9781422274101

MANAGING A MODERN ECONOMY

Politicians and public policy experts, no matter what their political persuasion, agree that they want people to have jobs and for the economy to grow at a healthy and sustainable rate. However, they disagree considerably about how to achieve these goals. Adam Smith, an eighteenth-century

Scottish economist and philosopher, was an early proponent of free market capitalism . In his book The Wealth of Nations , which was published in 1776, the same year the American Revolution began, described the interaction of producers and consumers as “the invisible hand.” [The rich] consume little more than the poor, and in spite of their natural selfishness and rapacity…they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. 1 In other words, according to Smith, unrestrained capitalism will always tend to create the most good and

7