Question: 1,000 words( no more than 1,100 words)ADAM SMITH’S THEORY OF REAL WAGES(must undertake...

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Question: 1,000 words( no more than 1,100 words)ADAM SMITH’S THEORY OF REAL WAGES(must undertake this written paper as a critical review – involving both exposition and critical appraisal. The paper must conform with the style guidelines of the Cambridge Journal of Economics ‘Notes to Contributors’)Required readingA. Smith XXXXXXXXXXAn Inquiry into the Nature and Causes of the Wealth of Nations: Book I, Chapters i–ix, pp. 10–115 (in the Glasgow edition)http://www2.hn.psu.edu/faculty/jmanis/adam-smith/wealth-nations.pdf
	
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David · Accepted Answer

ADAM SMITH’S THEORY OF REAL WAGES 
Introduction 
This theory was coined in the eighteenth century, where Adam Smith had belief that there 
is a predetermined fund of wealth which lays surplus with people who are wealthy and that an 
output of wages and savings are paid out of it. This magnitude of funds is determined by the 
demand of labor in the region and the amount (wages) paid to those labors. If the fund provided 
is higher than the demand would be higher for labor and wages. This process is vice versa.  
Wages is highly dependent on Demand and Supply of Labor and Wage fund is fixed here 
so in order to increase the wages there are two things which can be done either reduce the 
number of labors which consequently increases the wages per labor or there should be a large 
size of wage fund. (Smith 1776) 
 Criticism  
There is no proper clearance that from where to bring the wage fund. There has not been 
given a proper emphasis on productivity and efficiency. There is also no focus is given to the 
wage differentials.  
“Smith further believes that, broadly speaking, he has plenty of historical evidence for expecting 
an ever-increasing "universal opulence that extends itself to the lowest ranks of the 
people"(Smith 1776) 
The confidence that Smith had in the theory where socio economic development’s long 
term process is actually driven by the dynamics of the division of labor and market would slowly 
and steadily help in increasing the overall opulence, prosperity and productivity of societies in 
time. But of course, there is one thing which is clear that the benefits of this increasing prosperity 
finally will get spread, no doubt unequally, throughout the region.  
If to see carefully the natural progress of opulence would prosper the standard of living of 
poor people who are in majority in our society. This would steadily and slowly increase their 
prosperity significantly. But here there is a loophole,

Question: 1,000 words( no more than 1,100 words) ADAM SMITH’S THEORY OF REAL WAGES (must undertake this written paper as a critical review – involving both exposition and critical appraisal. The paper...

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