Adam Smith is one of the most famous economists in history and is considered the father of modern economics. In his economic theories he combines history, philosophy, economic development, psychology and ethics.
He was born in Scotland in 1723. He had a prodigious memory and vocation for study, faculties that made it easier for him to enter the University of Glasgow.
Adam Smith is one of the greatest exponents of classical economics. His studies on economic growth, free competition, liberalism and political economy stand out.
In this center, he became passionate about mathematics and was strongly influenced by the economic and philosophical ideas of Francis Autcheson, if only because of his later disagreement with them. Once he graduated, he obtained a scholarship to Balliol College, Oxford, where he brilliantly concluded his studies – at the age of 23 – with a perfect command of classical philosophy and its highest representatives: Plato, Aristotle and Socrates.
In 1748, and through his friend Lord Henry Kames, he was given the opportunity to give a series of lectures in Edinburgh. So, over the next two years, he delved into different disciplines – from rhetoric to economics to history – and began his career as a successful writer by publishing articles in the Edinburgh Review. In addition, at this time he established a very close relationship with the renowned philosopher David Hume.
After an extensive period in which he stood out as an exceptional teacher at the University of Glasgow, in 1758 he was appointed dean of the faculty surrounded by great prestige; in fact, there are several who affirm that Voltaire – a French writer and exponent of the Enlightenment – sent him his best students as a token of his appreciation and admiration.
During these same years, Adam Smith was part of a select group in Glasgow – made up of intellectuals, scientists, merchants and businessmen – a favorable breeding ground for exchanging ideas and information that would later make up his treatises on philosophy and economics.
Criticisms of Adam Smith
The criticisms of Adam Smith have come mainly for his idea that the market economy is the tool to achieve social welfare, while each one seeks his own interest (reflected in the invisible hand). However, he never believed that the market was perfect or that it worked automatically by magic. Furthermore, he admitted that a totally free trading market was a utopia. Smith also did not support an anarchic system, without rules or laws, but a market economy where free trade was allowed.
There have also been criticisms of Adam Smith for considering the human being as a cold and selfish individual, without any ethics and only concerned with his material interests. Nothing is further from reality. Smith was precisely Professor of Moral Philosophy at the University of Glasgow and, as we will see later, in his book "Theory of Moral Sentiments" describes the human feeling of empathy as his greatest virtue.
Works of Philosophy and Economics of Adam Smith
The book "Theory of Moral Sentiments", his masterpiece from a philosophical perspective, was published in 1759. In it he exposed the principles of human nature that guided the social behavior of man and spoke for the first time of "the invisible hand" that, unknowingly and unintentionally, he directed his own personal interest towards the good of society. The book begins by exploring human behaviors, in which egoism does not appear in a leading role anywhere. Instead, it narrates the human being’s process of feeling empathy and putting himself in the place of the other as his greatest virtue, since he feels it naturally even when he does not benefit from it. This feeling of empathy "is not at all limited to the virtuous or the human, although perhaps he feels it with the most exquisite sensitivity. The biggest ruffian, the most hardened violator of the laws of society, is not completely without him. "
Later, in 1764, and already installed in Paris, it was where his friend David Hume -secretary of the British Embassy- introduced him to the exquisite environments of the city. What’s more, it was then that he met François Quesnay, economist and founder of the Physiocratic school, an ideological current faithful follower of the maxim "let do, let go" – laissez faire , laissez passer, which places the intervention of the State on the sidelines- and that he maintained that the existence of natural law could ensure the proper functioning of the economic system. The influence of this school on Smith was evident.
The Wealth of Nations
Three years later, in 1767, he began to write his "Essay on the Wealth of Nations" which was finally published in London six years later. This work represented the first great work of classical and liberal political economy; that is to say, in it the principles of scientific research were applied to economics – for the first time – in an attempt to build an independent science. Furthermore, the book was the continuation of the theme started in his philosophical work, where he showed how the spontaneous play of human selfishness would suffice to increase the wealth of nations, if governments did not intervene with their measures; In short, it is the first modern book on economics, for which he is considered the father of modern economics (along with Cantillon), its success was such that it overshadowed the theory of moral sentiments , a work that is often not even mentioned. as a reference to the thought of Adam Smith.
In the five books that make up the Wealth of Nations, he talks about themes that have now become fundamental aspects of the economy, but which until then had not been applied. His analysis of how the wealth of a nation comes from work and not so much from resources stands out. In the first volume he talks about such relevant topics as the division of labor, wages, the use of money and the price of goods, shareholder profits, land rent, and fluctuations in gold and silver.
Smith has sometimes been called the guru of selfishness for his idea that the best thing for a society is for each individual to seek their own benefit. However, if his studies are analyzed, it can be understood that Smith goes far beyond these ideas, recognizing that human beings are not guided only by their own interest, but that humanity, justice, generosity and solidarity are qualities essential for the well-being of a society.