Adam Smith
Who He Was
Scottish economist + philosopher from the 1700s (1723–1790).
Often called the father of modern economics because his ideas basically shaped how markets work today.
Part of the Scottish Enlightenment, which was full of thinkers trying to understand society, science, and human behaviour.
Major Books
The Theory of Moral Sentiments (1759)
Focuses on human behaviour, sympathy, morality.
Smith says people aren’t just selfish — they care about how others see them.
This book sets up the moral background for his later economic ideas.
The Wealth of Nations (1776)
His most famous book.
Explains how markets operate, why free trade matters, and how countries grow richer.
Basically the first proper “economics textbook” ever written.
Key Economic Ideas
Division of Labour
Splitting work into small specialised tasks boosts productivity massively.
Uses the pin factory example: one person alone makes barely any pins, but a team with divided tasks makes thousands.
Invisible Hand
When people act in their own self‑interest, they unintentionally help society.
Not magic — just how markets coordinate millions of decisions.
Free Markets & Competition
Competition keeps prices low and forces businesses to improve.
Smith disliked monopolies because they block competition and harm consumers.
Absolute Advantage
Countries should specialise in what they’re best at producing.
Trade lets everyone benefit instead of hoarding resources.
Views on Government
Smith wasn’t “no government at all.”
He believed the state should:
provide public goods (roads, education, defence)
enforce laws and protect property
prevent monopolies and corruption
He warned that big companies could become too powerful and influence government decisions.
Impact + Why He Still Matters
His ideas shaped capitalism and classical economics.
Influenced later economists, even critics like Karl Marx.
Modern economics still uses his concepts to explain:
market efficiency
trade benefits
competition
market failures
A‑level/GCSE Economics topics like supply, demand, market failure, and trade all connect back to Smith.