postgraduateInvisible hand
accentsIn economics, the invisible hand, also known as the invisible hand of the market, the term economists u to describe the lf-regulating nature of the marketplace,[1] is a metaphor first coined by the economist Adam Smith in The Theory of Moral Sentiments. For Smith, the invisible hand was created by the conjunction of the forces of lf-interest, competition, and supply and demand, which he noted as being capable of allocating resources in society.display是什么[2] This is the founding justification for the laisz-fairenescafe economic philosophy.[3]
Adam Smith us the metaphor in Book IV of The Wealth of Nations, arguing that people in any society will employ their capital in foreign trading only if the profits available by that method far exceed tho available locally. In such a ca, Smith argues, it is better for society as a whole if they so do.
mascaraThe concept of the "invisible hand" is nearly always generalized beyond Smith's original dis低价在线刷qq名片赞网站
cussion of domestic versus foreign trade. Smith himlf participated in such generalization, as is already evident in his allusion to "many other cas" quoted above.
The theory of the Invisible Hand states that if each consumer is allowed to choo freely what to buy and each producer is allowed to choo freely what to ll and how to produce it, the market will ttle on a product distribution and prices that are beneficial to all the individual members of a community, and hence to the community as a whole. The reason for this is that lf-interest drives actors to beneficial behavior. Efficient methods of production are adopted to maximize profits. Low prices are charged to maximize revenue through gain in market share by undercutting competitors. Investors invest in tho industries most urgently needed to maximize returns, and withdraw capital from tho less efficient in creating value. Students prepare for the most needed (and therefore most remunerative) careers. All the effects take place dynamically and automatically.
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It also works as a balancing mechanism. For example, the inhabitants of a poor country
will be willing to work very cheaply, so entrepreneurs can make great profits by building factories in poor countries. Becau they increa the demand for labor, they will increa its price; further, becau the new producers also become consumers, local business must hire more people to provide the things they want to consume. As this process continues, the labor prices eventually ri to the point where there is no advantage for the foreign countries doing business in the formerly poor country. Overall, this mechanism caus the local economy to function on its own.
In The Wealth of Nations, Smith provides an example that illustrates the principle:
“ | It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own lf interest. We address ourlves, not to their humanity but to their lf-love, and never talk to them of our own necessities but of their advantages. | ” |
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Adam Smith and the invisible hand
富丽堂皇英文In his 1776 book "An Inquiry into the Nature and Caus of the Wealth of Nations" Adam Smith t out the mechanism by which he felt economic society operated. Each individual strives to become wealthy "intending only his own gain" but to this end he must exchange what he owns or produces with others who sufficiently value what he has to offer; in this way, by division of labour and a free market, public interest is advanced.
郑州雅思Smith is often regarded as the father of economics, and his writings have been enormously influential. Nowadays, "invisible hand" explanations are invoked to explain all sorts of phenomena, from scientific progress to environmental degradation.
Smith was profoundly religious, and saw the "invisible hand" as the mechanism by which a benevolent God administered a univer in which human happiness was maximid. He made it clear in his writings that quite considerable structure was required in society before the invisible hand mechanism could work efficiently. For example, property rights must be strong, and there must be widespread adherence to moral norms, such as prohi
bitions against theft and misreprentation. Theft was, to Smith, the worst crime of all, even though a poor man stealing from a rich man may increa overall happiness. He even went so far as to say that the purpo of government is to defend the rich from the poor.
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Here is a description of the way Smith imagined the univer operates:
∙ There is a benevolent deity who administers the world in such a way as to maximi human happiness.
∙ In order to do this he has created humans with a nature that leads them to act in a certain way.
∙ The world as we know it is pretty much perfect, and everyone is about equally happy. In particular, the rich are no happier than the poor.
∙ Although this means we should all be happy with our lot in life, our nature (which, remember, was created by God for the purpo of maximising happiness) leads us to thin
k that we would be happier if we were wealthier.
∙ This is a good thing, becau it leads us to struggle to become wealthier, thus increasing the sum total of human happiness via the mechanisms of exchange and division of labour.
