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Adam Smith
- "A System for Perfect/Natural Liberty"
- "the invisible hand"
- A person's private interests and passions lead to the interest of the whole society
- A person's private interests and passions lead to the interest of the whole society
- Laws of the market
- Self-interest leads to competition,
competition leads to production of
goods and prices wanted by society
- Self-interest "drives men to action"
- Competition regulates the market
- Self-interest "drives men to action"
- Self-interest leads to competition,
competition leads to production of
goods and prices wanted by society
- Public demand is the final arbiter
- Regulates income of those who
cooperate to produce these goods
- Workers will move to wherever
there is prosperity
- Workers will move to wherever
there is prosperity
- Old market vs Today's market
- Today's market includes huge corporations and labor unions. Its
massive size can stand against competition pressures and price
surges. It allows for companies to think about their self-interest.
- Today's market includes huge corporations and labor unions. Its
massive size can stand against competition pressures and price
surges. It allows for companies to think about their self-interest.
- Laws of behavior
- Law of Population
- Law of Accumulation
- To accumulate your savings
- Accumulation of capital provides
division of labor -> productivity
- Accumulation of capital provides
division of labor -> productivity
- Problem: leads to more machinery
which leads to more demand for
workers which leads to higher wages
- Results in fewer profits
- Overcome by the Law of Population
- According to Smith, how many
workers according to the demand
- Increasing the wages meant more workers
- "[the demand for men regulates the production of men]"
- Increasing the wages meant more workers
- According to Smith, how many
workers according to the demand
- Results in fewer profits
- Profits are the source
of accumulation
- To accumulate your savings
- Law of Population
- "economic growth has its limits"
- "Population would push wages back to their 'natural' level"
- "Population would push wages back to their 'natural' level"
- "the least government is the best"
- is not opposed to governments
who's goal is the "promotion of
general welfare"
- The Government's Economic Role
- "protect society against the violence and invasion of other societies"
- provide justice to all citizens
- taking care of public works and institutions
- "protect society against the violence and invasion of other societies"
- Disadvantages include powerful social forces that disturb society
- his vision could only work in a perfect society where only growth was possible
- his vision could only work in a perfect society where only growth was possible
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