In Brief
Adam Smith was a Scottish moral philosopher who taught at the University of Glasgow. He argued that ordinary people trading freely, each trying to better their own lives, create more wealth than any government plan. His two books, one on how we judge right and wrong and one on how nations grow rich, still shape economics today.
Big Ideas
1The division of labour
Splitting work into small, specialised tasks multiplies what each worker can make. In Smith’s pin factory, ten workers sharing the steps made upwards of 48,000 pins a day, where each alone might not have made twenty.
The Wealth of Nations, Book I, Chapter I · 17762Self-interest and exchange
We get what we need by offering others something they want in return. Trade rests on mutual benefit, not on anyone’s goodwill.
“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.”
3The invisible hand
Someone who seeks only their own gain is often led to promote the good of society without intending it. Smith uses the phrase “invisible hand” just once in each of his two books, far less than his fame for it suggests.
The Wealth of Nations, Book IV, Chapter II · 17764The impartial spectator
We judge our own conduct by imagining how a fair, well-informed onlooker would see it. For Smith, moral life begins with sympathy: our ability to feel what others feel.
The Theory of Moral Sentiments · 1759Life and Times
- 1723Born in Kirkcaldy, Fife, Scotland
- 1751Becomes a professor at the University of Glasgow
- 1759Work: Publishes The Theory of Moral Sentiments
- 1764–1766Tours France as tutor to the young Duke of Buccleuch; meets Quesnay and Turgot
- 1776Work: Publishes The Wealth of Nations
- 1778Appointed a Commissioner of Customs in Edinburgh
- 1790Dies in Edinburgh
Criticisms
The strongest objections, stated as their authors would state them.
Marx built on Smith’s labour theory of value to argue that profit comes from labour workers are not paid for. Economists from the 1870s replaced that theory with marginal utility, which dropped part of Smith’s own system too.
Karl Marx, Capital, Volume I · 1867Smith warned that a lifetime of one repetitive task could dull a worker’s mind, and argued for public schooling to offset it. Readers who cite only the pin factory tend to miss this.
The Wealth of Nations, Book V, Chapter I · 1776