by Suhas Rachaveti
Adam Smith was born on June 16, 1723, in a town called Kirkcaldy in the southeastern part of Scotland. His father was Adam Smith, a successful lawyer, and his mother, Margaret Douglas was the daughter of a landlord and Member of Parliament.
Adam Smith’s father died before he was born and was baptized on June 5, 1723. He first started his education in the year 1729 at the Burgh School of Kirkcaldy, which was one of the top secondary schools in Scotland until 1737.
Next, in 1737, Smith continued higher education through attending the University of Glasgow, which was one of the centers of Scottish enlightenment ideas.
Here, he met professor Francis Hutcheson, creator of the moral philosophy that human’s moral sense will help humans commit good actions.
This professor had a huge impact on how Smith thought, however, he soon came to oppose this moral philosophy in his future works.
He graduated from this university in 1740 and went on to study at Oxford University with the help of a scholarship.
He studied classical and modern philosophy at this university. Eventually, Smith dropped out of Oxford in 1746 because of how he believed that the teachers didn’t teach properly and his academic experience was not pleasant as he had been punished for reading A Treatise of Human Nature by David Hume, which was considered radical at the time.
After dropping out, Smith gave public lectures on rhetoric and economics with the help of his mother's familial connections. This job at the time was considered a very prestigious one and was the stepping stone for Smith to continue on to greatness.
In 1751, he was offered to become a professor at the University of Glasgow of logic and, later on, moral philosophy. During these years, Smith became well connected with members of the aristocracy, merchants, and many inventors such as James Watt and Robert Foulis.
These connections and experiences he had with them helped him develop The Wealth of Nations book later on in his life.
However, that book was published much later in his life. His first published work was called The Theory of Moral Sentiments. In this book, Smith contributed to the field of philosophy by stating that a person’s morality and behavior, in general, are built into a person.
These natural traits decide what behaviors are acceptable in our eyes and which behaviors are not acceptable. Based on this sense of right and wrong we criticize or feel pride when people do what we think is wrong or right respectively.
This book sets the base for The Wealth Of Nations by explaining how people have a sense of morality and reason which counterbalances our passionate nature. This shows how most people will act in the interests of the general public.
In the next few years from 1763, Adam Smith spent working as a tutor to the Duke of Buccleuch. It was here where he started the book we know as The Wealth of Nations.
This position helped him elevate his social status and got him connected to famous philosophers of the french salons such as Voltaire and Hume. The next 4 years were spent in England where Smith met even more famous people such as Benjamin Franklin.
In 1767, Smith returned to his hometown to finish in 1776 the most famous of his works, The Wealth of Nations ("An Inquiry Into The Nature of the Wealth of Nations").
Firstly, the old view of economics was that a country was economically successful if the country's stock of gold and silver were plenty, and more items were exported.
The government helped promote this through the adoption of mercantilist policies (where in order to increase wealth, British colonies would be the supplier of raw materials and exporter of finished products) and taxes on imports, but stipends to people who export more.
In Adam Smith’s Wealth of Nations, Smith points out that a country’s wealth should be based on the total production and sale of things. In today's terms, we call this the Gross National Product (GNP).
He stated that trade benefits both sides and the governments should be more accepting of imports and exports. This had a massive impact on the 19th-century free trade and economic expansion.
As a result of the industrial revolution, many people started manufacturing businesses, and for these businesses to thrive, the government needed to adopt a policy called laissez-faire. It refers to an economic system in which transactions between private parties are absent of any form of economic interventionism such as regulation and subsidies, which promoted limited government interference with the economy and free international trade with limited restrictions.
In this work, he also stated that the business owners will pay the workers the most profitable wage to them. This in turn stimulated Karl Marx to develop marxism which eventually led to the development of socialism and communism due to the business owners seeing their workers as a commodity and not as humans and thus taking the value out of their lives.
After his death and especially in the 19th and 20th centuries, Adam Smith was given the title "Father of Capitalism".
He stated that the industrialists especially will try and maximize their profits without government incentives, therefore, the government shouldn’t favor any corporations and should rather favor all because this will boost the economy.
In a way, he impacted the political sphere of Great Britain because the government was known to favor the British East India Company which led to severe setbacks.
This policy helped the British government realize that they had to support all industries which diverged from the mercantilist policies of the time. Another idea that Smith promoted was the use of the assembly line which maximized the efficiency of production while using the least amount of workers.
Smith’s books were distinctive because it was the first time where someone took all the ideas about the economy and logically placed them into a book. This is why he has also been given the title of the "Father of Economics" since before his time economics wasn’t considered a science.
In conclusion, Adam smith created the ideology behind modern-day capitalist economies of most countries today. His ideas helped the industrial revolution to become successful as the industrialists created big businesses. His ideas also helped the globalization of the economy by promoting exports and imports.
Adam Smith was dubious when it came to taxes, thus, he'd probably not be very supportive of what modern capitalism has become. Smith would view a policymaker who intervened in the operation of market forces with a lot of skepticism.
He may be the economist who named the "invisible hand" in economics that allowed for market forces to dictate what was produced and how it was priced, but he did not think highly of the services sector which is becoming dominant in most advanced economies.
After the publication of his most famous book, The Wealth of Nations, Smith became the commissioner of customs for Scotland which offered him a substantial wage and lived the rest of his life with his mother, whom he had a close relationship with his whole life until he died in 1790.