Adam Smith, philosopher and economist, died on the 17th of July, 1790.
The man with the most common surname was a most uncommon man, although he was regarded as one of the world’s ‘fathers’ – a common accolade for uncommon men who made a contribution to development of the western world. On the other hand, there haven’t been too many ‘mothers’ – other than ‘the mother of all battles’, which may be complimentary, or ‘the mother of all evil’, which isn’t.
Adam Smith is regarded as the ‘father’ of the science of economics and is most certainly the author of the pioneering work, ‘An Inquiry into the Nature and Causes of The Wealth of Nations’. Smith argued that the ‘invisible hand’ of self-interest guides the most efficient use of resources in an economy. To underscore his laissez-faire, free market convictions, Smith argued that state and personal efforts to promote social good are ineffectual compared to unbridled market forces. There is no doubt that ‘The Wealth of Nations’, written in 1776, established the intellectual framework for economics as an autonomous subject, launched the economic doctrine of free enterprise and had a profound influence on the ‘classical school’ of modern economics. Smith also wrote a ‘Theory of Moral Sentiments’, which is about the standards of ethical conduct, which hold society together, with emphasis on the general harmony of human motives and activities under a beneficent providence.
Adam Smith was born in Kirkcaldy, in Fife, and although the exact date of his birth is unknown, he was baptized on the 5th of June, 1723. In 1740, after graduating from Glasgow at the age of seventeen, Smith went to Oxford on a scholarship, where he learned Greek and began a “sound accumulation of Greek learning”. It was also whilst at Oxford that he read David Hume’s ‘A Treatise of Human Nature’, which work had been finished just a few years earlier, in 1735. Smith’s interest in Hume’s work brought him into conflict with the authorities at Oxford and he went back to Scotland. He lectured at first in Edinburgh, where he was a member of the intellectual scene in Edinburgh, which included Hume, John Home, Hugh Blair, Lord Hailes and Principal Robertson. As a lecturer and orator, Adam Smith acquired a great reputation and, once he got going, he was known for pouring out animated arguments.
In 1751, at the age of twenty-eight, Adam Smith became a Professor of Logic at Glasgow University. The following year, he took the Chair of Moral Philosophy. His subject was not economics per se as he had yet to introduce his creation. His lectures covered the fields of ethics, rhetoric, jurisprudence and political economy, or ‘police and revenue’. In Adam Smith’s day, much of the study carried out at Universities involved history or philosophy – moral philosophy and natural philosophy. A course in moral philosophy would include a study of jurisprudence, which would naturally lead to a study of legal systems, which, in turn, would lead to government and, ultimately, a study of political economy. Therein lies the evolutionary path of Smith’s thinking. However, by 1759, he had only gotten as far as being recognised as one of the school of ‘moral sense thinkers’ and publishing his ‘Theory of Moral Sentiments’.
In 1764, Smith went on a tour of the Continent, primarily in order to meet the influential thinkers of the day, but officially as tutor to the young Duke of Buccleuch. Amongst those he met were the French ‘Physiocrats’ Montesquieu, Quesnay, Turgot, Necker and Volatire, whom he met in Geneva. Smith formed the view that the French “Physiocratic system, with all its imperfections [was], perhaps, the nearest approximation to the truth that has yet been published upon the subject of political economy”.
Agricultural France was a well-spring of such innovative thought in direct contrast to its history, which was driven by envy of smaller, more successful, maritime nations, such as the British and the Dutch. The French government thought that the way to wealth and political influence was through trade and manufacture, but made the mistake of believing it could be exerted by import duties instead of listening to its ‘thinkers’. Its failure so to do eventually led to the bloody French Revolution, which in turn ushered in the era of Napoleon.
It was these highbrow meetings in France that helped Smith to further formulate and crystallise his ideas, which he recorded and, once he got back to Scotland, in 1766, started setting down in earnest. For the next ten years, Smith remained with his mother in his home town of Kirkcaldy, existing on an annuity from the Duke of Buccleuch and studying and thinking and deliberating. After the death of his friend, David Hume, Smith moved to London, where he moved once more within intellectual circles. He associated with luminaries such as Gibbon, Burke, Sir Joshua Reynolds, Samuel Johnson, and his sidekick, Boswell. In London, he also met Benjamin Franklin, to whom he read some parts of the draft of ‘The Wealth of Nations’, which was published later in 1776, the year of Hume’s death.
Smith's book was considered revolutionary as it did not dwell on the interests of the ruling or merchant classes in society. His ideas were pure democracy, concerned with promoting the wealth of the entire nation, wealth which consists of the goods that all people jointly consume. He had developed the concept of those thinkers, such as Turgot and Quesnay, whom he had met in France, and also native ideas from the likes of Sir William Petty and Sir Dudley North, to crystallise the answer to ‘life, the Universe and everything’ in the modern world.
He argued that markets would guide economic activity and act like an ‘invisible hand’ allocating resources. Prices would be the main driver as they would rise when there was a shortage of something and fall when it was plentiful. Market forces would ensure the production of the right goods and services, because producers would want to make profits by providing goods that were needed. Lacking unnecessary government intervention, public wellbeing would increase through competition. That would be because producers would try to outsell each other, which would bring prices down to their lowest possible profit level. If there was not enough competition, producers would make more profit, but only temporarily, as more firms would be attracted to the industry, bringing prices back down. Smith’s concepts are so fundamental that they are still present in nearly all economics courses today.
Adam Smith died in Edinburgh on the 17th of July, 1790, the same day that the Bank of Scotland was established under an Act of the Scottish Parliament. Smith was buried in the Canongate Kirkyard and, after his death, it was discovered that he had, in true moral style, devoted a considerable part of his income, in numerous secret acts, to charity.
After his death, his executors advised that he had been working throughout his career on a plan to give “a connected history of the liberal and elegant arts.” He had written on ancient physics and ancient logic, and on the arts (painting, poetry and music), but unfortunately, in the context of posterity, only two of his works made it to publication. But what a legacy!