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{{Otherpeople|Adam Smith}}
{{Infobox Philosopher
<!-- Philosopher Category -->
|region = Western Philosophers
|era = [[18th century philosophy]]<br />(Modern philosophy)
|color = #B0C4DE
|image_name = AdamSmith.jpg
<!-- Information -->
|name = Adam Smith
|birth = [[June 5]], [[1723]] (baptism)<br />{{smaller|<nowiki>[</nowiki>[[Old Style|OS]]: [[June 5]], [[1723]]<nowiki>]</nowiki>}}<br />[[Kirkcaldy]], [[Scotland]]
|death = {{death date and age|1790|7|17|1723|6|16}}<br />[[Edinburgh]], [[Scotland]]
|school_tradition = [[Classical economics]]
|main_interests = [[Political philosophy]], [[ethics]], [[economics]]
|influences = [[Aristotle]], [[Thomas Hobbes|Hobbes]], [[Joseph Butler|Butler]], [[John Locke|Locke]], [[Bernard de Mandeville|Mandeville]], [[Francis Hutcheson (philosopher)|Hutcheson]], [[David Hume|Hume]], [[Baron de Montesquieu|Montesquieu]], [[François Quesnay|Quesnay]]
|influenced = [[Thomas Malthus|Malthus]], [[David Ricardo|Ricardo]], [[John Stuart Mill|Mill]], [[John Maynard Keynes|Keynes]], [[Milton Friedman|Friedman]], [[Karl Marx|Marx]], [[Friedrich Engels|Engels]], [[Founding Fathers of the United States|American Founding Fathers]], [[Noam Chomsky|Chomsky]], [[Auguste Comte]]
|notable_ideas = [[Classical economics]],<br />modern [[free market]],<br />[[division of labour]],<br />the "[[invisible hand]]"
}}
'''Adam Smith ''' ([[Baptism|baptised]] [[June 16]], [[1723]] – [[July 17]], [[1790]] {{smaller|<nowiki>[</nowiki>[[Old Style|OS]]: [[June 5]], [[1723]] – [[July 17]], [[1790]]<nowiki>]</nowiki>}}) was a [[Scotland|Scottish]] [[Ethics|moral philosopher]] and a pioneering [[Political economy|political economist]]. One of the key figures of the intellectual movement known as the [[Scottish Enlightenment]], he is known primarily as the author of two treatises: ''[[The Theory of Moral Sentiments]]'' (1759), and ''[[The Wealth of Nations|An Inquiry into the Nature and Causes of the Wealth of Nations]]'' (1776). Smith is also known for his explanation of how rational self-interest and competition can lead to economic well-being and prosperity. His work helped to create the modern academic discipline of [[economics]] and provided one of the best-known rationales for [[free trade]] and [[capitalism]]. He is widely acknowledged as the "father of economics".<ref>{{cite web|accessdate=2008-05-14|url=http://www.nytimes.com/books/01/07/08/reviews/010708.08mattict.html|title=Who Is the Real Adam Smith? |work=[[The New York Times]]|date=2001-07-08|author=Mattick, Paul }}</ref>

''The Wealth of Nations'' is Smith's [[magnum opus]], and is considered to be one of the most influential economics books ever published. It was published in 1776.

==Biography==
===Early life===

Adam Smith was born to Margaret Douglas at [[Kirkcaldy]], [[Scotland]]. His father, also named Adam Smith, was a [[lawyer]], [[civil servant]], and [[widower]] who married Margaret Douglas in [[1720]]. His father died six months before Smith's birth.<ref>{{harvnb|Bussing-Burks|2003|pp=38–39}}</ref> The exact date of Smith's birth is unknown; however, his baptism was recorded on [[June 5]], [[1723]] at Kirkcaldy.<ref>{{harvnb|Buchan|2006|p=12}}</ref> Few events in Smith's early childhood were recorded, but one event recorded by Scottish journalist [[John Rae (biographer)|John Rae]] stated that Smith was abducted by gypsies at the age of four and eventually released when others went to rescue him.{{ref|gypsy}}<ref name="rae 1895 5 story">{{harvnb|Rae|1895|p=5}}</ref>

Smith attended the Burgh School of Kirkcaldy from roughly 1733 to 1737.<ref name="rae 1895 5">{{harvnb|Rae|1895|p=5}}</ref> Rae characterized the Burgh School as "one of the best secondary schools of Scotland at that period."<ref name="rae 1895 5" />

===Education===
Smith entered the [[University of Glasgow]] when he was fourteen and studied [[moral philosophy]] under [[Francis Hutcheson (philosopher)|Francis Hutcheson]].<ref>{{harvnb|Bussing-Burks|2003|p=39}}</ref> Here he developed his passion for [[liberty]], [[reason]], and [[free speech]]. In 1740, Smith was awarded the [[Snell exhibition]] and entered [[Balliol College, Oxford]]. Commenting on his schooling, William Robert Scott said "the [[University of Oxford|Oxford]] of his time gave little if any help towards what was to be his lifework," and Smith left the university in 1746. In Book V of ''[[The Wealth of Nations]]'', Smith comments on the low quality of instruction and the meager intellectual activity at English universities when compared to their Scottish counterparts. He attributes this both to the rich endowments of the colleges at Oxford and [[University of Cambridge|Cambridge]], which made the income of professors independent of their ability to attract students, and to the fact that distinguished [[men of letters]] could make an even more comfortable living as [[Minister (Christianity)|minister]]s of the [[Church of England]]. In Book V, Chapter II of his Wealth of Nations, he writes: "In the University of Oxford, the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching".

