ADAM SMITH FRSA (16 June 1723 NS (5 June 1723 OS ) – 17 July 1790) was a Scottish economist, philosopher, and author. He was a moral philosopher , a pioneer of political economy , and was a key figure during the Scottish Enlightenment era. He is best known for two classic works: _ The Theory of Moral Sentiments _ (1759), and _An Inquiry into the Nature and Causes of the Wealth of Nations _ (1776). The latter, usually abbreviated as _The Wealth of Nations_, is considered his _magnum opus _ and the first modern work of economics .
Smith studied social philosophy at the
University of Glasgow and at
Balliol College, Oxford , where he was one of the first students to
benefit from scholarships set up by fellow Scot,
John Snell . After
graduating, he delivered a successful series of public lectures at
Smith laid the foundations of classical free market economic theory.
_The Wealth of Nations_ was a precursor to the modern academic
discipline of economics. In this and other works, he developed the
concept of division of labour , and expounded upon how rational
self-interest and competition can lead to economic prosperity. Smith
was controversial in his own day and his general approach and writing
style were often satirised by Tory writers in the moralising tradition
* 1 Biography
* 1.1 Early life * 1.2 Formal education * 1.3 Teaching career * 1.4 Tutoring and travels * 1.5 Later years
* 2 Personality and beliefs
* 2.1 Character * 2.2 Religious views
* 3 Published works
* 3.1 _The Theory of Moral Sentiments_ * 3.2 _The Wealth of Nations_ * 3.3 Criticism and dissent * 3.4 Other works
* 4 Legacy
* 4.1 In economics and moral philosophy * 4.2 In British Imperial debates * 4.3 Portraits, monuments, and banknotes * 4.4 Residence * 4.5 As a symbol of free market economics
* 5 See also * 6 Notes * 7 Citations * 8 References * 9 Further reading * 10 External links
Portrait of Smith's mother, Margaret Douglas
Smith was born in
Kirkcaldy , in the County of
A commemorative plaque for Smith is located in Smith's home town of Kirkcaldy .
Smith entered the University of Glasgow when he was fourteen and studied moral philosophy under Francis Hutcheson . Here, Smith developed his passion for liberty , reason , and free speech . In 1740 Smith was the graduate scholar presented to undertake postgraduate studies at Balliol College , Oxford , under the Snell Exhibition .
In Book V of _The Wealth of Nations_, Smith comments on the low quality of instruction and the meager intellectual activity at English universities , when compared to their Scottish counterparts. He attributes this both to the rich endowments of the colleges at Oxford and Cambridge , which made the income of professors independent of their ability to attract students, and to the fact that distinguished men of letters could make an even more comfortable living as ministers of the Church of England .
Adam Smith's discontent at Oxford might be in part due to the absence of his beloved teacher in Glasgow, Francis Hutcheson . Hutcheson was well regarded as one of the most prominent lecturers at the University of Glasgow in his day and earned the approbation of students, colleagues, and even ordinary residents with the fervor and earnestness of his orations (which he sometimes opened to the public). His lectures endeavoured not merely to teach philosophy but to make his students embody that philosophy in their lives, appropriately acquiring the epithet, the preacher of philosophy. Unlike Smith, Hutcheson was not a system builder; rather it was his magnetic personality and method of lecturing that so influenced his students and caused the greatest of those to reverentially refer to him as "the never to be forgotten Hutcheson"—a title that Smith in all his correspondence used to describe only two people, his good friend David Hume and influential mentor Francis Hutcheson .
Smith began delivering public lectures in 1748 in
In 1750, he met the philosopher
In 1751, Smith earned a professorship at Glasgow University teaching
logic courses, and in 1752 he was elected a member of the
Smith published _ The Theory of Moral Sentiments _ in 1759, embodying some of his Glasgow lectures. This work was concerned with how human morality depends on sympathy between agent and spectator, or the individual and other members of society. Smith defined "mutual sympathy" as the basis of moral sentiments . He based his explanation, not on a special "moral sense" as the Third Lord Shaftesbury and Hutcheson had done, nor on utility as Hume did, but on mutual sympathy, a term best captured in modern parlance by the twentieth-century concept of empathy , the capacity to recognise feelings that are being experienced by another being.
