How Smith's Law of Accumulation does not Work in the Modern Market: Greed and the Effects on Laissez Faire
Year: 2025
Type: article
Abstract: This essay critiques Adam Smith's economic theories, particularly his Law of Accumulation, which posits that capitalists will reinvest profits into labor, resulting in increased productivity, higher wages, and overall societal benefit through the “invisible hand” of self-interest and competition. The author argues that Smith failed to foresee modern issues such as monopoly power and wage stagnation, particularly evident in large corporations like Walmart and Amazon. Despite immense profits, these companies often suppress wages, especially in rural areas or among laborers with limited job mobility, exacerbating income inequality. The essay concludes that Smith's ideas about self-correcting markets and wealth redistribution through competition are not reflected in today’s capitalist economy.
Author: Gao, Cindy
Language: English
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7105852719
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