[[Image:David Hume.jpg|thumb|left|upright|[[David Hume]] was a friend of Adam Smith.]]

===Career in Edinburgh and Glasgow===
Smith began delivering public lectures in 1748 at [[Edinburgh]] under the patronage of [[Lord Kames]]. Some of these dealt with rhetoric and ''[[belles-lettres]]'', but he later took up the subject of "the progress of opulence", and it was then in his mid-to-late 20s that he first expounded the economic philosophy of "the obvious and simple system of natural liberty" which he would later publish in greater detail in his ''[[The Wealth of Nations|Wealth of Nations]]''. In 1750, he met the philosopher [[David Hume]], who was his senior by more than a decade. The alignments of opinion that can be found within their respective writings covering history, politics, philosophy, economics, and religion indicate that they both shared a closer intellectual alliance and friendship than with the others who were to play important roles during the emergence of what has come to be known as the [[Scottish Enlightenment]].<ref>{{cite encyclopedia|title=Smith, Adam (bap. 1723, d. 1790)|encyclopedia=[[Dictionary of National Biography]]|publisher=[[Oxford University Press]]|date=September 2004|author=Winch, Donald}}</ref>

In 1750, Smith was appointed chair of [[logic]] at the [[University of Glasgow]] after the death of the previous professor. Smith would continue academic work for the next thirteen years and which Smith characterized as "by far the most useful and therefore by far the happiest and most honourable period [of his life]." <ref name="rae 1895 42">{{harvnb|Rae|1895|p=42}}</ref>
In 1752, Smith transferred to the [[Professor of Moral Philosophy, Glasgow|Chair of Moral Philosophy]], once occupied by his famous teacher, [[Francis Hutcheson (philosopher)|Francis Hutcheson]].

His lectures covered the fields of [[ethics]], [[rhetoric]], [[jurisprudence]], [[political economy]], and "police and revenue". He published his ''[[The Theory of Moral Sentiments]]'' in 1759, embodying some of his [[Glasgow]] lectures. This work, which established Smith's reputation in his day, was concerned with how human communication depends on sympathy between agent and spectator, or the individual and other members of society. His analysis of language evolution was somewhat superficial, as shown only fourteen years later by a more rigorous examination of primitive language evolution by [[Lord Monboddo]] in his ''Of the Origin and Progress of Language''.<ref>{{cite encyclopedia|title=[[James Burnett, Lord Monboddo]]|encyclopedia=[[Dictionary of National Biography]]|publisher=[[Oxford University Press]]|date=1972|author=Cloyd, E.L.|pages=64–66}}</ref> Smith's capacity for fluent, persuasive, if rather rhetorical argument, is much in evidence. He bases his explanation not on a special "moral sense", as the third Lord Shaftesbury and Hutcheson had done, nor on [[utilitarianism|utility]] as Hume did, but on sympathy.

Smith began to give more attention to jurisprudence and economics in his lectures and less to his theories of morals. An impression can be obtained about the development of his ideas on political economy from the notes of his lectures taken down by a student in 1763 which were later edited by [[Edwin Cannan]],<ref>{{harvnb|Buchan|2006|p=67}}</ref> and from what Scott, its discoverer and publisher, describes as "An Early Draft of Part of The Wealth of Nations". Cannan's work appeared as ''Lectures on Justice, Police, Revenue and Arms''. A more complete version was published as ''[[Lectures on Jurisprudence]]'' in the Glasgow Edition of 1776.

