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Q)4.Describe the main arguments of Adam Smith in the early stage of political economy.

There also existed a strong sense for morally sound and legitimate business practices rooted in 'social norms and obligations, of the proper economic functions of several parties within the community, which taken together, can be said to constitute [a] moral economy'.In Smith's time markets were localized and characterized by close personal relationships between seller and buyer.Smith, Veblen and Polanyi never aimed at eliminating the market.they were interested in understanding the social and cultural foundations of markets and how markets (sometimes with help from governments) can solve socioeconomic problems.Adam Smith's work is perhaps the most significant for incorporating moral issues into IPE because he is widely viewed as the founder of the discipline of economics.Smith explores the question how people acquire moral feelings that enable them to distinguish right fromwrong. The answer, according to Smith, was his concept of the impartial spectator.Smith grounds his analysis on the assumption that human behavior is based on self-interest, but he continues to explore the issue of how the individual can contribute positively to society and argues that by 'pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.Smith is mostly known for having coined the term of the 'invisible hand,' describing his assumption that individual selfishness can unintentionally generate positive societal outcomes. While Smithwas constantlyworried about the encroachment of government on economic affairs, he was nonetheless tolerant of certain forms of (limited) state intervention, particularly when society was served by state intervention.Concerning labor regulation he passionately argued: 'When the regulation, therefore, is in support of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters'Smith's work provides arguments in support of a broader perspective on socioeconomic interactions than generally associated with the liberal IPE perspective.Smith's work ultimately emphasizes the deeply social implications

of market-based economic interactions which can be informed by ethical and moral considerations as represented in fair trade.