Question

[The rich] are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. Adam Smith, The Theory of Moral Sentiments, 1759 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 "invisible hand" emphasizes the need for government interventions.

B. Smith's "invisible hand" aligns with the principles of modern social-democratic governments.

C. Smith's "invisible hand" supports a hands-off approach to government intervention.

D. Smith's "invisible hand" contradicts the objectives of government interventions.

Answer 1

Adam Smith's 'invisible hand' concept supports a hands-off approach to government intervention, emphasizing that individual self-interest in a free market can lead to positive societal outcomes, which is in contrast to substantial government-led interventions like the Marshall Plan. The correct answer is option C. Smith's "invisible hand" supports a hands-off approach to government intervention.

Step-by-step explanation:

Adam Smith's concept of the "invisible hand" refers to the idea that individuals' pursuit of their own interests can lead to positive outcomes for society as a whole, particularly in the context of a free-market economy. In this view, as people seek to maximize their own gains, they contribute to the overall economic prosperity, often without intending to promote the public good.

This stands in contrast to government interventions like the U.S.-led Marshall Plan or the social-democratic welfare states of Western Europe, which are based on the premise that the government has a significant role to play in redistributing wealth and resources and ensuring social welfare.

Therefore, the correct answer to the question posed is: C. Smith's "invisible hand" supports a hands-off approach to government intervention. This reflects Smith's belief in laissez-faire economics, where the government's role in the economy is minimized to allow the free market to regulate itself.