Adam Smith is often accused of propounding an economic
theory based solely on self-interest and individual welfare,
however Smith's own writings indicate that this is not the
case. Smith sees that his ideas surrounding the division of
labor will not only benefit the individuals in control of
production, but society as a whole. In Book Three of The
Wealth of Nations Smith writes:
"The gains of both are mutual and reciprocal,
and the division of labor is in this, as in all
other cases, advantageous to all the different
persons employed in the various occupations into
which it is subdivided."
All those involved in this division of labor benefit from
this system in some way. Smith goes on to write that when
workers do not receive benefits from their labors the owners
of the land or means of production will not see improvement
in their stock. Therefore it is to everyone's benefit for
those who work in production to be treated well and given
more then simple substance, but education and luxury items
In order for an individual proprietor to be
successful he must consider the welfare of his employees
and, therefore, he cannot be focused on himself as some
believe Smith's ideas propose.
While Smith does not focus on the self-interest aspect
of economy he does acknowledge that a certain amount of
self-interest in inherent to any economy. Smith writes:
"It is not from the benevolence of the butcher,
the brewer, or the baker that we expect our
dinner, but from their regard to their own
However benevolence does spring out from this self-interest.
Consumers have needs and they are willing to pay to have
those needs fulfilled. Producers seeking payment supply
those needs at a price the consumer is able to pay.
Another element of...