
Adam Smith (Baptised June 5, 1723 – July 17, 1790) was a Scotland political economy and moral philosophy. His ''Wealth of Nations'' was one of the earliest attempts to study the historical development of industry and commerce in Europe. That work helped to create the modern academic discipline of economics and provided one of the best-known intellectual rationales for free trade and capitalism. ==Biography== Smith was the son of the controller of the customs at Kirkcaldy, Fife, Scotland. The exact date of his birth is unknown, but he was baptized at Kirkcaldy on June 5, 1723, his father having died some six months previously. At around the age of 4, he was kidnapped by a band of Roma people, but he was quickly rescued by his uncle and returned to his mother. Smith's biographer, John Rae, commented wryly that he feared Smith would have made "a poor Gipsy." At the age of about fifteen, Smith proceeded to the University of Glasgow, studying moral philosophy under "the never-to-be-forgotten" (as Smith called him) Francis Hutcheson (philosopher). In 1740 he entered the Balliol College, Oxford of the University of Oxford, but as William Robert Scott has said, "the Oxford of his time gave little if any help towards what was to be his lifework," and he left the university in 1746. In 1748 he began delivering public lectures in Edinburgh under the patronage of Lord Kames. Some of these dealt with rhetoric and ''belles-lettres'', but later he took up the subject of "the progress of opulence," and it was then, in his middle or late 20s, that he first expounded the economic philosophy of "the obvious and simple system of natural liberty" which he was later to proclaim to the world in his ''Inquiry into the Nature and Causes of the Wealth of Nations''. About 1750 he met David Hume, who became one of the closest of his many friends. In 1751 Smith was appointed professor on logic at the University of Glasgow, transferring in 1752 to the chair of moral philosophy. His lectures covered the fields of ethics, rhetoric, jurisprudence, political economy, and "police and revenue." In 1759 he published his ''The Theory of Moral Sentiments'', embodying some of his Glasgow lectures. This work, which established Smith's reputation in his day, was concerned with how human communication depends on sympathy between speaker and listener. His capacity for fluent, persuasive, if rather rhetorical argument is much in evidence. He bases his explanation, not as the third Lord Shaftesbury and Hutcheson had done, on a special "moral sense", nor (like Hume) on utilitarianism, but on sympathy. Smith now began to give more attention to jurisprudence and economics in his lecture and less to his theories of morals. An impression can be obtained as to the development of his ideas on political economy from the notes of his lectures taken down by a student in about 1763 which were later edited by E. Cannan (''Lectures on Justice, Police, Revenue and Arms'', 1896), and from what Scott, its discoverer and publisher, describes as "An Early Draft of Part of The Wealth of Nations", which he dates about 1763. At the end of 1763 Smith obtained a lucrative post as tutor to the young Henry Scott, 3rd Duke of Buccleuch and resigned his professorship. From 1764-1766 he traveled with his pupil, mostly in France, where he came to know such intellectual leaders as Anne Robert Jacques Turgot, Baron de Laune, Jean le Rond d'Alembert, André Morellet, Helvétius and, in particular, Francois Quesnay, the head of the physiocrats whose work he much respected. On returning home to Kirkcaldy he devoted much of the next ten years to his magnum opus, ''An Inquiry into the Nature and Causes of the Wealth of Nations,'' which appeared in 1776. It was very well-received and popular, and Smith became famous. In 1778 he was appointed to a comfortable post as commissioner of customs in Scotland and went to live with his mother in Edinburgh. He died there on July 17, 1790, after a painful illness. He had apparently devoted a considerable part of his income to numerous secret acts of charity. He neither married nor fathered children. ==Works== 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'' (1795) probably contain parts of what would have been the latter treatise. ''The Wealth of Nations'' was influential since it did so much to create the field of economics and develop it into an autonomous systematic discipline. In the Western world, it is arguably the most influential book on the subject ever published. When the book, which has become a classic manifesto against mercantilism (the theory that large reserves of bullion are essential for economic success), appeared in 1776, there was a strong sentiment for free trade in both Kingdom of Great Britain and United States. This new feeling had been born out of the economic hardships and poverty caused by the war. However, at the time of publication, not everybody was immediately convinced of the advantages of free trade: the British public and Houses of Parliament still clung to mercantilism for many years to come. ''The Wealth of Nations'' also rejects the Physiocratic school's emphasis on the importance of land; instead, Smith believed labour was tantamount, and that a division of labour would effect a great increase in production. ''Nations'' was so successful, in fact, that it led to the abandonment of earlier economic schools, and later economists, such as Thomas Malthus and David Ricardo, focused on refining Smith's theory into what is now known as classical economics. (Modern economics evolved