ABSTRACT
The archetypal economist with which the market as a beneficial social institution has been historically associated is Adam Smith. Smith's account of the market has many aspects in common with the contemporary account made by mainstream economics. Basically, what Smith does is to advance, in an embryonic form, a version of what modern economics calls the first fundamental theorem of welfare economics. This theorem assigns a fundamental welfare property to perfectly competitive markets. For Smith, the market was the most convenient institution for determining how society's limited resources should be allocated in order to satisfy the 'endless desires'. Smith's argument is based on demonstrating that a market system of free-competition, on the one hand, has positive impacts on the production side of the economy and, on the other, ensures the allocation of resources where they are most socially beneficial or desired. Political economy is a branch of science and is governed specifically by the study of ophelimity.
