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In 1759, Smith published his first work, The Theory of Moral Sentiments. He continued making extensive revisions to the book, up until his death.[N 2] Although The Adam Smith (baptised 16 June 1723 – died 17 July 1790 [OS: 5 June 1723 – 17 July 1790]) was a Scottish moral philosopher and a pioneer of political economics. One of the key figures of the Scottish Enlightenment, Smith is the author ofThe Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. Smith is widely cited as the father of modern economics.
Smith studied moral philosophy at the University of Glasgow and the University of Oxford. After graduating, hedelivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time he wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met otherintellectual leaders of his day. Smith returned home and spent the next ten years writing The Wealth of Nations, publishing it in 1776. He died in 1790.
The Wealth of Nations
There is a fundamental dissent between classical and neoclassical economists about the central message of Smith’s most influential work: An Inquiry into the Nature and Causes of the Wealth of Nations. Neoclassical economistsemphasise Smith’s invisible hand[63], a concept mentioned in the middle of his work – book IV, chapter II – and classical economists believe that Smith stated his programme how to promote the “Wealth of Nations” in the first sentences.
Smith used the term "the invisible hand" in "History of Astronomy"[64] referring to “the invisible hand of Jupiter” and twice – each time with a different meaning –the term "an invisible hand": in The Theory of Moral Sentiments[65] (1759) and in The Wealth of Nations[66] (1776). This last statement about “an invisible hand” is interpreted as “the invisible hand” in innumerable ways. It is therefore important to read the original:
As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestick industry, andso to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the publick interest, nor knows how much he is promoting it . By preferring the support of domestiek to that of foreign industry, he intends only his own security; and bydirecting 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 eases, led by an invisible hand to promote an end which was no part of his intention . Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually thanwhen he really intends to promote it . I have never known much good done by those who affected to trade for the publick good. [emphasis added].
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 ownnecessities but of their advantages.
Smith’s statement about the benefits of “an invisible hand” is certainly meant to answer Mandeville’s contention that "Private Vices … may be turned into Publick Benefits”.[68] It shows Smith’s believe that when an individual pursues his self-interest, he indirectly promotes the good of society. Self-interested competition in the free market, he argued, would tend...