Dionne Ruby C.

Varela

Professor Jennie Lyn Reyes

CD 110 TXY

8 January 2023

CD 110 TXY
First Sem AY 2022-2023
Writing Assignment 2

What do you think is the value of economics? Why do Adam Smith's (and his
contemporaries’) ideas continue to resonate and influence our society? What do you think is
the value of economics for the poor, oppressed, and marginalized?

Economics can be defined in several ways. It is the study of scarcity, how people use
resources and respond to incentives, or how people make decisions. It frequently involves topics
such as wealth and finance, but it is not solely about money. Economics is a broad discipline that
helps us understand historical trends, interpret current headlines, and forecast future events (“What
is Economics”, n.d.).
Economics has an impact on our lives in both obvious and subtle ways. Individually,
economics shapes many of our decisions about work, leisure, consumption, and how much to save.
Macroeconomic trends such as inflation, interest rates, and economic growth also have an impact on
our lives. Furthermore, studying economics helps people understand their surroundings. It enables
people to better understand people, businesses, markets, and governments, and thus respond to the
threats and opportunities that arise when things change. In general, studying economics allows us to
comprehend past, present, and future models and apply them to societies, governments,
businesses, and individuals.
Considered the Father of Modern Economics, Adam Smith's ideas continue to resonate and
influence our society today. Smith's writings have an impact on economics today because he
believed that wealth is created through labor and that self-interest motivates people to use their
resources to earn money. He was an outspoken opponent of mercantilism and a strong supporter of
laissez-faire economic policies. Smith proposed the concept of an invisible hand in his first book,
The Theory of Moral Sentiments—the tendency of free markets to regulate themselves through
competition, supply and demand, and self-interest (Sharma, 2022). Smith's theories that economies
thrive when there is competition, capitalism, and a free market are still relevant in the twenty-first
century.
Moreover, Smith was the first to recognize that economics should be concerned not only with
the production of wealth but also with its distribution. Smith also influenced the development of the
free market economy by criticizing government intervention in the economy and providing a blueprint
for free markets and free trade. These two principles would eventually become the defining
characteristics of modern capitalism.
In application, the value of economics for the poor, oppressed, and marginalized is
manifested in theorizing its implementation to society and individuals by economic growth that
benefits nearly all citizens of a country and thus reduces poverty, and vice versa. If economic growth
raises everyone's income in an equal proportion, the income distribution will not change. However, if
growth is not accompanied by a reduction in poverty, income distribution may become unequal. It is
possible for rapid growth to occur without any reduction in poverty, but many studies show that this is
unlikely. Indeed, it is possible for income distribution to worsen slightly while poor income rises
(Banerjee & Duflo, 2007).
This begs the question of whether economic growth is sufficient to alleviate poverty. Some
argue that countries with higher rates of economic growth over the last 30 years have achieved
greater poverty reductions. Another point of view contends that if poverty is to be reduced, economic
growth should be prioritized. Is this correct? However, it may not be the quickest strategy for
reducing poverty. During the previous decade, the former group insisted that growth would
eventually result in rising income, including among the poor. However, the latter side disagreed
somewhat and emphasized the growth pattern instead.
A recurring and mysterious question in development economics is whether economic growth
alone is sufficient to alleviate poverty. The fact that so many of the world's poor now live in
middle-income countries (which have, by definition, experienced reasonable economic growth)
suggests that growth alone is insufficient to alleviate poverty. The persistence of poverty in the
developing world has led many to question the effectiveness of economic growth and development
as a means of alleviating poverty.
As community developers, we must recognize the importance of delving deeper into the
causes of poverty in our society's poor and marginalized sectors. Because, even if the country
experiences economic growth, we are aware that it merely widens the gap between the rich and the
poor, as the rich become richer while the poor become poorer. To mitigate and solve these
dilemmas, we must first look at the challenging structures and systems that are the root causes of
poverty in vulnerable sectors.
Sound macroeconomic policies and openness to the global economy may help reduce
poverty. These policies primarily affect economic growth: countries with better macroeconomic
policies grow faster, which eventually alleviates poverty. The dominant strategy must focus on
reducing poverty by focusing on basic social services. Measurable evidence of direct impact on the
poor should be scrutinized in development interventions. This seemed reasonable: after all, what
was the point of growth (and how long could it last) if poverty remained entrenched?
 References

Banerjee, A. V., & Duflo, E. (2007). The Economic Lives of the Poor. The journal of economic

perspectives: a journal of the American Economic Association, 21(1), 141–167.

https://doi.org/10.1257/jep.21.1.141

Sharma, R. (2022). Who Was Adam Smith? Investopedia.

https://www.investopedia.com/updates/adam-smith-economics/#:~:text=Adam%20Smith's%2

0writings%20influence%20economics,well%20in%20the%2021st%20century.

What is Economics? (n.d.). American Economic Association. Retrieved January 8, 2023, from

https://www.aeaweb.org/resources/students/what-is-economics.