from this.) Malthus expanded Smith's ruminations on overpopulation, while Ricardo believed in the "iron law of wages" — that overpopulation would prevent wages from topping the subsistence level. Smith postulated an increase of wages with an increase in production, a view considered more accurate today. One of the main points of ''The Wealth of Nations'' is that the free market, while appearing chaotic and unrestrained, is actually guided to produce the right amount and variety of goods by a so-called "invisible hand." If a product shortage occurs, for instance, its price rises, creating incentive for its production, and eventually curing the shortage. The increased competition among manufacturers and increased supply would also lower the price of the product to its production cost, the "natural price." Smith believed that while human motives are often selfish and greedy, the competition in the free market would tend to benefit society as a whole anyway. Nevertheless, he was wary of businessmen and argued against the formation of monopoly. Smith vigourously attacked the antiquated government restrictions which he thought were hindering industrial expansion. In fact, he attacked most forms of government interference in the economic process, including tariffs, arguing that this creates inefficiency and high prices in the long run. This theory, now referred to as "laissez-faire," influenced government legislation in later years, especially during the 19th century. However, Smith criticised a number of practices that later became associated with laissez-faire capitalism, such as the power and influence of big business and the emphasis on capital at the expense of labour. ==''"Das Adam-Smith-Problem"''== There has been considerable controversy as to whether there is a contradiction between Smith's emphasis on sympathy in his ''Theory of Moral Sentiments'' and the key role of self-interest in the ''Wealth of Nations''. Economist Joseph Schumpeter referred to this in German as ''das Adam Smith Problem.''[http://de.wikipedia.org/wiki/Adam-Smith-Problem] In his ''Moral Sentiments'' Smith seems to emphasize the broad synchronization of human intention and behavior under a beneficent Providence, while in the ''Wealth of Nations'', in spite of the general theme of "the invisible hand" creating harmony out of conflicting self-interests, he finds many more occasions for pointing out cases of conflict and of the narrow selfishness of human motives. Yet it would be inaccurate to describe the Adam Smith of the ''Moral Sentiments'' as disbelieving of an essential selfishness of most human motives, for he writes that: :''"Thus self-preservation, and the propagation of the species, are the great ends which Nature seems to have proposed in the formation of all animals. Mankind are endowed with a desire of those ends, and an aversion to the contrary; with a love of life, and a dread of dissolution; with a desire of the continuance and perpetuity of the species, and with an aversion to the thoughts of its intire extinction. But though we are in this manner endowed with a very strong desire of those ends, it has not been intrusted to the slow and uncertain determinations of our reason, to find out the proper means of bringing them about. Nature has directed us to the greater part of these by original and immediate instincts. Hunger, thirst, the passion which unites the two sexes, the love of pleasure, and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them."'' ==Influence== ''The Wealth of Nations'', and to a lesser extent ''The Theory of Moral Sentiments'', have become the starting point for any defence or critique of forms of capitalism, most influentially in the writings of Marx and Humanist economics. Because capitalism is so often associated with unbridled selfishness, there is a recent movement to emphasize the moral philosophy of Smith, with its focus on sympathy with one's fellows. There has been some controversy over the extent of Smith's originality in ''The Wealth of Nations''; some argue that the work added modestly to the already established ideas of thinkers such as David Hume and the Charles de Secondat, Baron de Montesquieu. Indeed, many of the theories Smith sets out simply describe historical trends away from mercantilism, towards free-trade, that had been developing for many decades, and had already had significant influence on governmental policy. Nevertheless, it organises their ideas comprehensively, and remains one of the most influential and important books in the field today. ''See also: History of economic thought'' ==Bibliography== * Smith, Adam. ''An Inquiry into the Nature and Causes of the Wealth of Nations'' (The Wealth of Nations). 1776. * Smith, Adam. ''The Theory of Moral Sentiments''. 