INVISIBLE HAND

1. Khái niệm, quan điểm về invisible hand theo Adam smith.

In Smith's second and best-known book, The Wealth of Nations,
he wrote the following passage: “It is not from the benevolence
of the butcher, the brewer, or the baker that we expect our
dinner, but from their regard to their own interest. We address
ourselves not to their humanity, but to their self-love, and never
talk to them of our own necessities, but of their advantages”.
What Smith observed, and what has become known as the
invisible hand, was that individuals pursuing their own interest,
namely selling goods and services to make a living, benefits
society by providing things people need and want. Consider the
baker. The baker benefits from selling his bread, but so do his
customers. They receive goods that they desire or need in
exchange for payment to the baker. Smith understood that the
value customers gained from the bread exceeded the price they
paid for it. This is called a value-added exchange, where both
parties are better off after the exchange.
This type of transaction is repeated millions of times every day.
But Smith was also concerned with the moral implications of
exchange. He recognized that the exchange of goods and
services between the baker and his customers must be voluntary.
That is, both the seller and the buyer must enter the exchange of
their own accord and voluntarily decide that the exchange is in
each of their interests. Each party must have an opt out option
the right to say no, thank you and go elsewhere if they so
choose. In this sense, both people are independent and
autonomous.
Adam Smith's invisible hand thus has both deep economic and
moral implications.

(Khái quát ra là: Trong tác phẩm này, Smith sử dụng thuật ngữ
"bàn tay vô hình" để miêu tả cách mà thị trường tự động hoạt
động để tạo ra sự phát triển kinh tế mà không cần sự can thiệp
trực tiếp của chính phủ.

Bằng cách mô tả quy luật tự nhiên của thị trường, Smith cho
rằng mỗi cá nhân trong xã hội, khi hành động vì lợi ích cá nhân
của mình, thường đóng góp vào lợi ích chung của toàn xã hội.
Ông lấy ví dụ về người thợ rèn, người làm nông, và người buôn
bán, và nhấn mạnh rằng mặc dù họ có thể không cố ý muốn thúc
đẩy lợi ích chung, nhưng họ lại tạo ra lợi ích chung thông qua
hoạt động kinh doanh của họ. Điều này tạo ra một cơ chế tự cân
bằng tự nhiên trong kinh tế, mà Smith gọi là "bàn tay vô hình
của thị trường", nơi các lực lượng cung và cầu tự động điều
chỉnh giá cả và phân phối tài nguyên.

Tóm lại, khái niệm "bàn tay vô hình" theo Adam Smith nhấn
mạnh sức mạnh tự điều chỉnh của thị trường tự do, mà qua đó,
cá nhân hành động vì lợi ích cá nhân cuối cùng lại góp phần vào
sự phát triển và sự thịnh vượng của toàn bộ xã hội.)
“t viết thêm phần này để bọn m hiểu vs đỡ phải dịch”
2. Examples and relationships to today's economy
Example of the Invisible Hand
Consider an example of a small business facing stiff
competition. To best position itself in the market, the small
business decides it will invest in higher quality materials
for its manufacturing process as well as reduce its prices.
though the small business may be doing so out of the best
interest of its company (i.e. to drive sales and steal market
share), the invisible hand is at work as the market now has
access to more affordable yet higher quality goods.

Why Is the Invisible Hand Important?

The invisible hand allows the market to reach equilibrium
without government or other interventions forcing it into
unnatural patterns. When supply and demand find
equilibrium naturally, oversupply and shortages are
avoided. The best interest of society is achieved via self-
interest and freedom of production and consumption.

How Is the Invisible Hand Used Today?

As former Fed Chair Ben Bernanke explained, the "market-
based approach is regulation by the invisible hand" which
"aims to align the incentives of market participants with the
objectives of the regulator."
3. Tranh cãi và thực trạng
Initially, Adam Smith's theory was compatible with
capitalism for a long period of time. However, later, as the
economies of other countries became more and more
complex, the Invisible Hand theory revealed outdated and
unreasonable points, especially the Great Economic Crisis
in the US and Western Europe in the past. 1929 - 1933
showed that the self-regulation mechanism of the free
market was often counterproductive.