===Tour of France===
[[Image:Kirkcaldy High Street Adam Smith Plaque.png|thumb|right|A commemorative plaque for Adam Smith is located at [[Kirkcaldy]], [[United Kingdom]].]]
In 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, the young [[Henry Scott, 3rd Duke of Buccleuch|Duke of Buccleuch]]. Smith subsequently resigned from his professorship and from 1764–66 traveled with his pupil, mostly in [[France]], where he came to know intellectual leaders such as [[Voltaire]],<ref>{{cite web|accessdate=2008-05-14|url=http://www.econlib.org/library/Enc/bios/Smith.html|title=Adam Smith (1723–90) |publisher=[[Concise Encyclopedia of Economics]]}}</ref> [[Anne Robert Jacques Turgot, Baron de Laune|Turgot]], [[Jean le Rond d'Alembert|Jean D'Alembert]], [[André Morellet]], [[Helvétius]] and, in particular, [[Francois Quesnay]], the head of the [[physiocrats|Physiocratic school]] whose work he respected greatly.<ref>{{harvnb|Buchan|2006|p=80}}</ref>
===Return to Britain===
Smith returned home to Kirkcaldy in 1766, and he devoted much of the next ten years to his [[magnum opus]], ''[[The Wealth of Nations]]'', published in 1776.<ref>{{harvnb|Buchan|2006|p=90}}</ref>. He was elected fellow of the [[Royal Society]] of [[London]] in May 1773<ref>{{harvnb|Buchan|2006|p=89}}</ref> In 1775, he was elected a member of the [[Literary Club]] established by [[Dr Samuel Johnson]]. Other members included [[Edmund Burke]], [[Edward Gibbon]] and [[Joshua Reynolds]]<ref>Rae, John, Life of Adam Smith, http://econlib.org/library/YPDBooks/Rae/raeLS10.html</ref>

===Later years===
In 1778, Smith was appointed to a post as [[commissioner]] of [[customs]] in Scotland and went to live with his mother in Edinburgh.<ref>{{harvnb|Buchan|2006|p=128}}</ref> Five years later, he became one of the founding members of the [[Royal Society of Edinburgh]]<ref>{{harvnb|Buchan|2006|p=133}}</ref> and from 1787–1789 he occupied the honorary position of Lord [[Rector of the University of Glasgow]].<ref>{{harvnb|Buchan|2006|p=137}}</ref> He died in Edinburgh on [[July 17]], [[1790]] after a painful illness and was buried in the [[Canongate Kirkyard]].<ref>{{harvnb|Buchan|2006|p=145}}</ref>

Smith's literary executors were two friends from the Scottish academic world: the physicist and chemist [[Joseph Black]], and the pioneering geologist [[James Hutton]].<ref name="buchan 2006 25">{{harvnb|Buchan|2006|p=25}}</ref> Smith left behind many notes and some unpublished material, but gave instructions to destroy anything that was not fit for publication.<ref name="buchan 2006 88">{{harvnb|Buchan|2006|p=88}}</ref> 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]]''.<ref name="buchan 2006 25" />

[[Image:Adam Smith.jpg|left|thumb|A [[Sketch (drawing)|sketch]] of Adam Smith]]

===Personal character===
Not much is known about Smith's personal views beyond what can be deduced from his published works. His personal papers were destroyed after his death.<ref name="buchan 2006 88" /> He never married<ref>{{harvnb|Buchan|2006|p=11}}</ref> 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.<ref>{{harvnb|Buchan|2006|p=134}}</ref>

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."<ref>{{harvnb|Rae|1895|p=262}}</ref>

Smith is often described as a prototypical [[absent-minded professor]].<ref name="skousen 2001 32">{{harvnb|Skousen|2001|p=32}}</ref> 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.<ref name="skousen 2001 32" />

Various anecdotes have discussed his absentminded nature. He supposedly fell into a [[tanning|tanning pit]] while talking with a friend. 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 several miles outside town before he realized where he was.<ref name="skousen 2001 32" />

===Religious views===
There has been considerable scholarly debate about the nature of Adam Smith's religious views. Smith's father had a strong interest in Christianity<ref>{{harvnb|Ross|1995|p=15}}</ref> and belonged to the moderate wing of the [[Church of Scotland]] (the [[national church]] of Scotland since 1690). Smith may have gone to [[England]] with the intention of a career in the Church of England: this is controversial and depends on the status of the Snell Exhibition. At Oxford, Smith rejected Christianity and it is generally believed that he returned to Scotland as a [[Deism|Deist]].<ref>{{cite journal|title=[[Times obituary of Adam Smith]]|journal=[[The Times]]|date=[[1790-07-24]]}}</ref>

Economist [[Ronald Coase]] has challenged the view that Smith was a Deist, stating that while Smith may have referred to the "[[Great Architect of the Universe]]", other scholars have "very much exaggerated the extent to which Adam Smith was committed to a belief in a personal God".{{Fact|date=May 2008}} He based this on analysis of a remark in ''The Wealth of Nations'' where Smith writes that the curiosity of mankind about the "great phenomena of nature" such as "the generation, the life, growth and dissolution of plants and animals" has led men to "enquire into their causes".{{Fact|date=May 2008}} Coase notes Smith's observation that: "Superstition first attempted to satisfy this curiosity, by referring all those wonderful appearances to the immediate agency of the gods."{{Fact|date=May 2008}} Smith's close friend and colleague [[David Hume]], with whom he agreed on most matters, is usually described as an [[Atheist]], rather than a Deist.{{Fact|date=May 2008}}

