"Economics and the Ordinary Person: Re-making Adam Smith," by Sam Fleischacker
Smith was so opposed to Hobbes's and Mandeville's positions that the very first sentence of The Theory of Moral Sentiments begins with their rejection:
Timeline of Smith's life at the Online Library of Liberty. PDF.
There has been considerable scholarly debate about the nature of Smith's religious views. Smith's father had shown a strong interest in Christianity and belonged to the moderate wing of the Church of Scotland. The fact that Adam Smith received the Snell Exhibition suggests that he may have gone to Oxford with the intention of pursuing a career in the Church of England.
Smith has been celebrated by advocates of free market policies as the founder of free market economics, a view reflected in the naming of bodies such as the Adam Smith Institute in London, the Adam Smith Society and the Australian Adam Smith Club, and in terms such as the Adam Smith necktie.
Adam Smith, c.1770 © Smith was a hugely influential Scottish political economist and philosopher, best known for his book 'The Wealth of Nations'.
For Smith, the most precise virtue is justice. It is "the main pillar that upholds the whole edifice" of society (TMS III.ii.4). It is, as he describes it, "a negative virtue" and the minimal condition for participation in the community. Obeying the rules of justice, therefore, result in little praise, but breaking them inspires great condemnation:
Philosophically, this is a tectonic shift in moral prescription. Dominant Christian beliefs had assumed that any self-interested action was sinful and shameful; the ideal person was entirely focused on the needs of others. Smith's commercial society assumes something different. It accepts that the person who focuses on his or her own needs actually contributes to the public good and that, as a result, such self-interest should be cultivated.
Some have also claimed, Emma Rothschild among them, that Smith would have supported a minimum wage, although there is no direct textual evidence supporting the claim. Indeed, Smith wrote:
Ultimately, according to Smith, a properly functioning market is one in which all these conditions—price, value, progress, efficiency, specialization, and universal opulence (wealth)—all work together to provide economic agents with a means to exchange accurately and freely as their self-interest motivates them. None of these conditions can be met if the government does not act appropriately, or if it oversteps its justified boundaries.
In 1751, Smith was appointed professor of logic at Glasgow University and a year later professor of moral philosophy. He became part of a brilliant intellectual circle that included David Hume, John Home, Lord Hailes and William Robertson.
Roberts on Smith, Ricardo, and Trade. How do trade, technology, and specialization improve the standard of living? EconTalk Podcast.
The increase in efficiency is also an increase in skill and dexterity, and brings with it a clarion call for the importance of specialization in the market. The more focused a worker is on a particular task the more likely they are to create innovation. He offers the following example:
Adam Smith resided at Panmure house from 1778–90. This residence has now been purchased by the Edinburgh Business School at Heriot Watt University and fundraising has begun to restore it. Part of the Northern end of the original building appears to have been demolished in the 19th century to make way for an iron foundry.
"Richard Cantillon and the Nationality of Political Economy", by William Stanley Jevons.
In light of the arguments put forward by Smith and other economic theorists in Britain, academic belief in mercantalism began to decline in Britain in the late 18th century. During the Industrial Revolution, Britain embraced free trade and Smith's laissez-faire economics, and via the British Empire, used its power to spread a broadly liberal economic model around the world, characterised by open markets, and relatively barrier free domestic and international trade.
EconTalk podcast and video episodes on Adam Smith. (Some also listed below.)
Echoing but tempering Mandeville's claim about private vices becoming public benefits, Smith illustrates that personal needs are complementary and not mutually exclusive. Human beings, by nature, have a "propensity to truck, barter, and exchange one thing for another" (WN I.ii.1). This tendency, which Smith suggests may be one of the "original principles in human nature," is common to all people and drives commercial society forward. In an oft-cited comment, Smith observes,
Smith also noted a rough equality of bargaining power:
Not much is known about Smith's personal views beyond what can be deduced from his published articles. His personal papers were destroyed after his death at his request. He never married, and seems to have maintained a close relationship with his mother, with whom he lived after his return from France and who died six years before his own death.
