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Adam Smith (baptised 16 June 1723 – 17 July 1790 [OS: 5 June 1723 – 17 July 1790]) was a Scottish moral philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. Adam Smith is widely cited as the father of modern economics.[1][2]

Smith studied moral philosophy at the University of Glasgow and Oxford University. After graduating he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time wrote and published The Theory of Moral Sentiments. In his later life he took a tutoring position which allowed him to travel throughout Europe where he met other intellectual leaders of his day. Smith returned home and spent the next ten years writing The Wealth of Nations (mainly from his lecture notes) which was published in 1776. He died in 1790.

Biography
[edit] Early life
Adam Smith was born to Margaret Douglas at Kirkcaldy, Fife, Scotland. His father, also named Adam Smith, was a lawyer, civil servant, and widower who married Margaret Douglas in 1720 and died six months before Smith was born.[3] Although the exact date of Smith's birth is unknown, his baptism was recorded on 16 June 1723 at Kirkcaldy.[4] Though few events in Smith's early childhood are known, Scottish journalist and biographer of Smith John Rae recorded that Smith was abducted by gypsies at the age of four and eventually released when others went to rescue him.[note 1] Smith was particularly close to his mother, who likely encouraged him to pursue his scholarly ambitions.[6] He attended the Burgh School of Kirkcaldy – characterised by Rae as "one of the best secondary schools of Scotland at that period" – from 1729 to 1737.[5] There he studied Latin, mathematics, history, and writing.[6]
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He published The Theory of Moral Sentiments in 1759, embodying some of his Glasgow lectures. This work was concerned with how human morality depends on sympathy between agent and spectator, or the individual and other members of society. He bases his explanation not on a special "moral sense", as the third Lord Shaftesbury and Hutcheson had done, nor on utility as Hume did, but on sympathy. Smith's popularity greatly increased due to the The Theory of Moral Sentiments, and as a result, many wealthy students left their schools in other countries to enroll at Glasgow to learn under Smith.[20]

After the publication of The Theory of Moral Sentiments, Smith began to give more attention to jurisprudence and economics in his lectures and less to his theories of morals. The development of his ideas on political economy can be observed from the lecture notes taken down by a student in 1763, and from what William Robert Scott described as an early version of part of The Wealth of Nations.[21] For example, Smith lectured that labor—rather than the nation's quantity of gold or silver—is the cause of increase in national wealth.[20]

François Quesnay, one of the leaders of the Physiocratic school of thoughtIn 1762, the academic senate of the University of Glasgow conferred on Smith the title of Doctor of Laws (LL.D.). At the end of 1763, he obtained a lucrative offer from Charles Townshend (who had been introduced to Smith by David Hume) to tutor his stepson, Henry Scott, the young Duke of Buccleuch. Smith subsequently resigned from his professorship to take the tutoring position. Because he resigned in the middle of the term, Smith attempted to return the fees he had collected from his students, but they refused.[22]

[edit] Tutoring and travels
Smith's tutoring job entailed touring Europe with Henry Scott while teaching him subjects including proper Polish.[22] Smith was paid £300 per year plus expenses along with £300 per year pension, which was roughly twice his former income as a teacher.[22] Smith first traveled as a tutor to Toulouse, France, where he stayed for a year and a half.[22] According to accounts, Smith found Toulouse to be very boring, and he wrote to Hume that he "had begun to write a book in order to pass away the time".[22] After touring the south of France, the group moved to Geneva. While in Geneva, Smith met with the philosopher Voltaire.[23] After staying in Geneva, the party went to Paris.

While in Paris, Smith came to know intellectual leaders such as Benjamin Franklin,[24] Turgot, Jean D'Alembert, André Morellet, Helvétius and, in particular, Francois Quesnay, the head of the Physiocratic school, whose academic products he respected greatly.[25] The physiocrats believed that wealth came from production and not from the attainment of precious metals, which was adverse to mercantilist thought. They also believed that agriculture tended to produce wealth and that merchants and manufacturers did not.[24] While Smith did not embrace all of the physiocrats' ideas, he did say that physiocracy was "with all its imperfections [perhaps] the nearest approximation to the truth that has yet been published upon the subject of political economy".[26]

