ABSTRACT
The subject matter of economics has always revolved around how to design policies to improve economic well-being. Indeed, Adam Smith’s complete title, An Inquiry Into the Nature and Causes of the Wealth of Nations, reveals his intention to explain how people are able to create wealth by working together well beyond what any individual could achieve alone. He begins by saying, "The greatest improvement in the productive powers of labour ... seem to have been the effects of the division of labour," 1 and goes on to give the delightful example of the pin factory in which he argues that people are hundreds of times more productive when they specialize their labor, and increase their well-being by trading with others who specialize in different productive activities. Just by looking at the prosperity that characterizes the modern world – in those parts of the world that have a well-functioning market economy – there can be no doubt that economic welfare is advanced by the results of resource allocation within a market setting.
