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Essay / Research Paper Abstract
This 3-page paper focuses on Adam Smith's invisible hand and division of labor, while discussing while these ideas likely won't work today. Bibliography lists 2 sources.
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3 pages (~225 words per page)
File: D0_MTadamsmit.rtf
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Unformatted sample text from the term paper:
Nature and Causes of the Wealth of Nations." Adam Smith is considered the father of modern economic theory. Explain his ideas about division of labor, self-interest and the invisible
hand. Do you think these ideas are relevant today? In her article "Adam Smith and the Invisible Hand," Helen Joyce
points out that Smith believed in a benevolent deity who ran the world in such a way that human happiness would be maximized, and that those humans would react in
a certain way. In this type of world, humans are driven to become wealthier in order to boost happiness, which increases the mechanism of exchange as well as the division
of labor (Joyce, 2009). The invisible hand, Smith believed, directed the most resources toward the most profitable ventures because it was what the consumers wanted (Joyce, 2009).
These ideas today, while quaint, dont have much to do with reality. The whole concept of invisible hand assumes free markets, free from government
intervention, will correct themselves toward equilibrium. It also assumes that consumers behave rationally. Both of these theories took a downfall in the market. Consumers, for one, have not behaved rationally
(some of the economic woes, for example, came about because people who couldnt afford houses ended up buying them anyway). And the market didnt correct itself - left to its
own device, the financial markets took a tumble. The problem with the concept of self-interest is that it involves more than what
makes people happy - Smiths theories dont factor in the idea that most people are constantly wanting to keep up with the Joneses; even if they have everything they want,
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