Exercise 2. Complete the text with missing words

The idea that the effectiveness of capitalist economic systems ____________ from the greedy behavior of

individuals comes in part from ___________ of Adam Smith's famous __________ regarding self-interest. In

fact, Smith did not feel self-interest and ____________ were equal. He was referring instead to "the natural

effort of every individual to ____________ his own condition." However, a more basic problem is that the

idea of a greed-____________ economy suggests a __________-sum game in which one person's

__________ can be obtained only at the ____________ of others. This goes against the realities of a free

____________ economy in which exchange cannot usually occur unless it is mutually _________. Greedy

behavior, or ____________, actually is a _________ on the system. The net effect of this misunderstanding

has been to create unwarranted suspicions of economic ___________ and to produce a systematic

_________ toward over-regulation.

It is commonplace today to hear that the __________ behind free-enterprise, capitalistic economic systems

is the selfish behavior of individuals. The profit __________ and "greed" are almost universally considered

synonymous. This presumption, with its clearly implied negative moral _____________, creates an

___________ image of free-enterprise economic activity. The problem is compounded by the common

tendency to attribute this belief to Adam Smith, the "father" of _______-_______ economic theory. In fact,

Smith's well-known statements regarding self-interest are often quoted as "proof" that it is indeed selfishness

which provides the ______________ force in a free market economy.

The association of selfishness with Smith's theory is, no doubt, due to his reliance on individual self-interest

as the behavioral ___________ of his theoretical structure. He did, in the Wealth of Nations, often explicitly

identify self-interest as the ___________ motive force __________ a free economy. However, Smith's

references to self-interest have been misinterpreted. In particular, it is common to characterize the behavior

thus implied in a ___________ manner, i.e., as being "selfish."

Smith did not consider ____________ to be the motive force underlying the success of capitalism. His great

_____________ was simply that the success of a free enterprise economic system does not depend on

universal _______________. This is particularly important in modern __________ where each of us relies on

the cooperation of large numbers of unknown individuals—individuals with whom, ____________, we can

develop no feelings of mutual benevolence. Therefore, an economic system which relies on the existence of

such feelings would be _____________ indeed.

In other words, the nearly universal personal desire to simply improve one's __________ in life can be relied

upon to provide the individual motivation necessary for the system to work.

A free enterprise economic system is not a zero-sum __________. Anyone can simply refuse to participate

in a ___________ which results in a net personal loss of __________. One person can induce another to

_________ in an exchange only by offering _________ which the second person perceives as improving his

own welfare. Thus the dynamic in this system is provided by individuals who seek _________ for themselves

by offering gain to others. Each person's gain occurs, not ___ the expense of others, but instead in

conjunction with the betterment of others. It seems of little use to characterize mutually ____________ (i.e.,

profitable) behavior of this type as "selfishness" on the part of either party involved.