Final answer:
Adam Smith theorized capitalism in "A Wealth of Nations," advocating for laissez faire economics with minimal government interference and the natural balance of supply and demand through the "invisible hand."
Step-by-step explanation:
The economic system theorized by Adam Smith in his book "A Wealth of Nations" is characterized by laissez faire economics and the laws of supply and demand. This system, known as capitalism, promotes the idea that markets should operate without government intervention, allowing private individuals and companies to own the means of production. Through the "invisible hand," a concept introduced by Smith, production and consumption naturally balance out, based on the market's supply and demand dynamics. Moreover, Smith's theories laid the foundation for modern economic liberal practice, rejecting mercantilism and advocating for a free-market approach where government interference is minimized.