Final answer:
Adam Smith argued that self-interested behavior benefits individuals and, through the 'invisible hand,' leads to positive social results. These benefits emerge in a market economy where individuals' pursuit of self-interest results in economic growth and consumer satisfaction.
Step-by-step explanation:
Adam Smith believed that individuals looking after their self-interest would make decisions that benefit themselves. Smith posited that this self-interest, in turn, leads to positive societal outcomes when governments provide the freedom to produce and trade. These activities, driven by self-interest, are guided by an invisible hand that encourages economic efficiency and growth. When individuals strive to improve their own lives, they contribute to economic output, and their search for the best deals stimulates businesses to innovate and cater to consumer needs.
In his seminal work, The Wealth of Nations, Smith provided an analysis of how a market economy operates optimally when individuals are free to act in their own best interest, which inadvertently leads to the betterment of society as a whole.