Adam Smith Great English economist and philosopher Date of Birth: 05.06.1723 Country: Great Britain

Adam Smith Biography

Adam Smith was an English economist and philosopher. He gained a reputation as a scholar and somewhat eccentric individual among his peers by the age of 17. He would often get lost in deep thought in the midst of a noisy gathering or engage in conversations with himself, oblivious to his surroundings. Smith was born in Scotland, a country that had been engaged in persistent wars with England for several centuries. However, with the establishment of the state union in 1707, Scottish and English industrialists, merchants, and wealthy farmers saw their influence greatly increase. This marked the beginning of significant economic development in Scotland, particularly in the city and port of Glasgow, where Smith spent most of his life.

During this time, the influence of the church and religion on society and academia gradually diminished. The church lost control over the universities, and Scottish universities, including the University of Glasgow where Smith studied and taught, embraced secular sciences and practical education. Smith's circle of friends included inventors such as James Watt, the inventor of the steam engine, and Joseph Black, one of the founders of modern chemistry. In the 1750s, Scotland experienced a cultural renaissance, with notable talents emerging in various fields of science and art. This environment greatly influenced Smith's upbringing and development as a scholar.

Adam Smith was born in 1723 in the small town of Kirkcaldy, near Edinburgh. His father, a customs official, passed away a few months before Adam's birth, leaving his young widow to devote her life to raising their son. Adam grew up frail and delicate, avoiding the rough play of his peers. Fortunately, Kirkcaldy had a good school, and there were always plenty of books around Adam, which helped him receive a good education. At the age of 14, following the customs of the time, Smith enrolled in the University of Glasgow. After completing the mandatory logic class, he pursued studies in moral philosophy, choosing a humanistic direction. However, he also studied mathematics and astronomy and showed significant knowledge in these areas. By the age of 17, Smith had gained a reputation as a scholar and somewhat peculiar individual among fellow students.

After successfully graduating from the university in 1740, Smith received a scholarship to continue his education at the University of Oxford. However, he was disappointed to find that the renowned university offered little in terms of education. The professors were more interested in intrigue and politics than teaching. Smith later criticized the majority of professors at Oxford, stating that they had abandoned teaching altogether. His unfruitful stay in England, along with political events such as the Jacobite uprising in 1745-1746, led Smith to return to Kirkcaldy in the summer of 1746. There, he spent two years continuing his self-education. By the age of 25, Adam Smith was already impressing others with his erudition and depth of knowledge in various fields. His early interest in political economy began to emerge during this time.

In 1751, Smith moved to Glasgow to take up a professorship at the university. He initially taught logic and later moral philosophy. Smith spent 13 years in Glasgow, regularly spending 2-3 months each year in Edinburgh. He considered this period the happiest of his life. He enjoyed the familiar and close-knit community, and he was respected by fellow professors, students, and prominent citizens. Smith could work unhindered, and there were high expectations for his contributions to the field of economics. Women played no significant role in Smith's life, much like in the lives of Newton and Leibniz. There are vague and unreliable reports that he almost got married twice during his time in Edinburgh and Glasgow, but both attempts fell through for various reasons. His mother and cousin managed his household throughout his life. According to a visitor, Smith's home was "absolutely Scottish," with traditional Scottish food and adherence to customs and traditions.

In 1759, Smith published his first major work, "The Theory of Moral Sentiments." However, during the writing process, his interests had shifted towards political economy. In the trade and industry-driven city of Glasgow, economic issues forcefully infiltrated daily life. There was a unique political economy club in Glasgow, organized by a wealthy and enlightened mayor. Smith soon became one of the prominent members of this club. His friendship with David Hume also strengthened his interest in political economy. In the late 18th century, British economist Edwin Cannan discovered and published important materials shedding light on the development of Smith's ideas. These materials consisted of lecture notes taken by a student at the University of Glasgow, which were slightly edited and rewritten. Based on their content, these lectures were delivered in 1762-1763. The lectures reveal that Smith's course on moral philosophy had essentially transformed into a course on sociology and political economy. The economic sections of the lectures clearly contain the seeds of ideas that would later be developed in "The Wealth of Nations." Another interesting find was a draft of the early chapters of "The Wealth of Nations," discovered in the 1930s.

