Liberalism and the Classical Economists

With the Classical economists, economic behavior was again seen as a natural

process, this time as one that performs best when left alone. Belief that the

gains of one must come at the expense of others gave way to the view that

natural cooperation would enhance the wellbeing of all parties. While Smith

recognized that economic processes could be corrupted, Others proclaimed his

“invisible hand” to be a doctrine of greed.

SPIEGEL: Chapters 10, 11, 12, 14 (All)

QUESTIONS:

1) What does Smith mean by “self interest”? Is this consistent with his previous

argument that “sympathy” is the foundation of a moral society?

2) In the first week I argued that there were three points made in the “Garden of

Eden” story that were a metaphors for nature and humankind’s relationship to it.

Does Smith’s “Invisible Hand” fit that model?

3) Acording to Smith, What is the down side of the division of labor? How does

he propose to fix it?

4) What problems does Spiegel have with Say’s Law? Under what conditions is

it valid and under what conditions might it not be?