[edit] Later years and writings
In 1766, Henry Scott's younger brother died in Paris, and Smith's tour as a tutor ended shortly thereafter.[26] Smith returned home that year to Kirkcaldy, and he devoted much of the next ten years to his magnum opus.[27] There he befriended Henry Moyes, a young blind man who showed precocious aptitude. As well as teaching Moyes himself, Smith secured the patronage of David Hume and Thomas Reid in the young man's education.[28] In May 1773 Smith was elected fellow of the Royal Society of London,[29] and was elected a member of the Literary Club in 1775.[30] The Wealth of Nations was published in 1776 and was an instant success, selling out the first edition in only six months.[31]

In 1778 Smith was appointed to a post as commissioner of customs in Scotland and went to live with his mother in Panmure House in Edinburgh's Canongate.[32] Five years later, he became one of the founding members of the Royal Society of Edinburgh,[33] and from 1787 to 1789 he occupied the honorary position of Lord Rector of the University of Glasgow.[34] He died in the northern wing of Panmure House in Edinburgh on 17 July 1790 after a painful illness and was buried in the Canongate Kirkyard.[35] On his death bed, Smith expressed disappointment that he had not achieved more.[36]

Smith's literary executors were two friends from the Scottish academic world: the physicist and chemist Joseph Black, and the pioneering geologist James Hutton.[37] Smith left behind many notes and some unpublished material, but gave instructions to destroy anything that was not fit for publication.[38] He mentioned an early unpublished History of Astronomy as probably suitable, and it duly appeared in 1795, along with other material such as Essays on Philosophical Subjects.[37]

[edit] Personality and beliefs
[edit] Character

James Tassie's enamel paste medallion of Smith provided the model for many engravings and portraits which remain today.[39]Not much is known about Smith's personal views beyond what can be deduced from his published articles. His personal papers were destroyed after his death.[38] He never married[40] and seems to have maintained a close relationship with his mother, with whom he lived after his return from France and who died six years before his own death.[41]

Contemporary accounts describe Smith as an eccentric but benevolent intellectual, comically absent minded, with peculiar habits of speech and gait and a smile of "inexpressible benignity".[42] He was known to talk to himself, and had occasional spells of imaginary illness.[36]

Smith is often described as a prototypical absent-minded professor.[43] He is reported to have had books and papers stacked up in his study, with a habit he developed during childhood of speaking to himself and smiling in rapt conversation with invisible companions.[43]

Various anecdotes have discussed his absentminded nature. In one story, Smith took Charles Townshend on a tour of a tanning factory and while discussing free trade, Smith walked into a huge tanning pit from which he had to be removed.[44] Another episode records that he put bread and butter into a teapot, drank the concoction, and declared it to be the worst cup of tea he ever had. In another example, Smith went out walking and daydreaming in his nightgown and ended up 15 miles (24 km) outside town before nearby church bells brought him back to reality.[43][44]

[edit] Published works
Adam Smith published a large body of works throughout his life, some of which have shaped the field of economics. Smith's first book, The Theory of Moral Sentiments was written in 1759.[55] It provided the ethical, philosophical, psychological, and methodological underpinnings to Smith's later works, including An Inquiry Into the Nature and Causes of the Wealth of Nations (1776), A Treatise on Public Opulence (1764) (first published in 1937), Essays on Philosophical Subjects (1795), Lectures on Justice, Police, Revenue, and Arms (1763) (first published in 1896), and Lectures on Rhetoric and Belles Lettres.

[edit] The Theory of Moral Sentiments (1759)
Main article: The Theory of Moral Sentiments
In 1759, Smith published his first work, The Theory of Moral Sentiments. He continued to revise the work throughout his life, making extensive revisions to the final (6th) edition shortly before his death in 1790.[note 2] Although The Wealth of Nations is widely regarded as Smith's most influential work, it has been reported that Smith himself "always considered his Theory of Moral Sentiments a much superior work to his Wealth of Nations".[57] P. J. O'Rourke, author of the commentary On The Wealth of Nations (2007), has agreed, calling Theory of Moral Sentiments "the better book".[58] It was in this work that Smith first referred to the "invisible hand" to describe the apparent benefits to society of people behaving in their own interests.[59]

In The Theory of Moral Sentiments, Smith critically examined the moral thinking of the time and suggested that conscience arises from social relationships.[60] His aim in the work is to explain the source of mankind's ability to form moral judgements, in spite of man's natural inclinations toward self-interest. Smith proposes a theory of sympathy in which the act of observing others makes people aware of themselves and the morality of their own behavior. Haakonssen writes that in Smith's theory, "Society is ... the mirror in which one catches sight of oneself, morally speaking."[61]

