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Issue 52 - Adam Smith

Scotland Magazine Issue 52
August 2010

 

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Adam Smith

The father of economics.

Most, if not all the readers of this magazine live in a free market economy, at home with capitalism if only because it’s all they know.

But how many of us have stopped to consider the system’s origins and the theories behind it?

Adam Smith is widely credited as the first modern economist. His work has influenced the way trade operates across the whole world.

He was born in Kickcaldy in 1723. His mother came from a long line of wealthy landowners. His father had died before Smith was born.

He showed promise from a young age, studying moral philosophy at Glasgow University at the age of 14 and entering Oxford University with a scholarship at only 17. At university Smith earned some disapproval for his liking of the work of David Hume, whose writing was considered heretical.

When Smith returned to Scotland he became Professor of Logic at Glasgow University in 1751, and only a year later took up the Chair of Moral Philosophy. He was a well known intellectual even in his youth, popular with his students because his lectures were so engaging. Smith was an accomplished public speaker and was unusual in choosing to lecture in English rather than the accustomed Latin.

Despite his talent for public speaking, he was a shy and awkward man in social situations. He never married and lived most of his life with his mother. In many ways he was the stereotypical absentminded academic.

In 1759 Smith’s first major work was published. Theory of Moral Sentiments was very successful, attracting international attention and acclaim. Today you might not expect an economist to be also a moralist, or be concerned with both subjects. But Smith studied these things as part of his wider study of philosophy. Philosophy encompassed almost every academic field, from economics and morality to politics, law, history, mathematics and more.

In Theory of Moral Sentiments, Smith established a general theory of morals, putting ‘sympathy’ at the core of moral sensibility, while also showing man to be self-interested and independent. The idea of self-interest was central to his later work on economics.

No doubt his literary success helped Smith gain the rather enviable job of private tutor to the heir of the Duke of Baccleuch, in 1763. Smith accompanied his young charge on a Grand Tour of Europe, stopping at various locations in France.

There Smith met the great French economic thinkers and philosophers of the day, including Voltaire, Quesnay, Turgot and Necker.

It seems the job of tutor wasn’t particularly demanding, and Smith took the opportunity to embark on his masterpiece, An Inquiry into the Nature and Causes of the Wealth of Nations. The Wealth of Nations is an epic piece of work, split into five sections. Smith builds on his previous theories, using detailed examples to show how man is motivated by self-interest, and how competition keeps our natural ambitions in check. High demand triggers competition, leading to an increase in supply which lowers prices. Smith demonstrates a self-regulating system which he regards as fair and not to be impeded by political interference or undue taxation, but critics have argued that his work promotes ruthless individualism.

The Wealth of Nations was published in 1776, after Smith had returned to Scotland.

It remains the first text to be read or referred to by any student of economics, and modern capitalism is largely based on Smith’s work. Today philosophy is perhaps not seen as being so influential, but the extent of influence of Smith’s philosophical writing on the global economy cannot really be underestimated.

Smith became Lord Rector of the University of Edinburgh in 1777 and a year later was appointed commissioner of customs. It was a highly respected and lucrative position; a fine end to life with very few documented low points.

Smith died in Edinburgh on 17th July, 1790, and was buried a few days later at Canongate Churchyard.