Following the publication of _The Theory of Moral Sentiments_, Smith became so popular that many wealthy students left their schools in other countries to enroll at Glasgow to learn under Smith. After the publication of _The Theory of Moral Sentiments_, Smith began to give more attention to jurisprudence and economics in his lectures and less to his theories of morals. For example, Smith lectured that the cause of increase in national wealth is labour, rather than the nation's quantity of gold or silver, which is the basis for mercantilism , the economic theory that dominated Western European economic policies at the time. François Quesnay , one of the leaders of the Physiocratic school of thought
In 1762, the University of Glasgow conferred on Smith the title of Doctor of Laws (LL.D.). At the end of 1763, he obtained an offer from Charles Townshend —who had been introduced to Smith by David Hume—to tutor his stepson, Henry Scott , the young Duke of Buccleuch. Smith then resigned from his professorship to take the tutoring position. He subsequently attempted to return the fees he had collected from his students because he resigned in the middle of the term, but his students refused.
TUTORING AND TRAVELS
Smith's tutoring job entailed touring Europe with Scott, during which
time he educated Scott on a variety of subjects—such as proper
Polish. He was paid £ 300 per year (plus expenses) along with a
£300 per year pension; roughly twice his former income as a teacher.
Smith first travelled as a tutor to
From Geneva, the party moved to Paris. Here Smith came to know
several great intellectual leaders of the time; invariably having an
effect on his future works. This list included:
The wealth of France was virtually destroyed by Louis XIV and Louis XV in ruinous wars, by aiding the American insurgents against the British, and perhaps most destructive (in terms of public perceptions) was what was seen as the excessive consumption of goods and services deemed to have no economic contribution—unproductive labour. Assuming that nobility and church are essentially detractors from economic growth, the feudal system of agriculture in France was the only sector important to maintain the wealth of the nation. Given that the English economy of the day yielded an income distribution that stood in contrast to that which existed in France, Smith concluded that the teachings and beliefs of Physiocrats were, "with all imperfections , the nearest approximation to the truth that has yet been published upon the subject of political economy". The distinction between productive versus unproductive labour—the physiocratic _classe steril_—was a predominant issue in the development and understanding of what would become classical economic theory.
In 1766, Henry Scott's younger brother died in Paris, and Smith's
tour as a tutor ended shortly thereafter. Smith returned home that
year to Kirkcaldy, and he devoted much of the next ten years to his
magnum opus. There he befriended
Henry Moyes , a young blind man who
showed precocious aptitude. As well as teaching Moyes, Smith secured
the patronage of
In 1778, Smith was appointed to a post as commissioner of customs in
Smith's literary executors were two friends from the Scottish
academic world: the physicist and chemist
Joseph Black , and the
Smith's library went by his will to David Douglas, Lord Reston (son of his cousin Colonel Robert Douglas of Strathendry, Fife), who lived with Smith. It was eventually divided between his two surviving children, Cecilia Margaret (Mrs. Cunningham) and David Anne (Mrs. Bannerman). On the death of her husband, the Reverend W. B. Cunningham of Prestonpans in 1878, Mrs. Cunningham sold some of the books. The remainder passed to her son, Professor Robert Oliver Cunningham of Queen's College, Belfast, who presented a part to the library of Queen's College. After his death the remaining books were sold. On the death of Mrs. Bannerman in 1879 her portion of the library went intact to the New College (of the Free Church), Edinburgh.
PERSONALITY AND BELIEFS
James Tassie 's enamel paste medallion of Smith provided the model for many engravings and portraits that remain today.
Not much is known about Smith's personal views beyond what can be deduced from his published articles. His personal papers were destroyed after his death at his request. He never married, and seems to have maintained a close relationship with his mother, whom he lived with after his return from France and who died six years before his own death.
Smith was described by several of his contemporaries and biographers as comically absent-minded, with peculiar habits of speech and gait, and a smile of "inexpressible benignity". He was known to talk to himself, a habit that began during his childhood when he would smile in rapt conversation with invisible companions. He also had occasional spells of imaginary illness, and he is reported to have had books and papers placed in tall stacks in his study. According to one story, Smith took Charles Townshend on a tour of a tanning factory, and while discussing free trade , Smith walked into a huge tanning pit from which he needed help to escape. He is also said to have put bread and butter into a teapot, drunk the concoction, and declared it to be the worst cup of tea he ever had. According to another account, Smith distractedly went out walking in his nightgown and ended up 15 miles (24 km) outside of town, before nearby church bells brought him back to reality.
