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| [[Image:Smith.gif|thumb|Description]]
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| Adam Smith advocated the idea of spontaneous order by arguing that individuals are guided by an “invisible hand” mechanism in their pursuits for achieving self-interested outcomes.
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| In [[http://www.bibliomania.com/2/1/65/112/frameset.html The Wealth of Nations]] Smith argues that a social order can be maintained by letting the natural forces operate freely. The invisible hand mechanism argues that members of a society do not coordinate their actions towards achieving a pre-specified outcome. Their actions do not intend to promote public interest and their behavior is not guided by an explicit agreement. As people are self-interested, they will act in such a way so that they can achieve the greatest gains for themselves. However, the results of their spontaneously coordinated actions will translate into the achievement of an aggregate outcome, which seems to be the product of an omniscient mind. He argues that the outcomes resulted by people pursuing their own interests are actually more effective then when people are actually trying to promote the interests of the society (Book IV, Chapter 2, of The Wealth of Nations). Smith believes that a central legislator cannot have the knowledge individuals have at their "local situations", and which is maximized in their pursuits to "better themselves".
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Latest revision as of 17:44, 4 September 2008
