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'''Adam Smith''' was a Scottish economist and philosopher who is regarded as the founder of modern economics. His book The Wealth of Nations is one of the most influential works ever written on the subject.

== Early Life and Education ==
Smith was born in 1723 in Kirkcaldy, in Scotland, shortly after the death of his father. He studied at the University of Glasgow and at Balliol College, Oxford.

He was appointed professor of logic and then of moral philosophy at Glasgow. He lectured on ethics, on jurisprudence, and on political economy.

He travelled in France and met the leading figures of the Enlightenment, including Voltaire and the physiocrats. He returned to Scotland and devoted himself to writing.

== The Theory of Moral Sentiments ==
The Theory of Moral Sentiments, published in 1759, established his reputation as a philosopher. It developed a theory of morality based on sympathy and on the approval of the impartial spectator.

Smith argued that we judge our own conduct by imagining how it would appear to an impartial observer. The theory is a form of sentimentalism.

The work was revised throughout his life and remained his favourite among his books. It is considered one of the major works of the Scottish Enlightenment.

== The Wealth of Nations ==
An Inquiry into the Nature and Causes of the Wealth of Nations was published in 1776, the year of the American Declaration of Independence. It is the founding text of classical economics.

Smith argued that the wealth of a nation consists in the annual produce of its labour and that the division of labour is the principal source of increased productivity. He illustrated this with the famous example of the pin factory.

He described the mechanism of the invisible hand, by which individuals pursuing their own interest are led to promote the public good. The market coordinates the activities of producers and consumers through prices.

He argued for free trade, for the limitation of government intervention, and for the removal of restrictions on commerce. The policy conclusions of the book were widely influential.

== The Division of Labour and the Market ==
Smith analysed the division of labour and its dependence on the extent of the market. He argued that specialisation increases productivity but also requires exchange.

He described the role of money, of capital, and of the accumulation of stock. He analysed the determination of prices by the interplay of supply and demand and of the natural and market rates.

He discussed the functions of government and identified three that were necessary: defence, the administration of justice, and the provision of public works and institutions.

== Later Life and Legacy ==
Smith was appointed Commissioner of Customs in Edinburgh in 1778. He lived with his mother and devoted himself to the revision of his works.

He died in 1790, and much of his unpublished work was destroyed at his request. His essays on philosophical subjects were published after his death.

His influence on economics and on political thought has been immense. He is regarded as the founder of the classical school and as the patron of the free market.

His ideas have been interpreted in different ways, and the phrase invisible hand has been used and abused in debates about the role of the state. He remains one of the most important figures in the history of economic thought.

== The Lectures and the Glasgow Circle ==
Smith's lectures on moral philosophy at Glasgow covered natural theology, ethics, jurisprudence, and political economy. The notes of his students provide a record of his teaching.

He was a member of the Glasgow Literary Society and of the Select Society in Edinburgh. He was a friend of David Hume, of James Watt, and of other figures of the Scottish Enlightenment.

He travelled in France as tutor to the Duke of Buccleuch and met the physiocrats, including Quesnay and Turgot. He was impressed by their analysis of the economy.

== The Division of Labour ==
Smith argued that the division of labour is the chief source of the increase in the productive powers of labour. The division of labour depends on the extent of the market and on the accumulation of capital.

He illustrated the principle with the example of the manufacture of pins, in which the work is divided into a series of operations. The increase in output is enormous.

He also noted the disadvantages of the division of labour, which can render the worker stupid and ignorant. He proposed education as a remedy.

== The Theory of Value and Distribution ==
Smith distinguished the value in use of a commodity from its value in exchange. He observed that water, which is useful, has little value in exchange, while diamonds, which have little use, have great value.

He argued that labour is the real measure of value and that the price of a commodity resolves into wages, profit, and rent. The analysis of distribution was developed by Ricardo.

He also discussed the accumulation of capital and the role of saving. He distinguished productive from unproductive labour.

== The Functions of Government ==
Smith assigned three functions to the sovereign: defence against external enemies, the administration of justice, and the provision of public works. He also supported education and some regulation of banking.

He criticised the mercantile system, which sought to promote exports and to restrict imports. He argued for free trade and for the removal of restrictions on commerce.

He was critical of monopolies and of the influence of merchants and manufacturers on legislation. He believed that the market, if left to itself, would produce beneficial results.

== The Reception of the Wealth of Nations ==
The Wealth of Nations was an immediate success and was widely influential. It was translated into several languages and was used to justify the reform of commercial policy.

The repeal of the corn laws and the adoption of free trade in the nineteenth century were influenced by his arguments. His work became the foundation of classical economics.

His reputation has grown, and he is regarded as the founder of the discipline. The Wealth of Nations is one of the most cited works in the social sciences.

== See also ==
* Classical economics
* Division of labour

== References ==

<ref name="r1">Ross, Ian Simpson. The Life of Adam Smith. Oxford: Clarendon Press, 1995.</ref>
<ref name="r2">Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. London, 1776.</ref>
<ref name="r3">Rae, John. Life of Adam Smith. London: Macmillan, 1895.</ref>
<ref name="r4">Phillipson, Nicholas. Adam Smith: An Enlightened Life. New Haven: Yale University Press, 2010.</ref>

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[[Category:Economics]]
[[Category:Philosophy]]
[[Category:Scotland]]

Adam Smith - Revision history

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