James Boswell who was a student of Smith's at Glasgow University, and
later knew him at the Literary Club , says that Smith thought that
speaking about his ideas in conversation might reduce the sale of his
books, and so his conversation was unimpressive. According to Boswell,
he once told Sir
Smith has been alternately described as someone who "had a large nose, bulging eyes, a protruding lower lip, a nervous twitch, and a speech impediment" and one whose "countenance was manly and agreeable." Smith is said to have acknowledged his looks at one point, saying, "I am a beau in nothing but my books." Smith rarely sat for portraits, so almost all depictions of him created during his lifetime were drawn from memory. The best-known portraits of Smith are the profile by James Tassie and two etchings by John Kay . The line engravings produced for the covers of 19th century reprints of _The Wealth of Nations_ were based largely on Tassie's medallion.
There has been considerable scholarly debate about the nature of
Smith's religious views. Smith's father had shown a strong interest in
Christianity and belonged to the moderate wing of the Church of
Some other authors argue that Smith's social and economic philosophy is inherently theological and that his entire model of social order is logically dependent on the notion of God's action in nature.
Smith was also a close friend and later the executor of
_THE THEORY OF MORAL SENTIMENTS_
Main article: The Theory of Moral Sentiments _ 1922 printing of An inquiry into the nature and causes of the wealth of nations_
In 1759, Smith published his first work, _The Theory of Moral Sentiments,_ sold by co-publishers Andrew Millar of London and Alexander Kincaid of Edinburgh. Smith continued making extensive revisions to the book, up until his death. Although _The Wealth of Nations_ is widely regarded as Smith's most influential work, it is believed that Smith himself considered _The Theory of Moral Sentiments_ to be a superior work.
In the work, Smith critically examines the moral thinking of his time, and suggests that conscience arises from dynamic and interactive social relationships through which people seek "mutual sympathy of sentiments." His goal in writing the work was to explain the source of mankind's ability to form moral judgement, given that people begin life with no moral sentiments at all. Smith proposes a theory of sympathy, in which the act of observing others and seeing the judgements they form of both others and oneself makes people aware of themselves and how others perceive their behavior. The feedback we receive from perceiving (or imagining) others' judgements creates an incentive to achieve "mutual sympathy of sentiments" with them and leads people to develop habits, and then principles, of behavior, which come to constitute one's conscience.
Some scholars have perceived a conflict between _The Theory of Moral Sentiments_ and _The Wealth of Nations_; the former emphasises sympathy for others, while the latter focuses on the role of self-interest. In recent years, however, some scholars of Smith's work have argued that no contradiction exists. They claim that in _The Theory of Moral Sentiments_, Smith develops a theory of psychology in which individuals seek the approval of the "impartial spectator" as a result of a natural desire to have outside observers sympathise with their sentiments. Rather than viewing _The Theory of Moral Sentiments_ and _The Wealth of Nations_ as presenting incompatible views of human nature, some Smith scholars regard the works as emphasising different aspects of human nature that vary depending on the situation. Otteson argues that both books are Newtonian in their methodology and deploy a similar "market model" for explaining the creation and development of large-scale human social orders, including morality, economics, as well as language. Ekelund and Hebert offer a differing view, observing that self-interest is present in both works and that "in the former, sympathy is the moral faculty that holds self-interest in check, whereas in the latter, competition is the economic faculty that restrains self-interest."
_THE WEALTH OF NATIONS_
Main article: The Wealth of Nations _ Later building on the site where Smith wrote The Wealth of Nations_
There is disagreement between classical and neoclassical economists about the central message of Smith's most influential work: _An Inquiry into the Nature and Causes of the Wealth of Nations_ (1776). Neoclassical economists emphasise Smith's invisible hand , a concept mentioned in the middle of his work – Book IV, Chapter II – and classical economists believe that Smith stated his programme for promoting the "wealth of nations" in the first sentences, which attributes the growth of wealth and prosperity to the division of labour.
Smith used the term "the invisible hand " in "History of Astronomy" referring to "the invisible hand of Jupiter," and once in each of his The Theory of Moral Sentiments (1759) and The Wealth of Nations (1776). This last statement about "an invisible hand" has been interpreted in numerous ways.