All references are to The Glasgow Edition of the Correspondence and Works of Adam Smith, the definitive edition of his works. Online versions of much of these can be found at The Library of Economics and Liberty.
The most sacred laws of justice, therefore, those whose violation seems to call loudest for vengeance and punishment, are the laws which guard the life and person of our neighbour; the next are those which guard his property and possessions; and last of all come those which guard what are called his personal rights, or what is due to him from the promises of others. (TMS II.ii.2.3)
James Boswell who was a student of Smith's at Glasgow University, and later knew him at the Literary Club, says that Smith thought that speaking about his ideas in conversation might reduce the sale of his books, and so his conversation was unimpressive. According to Boswell, he once told Sir Joshua Reynolds that 'he made it a rule when in company never to talk of what he understood'.
Paul Samuelson finds in Smith's pluralist use of supply and demand as applied to wages, rents, profit a valid and valuable anticipation of the general equilibrium modelling of Walras a century later. Smith's allowance for wage increases in the short and intermediate term from capital accumulation and invention contrasted with Malthus, Ricardo, and Karl Marx in their propounding a rigid subsistence–wage theory of labour supply.
The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes ... . [T]his produce ... bears a greater or smaller proportion to the number of those who are to consume it ... .[B]ut this proportion must in every nation be regulated by two different circumstances;
Russ Roberts and Mike Munger on How Adam Smith Can Change Your Life. EconTalk Podcast, Oct. 2014.
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. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
He added, however, that in general a retaliatory tariff "seems a bad method of compensating the injury done to certain classes of our people, to do another injury ourselves, not only to those classes, but to almost all the other classes of them" (The Wealth of Nations, IV.ii.39).
The dominant economic theory of Smith's time was mercantilism. It held that the wealth of a nation was to be assessed by the amount of money and goods within its borders at any given time. Smith calls this "stock." Mercantilists sought to restrict trade because this increased the assets within the borders which, in turn, were thought to increase wealth. Smith opposed this, and the sentence cited above shifted the definition of national wealth to a different standard: labor.
However selfish man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though they derive nothing from it except the pleasure of seeing it. (TMS I.i.1.1)
(1723-90).The publication in 1776 of his book An Inquiry into the Nature and Causes of the Wealth of Nations established Adam Smith as the single most influential figure in the development of modern economic theory. With exceptional clarity he described the workings of a market economy, the division of labor in production, the nature of wealth in relation to money, the inability of governments to manage economies, and the difference between productive and nonproductive labor.
Some other authors argue that Smith's social and economic philosophy is inherently theological and that his entire model of social order is logically dependent on the notion of God's action in nature.
Smith, Adam - Bournemouth (ENG)
Adam Smith FRSA (16 June 1723 NS (5 June 1723 OS) – 17 July 1790) was a Scottish moral philosopher, pioneer of political economy, and a key figure in the Scottish Enlightenment. He is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics.
Smith began delivering public lectures in 1748 in Edinburgh, sponsored by the Philosophical Society of Edinburgh under the patronage of Lord Kames. His lecture topics included rhetoric and belles-lettres, and later the subject of "the progress of opulence". On this latter topic he first expounded his economic philosophy of "the obvious and simple system of natural liberty". While Smith was not adept at public speaking, his lectures met with success.
Jack Russell Weinstein Email: firstname.lastname@example.org University of North Dakota U. S. A.
Education helps individuals overcome the monotony of day to day life. It helps them be better citizens, better soldiers, and more moral people; the intellect and the imagination are essential to moral judgment. No person can accurately sympathize if his or her mind is vacant and unskilled.
"The recovery of a great foreign market will generally more than compensate the transitory inconvenience of paying dearer during a short time for some sorts of goods."
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Economic historians such as Jacob Viner regard Smith as a strong advocate of free markets and limited government (what Smith called "natural liberty") but not as a dogmatic supporter of laissez-faire.