How does Adam Smith defend free markets on utilitarian grounds? What should government do, according to Smith, to advance the public welfare?
Adam Smith stated minimal regulation by the government on utilitarian grounds. Smith stated that free markets are economically most efficient and thus they promote general welfare. This is because utility is maximum in case of free markets as markets adjust automatically to equilibrium level and ensure overall maximization of total surplus in the society.Smith stated that government should do nothing to advance the public welfare. Free markets are the most efficient and ensure optimum utilization of resources. Thus, no government interference is needed and thus Smith also emphasized on laissez faire.
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