"It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest".
-Adam Smith
Adam Smith (1723-1790), the father of economics is often considered as the pioneer of political economy and the founding father of the concept of free market system which stresses the price of goods and services should set freely without any intervention from authorized monopoly. He plwas born in 1723 in Kirkcaldy, Scotland to an economically sound family. A prominent figure in the Scottish Enlightenment, Smith studied social philosophy at the University of Glasgow and later in his life he worked as tutor which allowed him to travel throughout Europe. He was very good in delivering public …show more content…
Smith wanted to know why some of the countries were wealthier than others. In the study of ten years, in his book he explained very broad topics such as implication of laser-faire economy, division of labor, productivity and free market. About five editions were published during his time, in 1776 A.D, 1778 A.D, 1784 A.D, 1786 A.D and 1789 A.D.
Adam Smith's greatest contribution was his theory of invisible hand. In his book "The Wealth of Nations" he mentions that if government entity doesn't involve in anything then there's a controlling factor of people themselves which can guide market. If consumers are allowed to buy freely and producers are producers are allowed to produce the goods and services freely then the market shall settle on a product distribution and prices that will be beneficial to all the individuals, the community and lastly to the society as a whole.
Invisible hand is a metaphor used to describe an unpremeditated societal prosperity resulting from self-interest. He had firstly introduced the concept of the invisible hand in "The Theory of Moral Sentiments". He had used the phrase only three times in his writings. In "The Wealth of Nation" Book IV, Chapter II he had mentioned the theory of the invisible …show more content…
He explains the theory of invisible hand by giving a simple example. He says that a butcher sells meat for his own reason. Similarly, a baker bakes cake for his own reason. But, as they are involved in various activities they are unintentionally helping to provide a meal to a family. So, self-interest of a butcher and a baker who are involved in their respective profession is contributing to provide a course meal for a family that is a society as a whole is being benefited generating the social interest. Another example of invisible hand is that every day student attends academic institutions. They eventually go there to get the degree for their personal and professional purposes. The academic institutions they attend are established academically for financial benefit. The self-interest of a student for the purpose of brightening their future benefits the academic institution and at last with the more production of well careered individuals a society will progress as a whole. So, unknowingly when an individual seeks his/her self-interest he/ she contribute to the social interest which leads to the welfare of the society. When an individual intends to attain his/her gain he/she is led by an invisible hand which unknowingly pursues the interest of the whole
-Adam Smith
Adam Smith (1723-1790), the father of economics is often considered as the pioneer of political economy and the founding father of the concept of free market system which stresses the price of goods and services should set freely without any intervention from authorized monopoly. He plwas born in 1723 in Kirkcaldy, Scotland to an economically sound family. A prominent figure in the Scottish Enlightenment, Smith studied social philosophy at the University of Glasgow and later in his life he worked as tutor which allowed him to travel throughout Europe. He was very good in delivering public …show more content…
Smith wanted to know why some of the countries were wealthier than others. In the study of ten years, in his book he explained very broad topics such as implication of laser-faire economy, division of labor, productivity and free market. About five editions were published during his time, in 1776 A.D, 1778 A.D, 1784 A.D, 1786 A.D and 1789 A.D.
Adam Smith's greatest contribution was his theory of invisible hand. In his book "The Wealth of Nations" he mentions that if government entity doesn't involve in anything then there's a controlling factor of people themselves which can guide market. If consumers are allowed to buy freely and producers are producers are allowed to produce the goods and services freely then the market shall settle on a product distribution and prices that will be beneficial to all the individuals, the community and lastly to the society as a whole.
Invisible hand is a metaphor used to describe an unpremeditated societal prosperity resulting from self-interest. He had firstly introduced the concept of the invisible hand in "The Theory of Moral Sentiments". He had used the phrase only three times in his writings. In "The Wealth of Nation" Book IV, Chapter II he had mentioned the theory of the invisible …show more content…
He explains the theory of invisible hand by giving a simple example. He says that a butcher sells meat for his own reason. Similarly, a baker bakes cake for his own reason. But, as they are involved in various activities they are unintentionally helping to provide a meal to a family. So, self-interest of a butcher and a baker who are involved in their respective profession is contributing to provide a course meal for a family that is a society as a whole is being benefited generating the social interest. Another example of invisible hand is that every day student attends academic institutions. They eventually go there to get the degree for their personal and professional purposes. The academic institutions they attend are established academically for financial benefit. The self-interest of a student for the purpose of brightening their future benefits the academic institution and at last with the more production of well careered individuals a society will progress as a whole. So, unknowingly when an individual seeks his/her self-interest he/ she contribute to the social interest which leads to the welfare of the society. When an individual intends to attain his/her gain he/she is led by an invisible hand which unknowingly pursues the interest of the whole