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Adam Smith, the father of economics, published The Wealth of Nations in 1776. Although it made little impact in its time, it conceptualised the economy in a radical new way: in terms of individual agents, acting out of self-interest. From an individualist perspective, he argued that people produced goods in order to make money, and made money in order to purchase goods they valued most. The exchange takes place in a market, where prices are set according to costs and the demand for the good. This was a self-regulating system which he described it as being controlled "as if by an invisible hand".
In his system, labour was the final measure of value—wages (a cost) based on the needs of the worker, and rent on the productivity of land. The market acted as a communicator and coordinator (via prices), and a motivator for individuals, such that general welfare was achieved. Another important observation was that the division of labour into specialised functions allowed for far greater......

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Approximate Pages: 4 (250 words per double-spaced page)

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