Currently, people still have to use the state as a "visible

hand" through laws, taxes and economic policies to
regulate the socio-economy combined with the self-
regulation mechanism according to the invisible hand
theory to promote the country's socio-economic
development.
 II. Division of labour and specialization
1. Theo quan điểm của Adam Smith
Adam Smith establishes his idea surrounding the division of
labour in his famous book, An Enquiry into the Nature and
Causes of the Wealth of Nations.
He does so in book one, chapter one titled Of the Division of
Labour, and he gives a classic example that is used extensively
nowadays to point to sort of the prime example of how this
looks in the real world of a pin factory. And he suggests that
men can be much, much more efficient in their manufacturing of
pins if they divide the process up into multiple different steps,
each of them becoming specialized and educated into their
particular individual. Step that together.
By doing that, they will be much more efficient and much more
productive through the specialization which he calls division of
labour.
So this is a quote from this section. He says, speaking of a pin
factory where he has seen division of labour, quote I have seen a
small manufactory of this kind where ten men only were
employed, and were some of them consequently perform 2 or 3
distinct operations. But though they were very poor, and
therefore but indifferently accommodated with the necessary
machinery, they could win, they exerted themselves make
among them about £12 of pins in a day. There are in a pound
upwards of 4000 pins of a middling size. Those ten persons,
therefore, could make among them upwards of 48,000 pins in a
day. Each person, therefore making a 10th part of 48,000 pins,
might be considered as making 4800 pins in a day.
But if they had all wrought separately and independently, and
without any of them having been educated to his particular
business, they certainly could not. Each of them have made 20,
perhaps not one pin in a day. That is certainly not the 240th,
perhaps not the 4,800th part of what they are at present capable
of performing in consequence of a proper division and
combination of their different operations, end quote.
So he's saying the men are exponentially, uh, in fact, almost
infinitely more productive if they specialize themselves and
divide this process up into smaller parts, and they themselves
become educated and incredibly efficient at doing the one task
over and over and over again. This is the classic example that
Adam Smith uses to establish his ideas surrounding division of
labor.
How does Adam Smith define division of labor?
According to Adam Smith, division of labor involves assessing the production process and
allocating tasks to individuals to enhance productivity. He gives the example of a pin that goes
through the production process and notes that division of labor leads to productivity.

What does division of labor mean in economics?

Division of labor is the assigning of different tasks to different people, which increases
productivity and ultimately profits. This leads to economic and monetary gains.

What is an example of division of labor?

A construction manager needs to construct a new building. The building needs to have
electricity, running water, a solid foundation, and an attractive, functional interior, among other
things. He realizes that in order to accomplish this, he needs masons, plumbers, carpenters,
electricians, painters, and interior designers. These different workers come together and use
their specialized skills to create the final product: a new building.

How important is division of labor?

Division of labor is important, as it increases productivity in organizations; ensures that market
demand is met with high-quality products made by skilled professionals; allows for job growth
as individuals become experts in their respective areas; and leads to monetary gain and
economic growth.

