Read Chapter 2, and write a summary of 1-2 pages (single spaced) and submit here.

In your review, summarize the main points of Adam Smith and his philosophy of limited laissez-faire.

1. Smith believed a dynamic interaction of the public and private sectors would result in a process of growth and development. Such growth and development would benefit every member in the society, especially members of the working class. What three obligations did Smith assign to the government? (p.39 8th ed.) Please explain in details each one of them.

2. Explain the concept of “invisible hand”. What are the incentives that each individual (as a laborer and a consumer) has while participating in the market? 

3. What is Smith’s labor theory of value?

4. What is a mercantilist policy? Why is Smith against it?

5. Why, according to Adam Smith, would competition and imitation eventually produce a more equitable society?

6. Study Figure 2.1 (p.51 8th ed.). Notice the roles that invention, imitation and innovation play in Smith’s competitive markets model. This model functions in a closed economy. What have changed in a globalized environment?

7. Is limited laissez-faire better than complete laissez-faire, or vice versa? What is the element of Moral Sentiments important in a well-functioning capitalism?