This is a 4 page paper researching on the life and times of Adam Smith.

University Degree Business and Administrative studies

Summary: This is a 4 page paper researching on the life and times of Adam Smith.

Thesis: Dr. Adam Smith is a great intellectual whose views and ideas had a great impact on the 19th Century and still continue to have value in the world today. He was not just an economist but also a philosopher, a sociologist and an analyst of political and social institutions.

Introduction

Adam Smith was one of the greatest political economists and philosophers of the 18th century.

He started of his career as a lecturer at Glasgow University where was appointed Professor of logic and later switched to the post of Professor of moral philosophy. A well-educated man, he had knowledge and interests in a variety of subjects such as history, science, astronomy, philosophy, and physics. He was also a linguist and knew English, Latin, Greek, French, and Italian. His books “The Theory of Moral Sentiments” and “An Inquiry into the Nature and Causes of the Wealth of Nations” were both very well received. He revolutionized trade and economics of the 18th and 19th century by advocating free trade, privatization and liberalization of the economy.

Adam Smith’s ideas on economics have resulted in economic expansion, world trade, and privatization of the market.

Adam Smith’s Life

Adam Smith was born in Kirkcaldy, Fife, Scotland in 1723. Smith pursued higher education in Glasgow University and later in Balliol College Oxford. He was admitted to both universities on merit and studied on scholarship.

On returning to Glasgow, he was appointed Professor of logic in 1751. The next year he took up the post of Professor of moral philosophy. His lectures were mainly on natural theology, ethics, rhetoric, jurisprudence and economics. He was both a philosopher and an economist although he is better remembered for his thoughts and work in economics.

In 1778 Smith was appointed to the post of commissioner of customs in Edinburgh, Scotland.

His first book was published when he was thirty-six years of age and dealt with moral philosophy. It was named – “The Theory of Moral Sentiments”. This was mainly based on the lectures he gave in Glasgow and talked about the standard of ethical conduct that holds society together.

The prominent politician, Charles Townshend was so impressed with Adam Smith’s work that he engaged him as tutor to his stepson, the Duke of Buccleuch.

In 1776, Smith wrote his second and last book – “An Inquiry into the Nature and Causes of the Wealth of Nations”. This book was Adam Smith’s key to fame and recognition as an economist for it helped establish economics as an autonomous subject. (Jack Russell, 2000)
It examined in detail the consequences of economic freedom, covering concepts such as the role of self – interest, division of labor, function of markets, privatization and division of wealth.
He coined the expression “the invisible hand,” to describe self – interest which guides the most efficient use of a nation’s resources. Public welfare was just a useful but necessary by – product.

He passed away on July 17, 1790, after a brief illness.

Adam Smith’s Personality and Character

No one is sure as to what Adam Smith looked like for the best portrait of his was painted after his death. He is described as being of middle height, large but not corpulent and is said to have kind, large gray eyes.

He is said to have been a shy man, embarrassed with strangers and very quiet by nature. He was devoted to his mother and never married so as to take care of her.

Adam Smith’s most well known quality ...

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He passed away on July 17, 1790, after a brief illness.

Adam Smith’s Personality and Character

He is said to have been a shy man, embarrassed with strangers and very quiet by nature. He was devoted to his mother and never married so as to take care of her.

Adam Smith’s most well known quality was his absent mindedness when it came to the mundane things in life. Anecdotes of his absentmindedness are legendary. But at the same time he possessed a phenomenal memory for matters that he wished to retain.

Smith had a passion for learning and was an avid collector of books especially on topics related to history, science, astronomy, physics and philosophy. He had a large library of his own. He was also interested in poetry and in learning the European classics, which he could recite without a flaw. He knew English, Latin, Greek, French, and Italian very well.
Adam Smith had a tendency to falter in his speech and could not organize his thoughts well. He would invariably jump from one topic to another and get so carried away that he would forget what he had started talking about. This did not stop him from being a very reputed and popular teacher and students came to him from as far away as even Russia.

He was greatly influenced by David Hume’s writings and way of thinking. The two were close friends. While writing his book “An Inquiry into the Nature and Causes of the Wealth of Nations” he discussed ideas and thoughts very often with David Hume.

After Smith’s death, it was discovered that he had contributed a considerable part of his income to charity.

“The Theory of Moral Sentiments”

“The Theory of Moral Sentiments” (1759) was a sensation when released and sold out within weeks of its publication not only because of Smith’s elegant prose but also because of the ideas it talked about. It dealt with moral philosophy where Smith wished to answer the fundamental question – Why do we approve certain actions and intentions while others are condemned? Some believed that the law that the sovereign made set the standards of right or wrong. Others believed that moral principles and values were the result of logical and rational reasoning. Smith argued both these theories on morality and came up with his own.

His theory was that people were born with a moral sense and their conscience was a judge of what was right or wrong. This conscience was neither given to us by lawmakers nor was it the product of reasoning but was innate and inborn just as ideas of beauty or harmony. This conscience was supported by a sense of brotherhood and fellow – feeling which he called “sympathy”. Sympathy, Smith said, was the capacity of one person to imagine himself in another’s place as an impartial spectator and thus understand the other man’s emotions and troubles. Conscience and sympathy worked hand in hand to ensure that man retained his set of moral principles and lived together as a social organization.

“The Wealth of Nations” and it’s Impact at that Time

“An Inquiry into the Nature and Causes of the Wealth” of Nations was published in 1776 after nearly ten years of editing. It was written as a sequel to his first book – “The Theory of Moral Sentiments” and although based on economics, proceeded in analyzing human behavior and moral obligations especially the concept of “self – interest”. The politicians controlled the market at that time and they viewed business with suspicion. There was no such thing as a free market in real estate or in labor and neither did corporations exist. This was a time when government granted monopolies and gave subsidies to their merchants, farmers and manufacturers so as to inhibit “unfair” competition. (Appleby, Joyce. Oldham, 1978).

