RICHMOND, Va. --CONSUMERS HAVE NOW had a few weeks to fiddle with their new iPhones — the latest “must-have” device that makes phone calls, plays music, schedules appointments, surfs the Web, and flosses your teeth — oops, that’s next year’s model.

Sales of the device exceeded one-quarter million units the first weekend, and half of Apple’s retail stores reportedly sold out just in one day. But this was far below expectations, and Apple’s stock took a temporary hit on the news.

Two questions emerge: Do consumers gobble up gadgets actually intending to use all these dazzling functions? Is the iPhone another example of wasteful spending by consumers crushed with debt — or, is it the sharp edge of technological innovation and progress that will bear fruit over time?

The history of economic thinking offers some insights. Adam Smith, the 18th Century economist and moral philosopher, pointed out that consumers often buy products not so much for their usefulness, as for the intrinsic beauty of their form and function. He writes, “What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it.”

A man, for example, buys a new watch that keeps exquisite time — not because he wishes to arrive on time, but because he wishes to own a machine capable of producing perfect time. Smith says the person who buys this watch “will not always be found either more scrupulously punctual than other men, or more anxiously concerned upon any other account, to know precisely what time of day it is.” Rather, what interests him is “the perfection of the machine” that attains this knowledge.

This is an important insight into human nature. A machine’s beauty is judged on the basis of hypothetical usefulness, and this characteristic is often valued more highly than actual usefulness. People buy fast cars that can potentially go 150 miles an hour, without ever intending to take them on the track.

Hence, products are purchased for what may seem like superficial or wasteful reasons. Many critics of capitalism bemoan our throw-away society, and the pressure to take on credit-card loans merely to assuage peer insecurity, in the guise of $100 sneakers or some other fad.

Smith would agree, and he worries, “How many people ruin themselves by laying out money on trinkets of frivolous utility? . . . All their pockets are stuffed with little conveniencies. They contrive new pockets, unknown in the clothes of other people, in order to carry a greater number.”

The owners of iPhones can actually unburden their pockets of the devices that the new machine replaces. But will owning the iPhone make anyone happier? People delude themselves into thinking so, but Smith says that after the initial rush of excitement, they will return to whatever state of happiness is their natural equilibrium. Only by constantly upgrading can one rekindle a blissful rush.

Smith’s system of progress through competition thus relies on consumers who stimulate markets by buying ever-more beautiful goods. The “invisible hand” operates through the self-delusion that compels people to think happiness depends on owning machines that perform feats of little actual utility. This stimulates technological innovation, which paradoxically may produce genuine human progress in the long run.

The genius of a competitive market system is not in the individual products produced, but in the climate of experimentation and discovery that unleashes the creativity of a society. Apple Inc. has consistently aimed high for form and function, applying Smith’s insights into the meaning of beauty. That bodes well for Apple and other companies that emulate it.

That’s not to say everyone will come on board this year. A marketing researcher in Shanghai recently told me that “cell phones are only meant to last for three to six months. Then the color or style changes and no one wants to be seen without a new one.”

I sighed and wondered: Who has the time or money to bother? I’ll buy the 2007 model in . . . oh, say . . . 2009.

Jonathan B. Wight is professor of economics at the University of Richmond and author of Saving Adam Smith: A Tale of Wealth, Transformation, and Virtue.