Adam Smith (1723–1790) was a Scottish philosopher and economist whose work laid the foundations of modern economics.
The Wealth of Nations (1776)
His most influential work, considered the foundation of modern economics.
- Invisible hand — individuals pursuing self-interest unintentionally promote society’s good through market mechanisms.
- Division of labor — the pin factory example showing how specialization dramatically increases productivity.
- Free markets / laissez-faire — markets generally allocate resources efficiently with minimal government interference.
- Critique of mercantilism — wealth comes from productive labor and trade, not the accumulation of gold and silver.
- Theory of value and prices — early analysis of how prices, wages, rents, and profits are determined.
The Theory of Moral Sentiments (1759)
His earlier work in moral philosophy, exploring how humans form moral judgments through “sympathy” (empathy) and the “impartial spectator” as an internal moral guide.
Broader legacy
- Helped establish economics as a distinct discipline.
- Influenced classical economists who followed (Ricardo, Mill, and others).
- His ideas remain central to debates about markets, capitalism, and the role of government.
Common misconception: Smith was not an advocate of unrestrained self-interest. His moral philosophy emphasized that markets function within a framework of justice, ethics, and social bonds.