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Adam Smith And Capitalism

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Adam Smith and Capitalism
In his 1776 book Wealth of Nations, Adam Smith introduced the notion of “Invisible
hand.” The concept was used to describe a puzzle of a perfect competition. According to
smith, a capitalist society operates without the control of anyone. Every individual in the
economy works towards achieving his or her own egotistic objectives (Joyce). Due to
command-style economy, there is no visible hand that tells companies what to produce. In
this case, entrepreneurs focus on getting rich through producing products that they think
clients will desire. On the other hand, customers determine products and companies that will
survive through buying or not buying goods from a particular company. Therefore, there is an
invisible hand (the will of customers) that play a great role in determining what happens in
the economy. Various merits are associated with the theory of ‘invisible hand.”. One of the
major advantages is consumer sovereignty where entrepreneurs produce what consumers
desire art a realistic price. Absence of bureaucracy is another advantage of invisible hand
theory. Entrepreneurs do not depend on the government in determining what to produce
(Agarwal). In addition, ‘invisible hand’ is advantageous because it lead to optimum allocation
of resources. A good example of invisible hand’ theory is the contribution of social media in
enhancing economic growth. Governments were not involved when owners of social media
decided to make these social sites. The ‘invisible hand of people started using these sites.
Due to higher number of consumers signed into these sites, advertisers are now using them.
In this case, social media have become viable economically without anyone ordering them to.

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Surname 1 Student’s Name Professor’s Name Course Date Adam Smith and Capitalism In his 1776 book Wealth of Nations, Adam Smith introduced the notion of “Invisible hand.” The concept was used to describe a puzzle of a perfect competition. According to smith, a capitalist society operates without the control of anyone. Every individual in the economy works towards achieving his or her own egotistic objectives (Joyce). Due to command-style economy, there is no visible hand that tells companies what to produce. In this case, entrepreneurs focus on getting rich through producing products th ...
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