The father of economics and creator of the free market model

Early Life

Although his exact date of birth is unknown, Adam Smith was baptised on the 5th of June, 1723, so this is often treated as his birthday. He was born in Scotland in the seaside town of Kircaldy with the same name as his father, a Scottish advocate and prosecutor and comptroller of customs in Kircaldy. Unfortunately, he died 2 months before Smith was born, leaving his mother, Margaret Douglas, a widow, and making Smith’s life a struggle from the very beginning. He was pretty close with his mother, who most likely was the one who pushed him to follow his scholarly ambitions.

Education

Between 1729 and 1737, Smith attended the Burgh School of Kircaldy, which was described by journalist John Rae as ‘one of the best secondary schools in Scotland at that period’. At school, he studied Latin, mathematics, history and writing. He then went on to study Moral Philosophy at Glasgow University at the age of 14, studying under Francis Hutcheson, who greatly influenced his future philosophical views. Then in 1740, he won the Snell Exhibition Award and was accepted into Oxford University to undertake postgraduate studies at Balliol College. However, he found the teaching at Glasgow far superior as he believed the Oxford atmosphere was intellectually stifling, and so he left in 1746 before his scholarship ended.

Published works

The first book Smith published was The Theory of Moral Sentiments, in 1759, and he made extensive revisions of this book throughout his life until he died, so it is unknown whether the book is truly complete. Although Smith himself believed this book to be his best work, it is widely perceived that The Wealth of Nations is his most influential work published in 1776. Most of his lectures and essays were published after his death in 1790, such as Essays on Philosophical Subjects published in 1795.

How did Smith think economies should be run?

Smith felt that government involvement was unnecessary in markets due to his theory of an ‘invisible hand’ in the market. This is what he believed controlled the price of goods in markets, and he was, in essence, describing the effects of supply and demand on pricing – if supply fell, the ‘invisible hand’ would raise the price to allow producers to profit. It meant there was no need for government price controls, as the cost would fluctuate based on the self-interests of both the consumer and the producer. If the producer decided to make more to increase profit, the price would fall as there is more supply, but then the consumer wants to buy more product as it is cheaper, so demand increases, and the price rises again until the supply has been used up. He also suggested and supported the division of labour and specialisation, as he believed it would allow for more efficient, better quality products. Overall, Smith favoured a free-market economy, with goods produced by privately-owned businesses with competition between different companies enabling high quality and low price.

---

Related Posts