Why might some historians consider Adam Smith one of the most influential people in history?

• A. He was the first to propose the theory of comparative advantage in international trade.
• B. He advocated for mercantilism as the best economic system.
• C. He introduced the idea of government planning as the main driver of economic growth.
• D. He developed the concept of the invisible hand, which explains how self-interested actions can lead to beneficial outcomes for society.

Answer: (D)

Verified step by step guidance

1. Understand the historical context of Adam Smith's work, particularly his book 'The Wealth of Nations,' where he laid foundational ideas for modern economics.
2. Recognize that Adam Smith is famous for introducing the concept of the 'invisible hand,' which describes how individuals pursuing their own self-interest can unintentionally promote the good of society as a whole.
3. Note that Adam Smith did not propose the theory of comparative advantage; that was developed later by David Ricardo.
4. Acknowledge that Adam Smith was critical of mercantilism and instead advocated for free markets rather than government planning as the main driver of economic growth.
5. Conclude that the most influential aspect of Adam Smith's contribution is the idea of the invisible hand, which explains the beneficial outcomes of self-interested economic behavior.