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What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

Adam Smith#13

EconomicsPolicyPoliticsFreedomInvestment

About this quote

What does it mean?
Individuals know best how to use their capital; statesmen should not direct them.
In plain terms
People know more about their money than lawmakers.
What can you take from it?
Let people decide how to invest.

Where it applies

  • economic policy
  • investment decisions
  • regulation limits

Putting it to work

  • limit government direction
  • protect individual choice

Questions to consider

  • When should government intervene?
  • Who really knows best?

Another view

Sometimes collective action prevents harmful investment.

More from Adam Smith

  1. As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry tha…

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  2. Such taxes [upon the necessaries of life], when they have grown up to a certain height, are a curse equal to the barrenness of the earth and the inclemency of …

    Permalink to quote #14
  3. But what all the violence of the feudal institutions could never have effected, the silent and insensible operation of foreign commerce and manufactures gradua…

    Permalink to quote #11

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