If there's one thing that makes the free market great in Adam Smith's mind, it's competition, competition, competition. In The Wealth of Nations, competition is the engine that drives all modern progress because it forces everyone to up their game and produce better and better products.
And the more good products people produce, the more people they need to hire to design and make them. That means more and more jobs and prosperity… at least that's how the theory goes. Other people might tell you that competition creates a horrible life where you can't rest for one second without worrying about someone taking your job.
Questions About Competition
Do you agree with Smith's idea that competition is what makes an economy great? Why or why not?
If Smith hates monopolies because they destroy competition, then what should a government do when one company gets too much power? Why?
What can a government do to encourage competition among companies?
In Smith's mind, what is the worst thing a country can do if it wants to encourage competition?
Chew on This
In The Wealth of Nations, Smith argues that governments should play no role in the economy if they want things to thrive. Competition will take care of everything on its own.
The Wealth of Nations shows us that, ironically, monopolies will take over and destroy competition in a free market. So the government actually has to intervene to keep competition up.