1759. ==See also== *Liberalism *Contributions to liberal theory *Adam Smith rule *capitalism *Anders Chydenius ==External links== *[http://www.econlib.org/library/Enc/bios/Smith.html Biography] at the "Concise Encyclopedia of Economics" *[http://www.econlib.org/library/YPDBooks/Rae/raeLS.html Life of Adam Smith,] by John Rae, at the Library of Economics and Liberty *[http://cepa.newschool.edu/het/profiles/smith.htm Smith's works] *[http://econ161.berkeley.edu/Economists/smith.html Brad deLong's Adam Smith page] *[http://www.adamsmith.org The Adam Smith Institute] *[http://www.libertyforums.com/ LibertyForums] - Classical Liberal, Libertarian & Objectivist Discussion Board. *[http://www.boomerbible.com/adam20.html Excerpt from "The Book of the VIP Adam"] Adam Smith is buried in Canongate Churchyard, Royal Mile, Edinburgh *[http://web.uvic.ca/~rutherfo/a_smith.html Grave of Adam Smith] on the [http://web.uvic.ca/~rutherfo/mr_grvs.html Famous Economists Grave Sites] ===Works=== *[http://www.econlib.org/library/Smith/smWN.html The Wealth of Nations] at the [http://www.econlib.org/index.html Library of Economics and Liberty]. Cannan edition. Definitive, fully searchable, free online. * *[http://www.mondopolitico.com/library/wealthofnations/toc.htm The Wealth of Nations] from [http://www.mondopolitico.com/library/ Mondo Politico Library] - full text; formatted for easy on-screen reading. *[http://www.adamsmith.org/smith/won-intro.htm The Wealth of Nations] from the [http://www.adamsmith.org/ Adam Smith Institute] - elegantly formatted for on-screen reading *[http://oll.libertyfund.org/Home3/BookSetToCPage.php?recordID=0141 Works and Correspondence of Adam Smith]. Glasgow edition, 7 volumes at the [http://oll.libertyfund.org/ Online Library of Liberty]. Definitive, free online. *[http://www.econlib.org/library/Smith/smMS.html The Theory of Moral Sentiments] at the [http://www.econlib.org/index.html Library of Economics and Liberty] ===Images=== The National Portrait Gallery has several images of Adam Smith *[http://www.npg.org.uk/live/search/ Search the collection] 1723 births 1790 deaths Enlightenment philosophers Economists Scottish economists Scottish philosophers Business theorists Glaswegians bn:এডাম স্মিথ ms:Adam Smith simple:Adam Smith th:แอดัม สมิท
:Fare: Adam Smith's "Wealth of Nation" was certainly not the first book in economics. See any site specialised in the :History of Economic Thought about that. == "he relinquished his exhibition" == Could someone please tell me what this means? :and he relinquished his exhibition in 1746. Thanks. -- User:Viajero 18:09, 1 Aug 2003 (UTC) :It means that he gave up his scholarship at Oxford and left the university. I think that, technically, at Oxford, an "exhibition" is a somewhat less generous grant to a student than a "scholarship." But it's the same idea. -- User:Eb.Hoop 11:00, 20 Oct 2004 (UTC) == Brits for or against mercantilism? == This reads inconsistently: When the book, which has become a classic manifesto against mercantilism, appeared in 1776, there was a strong sentiment for free trade ''in both Britain'' and United States of America. This new feeling had been born out of the economic hardships and poverty caused by the war. However, at the time of publication, not everybody was convinced of the advantages of free trade right away: the ''British public'' and Houses of Parliament still clung to mercantilism for many years to come. [italics mine] Wat the British public for or against mercantilism? -- User:Viajero 18:16, 1 Aug 2003 (UTC) I think that the answer is "Both". The Public, American or British, are generally for free trade where they think it doesn't harm them, and for mercantilism, particularly its protectionist aspect where they think that it benefits them. For examples take a look at the historical UK Corn laws or the present day US/Canadian softwood lumber dispute, the US/Vietnamese catfish saga or the current debate about IT outsourcing to India, where the "Public" have been or are divided over the merits of free trade versus protectionism. -- User:Derek Ross | User talk:Derek Ross == Quotes == I copied the quotes to Wikiquote. Perhaps we dont need the quote section here on Wikipedia now, or at least - not to that extent? --User:Piotrus 11:12, 25 Jul 2004 (UTC) :Done. Of course, others may not agree with my choices, but oh well. User:Brutannica 01:39, 10 Sep 2004 (UTC) ==Theory of Moral Sentiments== There is some material on this in the Biography section. Shouldn't it be moved down to the Works section? User:Brutannica 01:31, 10 Sep 2004 (UTC) == NPOV ... what today is considered capitalism... == The last edit by 146.151.30.214 doesn't seem to respect NPOV. I'm not sure whether everyone considers ''corporate structure, government run by business interests, and economic emphasis on business rather than on workers'' as today's capitalism. But there is some valid point (not rechecked by me, tough) in mentioning that Smith never used the term capitalism... It also does make sense to show differences between Smiths thoughts and some of his followers. I guess this is what the editor did intend. But this doesn't belong to the very first paragraph. Here's the bigger part of the change. : It is often cited by pro-capitalist ideologies as helping to create the modern academic discipline of economics and providing one of the best-known intellectual rationales for capitalism. However, Smith never used the term capitalism in any of his works as it did not exist in his time, and in fact opposed much of what today is considered capitalism, such as the corporate structure, government run by business interests, and economic emphasis on business rather than on workers. Could someone with more Smith knowledge than me, make this into its own sub-section? I will revert this change in a few days if it is still there... I deleted then statement that Marx agreed with the iron law of wages as this is incorrect. The Iron law of wages states workers wages will equal the physical subsistence, Marx on the other hand said wages would equal "social subsistence" - social subsistence can be considerably different than physical subsistence. ==Problem with invisible hand== I will delete the following passage, recently added by User:Wk_muriithi: :Even if it was possible to impose the implicit moral contract