==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.<ref>{{harvnb|Buchan|2006|p=51}}</ref> It provided the ethical, philosophical, psychological and methodological underpinnings to Smith's later works, including ''[[The Wealth of Nations|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 Jurisprudence|Lectures on Justice, Police, Revenue, and Arms]]'' (1763) (first published in 1896), and ''Lectures on Rhetoric and Belles Lettres''. In ''The Theory of Moral Sentiments'', Smith critically examined the moral thinking of the time and suggested that conscience arises from social relationships.<ref>{{cite web |url=http://www.liberalhistory.org.uk/item_single.php?item_id=37&item=biography |title=Biography of Smith |accessdate=2008-05-14 |publisher=[[Liberal Democrat History Group]] |date=1997 |author= Falkner, Robert}}</ref> Smith followed the views of his mentor, [[Francis Hutcheson (philosopher)|Francis Hutcheson]] of the [[University of Glasgow]], who divided moral philosophy into four parts: ethics and virtue; private rights and natural liberty; familial rights (called Oeconomicks); and state and individual rights (called Politicks). More specifically, Smith divided moral systems into the categories of the "nature of morality" (propriety, prudence, and benevolence) and "motive of morality" (self-love, reason, and sentiment).

''An Inquiry into the Nature and Causes of the Wealth of Nations'' is the ''[[magnum opus]]'' of Smith, published on [[March 9]],[[1776]], during the [[Scottish Enlightenment]]. It is a clearly written account of [[political economy]] at the dawn of the [[Industrial Revolution]], and is widely considered to be the first modern work in the field of [[economics]]. The work is also the first comprehensive defense of [[free market]] policies. It is broken down into five books between two volumes. ''The Wealth of Nations'' was written for the average educated individual of the [[18th century]] rather than for specialists and mathematicians. There are three main concepts that Smith expands upon in this work that forms the foundation of free market economics: division of labour, pursuit of self interest, and freedom of trade.

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.

===The Wealth of Nations===
[[Image:Wealth of Nations.jpg|thumb|right|The first page of the ''Wealth of Nations'', 1776 London edition]]
{{main|The Wealth of Nations}}
''The Wealth of Nations'' was Smith's most influential work, and is considered to be very important in the creation of the field of economics and its development into an autonomous systematic discipline. In the Western world, it is considered one of the most influential books on the subject ever published. When the book, which has become a classic manifesto against [[mercantilism]] (the theory that large reserves of [[bullion]] are essential for economic success), appeared in 1776, there was a strong sentiment for [[free trade]] in both Britain and America. This new feeling had been born out of the economic hardships and poverty caused by the American War of Independence. However, at the time of publication, not everybody was immediately convinced of the advantages of free trade: the British public and Parliament still clung to mercantilism for years to come.

''The Wealth of Nations'' also rejects the [[Physiocrat]]ic school's emphasis on the importance of land; instead, Smith believed labour was paramount, and 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 also concluded that excessive division of labor would negatively affect worker's intellect through the carrying out of monotonous and repetetive tasks and hence he called for the establishment of a public education system.{{Fact|date=February 2008}}

''Nations'' was so successful, in fact, that it led to the abandonment of earlier economic schools, and later economists, such as [[Thomas Malthus]] and [[David Ricardo]], focused on refining Smith's theory into what is now known as [[classical economics]].{{Fact|date=March 2008}} Both [[Modern economics]] and, separately, [[Marxian economics]] owe significantly to classical economics. Malthus expanded Smith's ruminations on [[overpopulation]], while Ricardo believed in the "[[iron law of wages]]"—that overpopulation would prevent wages from topping the subsistence level. Smith postulated an increase of wages with an increase in production, a view considered more accurate today.{{Fact|date=March 2008}}

One of the main points of ''The Wealth of Nations'' is 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]]". 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". If a product shortage occurs, for instance, its price rises, creating a profit margin that creates an incentive for others to enter production, eventually curing the shortage. If too many producers enter the market, the increased [[competition]] among manufacturers and increased supply would lower the price of the product to its production cost, the "[[natural price]]". {{POVassertion|Cost of Production Theory and the Invisible Hand}}

Even as profits are zeroed out at the "natural price", there would be incentives to produce goods and services, as the costs of production, including compensation for the owner's labour, are also built into the price of the goods. If prices dip below a zero profit, producers would drop out of the market; if they were above a zero profit, producers would enter the market. Smith believed that while human motives are often [[selfishness]] and [[Greed (emotion)|greed]], the competition in the free market 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 [[monopoly|monopolies]].

Smith vigorously attacked the antiquated government restrictions which he thought were [[hinder]]ing industrial expansion. In fact, he attacked most forms of government interference in the economic process, including [[tariff]]s, arguing that this creates inefficiency and high prices in the long run. It is believed that this theory influenced government legislation in later years, especially during the 19th century. (However this was not an [[Anarchism|anarchistic]] opposition to government. Smith advocated a Government that was active in sectors other than the economy: he advocated public education of poor adults; institutional systems that were not profitable for private industries; a judiciary; and a standing army.)

