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.

1. Describe what Smith meant by the “invisible hand.” How exactly does it function?
2. Describe how Smith’s work is a reaction to mercantilism, which dominated the seventeenth and eighteenth centuries. As a point of departure, define mercantilism.
3. 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?
4. Discuss the influences of Smith and his critics, like Marx, reflected in the mixed economy of the United States today.

Use three to five scholarly resources to support your explanations.

Prepare this assignment according to the guidelines found in the APA Style Guide.

Answer preview

Adam Smith is credited with coming up with the concept of the invisible hand (Wight, 2007). He introduced it in his book An Inquiry into the Nature and Causes of the Wealth of Nations and The Theory of Moral Sentiments. The concept gained prominence during the 1900s. The central premise of Smith’s invisible hand rests on two critical ideas. The first one is that voluntarily trading in a free market offers unintentional and numerous benefits. The second one is that these benefits will be greater than those people would otherwise enjoy in a regulated economy (Wight, 2007).

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