discussed above, it is unlikely that Adam Smith theory would ever work. This is because invisible hand only work in a perfect market, a condation that has never occured and will never occur. Some of the problem that makes the market imperfect are:- :* Information asymmetry - Its impossible for example, for even sophisticated buyer to be all knowing even where there is reasonable competition. A good real life example of this is in microprocessor market. Corporations can be assumed to be sophisticated buyers and are the main consumers of microprocessors. Despite this, Intel has been able to sell its inferior microprocessors at a higher price than its competitor, AMD. :* Natural monopoly - Some business like telecommunication, utility (water and power) railway are natural monopoly. Markets tend to badly at it. Witness the electricity fisco in USA sometimes back. :* Externality - Business tend to produce too much negative externalities (eg pollution) and too little positive externalities (eg research). Adam Smith argument ignore this facts and his theory is therefore not sustainable. Aside from problems with the grammar and the POV tone of the proposed addition, nowhere in WoN does Smith posit a perfect market. His work is largely descriptive, studying how markets had historically worked in Europe and elsewhere. The famous "invisible hand" in WoN refers primarily to the observation that there is an unplanned connection between specialization/trade and the creation of wealth. I suspect that the author of this passage has limited first-hand knowledge of what Smith actually says in his book. For a recent critique of the common, incorrect use of the term "invisible hand" by free-trade critics, see Vernon Smith, "Human Nature: An Economic Perspective," ''Daedalus'', pp. 67-76, Fall 2004. - User:Eb.hoop 15 Jun 2005, 15:45 (UTC). ::I concede that i am a tad too opinionated and my spelling leave a lot to be desired. I am however surprised that you seem to be asserting "invisible hand" has nothing to do with pricing. I quote from the article :::One of the main points of The Wealth of Nations is that the free market, while appearing chaotic and unrestrained, is actually guided to produce the right amount and variety of goods by a so-called "invisible hand." If a product shortage occurs, for instance, its price rises, creating incentive for its production, and eventually curing the shortage. The increased competition among manufacturers and increased supply would also lower the price of the product to its production cost, the "natural price." ::Boy, that sound to me like the supply - demand curves i see a lot in economics books. The curves attempt to demonstrate how market achieve optimal price. Are you for real when saying this has something to do with specialization? Would you be more specific on your understanding of what of what "invisible hand means? And if your assertion is true, don't you think the above paragraph is misleading and should be fixed? Can someone comment on this? :::I agree that the paragraph from the article you quote is misleading. In WoN, the "invisible hand" refers generally to the fact that the people participating in a free market system achieve results for themselves and for society that are never part of their conscious motives. The price mechanism is one aspect of this general phenomenon, but it is not the only one, or even the most important in Smith's thinking. Smith's central point in WoN is that specialization and division of labor dramatically increase productivity and are the source of all wealth. Specialization is possible only if trade allows people to exchange what they specialize in making (e.g., pins) for everything else they need (e.g., food). :::Here's the relevant quote from Vernon Smith's article: ''When Smith uses the metaphor of the invisible hand, he is referring to the essential insight that people in markets achieve ends that are not part of their intention; i.e., people achieve more efficient arrangements induced by the specialization-exchange nexus than is possible without that nexus. The more common, inappropiate, interpretation is illustrated in the following quotations from Joseph Stiglitz: "The argument of Adam Smith ... that free markets led to efficient outcomes, 'as if by an invisible hand,' has played a central role in these [information economics] debates ... The set of ideas that I will present here undermines Smith's theory and the view of government that rested on it. They have suggested that the reason that the hand may be invisible is that it is simply no there - or at least it is palsied." '' :::Having read WoN, I agree with Smith that the common perception (repeated by Stiglitz) that the "invisible hand" refers simply to efficient pricing is quite wrong. Smith was arguing at a far more fundamental level that people like Stiglitz are today. We tend to forget that most of what Smith writes about in WoN is now received wisdom in economics and uncontroversial even to free-market skeptics like Stiglitz. I notice that the Wikipedia article on the invisible hand does a better job that this biography of explaining what Smith was talking about. - User:Eb.hoop 20:38 17 Jun 2005 (UTC). ::::Thanks for response. I think you are in better position to understand what invisible hand means as you seem to have read WoN. I was basing my argument wholly on the above paragraph, but since you say its wrong, then my argument is consequently weak. And yeah, my skeptism on the WoN thing is heavily influenced by Stiglitz. He seem to think its bull.