As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.
Those who regard that statement as Smith's central message also quote frequently Smith's dictum:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. _ The first page of The Wealth of Nations_, 1776 London edition
Smith's statement about the benefits of "an invisible hand" may be meant to answer Mandeville\'s contention that "Private Vices … may be turned into Public Benefits". It shows Smith's belief that when an individual pursues his self-interest under conditions of justice, he unintentionally promotes the good of society. Self-interested competition in the free market, he argued, would tend to benefit society as a whole by keeping prices low, while still building in an incentive for a wide variety of goods and services. Nevertheless, he was wary of businessmen and warned of their "conspiracy against the public or in some other contrivance to raise prices". Again and again, Smith warned of the collusive nature of business interests, which may form cabals or monopolies , fixing the highest price "which can be squeezed out of the buyers". Smith also warned that a business-dominated political system would allow a conspiracy of businesses and industry against consumers, with the former scheming to influence politics and legislation. Smith states that the interest of manufacturers and merchants "...in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public...The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention." Thus Smith's chief worry seems to be when business is given special protections or privileges from government; by contrast, in the absence of such special political favours, he believed that business activities were generally beneficial to the whole society:
It is the great multiplication of the production of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of society. (_The Wealth of Nations,_ I.i.10)
The neoclassical interest in Smith's statement about "an invisible hand" originates in the possibility of seeing it as a precursor of neoclassical economics and its concept of general equilibrium – Samuelson\'s "Economics" refers six times to Smith's "invisible hand". To emphasise this connection, Samuelson quotes Smith's "invisible hand" statement substituting "general interest" for "public interest". Samuelson concludes: "Smith was unable to prove the essence of his invisible-hand doctrine. Indeed, until the 1940s no one knew how to prove, even to state properly, the kernel of truth in this proposition about perfectly competitive market."
Very differently, classical economists see in Smith's first sentences his programme to promote "The Wealth of Nations". Using the physiocratical concept of the economy as a circular process, to secure growth the inputs of Period 2 must exceed the inputs of Period 1. Therefore, those outputs of Period 1 which are not used or usable as inputs of Period 2 are regarded as unproductive labour, as they do not contribute to growth. This is what Smith had heard in France from, among others, Quesnay . To this French insight that unproductive labour should be reduced in order to use labour more productively, Smith added his own proposal, that productive labour should be made even more productive by deepening the division of labour . Smith argued that deepening the division of labour under competition leads to greater productivity, which leads to lower prices and thus an increasing standard of living—"general plenty" and "universal opulence"—for all. Extended markets and increased production lead to the continuous reorganisation of production and the invention of new ways of producing, which in turn lead to further increased production, lower prices, and improved standards of living. Smith's central message is therefore that under dynamic competition a growth machine secures "The Wealth of Nations". Smith's argument predicted Britain's evolution as the workshop of the world, underselling and outproducing all its competitors. The opening sentences of the "Wealth of Nations" summarise this policy:
The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes … . his produce … bears a greater or smaller proportion to the number of those who are to consume it … .ut this proportion must in every nation be regulated by two different circumstances;
* first, by the skill, dexterity, and judgment with which its labour is generally applied; and, * secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed .
Smith added, however, that the "abundance or scantiness of this supply too seems to depend more upon the former of those two circumstances than upon the latter."
CRITICISM AND DISSENT
Alfred Marshall criticised Smith's definition of economy on several points. He argued that man should be equally important as money, services are as important as goods, and that there must be an emphasis on human welfare, instead of just wealth. The "invisible hand" only works well when both production and consumption operates in free markets, with small ("atomistic") producers and consumers allowing supply and demand to fluctuate and equilibrate. In conditions of monopoly and oligopoly , the "invisible hand" fails. Nobel Prize-winning economist Joseph E. Stiglitz says, on the topic of one of Smith's better known ideas: "the reason that the invisible hand often seems invisible is that it is often not there."
