The Invisible Hand of Competition

 

Adam Smith (baptised 16 June 1723 – 17 July 1790 [OS: 5 June 1723 – 17 July 1790]) was a Scottish social philosopher and a pioneer of political economy.

Adam Smith was an Scotsman economist during the times of the American Revolution. He is most known for writing book, "The Wealth Of Nations" which helped to enforce most of the rules set in today's economic society. The Wealth of Nations was published during 1776, around the time that the United States gained it's independence. Within this book, Smith made the case for economic freedom with his belief that if everyone pursued their own goals the population is better off than if a Government or dictatorship runs the show and determines who gets what.

Smith believed that millions of people could create a stable society by being able to buy and sell whatever they pleased and would allow more chances for the economy to receive financial stability.

In his book, he also covered a term which he called an Invisible Hand. This was his way of explaining supply and demand kept in balance. 

For example, with today's society you find many musical artists pouring into the economies. This also creates an influx of music, creating more competition and forcing music sellers to lower prices on their sales. This competition helps to keep balance within the different fields of work, because with more lowered prices and competition, you then notice more musical artists are forced to find a more profitable career for stability. Thus, creating more balance in the job market.

"Whenever there's a demand for a new product, such as computers, more and more companies get into business, until there are so many computers for sale that the stores have to drop their prices." - Peter Lynch

This is just only a first-step basis to how the free market works, but can apply to any line of career when thought of in general terms. This kind of competition not only creates balance with the economy, but also helps to create improved products and lowered prices for the consumer.

How this information should be applied is understanding that no matter what you do if you stick to it, the doors will eventually open up.


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