Adam Smith

Adam Smith made his contribution in the

field of economics. He was greatly
influenced by the Physiocratic School of
philosophical thought popular in Europe
during that period. The Physiocratic
School built its economic doctrine on a
belief in the supremacy of natural law,
of order, and of wealth.

 Smith discovered a natural law that

he believed governed the economic
realm-the law of supply and
demand. An explanation of his
discovery and the effect this law
had on economies was published in
his 1776 book entitled, An Inquiry
Into the Nature and Causes of the
Wealth of Nations .

 Smith said that the best way to

generate the greatest economic
good for the greatest number was
to encourage each individual to
pursue his own self-interest wholeheartedly.

 Smith said that if society keeps its

hands off, the economy will regulate
itself more efficiently than the
government could ever hope to. When
asked about the possibility of
exploitation due to the absence of
regulation, Smith said the invisible
hand would ensure that the individual
pursuit of wealth ends up benefiting the
whole.

 But Smith also said that for the

supply and demand approach to
work, everybody must be willing to
play by the ruled. Companies
cannot, for example, decrease
prices artificially in order to force
smaller competitors who are unable
to follow suit out of business.

 Companies cannot, for example, build

monopolies. They cannot gain control of
critical resources and deny other producers
access to resources. They cannot spread
false rumors about the quality of other
companies products. Manufacturers have
to do their best to win and to add to their
wealth simply by raising or lowering their
price according to the law of supply and
demand. No cheating allowed.

 The temptation to not play by the rules,

however, was too great. Despite the
lessons taught by the American
Revolutionary War (1776) and the French
Revolution (1787), both of which resulted in
large part from the unwillingness or
inability of monarchs to follow Smiths
council, very few if any of the new, hungry
industrial entrepreneurs listed to this
second part of Smiths message, i.e., the
part about playing fair.

 Instead, they began doing everything

possible to pervert the law of supply and
demand in ways that would give them an
advantage and would make them the new
ruling class. Their exploitations turned
the early Industrial Revolution in Europe
(1800-1850) and the United States
(1860-1910) into one of the bleakest
periods in the history of human
exploitation

quickly
becomes
the
Egoism
dominant thinking.
The common
good is all but forgotten.
This
arrangement, unrestrained, ends up
benefiting only the strongest, or,
perhaps, the most ruthless.

 egoism generates a short-term

perspective. Egoists need to win
every little battle, progressing from
moment to moment ignoring the
more long-term perspective.