Adam Smith Social Contract Analysis

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. Explain what is meant by the “social contract” between a business and the society in which it operates.
A social contract between two parties is used to make an agreement. They reflect societal expectations from businesses, especially in the social aspect. The social contract theories in business grasp that businesses are all trying to improve the status of societies. To achieve this, businesses are required to be aware of employees’ interests without having to break the rules of any society. Social contract theories in business come from the traditional models of a social contract.
3. Explain the view of capitalism that was expressed in Adam Smith’s Wealth of Nations.
In, The Wealth of Nations, Smith explained why capitalism is the most known economic system. He gives credit to the defenders of the principle parrot his basic arguments. The theme of The Wealth of Nations is what Smith's supporters called the doctrine of laissez-faire capitalism. This doctrine had the world of economics functions under natural laws. It operated exclusively on politics. Government in the economic order of things did not like these natural laws, and said the laws disrupted the nation's economy. The hands-off policy permits citizens to complete economic freedom, and shows that governments could promise the growth of a nation's wealth. Smith realized that under a free enterprise system, individuals would pursue their own self-interests. He said that selfish individuals need competition, so
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