Economic essay revise

Smith's View of Human Nature

In the Wealth of Nations, Adam Smith introduces the nature and reasons for the opulence of nations. In the first volume, he analyzed many economics behaviors and phenomenon step by step from the perspective of the nature of human. He believes self-interest is one conspicuous characteristic of human nature, and it is the primary motivation of human's behaviors. He set up his economic theories based on self-interest, and his perspectives even influence economical thoughts today. Can self-interest bring benefits to the whole society? The article is talking about what is Smith's view of human nature and how it runs through some of his economic and political perspectives, however, self-interest cannot bring the benefits to the society all the time.

Smith believes that self-interest is one of the most important human nature. What is self-interest? People are self-interested, and they are usually considering their own benefit at first priority. If there is no other limitation exists, people are going to pursue increasing their own profit. However, people also have benevolence (Smith, 30). There are many homeless people begging on the street. If no one has sympathetic emotion, there will not have beggars in the world. Although he mentioned altruistic behavior (benevolence) in his book, he thinks that it is not human nature. However, he does not explain specifically. Altruistic behavior is a kind of means, but egoistic behavior is the purpose and the result. Is self-interest is conflicted with the perspectives that the enlightenment is appealed? During the Scottish Enlightenment in the 18th century, Smith was one of the representative personages. The Scottish Enlightenment appealed people to believe in the natural law which emphasizes that people are not only motivated by self-interest but also sympathy and other artificial virtues. It seems to be a conflict with the perspectives from Smith, however, it is difficult to say that there is confliction between sympathy and self-interest. People are complex and indecisive between the rational and perceptual. Moreover, Smith illustrates that the whole of society's wealth will be increased if everyone pursues their own interest.

According to Smith's statements in chapter I to chapter III, division of labor is one way that self-interest relates to the economy. Self-interest the primary motivation of the division of labor and the origin of the money. The division of labor is an inevitable outcome by following people's efforts to promote their own interests. Smith states that the division of labor is the result of the propensity of human to exchange, and it is formerly caused by human nature instead of human wisdom (Smith, 29). People decide to make a living by something for their own interest. Smith illustrates this by using a vivid example of the armorer. The person is willing to be an armorer because he gains more foods and other benefits. The armorer obtains more food and stuff by exchanging the arrows he made to others than hunting and making food by himself (Smith, 32). The example explains that self-interest is a kind of propensity, and people can be benefited more than before by exchanging. Once people obtained the benefits from exchanging, the division of labor is the result. The root reason for the division of labor is self-interest, and people are motivated by their own interests. People are willing to exchange to get more food and resource to get a better life. With the development of exchanging and trading, the key elements and concepts in economics like money and price are appeared to help people to exchange fairly. Furthermore, Smith states that "every man thus lives by exchanging or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society" (Smith, 41). Based on his statements, everyone is a merchant. Because self-interest is the nature of merchant, people are supposed to pursue their personal interests.

In Smith's perspective, price in the market will be adjusted by itself (Smith, 72), and the government is not supposed to intervene it. In other words, the price should be decided by the market instead of the government. Smith used the example in the gold and silver market to illustrates the fluctuating of the price and how the price can be adjusted by itself. Merchants will adjust their goods' prices by considering the situation in the market to decrease their loss or increase their own profits. Price is changing depending on the relationship between supply and demand. In chapter III, he believed that the sovereign in any country is greedy, and he criticized the behavior of diminishing the real quantity of mental to decrease the real value of money in many countries in the history (Smith, 47). In fact, devaluation will enormously damage creditors and individuals' interest. It is not difficult to find that Smith is opposed to controlling money and price by the imperial power or authority.

People will promote public interest increased unconsciously while they are chasing their own interest, but it will also sometimes lead public interest in a negative direction. Based on Smith's perspective, if there is no other restriction, people will always pursue their own interest and try to increase their profit and capital. Smith explained that an individual aspires to produce the greatest value, and he is guided by an invisible hand. Although he is not intended to promote the public interest, his behavior will affect the whole society to increase public interest (Smith, 593). It is also why self-interest is not conflicted with other human nature, and personal interest can relate to the public interest. However, self-interest cannot always indicate public interest in a positive way. Smith mentioned that people who are convicted to be guilty because of engrossing and forestalling are innocence (Smith, 702). The behavior of engrossing and forestalling can damage public interest as forestalling corns will trigger to famine and panic, and it should not be appealed as innocence. Furthermore, pursuing personal interest can also lead to many drawbacks. Monopoly is the behavior of looking for the greatest interest, and it is a typical consequence of pursuing personal interest. Monopolizing will break the rule of fair competition in a market, and it will damage others' interest. Additionally, it is very contradictory to his own perspective of opposed to monopolize a market by policies. Although the reason for the monopoly is different from individual and the government, nature is similar. However, a country enacts policy to monopoly a market could be a way to keep public interest but an individual who is trying to monopolize the market is usually trying to pursue his own interest.

Above all, self-interest is not only Smith's view of human nature, but it is also the starting point for him to build his economic ideology and theories. In Smith's book, he illustrates that self-interest is the biggest motivation of human beings to do so many economical behaviors. The economic behavior like the labor of division is a kind of propensity of human nature, and it is an inevitable result. Furthermore, money and price are also produced for exchange. Prices should not be controlled by the government but the market as the market is an invisible hand that can lead merchants to change the price. The market and the society can adjust by itself to find a balance in a long-term perspective. Public interest will ultimately increase as people are pursuing to maximize their own interest, so self-interest not only motivates people to obtain higher personal interest but also can bring benefits to the whole society. However, we should also consider the negative behaviors like monopoly which is also derived by self-interest. In some situations, it can be conflicted between personal interest and public interest as well. Indeed, self-interest can bring many benefits to the whole society as Smith mentioned a lot in his book, however, we have to admit it is not all the time.

Reference

Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. University of Chicago Press, 1977.