ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Naturalism and Optimism - Economic Thought

Updated on July 23, 2013
Optimism | Source

Gide and Rist point out that beneath the economic order as conceived by Adam Smith, we can discern two fundamental ideas. These were his Naturalism and Optimism. Naturalism denotes the spontaneous and natural origin of economic institutions while Optimism refers to the belief that economic institutions so created were beneficial in their effects. Smith was emphatic that human actions guided by their selfish interests were bound to result in social good. To Smith spontaneity and beneficence went together. The presence of one implied the presence of the other.

Every individual is motivated by self interest. Every man, so to say, is the maximiser of gain and minimizer of loss. Therefore, every man undertakes that activity which appears to him to be the most profitable. The entire society is based on this conceptualization. Everybody wants to make his conditions better. Being guided by such a rationale, when people undertake different activities, the society gets many types of economic institutions. These economic institutions are spontaneous in character. But, although the institutions are primarily based on self-interest, they ultimately increase social welfare. It is not from the benevolence of butcher, the brewer or the baker that we expect our dinner, but from their regard to their on interest.

Every man is naturally the best judge of his own interest and should, therefore, be allowed to pursue his own way. Adam Smith pointed out that in pursuing his own advantage, every individual is led by an invisible hand to promote an end which was no part of his intention. Smith believed that given the natural order, the interests of different economic units cannot be in conflict with one another. Their interests must be in harmony. This is ensured by the working of the Invisible hand or automatic adjustment mechanism. If perfect competition prevails, Smith things, individual interest and social interest would be compatible with each other. For the working of the natural order or naturalism, there must be liberty, free competition and laissez- faire.


Adam Smith has given a number of examples of economic institutions which are spontaneous in origin and are beneficial in character. It is the instinct to barter and exchange one thing for the other that men resorted to specialization and division of labour. But division of labour gives rise to opulence and is hence beneficial. The institution of money arose as a spontaneous institution; but it removed the difficulties of barter system and facilitated trade, exchange and commerce and thus became useful. Adam Smith extended his principles of spontaneity to the supply of money and the distribution of gold and silver stocks between different countries of the world. There was a mechanism which automatically corrected any imbalance here. In the same say we may look at his contribution to the theory of capital accumulation where again the natural instincts of man lend a spontaneity of man lend a spontaneity to it and make it useful to the society. Another example of Smith’s naturalism and spontaneity of economic institutions is his theory of demand and supply. Like Marshall, Smith pointed out that in the market, an excess of supply over demand would push down the price of the good under consideration and the price would rise in the opposite case. In this way a continuous process is always in operation whereby the balance between demand and supply gets restored. Smith also extends his “spontaniety’’ in the case of population. He maintains that it is the variation in the wage rate that regulates the supply of labour through a variation in population.

Thus, in the Wealth of Nations the concept of ‘naturalism’ is combined with ‘optimism’. Smith maintains that economic institutions are not only natural, but also beneficial. The institutions which have come into existence spontaneously through self interest of individuals are natural and beneficial, as these institutions ensure progress towards wealth and prosperity.


His theory of optimism seems to be correct in the area of production. But in the area of distribution, there is hardly any scope for optimism and harmony of interest. Smith himself has shown that in the field of distribution there is the possibility of a class of interest between labour and capital. His theory of optimism is not based upon completely scientific foundation. Individual interest and social interest may not coincide with each other all the time. Similarly, the private sector and public sector do not have the same common interest and the same efficiency. The conclusion drawn by Adam Smith with respect to naturalism and optimism is based on insufficient inductive or empirical study. These are not based on any casual relation or a priori theorising. It has been found that with the progress of capitalism, class division in society grows sharper and sharper. Smith is not right when he says that naturalism and optimism can be obtained without the help of the state. In fact, in many cases, state help will be necessary for obtaining optimism and naturalism.


    0 of 8192 characters used
    Post Comment
    • Haseena Firdousia profile imageAUTHOR


      3 years ago from India

      Thank you queen .

    • profile image


      3 years ago

      Nice work am grateful

    • Haseena Firdousia profile imageAUTHOR


      4 years ago from India

      Thanks for your kind support, Elida.

    • profile image


      5 years ago

      The hontesy of your posting shines through

    • Haseena Firdousia profile imageAUTHOR


      6 years ago from India

      Thank you Jabelufiroz.

    • jabelufiroz profile image


      6 years ago from India

      Great article on economics. Thanks for sharing. Voted up and useful.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)