Two of the most famous and often-quoted passages in ''The Wealth of Nations'' are:

{{quote|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 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.}}

And

{{quote|As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual value of society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he 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 society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.}}

Another favorite quote, usually recited by economists, also from ''The Wealth of Nations'' is:

{{quote|People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.}}

Smith postulated four "maxims" of taxation: proportionality, transparency, convenience, and efficiency. He supported low taxes and was opposed to the taxation of capital gains.<ref>{{cite web|accessdate=2008-05-14|url=http://www.ncpa.org/oped/bartlett/jan2401.html|title=Adam Smith On Taxes|publisher=[[National Center for Policy Analysis]]|date=2001-01-24|author=Bartlett, Bruce}}</ref> Some economists credit Smith as one of the first to advocate a [[progressive tax]].<ref name="reich">{{cite web|title=Do Americans Still Believe In Sharing The Burden?|work=[[The Washington Post]]|date=1987-04-26|author=Reich, Robert B.|page=d.01|url=http://pqasb.pqarchiver.com/washingtonpost/access/73816461.html?dids=73816461:73816461&FMT=ABS&FMTS=ABS:FT&date=Apr+26%2C+1987&author=Robert+B.+Reich&pub=The+Washington+Post+(pre-1997+Fulltext)&edition=&startpage=d.01&desc=Do+Americans+Still+Believe+In+Sharing+The+Burden%3F|accessdate=2008-05-14}}</ref><ref>{{cite news|last=Stein|first=Herbert |date=[[1994-04-06]]|title=Board of Contributors: Remembering Adam Smith|work=[[Wall Street Journal]] (Eastern Edition)|accessdate=2008-05-14}}</ref> Smith wrote, "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more in proportion." In another quote, he supported taxation in proportion to the revenue (income) of the individual:

{{quote|The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.}}

===Interpreting works===
Vivienne Brown alleged in ''[[The Economic Journal]]'' that in the 20th century United States, [[Reaganomics]] supporters, ''[[The Wall Street Journal]]'', and other similar sources have spread among the general public a partial and misleading vision of Adam Smith, portraying him as an "extreme dogmatic defender of [[laissez-faire]] capitalism and [[supply-side economics]]".<ref name="Brown93">{{cite journal|author=Brown, Vivienne|date=January 1993|journal=[[The Economic Journal]]|volume=103|issue=416|pages=230–232|doi=10.2307/2234351|title=Capitalism as a Moral System: Adam Smith's Critique of the Free Market Economy}}</ref> According to Brown and Pack, Smith's position was very close to what is currently perceived in the USA as a "[[liberal democrat]]".<ref name="Brown93"/> In the ''Wealth of Nations'', they claim that Smith advocates government economic intervention with the allocation of many economic functions. In this analysis, Smith instead attacked the corrupted favoritism made by the governments in favor of the rich and powerful and against the poor.<ref name="Brown93"/>

====Adam Smith Problem====
In the ''Wealth of Nations'', Smith states that self-interest alone (in a proper institutional setting) can lead to socially beneficial results, but argues in ''Theory of Moral Sentiments'' that sympathy is required to achieve these results. On the surface, it appears that a contradiction exists. Economist August Oncken referred to this as the "Adam-Smith-Problem".<ref>{{cite journal|title=The Consistency of Adam Smith|journal=[[The Economic Journal]]|author=Oncken, August|volume=7|issue=27|date=September 1897|pages=443–450}}</ref> [[Austria]]n economist [[Joseph Schumpeter]] also emphasized this apparent contradiction in his commentary on Smith's work.

Adam Smith himself cannot have seen any contradiction, since he produced a revised edition of ''Moral Sentiments'' after the publication of ''Wealth of Nations''. Both sets of ideas are to be found in his ''Lectures on Jurisprudence''. In recent years most students of Adam Smith's work have argued that no contradiction exists. In the ''Theory of Moral Sentiments'', Smith develops a theory of psychology in which individuals in society find it in their self-interest to develop sympathy as they seek approval of what he calls the "impartial spectator." The self-interest he speaks of is not a narrow selfishness but something that involves sympathy.

Some readers of ''The Wealth of Nations'' have assumed that when Smith speaks of "self-interest" he is referring to selfishness. Although in some contexts, such as buying and selling, sympathy generally need not be considered, Smith makes it clear that he regards selfishness as inappropriate, if not immoral, and that the self-interested actor has sympathy for others. In ''The Theory of Moral Sentiments'' Smith argues that the self-interest of any actor includes the interest of the rest of society, since the socially-defined notions of appropriate and inappropriate actions necessarily affect the interests of the individual as a member of society. Context is also useful as Adam Smith was against the idea of corporations, or "joint stock companies."

