Adam Smith
Economist 1723�1790
Adam Smith is considered the father of economics. Educated at Oxford University in England, Smith�s intelligence earned him a professorship at Glasgow University in Scotland. After leaving and traveling in France, Smith returned to Scotland, his homeland, to write one of the most influential books on economics ever written. In The Wealth of Nations (1776), Smith used historical examples and illustrative stories to analyze and critique economic theory. His book elevated economics to the status of science. Smith�s main idea was that political economics depended on the free market (free enterprise, or capitalism). He believed in the �invisible hand� of the market. �Invisible hand� means that an ideal economic system is shaped by the interaction of economic players and should not be controlled by government regulation. When each actor in the economic system acts in his or her own self-interest, an economy that benefits everyone will naturally arise. �Rational self-interest� would free economics and improve general welfare. Smith supported the free market, but he understood that markets and economies function within social systems. These social systems should reign in market-distorting forces, such as monopolies. He criticized cutthroat, �dog-eat-dog� capitalism but supported a capitalist system in which everyone participated to gain his or her own best interest.
Adam Smith is considered the father of economics. Educated at Oxford University in England, Smith�s intelligence earned him a professorship at Glasgow University in Scotland. After leaving and traveling in France, Smith returned to Scotland, his homeland, to write one of the most influential books on economics ever written. In The Wealth of Nations (1776), Smith used historical examples and illustrative stories to analyze and critique economic theory. His book elevated economics to the status of science. Smith�s main idea was that political economics depended on the free market (free enterprise, or capitalism). He believed in the �invisible hand� of the market. �Invisible hand� means that an ideal economic system is shaped by the interaction of economic players and should not be controlled by government regulation. When each actor in the economic system acts in his or her own self-interest, an economy that benefits everyone will naturally arise. �Rational self-interest� would free economics and improve general welfare. Smith supported the free market, but he understood that markets and economies function within social systems. These social systems should reign in market-distorting forces, such as monopolies. He criticized cutthroat, �dog-eat-dog� capitalism but supported a capitalist system in which everyone participated to gain his or her own best interest.
CRITICAL THINKING
Finding the Main Idea On the basis of his writings in The Wealth of Nations, what do you think is Smith�s central idea about what makes an economy function optimally?