Adam Smith was a Scottish professor that strongly believed in the idea of a free economy. His ideas were the foundation of Capitalism. In this passage from his book The Wealth of Nations, Adam Smith discusses his law of self-interest, which is the idea that people work for their own good.
“The natural desire of every individual is to improve his own condition (life).
For example, it is not because of the benevolence (kindness) of the butcher, the brewer, or the baker that we expect our dinner, but from their regard for their own self-interest
It is for his own benefit, and not that of the society, that the butcher is thinking about when he slaughters his pigs for meat. His self-interest leads him to choose that employment (job) which is also helpful to society, but he intends (desires) only his own gain. If people were not willing to pay the butcher good money for his meat, then the butcher would not care to slaughter his pigs.”
Analyze: What does Smith mean when he says “the natural desire of every individual is to improve his own condition”? Explain.
Summarize. Why does Adam Smith believe the butcher does his job (EXPLAIN! Don’t just say “self-interest!”)?
Interpret: Do you agree with Adam Smith that people do their jobs only out of self-interest? Are there any jobs that people might do for a different reason? Explain.
Adam Smith on Competition (Document B)
Adam Smith was a Scottish professor that strongly believed in the idea of a free economy. His ideas were the foundation of Capitalism. In this passage from his book The Wealth of Nations, Adam Smith discusses his law of competition, which is the idea that competition forces people to make a better product
“If any trade, item, or object is beneficial (helpful) to the public, free and more general (widespread) competition will always make it more so (beneficial). It is a characteristic of man that no item or object is produced to his liking. He finds that there is need for improvement in everything.
The whole industry of human life is not employed (used) to obtain the supply of our three most basic needs, which are food, clothes and lodging (housing). The industry of mankind is employed to obtain the luxuries (nice things) of life according to the nicety and delicacy of our tastes (the styles people like).”
Analyze: According to Adam Smith, why is competition a good thing? Explain.