Final answer:
The correct option is d). Adam Smith disagreed with Colbert on the benefits of government economic regulation, arguing for laissez-faire economics where markets self-regulate. He posited that nations should trade based on comparative advantages, fostering mutually beneficial relations rather than pursuing competitive trade policies. Smith also redefined the concept of balance of trade to focus on freedom and efficiency over mercantilist protectionism.
Step-by-step explanation:
Adam Smith and Jean-Baptiste Colbert had contrasting ideas about government economic regulation, economic competition among nations, and the meaning of the balance of trade. Smith, a proponent of laissez-faire, believed that government interference harms the economy and that trade should be free and unregulated. Contrary to mercantilist policies which were more aligned with Colbert's ideologies, Smith argued that economic gain for one nation does not mean loss for another, and that trade could be mutually beneficial. He advocated for an invisible hand, where market forces, not government controls, ensure efficient allocation of resources, benefiting society as a whole.
On the topic of economic competition, Smith considered that nations would prosper best by focusing on their comparative advantages, leading to mutually beneficial international trade rather than competitive exclusion. He contested the mercantilist emphasis on achieving a favorable balance of trade through protectionist measures like tariffs and subsidies. Smith emphasized that a nation's wealth grows with its freedom of trade, rather than through accumulation of gold and silver or maintaining trade surpluses. His critique of mercantilism and advocacy for capitalism transformed the economic landscape, influencing key changes in international trade policies.