Adam Smith, a very influential eighteenth-century political economist, wrote, “By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it” (cited in Stiglitz & Rosengard, 2015, p. 62). Considering the quotation, in 1,250-1,500 words, address the following questions.
- Describe what Smith meant by the “invisible hand.” How exactly does it function?
- Describe how Smith’s work is a reaction to mercantilism, which dominated the seventeenth and eighteenth centuries. As a point of departure, define mercantilism.
- Discuss if all 19th-century thinkers agree with Smith. How did, for instance, Karl Marx view the doctrine of laissez-faire? What were the inevitable consequences of such an economic system?
- Discuss the influences of Smith and his critics, like Marx, reflected in the mixed economy of the United States today.