Final answer:
Adam Smith's economic theory combines self-interest with altruistic concern for others' welfare and proposes that a laissez-faire economy cultivates growth. Say's Law, associated with Smith, underscores the idea that supply creates its own demand, a principle instrumental in neoclassical economics.
Step-by-step explanation:
The basic premise of Adam Smith's theory of economics, according to Wagner, centers on the concept that individuals inherently possess both self-interest and altruistic tendencies. Smith's classical economic theories suggest that the accumulation of capital is critical for industrial progress, improving societal living standards, and he highlighted the importance of laissez-faire principles in fostering economic growth. Crucially, Smith also introduced moral sentiments into the conversation, explaining in The Theory of Moral Sentiments that despite individuals' self-interest, there is a natural concern for others' wellbeing.
Another key element of Smith's thought, as alluded to by the classical and neoclassical economists, is Say's Law, which posits that the act of producing and selling goods and services generates income, and supply must consequently create an equivalent demand elsewhere in the economy. This principle lends itself to understanding the role of supply in determining macroeconomic size and stability.