Question

Which British economist believed that competition among businesses is important and that "the market" is driven by self-interest? A. Richard Arkwright B. John Kay C. Adam Smith D. James Hargreaves

Answer 1

It was Adam Smith who believed that competition among businesses is important and that "the market" is driven by self-interest. He called this the "invisible hand" of the market.

Answer 2

The right answer is C. Adam Smith.

Adam Smith was impressed by the new free market economy of his time. This impression was the incident that caused him to think about the principles that made the new economy so successful. For the first time, he connects the idea of economic productivity with the miraculous incentive created by self-interest. He considered the division of labor a crucial factor in the great productivity of the new economic order. This division of labor made human beings all more dependent on each other. Human beings produced very efficiently what they specialized in, but they needed to find other human beings with whom to exchange what they had in abundance with what they lacked. Self-interest pushed human beings to be productive as they were the beneficiaries of their efficiency. On the consumption side, people could count on the self-interest of the producers to offer the products they wanted.