Biography
Adam Smith was a towering figure in the Scottish Enlightenment, profoundly influencing economic thought across centuries. His seminal work, "The Wealth of Nations," has been revered by both 19th-century liberals and 20th-century conservatives for its insights into the benefits of a free market. Economists continue to acknowledge Smith’s pivotal role in shaping the field of economic development.
Early Life
Born in the town of Kirkcaldy, near Edinburgh, Adam Smith's birth date remains elusive, though he was baptized on June 5, 1723. His early life was marked by the absence of his father, who passed away before Smith's birth, leaving his mother, Margaret Douglas, as a central influence. Smith's education began at the local school, after which he entered the University of Glasgow at the young age of 14. His academic prowess earned him the Snell Exhibition, a scholarship to study at Balliol College, Oxford, where he immersed himself in classical literature and philosophy for six years. By 1746, Smith had returned to Kirkcaldy, living with his mother until his friends arranged for him to give public lectures in Edinburgh. The success of these lectures led to his appointment as chair of logic at the University of Glasgow in 1751, a position he swiftly exchanged for the chair in moral philosophy. Smith distinguished himself not only as a lecturer but also as an active participant in university administration, holding roles such as quaestor, dean of faculty, and vice rector.
At Glasgow, Smith's lectures spanned rhetoric, belles-lettres, ethics, and jurisprudence, though little is known about his teachings on natural theology. His lectures on ethics informed his first major publication, "The Theory of Moral Sentiments," which achieved immediate acclaim, translated into multiple languages, and saw numerous editions during his lifetime. The book caught the attention of Charles Townshend, an influential politician, who hired Smith to tutor his stepson, the Duke of Buccleuch. In 1764, Smith resigned from his Glasgow post to join the Duke on a Grand Tour across the Continent, returning to England two years later. Back in Kirkcaldy, supported by a lifelong pension from Buccleuch, Smith dedicated himself to his masterpiece, "The Wealth of Nations," while also serving as an adviser to Townshend in London from 1773 to 1776. This work's publication marked a watershed moment in intellectual history.
Life's Work
"The Theory of Moral Sentiments" was Smith's initial claim to fame, addressing the social integration of individuals within a community. He posited that humans are endowed by nature with "moral sentiments," which bind them together, emphasizing the desire for social approval and the ability to empathize with others. Justice, Smith argued, was the critical foundation of society, defined by refraining from harm and respecting others' rights. Yet, he acknowledged the limitations of relying solely on human impulses for achieving justice, stressing the necessity of laws and government. Central to "The Wealth of Nations" was Smith's belief in self-interest driving economic activity in the impersonal marketplace, famously stating that individuals act out of self-interest, not altruism, to meet needs: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest."
Smith aimed to identify the drivers of economic development, which he termed the "progress of opulence." He noted two primary motivations: the innate tendency to trade and the ambition to elevate social status through economic success. The division of labor, he argued, was pivotal for productivity, as specialization reduced transition times between tasks, honed skills, and spurred innovation. The extent of labor division, however, hinged on market size, creating a cycle of expanding productivity, larger...
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populations, and further market growth. Smith extended these principles to international trade, arguing that specialization based on comparative advantage would enhance global wealth. He critiqued mercantilism for steering industries into less productive paths than a free market would choose naturally.
Inspired by Newton's vision of a self-regulating universe, Smith believed free markets function similarly, with each person enhancing their nation's economy by pursuing personal gain. He assumed economies naturally reached balance, with free competition adjusting prices, wages, and profits to their "natural" levels. Government interference, he argued, disrupts this efficiency. "The Wealth of Nations" quickly gained traction, selling out its first edition within six months, with subsequent editions and translations widening its impact. Appointed commissioner of the customs in Edinburgh in 1777, Smith spent his remaining years there, enjoying a comfortable life with his pension and salary. Although he never married, he remained engaged with Edinburgh's intellectual community, revising his earlier works and contributing to philosophy until his death in 1790.
Influence
"The Wealth of Nations" became the cornerstone of laissez-faire economics, advocating minimal government interference in market dynamics. However, Smith was cautious about unchecked private enterprise, wary of businesses seeking governmental privileges and monopolizing profits. He believed in government intervention where monopoly was inevitable and supported public services that benefitted society, including compulsory education to counteract the division of labor's negative effects. Smith even sanctioned protectionist measures for national defense, prioritizing it over economic gain.
Despite later distortions of his ideas, Smith’s work significantly influenced government policies across the Western world. Historian H.T. Buckle, writing in 1857, praised "The Wealth of Nations" as potentially the most important book ever written, espousing principles foundational to government. Though laissez-faire fell out of favor, Smith's writings continued to inspire 20th-century free-market advocates.
Smith's influence extended beyond economics, as he pioneered historical analysis of economic phenomena, blending observation with historical data. His comprehensive exploration of capitalist economies, particularly the division of labor, provided a framework for future economists, including critics like Karl Marx. Smith's legacy endures, shaping both economic thought and policy long after his time.
Additional Reading
Brown, Maurice. Adam Smith’s Economics: Its Place in the Development of Economic Thought. A scholarly yet accessible examination of the economic and historical context of Smith's theories.
Campbell, R. Hutchinson, and Andrew S. Skinner. Adam Smith. This volume provides a biography of Smith and insight into the intellectual landscape of 18th-century Scotland.
Fay, Charles R. Adam Smith and the Scotland of His Day. Essays contextualizing Smith's life and work within his time.
Fay, Charles R. The World of Adam Smith. Historical and philosophical exploration of Smith's disdain for mercantilism.
Glahe, Fred R., ed. Adam Smith and the Wealth of Nations: 1776-1996. A collection celebrating Smith's bicentennial impact.
Heilbroner, Robert. The Nature and Logic of Capitalism. Analyzes Smith's role in the rise of capitalism.
Hollander, Samuel. The Economics of Adam Smith. A comprehensive survey of Smith's economic ideas.
Lindgren, J. Ralph. The Social Philosophy of Adam Smith. Examines Smith's broader philosophical views.
Muller, Jerry Z. Adam Smith in His Time and Ours: Designing the Decent Society. Defends Smith’s relevance for modern society.
Pack, Spencer J. Capitalism as a Moral System: Adam Smith’s Critique of the Free Market Economy. Highlights Smith’s criticisms of capitalism.
Raphael, D. D. Adam Smith. An intellectual biography for general readers.
Rashid, Salim. The Myth of Adam Smith. Critiques Smith's economic analysis.
Skinner, Andrew S. A System of Social Science: Papers Relating to Adam Smith. Essays on various aspects of Smith's thought.
Tawney, Richard H. Religion and the Rise of Capitalism. Explores the social and religious context of Smith's Britain.
Wood, John Cunningham, ed. Adam Smith: Critical Assessments. A compilation of critical articles on Smith's work.
Young, Jeffrey T. Economics as A Moral Science: The Political Economy of Adam Smith. Focuses on the moral dimensions of Smith’s ideas.