theory.
The United States has a capitalistic economic system. Sometimes this system is called the free-enterprise system because that term is more acceptable to certain individuals. A capitalistic system includes a market society, or market system—a system of mercantilism in which participants react freely to the opportunities and challenges of the marketplace. This is in contrast to systems in which participants follow tradition or the commands of others. In a market system, anyone can buy land or sell it of his or her own free will or produce products and/or services that are sold at a market price. In earlier societies, participants responded not to the demands of the marketplace but to the demands of tradition or law as well as the threat and fear of punishment.
The factors of production, key to a capitalistic system, are the result of historical changes that made labor a key to creating wealth, made real estate out of land that had been in families for generations, and made capital out of possessions. Capitalism, a free-market system, was the cause of much unrest and insecurity, but it also gave birth to progress and, ultimately, fulfillment. There have been several key individuals whose work and economic writing help to clarify current thought about economic systems. The ideas of four are presented here.
Perhaps the best known and one of the most revered economists, Adam Smith wrote The Wealth of Nations in 1776, the same year the Declaration of Independence was signed. In this famous work, Smith explained how an independent society works. He answered several questions that people had at the time regarding the concepts of a free-market system.
Of primary concern was the question of how those consumed with greed might be controlled so they would not take over society. Smith introduced the concept of...
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