Biography of Adam Smith, Founding Father of Economics

Adam Smith (June 16, 1723–July 17, 1790) was a Scottish philosopher who today is considered to be the father of economics. His seminal work, "The Wealth of Nations," published in 1776, influenced generations of politicians, leaders, and thinkers, including Alexander Hamilton, who looked to Smith's theories when, as secretary of the treasury, he fashioned the economic system of the United States.

Early Years and Education

Smith was born in 1723 in Kirkcaldy, Scotland, where his widowed mother raised him. At age 14, as was the usual practice, he entered the University of Glasgow on a scholarship. He later attended Balliol College at Oxford, graduating with extensive knowledge of European literature.

He returned home and delivered a series of well-received lectures at Glasgow University, which appointed him first as the chair of logic in 1751 and then chair of moral philosophy in 1752.

Founding Father of Economics

Smith is often described as the "founding father of economics." A great deal of what is now considered standard belief about the theory about markets was developed by Smith. He explained his theories in "Theory of Moral Sentiments," published in 1759. In 1776, he published his masterpiece, "An Inquiry into the Nature and Causes of the Wealth of Nations," which today is generally called "The Wealth of Nations."

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In "Theory of Moral Sentiments," Smith developed the foundation for a general system of morals. It is a very important text in the history of moral and political thought. It provides the ethical, philosophical, psychological, and methodological underpinnings to Smith's later works. ​

In this work, Smith stated that man was self-interested and self-commanded. Individual freedom, according to Smith, is rooted in self-reliance, the ability of an individual to pursue his self-interest while commanding himself based on the principles of natural law.

'The Wealth of Nations'

"The Wealth of Nations" is actually a five-book series and considered to be the first modern work in the field of economics. Using very detailed examples, Smith attempted to reveal the nature and cause of a nation's prosperity.

Through his examination, he developed a critique of the economic system. Most commonly known are Smith's critique of mercantilism and his concept of the "invisible hand," which guides economic activity. In explaining this theory, Smith stated that wealthy individuals are:

"...led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society."

What led Smith to this remarkable conclusion was his recognition that wealthy people don't live in a vacuum: they need to pay (and thus feed) the individuals who grow their food, manufacture their household items, and toil as their servants. Simply put, they can't keep all the money for themselves. Smith's arguments are still used and cited today in debates. Not everyone agrees with Smith's ideas. Many see Smith as an advocate of ruthless individualism.

Regardless of how Smith's ideas are viewed, "The Wealth of Nations" is considered to be, and is arguably, the most important book on the subject ever published. Without a doubt, it is the most seminal text in the field of free-market capitalism.

Later Years and Death

After living in both France and London for a time, Smith returned to Scotland in 1778 when he was appointed the commissioner of customs for Edinburgh. Smith died on July 17, 1790, in Edinburgh and was buried in the Canongate churchyard.

Legacy

Smith's work had a profound effect on the American founding fathers and the nation's economic system. Instead of founding the United States on the idea of mercantilism and creating a culture of high tariffs to protect local interests, many key leaders, including James Madison and Hamilton, espoused the ideas of free trade and limited government intervention.

In fact, Hamilton, in his "Report on Manufacturers" espoused a number of theories first stated by Smith. These theories stressed the need to cultivate the extensive land that was available in America to create a wealth of capital through labor, distrust of inherited titles and nobility, and the establishment of a military to protect the land against foreign intrusions.

Sources

• “Adam Smith.” Econlib.
• Brett, Sarah, and Oxford University Press. “Adam Smith (1723-90).” Oxford University Press | Online Resource Centre.
• Founders Online. "Alexander Hamilton's Final Version of the Report on the Subject of the Manufactures." National Archives and Records Administration, National Archives and Records Administration.