Etching by Cadell and Davies, Introduction Adam Smith - was a Scottish philosopher and political economist of the Age of Enlightenment and a key figures in the Scottish Enlightenment. He is widely cited as the father of modern economics, and sometimes as the father of modern Capitalismand his magnum opus, "The Wealth of Nations", is considered the first modern work of classical economics. His metaphor of the invisible hand of the free market has been of untold influence in the development of laissez faire economics and modern Capitalism and Individualismbut Smith's work has been almost as influential in other areas of Political Philosophyincluding UtilitarianismLiberalismLibertarianismSocialism and Marxism. Life Smith was born in early June in Kirkcaldy, Scotland.
In his first book, "The Theory of Moral Sentiments," Smith proposed the idea of the invisible hand—the tendency of free markets to regulate themselves by means of competition, supply and demand, and self-interest. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs tend to pay higher wages to attract workers to these positions, but he is most famous for his book: Smith attended the University of Glasgow at age 14, later attending the prestigious Balliol College at Oxford University.
He spent years teaching and tutoring, publishing some of his lectures in his book, "The Theory of Moral Sentiments. The Theory of Moral Sentiments Smith is most famous for his piece, "The Wealth of Nations," but his first major treatise, "The Theory of Moral Sentiments," released in created many ideas still practiced today.
The book extensively explored ideas such as morality and human sympathy. In the book, Smith argued that people are self-interested but naturally like to help others. While this may seem to be at odds with his economic views of individuals working to better themselves with no regard for the common good, the idea of an invisible hand that helps everyone through the labor of self-centered individuals offsets this seeming contradiction.
As a result, he is responsible for popularizing many of the ideas that underpin the school of thought that became known as classical economics. These ideas reflect the concept that each person, by looking out for him or herself, inadvertently helps to create the best outcome for all.
By selling products that people want to buy, the butcher, brewer, and baker hope to make money. If they are effective in meeting the needs of their customers, they will enjoy the financial rewards.
While they are engaging in their enterprises for the purpose of earning money, they are also providing products that people want. Such a system, Smith argued, creates wealth not just for the butcher, brewer, and baker, but for the nation as a whole when that nation is populated with citizens working productively to better themselves and address their financial needs.
Similarly, Smith noted that a man would invest his wealth in the enterprise most likely to help him earn the highest return for a given risk level.
Today, the invisible-hand theory is often presented in terms of a natural phenomenon that guides free markets and capitalism in the direction of efficiency, through supply and demand and competition for scarce resources, rather than as something that results in the well-being of individuals.
The ideas it promoted generated international attention and helped drive the move from land-based wealth to wealth created by assembly-line production methods driven by the division of labor.
One example Smith cited involved the work required to make a pin. One man undertaking the 18 steps required to complete the tasks could make but a handful of pins each week, but if the 18 tasks were completed in assembly-line fashion by ten men, production would jump to thousands of pins per week.
In short, Smith argues that the division of labor and specialization produces prosperity. Before the release of "The Wealth of Nations," countries declared their wealth based on the value of their gold and silver deposits.
However, Smith argued that a free exchange should be created, as both sides trading become better off. This led to the increase in imports and exports and countries judging their value accordingly. Smith also argued for a limited government. He wanted to see a hands-off government and legislation conducive an open and free market.
Smith did see the government responsible for some sectors, however, including education and defense. The Bottom Line The ideas that became associated with Smith became the foundation of the classical school of economics and gave him a place in history as the father of economics.
Concepts Smith pioneered, such as the invisible hand and the division of labor serve are now quintessential economic theories. Smith died on July 19,at age 67 but the ideas he promoted live on in the form of contemporary economic research and institutes like the Adam Smith Institute.- ADAM SMITH- Adam Smith ( ) was a Scottish social philosopher and political economist.
One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments () and An Inquiry into the Nature and Causes of the Wealth of Nations(). Adam Smith's philosophy bears little resemblance to the libertarian caricature put forth by proponents of laissez faire markets who describe humans solely as homo economicus.
For Smith, the market is a mechanism of morality and social support. Looking at the typical biographical information of Adam Smith yields many different perspectives. There seem to be considerable influences from the Presbyterian theology of the Church of Scotland and minor influence from the Episcopal theology of the Church of England from the earliest time.
Much more is known about Adam Smith’s thought than about his life. He was the son by second marriage of Adam Smith, comptroller of customs at Kirkcaldy, a small (population 1,) but thriving fishing village near Edinburgh, and Margaret Douglas, daughter of a substantial landowner.
Adam Smith () is commonly regarded as the first modern economist with the publication in of The Wealth of Nations. He wrote in a wide range of disciplines: moral philosophy, jurisprudence, rhetoric and literature, and the history of science.
The particular contribution of Adam Smith that is most clearly celebrated today—and has certainly not been neglected—is the way he helped to reshape the subject of economics.