The Free Market Is Adam Smith Essay

2281 Words Mar 14th, 2016 null Page
The free market is Adam Smith’s brainchild; the revolutionary theory was based on the antithesis of the mercantile system that was in place in its prominence during the 16 - 18th centuries. The convention was for nations building their wealth overseas through a complicated system of protectionism. Mercantilism adhered to a zero sum game ideology and was centred around the belief the nation’s wealth was based on its holding of precious metals or resources and its duty to protect their interests, which meant the government needed to implement restrictions and regulations on trade with other states. In order to protect their economy and in what they feel would increase their wealth, policies like tariffs on foreign goods, duties, bounties, etc. Smith argued against the mercantilist framework from a number of positions; trade restrictions/regulations interfered with natural prices, reduced the specialisation within industries, reduced the country consumption and had an ineffective output mechanisms and on a number of basis that will be explored in the essay.
To challenge this, Smith theorised the free market supported by the division of labour which should be defined and guided under certain conditions by a self-regulating formula known as the inviable hand. To smith, restrictions on the free market were both immoral and inefficient for a number of reasons. Instead, he believed institutional adjustments could channel individual interest to achieve socially desirable…

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