Adam Smith Invisible Hand Study

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Adam smith believed that one of the most powerful forces promoting economic progress was self-interest directed by market prices. His invisible hand theory suggested that market prices organized the actions of self-interested individuals and directs them toward activities that promote the general welfare. From his book, The Wealth of Nations, he states "Every individual is continually exerting himself to find out the most advantageous employment for whatever income he can command. It is his own advantage, indeed, and not that of the society which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to society...He intends only his own gain, and he …show more content…

The market moves as if an invisible hand were guiding everything. When people peruse what they think will benefit them the most, they actually end up not just only reaching their interest but society’s as well. It occurs because of free will of the business owner, consumer, and producers. There is no control and it all happens naturally. A perfect example of how the invisible hand is at work is when customers go to the grocery store and go to the check-out lane, there is no authority telling them which lane they are assigned to. They naturally just go to the next available lane that they believe that will get them out the store the quickest. If one lane gets full or held up for any reason, customers will move to other lanes making the flow of traffic …show more content…

According to Smith, a struggling economy is capable of fixing itself. When a weak company fails it leaves room for other companies or new ones to fill the void and expand. For example, the Chrysler bailout in 2008, if the United States government allowed Chrysler to go out of business consumers would still buy cars. If they cannot buy them from Chrysler they would have to buy them from another car manufacturer. With sales increasing the other manufacturers would have to hire more workers and build more manufacturing plants to fulfill the increase of

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