Adam Smith Research Paper

Adam Smith was a Scottish moral philosopher and an innovator of political economy and contemporary capitalist economic system, who lived during the early 18th century. Many of Smith’s ideas and theories are still used in modern economics, several including the effect of self-interest, self-love and selfishness affected. Because Smith’s theories and ideas were the most methodical and comprehensive study of economics up until that time, his economic thinking became the foundation for classical economics. And because several of his ideas have outlasted those of any other economist, such as select ideas from writings such as "Theory of Moral Sentiments" and "The Wealth of Nations" he was considered to be an innovator of political economy. The following …show more content…
This suggests that Smith believed individuals are not only driven by their own personal wellbeing, but are also driven by the wellbeing and happiness of those affected by his actions. Suggesting that Smith portrays the idea that compassion and sympathy regarding self-interest is negating; they were complementary by stating that mankind constantly have to rely on each other, and will fail if they expect people to come to the aid of an individual solely based on compassion (Smith Wealth, ex. 3). Smith also stated that an individual working for money in order to benefit himself or herself, unknowingly and indirectly also benefits society, because to earn income through hard work in an aggressive, competitive market, one must produce something that is valued and demanded by others. Smith maintains “...by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain supports this. He is in this… promote[s] an outcome which was not part of his intention.” This is a perfect example of Adam Smith’s “invisible hand” theory, this puts forth the idea that; frequently an individual’s personal interest indirectly stimulates the bettering of society. Self-interest motivates economic activity, whilst competition formed from this self-interest, governs economic activity as more firms competing with this company ultimately leads to an increase in the quality of goods and services in this particular field. Additionally, Young (1997, p. 157) claimed that “[T] he invisible hand actually eradicates any socially ethical dimension to individual, self-interested behavior on the grounds that the outcome is a guaranteed to be beneficial for the whole, even the motive was not