ECON 1011 Lecture Notes - Lecture 2: Invisible Hand, Profit Motive, Human Nature
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Value of oxygen rises when used underwater. 4 important economic principles: the profit motive and self-interest, the division of labor, mutually voluntary exchange, the invisible hand. Adam smith- author of the wealth of nations (1776) It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. The butcher, brewer etc. want to do good for themselves. Altruism- giving away supplies freely without anything in return. Splitting up labor to produce more goods and services. Dividing labor=expands products and raises standard of living. No one individual knows how to make a product. Much more effective when individuals specialize in one thing. Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.
