Perhaps the most famous concept in the book is the "Invisible Hand." Smith argues that individuals act in their own self-interest to gain income and security. While they do not intend to promote the public interest, they are led by an "invisible hand" to do so.
By pursuing his own interest, an individual frequently promotes that of society more effectually than when he really intends to promote it. This mechanism operates through the price system:
A: No. Unlike Karl Marx’s Das Kapital, which assumes familiarity with Hegel, Smith wrote for educated general readers. You can start directly with this book. However, reading Smith’s earlier work, The Theory of Moral Sentiments (1759), gives a fuller picture of his views on human nature. adam smit bogatstvo naroda pdf full
Reading the full text today is an exercise in both admiration and patience.
Smith’s most famous metaphor. He argued that when individuals pursue their own self-interest (e.g., a baker making bread to earn money), they unintentionally promote the good of society (e.g., the community gets bread). The "invisible hand" of competition and supply/demand regulates the market better than any government planner. Chapter 2: Of the Money Arising from the Principles of Stock
To explain how markets function, Smith establishes a theory of value. He distinguishes between:
Smith famously notes the "paradox of value" (the diamond-water paradox): water has high use-value but low exchange-value, while diamonds have low use-value but high exchange-value. He resolves this by introducing the Labor Theory of Value, suggesting that the real price of everything is the toil and trouble of acquiring it. Perhaps the most famous concept in the book
He further breaks down price into components:
In a primitive society, the whole produce of labor belongs to the laborer. However, in a "civilized" society with private land and accumulated stock, the produce is shared among laborers, landlords, and capitalists.