Adam Smith appeared to believed that moral sentiments and self-interest would always add up to the same thing. One possible line of reasoning he might have employed in reaching this conclusion is as follows: the invisible hand cannot operate if there is no society, for precluding a societal construct precludes division of labor, and thus, the efficiency which comes with its manifestation. Now for society to exist, justice is a necessary condition (as pointed out in Smith's ''Theory of Moral Sentiments''). For justice to exist in any social setting, individuals must harbor the passions of gratitude and resentment governed by a sense of 'merit' and 'demerit' (again from Smith's ''Theory of Moral Sentiments''). And finally, as Smith himself would have so vehemently argued, the sense of 'merit' and 'demerit' is almost exclusively engendered by human sympathy. In conclusion, the invisible hand of the market is, at some level, contingent upon the ability of humans to sympathize: Smith's self-interest is indeed in consonance with the notion of sympathy.{{Fact|date=May 2008}}

==Influence==
[[Image:Adam smith note.jpg|150px|thumb|This [[Pound sterling|£]]20 note was issued by the [[Bank of England]] and features Adam Smith.]]
''The Wealth of Nations'', one of the earliest attempts to study the rise of industry and commercial development in Europe, was a precursor to the modern academic discipline of economics. It provided one of the best-known intellectual rationales for free trade and [[capitalism]], greatly influencing the writings of later economists. [[David Ricardo]] and [[Karl Marx]] were influenced by economic theories of Adam Smith. Smith was ranked #30 in Michael H. Hart's [[The 100|list of the most influential figures in history]].<ref>{{harvnb|Hart|1989}}</ref>

Beginning [[13 March]], [[2007]], Smith's portrait appeared in the UK on new [[Pound sterling|£]]20 notes. He is the first Scotsman to feature on a currency issued by the [[Bank of England]].<ref name="bbc1">{{Cite web|url=http://news.bbc.co.uk/1/hi/business/6096938.stm|title=Smith replaces Elgar on £20 note|accessdate=2008-05-14|publisher=[[BBC]]|date=2006}}</ref> A picture of the note is available on the Bank of England website.<ref name="bank">{{Cite web|url=http://www.bankofengland.co.uk/banknotes/virtualtour/virtual_tour_flash.htm|title=Bank of England Banknotes - Virtual Tour|accessdate=2008-05-14|publisher=[[Bank of England]]}}</ref> Despite the ubiquity provided by Smith's placement on such a common note, there is a lack of unanimity of opinion on Smith's legacy. Some feel that the works of Adam Smith have been misinterpreted, and others argue that Adam Smith's legacy has been "lost".

In a journal article, "The Rise of Adam Smith: Articles and Citations, 1970–1997", economist Jonathan B. Wight reports that only two articles on Adam Smith or his works were published the year before 1971. In 2002 Wight, the author of this paper and of other books and articles on Adam Smith and his works, reports that six hundred articles and thirty books were published in the twenty seven years between 1970 and 1997. A heightened interest in Adam Smith and his works has been sustained. And, this trend Wight writes is more than a "speculative bubble" in a 2004 conference paper titled "Is There a Speculative Bubble in Scholarship on Adam Smith?", presented at the Eleventh World Congress of Social Economics, Albertville, France.

The bicentennial anniversary of the publication of the Wealth of Nations was celebrated in 1976. Results of this celebration has been increased interest in Smith's first book, The Theory of Moral Sentiments, and in his other works, throughout academia. This heightened interest in his book on moral philosophy has also been sustained. Or, as some say, in 1976 there was a break with the earlier emphasis on an Adam Smith problem. After 1976 Adam Smith was more likely to be represented as the author of both the Wealth of Nations and The Theory of Moral Sentiments and thereby as the founder of a moral philosophy and the science of economics. His "economic man" or actor was also more often represented as a moral person. Finally, also pointed to was his opposition to slavery, colonialism, and empire or his statements about high wages for the poor, his views that a common street porter was not intellectually inferior to a philosopher (Levy, Peart).<ref>{{harvnb|Smith|1977|p=Book I, Chapter 2}}</ref> And, more than one author refer to a need to recover "Adam Smith's lost legacy" (Kennedy, West).

[[Image:adamsmith.JPG|left|thumb|The Adam Smith Theatre in Kirkcaldy]]
In line with such trends, on [[January 24]], [[2008]] [[Bill Gates]] said the following at the world economic forum in Davos Switzerland "Adam Smith, the very father of capitalism and the author of “Wealth of Nations,” who believed strongly in the value of self-interest for society, opened his first book with the following lines:
"How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it."