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Adam Smith
Adam Smith (Baptised June 5, 1723 – July 17, 1790) was a Scotland political economy and moral philosophy. His ''Wealth of Nations'' was one of the earliest attempts to study the historical development of industry and commerce in Europe. That work helped to create the modern academic discipline of economics and provided one of the best-known intellectual rationales for free trade and capitalism. ==Biography== Smith was the son of the controller of the customs at Kirkcaldy, Fife, Scotland. The exact date of his birth is unknown, but he was baptized at Kirkcaldy on June 5, 1723, his father having died some six months previously. At around the age of 4, he was kidnapped by a band of Roma people, but he was quickly rescued by his uncle and returned to his mother. Smith's biographer, John Rae, commented wryly that he feared Smith would have made "a poor Gipsy." At the age of about fifteen, Smith proceeded to the University of Glasgow, studying moral philosophy under "the never-to-be-forgotten" (as Smith called him) Francis Hutcheson (philosopher). In 1740 he entered the Balliol College, Oxford of the University of Oxford, but as William Robert Scott has said, "the Oxford of his time gave little if any help towards what was to be his lifework," and he left the university in 1746. In 1748 he began delivering public lectures in Edinburgh under the patronage of Lord Kames. Some of these dealt with rhetoric and ''belles-lettres'', but later he took up the subject of "the progress of opulence," and it was then, in his middle or late 20s, that he first expounded the economic philosophy of "the obvious and simple system of natural liberty" which he was later to proclaim to the world in his ''Inquiry into the Nature and Causes of the Wealth of Nations''. About 1750 he met David Hume, who became one of the closest of his many friends. In 1751 Smith was appointed professor on logic at the University of Glasgow, transferring in 1752 to the chair of moral philosophy. His lectures covered the fields of ethics, rhetoric, jurisprudence, political economy, and "police and revenue." In 1759 he published his ''The Theory of Moral Sentiments'', embodying some of his Glasgow lectures. This work, which established Smith's reputation in his day, was concerned with how human communication depends on sympathy between speaker and listener. His capacity for fluent, persuasive, if rather rhetorical argument is much in evidence. He bases his explanation, not as the third Lord Shaftesbury and Hutcheson had done, on a special "moral sense", nor (like Hume) on utilitarianism, but on sympathy. Smith now began to give more attention to jurisprudence and economics in his lecture and less to his theories of morals. An impression can be obtained as to the development of his ideas on political economy from the notes of his lectures taken down by a student in about 1763 which were later edited by E. Cannan (''Lectures on Justice, Police, Revenue and Arms'', 1896), and from what Scott, its discoverer and publisher, describes as "An Early Draft of Part of The Wealth of Nations", which he dates about 1763. At the end of 1763 Smith obtained a lucrative post as tutor to the young Henry Scott, 3rd Duke of Buccleuch and resigned his professorship. From 1764-1766 he traveled with his pupil, mostly in France, where he came to know such intellectual leaders as Anne Robert Jacques Turgot, Baron de Laune, Jean le Rond d'Alembert, André Morellet, Helvétius and, in particular, Francois Quesnay, the head of the physiocrats whose work he much respected. On returning home to Kirkcaldy he devoted much of the next ten years to his magnum opus, ''An Inquiry into the Nature and Causes of the Wealth of Nations,'' which appeared in 1776. It was very well-received and popular, and Smith became famous. In 1778 he was appointed to a comfortable post as commissioner of customs in Scotland and went to live with his mother in Edinburgh. He died there on July 17, 1790, after a painful illness. He had apparently devoted a considerable part of his income to numerous secret acts of charity. He neither married nor fathered children. ==Works== 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'' (1795) probably contain parts of what would have been the latter treatise. ''The Wealth of Nations'' was influential since it did so much to create the field of economics and develop it into an autonomous systematic discipline. In the Western world, it is arguably the most influential book on the subject ever published. When the book, which has become a classic manifesto against mercantilism (the theory that large reserves of bullion are essential for economic success), appeared in 1776, there was a strong sentiment for free trade in both Kingdom of Great Britain and United States. This new feeling had been born out of the economic hardships and poverty caused by the war. However, at the time of publication, not everybody was immediately convinced of the advantages of free trade: the British public and Houses of Parliament still clung to mercantilism for many years to come. ''The Wealth of Nations'' also rejects the Physiocratic school's emphasis on the importance of land; instead, Smith believed labour was tantamount, and that a division of labour would effect a great increase in production. ''Nations'' was so successful, in fact, that it led to the abandonment of earlier economic schools, and later economists, such as Thomas Malthus and David Ricardo, focused on refining Smith's theory into what is now known as classical