In this paper we are going to study the biographical facts and writings of the famous moral philosopher, person, who is considered to be a pioneer of political economy ”“ Adam Smith. Critics state, that Adam Smith is the key figure of the Scottish Enlightenment as the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations (Skinner, 1988).
Adam Smith was said to be born in Scotland in 1723, although there is no concrete information about his birth date.
There is also very little information about the early years of Smith, we could trace the records, telling about his kidnapping by gypsies, after which he was quickly released. The boy had to grow without father, who died short before the child’s birth and he was very devoted to his mother, who did her best in order to support his scholarly undertakings and ambitions. Between the years 1729 and 1337 Smith studied at the Burgh School of Kirkcaldy, learning the basic of mathematics, Latin and writing (Buchan, 2006). At that moment this was one of the best secondary schools in the whole country.
Later on, at the age of fourteen, Smith became the student of the University of Glasgow and took up moral philosophy. This set the beginning for the development of his liberty ideas and free speech talents. In the year 1740 Smith moved to Balliol College in Oxford. His experiences from the studies Smith put down in his writing The Wealth of Nations: “In the University of Oxford, the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching”ť (Rae, 1895). In general education at Glasgow seemed more rewarding for Smith than at Oxford. For example he was outraged, when he was not allowed to read the works by David Hume and moreover was punished for this.Â Smith tried to use for maximum the library of Oxford and to make self- education as complete as possible, however, apart of studies, there war hardly anything that brought happiness or at least satisfaction to Smith and when finally he began to suffer from nervous breakdown, he took a decision to leave Oxford, not waiting till the end of his scholarship. Initially Smith was going to devote his studies to theology, but the ideas of David Hume made his change his direction.
In 1748 Smith started to deliver public lectures in Edinburgh.Â His lectures on economics and theology became very popular during the times of the Scottish Enlightenment. When Smith took up teaching logic courses, he got professorship at the University of Glasgow. A year later he was already able to take the position of the Chair of Moral Philosophy. The following years were characterized by serious academic work and Smith described them as follows: “by far the most useful and therefore by far the happiest and most honourable period [of his life]” (Buchan, 2006).
He widened the range of themes of his lections to those of ethics, political economy, rhetoric and so on. In 1759 Smith published The Theory of Moral Sentiments, where some of his lectures from Glasgow were included. The central theme of this writing was the process of communication between agent and spectator, or in other words between individual members of the society. The analysis of the language evolution, presented in this writing however proved to be not profound enough, as was later evident from the works by Lord Monboddo. The persuasive arguments of Smith were based actually on sympathy, this was a completely new approach in comparison to Hume and Hutcheson. After publishing of the Theory of Moral Sentiments, Smith became very popular among students, who even moved from other universities in order to get education under Smith at Glasgow. At the same moment Smith started to deepen his interest in economics and jurisprudence, instead of morals. Some of his ideas on political economy were taken from the notes, done by some student in 1763 during Smith’s lecture: “labor””rather than the nation’s quantity of gold or silver””is the cause of increase in national wealth”ť (Buchan, 2006). In 1762 Smith got the title of Doctor of Laws at the University of Glasgow. A year later, Smith decided to take the tutoring position by Charles Townshend, who wanted a tutor for his stepson. The students of the University were so much amazed by their professor, that they even didn’t agree to take back the rests of the fees, because Smith left in the middle of the semester.
During his tutoring activity Smith received rather high salary and had the chance to travel a lot, for example he stayed for around six months in France. These months seemed so useless and boring for Smith, that he started to write a book. After France Smith visited Geneva and Paris. he had the chance to meet Voltaire, Benjamin Franklin, Turgon, Helvetius and Francois Quesnay, who was the head manager of the Physiocratic school. He studied the views of the physiocrats, who stated, that the real source of wealth was production and not something like precious metals. The major emphasis they put on agriculture instead of manufacturing and sales. For Smith physiocracy was “”with all its imperfections [perhaps] the nearest approximation to the truth that has yet been published upon the subject of political economy” (Rae, 1895).
In 1766 the tutoring for Smith was finished and he went back to Kirkcaldy, where for the next ten years he devoted almost all his time to writing his magnum opus, which was published in 1776. After he was elected fellow of the Royal Society of London, Smith received the post of a commissioner of customs in Scotland and moved to Edinburgh.
Between the years 1787 and 1789 he took the position of Lord Rector of the University of Glasgow. In 1790 Smith died, full of disappointment, that his achievements were so minor and that he didn’t manage to do much more.
When Smith was dieing there were a lot of materials, which were not published, he ordered to leave only those, which could fit publication, they rest should have been destroyed. Thus his History of Astronomy was published only in five years after his death.
