We shall then move on to larger marketplaces, analyzing how prices, wages, interest rates, and profits are determined. Initially we shall examine these phenomena in the free market—that is, in a market consisting entirely of peaceful action, from which the use of force is absent. The free market is far better understood today than it was in 1776, when Adam Smith was obliged to postulate an "invisible hand" that supposedly directed the market's orderly processes. Today we can show logically how such processes must arise as a natural consequence of the interaction of individual purposes, and we can correct certain early errors of the classical economists. In order to make our analysis easier to understand, we shall first analyze the operation of a hypothetical market in which human beings could foresee the precise effects of their actions. We shall then move beyond this model, examining how uncertainty, risk, and error affect action in the real-life marketplace.