Adam Smith

Adam Smith (1723–1790) was the Scottish Enlightenment moral philosopher who founded classical political economy. His The Wealth of Nations (1776) is the source-text of the free-market case.

The founder of classical economics

Smith was a professor of moral philosophy at Glasgow before he was an economist, and his first book, The Theory of Moral Sentiments (1759), grounded ethics in sympathy — our capacity to imagine ourselves in another’s place. The Wealth of Nations, seventeen years later, is often read as its complement rather than its contradiction: the market, in Smith’s account, is precisely the institution that lets self-interested strangers serve one another without requiring the benevolence his ethics reserved for closer relations. (Smith’s biographical details here are widely documented common knowledge, not drawn from the work this page cites.)

The ideas that endure

Three ideas from The Wealth of Nations became permanent. The division of labour explains a nation’s productivity by the specialization of tasks rather than the abundance of resources. Self-interest coordinated by exchange explains how a complex economy feeds itself without central direction — the butcher and baker serve their customers from regard to their own interest, and the merchant seeking only his own gain is “led by an invisible hand to promote an end which was no part of his intention.” And free trade follows from both: the mercantilist attempt to manage commerce for a favourable balance of gold enriches the protected few at the general expense. The wiki develops these in the book’s own reference page.

Place in This Wiki

Smith is the classical-liberal foundation nearly every school in the wiki’s comparison of economic schools traces itself to, and the first clear statement of the spontaneous order argument the Austrians later made central. But the wiki reads him critically as well: his slide toward locating value in cost and labour was a step back from the subjective-value insights of the earlier Scholastics, and it was corrected only by the marginal revolution a century on — the Austrian reading set out in Rothbard’s history.

See Also

• The Wealth of Nations - his founding treatise
• Spontaneous Order - the idea his invisible hand first states
• Free Trade and Comparative Advantage - the anti-mercantilist case he launched
• Subjective Value vs the Labor Theory of Value - where the Austrians correct him
• Economic Thought Before Adam Smith - Rothbard’s critical placement of Smith
• Schools of Economics - the classical root of the schools that follow
• G. W. F. Hegel

Sources

• The Wealth of Nations (Full Text) - Smith’s 1776 treatise (Project Gutenberg, public domain), the source of the division-of-labour, invisible-hand, and free-trade arguments summarized here