Question

What is the similarity between Adam Smith and Richard Cantillion in terms of price determination and equilibrium price?

Answer 1

It is the invisible hand.

The mention of invisible hand Richard Cantillon can be found in his book  Essai sur la Nature du Commerce en Général, 1955.

Smith use invisible hand as a case of income distribution in Moral Sentiments while in Wealth of the Nations Smith use it in the case of production. However, the foundations of these can be found in the work of Cantillon. the theory on the model of the isolated estate by Cantillon talks about the visible and invisible in market economy.

Therefore both the economist had same opinion on the role of the invisible hand in terms of price determination and equilibrium price. Smith might have got his inspiration from Cantillion. Some argue otherwise since Smith was not aware of Cantillion's work. This is a matter evoking discussion. Who inspired who?

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