economics. (Modern economics evolved from this.) Malthus expanded Smith's ruminations on overpopulation, while Ricardo believed in the "iron law of wages" — that overpopulation would prevent wages from topping the subsistence level. Smith postulated an increase of wages with an increase in production, a view considered more accurate today. One of the main points of ''The Wealth of Nations'' is that the free market, while appearing chaotic and unrestrained, is actually guided to produce the right amount and variety of goods by a so-called "invisible hand." If a product shortage occurs, for instance, its price rises, creating incentive for its production, and eventually curing the shortage. The increased competition among manufacturers and increased supply would also lower the price of the product to its production cost, the "natural price." Smith believed that while human motives are often selfish and greedy, the competition in the free market would tend to benefit society as a whole anyway. Nevertheless, he was wary of businessmen and argued against the formation of monopoly. Smith vigourously attacked the antiquated government restrictions which he thought were hindering industrial expansion. In fact, he attacked most forms of government interference in the economic process, including tariffs, arguing that this creates inefficiency and high prices in the long run. This theory, now referred to as "laissez-faire," influenced government legislation in later years, especially during the 19th century. However, Smith criticised a number of practices that later became associated with laissez-faire capitalism, such as the power and influence of big business and the emphasis on capital at the expense of labour. ==''"Das Adam-Smith-Problem"''== There has been considerable controversy as to whether there is a contradiction between Smith's emphasis on sympathy in his ''Theory of Moral Sentiments'' and the key role of self-interest in the ''Wealth of Nations''. Economist Joseph Schumpeter referred to this in German as ''das Adam Smith Problem.''[http://de.wikipedia.org/wiki/Adam-Smith-Problem] In his ''Moral Sentiments'' Smith seems to emphasize the broad synchronization of human intention and behavior under a beneficent Providence, while in the ''Wealth of Nations'', in spite of the general theme of "the invisible hand" creating harmony out of conflicting self-interests, he finds many more occasions for pointing out cases of conflict and of the narrow selfishness of human motives. Yet it would be inaccurate to describe the Adam Smith of the ''Moral Sentiments'' as disbelieving of an essential selfishness of most human motives, for he writes that: :''"Thus self-preservation, and the propagation of the species, are the great ends which Nature seems to have proposed in the formation of all animals. Mankind are endowed with a desire of those ends, and an aversion to the contrary; with a love of life, and a dread of dissolution; with a desire of the continuance and perpetuity of the species, and with an aversion to the thoughts of its intire extinction. But though we are in this manner endowed with a very strong desire of those ends, it has not been intrusted to the slow and uncertain determinations of our reason, to find out the proper means of bringing them about. Nature has directed us to the greater part of these by original and immediate instincts. Hunger, thirst, the passion which unites the two sexes, the love of pleasure, and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them."'' ==Influence== ''The Wealth of Nations'', and to a lesser extent ''The Theory of Moral Sentiments'', have become the starting point for any defence or critique of forms of capitalism, most influentially in the writings of Marx and Humanist economics. Because capitalism is so often associated with unbridled selfishness, there is a recent movement to emphasize the moral philosophy of Smith, with its focus on sympathy with one's fellows. There has been some controversy over the extent of Smith's originality in ''The Wealth of Nations''; some argue that the work added modestly to the already established ideas of thinkers such as David Hume and the Charles de Secondat, Baron de Montesquieu. Indeed, many of the theories Smith sets out simply describe historical trends away from mercantilism, towards free-trade, that had been developing for many decades, and had already had significant influence on governmental policy. Nevertheless, it organises their ideas comprehensively, and remains one of the most influential and important books in the field today. ''See also: History of economic thought'' ==Bibliography== * Smith, Adam. ''An Inquiry into the Nature and Causes of the Wealth of Nations'' (The Wealth of Nations). 1776. * Smith, Adam. ''The Theory of Moral Sentiments''. 