Expressing his interest in reducing poverty in 2008, he spoke about a "creative" capitalism, rather than an "unfettered" or laissez-faire capitalism. "Creative capitalism takes this interest in the fortunes of others and ties it to our interest in our own fortunes in ways that help advance both. This hybrid engine of self-interest and concern for others can serve a much wider circle of people than can be reached by self-interest or caring alone."<ref>{{cite web|accessdate=2008-05-14|url=http://www.microsoft.com/Presspass/exec/billg/speeches/2008/01-24WEFDavos.mspx|title=Bill Gates: World Economic Forum 2008|publisher=[[Microsoft]]|date=2008-01-24|author=[[Bill Gates|Gates, Bill]]}}</ref>
Nearly two years before, Gates' interest in Adam Smith was also evident. On [[June 25]] [[2006]], Gates presented a copy of Adam Smith's [[Wealth of Nations]] to [[Warren Buffett]] after Buffett announced that he would donate his wealth to [[Bill & Melinda Gates Foundation|The Bill and Melinda Gates Foundation]].<ref name="nytimes1">{{Cite web|url=http://www.nytimes.com/2006/06/26/business/26cnd-buffet.html|title=Buffett Always Planned to Give Away His Billions|accessdate=2008-05-14|work=[[The New York Times]]|date=2006-06-26|author=Peters, Jeremy W.}}</ref>

There, in addition, has been a controversy over the extent of Smith's originality in ''The Wealth of Nations.'' Some argue that the work added only modestly to the already established ideas of thinkers such as [[Anders Chydenius]] ([[The National Gain]] 1765), [[David Hume]] and the [[Charles de Secondat, Baron de Montesquieu|Baron de Montesquieu]]. Indeed, many of the theories Smith set out simply described historical trends away from mercantilism and towards free trade that had been developing for many decades and had already had significant influence on governmental policy. Nevertheless, Smith's work organized their ideas comprehensively, and so remains one of the most influential and important books in the field today.

Herbert Stein, in a frequently-quoted article, "Adam Smith did not wear an Adam Smith necktie," wrote that the people who wear the Adam Smith tie do it "to make a statement of their devotion to the idea of free markets and limited government. What stands out in the Wealth of Nations, however, is that their patron saint was not pure or doctrinaire about this idea. He viewed government intervention in the market with great skepticism. He regarded his exposition of the virtues of the free market as his main contribution to policy, and the purpose for which his economic analysis was developed. "Yet he was prepared to accept or propose qualifications to that policy in the specific cases where he judged that their net effect would be beneficial and would not undermine the basically free character of the system," wrote Stein. "He did not wear the Adam Smith necktie." In Stein's reading, ''The Wealth of Nations'' could justify the Food and Drug Administration, The Consumer Product Safety Commission, mandatory employer health benefits, environmentalism, and "discriminatory taxation to deter improper or luxurious behavior."<ref>{{cite journal|author=Stein, Herbert|date=[[1994-04-06]]|title=Board of Contributors: Remembering Adam Smith|journal=[[The Wall Street Journal Asia]]|page=A14}}</ref><!-- text is mirrored at: http://web.archive.org/web/20061119220535/http://progecon.wordpress.com/2006/06/09/adam-smith-did-not-wear-an-adam-smith-necktie/ -->

==Footnotes==
{{refbegin}}
* {{note|gypsy}}"In his fourth year, while on a visit to his grandfather's house at Strathendry on the banks of the Leven, [Smith] was stolen by a passing band of gypsies, and for a time could not be found. But presently a gentleman arrived who had met a gypsy woman a few miles down the road carrying a child that was crying piteously. Scouts were immediately dispatched in the direction indicated, and they came upon the woman in Leslie wood. As soon as she saw them she threw her burden down and escaped, and the child was brought back to his mother. [Smith] would have made, I fear, a poor gypsy."
{{refend}}

==Notes==
{{reflist|3}}

==References==
* {{citation|title=The Authentic Adam Smith: His Life and Ideas|first=James|last=Buchan|publisher=[[W. W. Norton & Company]]|year=2006|date=[[2006-08-21]]|isbn=0393061213|url=http://www.amazon.com/dp/0393061213}}.
* {{citation|last=Bussing-Burks|first=Marie|title=Influential Economists|publisher=The Oliver Press|location=[[Minneapolis]]|year=2003|isbn=1-881508-72-2|url=http://www.amazon.com/dp/1881508722}}
* {{citation|title=[[The 100]]|authorlink=Michael H. Hart|first=Michael H.|last=Hart |publisher=Carol Publishing Group|year=1989|date=March 1989|isbn=0806510684}}.
* {{citation | authorlink=John Rae (biographer)|first=John|last=Rae | title = Life of Adam Smith | publisher = [[Macmillan Publishers]] | year = 1895 | location = [[New York City]] | url =http://books.google.com/books?id=V80JAAAAIAAJ&printsec=frontcover&dq=Adam+Smith+-inauthor:%22Adam+Smith%22&ei=lCArSNj3K4uujgGNgtnCDQ#PPA4,M1 | isbn = 0722226586}}.
* {{citation|title=The Life of Adam Smith|first=Ian Simpson|last=Ross|publisher=[[Oxford University Press]]|year=1995|date=[[1995-12-14]]|isbn=0198288212}}.
* {{citation| first=Mark|last=Skousen|authorlink=Mark Skousen| title = The Making of Modern Economics: The Lives and Ideas of Great Thinkers| publisher = M.E. Sharpe| year = 2001| url = http://books.google.com/books?id=nsnl3hHPuowC | isbn = 0765604809}}
* {{citation|title=An Inquiry into the Nature and Causes of the Wealth of Nations|first=Adam|last=Smith|publisher=[[University Of Chicago Press]]|year=1977|date=[[1977-02-15]]|isbn=0226763749}}.
* {{A Short Biographical Dictionary of English Literature}}

