Chapter Summary: The Wonderful World Of Adam Smith
Chapter III. The Wonderful World of Adam Smith
In this chapter, Smith focuses on two laws of the market which are self-interest or profit motive and competition. The desire for wealth control all human activity. Thus, self-interest, or profit motive (first law of the market) will make people to perform well for any task or work to gain their own profit. Smith writes "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from our regard to their self-interest." This means that all people do what their expected, actually is for their self-interest.
For second law, Smith thinks about how the individual’s selfish can brings benefit to society since all people are aiming for their self-interest. Meanwhile, Smith said that when individual complete their task to gain the profit, involuntarily they effort will contributes to the whole society. As a result, the second law in the market system is competition. For an example, in a perfect competitive market, all the firms are price taker, the price is fixed for the demand of the society, so if a firm who want to gain more profit, then he set higher price on that particular goods, his business will be taken away by competitor who offering the reasonable prices. If wages too less, workers will choose to quit the job and find for
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Utopia is complete equality. There will be anarchic communism which contract of marriage can be abolished. Daniel Malthus felt sympathetically inclined toward utopia but his son (Reverend Thomas Robert Malthus) does not think the same. Hence, he wrote objection to convince his father. An Essay on the Principle of Population as It Affects the Future Improvement of Society has wiped out all the hopes of harmonious universe. There is a possibility in nature for population to exceed the means of subsistence. Hence, Carlyle called economics as the dismal
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