Scottish economist and philosopher who was the founder and leader of the classical school of economics. He was born in Kirkcaldy, a Fife town to the north of Edinburgh, the only son of a Customs Commissioner who died before his birth, leaving his mother to be a major influence throughout 61 years of his life. He was educated at the local burgh school and at Glasgow University from 1737 to 1740 under Francis Hutcheson, professor of moral philosophy, whose utilitarian ideas were to influence the early stage of Smith’s economic theorizing. An unhappy period as Snell Exhibitioner at Balliol College, Oxford, from 1740 to 1746 enabled him to spend long solitary hours in acquiring the basis of his erudition. Returning to Scotland, he was successively professor of logic, from 1751 to 1752, and professor of moral philosophy, from 1752 to 1764, at Glasgow University His wide duties as a professor included lecturing on jurisprudence which he broadly interpreted to include economics, as the police in France had the task of regulating markets. In his extant Lectures on Jurisprudence for the winter of 1762–3 there is an early sketch of the ideas which were to appear in THE WEALTH OF NATIONS: the DIVISION OF LABOUR, the distinction between VALUE IN USE and VALUE IN EXCHANGE, the importance of FREE TRADE and the stages of economic development are discussed. More importantly for his career, he produced in that period his Theory of Moral Sentiments (1759; republished five times in his lifetime) which was based on the Stoics’ view of the natural order and provided an exposition of his concept of the INVISIBLE HAND which was to play an important role in the theoretical framework of The Wealth of Nations. A leading government minister, Charles Townsend, was so impressed by the Theory that he persuaded Smith to abandon his Glasgow professorship and become travelling tutor to his stepson, the young Duke of Buccleuch. This Grand Tour to France and Switzerland in the years 1764–6 enabled Smith to meet QUESNAY and TURGOT, the prominent PHYSIOCRATS who were perhaps the most important economists of the day: not surprisingly, their influence is evident in The Wealth of Nations.
The Grand Tour, cut short by the death of the Duke’s brother, brought Smith back to Kirkcaldy where, supported by his continued stipend of £300 per annum from the Duke, he spent six years preparing his great work on economics. In London, in 1773–6, he completed it, as well as giving government ministers advice on major policy issues, including the problem of the American colonies. His highly acclaimed Wealth of Nations (1776 and four more editions in his lifetime) provided a powerful theory of economic growth.
This was built upon the division of labour principle and the consequence of man’s desire for betterment that leads to savings which are productively invested. Also theories of value, distribution, international trade and public finance were presented. Although sharing much with LAISSEZ-FAIRE economists, he allowed many exceptions to complete economic liberty: for example, on the grounds of national defence he praised the NAVIGATION ACTS which excluded foreign ships from carrying British trade. From 1778 to his death he resided as a Commissioner of Customs in Edinburgh—perhaps a strange occupation for the apostle of free trade but a useful £600 per annum addition to his income. Also, this appointment was a major mark of government approval and an opportunity to undertake empirical research into the mercantile system he so forcefully attacked. Any reader of his works is soon impressed by their breadth, humanity and fundamental arguments. Justifiably, he was then and is now regarded as one of the world’s greatest thinkers and economic theorists.
