Adam Smith (1723–1790) was a Scottish philosopher and economist and one of the foundational thinkers who established the core principles of modern economics. Recognized as one of the most influential figures of the Scottish Enlightenment, Smith is particularly regarded as the founder of classical economic theory through his seminal work, The Wealth of Nations (1776). His contributions extended beyond economics to significantly influence morality philosophy and political economy. Many of the fundamental principles of today’s free market economy are rooted in Smith’s ideas.

Early Life and Education

Adam Smith was born on 5 June 1723 in Kirkcaldy, Scotland. Despite losing his father at an early age, he received a strong education from his mother. From a young age, he demonstrated exceptional ability in Small, mathematics and literature. After studying ethics and philosophy at the University of Glasgow, he continued his education at the University of Oxford. Although he studied classical literature and philosophy there, he was dissatisfied with the educational system and returned to Scotland. During his time in Glasgow, he attended the lectures of famous philosopher Francis Hutcheson and was deeply influenced by his moral philosophy. This education shaped his later ideas on economic and moral thought.

Academic Career and Moral Philosophy

Smith began his academic career in 1751 as a professor of logic at the University of Glasgow, short duration later becoming professor of moral philosophy. In 1759 he published The Theory of Moral Sentiments, which argued that human behavior is fundamentally guided by empathy and moral sentiments place. This work played a crucial role in the development of Smith’s economic theories.

In this work, Smith proposed that individuals’ moral values are shaped by social interaction and that the “invisible hand” operates not only in economic activity but also within social structures. He argued that the pursuit of self-interest, when balanced by moral considerations, could lead to beneficial outcomes for society. This opinion became one of the foundational pillars of classical liberal thought.

Economic Thought and “The Wealth of Nations”

Smith’s most famous work, The Wealth of Nations (A Inquiry into the Nature and Causes of the Wealth of Nations), was published in 1776. This work is regarded as the first systematic defense of free market economics. Smith introduced the concept of the “invisible hand” to argue that individuals pursuing their own interests inadvertently contribute to the general welfare of society. He also emphasized that division of labor and specialization enhance economic efficiency.

The Wealth of Nations consists of five books and primarily explains how economic freedom enhances both individual and societal well-being. Smith criticized mercantilist policies and argued that government intervention in the economy should be limited. He maintained that a competitive market environment encourages productivity and innovation. He stressed the balanced development of agriculture, trade and industry and introduced the labor value theory, asserting that the value of a good is directly related to the amount of labor expended in its production.

Smith’s Understanding of Political Economy

Adam Smith’s conception of political economy emphasized limiting the state’s role in the economy while promoting individual entrepreneurial freedom. However, this did not imply that the state should withdraw entirely from economic affairs. Smith argued that the state has three essential duties:

1. Protecting the country from external threats (defense services),

2. Maintaining internal order and the rule of law (justice system),

3. Providing education, infrastructure and public services that the private sector cannot adequately supply to offer.

These views laid the groundwork for modern public policy and played a pivotal role in shaping economic thought.

Later Years and Legacy

Adam Smith spent much of his life engaged in academic work and developing ideas on political economy. After the publication of The Wealth of Nations, he gained widespread recognition and engaged in intellectual exchanges with leading political figures in England. In the final years of his life, he served as a commissioner of customs and offered recommendations on certain financial reform. He died in Edinburgh in 1790.

His works and ideas continue to form one of the foundational pillars of modern economic thought. His views on liberal economics, free market principles, and the role of the state in the economy were decisive in the development of modern economics. Although Smith’s ideas have been interpreted differently from Keynesian economic policies, they remain a vital reference point for advocates of free market economics.