Smith's burial place in Canongate Kirkyard
Shortly before his death, Smith had nearly all his manuscripts destroyed. In his last years, he seemed to have been planning two major treatises, one on the theory and history of law and one on the sciences and arts. The posthumously published _Essays on Philosophical Subjects_, a history of astronomy down to Smith's own era, plus some thoughts on ancient physics and metaphysics , probably contain parts of what would have been the latter treatise. _Lectures on Jurisprudence _ were notes taken from Smith's early lectures, plus an early draft of _The Wealth of Nations_, published as part of the 1976 Glasgow Edition of the works and correspondence of Smith. Other works, including some published posthumously, include _Lectures on Justice, Police, Revenue, and Arms_ (1763) (first published in 1896); and _Essays on Philosophical Subjects_ (1795).
IN ECONOMICS AND MORAL PHILOSOPHY
_The Wealth of Nations_ was a precursor to the modern academic
discipline of economics. In this and other works, Smith expounded how
rational self-interest and competition can lead to economic
prosperity. Smith was controversial in his own day and his general
approach and writing style were often satirised by Tory writers in the
moralising tradition of Hogarth and Swift, as a discussion at the
University of Winchester suggests. In 2005, _The Wealth of Nations_
was named among the 100 Best Scottish Books of all time. Former UK
In light of the arguments put forward by Smith and other economic
theorists in Britain, academic belief in mercantilism began to decline
in Britain in the late 18th century. During the Industrial Revolution
, Britain embraced free trade and Smith's laissez-faire economics, and
George Stigler attributes to Smith "the most important substantive proposition in all of economics". It is that, under competition, owners of resources (for example labour, land, and capital) will use them most profitably, resulting in an equal rate of return in equilibrium for all uses, adjusted for apparent differences arising from such factors as training, trust, hardship, and unemployment.
Paul Samuelson finds in Smith's pluralist use of supply and demand as
applied to wages, rents, and profit a valid and valuable anticipation
of the general equilibrium modelling of
Walras a century later.
Smith's allowance for wage increases in the short and intermediate
term from capital accumulation and invention contrasted with Malthus,
Joseph Schumpeter criticised Smith for a lack of technical rigor, yet he argued that this enabled Smith's writings to appeal to wider audiences: "His very limitation made for success. Had he been more brilliant, he would not have been taken so seriously. Had he dug more deeply, had he unearthed more recondite truth, had he used more difficult and ingenious methods, he would not have been understood. But he had no such ambitions; in fact he disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along."
Classical economists presented competing theories of those of Smith,
termed the "labour theory of value ". Later Marxian economics
descending from classical economics also use Smith's labour theories,
in part. The first volume of
The body of theory later termed "neoclassical economics" or "marginalism " formed from about 1870 to 1910. The term "economics" was popularised by such neoclassical economists as Alfred Marshall as a concise synonym for "economic science" and a substitute for the earlier, broader term "political economy " used by Smith. This corresponded to the influence on the subject of mathematical methods used in the natural sciences . Neoclassical economics systematised supply and demand as joint determinants of price and quantity in market equilibrium, affecting both the allocation of output and the distribution of income. It dispensed with the labour theory of value of which Smith was most famously identified with in classical economics, in favour of a marginal utility theory of value on the demand side and a more general theory of costs on the supply side.
The bicentennial anniversary of the publication of _The Wealth of Nations_ was celebrated in 1976, resulting in increased interest for _The Theory of Moral Sentiments_ and his other works throughout academia. After 1976, Smith was more likely to be represented as the author of both _The Wealth of Nations_ and _The Theory of Moral Sentiments_, and thereby as the founder of a moral philosophy and the science of economics. His _homo economicus _ or "economic man" was also more often represented as a moral person. Additionally, economists David Levy and Sandra Peart in "The Secret History of the Dismal Science" point to his opposition to hierarchy and beliefs in inequality, including racial inequality, and provide additional support for those who point to Smith's opposition to slavery, colonialism, and empire. They show the caricatures of Smith drawn by the opponents of views on hierarchy and inequality in this online article. Emphasised also are Smith's statements of the need for high wages for the poor, and the efforts to keep wages low. In The "Vanity of the Philosopher: From Equality to Hierarchy in Postclassical Economics", Peart and Levy also cite Smith's view that a common street porter was not intellectually inferior to a philosopher, and point to the need for greater appreciation of the public views in discussions of science and other subjects now considered to be technical. They also cite Smith's opposition to the often expressed view that science is superior to common sense.
