Questions what is the main features of the socialist economy?

According to Smith, why do people care about the well-being of others?

Key words: steer humans toward productive pursuits, competition for scarce resources, efficiency, through supply and deman

The allure of extreme wealth can contort human sympathies, causing the public to admire the wealthy and shun the poor. One of the more memorable statements of Barack Obama’s presidency thus far has been his claim, in a high-profile December 2013 speech, that great and growing economic inequality is “the defining challenge of our time.” In making his case Obama appealed to the authority of a seemingly unlikely ally: Adam Smith, the purported founding father of laissez-faire capitalism, who is widely thought to have advocated unbridled greed and selfishness in the name of allowing the invisible hand of the market to work its magic.

It is also indisputable that the alleviation of poverty was one of Smith’s central concerns, the common caricature notwithstanding. Even a cursory reading of The Wealth of Nations should make this point abundantly clear. Smith states, explicitly and repeatedly, that the true measure of a nation’s wealth is not the size of its king’s treasury or the holdings of an affluent few but rather the wages of “the laboring poor.” In a passage that Obama quoted in his speech, Smith declares that it is a matter of simple “equity” that “they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.” Yet there remains a broad consensus, even among scholars of the period, that Smith was concerned by poverty but not by economic inequality itself. According to this view, Smith hoped to ensure that all members of society could satisfy their basic needs, but he was untroubled by relative differences in income and wealth. As long as everyone has food on their tables, clothes on their backs, and a roof over their heads, the thinking goes, it does not matter if some have far more than others. Indeed, it is often claimed that Smith saw economic inequality as a manifestly good thing.

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