Smith’s book talked about the power of free trade and privatization that would increase competition and act as stimulants to innovation and progress and spur economic development. He argued that with the coming of free trade and privatization, “the invisible hand” which was self – interest acts as a driving force and would richen the economy, reduce poverty and at the same result in social and moral improvement of man.

He convincingly argued his case, giving examples from the world over – from the diamond mines of Golconda, to the fisheries of Holland to the plight of Irish prostitutes in England! His book proved to be the foundation for free trade and privatization.

Smith believed that the buyer should profit no less than the seller did. This was an unconventional view at that time. Smith showed that a free market was like a polling booth where to buy an article, the consumer could vote. He could decide which was less desired or more costly or less useful and make his choice.

In his book Wealth of Nations, Adam Smith remarks - “Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.” (Adam Smith, 1776) Prices therefore would reflect their utility and demand, therefore the producer or manufacturer could not price his goods as he wished. A free market would be impartial and reward efficiency, quality and improve services for the power lay in the hands of an individual – the consumer.

His idea on free trade and privatization so as to increase competitiveness and thus quality of services led to one unalterable goal – The government had to abolish monopolization of the market, enforce competition and punish anyone who conspired to fix prices, divide the market or restrict production.
Poverty was accepted as a natural occurrence and labor was cheap but hard working and ignorant. Smith said that wealth was not gold or silver but the total sum of a nation’s resources, skills and production. (Leo Rosten, 1970)

Adam Smith says in his book – “What improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” (Adam Smith, 1776).

Adam Smith believed in the division of labor. Division of labor would result in specialization of skills and encourage innovation and ingenuity. The driving force behind this would be “the invisible hand” of self-interest. Economic growth and progress would be the by-product of their desire to improve personal profits and gains. For all this depoliticization of market place and entrance of competitiveness was necessary.

Smith put forward his theory that if man was allowed to work for his own “self – interest” and given maximum freedom to pursue whatever enterprise best satisfied his needs, and if the government stayed away from economy, then the result would be “not anarchy or chaos or a jungle of selfish social destructiveness, but an ordered harmony in which the automatic forces of supply and demand, in a responsive and resilient free market, must bring about the most efficient utilization of all resources (labor, land, capital, skills, brains, ingenuity, inventiveness) to secure the largest and most lasting advantages to a nation.”(Adam Smith, 1776).
What is admirable about Adam Smith is that he realized that his system was not perfect and could be improved upon. But, he did demonstrate in his book, how it was better than other ideas and views existing at that time.
Smith did not foresee the products of the industrial revolution – role of gigantic corporations, power of trade unions and problem of business cycles. Neither did he foresee calamities like the world wars and massive unemployment and economic decline caused by them. (Leo Rosten, 1970)

People may want freedom but are not interested in taking the risks involved. The weak, unlucky, insecure, unanalytic, dull or inept man is unable to comprehend the importance of a free market. Therefore he prefers to turn to the government for prevention of free trade and liberalization and wishes to get monopolization and subsidies so as to prevent “unfair” competition and remain in the market. It is such ignorant producers who speak against free trade, as they do not realize the value and power of the consumer.

Adam Smith was more often right than wrong and people who stand against free trade have not been able to change the present day economy and instead have been forced to quit the race.Relevance of Adam Smith’s Views Today

Adam Smith’s thoughts and actions continue to have a major effect on the economic life of today.

It has become evident over the times that the driving force of individual self – interest and self – help and man’s effort to better his condition is the wealth of the nations for it has public welfare and economic growth as important by products.

Adam Smith’s application of his principles of choice, competition and the market economy to his times is still applicable although his world was different from ours.

The governments of the world have been forced to move entire state operations into the private sector and face the competition. Instead of requiring subsidies, these same businesses and industries have started to make profits and pay taxes. ( Michael Forsyth, 1990)

Economic progress and growth has come about not because of the government’s involvement but because of their lack of it! Ending of state monopolies and leaving the choice in the hands of the consumer resulted in competitiveness and improvement of services in an attempt by the producers to improve profits – all done for the sake of “self – interest”.

Conclusion

Smith laid the intellectual framework for free trade and economic expansion that dominated the nineteenth century and still holds true today. The basic principles of Smith’s approach to a developed economy was – importance of free trade, putting the consumer before the producer, privatization to ensure competition, division of labor, reducing of taxes and leniency in state regulations and lastly, preventing politicians from trying to shape the economy of the country.

Smith contributed not only to the field of economics but also to the field of philosophy as to what moral principles were and how they were formed.

He virtually founded a secular faith - individualism - and The Wealth of Nations became its bible. "Next to Napoleon," one historian concluded, Adam Smith was "the mightiest monarch in Europe." (Leo Rosten, 1970)

Bibliography

Adam Smith: The Wealth of Nations: An Inquiry into the Nature and Causes, 1776.The Adam Smit Institute http:// ww.adamsmith.org.uk/
Adam Smith, Robert L. Heilbroner (Editor), Laurence J. Malone (Contributor): Essential Adam Smith, W.W. Norton & Company 1987.
Jack Russell Weinstein: On Adam Smith, Wadsworth Pub Co 2000.
Edward J. Harpham's Website, 2000 http://www.utdallas.edu/~harpham/
Appleby, Joyce. Oldham.: Economic Thought and Ideology in Seventeenth Century England, Princeton University Press 1978.
Avila, M.: Smith and Undeveloped Nations, Croom Helm, 1983.