==Further reading==
* {{cite book|title=Adam Smith's Wealth of Nations: New Interdisciplinary Essays|author=Copley, Stephen|publisher=[[Manchester University Press]]|date=March 1995|isbn=0719039436|url=http://www.amazon.com/Adam-Smiths-Wealth-Nations-Interdisciplinary/dp/0719039436}}
* {{cite book|title=Adam Smith and the Wealth of Nations: 1776–1976|author=Glahe, F.|publisher=[[University Press of Colorado]]|date=June 1977|isbn=0870810820|url=http://www.amazon.com/Adam-Smith-Wealth-Nations-1776-1976/dp/0870810820}}
* {{cite book|title=The Cambridge Companion to Adam Smith|author=Haakonssen, Knud|publisher=[[Cambridge University Press]]|date=[[2006-03-06]]|isbn=0521779243|url=http://www.amazon.com/Cambridge-Companion-Smith-Companions-Philosophy/dp/0521779243}}
* {{cite book|title=Economics of Adam Smith|author=[[Samuel Hollander|Hollander, Samuel]]|publisher=[[University of Toronto Press]]|date=June 1973|isbn=0802063020|url=http://www.amazon.com/Economics-Adam-Smith-Samuel-Hollander/dp/0802063020}}
* {{cite book|title=Adam Smith in His Time and Ours|author=Muller, Jerry Z.|publisher=[[Princeton University Press]]|date=[[1995-07-03]]|isbn=0691001618|url=http://www.amazon.com/Adam-Smith-His-Time-Ours/dp/0691001618}}
* {{cite book|title=On The Wealth of Nations|author=O'Rourke, P. J.|publisher=[[Grove/Atlantic Inc.]]|date=[[2006-12-04]]|isbn=0871139499|url=http://www.amazon.com/Wealth-Nations-Books-Changed-World/dp/0871139499}}

==External links==
{{Wikiquote}}
{{Wikisource author}}
* {{gutenberg author| id=Adam+Smith | name=Adam Smith}}
*[http://metalibri.incubadora.fapesp.br/portal/authors/AnInquiryIntoTheNatureAndCausesOfTheWealthOfNations ''An Inquiry into the Nature and Causes of the Wealth of Nations''] at MetaLibri Digital Library (PDF)
* [http://www.econlib.org/library/Smith/smMS.html ''The Theory of Moral Sentiments''] at the [http://www.econlib.org/index.html Library of Economics and Liberty]
* {{Gutenberg|no=3300|name=The Wealth of Nations}}
* [http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=197&Itemid=99999999 ''Works and Correspondence of Adam Smith'']
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{{succession box|title=[[Rector of the University of Glasgow]]|years=1787&mdash;1789|before=[[Robert Cunninghame-Grahame of Gartmore]]|after=[[Walter Campbell of Shawfield]]}}
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{{ History of economic thought}}

{{Enlightenment}}

{{Persondata
|NAME=Smith, Adam
|ALTERNATIVE NAMES=
|SHORT DESCRIPTION=Scottish philosopher and economist
|DATE OF BIRTH={{birth date|1723|6|5|mf=y}} [[Old Style|O.S.]] ([[June 16]] [[New Style|N.S.]])
|PLACE OF BIRTH=[[Kirkcaldy]], [[Fife]], [[Scotland]]
|DATE OF DEATH={{death date|1790|7|17|mf=y}}
|PLACE OF DEATH=[[Edinburgh]], [[Scotland]]
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[[Category:Classical economists]]
[[Category:Classical liberals]]
[[Category:Deist thinkers]]
[[Category:Economists]]
[[Category:Enlightenment philosophers]]
[[Category:Scottish business theorists]]
[[Category:Scottish economists]]
[[Category:Scottish Enlightenment]]
[[Category:Scottish philosophers]]
[[Category:Academics of the University of Edinburgh]]
[[Category:Academics of the University of Glasgow]]
[[Category:Fellows of the Royal Society]]
[[Category:Fellows of the Royal Society of Arts]]
[[Category:Fellows of the Royal Society of Edinburgh]]
[[Category:Alumni of the University of Glasgow]]
[[Category:Alumni of Balliol College, Oxford]]
[[Category:People from Kirkcaldy]]
[[Category:1723 births]]
[[Category:1790 deaths]]
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