In part because Theory of Moral Sentiments emphasizes sympathy for others while Wealth of Nations famously emphasizes the role of self interest, some scholars have perceived a conflict between these works. As one economic historian observed: "Many writers, including the present author at an early stage of his study of Smith, have found these two works in some measure basically inconsistent."[62] But in recent years most scholars of Adam Smith's work have argued that no contradiction exists. In Theory of Moral Sentiments, Smith develops a theory of psychology in which individuals seek the approval of the "impartial spectator" as a result of a natural desire to have outside observers sympathize with them. Rather than viewing the Wealth of Nations and Theory of Moral Sentiments as presenting incompatible views of human nature, most Smith scholars regard the works as emphasizing different aspects of human nature that vary depending on the situation. The Wealth of Nations draws on situations where man's morality is likely to play a smaller role—such as the laborer involved in pin-making—whereas the Theory of Moral Sentiments focuses on situations where man's morality is likely to play a dominant role among more personal exchanges.

The site where Adam Smith wrote the Wealth of Nations[edit] The Wealth of Nations (1776)
Main article: The Wealth of Nations
The Wealth of Nations expounds 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".[59] Smith opposed any form of economic concentration because it distorts the market's natural ability to establish a price that provides a fair return on land, labor, and capital. He advanced the idea that a market economy would produce a satisfactory outcome for both buyers and sellers, and would optimally allocate society's resources.[63] The image of the invisible hand was previously employed by Smith in Theory of Moral Sentiments, but it has its original use in his essay, "The History of Astronomy". Smith believed that when an individual pursues his self-interest, he indirectly promotes the good of society: "by pursuing his own interest, [the individual] frequently promotes that of the society more effectually than when he intends to promote it."[64] Self-interested competition in the free market, he argued, would tend to benefit society as a whole by keeping prices low, while still building in an incentive for a wide variety of goods and services. Nevertheless, he was wary of businessmen and argued against the formation of monopolies.

An often-quoted passage from The Wealth of Nations is:[65]

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

The first page of the Wealth of Nations, 1776 London editionValue theory was important in classical theory. Smith wrote that the "real price of every thing ... is the toil and trouble of acquiring it" as influenced by its scarcity. Smith maintained that, with rent and profit, other costs besides wages also enter the price of a commodity.[66] Other classical economists presented variations on Smith, termed the 'labour theory of value'. Classical economics focused on the tendency of markets to move to long-run equilibrium.

Adam Smith's advocacy of self-interest based economic exchange did not, however, preclude for him issues of fairness and justice. In Asia, Europeans "by different arts of oppression..have reduced the population of several of the Moluccas,"[67] he wrote, while "the savage injustice of the Europeans" arriving in America, "rendered an event, which ought to have been beneficial to all, ruinous and destructive to several of those unfortunate countries."[68] The Native Americans, "far from having ever injured the people of Europe, had received the first adventurers with every mark of kindness and hospitality." However, "superiority of force" was "so great on the side of the Europeans, that they were enabled to commit with impunity every sort of injustice in those remote countries."[69]

Smith also believed that a division of labour would effect a great increase in production. One example he used was the making of pins. One worker could probably make only twenty pins per day. However, if ten people divided up the eighteen steps required to make a pin, they could make a combined amount of 48,000 pins in one day. However, Smith's views on division of labour are not unambiguously positive, and are typically mis-characterized. Smith says of the division of labour:

"In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations, frequently only one or two. ...The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. ...His dexterity at his own particular trade seems, in this manner, to be acquired at the expense of his intellectual, social, and martial virtues. ...this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it."[70]

On labor relations, Smith noted "severity" of laws against worker actions, and contrasted the masters' "clamour" against workers associations, with associations and collusions of the masters which "are never heard by the people" though such actions are "always" and "everywhere" taking place:

"We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate...Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy till the moment of execution; and when the workmen yield, as they sometimes do without resistance, though severely felt by them, they are never heard of by other people" In contrast, when workers combine, "the masters..never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combination of servants, labourers, and journeymen."[71]

Adam Smith's burial place in Canongate Kirkyard[edit] Other 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, a history of astronomy down to Smith's own era, plus some thoughts on ancient physics and metaphysics, probably contain parts of what would have been the latter treatise. Lectures on Jurisprudence were notes taken from Smith's early lectures, plus an early draft of The Wealth of Nations, published as part of the 1976 Glasgow Edition of the works and correspondence of Adam Smith.

Other works, including some published posthumously, include Lectures on Justice, Police, Revenue, and Arms (1763) (first published in 1896); A Treatise on Public Opulence (1764) (first published in 1937); and Essays on Philosophical Subjects (1795).