By the end of his time in Glasgow, Smith had become a profound and original economic thinker. However, he was not yet ready to create his main work. A three-year trip to France as the tutor of the young Duke of Buccleuch and personal acquaintance with the physiocrats solidified his preparation. Smith arrived in France at the perfect time. On one hand, he was already a mature and accomplished scholar and individual, immune to the influence of the physiocrats (unlike many intelligent foreigners, including Benjamin Franklin). On the other hand, his economic system had not fully crystallized in his mind, making him receptive to the beneficial influence of François Quesnay and Anne-Robert-Jacques Turgot. France is present in Smith's book not only through direct or indirect ideas related to physiocracy but also through numerous observations, examples, and illustrations. The overall tone of this material is critical. For Smith, France, with its feudal-absolutist system and restrictions on bourgeois development, was the most vivid example of the contradiction between actual order and the ideal "natural order." While things were far from perfect in England, its structure was much closer to the "natural order" with its emphasis on personal freedom, conscience, and entrepreneurship.

What did the three years in France mean for Smith personally? Firstly, it significantly improved his financial situation. According to an agreement with the Duke of Buccleuch's parents, Smith was entitled to an annual pension of 300 pounds during and after the trip until his death. This allowed Smith to dedicate the next 10 years solely to working on his book, and he did not return to the University of Glasgow. Secondly, all contemporaries noted a change in Smith's character. He became more composed, business-oriented, energetic, and developed a skill for interacting with various individuals, including influential figures. However, he did not acquire any social polish and remained, in the eyes of most acquaintances, a quirky and absent-minded professor.

Smith spent approximately a year in Paris, from December 1765 to October 1766. As literary salons were the centers of intellectual life in Paris, he mainly engaged with philosophers. It is likely that Smith found his acquaintance with Anne-Robert-Jacques Turgot, a man of great personal charm and intellect, particularly significant. In his philosophy, Turgot declared selfishness as a natural human quality and a factor for societal progress. This idea resonated with Smith, who had already encountered similar notions from philosophers John Locke and David Hume and in the paradoxes of Bernard Mandeville. However, the persuasive arguments of Turgot had a particularly strong impact on Smith. He further developed these ideas and applied them to political economy. Smith's conception of human nature and the relationship between individuals and society formed the basis of the classical school of economics. The concept of homo oeconomicus (economic man) emerged later, but its creators drew heavily from Smith. The famous reference to the "invisible hand" is one of the most frequently cited passages from "The Wealth of Nations."

So, what do "economic man" and the "invisible hand" mean? We can roughly understand Smith's train of thought as follows. The primary motive for human economic activity is self-interest. However, individuals can pursue their self-interest only by providing services to others, offering their labor and products in exchange. This leads to the division of labor. Each individual strives to utilize their labor and capital (including both workers and capitalists) in a way that maximizes the value of their products. While individuals do not consciously think about the societal benefit and how much they contribute to it, the market guides them to allocate resources where their contribution is valued the highest by society. The "invisible hand" metaphorically represents the spontaneous operation of objective economic laws. Conditions that allow self-interest and the natural laws of economic development to have the most beneficial impact Smith referred to as the natural order. This concept has a dual meaning for Smith. On one hand, it represents the principle and goal of economic policy, namely laissez faire. On the other hand, it serves as a theoretical construct or model for studying economic reality.

In physics, abstractions such as ideal gas and ideal liquid are valuable tools for understanding the nature of the physical world. Real gases and liquids do not behave "ideally" or only do so under certain specific conditions. Nevertheless, it is meaningful to abstract away from these deviations in order to study phenomena "in their pure form." Similarly, in political economy, the abstraction of "economic man" and perfect competition played a crucial role. Without making certain assumptions that simplify and model the infinitely complex and diverse reality, economics would not be able to study mass economic phenomena and processes. From this perspective, the abstraction of "economic man" and perfect competition provided a vital framework for economic science.

For Smith, homo oeconomicus is an expression of eternal and natural human nature, and laissez faire policy directly follows from his views on individuals and society. If the economic activities of each person ultimately lead to the benefit of society, it is clear that these activities should not be hindered. Smith believed that with the freedom of movement for goods, money, capital, and labor, society's resources would be utilized most efficiently.

The economic policies of the British government throughout the following century can be seen as the implementation of Smith's program to some extent.