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Chapter 3: Problem 8

Would Adam Smith agree that the benefits of free enterprise are a consequence of the human desire to make life better for others? Explain.

Short Answer

Expert verified
According to Adam Smith, the benefits that society derives from free enterprise are not a result of the human desire to improve life for others, but are a consequence of individual self-interest. While enhancing societal well-being can be a byproduct of free enterprise, it is not the primary motivating factor driving market activities in Smith's view.

Step by step solution

01

Understanding Adam Smith's Economic Philosophy

Adam Smith was a classical economist who is credited with the concept of the 'invisible hand' guiding market dynamics. According to Smith, each individual, by pursuing their self-interest under conditions of fair competition, unintentionally promotes the good of the community. He believed a free market, with limited government intervention, would result in the most efficient and socially beneficial outcome.
02

Exploring the Central Question- Nature of Benefits from Free Enterprise

The question here seeks to explore whether Smith agreed that benefits of free enterprise arise from an inherent desire to ameliorate life conditions of others. As per his doctrine, while the benefits of free market do trickle down to the society, they are not a consequence of a deliberate desire to promote collective well-being, but of self-interest.
03

Formulating the Answer

Drawing from Smith's economic philosophy, it can be stated that the prosperity free enterprise brings to the community isn't a result of a predefined intention to benefit others but of individual's pursuit of self-interest. Society-wide benefits happen to be a positive externality of this process.

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Most popular questions from this chapter

Define: a. profit b. loss

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