A major thinker in the Scottish Enlightenment, Adam Smith (1723-1790) was a moral philosopher and political economist. He's often referred to as "The Father of Modern Economics".

The Wealth of Nations

Smith’s most famous book, published in 1776, focused on economic ideas, like...

Specialization

Specialization is the idea that people will trade what they do well for what they can't do as well. This leads to greater productivity, and everyone gains through voluntary exchange.

Power of Markets

As we trade, we can do more with larger markets, because we have more recipients for our goods and more choices of theirs. The resulting competition leads to lower prices and better products.

The Invisible Hand

Smith argued that as people worked for their own good, the greatest good for society resulted. He equated this harmony to an "invisible hand" (as opposed to the visible hand of government rule) guiding the process.

The Role of Government

Smith was not laissez-faire; he did see a role for government: to protect consumers. He hated the idea of monopolies.

Trade Promotes Peace

A nation's wealth comes from the productivity of its people. As people specialize, thus producing more (and more efficiently), trade becomes more necessary. The necessity for trade makes us work together, promoting international peace. War disrupts trade.

Competitive Markets

Are free markets good? Smith's studies of private morality shaped the ideas in Wealth of Nations. Competitive markets are the best way to help the poor. Other systems promote "cronyism" or elite dominance. Smith was pro-market, not pro-business, and was anti-monopoly.

The Theory of Moral Sentiments

This book, less well-known than The Wealth of Nations, examines a life well-lived. It influenced the public systems described in The Wealth of Nations. It discussed concepts like...

The Impartial Spectator

We want to be loved and considered good. The Impartial Spectator is our imaginary judge, our conscience. We learn good from bad by observing others’ reactions to our behavior.

"Ideal" Societies

Smith disparaged those men who trusted in their own ability to impose an "ideal" on the rest of society. Fascists, Communists, etc. have continued to commit this fallacy.

There is more happiness when people are able to choose for themselves.

Productivity

Smith taught that wealth came, not from silver or gold, but from the productivity of a society's people. This helped end mercantilism and usher in the prosperity of the nineteenth century. He showed how markets could help the poor; his thinking on private morality shaped his view on the role of government.

In Conclusion...

Do What You Do Best, and Trade For the Rest!