SMITH, ADAM

Scottish economist and moral philosopher; b. Kirkcaldy, Scotland, June 5, 1723; d. Edinburgh, Scotland, July 7, 1790. Having been educated at Glasgow and Oxford, he became professor of moral philosophy at the University of Glasgow in 1752 and seven years later published his first book, A Theory of the Moral Sentiments. That book, at first widely read and admired, soon fell almost into oblivion; thus, unfortunately, the psychological and ethical insights expressed in it have rarely been taken into account, as they should be, in interpreting Smith's theory of economics and his advice about economic policy, as presented in his great work on the wealth of nations. Before writing the latter, he traveled on the Continent from 1764 to 1766, and while in France met some of the Physiocrats, whose important contributions to economics partially anticipated his own; but his indebtedness to them was limited. After returning in 1766 to the University of Glasgow, he labored there for ten

years more and brought out, in 1776, his masterwork, An Inquiry into the Nature and Causes of the Wealth of Nations. In 1778 he was appointed commissioner of customs for Scotland. Little more of note happened in the remaining 12 years of his life. His Essays on Philosophical Subjects, written relatively early in his life (before 1752), were found among his papers and published posthumously in 1795.

Smith's place in the age-long history of the development of political economy must be estimated as very high, although not as high as was widely supposed in the early nineteenth century. He was by no means the founder of that science, the beginnings of which go back at least to Aristotle, and to which numerous scholastic and other writers in the medieval and early-modern centuries made important contributions. Smith was one among many great economists in his own century. Yet he stands above the others not as being more original, or brilliant, or penetrating, or invariably correct in his observations and reasonings, but by virtue of the nearly all-comprehensive breadth of his outlook and knowledge, and the surpassingly realistic, well-balanced, and moral wisdom of his treatment of the vast subject of his famous Inquiry. This work in its way sums up the main fruits of most previous research and thinking in its field, and contains

the germs of many, if not most, of the advances that have since been achieved.

The generally prevailing impression, however, of the supposed central thesis of the Wealth of Nations has always been somewhat incorrect. This is so in part because there has been general neglect of the relevant psychological and ethical views expressed in Smith's earlier work on the moral sentiments, and in part because, as "capitalism" and attacks upon it, and diverse political ideologies, went on developing throughout the nineteenth century, it became the fashion to attribute to Smith the original sponsorship of the crude, dogmatic, unqualified, and biased laissez-faire gospel of later generations of conservative businessmen. The economic liberalism—in his phrase, "system of natural liberty" for all individuals—that Smith really sponsored had behind it both his ethical and humane concern for equal rights and opportunities for all men, and his economic analysis of the requirements of an optimal growth of their common wealth and welfare. In his early treatise, he argued that citizens of a free society could be led by their human-natural, humane, reciprocal "sympathies" and sensitivities to each others' moral judgments to develop a moral consensus and (to implement that) a just legal order, impartially defining the just rights and freedoms of all severally, and allowing none to infringe the rights of others. In his subsequent economic treatise, presupposing the existence (in a good approximation) of such a moral climate and legal order, he went on to argue that, within it, a generally competitive economic system could function in such a way that all in maximizing their private gains would also be maximizing their contributions to the aggregate wealth of the nation and the world. The wisdom of that outlook can be questioned, but its true meaning, grounds, and implications as elaborated in Smith's own writings need and deserve careful study and just appraisal undistorted by confusions of it with propaganda. Nor is his program for creating a harmony of individual (suitably modified) self-interests and the common welfare the whole or main substance of his economics. His immortal Inquiry in its time was, and even today remains, an inexhaustible mine of wisdom about the processes and conditions of on-going growth of aggregate and per capita wealth or economic welfare in and throughout all nations.

Bibliography: o. h. taylor, Economics and Liberalism (Cambridge, Mass. 1955); A History of Economic Thought (New York 1960). r. b. haldane, Life of Adam Smith (London 1887). g.r. morrow, The Ethical and Economic Theories of Adam Smith (New York 1923). j. rae, Life of Adam Smith (New York 1895). f. a. neff, Adam Smith and His Master Work (Wichita, Ks. 1940).

[o. h. taylor]