Adam Smith
Adam Smith was a prominent philosopher of the 18th century, renowned for his focus on the interconnectedness of philosophy, economics, and politics. His influence on modern economic thought is profound. Born in the early 1700s in the Scottish town of Kirkcaldy, he began his academic journey at the University of Glasgow, where he studied under influential professors who shaped his philosophical and economic views. He later continued his education at the University of Oxford, where he deepened his understanding of both modern and classical philosophy. By 1752, he was appointed as a lecturer in moral philosophy, legislation, and political economy, and he passed away in 1790.
Philosophical and Economic Thought of Adam Smith
In his seminal works, Adam Smith advocated for an economic philosophy centered around market freedom and independence, free from government intervention—a concept known in French as laissez-faire. This philosophy stood in opposition to the politically-driven economic theories of the time. Smith was particularly critical of mercantilism, a dominant economic doctrine in Europe that called for extensive government involvement in the economy. He argued that the government’s primary role should be to safeguard the rights of traders and provide public services for all citizens, rather than to intervene in economic affairs.
Major Works of Adam Smith
Adam Smith is celebrated for several pivotal works that have greatly influenced economic thought and laid the groundwork for modern economic philosophies. These works include:
The Wealth of Nations
Published in 1759 during his tenure as a university lecturer, The Wealth of Nations is considered a cornerstone of modern economic philosophy. In this book, Smith examines the evolution of human society and its economic behaviors, tracing a path from pre-legal hunter-gatherer societies to contemporary legal frameworks centered around property rights. He proposed a theory of economic freedom, advocating for minimal government intervention, founded on the self-interest of individuals. This work significantly impacted the thinking of 19th-century economists like Marx and Ricardo, as well as 20th-century theorists such as Keynes and Friedman. Additionally, it contributed to the establishment of classical economic theory, particularly during the Great Depression, and introduced the concept of Gross Domestic Product (GDP) as a measure of national wealth, as opposed to the traditional metrics of precious metals.
The Theory of Moral Sentiments
This philosophical text by Adam Smith emphasizes the idea that moral thoughts and actions arise from the inherent nature and psychological traits of individuals and societies. Smith contended that this inherent nature is a more powerful motivator for ethical behavior than logic. While each person inherently seeks their own self-interest, they are also social beings who strive for acceptance and emotional interaction with others. Consequently, values such as virtue, justice, and self-restraint are essential, as true virtue lies in the ability to exercise self-control, all aimed at the growth and prosperity of society as a whole.
The Invisible Hand
The concept of the “Invisible Hand” is one of Adam Smith’s most famous economic theories. It posits that there exists a natural self-regulating mechanism within a free market system that enhances economic efficiency. This mechanism relies on the principles of supply and demand, as well as competition for scarce resources, driving individuals in society towards productivity in order to satisfy their material needs. Smith also emphasized the importance of establishing a judicial system to protect fair competition and economic freedom.