Nielsen, Makayla
S00561651
Business-1050-042
2/21/2013
Assignment 12
Standard Six
1. The text was written by Adam Smith. Smith was a Scottish moral philosopher and a
pioneer of political economy. He wrote a number of works and a few are: The Theory of
Moral Sentiments, The Wealth of Nations, and Criticism and Dissent.
2. The text is about Smith’s ideas about the political economy. He wrote about trade,
personal profit, monopoly, and he also discussed the Invisible-Hand.
3. The text was written in the year of 1776. Some major events happening in the world at
that time were: Austria ended its interrogation torture, the American War of
Independence, U.S. Declared independence from Britain, and Captain James Cook began
his third voyage.
4. The text was supposedly written in Scotland. Within the same year the only major idea
was Smith’s The Wealth of Nations. But years surrounding then included: the discovery
of Carbon Dioxide (1754), and James Watt patented the idea for separate condensing
chamber in the Steam Engine. (1769).
5. The text is relevant to the study of modern business because it discusses the early ideas of
today’s system. Talking about personal profit, monopoly, markets, and trade all have to
do with what is performed in today’s society.
6. The text made me feel that my education was being increased by learning of Smith’s
early ideas of how business should be run. There were only a few words that I didn’t fully
understand but otherwise the literature was very understandable. I feel that my grasp of
Critical Thinking is not yet complete and will continue to grow as I learn more and more
of its existence in time.
Questions 1-10
1. In the Glossary read the entry under Capitalism. Explain the high hopes smith had for his
theory of wealth.
a. Smith had hoped that his theory of wealth would help others to find freedom
within the economy. He had hoped that the markets would be free, the business
owners would be free from corporations, and that society would be free from the
ties of other nations.
2. Briefly explain Smith’s concept of the Profit Motive.
a. Smith’s concept of the Profit Motive was that of a by-product of self interest.
Adam claimed that the profit was only motive to obtain more stockholders.
3. Briefly explain Smith’s concept of Private Wealth.
a. Smith’s concept of Private Wealth was merely that every man was looking for the
most profitable work he could find suitable for himself. By doing this he
discussed how the general industry of society couldn’t exceed what the capital
was able to employ. Thus Private Wealth was more like personal profit.
4. Briefly explain Smith’s idea of Free Markets.
a. Smith’s idea of Free Markets was that the markets would be free because there
would be no set price of items sold. It would merely be a competition between
entrepreneurs and craftsmen to obtain the most clientele and as clientele search
for the best price, the Free Market system would allow them to find what they
needed for reasonable prices.
5. Use the Glossary. Briefly explain Laissez-faire.
a. Laissez-faire basically states “hands off.” In terms through the texts, Smith
wanted the large corporations to take their hands off of the small merchants, the
artificers, and off of the economy of the nation, found in his proposition of
Mercantilism.
6. Briefly explain the Invisible-Hand.
a. The Invisible-Hand is Smith’s idea of natural guidance for Free Market
Capitalism. It provided a freedom from the government having their hand in
everything. He stated that the “Invisible-hand” would guide market participants to
trade in the most mutually beneficial manner.
7. In the Glossary read the entry under Game Theory. What impact did Game Theory have
on Adam Smith’s idea of the Invisible-Hand?
a. The Game Theory is contradictory to Smith’s idea of the Invisible-Hand. Game
Theory states that there must be rules otherwise the economy will fall into a
vicious cycle of boom to bust, bubble to great depression, always making profit
but never distributing it.
8. Explain why these economic ideas are not the same as scientific principles?
a. The economic ideas are not the same as scientific principles because the scientific
principles have figured out ways to ensure that profit is earned and distributed
whereas the economic ideas are without rule and thus individuals are abusing
them to their own advantage.
9. Adam Smith advocated a society based on the pursuit of wealth. This contradicted major
religions of the world, and therefore he was highly criticized. In the Glossary read the
entry called Justification. Explain how the Invisible-Hand was Smith’s Justification for
advocating a society built on pursuit of personal profit.
a. The Invisible-Hand was Smith’s Justification for advocating a society built on
pursuit of personal profit because he believed that if the economy worked without
ruling there would be more wealth. He believed that the “hand” would guide the
traders to what they needed but rather it created more of a boom to bust routine.
10. Speculate on Adam Smith’s motives, as in why he wrote it?
a. Smith wrote the text in order to present a revolutionary, more beneficiary system
to run business by. Rather than being ruled by the higher corporations, countries,
classes, etc, he was providing an outlet for individual growth that was highly
criticized by Christianity as being “sinful”.
10 Vocabulary
1. Graziers
a. An owner of cattle that are raised and fattened for market.
2. Advantageous
a. Of use or benefit.
3. Redress
a. To provide compensation or reparation for a loss or wrong experienced.
4. Emporium
a. A marketplace or center of trade.
5. Affectation
a. An appearance or manner assumed as a show or pretense, often to impress others.
6. Dissuading
a. To persuade somebody no to do something.
7. Maxim
a. A succinct or pithy saying that has some proven truth to it.
8. Artificers
a. Somebody whose work requires manual skill.
9. Supposition
a. Something that is suggested might be true, or that is accepted as true on the basis
of some evidence but without proof.
10. Augmented
a. To add something in order to make it larger or more substantial, or to grow in this
way.
Works Cited

Adam Smith." Wikipedia. Wikimedia Foundation, 22 Feb. 2013. Web. 22 Feb. 2013

"Historical Events for Year 1776." Today in History, Birthdays & History Articles. N.p.,
n.d. Web. 22 Feb. 2013.

"Timeline of Scottish History." Wikipedia. Wikimedia Foundation, 14 Feb. 2013. Web.
22 Feb. 2013.

Smith, Adam. "Exercept from The Wealth of Nations." 1776. Critical Thinking, Readings
from the Literature of Business and Society. By Edward G. Engh. N.p.: n.p., n.d. 127133. Print