Adam Smith and Laissez-Faire (18th Century)
Economic Methodology and the Evolution of Economic Thought
AO2
Syllabus requirement
Introduces Smith’s ideas on self-interest, the invisible hand and minimal government intervention.
Assessment objectives
AO2 Application and Analysis
Summary
This topic explains Adam Smith's role in founding modern economics and his key ideas about markets coordinating activity through self-interest and competition. It covers the invisible hand, the price mechanism, and laissez-faire, and also notes Smith's support for limited government roles such as defence, justice and public works. These ideas are important for understanding concepts like scarcity, incentives, efficiency and debates about market failure and the role of the state in IB Economics.