<p>Adam Smith’s great contribution in the <i>Wealth of Nations</i> was to provide a systematic explanation for how individuals, acting on no more than their own self-interest, can—and under the right conditions will—take actions in the economic sphere that make others better off in addition to themselves. Smith showed that the key condition is competition in markets, and the guiding mechanism centers on the role of prices. His goal was to provide, for the economic dimension of human activity, an equivalent of what Newton had recently done for the physical world. Far from seeing this mechanism as a delicate instrument that needed protection under all circumstances, what impressed Smith was its robustness. For this reason, he was prepared to accept a wide range of interference with the market mechanism—progressive income taxes, luxury taxes for purposes of redistribution, tight regulation on banks, and many others—if there was a valid public purpose.</p>