Adam Smith Free Market

October 19, 2016
(A side note: I dare anyone to

What was the most important document published in 1776? The Declaration of Independence is the easy answer for Americans, but many would argue that Adam Smith's "The Wealth of Nations" had a more important global impact. In this article, we will look at Smith's masterpiece and its contributions to modern economics. (For background reading, see .)

In Opposition to Mercantilism
On March 9, 1776, "An Inquiry into the Nature and Causes of the Wealth of Nations" (commonly referred to as simply "The Wealth of Nations") was published. Smith, a Scottish philosopher by trade, wrote the book to upend the mercantilist system. Mercantilism held that wealth was fixed and finite, and that the only way to prosper was to hoard gold and tariff products from abroad. This meant that nations should sell their goods to other countries while buying nothing in return. Predictably, nations fell into rounds of retaliatory tariffs that choked off international trade. (For related reading, see .)

The Invisible Hand
The core of Smith's thesis was that man's natural tendency toward self-interest - in modern terms, looking out for No.1 - results in prosperity. By giving everyone freedom to produce and exchange goods as they pleased (free trade) and opening all markets to competition (international as well as domestic - Smith lived in the age of government chartered monopolies), people's natural self-interest would bring about universal opulence with very little effort from a nation's government. This free-market force became known as the invisible hand, but it needed support to bring about its magic. (For more insight on free market theories, see )

YOU MIGHT ALSO LIKE
Meet the Young Man Bringing Adam Smith and the Free Market
Meet the Young Man Bringing Adam Smith and the Free Market ...
Free Markets Series E9: Adam Smith and The Birth of Economics
Free Markets Series E9: Adam Smith and The Birth of Economics
Free Market Masters: Adam Smith
Free Market Masters: Adam Smith
Share this Post