Adam Smith

Adam Smith (baptised 16 June 1723, Kirkcaldy, Fife, Scotland – 17 July 1790, Edinburgh, Scotland) was a Scottish moral philosopher and political economist whose writings established the theoretical framework that underpins modern economics. He is best known for two landmark works: The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). Smith is frequently described as the father of capitalism and the founder of classical economics, though scholars note that his thought is considerably more nuanced than either label suggests.

Early life and education

Smith was born in Kirkcaldy, a small coastal town in Fife, Scotland, and baptised on 16 June 1723. The exact date of his birth is not recorded. His father, also named Adam Smith, was a customs comptroller who died before his son's birth. Smith was raised by his mother, Margaret Douglas, to whom he remained close throughout his life.

At approximately fourteen years of age, Smith entered the University of Glasgow, where he studied under Francis Hutcheson, a prominent moral philosopher whose ideas on sympathy and benevolence influenced Smith's later work. In 1740 Smith was awarded a Snell Exhibition scholarship to Balliol College, University of Oxford, where he remained until 1746. He later expressed dissatisfaction with the quality of teaching at Oxford, a criticism documented in The Wealth of Nations itself.

Academic career

After returning to Scotland, Smith delivered a series of public lectures in Edinburgh, which proved successful and brought him to wider intellectual attention. In 1751 he was appointed Professor of Logic at the University of Glasgow, and the following year he assumed the Chair of Moral Philosophy, a post he held for over a decade.

Smith was a prominent figure in the Scottish Enlightenment, associating with leading thinkers including David Hume, with whom he maintained a close and lifelong friendship, and Joseph Black, the chemist. His Glasgow lectures covered a broad curriculum encompassing natural theology, ethics, jurisprudence, and political economy.

The Theory of Moral Sentiments

Published in 1759, The Theory of Moral Sentiments established Smith's reputation across Europe. The work argues that human moral judgement arises from sympathy — an imaginative capacity to understand the feelings of others — and introduces the concept of an impartial spectator, an internalised figure by whose standards individuals evaluate their own conduct. The book went through six editions during Smith's lifetime and was admired by figures including Edmund Burke and Voltaire.

The Wealth of Nations

An Inquiry into the Nature and Causes of the Wealth of Nations, published on 9 March 1776 in London, is considered Smith's magnum opus and one of the most influential books in the history of economic thought. The work is divided into five books and addresses the nature of productive labour, the division of labour, the theory of value, wages, profit, rent, capital accumulation, the history of economic policy, and the proper role of government.

Division of labour

One of Smith's most celebrated contributions is his analysis of the division of labour, illustrated at the opening of The Wealth of Nations with the example of a pin factory. Smith argued that dividing production into specialised tasks dramatically increases output per worker, and that this specialisation is ultimately limited by the extent of the market.

The invisible hand

Smith introduced the metaphor of the invisible hand to describe the mechanism by which individuals pursuing their own self-interest inadvertently contribute to the economic well-being of society as a whole. The phrase appears only three times across his published writings, and historians of economic thought caution against reading into it a blanket endorsement of unregulated markets, a position Smith himself did not hold.

Role of government

Contrary to later laissez-faire interpretations, Smith identified several legitimate functions of government: national defence, the administration of justice, and the provision of public works and institutions that private enterprise would not supply profitably. He was also a critic of monopolies, mercantile special interests, and the collusion of employers against workers.

Later life and legacy

In 1764 Smith resigned his professorship to serve as private tutor to the young Duke of Buccleuch, accompanying him on a grand tour of France and Switzerland. During this period Smith met François Quesnay and other leading French Physiocrats, whose economic ideas influenced his thinking. He spent much of the following decade in Kirkcaldy drafting The Wealth of Nations.

In 1778 Smith was appointed a Commissioner of Customs for Scotland, a post he held until his death. He died in Edinburgh on 17 July 1790 and is buried in Canongate Kirkyard. At his request, most of his unpublished manuscripts were destroyed.

Smith's influence on subsequent economic thought is difficult to overstate. David Ricardo, John Stuart Mill, and Karl Marx all engaged extensively with his work, whether building upon it or critiquing it. In the twentieth century, his ideas were variously claimed by free-market liberals and reinterpreted by historians emphasising the ethical dimensions of his political economy. His portrait appeared on the Bank of England £20 banknote from 2007 until 2021.

Frequently asked questions

Is Adam Smith the father of economics?

Smith is widely described as the father of modern economics or classical economics due to the systematic analytical framework presented in The Wealth of Nations. However, many scholars note that earlier thinkers, including the Physiocrats and mercantilist writers, made significant contributions before him.

Is Adam Smith a supporter of unregulated free markets?

This is a common misconception. While Smith championed free trade and criticised government-granted monopolies, he explicitly recognised legitimate roles for government intervention and expressed concern about the power of merchants and manufacturers to manipulate markets in their own favour.

Is The Theory of Moral Sentiments consistent with The Wealth of Nations?

Historians of economic thought have debated this question, sometimes calling the perceived tension the Das Adam Smith Problem. The prevailing scholarly consensus today holds that the two works are complementary rather than contradictory, with sympathy and self-interest operating in different but compatible social domains.

Is Adam Smith Scottish or British?

Smith was born in Scotland in 1723, almost two decades after the Acts of Union (1707) that united Scotland and England into the Kingdom of Great Britain. He is therefore accurately described as both Scottish and British.