Question

source: adam smith. the wealth of nations, 1776.
note: the most common economic system in europe during the 16th and 17th centuries was called mercantilism. the goal of mercantilism was to make the state (country) rich. most people at the time assumed that a monarch, who had been granted his power by god, should be in charge of making economic decisions. common people were not capable of making decisions that would benefit the national economy.
without government interference the obvious and simple system of natural liberty establishes itself of its own accord. every man... is left perfectly free to pursue his own interest in his own way.... the ruler is completely discharged from a duty for which no human wisdom or knowledge could ever be sufficient - the duty of superintending guiding the industry of private people, and of directing it towards... the interest of the society....
as every individual, therefore, endeavours as much as he can both to employ his capital money in the support of... industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily contributes to the annual revenue of the society as great as he can. he... neither intends to promote the public interest, nor knows how much he is promoting it.... he intends only his own gain, and he is in this... led by an invisible hand to promote an end which was no part of his intention.... by pursuing his own interest he frequently promotes that of the society more effectively than when he really intends to promote it.
document analysis

1. in paragraph one, does adam smith support an economic system based on government control or individual decision - making? why?
2. in paragraph two, according to adam smith, why do most individuals work?
3. according to smith, what is the happy and unexpected result when people pursue their own economic gain?
4. in paragraph two, smith mentions an \invisible hand.\ what do you think he means by that?
5. what is adam smiths main idea about trade and economic decision - making?
6. what does adam smiths economic philosophy have in common with john lockes and voltaires ideas about government and religion?

Explanation:

1. The first paragraph states the system of natural liberty forms without government interference, leaving individuals free to pursue their own interests and dismissing the ruler's duty to superintend private industry.
2. The second paragraph explicitly says individuals work to employ their capital for their own gain.
3. Smith notes pursuing self-interest leads to promoting the public/societal interest unintentionally.
4. The "invisible hand" refers to the unplanned societal benefit from individuals acting in their self-interest.
5. Smith’s main idea is that individual decision-making (without government control) via self-interest effectively promotes societal economic well-being.
6. All three thinkers emphasize individual freedom: Smith (economic liberty), Locke (political liberty/rights), Voltaire (religious liberty).

Answer:

1. Individual decision-making. Because he argues the system of natural liberty forms without government interference, and rulers lack sufficient wisdom to direct private industry.
2. To employ their capital in industry to maximize the value of its produce and gain their own interest.
3. They unintentionally promote the interest of society.
4. It refers to the unintended societal benefit that arises when individuals pursue their own economic self-interest.
5. Individual decision-making (without government control) driven by self-interest effectively promotes the economic well-being of society.
6. They all advocate for individual freedom (economic, political, or religious) and question excessive authority/control.