Question

5. Are there any reasons why Smith's model of capitalism might not be a successful argument in favor of the free-market system? Explain.

Answer 1

There are many reasons to criticize Adam Smith’s model of capitalism, first because when he defended his ideals the world was a different place, most of the people worked in farms and as craftsmen and practiced trade. When the industrial revolution came, capitalism changed deeply.

Adam Smith defended the idea of demand and offer, that would create an invisible hand that would balance the market. But the Industrial Revolution came and changed the world deeply, the laissez-faire is not a good policy because it makes room for abuses and makes disparity grow in society. Because of that, the regulation of capitalism by the government is very important so social equality is achieved.

Answer 2

The Reverend Adam Smith was a Presbyterian minister who developed his economic theories within a frame work of Scottish “moderate” economic, politic, moral, and religious thought.
In The Theory of Moral Sentiments, Smith examined the nature and origin of ethical judgments, and in his masterpiece, The Wealth of Nations, he explored the motivations of economic actors operating in a free market. As Smith points out, in order to form sound judgments about the conduct of others, individuals must be able to make judgments about their own behavior that are free of self-interest. In what is considered the most original aspect of Smith's ethical theory, he argued that the only way to avoid self-deception in our assessments of ourselves is to view our own actions through the eyes of an "ideal impartial spectator," a person possessed of perfect virtue who knows all the relevant facts but is not personally involved and who adheres to a set of general rules about what is considered socially appropiate behavior.