BABAR, Princess Norhaya C.
March 14, 2025
2 – ECO PROF. TOLENTINO, Ernie G.
History of Economics Society and Economic Thoughts
(ADAM SMITH)
I. BIOGRAPHY
Adam Smith (1723–1790) was a Scottish philosopher and economist, widely regarded as the
"Father of Economics" and a key figure in the Scottish Enlightenment. His groundbreaking
works laid the foundation for modern economic theory and moral philosophy.
Early Life and Education: Adam Smith was born in Kirkcaldy, Fife, Scotland, and baptized on
June 5, 1723. His father, a customs official, passed away before Smith's birth, leaving him to be
raised by his mother, Margaret Douglas. Smith's early education took place at a local school in
Kirkcaldy, where he demonstrated a keen intellect. At the age of 14, Smith entered the
University of Glasgow, where he studied moral philosophy under Francis Hutcheson. He later
attended Balliol College, Oxford, on a scholarship, though he found the academic environment at
Oxford less stimulating.
Academic and Professional Career: In 1751, Smith became a professor of logic at the
University of Glasgow, and a year later, he was appointed professor of moral philosophy. His
lectures covered a wide range of topics, including ethics, jurisprudence, and political economy.
During this time, he developed many of the ideas that would later appear in his published works.
Smith's first major work, The Theory of Moral Sentiments (1759), explored the nature of human
morality and the role of sympathy in ethical behavior. This book established his reputation as a
leading thinker of his time.
Travels and Influences: From 1764 to 1766, Smith traveled across Europe as a tutor to the
young Duke of Buccleuch. During his travels, he met prominent intellectuals such as Voltaire,
Jean-Jacques Rousseau, and François Quesnay. These encounters, along with his observations of
European economies, significantly influenced his later work.
The Wealth of Nations; In 1776, Smith published his magnum opus, An Inquiry into the Nature
and Causes of the Wealth of Nations. This work is considered the first comprehensive system of
political economy. It introduced key concepts such as the division of labor, the "invisible hand"
of the market, and the benefits of free trade. Smith argued for limited government intervention in
markets, emphasizing the importance of competition and self-interest in driving economic
prosperity.
Later Years and Legacy: After the publication of The Wealth of Nations, Smith returned to
Scotland and took up a position as a commissioner of customs in Edinburgh. He spent his later
years revising his works and engaging in intellectual discussions with fellow Enlightenment
thinkers. Smith passed away on July 17, 1790, in Edinburgh. His contributions to economics and
moral philosophy continue to influence modern thought. He is remembered not only as a pioneer
of classical economics but also as a profound moral philosopher who sought to understand the
complexities of human behavior and society.
II. SOCIAL AND POLITICAL AFFILIATIONS
SOCIAL AFFILIATIONS:
Scottish Enlightenment Circle: Smith was a prominent figure in the Scottish
Enlightenment, a period of intellectual flourishing in 18th-century Scotland. He was
closely associated with other leading thinkers, such as David Hume, a philosopher and
historian, and Francis Hutcheson, his mentor at the University of Glasgow. These
relationships influenced his ideas on morality, economics, and society.
European Intellectuals: During his travels in Europe as a tutor, Smith interacted with
notable figures like Voltaire, Jean-Jacques Rousseau, and François Quesnay. These
encounters enriched his understanding of economic and social systems, particularly the
French Physiocrats' ideas on agriculture and free markets.
Academic and Professional Networks: As a professor at the University of Glasgow,
Smith was part of a vibrant academic community. His lectures attracted students and
intellectuals interested in moral philosophy, jurisprudence, and political economy.
POLITICAL AFFILIATIONS:
Classical Liberalism: Smith is often regarded as a pioneer of classical liberalism,
advocating for individual liberty, free markets, and limited government intervention. His
ideas laid the groundwork for modern economic and political thought.
Government Roles: Later in life, Smith served as a commissioner of customs in
Edinburgh. This position reflected his practical engagement with economic policy and
governance, despite his theoretical preference for minimal government interference.
Economic Policy Influence: Smith's ideas influenced policymakers of his time and
beyond. His advocacy for free trade and competition resonated with the emerging
capitalist economies of the 19th century.
III. SIGNIFICANT CONTRIBUTION TO THE FIELD OF
ECONOMICS
The Wealth of Nations (1776):
Smith’s magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, is
considered the first comprehensive work in economics. It systematically analyzed the
functioning of markets, trade, and economic systems.
In the book, Smith argued that individuals' pursuit of self-interest leads to societal benefit, an
idea encapsulated in his famous metaphor of the invisible hand. He believed that when people act
in their own self-interest within competitive markets, resources are allocated efficiently.
Division of Labor:
Smith highlighted the importance of the division of labor in increasing productivity. He famously
illustrated this with the example of a pin factory, where specialization in tasks allowed workers
to produce significantly more pins compared to if they worked individually.
This concept laid the groundwork for modern theories of specialization and economies of scale.
Theory of Value and Price:
Smith distinguished between the "natural price" (long-term cost of production) and the "market
price" (actual price determined by supply and demand). This distinction influenced later
economists in their study of price mechanisms.
Free Markets and Trade:
Smith advocated for free markets and minimal government intervention, arguing that
competition and trade lead to economic prosperity. He was critical of mercantilism, which
prioritized stockpiling wealth and restricting trade.
Role of Government:
While emphasizing limited government intervention, Smith acknowledged the necessity of
government in certain areas, such as defense, justice, public works, and education. His nuanced
view balanced laissez-faire economics with the recognition of public goods.
References:
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9780199550036
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smith/867217A947E5DFA83F7B0A91533EE0BD
