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Individualism does not mean there is no cooperation between individuals. In the pursuit of personal desire, cooperation between individuals is also required. This described in the principle of "division of labor". If one can focus on a particular field and other fields to submit to someone else, then they can be an expert. In the end, the results obtained by each individual, can be maximized. This concept does not just apply to relationships between individuals, but also the State's relationship (Deliarnov, 2006: 26).
Furthermore, Adam Smith introduced the concept of absolute advantage. A state should be able to produce goods that require only minimal production costs and maximum quality. The surplus goods then can be exported and other goods that are not produced in the country can be imported. The principle of absolute advantage is considered to encourage the growth of international trade (Rohmann, 2000: 7).
The process is identical with the trade market mechanism. In the principle of capitalism, market mechanisms occur in the absence of planning, ordering or structuring. Smith said the driver of the market mechanism is the invisible hand, or means to let the market work by itself withour interfere by any state power. The invisible hand can regulate economic activity that takes place between consumers, distributors, and manufacturers. This concept will bring the market mechanism at the equilibrium point or balance (Deliarnov, 2000: 29).
Capitalism can also be referred to as a free economic system. This is because Smith's teach about the individual freedom of action. This concept says that every person is free to do the best for him respectively. The concept of freedom is known as liberalism. Liberalism is an ideology that defends freedom. Freedom includes the individual action in work and the national government tried to minimize interference (Deliarnov, 2000: 30).
Although Smith opposed government interference in the economic aspects, this does not mean the country is not considered important. Smith considers the sovereign state has an important role as well. State role in the defense, justice, public works and public institutions (Deliarnov, 2000: 32).
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