The views, Smith expressed in his published works had serious impact upon the development of the field of economics. The two most important writings, produced by Smith are considered to be The Theory of Moral Sentiments and The Wealth of Nations. For the first time, as it was already mentioned, The Theory of Moral Sentiments was published in 1759. However Adam Smith continued to make changes of his writing during his whole life. In his writing the philosopher studied the issues related to moral thinking of that period of time, and argued that the source of conscience was in social relationships. The major task of this work, the author saw in underlining the ability of humans to make moral judgments, although we all have inclinations towards self-interest (Buchan, 2006).
His theory of sympathy explained, that people become aware of their morality, when they observed others around them.
Some researchers state, that there is a strong contradiction between the two works ”“ The Theory of Moral Sentiments and The Wealth of Nations ”“ because the first underlines sympathy, whereas the second is devoted to the role of self-interest. “Many writers, including the present author at an early stage of his study of Smith, have found these two works in some measure basically inconsistent.” (Buchan, 2006). In reality there is no contradiction, for the author the notions of sympathy and self-interest were on the one hand closely related and on the other interchangeable in a way. All individuals have self-interests and at the same time they are able to develop sympathy.
Thus the two works just studied the various aspects of human nature.
In The Wealth of Nations Smith continued to use his image of the “invisible hand”ť, stating, that the free market is guided by a so-called invisible hand, although it seems rather chaotic on the surface. Smith explained, that usual human motives were selfishness and avidity, due to this the competition of the free market urged the prices to remain low along with presenting a big choice of services and goods. However Smith was not a supporter of monopolies.
Value theory of Smith played also an important role for the classical economical theory. According to him rent and profit along with other costs, not including salary, were to be considered into the price of a commodity. “Other classical economists presented variations on Smith, termed the ‘labor theory of value’. Classical economics focused on the tendency of markets to move to long-run equilibrium”ť (Rae, 1895). Adam Smith also paid great attention to the division of the operations in production. He proved with the help of examples, that one worker, performing all operations in order to produce a pin, could make only some limited number of ready pins per day, whereas if to split the manufacturing process into several operations, fulfilled by several different workers, this would show much better results in efficiency. This idea was of high importance to many manufacturing enterprises in various spheres of goods and of different times, even nowadays, this method is quite applicable.
After Smith’s death a lot of his writings, which were not published, were destroyed. Published were only his Essays on Philosophical subjects, History of Astronomy, some ideas concerning ancient physics and metaphysics, Lectures on Jurisprudence, Lectures on Justice, Police, Revenue, and Arms, A Treatise on Public Opulence (Buchan, 2006).
This is evident, that many years of hard work of a talented and versatile philosopher and economist resulted in his sufficient impact upon the development of economics theories. Adam Smith was declared to be a symbol of free market economics and founder of free market policies. There were Adam Smith Institute and Adam Smith Society created.
According to Alan Greenspan: “”it was left to Adam Smith to identify the more-general set of principles that brought conceptual clarity to the seeming chaos of market transactions”ť (Rae, 1895). He also declared, that The Wealth of Nations belongs to the greatest achievements in human intellectual history.
As for Smith’s ideas about laissez-faire there were various opinions expressed. For example Herbert Stein argued that Smith didn’t develop a pure understanding of this idea, he showed his skepticism concerning the intervention of the government, however he was ready to accept “qualifications to that policy in the specific cases where he judged that their net effect would be beneficial and would not undermine the basically free character of the system. He did not wear the Adam Smith necktie”ť (Buchan, 2006).
“Economic historians such as Jacob Viner regard Smith as a strong advocate of free markets and limited government (what Smith called “natural liberty”) but not as a dogmatic supporter of laissez-faire”ť (Rae, 1895).
There is also an opinion, that Adam Smith had an influence upon the American revolution of the 1700s, due to his impact upon the formation of economic policies of the several American governments during this period. Thus the revolution, ratification of the Constitution and the first national policies are said to be related to Smith’s ideas, mostly to his statement, that the wealth of nations is in nation’s trade, not in its capital.
We can conclude, that profoundness and complexity of Adam Smith’s theories and ideas caused a lot of various approaches to interpretation of his ideas and major statements. However, he remained an outstanding and extraordinary personality within his lifetime as well as afterwards. The same like many years ago his students were eager to know more about his ideas and penetrate deeper into the theories he developed. He gained recognition among philosophers and economists in many counties as his work “provided a rationale of inestimable importance for practical economic policy”ť (Skinner, 1988).
Although Smith used to write for his generation, in reality his knowledge was so generalized and broad, that even nowadays it is hard to imagine a specialist in economy, who is not aware of the postulates, developed by Adam Smith. His realistic and practical approach was a key to his successful discoveries and development of progressive thinking.