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Wealth of Nations

by Niamh Wood

Adam Smith

Adam Smith was a hugely influential Scottish political economist and philosopher, who wrote the book ‘The Wealth of Nations,’ in which he details the first system of political economy.

Adam Smith's exact date of birth is unknown, but he was baptised on June 5th, 1723, in Kirkcaldy, Scotland. He was the son by the second marriage of his father, Adam Smith, who was a customs officer, and his mother, Margaret Douglas, who was the daughter of a substantial landowner. Sadly, Smith’s father died just five months before his birth, so his mother raised him on her own.

Smith received his elementary education at the Burgh School in Kirkcaldy, where he studied Latin, mathematics, history, and writing. At age 14, in 1737, Smith entered the University of Glasgow and graduated in 1740. He went on to win a scholarship (the Snell Exhibition) to study at Balliol College, Oxford. He attended here for six years before returning home to Kirkcaldy in 1746 looking for suitable employment. In 1748, he received an opportunity, made through family connections, to present a series of public lectures in Edinburgh on rhetoric and belles lettres. It was this opportunity that established his reputation. Through these lectures, in 1750, Smith met and became a lifelong friend with David Hume, a Scottish philosopher, and economist. Their relationship led to Smith being appointed professor of logic at Glasgow University in 1751. Just a year later he became professor of moral philosophy.

Smith published his book ‘The theory of moral sentiments’ in 1759. In it, Smith shows that our moral ideas and actions are a product of our very nature as social creatures. It argues that social psychology is a better guide to moral action. Not long after his book's publication, Smith was asked to tutor the future Duke of Buccleuch, Henry. Smith accepted and in 1764, he left Glasgow and traveled with Henry to France. Here, Smith met with several eminent European intellectuals including, Benjamin Franklin and French economist Turgot.

In 1776, Smith moved to London and published ‘An inquiry into the Nature and Causes of the Wealth of Nations' (usually shortened to and known as ‘The Wealth of Nations), which is thought of as the first work dedicated to the study of political economy. He published this with the intention of it being the first part of a complete theory of society, covering theology, ethics, politics, and law. Economics at the time was dominated by the idea that a country's wealth was best measured by its store of gold and silver. Smith proposed the idea that a nation’s wealth should not be judged by this but by the total of its production and commerce (today known as gross domestic product or GDP). He wrote about his system of ‘perfect liberty’ which theorised that if people were set free to better themselves, it would produce economic prosperity for all.

Smith’s ideas are a reflection on economics considering the beginning of the industrial revolution, and he states that free-market economies such as capitalist ones are the most productive and beneficial to their societies. He goes on to argue that an economic system based on individual self-interest led by an ‘invisible hand’ would achieve the greatest good for all.

In 1778, Smith was appointed commissioner of customs in Edinburgh and in 1783, became a founding member of the Royal Society of Edinburgh. In 1787 he was named rector of the University of Glasgow where he once studied but sadly died just three years later at the age of 67 on July 17th, 1790. His work on ‘The Wealth of Nations’ was considered a foundational work of classical economics and continues to be regarded as one of the most influential books ever written. Although Smith is mostly known for this book, he also wrote other writings including, ‘lectures on justice politics, revenue, and arms (1763) and ‘Essays on Philosophical subjects (1795). These books were both published after his death.

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