Question

Discuss the manner in which Smith can be said to be writing in the “enlightenment”

tradition. Compare Smith's theories to those of Newton. Be sure to discuss the invisible

hand, the propensity to truck barter and exchange, and the notion of a “self correcting”

market.

Answer 1

While comparing the theories of Adam Smith and that of Newton it's been argued that both the theories have something in common.Smith has incorporated Newtonian method in some of his works.The two major works of Adam Smith namely The theory of moral sentiments and Wealth Of Nations is based on the Newtonian method.
The concept of Invisible Hand was introduced by Adam Smith in his book Wealth Of Nations. Invisible hand refers to the market forces that are not observable which help the demand and supply to reach equilibrium.

Propensity to barter and exchange:According to Adam Smith the propensity to truck and exchange are observed in human nature and this may give rise to the division of labor.According to him propensity to truck barter and exchange are part of human nature.

Self correcting market:According to this concept the markets will adjust themselves when an equilibrium or disequilibrium happens.Whenever shocks occurs in the economy prices gets adjusted and equilibrium is restored.Newtons law of motion's were taken by Adam Smith and incorporated in some of his theories. Newton's third law of motion was used by Adam Smith to explain about the market prices.According to Newtons law every action there is an equal and opposite reaction.In economics there exists such relationship between the interest rates and demand cash