Intro to business
Intro to businessCapitalism is based upon the ideas of the economist John Smith. Smith wrote in his book, The Wealth of Nations, about an economy free of government intervention. Each citizen can pursue his own best interest within the economy. Inturn, the society would benefit without government becoming involved. The French term laissez faire, meaning "let them do", is generally used to describe Smith's capitalistic system.
Smiths ideas are usually broken down into four basic ideas. The first being that an individual should be responsible for his own prosperity. By doing so, he is likley to be more productive and contribute more wealth and commodities into the economy. Second, the individual should be the one to decide how his resources are utilized. This also includes deciding how his profits from owning these items are used. If an individual has the freedom to spend his wealth on what he not only needs, but also on what he wants, he will strive to produce more revenue. Third, a society that has economic freedom creates competition. Competition leads to a market where buyers and sellers can enter and exit as they please, commonly knwn as a free-market economy. This promotes growth in the specific market, as well as growth in the overall economy. The fourth and final idea is that the government should not be involved in the economy. Smith felt that the government should be limited to providing defense against foreign countries, while allowing it's citizens to control the economy. He did...
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