Smith also explained the relationship between growth of private property and civil government:
Men may live together in society with some tolerable degree of security, though there is no civil magistrate to protect them from the injustice of those passions. But avarice and ambition in the rich, in the poor the hatred of labour and the love of present ease and enjoyment, are the passions which prompt to invade property, passions much more steady in their operation, and much more universal in their influence. Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it. The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days' labour, civil government is not so necessary. Civil government supposes a certain subordination. But as the necessity of civil government gradually grows up with the acquisition of valuable property, so the principal causes which naturally introduce subordination gradually grow up with the growth of that valuable property. (…) Men of inferior wealth combine to defend those of superior wealth in the possession of their property, in order that men of superior wealth may combine to defend them in the possession of theirs. All the inferior shepherds and herdsmen feel that the security of their own herds and flocks depends upon the security of those of the great shepherd or herdsman; that the maintenance of their lesser authority depends upon that of his greater authority, and that upon their subordination to him depends his power of keeping their inferiors in subordination to them. They constitute a sort of little nobility, who feel themselves interested to defend the property and to support the authority of their own little sovereign in order that he may be able to defend their property and to support their authority. Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all. (Source: _The Wealth of Nations_, Book 5, Chapter 1, Part 2)
IN BRITISH IMPERIAL DEBATES
Smith's chapter on colonies in turn would help shape British imperial debates from the mid-nineteenth century onward. _The Wealth of Nations_ would become an ambiguous text regarding the imperial question. In his chapter on colonies, Smith pondered how to solve the crisis developing across the Atlantic among the empire's thirteen American colonies. He offered two different proposals for easing tensions. The first proposal called for giving the colonies their independence and, by thus parting on a friendly basis, Britain would be able to develop and maintain a free-trade relationship with them, and possibly even an informal military alliance. Smith's second proposal called for a theoretical imperial federation that would bring the colonies and the metropole closer together through an imperial parliamentary system and imperial free trade.
Smith's most prominent disciple in nineteenth-century Britain, peace
Richard Cobden , preferred the first proposal. Cobden would
Anti-Corn Law League
PORTRAITS, MONUMENTS, AND BANKNOTES
Smith has been commemorated in the UK on banknotes printed by two
different banks; his portrait has appeared since 1981 on the £ 50
notes issued by the
Clydesdale Bank in Scotland, and in March 2007
Smith's image also appeared on the new series of £20 notes issued by
Bank of England
A large-scale memorial of Smith by
A bust of Smith is in the Hall of Heroes of the National Wallace
AS A SYMBOL OF FREE MARKET ECONOMICS
Smith has been celebrated by advocates of free market policies as the
founder of free market economics, a view reflected in the naming of
bodies such as the
Adam Smith Institute in London, the Adam Smith
Alan Greenspan argues that, while Smith did not coin the term
_laissez-faire _, "it was left to
Other writers have argued that Smith's support for _laissez-faire_
(which in French means leave alone) has been overstated. Herbert Stein
wrote that the people who "wear an
Similarly, Vivienne Brown stated in _ The Economic Journal _ that in the 20th century United States, Reaganomics supporters, the _Wall Street Journal _, and other similar sources have spread among the general public a partial and misleading vision of Smith, portraying him as an "extreme dogmatic defender of _laissez-faire _ capitalism and supply-side economics ". In fact, _The Wealth of Nations_ includes the following statement on the payment of taxes:
"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state."
Some commentators have argued that Smith's works show support for a progressive, not flat, income tax and that he specifically named taxes that he thought should be required by the state, among them luxury goods taxes and tax on rent. Yet Smith argued for the "impossibility of taxing the people, in proportion to their economic revenue, by any capitation" (_The Wealth of Nations,_ V.ii.k.1). Smith argued that taxes should principally go toward protecting "justice" and "certain publick institutions" that were necessary for the benefit of all of society but that could not be provided by private enterprise (_The Wealth of Nations,_ IV.ix.51).
