Adam Smith's Idea of Free Economy

Adam Smith is also known as one of the fathers of economics. He is most known for his profound ideas and theories on capitalism presented in his book the Wealth of Nations. In the Wealth of Nations, the ideal capitalist government and society relies on man being prudent and those assumptions and descriptions of the prudent man are seen throughout the Wealth of Nations. Smith is considered by many to be the first free-market capitalists. In many ways his philosophies and theories have helped shape our economy into what it is today.

Smith introduced us to the invisible hand theory which emphasized a free economy, not influenced by government intervention . The invisible hand theory stated that ultimately when people were left able to pursue their best interests, meaning that they were able to pursue work that made them happy and that enabled them to command the highest wage for themselves or when entrepreneurs were able to provide goods, the economy would flourish on its own. Smith argued that the intentional intervention of government regulation, although it is specifically intended to protect or benefit society as a whole, in practice is usually less effective for achieving that as opposed to a freely operating market economy. In many cases, it is harmful to the people as a whole by denying them the benefits of a burdenless marketplace. By having the government keep their hands off the economy it forces the people to work and make more money for themselves. When the government butts in people have less incentive to work because it will not be as much as it would be if they worked on their own

Adam Smith’s ideas are very much relevant today. However, with recent events in today’s economy, it’s obvious that some of the practices that worked previously need some serious revision to work in today’s world. There was a market crisis in early 2008, mainly because of the way that the markets were being run and the lack of transparency. Smith’s theories held that there is no need for government involvement, but clearly lack of government involvement in this case was simply not an option and would have led to an even more chaotic situation. Smith’s theories were a great foundation and a lot of the ways in which we live today are based on these theories. It’s evident in our ever-growing society, in the many professions that people work in and the number of new businesses being created. With that said, even though Smith’s theories are still relevant, with the changing times and society, the way the markets are handled will need to be improved. This will probably mean more government involvement at many levels to ensure and promote transparency. As the world continues to change and as new challenges are faced, there will definitely be the need for a new way of thinking to be applied to smith’s ideas

In conclusion, Smith’s ideas were and still are very instrumental to our society and the way that the free markets are run. Since Adam Smith’s ideas and theories have outlasted those of any other economist. Whether or the invisible hand exists or not it is frequently debated. It is, however, difficult to deny that Smiths philosophies helped to create the most successful economy in history.