Smith and Ricardo 203the problems of production, distribution, exchange, capital and
public finance. Smith used each of these five particular problems
to emphasize the supreme goodness of the natural order and to
point out the imperfection of human institutions.
Smith’s basic contention is that man is primarily motivated by
self interest. This is not only his view of human nature, but is the
point around which his economic philosophy revolves. Other
characteristics which are controlling factors in determining
human conduct are sympathy, a sense of propriety, the desire to
be free, the propensity to barter and exchange goods, and the
habit of labor. Man, according to Smith, is a very complex and
dignified being. Each person is the best judge of his own interests
and should be allowed to pursue those interests. Smith also
contends that the effect of each man pursuing his own advantage
will not result in chaos. He maintains that there is in this natural
order of things, a delicate mechanism which transfers this
personal striving into social good. The individual is “led by an
invisible hand to promote an end which was no part of his
intention.”
The consequences of his belief in the natural order of things
result in an negative view of the role of government. Generally,
governmental intervention into economic affairs has a negative
effect; actually governmental intervention into most human
affairs has a negative result. If government allows each member
of the community to seek his own advantage, the result will be
the improvement of the common good. Obviously, the govern
ment does have a role to play in the natural order of things. The
first is to provide for the common defense; second, to establish
a system of justice, third, to maintain those public works projects
which individuals and groups could not operate at a profit, and
fourth, to maintain a monetary system. Outside of these four
natural functions of government, Smith feels that government
would do well to stay out of the affairs of individuals and thereby
allow them to provide better for themselves and for the common
good. Interestingly, Smith contends that monopoly is not the
product solely of a business conspiracy; as a matter of fact,
absolute monopoly could not exist for any length of time without
government cooperation.
Thus, to Smith the natural order requires that economics be
free from all forms of state interference with the ordinary