Additionally, Smith outlined the proper expenses of the government in _The Wealth of Nations, Book V, Ch. I_. Included in his requirements of a government is to enforce contracts and provide justice system, grant patents and copy rights, provide public goods such as infrastructure, provide national defence and regulate banking. It was the role of the government to provide goods "of such a nature that the profit could never repay the expense to any individual" such as roads, bridges, canals, and harbours. He also encouraged invention and new ideas through his patent enforcement and support of infant industry monopolies. He supported partial public subsidies for elementary education, and he believed that competition among religious institutions would provide general benefit to the society. In such cases, however, Smith argued for local rather than centralised control: "Even those publick works which are of such a nature that they cannot afford any revenue for maintaining themselves . . . are always better maintained by a local or provincial revenue, under the management of a local and provincial administration, than by the general revenue of the state" (_Wealth of Nations,_ V.i.d.18). Finally he outlined how the government should support the dignity of the monarch or chief magistrate, such that they are equal or above the public in fashion. He even states that monarchs should be provided for in a greater fashion than magistrates of a republic because "we naturally expect more splendor in the court of a king than in the mansion-house of a doge ". In addition, he allowed that in some specific circumstances retaliatory tariffs may be beneficial:
"The recovery of a great foreign market will generally more than compensate the transitory inconvenience of paying dearer during a short time for some sorts of goods."
He added, however, that in general a retaliatory tariff "seems a bad method of compensating the injury done to certain classes of our people, to do another injury ourselves, not only to those classes, but to almost all the other classes of them" (_The Wealth of Nations,_ IV.ii.39).
Economic historians such as Jacob Viner regard Smith as a strong advocate of free markets and limited government (what Smith called "natural liberty") but not as a dogmatic supporter of _laissez-faire_.
Economist Daniel Klein believes using the term "free market
economics" or "free market economist" to identify the ideas of Smith
is too general and slightly misleading. Klein offers six
characteristics central to the identity of Smith's economic thought
and argues that a new name is needed to give a more accurate depiction
of the "Smithian" identity.
Some have also claimed, Emma Rothschild among them, that Smith would have supported a minimum wage, although there is no direct textual evidence supporting the claim. Indeed, Smith wrote:
The price of labour, it must be observed, cannot be ascertained very accurately anywhere, different prices being often paid at the same place and for the same sort of labour, not only according to the different abilities of the workmen, but according to the easiness or hardness of the masters. Where wages are not regulated by law, all that we can pretend to determine is what are the most usual; and experience seems to show that law can never regulate them properly, though it has often pretended to do so. (_The Wealth of Nations_, Book 1, Chapter 8)
Smith also noted a rough equality of bargaining power :
A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.
* ^ In _Life of Adam Smith_, Rae writes, "In his fourth year, while on a visit to his grandfather's house at Strathendry on the banks of the Leven, was stolen by a passing band of gypsies, and for a time could not be found. But presently a gentleman arrived who had met a gypsy woman a few miles down the road carrying a child that was crying piteously. Scouts were immediately dispatched in the direction indicated, and they came upon the woman in Leslie wood. As soon as she saw them she threw her burden down and escaped, and the child was brought back to his mother. would have made, I fear, a poor gypsy." * ^ The 6 editions of _The Theory of Moral Sentiments_ were published in 1759, 1761, 1767, 1774, 1781, and 1790 respectively.
* ^ "Great Thinkers of the Scottish Enlightenment".
* ^ L. Davis, William; Figgins, Bob; Hedengren, David; B. Klein,
Daniel (May 2011). "
* ^ Rae 1895 , p. 42
* ^ Buchholz 1999 , p. 15
* ^ Buchan 2006 , p. 67
* ^ Buchholz 1999 , p. 13
* ^ _A_ _B_ _C_ _D_ _E_ Buchholz 1999 , p. 16
* ^ Buchholz 1999 , pp. 16–17
* ^ _A_ _B_ _C_ Buchholz 1999 , p. 17
* ^ "Adam Smith". _policonomics.com_.
* ^ Buchan 2006 , p. 80
* ^ Stewart, D., 1799, _Essays on Philosophical Subjects, to which
is prefixed An Account of the Life and Writings of the Author by
Dugald Steward, F.R.S.E._, Basil; from the Transactions of the Royal
* ^ "The
* Robert.L.Helbroner. _The Essential Adam Smith_. ISBN 0-393-95530-3
* Benians, E. A (1925). "Adam Smith’s Project of an Empire."
_Cambridge Historical Journal_ 1 (3): 249–83.
* Bonar, James (1895). _A Catalogue of the Library of Adam Smith_.
_ Wikisource has the text of A Short Biographical Dictionary of English Literature 's article about SMITH, ADAM _.
* Butler, Eamonn (March 2007). _
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