Founder of Classical Economics
Professor of Moral Philosophy, University of Glasgow,
Author of The Theory of Moral Sentiments (1759),
Author of An Inquiry Into the Nature and Causes of the Wealth of Nations (1776)
A dam Smith was born in Kirkcaldy, Scotland, in 1723. In school he proved himself a good scholar as he studied the usual subjects of the period— English, Latin, Greek, history, and arithmetic. At 14, along with other boys the same age, he entered Glasgow University, and in 1740 went on to Oxford.
Throughout his student years he encountered many ideas and individuals that would prepare him for the eventual writing of his important work, An Inquiry into the Nature and Causes of the Wealth of Nations. In it he brought together the economic concepts and theories that established the basis of modern economics. Smith’s main argument was that the general welfare of society is best promoted by allowing individuals to pursue their own self-interest within the law, because this alone is “capable of carrying on the society to wealth and prosperity.” People should be able to do so through voluntary and mutually beneficial exchanges in free markets, with limited regulation by government officials:
“ [E]very individual . . . 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.”
A dam Smith also believed that any attempt by government to force the economy beyond this “system of natural liberty” is counterproductive: “It retards, instead of accelerating, the progress of the society towards real wealth and greatness; and diminishes, instead of increasing, the real value of the annual produce of its land and labor.” Because of the original ideas Smith put forth in his works, he is considered the founder of classical economics.