Adam Smith (1723–1790)

Famous British economist, chief representative of English bourgeois classical political economy.

Smith was born on June 5, 1723, in the Scottish town of Kirkcaldy, Fife, to a father who was Scottish customs auditor and a mother Margaret Douglas who was the daughter of a big landowner. In 1737, Smith entered University of Glasgow, majored in Latin, Greek, mathematics and moral philosophy. The then University of Glasgow was the center of the Scottish Enlightenment, where Smith was deeply influenced by the liberal spirit of the famous moral philosopher Hutcheson. In 1740, Smith graduated from university and received a scholarship to study at Balliol College, Oxford University. The state of education at Oxford at the time was not ideal, and Smith relied on self-education to master both classical and contemporary philosophy. In 1746, Smith was given the opportunity to give a series of public lectures at the University of Edinburgh on a variety of topics including rhetoric, history, and economics. These lectures earned him a great reputation. In 1748, Smith became a lecturer at the University of Edinburgh, mainly lecturing on English literature, and later began teaching courses in economics. In 1751, Smith was appointed Professor of Logic at the University of Glasgow, and in 1752 he was transferred to the post of Professor of Moral Philosophy. During his tenure at the University of Glasgow, Smith openly expressed his proposition of economic liberalism and formed his own ideas of liberal economics.

In 1759, Smith published his first work, The Theory of Moral Sentiments, a work of ethics that chiefly discusses questions of moral philosophy. In this work, Smith chiefly dealt with how individuals with egoistic nature (mainly capitalists who seek to maximize profits) control their feelings and behaviors, especially those of self-interest, in capitalist relations of production and social relations. In his book, Smith uses the basic principle of sympathy to explain the roots of all moral sentiments such as benevolence, self-command, justice, etc., dealt with the nature and principles of moral evaluation and the basic features of various virtues, and introduced and evaluated various moral philosophical doctrines in an attempt to reveal the moral basis on which the human society depends for its sustenance and harmonious development, as well as the general moral principles that human conducts ought to follow. The system of economic theory constructed in Smith’s representative work, The Wealth of Nations, is premised on these expositions in The Theory of Moral Sentiments.

In 1763, Smith resigned from the University of Glasgow and accompanied the Duke of Buccleuch to France as a private tutor. During this period, he became acquainted with famous scholars such as Voltaire and Quesnay, among whom Quesnay’s physiocratic economics had a great influence on him. In 1776, Smith’s masterpiece of economics, An Inquiry into the Nature and Causes of the Wealth of Nations (i.e. The Wealth of Nations), was finally completed after six years, after three years of revision. The publication of this book marked the official birth of classical British liberal economics.

The Wealth of Nations mainly elaborated the following important economic points of view: (1) The very essence of the economic system of a society is to guarantee the subsistence and development of individuals, and if each individual can achieve his or her own full development, the society as a whole will also attain development. This is actually an expression of his proposition of individualism. (2) Only when private persons have the right to own and dispose of their own wealth, can they fully develop and society as a whole can make progress. (3) Pursuing wealth is a legitimate act, and although entrepreneurs invest in industry and commerce to meet their individual end of pursuing profits, they often produce the effect of serving the crowd, contributing to society and promoting social progress in this process, i.e., the so-called subjectively for themselves and objectively for others. (4) The government should remain politically neutral and not interfere in economic activities at will, and the best practice for the government is to enable everyone to carry out their economic activities freely according to their will, so as to improve the efficiency of society. (5) The price of commodities should be determined by the market (“invisible hand”), and only in this way, not only the prices will be adjusted properly, but also the resources will be allocated rationally, so as to ultimately make the social efficiency to achieve the best state.

Adam Smith formed a complete theoretical system of political economy for the first time, which laid a good foundation for the development of political economy, and his The Wealth of Nations is the starting point for the study of modern political economy. Smith’s theory of classical political economy is also one of the important ideological sources of Marxist political economy. Marx critically drew on and assimilated Smith’s labor theory of value, and founded Marxist labor theory of value.

Smith died in in Edinburgh on 17 July 1790, at the age of 67. The tombstone is engraved: “Here are deposited the remains of Adam Smith, author of The Theory of Moral Sentiments and Wealth of Nations.”