DREAM / The Prime Minister resigns and wakes up under the Parisian bridge!

 Kliko këtu për të tjera
Voxpress:

What is the "invisible hand" of the economy?

2022-08-16 16:18:51Biznes SHKRUAR NGA REDAKSIA VOX
What is the "invisible hand" of the economy?
The "invisible hand" of the economy

The "invisible hand" is a metaphor which in economics refers to the invisible forces that drive the free market economy.

The concept was introduced by Adam Smith, otherwise known as the father of economics, who wrote about this "hand" in many of his publications.

In fact, the "invisible hand" is part of the "Laissez-faire" ideology, pronounced "let it do/let it flow". In other words, the market can self-regulate, without the intervention of government policies, which impose unnatural market behavior.

In economics, this concept is used in two main ideas. First, voluntary trade in a free market produces untargeted and widely diffused benefits.

Second, these benefits are greater than those of a regulated, planned market. Smith developed the concept of the invisible hand of the market based on Richard Cantillon's famous book, An Essay on Economic Theories.

This book, published in 1755, describes how a farm isolated from the system fared better than other competing tenant farms. Independent entrepreneurs ran to every possible farm to maximize their production and profits.

Successful farmers introduced better equipment and techniques, and brought to market only those goods that consumers were willing to pay for.

Richard Cantillon's example showed that profits were much higher when competing self-interests ruled the fortunes than when they were "subservient" to the economic system of the predecessor entrepreneur.


Në përputhje me standarded JTI

Video

SHIKO KANALIN NE YOUTUBE
×