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# Artificial Direction of Industry

## Definition

Government intervention that forces capital and labor into specific economic activities through regulations, prohibitions, or incentives, rather than allowing market forces to determine natural employment patterns. This intervention often results in less efficient resource allocation.

## Source Chapter

Book IV, Chapter 2

## Context

Smith critiques government attempts to direct industry through protectionist measures, arguing that such artificial direction typically leads to less advantageous outcomes than would occur naturally. He uses the example of forcing capital into domestic manufacturing when foreign goods could be obtained more cheaply.

## Economic Domain

Regulation

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