Kết quả:
What Factors Led Societies to Develop Division of Labor?
 Complexity in production: One of the primary factors that
led civilization to adopt division of labor was the complex
nature of production processes. It is observable that
production processes require many tasks for successful
delivery of a product. Take the assembly industry, for
instance. There are various different components added to a
product to make it complete. Imagine a specific product,
like a phone. Phones are made up of many different parts.
Parts such as the processor, the battery, and the
motherboard are created by different people and later
assembled to make a phone. The phone-making process is a
complex one and thus requires division of labor to ensure
that every component is made well for the final product.
 Increased Product Demand: As aforementioned, there is
high production when labor is divided. Societies observed
that there are large markets for various products. Therefore,
division of labor was introduced to increase production. It
was an aspect of meeting huge market demand.
 Specialization: When individuals work on a specific part in
the production process, there is an observed improvement
in output and competency. When many people work on the
 main task, there is a possibility of laxity and incompetence
among workers. Due to this, it was deemed reasonable for
tasks to be divided so that people could be allocated small,
manageable activities that would contribute to the main
task.
*** SPECIALIZATION( bài học về chuyên môn hóa lao
động)
According to Adam Smith, specialization of labor contributes to
the wealth of a nation. In his seminal work, The Wealth of
Nations, Smith explains three ways this happens. He also
discusses how a market’s size affects the amount of
specialization that can occur.
Continue reading to learn Smith’s views on labor specialization.
Adam Smith on Specialization of Labor
Specialization of labor is the practice of dividing one
complicated task done by one worker into a series of smaller,
simpler tasks done by multiple workers. For example, if you’re
making bread without specializing, one worker will grow the
wheat, grind it into flour, and then use it to make the loaf. With
the specialization of labor, you’ll have a farmer who specializes
in growing wheat, a miller who specializes in grinding flour, and
a baker who specializes in making bread.
According to Adam Smith, specialization of labor allows for
much greater productivity overall. The same number of
workers will produce far more loaves of bread if they specialize
than if each worker completes the entire job. Smith provides
three reasons why specialization increases productivity.
1. The more a worker performs a task, the more skilled
they will become at it. A highly skilled worker will
complete the task even faster, allowing for more
productivity overall.
2. A specialized worker saves time by not switching
between tasks. Different stages of tasks may require the
worker to use different tools or work in different locations.
This means it takes time to switch from one task to another
—time that could have been spent working.
3. A specialized worker will be more likely to come up
with more efficient ways of completing a task. If
someone spends all of their time concentrating on one task,
they will understand the task better than anyone else. This
will help them come up with new tools, methods, or
machines that allow them to complete the task more
efficiently.
*Example:
A specific example of labor specialization according to Adam
Smith's theory could be found in the automobile manufacturing
industry.
In the process of automobile production, workers are divided
into specific tasks and specialize in each stage of the production
process. For example, one worker may specialize in assembling
engines, another worker may specialize in installing air
conditioning systems, yet another worker may specialize in
assembling suspension systems, and so on.
As each worker focuses on a specific task, they can become
highly skilled in their respective area. They can quickly learn
and develop skills in their specialized field. This leads to
increased production efficiency and reduced time required for
each stage of the production process.
Thanks to labor specialization, automobile manufacturing plants
can produce high-quality products at competitive prices.
Additionally, labor specialization fosters increased competition
and innovation in the automotive industry.
III. Lesson on the Abundance of Wealth Origins(Bài học về
sự phong phú các nguồn gốc của sự giàu có)
Adam Smith laid the foundation for modern economic science
by questioning the origins of a nation's wealth and pointing out
that the source is the division of labor - specialization and
rational labor allocation between the state and the market. Since
then, following Adam Smith's footsteps, some 20th-century
scholars have discovered additional sources of a nation's wealth.
For example, F. Taylor discovered scientific management for
labor; G. Becker, J. Coleman, and Bourdieu discovered human
capital and social capital; Amartya Sen and Joseph Stiglitz
discovered freedom and broad participation of people in social
processes as sources of development.
Most recently, two leading economists, Acemoglu and
Robinson, also pointed out the origins of poverty and failure of
nations as extractive institutions and the origins of wealth and
prosperity of nations as inclusive institutions. According to these
two authors, inclusive economic institutions are those that allow
and encourage the participation of the majority of people in
economic activities, making the best use of their talents and
skills, and helping individuals make choices they want. To
achieve this, economic (inclusive) institutions must recognize
private property rights, have an impartial legal system, and
provide public services, providing an equal playing field where
everyone can exchange and sign contracts: those institutions
must also allow the establishment of businesses and allow
people to choose their careers.
These authors state: extractive economic institutions are
characterized by factors that are contrary to inclusive
institutions, and those institutions are "extractive" because they
are designed to extract benefits, income, and wealth from one
part and enrich another part of society.
 From the above discussions, some very important and
necessary classic lessons for leadership, management of
socialist-oriented society can be drawn, which is to
continuously study and discover the origins of wealth and
poverty, success and failure. From there, ways can be
found to build inclusive economic institutions,
harmoniously aiming at the goal of building a society in
which the free development of each individual is a
condition for the free development of all.
In Vietnam
In Vietnam, after decades of economic indoctrination and
centralized management mechanisms, bureaucracy, and
subsidies, it was not until 1986 that the thinking of leadership
and management of the socialist-oriented market economy
began to officially appear. Since then, the idea of citizens being
free to do business with what the law does not prohibit has
gradually been institutionalized through laws with inclusive
characteristics such as the Enterprise Law, the Labor Law, and
other laws. The leadership and management lesson here is
continuous learning, research, and improvement, firstly in terms
of thinking, institutions, and scientific and rational labor
allocation to improve productivity, quality, and labor efficiency
of the whole society towards the goal of prosperity and
sustainable development.