intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. (Smith 423)Here, Smith explains his idea that the government is not needed at all times to direct the market in the best direction. The idea of the "invisible hand" included more individual freedom. Free competition and free trade promoted economic growth and helped balance the market. He favored a set of rules that "replaced destabilizing activist intervention with smoothly operating, or stabilizing, automatic adjustment mechanisms" (Humphrey) and the more popular laissez faire economics, or "rule by the people". Although he didn't like government intervention, he favored it in times of despair when it was the only hope in getting the economy and nation back on track.Adam Smith also saw wealth in a different way than the mercantilists did. According to the mercantilists, without gold and silver mines, a nation could only accumulate wealth--the precious metals--by selling more merchandise to foreigners than it bought from them. Thus, they thought the best way to obtain a permanent trade balance surplus was to promote exportation and restrict importation, compelling foreigners to cover their deficits by shipping gold and silver. To Smith, national wealth wasn't precious metal, but rather the stocks of productive resources and the efficiency of using them. Those resources include land, labor and capital. For example, he saw agriculture as a major source of wealth for nations. Wealth-enhancing, efficient resource allocation required free trade in order to exploit comparative advantages stemming from specialization and the division of labor. Smith focused on the division of labor in Book I of the Wealth of Nations. While the mercantilist divided exports and imports unequally to encourage a flow of precious metals into...
