Over recent years, the world has experienced social unrest attributed to increased dissatisfaction among the poor and low-income earners. These social unrests manifest in violent behavior, crime, and unconventional behavior geared towards social order disruption. The increase in popularity of capitalism has contributed to disparities in social status; thus widening the gap separating the wealthy and the poor, according to Fleischacker (2019) . Uneven distribution of wealth within Capitalist states such as Japan, The UAE, the United States, and South Africa and other countries has led to increasing social unrest over the past few decades according to Rothschild (2019) . This term paper seeks to highlight and elaborate on Adam Smith’s perspective on unequal wealth distribution and how it has led to increased frustration and desperation among the poor and middle-class members of society. Smith’s economic development, moral sentiments, classical free market, the harmony of interest & limited government, and the invisible hand theories will lay the foundations for arguments in this paper.
Classical Free Market Economic Theory
Adam Smith laid a strong foundation for the classical free-market economic theory using the Laissez-faire and natural law principles of economic affairs through which he opposed the government’s intervention in the market ( Viner, 2017) . Prof Adam Smith proposed an open trade economy in which the buyers and market dynamics determine the prices of commodities within the market. Smith would have explained that social unrest, due to the uneven distribution of wealth, emerge as a result of self-interests (Lamb, 2014). Smith suggests that wealth and poverty are separated by an individual’s desire to work and achieve long-term objectives. Therefore, Smith would have argued that social unrests are uncalled for since lower class individuals lack drive and passion for working hard and accumulating wealth. He was popularly known for his advocacy for capitalism.
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Theory of Economic Development
In Smith’s economic development theoretical model highlighted in “Wealth of Nations,” Prof. Smith attributes economic growth and wealth accumulation to functions such as land, labor, and capital ( Fleischacker, 2019) . According to Smith (2019), labor productivity leads to more income generation and accumulation of wealth. In response to claims that uneven distribution of wealth leads to unrests in society, Smith would blame the poor for their social status citing their laziness as the cause of poverty. Smith suggests that the open market economy encourages individuals to venture into different employments to maximize income. Therefore, Smith asserts unequal distribution of wealth to unemployment, privatization of production resources, and underutilization of labor ( Rothschild, 2019) .
Theory of Moral Sentiments
In his book, “Theory of Moral Sentiments,” Prof. Smith suggests that interactive social relations and economy dynamics drive people’s conscience towards the quest for the sympathy of sentiments ( Rothschild, 2014) . The act of observing others makes oneself aware of how others perceive their behavior (Smith, 2015). In response to the claim that uneven wealth distribution has a causal relationship with social unrest, Prof. Adam Smith would relate the social disorders to human actions for seeking sympathy. He would support the claim citing that economic disparities influence psychological behaviors of individuals; thus, the rising cases of social unrest due to poverty, desperation, and frustration among low-income earners. Moreover, he would attribute these social unrests to individuals desires to accumulate wealth within a short period by forfeiting the conventional process.
Harmony of Interest & Limited Government Theory
This theory is Prof. Adam Smith’s most popular contribution to the field of economics (Viner, 2017). Smith argues that disparities in the economy and uneven wealth distribution are caused by the government’s imposition of unproportionate taxes and quotas on middle-class earners and small-scale traders. Prof. Adam Smith would have supported the claim that social unrest may arise as a result of unequal distribution following the government’s involvement in open markets. Taxes and quotas imposed by the government on small-scale traders may reflect as huge deductions to the traders’ profits; thus introducing financial constraints, according to Fleischacker (2019) . However, the government’s imposition of taxes on well-established organizations’ profits does not affect the overall financial position of the organization. Therefore, Smith would suggest that government intervention in trade is making the rich to become more productive at the expense of the poor.
Invisible Hand Theory
Prof. Smith came up with the invisible hand theory to direct markets within large economies, to an optimal level, which would guarantee satisfaction among all players in the marketplace, as suggested by Rothschild (2014) . He cited that demand and supply for commodities available in the market influence production efficiencies, which subsequently lead to the distribution of wealth, goods, and services ( Rothschild, 2014) . In response to the claim that uneven distribution of wealth stirs social conflicts, Smith would support the claim. In the invisible hand theory, Smith also proposed that increased demand for commodities in the market would make producers increase prices and increase production. When supply surpasses demand, the same producers will lower their costs to the market price or even below the market price (Smith, 2015). Uneven distribution of wealth makes the economy unsustainable for the poor; thus prompting them to riot or engage in crimes such as fraud and robbery.
Conclusion
Based on Adam Smith’s economic theoretical models and theories, it is quite evident that he would support the claim that the uneven distribution of wealth in society leads to social unrest. From Smith’s moral sentiments, invisible hand, economic development, classical free market, and harmony of interest and limited government theories, it can be deduced that Adam Smith was a capitalist advocate. Capitalism often leads to unequal distribution of wealth and formation of social statuses, which Smith supports. He also believed that self-interest and sympathy encourage poor individuals to protest and engage in crime to meet societal expectations and make ends meet.
References
Fleischacker, S. (2019). On Adam Smith's Wealth of Nations: a philosophical companion . Princeton University Press.
Lamb, R. B. (2014). Adam Smith's system: sympathy not self-interest. Journal of the History of Ideas , 671-682.
Rothschild, E. (2014). Adam Smith and the invisible hand. The American Economic Review , 84 (2), 319-322.
Rothschild, S. (2019). On Adam Smith's Wealth of Nations: a philosophical companion . Princeton University Press.
Smith, A. (2015). The theory of moral sentiments . Penguin.
Smith, A. (2019). The wealth of nations . Courier Dover Publications.
Viner, J. (2017). Adam Smith and laissez-faire. Journal of Political Economy , 35 (2), 198-232 .
