Adam Smith was a Scottish political philosopher and economist, considered one of the forefathers of classical economics and a pioneer of the study of political economy. Smith graduated from Balliol College at Oxford, and later served as the chair of moral philosophy at the University of Glasgow. He departed from his academic position after 12 years to tutor the Duke of Bucchleuch in Switzerland. His two major works, An Inquiry into the Nature and Causes of the Wealth of Nations, and The Theory of Moral Sentiments, were composed after he left the service of the Duke on a lifetime pension.
The former work, considered his magnum opus, is often referred to by its abridged title The Wealth of Nations. It was first published in 1776, the same year as the American Declaration of Independence, and is considered a foundational text in modern economic theory. It is noted for its influence on the American founding fathers James Madison, Alexander Hamilton, and Thomas Jefferson, and upon the economic theories of Karl Marx, John Maynard Keynes, and Milton Friedman.
The latter work expressed Smith’s deep interest in moral philosophy, and expanded upon the philosophical, juridical and ethical framework of his earlier work. While known primarily as an economist today, Smith’s work and interests lay primarily in the fields of theology, jurisprudence, and moral philosophy.
Before Adam Smith, most people seemed to believe government was necessary to make an economy work. In Britain and Europe, governments promoted economic self-sufficiency as a bulwark of national security. They subsidized “strategic” industries like mining and silk‑making. Governments helped protect apothecaries, bricklayers, woodmongers, playing card makers and myriad other workers against what they considered unfair competition. Governments protected overseas trading companies. Governments restricted imports in the name of accumulating gold hoards, thought to be a secret of wealth and power. Life without considerable government intervention was unthinkable.
Adam Smith defied all this with The Wealth of Nations, a clarion call for economic liberty. Although many specifics weren’t original with Smith, he created a bold vision which inspired people everywhere. He showed that the way to achieve peace and prosperity is to set individuals free. He attacked one type of government intervention after another. He recommended liberating Britain’s American colonies. He denounced slavery. Smith had an enormous impact on ideas, where change begins.
Smith was an unlikely revolutionary. He came across as a serious, absent-minded, thoroughly likeable man. He was a dedicated scholar, forming a personal library of some 3,000 volumes. He was often so preoccupied with ideas that he forgot what he was doing. Once, reportedly, he was giving a tour of a Glasgow tannery, and he absent-mindedly fell right into the tannery pit, from which his friends extricated him. He seemed to make friends wherever people enjoyed playing cards or talking about such things as current affairs, history, literature, philosophy or government policy. Voltaire, the famed French defender of religious toleration, wrote admiringly about Smith: “We have nothing to compare with him, and I am embarrassed for my dear compatriots.” Madame Riccoboni, a French novelist, gushed: “Scold me, beat me, kill me, but I like Mr. Smith, I like him greatly. I wish that the devil would carry off all of our own men of letters, all of our philosophers, and bring Mr. Smith to me. Superior men seek him out.”
What did Smith look like? He never sat for a portrait, but James Tassie did a medallion in 1787, when Smith was 64 and ill. Such medallions were typically modelled from wax, so this one is presumed to be accurate. As Royal Economic Society cataloguer James Bonar described it: “The head, which appears turned in pure profile to the right of the spectator, shows a particularly full forehead, a full nose, slightly aquiline in its curve; a long thin upper lip and a lower lip that protrudes a little; and a firm, well-shaped chin and jaw. The eyebrow is strongly curved, the upper eyelid heavy and drooping, the eyeball particularly prominent; and beneath the lower eyelid the skin is loose and wrinkled. A wig is worn, tied behind in a bag with ribbons, showing small curls in front, and two large curls at the side which cover and conceal the ear.” Smith admitted to a friend: “I am a beau in nothing but my books.”
Writing was always tough for Smith. The bookish bachelor wrote with a “schoolboy hand,” forming big, round letters which were laboriously connected. Composition was just as tough. Smith wrestled with a few big ideas for decades and agonized over how to express himself. The Wealth of Nations was at least 27 years in the making.
Biographer Ian Simpson Ross noted “his harsh voice with an almost stammering impediment , and a conversational style that amounted to lecturing. His friends understood this, and made allowances for his disposition…What shines through all accounts of his character and characteristics, particularly as they were displayed in his relationships with young people, was his essential kindness.”
It isn’t known exactly when Adam Smith was born, but he was baptized June 5, 1723, in Kirkaldy, a small fishing village on Scotland’s east coast. While his house is no longer there, some of the garden survives — it goes down to the sea.
Smith’s father, a customs official also named Adam, died several months before he was born. The youngster was raised by his mother Margaret Douglas, daughter of a landowner. The only thing we know about his childhood was that at age four he was briefly abducted by a band of gypsies. “He would have made, I fear, a poor gypsy,” wrote biographer John Rae.
