Adam Smith's Arguments For Capitalism

Business Ethics Paper #1

Recently, we have discussed about a few arguments for capitalism in the class, which is utilitarian argument, the libertarian argument, the private property argument and Adam Smith’s argument. Personally, I will be expected to talk about Adam Smith’s argument and the private property. In my opinion, Adam Smith is a major economist in the history. His book “The Wealth of Nation” provides a theory that helps a great number of societal developing economic systems. He gave the great criticism on policy of physiocracy and restriction of business and approved that industry and commerce made contribution to national wealth. Basically, there are three main points:

1. He encouraged that the allocation of resources should be decided only by the market. He objected to the government intervention and approved of free competition.

2. According to the human nature, the self-interest is the motivation of people of all economic activities.

3. He put forward the labor theory of value and showed the division of labor is the key to improve the efficiency.

And Adam Smith argued that capitalism is the best economic system for increasing citizen’s quality of life because of following reasons:

1. Capitalism encourages citizens who want to make money to make products others want to buy, so this system naturally increased production of better products sold as lower prices.

2. Videlicet, everyone based on the personal interests would like to pursue the benefit