#adamsmith #economicthought #laissezfaire
Smith laid the foundations of classical free market economic theory. The Wealth of Nations was a precursor to the modern academic discipline of economics. In this and other works, he developed the concept of division of labour and expounded upon how rational self-interest and competition can lead to economic prosperity. Smith was controversial in his own day and his general approach and writing style were often satirised by writers such as Horace Walpole.
Laissez-faire is an economic theory from the 18th century that opposed any government intervention in business affairs. The driving principle behind laissez-faire, a French term that translates to "leave alone" (literally, "let you do"), is that the less the government is involved in the economy, the better off business will be, and by extension, society as a whole. Laissez-faire economics is a key part of free-market capitalism.
The underlying beliefs that make up the fundamentals of laissez-faire economics include the idea that economic competition constitutes a "natural order" that rules the world. Because this natural self-regulation is the best type of regulation, laissez-faire economists argue that there is no need for business and industrial affairs to be complicated by government intervention.
As a result, they oppose any sort of federal involvement in the economy, which includes any type of legislation or oversight; they are against minimum wages, duties, trade restrictions, and corporate taxes. In fact, laissez-faire economists see such taxes as a penalty for production.
The invisible hand is a metaphor for the unseen forces that move the free market economy. Through individual self-interest and freedom of production and consumption, the best interest of society, as a whole, are fulfilled. The constant interplay of individual pressures on market supply and demand causes the natural movement of prices and the flow of trade.
The invisible hand is part of laissez-faire, meaning the "let do/let go," approach to the market. In other words, the approach holds that the market will find equilibrium without government or other interventions forcing it into unnatural patterns.
Scottish Enlightenment thinker Adam Smith introduced the concept in several of his writings, such as the economic interpretation in his book An Inquiry Into the Nature and Causes of the Wealth of Nations (often shortened to just The Wealth of Nations) published in 1776 and in The Theory of Moral Sentiments published in 1759. The term found use in an economic sense during the 1900s.
*** ADAM SMITH - Features of Smith's theory of economic development | Laissez Faire ( Easy & Lucid ) : • 78. ADAM SMITH - Featu...
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