In 1776, Scottish economist along with philosopher, Adam Smith wrote the masterwork, ‘The Wealth of Nations’- actually ‘An Inquiry in the Nature and Causes of the Riches of Nations”. By coincidence, the U . s . Declaration of Independence was adopted a similar year, making the American colonies independent and thus no longer an element of the British Empire.
America has since evolved to rule the old British Empire in just about any aspect of human endeavors, except probably, social welfare. The Yankees figuratively ended up discipled by Dr. Smith who believed in free market place and made his argument that ‘capitalism’ will benefit mankind than some other economic structure. He laid this foundation with the onset of industrial revolution and provided basic principles for modern economics.
Smith made his case regarding the ‘invisible hand’ and why monopoly along with undue and unfettered government regulations as well as interference in market and industry have to be discouraged. He was of the thoughts and opinions that prudent allocation of resources are not able to happen when states dominate and around interfere.
In that old time, The us farmers could grow cotton, but may not process it. It has to be deliver to England where it would later always be imported into U. S as a new finished product. Understanding that this decision has not been due to lack of processing potential, you will appreciate Smith’s argument that market have to be free.
His theses were clear along with were very influential; they provided a similar level of fulcrum to Economics while Isaac Newton’s Mathematica Prinicipia to Physics. Or nowadays, Bill Gates’ Windows to the data economy.
While reading Smith’s book and understanding some time frame it was written, one cannot but appreciate the intellectual rigor in this piece. Before technology was penetrated in en mass through the regions of the world, he noted that every nations could compete at par throughout agricultural productivity. The reason was absence of section of labor in any subsistence farming system on the globe. A farmer does everything in the farm and is also not an expert in most.
Discounting fertile territory, rain and other factors that may help farmers, all the farmers, from Cameras to plantations in Alabama, the a higher level productivity was similar. Why? No specialization was employed in farming business back then.
Fast track forward when the industrial revolution established. The British Empire became an serp of wealth creation through automation. It turned out a quintessential period of unrivalled man productivity which resulted to enormous wealth created inside empire. Technology not only helped rate process execution, it helped in section of labor.
Interestingly, Dr Smith had noted that apart from agriculture where productivity was flat as a consequence of lack of division of labor, various other industries were doing just fine. Along with in those industries, there were prepared structures which enabled division of job. For instance in the construction sector, there were bricklayers, carpenters, painters, and the like; but a farmer was a farmer.
As you read through Wealth of Nations and take notice of the 21st century, it becomes evident that technology was so influential in the last few centuries. It has changed our structures and created a whole new business adaptation rules like outsourcing and that is indeed a new breed of section of labor.
From accumulation of investment and pricing, as explained by Dr. Smith, we see today a entire world where technology is shaping everything throughout very fundamental ways for wealth design. In this era, it has become technology as technology translates to wealth. So, nations that focus in creating, diffusing and penetrating technology will perform well.
Why? It is about country wide technology DNA. The more passionate and innovative nations are triumphing with the global business scene. Give me Japan and I gives you electronics. Talk about United States, Let me share biotechnology and pharmaceutical technologies, as wll as every major technology. Give me Tiongkok, and I will give you natural technologies.
So, as nations continue to compete for the technology paradigm, we see at the very best level of success measurement an embodiment harnessed by technology capability. When nations are understood through the lens of their Technology Readiness Directory, Knowledge Economic Index, we see that countries are getting to be technology competing nodes. In some really poor countries without having (effectual) technology, they will not have a node and are unplugged inside sphere of global wealth creation.
Just, it will be difficult to separate the health of any modern economy from its technological innovation. It goes beyond the wealth of these nation to its survivability. The most advanced nations are the technology juggernauts as you move the least developing economics barely record just about any technology penetration impact. For the second item, it is like still living inside pre-industrial age Dr. Smith discussed in agriculture and division of labor wherever processes were inefficient.
Perhaps, this explains the efficiency in developed world in the two public and private arenas. The additional technologies they diffuse, the more profitable they become. In other words, show me the technology and Let me tell you where the nation stands inside league of countries. Interestingly, the invention of steam engine changed the globe and powered the industrial revolution. The invention of transistor transformed the 20th century and is also fuelling the new innovation century.
Apparently major scientific breakthroughs bring major wonderful countries. Let me emphasize here that a number of old kingdoms that ruled the world for example the old Babylon, Roman Empire, and Pharaoh’s Egypt; there are associated knowledge base that put these people ahead. You cannot disassociate good crop production in River Nile on the mastery of Egyptians in inventing some sections of geometry for farming. Some of the old wars ended up won by developing constructs that made it possible for efficient transportation of soldiers to arena. There was science and nations were winning by making use of that knowledge.