On this blog, we discuss lots of ideas that have emerged in modern economics over the past century or two. And, indeed, it has been quite a ride! Now, however, we think it might be a good idea to take a look at a man who inspired, or at least influenced, nearly every major economic thinker who came after him. This man was the Scottish economist, Adam Smith. On top of his major economist credentials, he was renowned in his time as a philosopher and moral writer, as well. Indeed, his influence is so widespread, that he frequently still gets brought up in conversations today. Ironically, many named drops of Smith tie him to a way of thinking that he didn’t actually purport. Let’s take a look at this fascinating man, and some of the ideas he brought to light...

Smith’s life up to prominence

Adam Smith was born in Fife, Scotland in 1723, to a writer and legal professional, also named Adam Smith. In his youth, the Adam Smith we are writing about was quite an academic, and pursued Latin, history, and math from a young age. He had educational bouts at both Oxford and the University of Glasgow, the latter of which he greatly preferred, and even began to teach at, after his graduation. During his travels, after teaching, he found his way to Paris, where he began to be influenced by prominent figures such as Benjamin Franklin, Francois Quesnay, and Jean D’Alembert. This time of his life was what led him to write his most famous piece of work...

Classical economic theory (and The Wealth of Nations)

During Smith’s time, the widespread belief in European (and Colonial) economics was based in mercantilism, or the belief that a nation’s riches had to do with the amount of gold and silver that they had. Smith, along with Francois Quesnay, however, believed that the labor was a far more valuable way to determine a nation’s wealth. He had already outlined much of these ideas in his earlier work, The Theory of Moral Sentiments, but it was his work he wrote while corresponding with Quesnay in Paris that led him to detail more of this in his masterpiece, The Wealth of Nations. In that book, he laid the groundwork for classical economic theory with his notions of free trade. While many of his ideas don’t work in the practice of today’s economy (for example, Smith believed that agriculture was one of the only ways to truly measure a nation’s wealth, and that manufacturers were not a good measure, which is disproven by modern society), Smith’s work on the theory of the “invisible hand of the market” affects nearly every modern discussion on economics. For more information, be sure to read The Wealth of Nations, as the ideas within those pages can’t be entirely summed up in a single blog post.