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# Natural Employment of Capital

## Definition

The allocation of financial resources to economic activities that would occur without artificial intervention, based on comparative advantage and market forces. This represents the most efficient use of capital as determined by natural market conditions rather than government regulation.

## Source Chapter

Book IV, Chapter 2

## Context

Smith argues that capital naturally flows to its most advantageous employment, and that government regulations attempting to direct capital often result in less efficient outcomes. He emphasizes that individuals seeking their own advantage naturally promote the most efficient allocation of resources.

## Economic Domain

Accumulation

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