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Understanding Adam Smith's Big Idea: Free Enterprise Capitalism and the Role of Government

Discover the essence of Adam Smith's concept of free enterprise capitalism and the idea that government should stay out of the economy. Learn about laissez-faire principles, the importance of self-interest, supply and demand, and the benefits of competition. Explore the role of government in protecting citizens and building infrastructure, and understand the dynamics of the economy guided by the invisible hand. Delve into the downside of the system and its implications on individuals lacking necessary skills or capital. Explore the U.S. economy and its alignment with a Free Enterprise Capitalist system.

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Understanding Adam Smith's Big Idea: Free Enterprise Capitalism and the Role of Government

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Presentation Transcript

  1. Adam Smith

  2. Big Idea? The Government should stay OUT of the economy! Free Enterprise Capitalist System

  3. Stay out? • No regulations • No protection for workers • No control of prices • No control of wages “Laissez-faire”

  4. So what should government do? • Protect citizens from foreign invasion • Guard against crime within the nation • Help build infrastructure

  5. What will guide the economy? • “The Invisible Hand” • Self-Interest • Supply and Demand • Competition

  6. Self Interest? • Everyone wants to make the most…..

  7. Supply and Demand?

  8. So… • If demand is greater than the supply available… • If demand decreases for a particular item…

  9. Competition? • Competition is great! • Prices • Efficiency

  10. Is there a down side? • What if you don’t have skills needed in the economy? • What if you don’t have money or capital to buy the things that you need?

  11. How about the U.S. economy? • Do we have a Free Enterprise Capitalist system?

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