Adam Smith and Early Capitalism
📌 Adam Smith, considered the father of political economy, published *Theory of Moral Sentiments* (1759) emphasizing empathy alongside egoism.
📜 His seminal work, *The Wealth of Nations* (1776), is the first modern economy book scientifically systematizing the foundations of capitalism.
🌍 Smith's ideas, formed during his travels and exposure to Enlightenment thinkers, were inspired by the burgeoning prosperity during the Industrial Revolution in England.

Production and Division of Labor
🛠️ In manufacturing, the industrial capitalist owns the means of production (machines, tools, raw materials) and directs specialized workers.
🏭 The division of work within a factory (e.g., pin manufacturing) drastically increases wealth production due to specialization, reduced transition time, and better tooling.
📈 Smith favored industrial activities over agriculture for societal benefit due to the greater potential for the division of labor.

Smith's Economic Laws and Pricing
🤝 Smith believed the natural propensity to change (buy and sell) is fundamental, manifesting fully as markets expand via improved transport.
🧠 The source of national wealth is productive work (workers, merchants, capitalists); non-productive work includes officials, military, and service providers.
💰 Price determination shifts in capitalism from the labor value law (in primitive society) to the cost of production theory: Price = Salary + Profit + Income.
⚖️ The natural price is reached when market price equals the sum of natural levels of salary, profit, and income; market price fluctuates based on supply and demand, seeking equilibrium with the natural price (Law of Supply and Demand).

Critique and Defense of Capitalism
😟 Smith acknowledged the disastrous intellectual and spiritual consequences of the division of labor on workers due to monotonous tasks.
🛑 He recognized the unequal power dynamic between workers seeking higher wages and capitalists seeking minimum payment, noting the law favored the bourgeois class.
👐 Despite critiques, Smith defended capitalism, arguing that individual pursuit of self-interest, guided by an "invisible hand," naturally promotes society's overall wealth and welfare.
🏛️ Government's role, according to Smith, should be limited to defense, justice, public works, institutions, and protecting private property, while advocating for free markets and eliminating protectionism.

Key Points & Insights
➡️ Productive work (creating goods or capital) is the true foundation of societal wealth, according to Smith, rather than all forms of labor.
➡️ Capitalist success (like Pablo and Esteban's PC factory) is fueled by reinvesting benefits and organizing production using the division of labor principle.
➡️ Individuals are motivated by self-interest in exchange, and this pursuit, when operating in a free competition system, ultimately benefits society more effectively than benevolence.
➡️ Market equilibrium occurs when the quantity supplied equals the quantity demanded, resulting in the market price matching the natural price.

📸 Video summarized with SummaryTube.com on Oct 06, 2025, 22:36 UTC