The father of Economics: Adam Smith (1723-1790)

The contribution that The Wealth of Nations, published in 1776, made to the understanding of what came to be called capitalism was monumental. Smith showed how the freeing of trade can very often be extremely helpful in generating economic prosperity through specialization in production and division of labor and in making good use of economies of large scale (Sen 2009).

The book I have chosen as my book of the 18th century is An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith. It was published in 1776 the same year as American Independence, with the author having worked on it for ten years. Smith divided Wealth into five parts which are as follows:

1. Of the Causes of Improvement in the productive Powers of Labour
2. Of the Nature, Accumulation, and Employment of Stock
3. Of the different Progress of Opulence in different Nations
4. Of Systems of political Economy
5. Of the Revenue of the Sovereign or Commonwealth

As can be seen Smith did not go for catchy titles and very much liked the word "of".

 Smith was born into a small fishing village of Kirkcaldy in Scotland. He went on to be educated at Glasgow University where he later obtained a professorship teaching moral philosophy. Little is known of the personal life of Smith who like Spinoza ordered his friends to destroy his private papers after his death. He was an integral member of the Scottish Enlightenment along many other great minds including David Hume, Robert Burns, James Watt and Sir Walter Scott.

The continuing relevance of the book can be found in the following passage taken from it:

When the people of any particular country have such confidence in the fortune, probity, and prudence of a particular banker, as to believe that he is always ready to pay upon demand such of his promissory notes as are likely to be at any time presented to him; those notes come to have the same currency as gold and silver money, from the confidence that such money can at any time be had for them (Smith 1776, p.292).

The Economical Man Himself

Many people quote Smith without having actually read him and economic fundamentalists have, especially since the Thatcher/Reagan era onwards, used his words for their own purpose. This is something that can happen to all great works. Many fundamentalists argue for free unregulated markets and laissez-faire; however in another quote from economist and Noble Laureate Amartya Sen:

Smith’s economic analysis went well beyond leaving everything to the invisible hand of the market mechanism. He was not only a defender of the role of the state in providing public services, such as education, and in poverty relief (along with demanding greater freedom for the indigents who received support than the Poor Laws of his day provided), he was also deeply concerned about the inequality and poverty that might survive in an otherwise successful market economy (Sen 2009).

The message to take from this is that Wealth is not only relevant to our times but it needs to be re-read, reinterpreted and revitalised.

This is a good concise video giving an overview of Smith by Cloudbiography.

 All 900 pages of the tome can be found here at Project Gutenberg. It should come as no surprise that Wealth of Nations is included in the 100 best Scottish books of all time. Melvyn Bragg in his book Twelve books that changed the world lists Wealth as one of his choices, and who are we to argue with Melvyn?

Reflection on research

A research facility that I am finding very useful that I neglected to mention in post 3 is the use of podcasts. I have found podcasts on the various books and authors on many networks including NPR, ABC, BBC, RTE and for this post on Econtalk. One particular podcast has been very useful and that is  In Our Time from BBC Radio 4 and I can already see that it has many podcasts concerning my next post. I have changed from using the catalogue at Swinburne to the catalogue at the State Library of Victoria, as I am finding its results more useful and it does not have as many broken links.

Reference list

Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, edited by R.H. Campbell and A.S. Skinner (Clarendon Press, 1976), I, II.ii.28, p. 292

Adam Smith [image], Wikimedia Commons, viewed 22 April 2012, <http://commons.wikimedia.org/wiki/File:AdamSmith.jpg>.

Abrahams, T 2005, Adam Smith - The Wealth of Nations (1776),  The List, viewed 22 April 2012, <http://www.list.co.uk/article/2826-adam-smith-the-wealth-of-nations-1776/>.

Amartya Sen 2009, Capitalism Beyond the Crisis, The New York Review of Books, viewed 22 April 2012, < http://www.nybooks.com/articles/archives/2009/mar/26/capitalism-beyond-the-crisis/>.

An Inquiry Into the Nature and Causes of The Wealth Of Nations, Project Gutenberg, viewed 22 April 2012, <http://www.gutenberg.org/files/3300/3300-h/3300-h.htm>.

BBC 2012, Radio 4 People - Melvyn Bragg, viewed 22 April 2012, <http://www.bbc.co.uk/radio4/people/presenters/melvyn-bragg/>.

Cloudbio 2011, Adam Smith, 12 December, viewed 22 April 2012, < http://www.youtube.com/watch?v=8rif2cq47c8>.

Miller, The Legendary Adam Smith Building Cat | Facebook, 2012, viewed 22 April 2012 <http://www.facebook.com/TheAdamSmithBuildingCat>.

Twelve Books That Changed the World - Wikipedia, the free encyclopedia, 2012, viewed 22 April 2012, <http://en.wikipedia.org/wiki/Twelve_Books_That_Changed_the_World>.