1759. ==See also== *Liberalism *Contributions to liberal theory *Adam Smith rule *capitalism *Anders Chydenius ==External links== *[http://www.econlib.org/library/Enc/bios/Smith.html Biography] at the "Concise Encyclopedia of Economics" *[http://www.econlib.org/library/YPDBooks/Rae/raeLS.html Life of Adam Smith,] by John Rae, at the Library of Economics and Liberty *[http://cepa.newschool.edu/het/profiles/smith.htm Smith's works] *[http://econ161.berkeley.edu/Economists/smith.html Brad deLong's Adam Smith page] *[http://www.adamsmith.org The Adam Smith Institute] *[http://www.libertyforums.com/ LibertyForums] - Classical Liberal, Libertarian & Objectivist Discussion Board. *[http://www.boomerbible.com/adam20.html Excerpt from "The Book of the VIP Adam"] Adam Smith is buried in Canongate Churchyard, Royal Mile, Edinburgh *[http://web.uvic.ca/~rutherfo/a_smith.html Grave of Adam Smith] on the [http://web.uvic.ca/~rutherfo/mr_grvs.html Famous Economists Grave Sites] ===Works=== *[http://www.econlib.org/library/Smith/smWN.html The Wealth of Nations] at the [http://www.econlib.org/index.html Library of Economics and Liberty]. Cannan edition. Definitive, fully searchable, free online. * *[http://www.mondopolitico.com/library/wealthofnations/toc.htm The Wealth of Nations] from [http://www.mondopolitico.com/library/ Mondo Politico Library] - full text; formatted for easy on-screen reading. *[http://www.adamsmith.org/smith/won-intro.htm The Wealth of Nations] from the [http://www.adamsmith.org/ Adam Smith Institute] - elegantly formatted for on-screen reading *[http://oll.libertyfund.org/Home3/BookSetToCPage.php?recordID=0141 Works and Correspondence of Adam Smith]. Glasgow edition, 7 volumes at the [http://oll.libertyfund.org/ Online Library of Liberty]. Definitive, free online. *[http://www.econlib.org/library/Smith/smMS.html The Theory of Moral Sentiments] at the [http://www.econlib.org/index.html Library of Economics and Liberty] ===Images=== The National Portrait Gallery has several images of Adam Smith *[http://www.npg.org.uk/live/search/ Search the collection] 1723 births 1790 deaths Enlightenment philosophers Economists Scottish economists Scottish philosophers Business theorists Glaswegians bn:এডাম স্মিথ ms:Adam Smith simple:Adam Smith th:แอดัม สมิท
Adam Smith
:Fare: Adam Smith's "Wealth of Nation" was certainly not the first book in economics. See any site specialised in the :History of Economic Thought about that. == "he relinquished his exhibition" == Could someone please tell me what this means? :and he relinquished his exhibition in 1746. Thanks. -- User:Viajero 18:09, 1 Aug 2003 (UTC) :It means that he gave up his scholarship at Oxford and left the university. I think that, technically, at Oxford, an "exhibition" is a somewhat less generous grant to a student than a "scholarship." But it's the same idea. -- User:Eb.Hoop 11:00, 20 Oct 2004 (UTC) == Brits for or against mercantilism? == This reads inconsistently: When the book, which has become a classic manifesto against mercantilism, appeared in 1776, there was a strong sentiment for free trade ''in both Britain'' and United States of America. This new feeling had been born out of the economic hardships and poverty caused by the war. However, at the time of publication, not everybody was convinced of the advantages of free trade right away: the ''British public'' and Houses of Parliament still clung to mercantilism for many years to come. [italics mine] Wat the British public for or against mercantilism? -- User:Viajero 18:16, 1 Aug 2003 (UTC) I think that the answer is "Both". The Public, American or British, are generally for free trade where they think it doesn't harm them, and for mercantilism, particularly its protectionist aspect where they think that it benefits them. For examples take a look at the historical UK Corn laws or the present day US/Canadian softwood lumber dispute, the US/Vietnamese catfish saga or the current debate about IT outsourcing to India, where the "Public" have been or are divided over the merits of free trade versus protectionism. -- User:Derek Ross | User talk:Derek Ross == Quotes == I copied the quotes to Wikiquote. Perhaps we dont need the quote section here on Wikipedia now, or at least - not to that extent? --User:Piotrus 11:12, 25 Jul 2004 (UTC) :Done. Of course, others may not agree with my choices, but oh well. User:Brutannica 01:39, 10 Sep 2004 (UTC) ==Theory of Moral Sentiments== There is some material on this in the Biography section. Shouldn't it be moved down to the Works section? User:Brutannica 01:31, 10 Sep 2004 (UTC) == NPOV ... what today is considered capitalism... == The last edit by 146.151.30.214 doesn't seem to respect NPOV. I'm not sure whether everyone considers ''corporate structure, government run by business interests, and economic emphasis on business rather than on workers'' as today's capitalism. But there is some valid point (not rechecked by me, tough) in mentioning that Smith never used the term capitalism... It also does make sense to show differences between Smiths thoughts and some of his followers. I guess this is what the editor did intend. But this doesn't belong to the very first paragraph. Here's the bigger part of the change. : It is often cited by pro-capitalist ideologies as helping to create the modern academic discipline of economics and providing one of the best-known intellectual rationales for capitalism. However, Smith never used the term capitalism in any of his works as it did not exist in his time, and in fact opposed much of what today is considered capitalism, such as the corporate structure, government run by business interests, and economic emphasis on business rather than on workers. Could someone with more Smith knowledge than me, make this into its own sub-section? I will revert this change in a few days if it is still there... I deleted then statement that Marx agreed with the iron law of wages as this is incorrect. The Iron law of wages states workers wages will equal the physical subsistence, Marx on the other hand said wages would equal "social subsistence" - social subsistence can be considerably different than physical subsistence. ==Problem with invisible hand== I will delete the following passage, recently added by User:Wk_muriithi: :Even if it was possible to impose the implicit moral contract discussed above, it is