The Father of Economics, Adam Smith

"The Father of Economics", Adam Smith (1723 – 1790) was a Scottish economist and philosopher. He was born in a small town, Kirkcaldy near Edinburgh in Scotland, and was the son of the comptroller of the customs.

1. Life and Background
Adam Smith entered the University of Glasgow when he was 15 years old, studying Greek literature, mathematics, and ethics. He also studied moral philosophy under "the never-to-be-forgotten" Francis Hutcheson, a mercantilist. In 1740, he shifted to the Balliol College of the University of Oxford to study because England was stronger both in agriculture and economy than Scotland's. He met the philosopher David Hume who became one of the closets of his friends there, and was influenced by Hume's treatise, Human Nature. At the age of 25, he began delivering public lectures, rhetoric in Edinburgh, and then he assumed the professor of the University of Glasgow. In 1752, he transferred to the chair of moral philosophy that was a lecture of Smith's mentor, Francis Hutcheson. Smith's lectures covered the field of ethics, rhetoric, jurisprudence, and political economy, or "police and revenue". In 1759 he published Theory of Moral Sentiments, embodying some of his Glasgow lectures. This work gave him his reputation. At the end of 1763, he left Glasgow to become tutor to the young duke of Buccleuch, and he travelled France with his pupil from 1764 until 1766. In his travels, he came to know French physiocrats and philosophers such as Voltaire, Rousseau, and Franklin. After travelling, he devoted much of the next ten years to his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations which appeared in 1776. He also plunged studies of philosophy, history, and politics. He was appointed the president of the University of Glasgow in 1787 and died in Edinburgh on July 17, 1790.

The period of his time was before the Industrial Revolution. Merchant capital had been growing in cities, and manufacture became as new way of production in rural communities that time. Adam Smith could be called the economist of the age of manufacture. The beginning of large-scale industrial capitalism based on division of work affected his ideas; the whole society is similar to workplace doing division of work, the manufacturing industry is also important with commercial and agriculture industries. In 1776, however, the Industrial Revolution just began when An Inquiry into the Nature and Causes of the Wealth of Nations appeared. The theory of economy which worked after the Industrial Revolution was described by Smith before the Industrial Revolution through An Inquiry into the Nature and Causes of the Wealth of Nations. It could make sure Adam Smith was the father of economics.

2. Career and Achievements
Adam Smith studied at the University of Glasgow, and then had studied by him self at the University of Oxford for six years. This was because there was no substantial education at Oxford. On returning to the University of Glasgow, he was appointed professor of logic (1751), then the chair of moral philosophy (1752). Economics was not an independent subject yet, so it was included moral philosophy in that time. This fact could be known that Smith's ideas were the beginning of economics.

Smith published two books, Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).

● Theory of Moral Sentiments
This theory was concerned with the explanation of moral approval and disapproval. From Smith's question; Why do we regard certain actions or intentions with approval and condemn others? People's opinions in the age of Smith were separated as two kinds; the law could judge what was right or wrong, and another was the moral standard which could be like mathematics formula. However, Smith presented new way of judgement within these arguments. He stated that everybody has lived with a moral sense which can see what is right or not. According to Smith, this sense called "sympathy" could be able to provide in social organisation. Thus, ethical emotion is a result of human nature, not human reason. This means that social organisation is seen as the outcome of human action but not necessarily of human design.

● An Inquiry into the Nature and Causes of the Wealth of Nations
This book became the first systematised economics book, and contributed theoretical and practical knowledge about economy. In this book, Smith claimed that free trade must be established proliferation of division of work being to increase people's wealth; he also warned monopolisation and protection in market by the Government are more harm than good. "A vast and stinging critique of the crippling regulation of commerce and trade that was then current, it argued that if people were set free to better themselves, it would – 'as if by an invisible hand' – actually benefit the whole of society" (Adam Smith Institute 2007, para. 6).

3. Context of His Age and His Ideas
When he published An Inquiry into the Nature and Causes of the Wealth of Nations, the Industrial Revolution just began. England as an agricultural country exported food but the manufacturing industry just produced only fabric made by small farmhouses or minor enterprises. Nation's policy was mercantilism following regulation that defined labours cannot be able to move freely, and incomes are controlled. However, mercantilism was not affect because of the movement of population from rural communities and prevalence of contraband. As a result, new industrial capitalists and people in the city wanted to get free economic activities. Adam Smith's ideas were welcomed because his ideas were what they wanted.

"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. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages" (Smith 1776, Book I, Chapter II). Through his book, he demonstrated that major motivation of human nature is pursuit of their own profits. In addition, there were basic regularities in the world, so whole social profits composed of individual profit naturally. He thought that these theories could be archived in the market by price called "the invisible hand". The basis called "laissez-faire" of this view was that a good economic system on field could be created when the government has less interference. In this view, the government must become small. This means that the government would arrange just the defence of a country, the public safety, and public enterprises, also against protective trade and claimed free trade.

4. Strengths or Weaknesses
In United States of 1929, the Wall Street Crash showed the weak point of Smith's "invisible hand". The Wall Street Crash of 1929 was one of the most devastation stock market crashes in United States' history. People believed that we had just waited to become quiet of the crash because market could be reduced by its self. However, there was no "invisible hand" there. For solving this panic, new government policy called "new deal" appeared by Roosevelt who was the thirty-second President of the United States. Free trade from laissez-faire also has not proved that the rich-get-richer and the poor-get-poorer. However, although his ideas have been weak, his ideas are still the basis of modern economics and still working. Adam Smith created the theory which could be proved the Industrial Revolution, capitalism, and modern economics before it happened.

References

Adam Smith Institute 2007, ‘Adam Smith’, Adam Smith Institute, viewed 29 August 2007, <http://www.adamsmith.org/smith>.

Smith, A. 1759, The Theory of Moral Sentiments.

Smith, A. 1776, An Inquiry into the Nature and Causes of the Wealth of Nations.