from The Timeless Wisdom of Adam Smith - Foundation for Economic Education - Richard M. Ebeling:
December 17, 2016 - "Adam Smith’s central contribution to economic understanding was surely his demonstration that under an institutional arrangement of individual liberty, property rights, and voluntary exchange the self-interested conduct of market participants could be shown to be consistent with a general betterment of the human condition.
"The emergence of a social system of division of labor makes men interdependent for the necessities, amenities and luxuries of life. But in the free, competitive market order every individual can only access what others in society can supply him with by offering them something in exchange that they value more highly than what is being asked from them in trade.
"Thus ... as if by an 'invisible hand' each individual is guided to apply his knowledge, ability and talents in ways that serve the trading desires of others as the means of fulfilling his own self-interested goals and purposes. Furthermore, not only is the need for government regulation and control of economic affairs shown to be unnecessary for societal improvement, Smith went on to argue that such government intervention was detrimental.... Smith explained in The Wealth of Nations (1776):
Read more: https://fee.org/articles/the-timeless-wisdom-of-adam-smith/
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December 17, 2016 - "Adam Smith’s central contribution to economic understanding was surely his demonstration that under an institutional arrangement of individual liberty, property rights, and voluntary exchange the self-interested conduct of market participants could be shown to be consistent with a general betterment of the human condition.
"The emergence of a social system of division of labor makes men interdependent for the necessities, amenities and luxuries of life. But in the free, competitive market order every individual can only access what others in society can supply him with by offering them something in exchange that they value more highly than what is being asked from them in trade.
"Thus ... as if by an 'invisible hand' each individual is guided to apply his knowledge, ability and talents in ways that serve the trading desires of others as the means of fulfilling his own self-interested goals and purposes. Furthermore, not only is the need for government regulation and control of economic affairs shown to be unnecessary for societal improvement, Smith went on to argue that such government intervention was detrimental.... Smith explained in The Wealth of Nations (1776):
“To give the monopoly of the home-market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation. If the produce of domestic can be bought there as cheap as that of foreign industry, the regulation is evidently useless. If it cannot, it must generally be hurtful."Smith was scathing in his criticisms of manufacturers, merchants and agricultural special interests who wished to maintain or gain market share and greater profits from restricting the free flow of goods and services between countries through government action.... Said Smith:
“It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.... What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better to buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage..... It is certainly not employed to the greatest advantage when it is directed towards an object which it can buy cheaper than it can make it....
Commerce, which ought naturally to be, among nations, as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity. The capricious ambition of kings and ministers has not, during the present and the preceding century, been more fatal to the repose of Europe, than the impertinent jealousy of merchants and manufacturers."Smith warned of the 'interested sophistry' of those desiring anti-competitive interventions and protections in the private sector through the political power of governments by creating false notions that trade is a zero-sum game in which if one side wins the other side must have lost, or that imports and a trade deficit are inherently harmful to the material well-being of a nation. These distortions and errors had to be refuted so it would be better understood that, 'In every country it always is and must be in the interest of the great body of the people to buy whatever they want of those who sell it cheapest.'"
The violence and injustice of the rulers of mankind is an ancient evil, for which I am afraid, the nature of human affairs can scarce admit of remedy. But the mean rapacity, the monopolizing spirit of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind, though it cannot perhaps be corrected, may very easily be prevented from disturbing the tranquility of any body but themselves.
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