Adam Smith (1723-1790)

Adam Smith

• Moral philosopher who founded Economics as a discipline due to influential book “Wealth of Nations”

• Physiocrats

• Influenced by Lockean Theory of Property, Hume’s works, and Isaac Newton (1643-1727)

• social science was known as natural philosophy

• benefits of property system to everyone

Major works

• The Theory of Moral Sentiments (1759)

  • ethics based on sympathy

  • enlightened self-interest

• An Inquiry into the Nature and Wealth of Nations (1776)

• to determine what causes nations

• gold

• productive collapsing

• three reasons division and labor increases production

• division of labour causes different abilities not innate talents

• the invisible hand

  • individuals seeking their own advantage

  • serves the advantage of society

  • works if four conditions hold

  • secure property rights