Our economy has been living in an Adam Smith world since 1776. Something different is coming

This year marks the 250th anniversary of the publication of The Wealth of Nations—the book that built the intellectual foundation of free-market capitalism. Smith’s argument was elegant: when individuals pursue their own interests within competitive markets—governed by rules and institutions—it leads to economic prosperity for the entire society, guided by what he called the “invisible hand” that steers resources toward broad prosperity. 

What Smith did not anticipate was that if leaders...