unlikely that Adam Smith theory would ever work. This is because invisible hand only work in a perfect market, a condation that has never occured and will never occur. Some of the problem that makes the market imperfect are:- :* Information asymmetry - Its impossible for example, for even sophisticated buyer to be all knowing even where there is reasonable competition. A good real life example of this is in microprocessor market. Corporations can be assumed to be sophisticated buyers and are the main consumers of microprocessors. Despite this, Intel has been able to sell its inferior microprocessors at a higher price than its competitor, AMD. :* Natural monopoly - Some business like telecommunication, utility (water and power) railway are natural monopoly. Markets tend to badly at it. Witness the electricity fisco in USA sometimes back. :* Externality - Business tend to produce too much negative externalities (eg pollution) and too little positive externalities (eg research). Adam Smith argument ignore this facts and his theory is therefore not sustainable. Aside from problems with the grammar and the POV tone of the proposed addition, nowhere in WoN does Smith posit a perfect market. His work is largely descriptive, studying how markets had historically worked in Europe and elsewhere. The famous "invisible hand" in WoN refers primarily to the observation that there is an unplanned connection between specialization/trade and the creation of wealth. I suspect that the author of this passage has limited first-hand knowledge of what Smith actually says in his book. For a recent critique of the common, incorrect use of the term "invisible hand" by free-trade critics, see Vernon Smith, "Human Nature: An Economic Perspective," ''Daedalus'', pp. 67-76, Fall 2004. - User:Eb.hoop 15 Jun 2005, 15:45 (UTC). ::I concede that i am a tad too opinionated and my spelling leave a lot to be desired. I am however surprised that you seem to be asserting "invisible hand" has nothing to do with pricing. I quote from the article :::One of the main points of The Wealth of Nations is that the free market, while appearing chaotic and unrestrained, is actually guided to produce the right amount and variety of goods by a so-called "invisible hand." If a product shortage occurs, for instance, its price rises, creating incentive for its production, and eventually curing the shortage. The increased competition among manufacturers and increased supply would also lower the price of the product to its production cost, the "natural price." ::Boy, that sound to me like the supply - demand curves i see a lot in economics books. The curves attempt to demonstrate how market achieve optimal price. Are you for real when saying this has something to do with specialization? Would you be more specific on your understanding of what of what "invisible hand means? And if your assertion is true, don't you think the above paragraph is misleading and should be fixed? Can someone comment on this? :::I agree that the paragraph from the article you quote is misleading. In WoN, the "invisible hand" refers generally to the fact that the people participating in a free market system achieve results for themselves and for society that are never part of their conscious motives. The price mechanism is one aspect of this general phenomenon, but it is not the only one, or even the most important in Smith's thinking. Smith's central point in WoN is that specialization and division of labor dramatically increase productivity and are the source of all wealth. Specialization is possible only if trade allows people to exchange what they specialize in making (e.g., pins) for everything else they need (e.g., food). :::Here's the relevant quote from Vernon Smith's article: ''When Smith uses the metaphor of the invisible hand, he is referring to the essential insight that people in markets achieve ends that are not part of their intention; i.e., people achieve more efficient arrangements induced by the specialization-exchange nexus than is possible without that nexus. The more common, inappropiate, interpretation is illustrated in the following quotations from Joseph Stiglitz: "The argument of Adam Smith ... that free markets led to efficient outcomes, 'as if by an invisible hand,' has played a central role in these [information economics] debates ... The set of ideas that I will present here undermines Smith's theory and the view of government that rested on it. They have suggested that the reason that the hand may be invisible is that it is simply no there - or at least it is palsied." '' :::Having read WoN, I agree with Smith that the common perception (repeated by Stiglitz) that the "invisible hand" refers simply to efficient pricing is quite wrong. Smith was arguing at a far more fundamental level that people like Stiglitz are today. We tend to forget that most of what Smith writes about in WoN is now received wisdom in economics and uncontroversial even to free-market skeptics like Stiglitz. I notice that the Wikipedia article on the invisible hand does a better job that this biography of explaining what Smith was talking about. - User:Eb.hoop 20:38 17 Jun 2005 (UTC). ::::Thanks for response. I think you are in better position to understand what invisible hand means as you seem to have read WoN. I was basing my argument wholly on the above paragraph, but since you say its wrong, then my argument is consequently weak. And yeah, my skeptism on the WoN thing is heavily influenced by Stiglitz. He seem to think its bull.
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