Adam Smith’s idea on self-interest in the market, is what we refer to as the “invisible hand” argument. Smith believed that there is an invisible force that motivates people’s behaviour, which leads to successful markets.
One of the main premises of this argument, is that all individuals strive to earn a good living, which in turn allows them to support themselves and their families. In trying to pursue a good living, individual’s subconsciously make a social contribution – by creating a good or service that others need – even though they were solely focused on their own interests (ie. make money), (Module 4, 2017). Individual’s produce more than they need for themselves, so they sell the extra supply. This turns products that are unneeded …show more content…
Being greedy in my opinion, is a concern only for your own wants and needs, where you want more and more of something, without caring that by taking more, someone gets less. Coase successfully debunks this misconception by quoting Smith’s, The Theory of Moral Sentiments, in which Smith states that man does care about the fortunes of others, even though it does not benefit him in any way, (Coase, 1976). Therefore, it cannot be construed that Smith approved of greed, but rather that Smith saw people as they really were; dominated by self-love, yes, but not without concern for others, (Coase, 1976). If you concern for others, you can not take more and …show more content…
In his paper Coase explains one other important motivator that he believes Smith would have accepted, is moral sentiments, (Coase, 1976). The importance of moral sentiments is explained by a quote from Smith’s, The Theory of Moral Sentiments, "Society ... cannot subsist among those who are at all times ready to hurt and injure one another,” (Smith, 1759). What this illustrates is that ethical principles must be followed and should assist in facilitating business transactions because without them society will never reach its maximum capacity, (Coase,
One of the main premises of this argument, is that all individuals strive to earn a good living, which in turn allows them to support themselves and their families. In trying to pursue a good living, individual’s subconsciously make a social contribution – by creating a good or service that others need – even though they were solely focused on their own interests (ie. make money), (Module 4, 2017). Individual’s produce more than they need for themselves, so they sell the extra supply. This turns products that are unneeded …show more content…
Being greedy in my opinion, is a concern only for your own wants and needs, where you want more and more of something, without caring that by taking more, someone gets less. Coase successfully debunks this misconception by quoting Smith’s, The Theory of Moral Sentiments, in which Smith states that man does care about the fortunes of others, even though it does not benefit him in any way, (Coase, 1976). Therefore, it cannot be construed that Smith approved of greed, but rather that Smith saw people as they really were; dominated by self-love, yes, but not without concern for others, (Coase, 1976). If you concern for others, you can not take more and …show more content…
In his paper Coase explains one other important motivator that he believes Smith would have accepted, is moral sentiments, (Coase, 1976). The importance of moral sentiments is explained by a quote from Smith’s, The Theory of Moral Sentiments, "Society ... cannot subsist among those who are at all times ready to hurt and injure one another,” (Smith, 1759). What this illustrates is that ethical principles must be followed and should assist in facilitating business transactions because without them society will never reach its maximum capacity, (Coase,