A person's private interests and passions lead to the interest of the whole society
Laws of the market
Self-interest leads to competition,
competition leads to production of
goods and prices wanted by society
Self-interest "drives men to action"
Competition regulates the market
Public demand is the final arbiter
Regulates income of those who
cooperate to produce these goods
Workers will move to wherever
there is prosperity
Old market vs Today's market
Today's market includes huge corporations and labor unions. Its
massive size can stand against competition pressures and price
surges. It allows for companies to think about their self-interest.
Laws of behavior
Law of Population
Law of Accumulation
To accumulate your savings
Accumulation of capital provides
division of labor -> productivity
Problem: leads to more machinery
which leads to more demand for
workers which leads to higher wages
Results in fewer profits
Overcome by the Law of Population
According to Smith, how many
workers according to the demand
Increasing the wages meant more workers
"[the demand for men regulates the production of men]"
Profits are the source
of accumulation
"economic growth has its limits"
"Population would push wages back to their 'natural' level"
"the least government is the best"
is not opposed to governments
who's goal is the "promotion of
general welfare"
The Government's Economic Role
"protect society against the violence and invasion of other societies"
provide justice to all citizens
taking care of public works and institutions
Disadvantages include powerful social forces that disturb society
his vision could only work in a perfect society where only growth was possible