Adam Smith (1723-1790) was an economist and social philosopher of the Scottish Enlightenment and is considered the Father of Modern Economics.
He addressed issues such as economic growth, ethics, education, division of labor, free competition, social evolution, etc.
Biography
Son of lawyer Adam Smith and Margaret Douglas, Adam Smith was born in the small port town of Kirkcaldy, Scotland, on July 16, 1723.
There was no industrial activity there except a pin factory. Observing the organization and functioning of this establishment, Adam Smith will be exposed to new forms of production.
He lost his father when he was only two months old. He was enrolled in the College “Burgh school of Kirkcaldy”, where he studied Latin, mathematics, history and writing.
In 1737, at just 14 years of age, he entered the Philosophy course at the University of Glasgow. He graduated in 1740, the year he won a scholarship to study at the “balliol college”, from the University of Oxford.
He taught classes in rhetoric and philosophy, being appointed Professor of the Chair of Logic at the University of Glasgow (1751). And later, in 1758, he was elected rector of the same university. There he would be a friend of the philosopher David Hume who would influence his thought so much.
In addition, he was tutor to the Duke of Buccleuch, accompanying him on trips to Toulouse and Paris, France, and Geneva, Switzerland. In addition, he was an inspector of customs at Edinburgh from 1777.
Adam Smith never married and little is known about his intimate life. On July 17, 1790, the economist died in Edinburgh.
Adam Smith's thought would found economic theory and his works are references for economists and philosophers around the world to this day.
Curiosity
Adam Smith, around 4 years old, was kidnapped by gypsies, and luckily rescued.
Intellectual Influence
One of the great influences on Adam Smith's thought was the thought of the Scottish philosopher. David Hume. For Hume, there was a relationship between natural morality, based on selfish impulse, and altruism.
More than kindness, what led the human being to act correctly was survival. Interestingly, this was positive, because when thinking about themselves, the individual often ended up benefiting his surroundings.
In 1759, Adam Smith publishes “Theory of moral sentiments”. In this work, he critically analyzes the morals of his time and human nature, seeking to understand their motivations for acting in society.
Main Works
- Theory of Moral Sentiments (1759)
- An investigation into the nature and causes of the wealth of nations (1776)
- Essay on Philosophical Themes (1795).
The Wealth of Nations
Adam Smith took notes for over thirty years on various topics and took another ten to elaborate his great work “An Inquiry into the Nature and Causes of the Wealth of Nations”. The work would become better known as "Wealth of Nations".
There he explains the nature of the economic system, the changes that the economy was undergoing in the 18th century and points out new paths towards the english industrial revolution who crawled.
economic nature
For Smith, the economy moves in the private interest of individuals.
Example: A worker doesn't get up every morning just because he loves his job or wants to do good. He knows he needs this occupation to survive. However, with this gesture, he helps society as a whole, because thanks to his effort, the people who depend on him are also benefited.
Smith said that even if it was not intentional, people's selfishness resulted in the common good.
“Every individual necessarily works to make the society's annual income as high as possible. In fact, he generally has no intention of promoting the public interest, nor does he know how much to promote it. In preferring to support domestic activity rather than abroad, he has only his own safety in view; and, in directing this activity in such a way that his production is of the greatest possible value, he has in view only his own profit, and in this case, as in many others, he is guided by an invisible hand to promote an end that was not part of his intention. And the fact that this end is not part of his intention is not always the worst thing for society. In pursuing his own interest, he often promotes society's more effectively than when he actually intends to promote it.”
invisible hand
The invisible hand metaphor would become the most famous figure in economics and the motto of the economic liberalism.
Adam Smith uses it to explain that the “invisible hand” makes human beings prefer to consume products from domestic industry and not from foreign ones.
"The individual, by preferring to support his country's industry, rather than the foreign one, proposes only to seek his own safety (...) in this as in many other cases, an invisible hand leads him to encourage an activity that did not enter his purposes".
The concept of “invisible hand” will be used to explain market laws and the adjustment between supply and demand.
division of labor
Adam Smith defended that the work should be carried out in stages, so that each worker would improve and improve their efforts throughout production.
Likewise, he transposed this idea to the nations, stating that each one should specialize in manufacturing only certain products in order to sell them on the market.
This would create a skilled workforce and technical knowledge difficult to overcome.
Mercantilism
In the eighteenth century, the idea was that the wealth of a nation was the amount of gold and silver stored in its coffers. For this, state intervention and obstacles to foreign trade were necessary. This set of measures was called Mercantilism.
Adam Smith rejects this idea and explains that a country's wealth lies in its ability to produce goods. For this, it must have capable citizens and a State that is not intervening.
Smith defended contractual freedom (between employers and employees), private property and that the state not interfere in the economy.
physiocracy
Adam Smith made a trip to France, from 1764 to 1766, which will be decisive in his life. In this country he met the most important physiocrats of the time: François Quesnay and Anne Robert Jacques Turgot. From this meeting, Smith's interest in economics would be born.
The Physiocrats were based on the primacy of natural law, the power of land and owners, on the freedom to sell and buy.
For them, the best form of government would be one where things would work themselves out, summed up in the French expression "laissez-faire" (let it do).
A year later, he returns to Scotland and begins writing his masterpiece. However, the situation in Scotland was very different from France. United with England since 1707, the political scene was more stable than the French.
In this way, steam engines were invented by James Watt, who was a personal friend of Adam Smith. His invention allowed the creation of the locomotive, railways and large factories that would completely change the landscape and the world economy.
Adam Smith did not get to see the great factories of the Industrial Revolution, but he knew how to anticipate the changes they would bring to the world.
Adam Smith's Phrases
- What will generate the wealth of nations is the fact that each individual seeks his personal development and economic growth.
- Where there is great property, there is great inequality. For the very rich, there are at least five hundred poor, and the wealth of the few presumes the indigence of the many.
- Science is the great antidote against the poison of enthusiasm and superstition.
- It is unfair that society as a whole contributes to defraying an expense whose benefit goes to only a part of that society.
- It is the fear of losing your job that curbs your fraud and corrects your negligence.
- The universal ambition of men is to live by reaping what they never sowed.
- The wealth of a nation is measured by the wealth of the people and not by the wealth of princes.
- The real value of things is the effort and problem of acquiring them.
- No nation can flourish and be happy while a large part of its members are poor and miserable.
read more:
- Macroeconomics
- Keynesianism
- Capitalism
- Liberalism
- questions about capitalism