Smith entered Glasgow University at 14, the customary age for enrollment. The town of 25,000 prospered largely as an entrepot for American tobacco, and this commerce stimulated intellectual life — the Scottish Enlightenment was in full flower. Glasgow University was famed for its teaching, in part, because professors were compensated directly by student fees. They had an incentive to perform well. Smith studied with moral philosopher Francis Hutcheson, a forceful character who broke with tradition and delivered his lectures in English instead of Latin. Hutcheson expressed a passion for reason, liberty and free speech, inspiring Smith. It seems to have been Hutcheson who brought his bright student to the attention of controversial rationalist philosopher David Hume; Smith and Hume were to become best friends.
To be sure, Smith was his own man, disagreeing with Hutcheson on some key issues. Hutcheson, for example, believed that self-love was a bad thing and that only well-intended actions were virtuous. As Smith wrote later: “The habits of economy, industry, discretion, attention and application of thought, are generally supposed to be cultivated from self-interested motives, and at the same time are apprehended to be very praise-worthy qualities which deserve the esteem and approbation of every body.”
How did Smith discover the wondrous effects of self-interest? Well, he was a remarkably perceptive person who spent years in a thriving commercial center, so he must have learned much from his own observations. Smith scholar Edwin Canaan thought that the Dutch doctor Bernard Mandeville must have influenced Smith’s thinking, too, with his provocative satire The Fable of the Bees: or Private Vices, Public Benefits (expanded edition, 1729). In it, Mandeville scandalized high‑minded folks by suggesting that self‑interest is good, because it leads people to serve each other and help society prosper.
Smith wanted to teach at a Scottish university, and the traditional method of seeking a professorship was to show what one could do ‑- deliver some public lectures. If university officials were impressed and needed to fill an opening, he might be appointed. Accordingly, in 1748, in Edinburgh, Smith began delivering lectures about ethics, economics and defense policy. He was to spend the rest of his life expanding this material into books.
As early as 1749 — before major works of the French laissez faire economists were published — Smith had concluded that the way to promote prosperity is for governments to leave people alone. Dugald Stewart, a student of his, reported that in a lecture that year, Smith declared: “Little else is required to carry a state to the highest degree of affluence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel, or which endeavor to arrest the progress of society at a particular point…are obliged to be oppressive and tyrannical.”
Smith’s lectures were well received, and by 1751, he was teaching logic at Glasgow University. A year later, he was asked to teach moral philosophy there. Five times a week at 7:30 in the morning, he delivered an hour-long lecture. Three days a week at 11:00, he taught private classes. He seemed to have won the respect of students and faculty alike, because in 1758 he was named dean. Recalled one of his students, James Boswell, later a famous literary biographer: “Mr. Smith’s sentiments are striking, profound and beautiful. He has nothing of that stiffness and pedantry which is too often found in professors.”
Evenings, Smith played whist and chatted with some of Scotland’s brightest minds. These included David Hume, steam engine inventor James Watt and chemist Joseph Black. Smith participated in a discussion club which, started in the 1740s by banker Andrew Cochrane, met weekly to talk about economic and political issues. Smith didn’t have much luck with ladies, however; he proposed marriage two or three times but was rejected.
Meanwhile, Smith spent four years transforming lecture material into his first book, The Theory of Moral Sentiments. It was about motivations other than self-interest which influenced human behavior. Published in London, 1759, it made him a literary celebrity. He dined with all kinds of interesting people like Benjamin Franklin.
In The Theory of Moral Sentiments, Smith announced his next project: “I shall in another discourse endeavor to give an account of the general principles of law and government, and of the different revolutions they have undergone in the different ages and periods of society, not only in what concerns justice, but in what concerns policy revenue and arms, and whatever else is the object of law.” That project, of course, was The Wealth of Nations.
Hume sent a copy of The Theory of Moral Sentiments to the English statesman Charles Townshend. As colonial minister, he was to earn notoriety for depriving the American colonies of cherished prerogatives and unintentionally provoking the revolutionary movement. Townshend wanted someone distinguished to tutor his stepson, Henry Scott, the Duke of Buccleugh. Townshend agreed to pay Smith L300 a year plus expenses — about three times more than Smith got from the University of Glasgow — for giving the Duke a Grand Tour of Europe. Moreover, Smith got a L300 annual pension for life. Smith might never have worked in business, but he knew how to cut a good deal! Smith met the Duke in London, January 1764, and from there travelled to Toulouse, a resort town popular among the English. In Toulouse, Smith acquired another young charge, the Duke’s younger brother Hew Campbell Scott.
Although Smith’s tutoring deal might seem to have interrupted his studies, it offered him two unexpected opportunities. First, for anyone interested in liberty, France was an ideal destination at that time. Smith saw first-hand how the French were struggling with a much more costly, interventionist government than he had experienced. Smith visited with leading intellectual rebels. Smith visited Geneva and met Voltaire who reportedly declared: “This Smith is an excellent man!” In Paris, Smith visited Francois Quesnay, founder of the Physiocratic school of laissez faire economics. Smith got to know Jacques Turgot who put laissez faire principles into action. Smith declared that the French laissez faire philosophy, “with all its imperfections, is perhaps the nearest approximation to the truth that has yet been published upon the subject of political economy, and is, upon that account, well worth the consideration of every man who wishes to examine with attention the principles of that very important science.”
