Invisible Hand - 1787 Words

Name: Pham Tan Vuong ID: S3411932 Lecturer: Antoine Goupille Word count: 1625 INTRODUCTION Adam Smith (1723-1790) was one of the greatest economists in the world with his concept of the â€Å"Invisible Hand†. The â€Å"Invisible Hand† explains the reasons why people do things in the market based on the principles of supply and demand. This theory also creates an economic system called free market or liberal market. This type of market has some main features namely, no governmental interventions and high competition. Adam Smith’s theory is interesting because he was the first one to set up the idea of a â€Å"market† that still exists now. The aim of this essay is to give an overview of the â€Å"Invisible hand†, analyze advantages and disadvantages of†¦show more content†¦According to Ollman (1999), workers’ exploitation will worsen continually because the longer, faster and harder people work, the less they are paid. As more people working longer and harder, employers will have more profit leading to the unbalanced distri bution of wealth. Van Suntum (2004) points out that while the majority of employers are holding huge amount of assets, their workers are often living in poverty as they have nothing else to offer but their labor on the market. Therefore, the free market often has the worker union to fight for their rights. This could create a huge loss for the economy as there may be no one working during that period of time. Nonetheless, when the market economy faces an economic crisis, it will become a big obstacle because it takes a long time to self-regulate without any interventions from the governments. Thus, firms will suffer from the shortage of demand or access to fund, whereas workers have to face with high rate of unemployment and low wages for a long time. APPLICATION OF THE â€Å"INVISIBLE HAND† The â€Å"Invisible Hand† is the force which could make people realize business opportunities and hence, push them forward to seize opportunities. Quynh Anh , author of the article â€Å"Sumitomo Increases Investment in Vietnam† published in the Vietnam Chamber of Commerce and Industry (VCCI), in March 2013 asserts that Nakamura , President of Sumitomo Corporation of Japan, highlyShow MoreRelatedLooking through Life with an Invisible Hand in Adam Smith967 Words   |  4 Pages Title: Looking through life with an Invisible Hand in Adam Smith Thesis: Throughout the centuries, countless philosophers have searched for what the meaning of life maybe. What is being? They have asked. Philosophers such as Heraclitus thought of being as fire. Other philosophers like Pythagoras, thought being was through numbers. Each philosopher thinks of life differently, although each shares their common goal. Some focus more on purpose through Christianity outlook such as St. Augustine andRead MoreMGT 623 Week 1 Assignment Essay example785 Words   |  4 Pagesof the Wealth of Nations  (1776), however, Smith stated that society is best served when each person pursues his own best interests; an invisible hand will ensure that self-interested behavior serves the common social good. The competition that would result between individuals would be played out within the confines of government regulations. Smiths invisible hand concept is based on the theory of psychological egoism, which holds that individuals will do a better job of looking afte r their own interestsRead MoreAdam Smith s Wealth Of Nations1057 Words   |  5 PagesTherefore, the real value that the market needs to promote is the labor that is invested in the product. For example, in real life diamond or gold is very expensive but people do not really need them because without them, people still alive. 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