Adam Smith believed in Free Trade not free markets

Over a period of about 30 years that ended with the recession in 2008 there was an obsession with Free Market reforms that bordered on insanity. Nationalised industries in the UK were sold to the public at bargain basement prices, but the ordinary citizen, whether they purchased shares or not, saw no significant benefit. In the US the repeal of the Glass-Steagal act, which ring fenced investment banking to protect citizens from casino capitalism was hailed triumphantly as progress, just as the act that prevented private individuals in the USA from going into protective bankruptcy was doubtless hailed as making feckless people responsible for their own actions and cementing the American tradition that corporations have more rights than humans. Although Free Marketry is not so much in fashion now, it will come back and someone has to remind people of its weaknesses.

The Adam Smith Cult

Many of the free market Fanatics of the 80s onwards took Adam Smith's Wealth of Nations (WON) as a scriptural text with the attitude that there is no god but the market and Adam Smith is its prophet, (for without a prophet they would not be in business). Various Free market Privateers (dedicated to privatising as much as possible) used alleged quotes and misinterpretation of Smith's long and rather tedious book to bolster their theories, theories Smith would probably have categorically rejected. Many of the most vociferous Smithians had never read WON and got their ideas of Smith, in particular removing regulation of business, from text and sound bites from other Smithians.

The twentieth century Smith cult ignored the vastly different world in which Smith lived, ignored the changes in the English Language since WON was first published, and ignored the fact that for Smith maximisation of profit meant maximisation of employment, something that has gone by the board with machine based mass production: indeed in his Essay “The Right to be Lazy” Lafarge notes that the use of machinery resulted in massive overproduction.

The Large Gap Between the Rich and Poor in Third World Countries

There Is No Middle Class in the Third World

The world is in an economic mess no what which country you mean. First world countries like United States, Canada, and Great Britain are full of people who are unemployed and people who are living below poverty. This is a deplorable situation for every country.

Meanwhile, first world countries are also full of wealthy people who live the high life. Through hard work at jobs that have allowed them to retire eventually in luxury, a job that pays high wages in the first place so that the people never knew poverty, or inheriting money rich people are very rich indeed. There is nothing wrong with this unless they pay their employees low wages or send all their jobs overseas. Some rich people actually do this. However - There are plenty of rich people that do neither of these things. They pay their employees proper wages and try the best they can to run a business in an world economy that is tanking.

But first world countries have a middle class. Always remember this. No matter how bad the situation is in our countries, we do indeed have a class of people who are neither living in squalor nor in a huge estate. Because of this middle class, there is some balance where we live. It does not excuse the fact that poor people can't afford to take care of themselves. However, it does mean that the extremes are not as noticeable as in, say, Hong Kong.

The Effects of Inflation

Effects of Inflation

Inflation is not considered bad so long as it creates additional employment to the factors of production.  It becomes bad the moment it goes out of control.  Inflation may be compared to a robber.  It deprives the victim of some possession with the difference that robber is visible, inflation is invisible.  The robber's victim may be one or a few at a time.  But the victim of inflation is the whole nation.  The robber may be dragged to a court of law but inflation is legal.  Inflation disrupts the economy and paves the way for social and economic upheavals, besides being highly demoralizing.

The entrepreneur faced with the demand for higher wages and trying to keep up with such a demand, a retired person trying to manage his living on a fixed pension, a person with fixed income meeting his needs of household expenditure by borrowing from banks and other financial organizations, and the housewife struggling hard to serve food in a period of rising prices are aware of the effects of inflation with out being told about it.


Effects of inflation on distribution: Inflation has the effect of redistributing income because prices of all factors do not in the same proportion.  Entrepreneurs stand to gain more than wage earners or fixed income groups.  Speculators, hoarders, black marketers and smugglers gain on account of windfall profits.  Change in the value of money also result in the redistribution of wealth, partly because during inflation there is no uniform rise in prices and partly because debts are expressed in terms of money.  Inflation is a kind of hidden tad, highly harmful to the poorer sections of society.  Thus, poor become poorer.

Multinational corporations are more harmful than beneficial to developing countries

Multinational corporations are large companies that expand their businesses to other countries through globalization. Many American companies have moved their factories to countries with a less developed economy and political system. The American dream has multiplied multinational corporations so that we are able to take advantage of cheap consumerist products for cheap labor in order to achieve our dreams of having a big house, fancy car, and new technologies that the economic market has to offer. The whole world is interconnected by the global trading system.

These corporations have a strong hold on the local media and influence a consumerist ideology on the people through the use of commercialization. The consumerist to presume a higher standard of living the cost must buy goods that are mass produced in other countries through cheap labor. Wal-mart products are mass produced in China, and they are shipped over to the United States to be sold to middle class families. Multinational corporations have a history of taking control or having some power in the political system because they have so much investment in the country.

Many of these corporations take advantage of the political system because they have such a strong impact on the economy it would be devastating to the country if a corporation decided to remove its large investment from the country’s economy. The companies can just pay off government officials to protect their company from being shut down. The government is then compelled to accommodate the companies by modify their labor and environmental policies. Powerful business owners are not as heavily punished; they can just use their money or power of their company to avoid jail time for any crimes they committed. Billions of dollars are stolen each year by corporations through tax evasion from developing countries. Many CEOs and other employees of multinational corporations are guilty of crimes such as fraud and tax evasion that are overlooked because they can use their powerful position and money to avoid any serious punishment.

How high inflation rate affects on business and economy

In simple language, inflation means rising prices and it shows the increase in cost of living. In economics, inflation is explained as rise in the general level of prices of goods and services in an economy over a period of time. With the rise in price levels a unit of currency will buy fewer goods and services. As a result, the purchasing power of money will be reduced with inflation. In other words the real value of money will be lost day by day along with inflation. Inflation is measured by the Rate of Inflation or Inflation Rate which is the percentage change in a general price index calculated as an annualized figure.
A low inflation rate is beneficial to a country and zero or negative inflation is considered as bad. Also, a high inflation is harmful to an economy and it affects an economy in many ways.

• High inflation distorts consumer behavior. Because of the fear of price increases, people tend to purchase their requirements in advance as much as possible. This can destabilize markets creating unnecessary shortages.

• High inflation redistributes the income of people. The fixed income earners and those lacking bargaining power will become relatively worse off as their purchasing power falls.