Equally important, Smith became bored and restless in Toulouse. He resolved to pursue the project he had described five years earlier in The Theory of Moral Sentiments. On July 5, 1764, he wrote Hume: “I have begun to write a book in order to pass away the time.” Thus began his initial draft of The Wealth of Nations.
Smith’s European stay ended abruptly after Hew Scott was murdered in Paris, October 1766. Smith and the Duke returned to London, and Smith turned to revising The Theory of Moral Sentiments. Then he made his way back to Kirkaldy where, living with his mother, he worked on The Wealth of Nations. “My business here is Study,” he wrote. “My Amusements are long, solitary walks by the Sea side…I feel myself, however, extremely happy, comfortable and contented. I never was, perhaps, more so in all my life.”
By 1770, Smith plunged into laborious revisions. During 1773, he added important material on rent, wages and the American colonies. In April that year, he moved to London so he could see more research materials. He pored through documents at the British Museum. He worked on revisions at the British Coffee‑House, Cockspur Street, where many Scottish artists and intellectuals gathered. He belonged to a weekly dining club at the coffee house, joining portrait painter Joshua Reynolds and architect Robert Adam, among others. Apparently, Smith gave copies of each new chapter to friends who discussed and criticized it. Smith’s friend Adam Ferguson, in the fourth edition of his History of Civil Society, alerted readers to what was coming: “The public will probably soon be furnished (by Mr. Smith, author of The Theory of Moral Sentiments) with a theory of national economy equal to what has ever appeared on any subject of science whatever.”
Finally, on March 9, 1776, The Wealth of Nations was published by the firm Strahan and Cadell. It was two quarto (9 by 12 inch) volumes, over 1,000 pages. Smith was 53.
Biographer Ross reported that “publication…was timed to seize Parliament’s attention, and influence members to support a peaceful resolution of the [American] conflict. America offered a major point of application for free-market theory, and if Smith could win supporters, there was some hope of ending the cycle of violence induced by efforts to preserve the old colonial system involving economic restraints and prohibitions.”
Smith’s painstaking revisions paid off, because the book reads as if he were speaking to you across a table, explaining simply what makes an economy tick. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner,” he wrote, “but from their regard to their own 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.”
Again and again, Smith presented a stalwart defense of private individuals against rapacious politicians. For example: “It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves, always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.”
The Wealth of Nations conveyed a keen appreciation for the way a free society works best. Smith’s most famous lines: “[a typical investor] intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affect to trade for the public good.”
The first reactions came from his friends who had seen the book evolve. For example, David Hume, April 1, 1776 — “I am much pleas’d with your Performance.” Historian Edward Gibbon wrote Adam Ferguson: “What an excellent work is that with which our common friend Mr. Adam Smith has enriched the public! An extensive science in a single book, and the most profound ideas expressed in the most perspicuous language.” Thomas Jefferson was enthusiastic, saying that on the subject of money and commerce, ” Smith’s Wealth of Nations is the best book to be read…”
The first printing sold out in six months and made Smith a sensation. A German edition appeared in 1776, a Danish edition in 1779, an Italian edition in 1780 and a French edition in 1781. The Spanish Inquisition suppressed the book for what officials considered “the lowness of its style and the looseness of its morals.”
Smith had no sooner finished the book than he began revising it. New English editions appeared in 1778, 1784, 1786 and 1789. Smith had time for little else. With a mischievous flash of humor, referring to his well-known absent-mindedness, he told his London publisher in 1780: “I had almost forgot that I was the author of the inquiry concerning the Wealth of Nations.”
The Duke of Buccleuch was thrilled with Smith’s success and pulled strings to get his former tutor appointed Commissioner of Customs, a lucrative though not very demanding position (L600 a year) which Smith accepted. Some reward for a free trader! Smith gathered material and made notes for a history of philosophy and a history of law and government. But he proceeded slowly, as he had with his other projects, and this work was doomed by his failing health.
Smith died quietly at his Kirkaldy home on July 17, 1790. He was buried in the Cannongate cemetery. As he had asked, his executors Joseph Black and James Hutton burned almost all his papers, frustrating generations of biographers.
His work lived on, and he became a guiding light whose love of liberty helped make the 19th century the most peaceful period in modern history. Now some two hundred years after Smith’s death, economists have identified technical errors in his work, yet his reputation towers over seductive challengers like Karl Marx and John Maynard Keynes. Nobel Laureate George Stigler dubbed Smith “the patron saint of free enterprise.” H.L. Mencken declared: “There is no more engrossing book in the English language than Adam Smith’s ‘The Wealth of Nations.’” He’s a major presence as liberty is being reborn at the dawn of the 21st century.
Reprinted from The Triumph of Liberty by Jim Powell.