The Scottish philosopher Adam Smith was one of the fathers of the field of economics. Although Smith wrote works on moral philosophy and government, he is best remembered for his comprehensive 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations. The Wealth of Nations was a groundbreaking work of political economy, exploring how the economic and political systems of Smith’s time interacted. Although he wrote nearly three centuries ago, Smith made insights that are still valued today. If you want to increase your wealth of economics knowledge, read on!
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A THEORY OF MORAL SENTIMENTS
Smith’s first major work, A Theory of Moral Sentiments, was published in 1759. In it, Smith set out to explain how institutions, such as government, proceeded from human behavior. As the title suggests, Smith was concerned with the human capacity to form moral judgments despite our inborn tendency to maximize our own self-interest. Smith claims that this is possible thanks to the presence of an internal “inner man” that he refers to as an impartial spectator. This impartial spectator is what allows us to reason and sympathize with others.
LECTURES ON JURISPRUDENCE
Smith would continue to refine his ideas that led to The Wealth of Nations. He delivered a series of lectures at the University of Glasgow in 1763 that came to be called Lectures on Jurisprudence. The lectures are also known by the more interesting title of Lectures on Justice, Police, Revenue, and Arms. In the Lectures Smith proposes that the purpose of the laws constraining government action should be focused on protecting the individual from injury and preserving individual rights.
A TREATISE ON PUBLIC OPULENCE
Not all of Smith’s works were published in his lifetime. Although written in 1764, A Treatise on Public Opulence would not be published until the 1930s. Smith was interested in promoting public opulence, or wealth spread across all levels of society. He saw economic practices of the day, such as the export-maximizing system of mercantilism, as detrimental to this goal.
THE WEALTH OF NATIONS
Smith’s magnum opus, The Wealth of Nations, flew in the face of prevailing economic theories. The key to economic prosperity, as Smith saw it, lay in incentivizing individual profit motives. The division of labor creates economic interdependencies that strengthen the market. Smith offers a description of the many jobs required in even a simple pin factory to demonstrate this division of labor. People pursue their own self-interest by specializing in a task and producing goods that others can’t make because they are specializing in their own labors for similar economic ends. For instance, a butcher can produce meat for a baker while the baker produces bread for the butcher.
THE INVISIBLE HAND
Smith believed that heavy government interference was bad for the economy. The stifling tariffs necessitated by mercantilism were strangling foreign trade and, in Smith’s eyes, not encouraging prosperity. Smith referred to the natural forces of human nature that ought to guide economic activity as the “Invisible Hand.”
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Quizbowl is about learning, not rote memorization, so we encourage you to use this as a springboard for further reading rather than as an endpoint. Here are a few things to check out:
How much did Smith really know about pin factories?
Smith was influenced by, and eventually formed a friendship with, Scottish philosopher David Hume.
Wonder what was behind A Theory of Moral Sentiments? Read this article to learn more about Smith’s moral philosophy.
Smith may have advocated for laissez-faire economic policies, but he wanted to create as humane a form of capitalism as possible:
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