Question

The rich are led by an invisible hand to make nearly the same distribution of the necessaries of life... How does Smith's idea of the 'invisible hand' of capitalism compare to modern-day government interventions such as the U.S.-led Marshall Plan or the social-democratic governments of Western Europe?

a) Smith's idea opposes government interventions
b) Smith's idea supports government interventions
c) Smith's idea is indifferent to government interventions
d) Smith's idea advocates for socialist policies

Answer 1

Adam Smith's idea of the 'invisible hand' opposes government interventions, in contrast to modern-day government interventions such as the U.S.-led Marshall Plan or the social-democratic governments of Western Europe.

Step-by-step explanation:

The concept of the 'invisible hand,' as proposed by Adam Smith in his book The Wealth of Nations, refers to the unseen forces that regulate the market and economy. It suggests that individuals, driven by self-interest, unintentionally contribute to the overall well-being of society by pursuing their own economic goals. Smith's idea of the invisible hand opposes government interventions, as he believed that the free market should be left alone by governments to establish prices and determine the distribution of goods and services.

In contrast, modern-day government interventions such as the U.S.-led Marshall Plan or the social-democratic governments of Western Europe involve deliberate actions taken by the government to regulate and stimulate economic growth, address social welfare concerns, and promote economic equality. These interventions go against Smith's idea of the invisible hand, as they involve government interference in the market and aim to steer the distribution of wealth and resources.