Adam Smith (baptized June 5, 1723, Kirkcaldy, Scotland – July 17, 1790, Edinburgh) was the moral philosopher who founded modern economics. In The Theory of Moral Sentiments (1759) he explained how conscience and sympathy hold society together, and in An Inquiry into the Nature and Causes of the Wealth of Nations (1776) he explained how nations actually grow rich: division of labour, widening markets, and self-interest channeled by competition. Read together, the two books are one system, an account of how strangers can cooperate for mutual benefit without anyone designing the outcome. Nearly every argument in economics since has been a footnote to, or a quarrel with, Smith.
He was a postmaster’s son, raised by his widowed mother in the Fife port of Kirkcaldy. Glasgow University took him at fourteen; a scholarship carried him to Balliol College, Oxford, where he educated himself in a library he found far more useful than the lectures. He returned to Scotland, and in 1751 Glasgow made him professor of logic; a year later he moved to the chair of moral philosophy. The Theory of Moral Sentiments (1759) made his reputation, introducing sympathy and the impartial spectator, the imagined judge inside the breast whose approval we seek. There he also formed his closest friendship, with the philosopher David Hume, the most famous skeptic of the age.
In 1764 Smith resigned his chair to travel as tutor to the young Duke of Buccleuch. In France he met Voltaire and the Physiocrat economists Quesnay and Turgot, and came home with a lifetime pension and a book to write. It took him the better part of a decade in Kirkcaldy. The Wealth of Nations appeared on March 9, 1776, the year of American independence: nine years of thinking compressed into a systematic attack on mercantilism, the doctrine that wealth is gold, trade is war by other means, and producers deserve the state’s protection. In 1778 he became Scotland’s commissioner of customs, administering the very trade laws his book criticized (he did the job conscientiously), and he lived out his years in Edinburgh’s Panmure House, revising both books and adding, near death, substantial new material to the sixth edition of the Moral Sentiments. Shortly before he died he had his literary executors burn the manuscripts he had never finished.
His afterlife is usually reduced to two words, “invisible hand,” a phrase he used once in each of three works and never turned into the slogan it became. The fuller Smith is more interesting: a philosopher who thought markets work because people are not only selfish, who insisted consumption is the sole end of production, who accused producers’ lobbies of conspiring against the public in prose any muckraker would envy, and who believed science is the great antidote to superstition. He is this site’s founding thinker twice over: once for how wealth is made, and once for how character is.
Core Ideas
- Division of labour: Splitting work into simple operations, and repeating them with dexterity and machinery, multiplies what a nation can produce. The pin factory is his emblem: ten men, eighteen operations, thousands of pins no one man could make alone.
- Self-interest, channeled: We get our dinner not from the butcher’s benevolence but from his regard to his own interest. Under competition, that pursuit, “led by an invisible hand,” lands on public ends the pursuer never intended.
- Sympathy and the impartial spectator: Human beings naturally imagine how their conduct looks to others, and conscience is that imagined spectator moved indoors. Markets run on this as much as on appetite: trust, reputation, and the desire to be respectable.
- The consumer is the point: Consumption is the sole end and purpose of all production, and producers (guilds, monopolists, trade lobbies) perennially conspire to invert that order. Policy should be judged by what it does for buyers, not sellers.
- Think in systems, hold them loosely: Smith built the first real system of political economy, then warned against the “man of system” who treats people like chess pieces. Inquiry, and science generally, is the antidote to enthusiasm and superstition.
Adam Smith Quotes
“Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.”
— The Wealth of Nations, Book I, Chapter II (1776)
“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.”
— The Wealth of Nations, Book I, Chapter II (1776)
“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”
— The Wealth of Nations, Book I, Chapter VIII (1776)
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
— The Wealth of Nations, Book I, Chapter X (1776)
“By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”
— The Wealth of Nations, Book IV, Chapter II (1776)
“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”
— The Wealth of Nations, Book IV, Chapter VIII (1776)
“Science is the great antidote to the poison of enthusiasm and superstition.”
— The Wealth of Nations, Book V, Chapter I (1776)
“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”
— The Theory of Moral Sentiments, Part I (1759)
“There are two different occasions, upon which we examine our own conduct, and endeavour to view it in the light in which the impartial spectator would view it.”
— The Theory of Moral Sentiments, Part III (1759)
Adam Smith Books
The Wealth of Nations (Penguin Classics, ed. Andrew Skinner) — The approachable modern one-volume text of the 1776 founding work of economics: division of labour, markets, and the case against mercantilism, with a serious editor’s apparatus.
The Theory of Moral Sentiments (Penguin Classics, ed. Ryan Hanley) — Smith’s first book and the moral half of his system: sympathy, conscience, and the impartial spectator. The necessary companion to the economics.
The Infidel and the Professor (Dennis C. Rasmussen) — The story of Smith’s friendship with David Hume, the skeptic and the economist who made each other braver. The most enjoyable modern route into Smith’s world.
Browse all 9 Adam Smith quotes in the Quote Library.
