Adam Smith and Charles Darwin will be praised by generations and generations due to their intelligence in formulating various economic theories and ideas. However, the question of who between the two is the real intellectual founder of economics still lies in the minds of many people. This paper will address the main issues regarding the theory on the invisible hand by Adam Smith as well as assess the applicability of issues of the theory in real-life experience.
The message of the article regarding the invisible hand is to some extent a true picture of reality. Most of the arguments concerning the theory are correct and applicable in the social-economic arena. The concept of people practicing in a free market to produce the best is practical and thus a selling point of the theory. However, the theory has faced immense critics and skepticism concerning the behavior of businessmen to lure customers. Smith’s arguments on the rival businessmen having stronger incentives are more realistic than, Darwin’s idea of greed. In this case, it is evident that; competition between businessmen doesn’t go to their benefit rather the consumer due to reduced prices and immense incentives.
From another perspective, the results of the theory are however devastating and require control and regulation. Additionally, the idea by Adam smith that the free practice of businessmen will be for a common good is unrealistic. In order, to ensure fairness; regulations must be enforced in the market to avoid exploitation or unfair completion. Further, the theory on the invisible hand is perceived to be controversial in the argument that competition favors qualities and conduct and thus led to individual success, not group success or other species. According to Smith, qualities that enhance individual suitability sometimes support group welfare. On the contrary, relative performance is a key determinant to the success of individual or group interests. On this basis, the theory on the invisible hand is greatly challenged. In his case, the magnitude of success is proportional to the risk taken.
The issue of the invisible hand is applicable in real-life experience in; culture, politics, society, or international relations. The behaviors of human beings are guided by personal interests which is similar to the concept of the invisible hand. In this case, issues in politics, international relations are directly induced by an individual or group interest; whereby the success is a product of the traits and the behaviors of the various parties. However, the issue of regulations is very vital since it will ensure fairness and avoid exploitation of the less fortunate.
The issue of the applicability and viability of smith’s theory on the invisible hand is still a matter of discussion. Based on this, the class should further debate on the relevance of the theory; whereby the following questions will be debated. First, what are the main strong points on the viability of the theory of the invisible hand? Secondly, what are the major critics or shortcomings of the theory on the invisible hand by Adam Smith? It should be noted that the class discussion will help in clearing any controversy about the theory.
From the above analysis, it is noted that the theory of the invisible hand by Adam Smith has raised many questions about its viability. Some scholars have acknowledged the theory while many others have disagreed with smith’s ideas. Importantly, it should be considered that regulations are inevitable for the existence of fair play in the market or any human venture.