Adam Smith (1723-1790)
On this day in 1790 died the great Scottish economist Adam Smith. To us he is best known for his pioneering 1776 book An Inquiry Into The Nature And Causes Of The Wealth Of Nations – which he called simply his Inquiry, but which today is known as The Wealth of Nations. It was arguably the first systematic presentation of modern economics: on the very first page, it introduces the notions of Gross National Product (GNP), GNP per capita, and productivity – all of which are essential tools for economists today. But it was more than a mere textbook. It was a polemic against government controls over economic life: of trade barriers and protectionism (designed to favour domestic industries and keep out other countries’ imports, but which merely impoverished both sides); and of government regulatory power that could be used cynically by businesses keep out their competitors.
But it was his earlier 1759 book on moral philosophy, The Theory Of Moral Sentiments, that propelled him to fame. Philosophers at the time struggled to work out how we could know what was moral and what was not. Many appealed to religion as the answer. Others thought that we might have a sixth sense, a ‘moral sense’ that could detect good and evil. Smith explained it in terms of our natural feeling for the welfare of others and the praise or blame that others heap on us for our good and bad actions. This, by some sort of providence, prompted us to act morally and curb our selfishness, thereby promoting the general good of society and survival of humanity. Smith tried, but could not explain this happy providence by which positive moral sentiments are visited on one generation after another. It would be exactly a century later before Charles Darwin’s 1859 The Origin Of Species identified the mechanism.
The Theory Of Moral Sentiments so impressed the prominent statesman Charles Townsend, who was stepfather to the 12-year-old Duke of Buccleuch, that he promptly hired Smith, on a lifetime salary of £300 a year, to tutor the young nobleman. On their travels in Europe, Smith met many of the leading Continental thinkers and was exposed to the very different economies of Europe. He began to write notes for a book – the book that would become The Wealth Of Nations.
It took him a decade and a half. But Smith’s second book proved even more sensational than the first. It quickly went through several editions and translations. It changed the direction of public policy on trade, regulation and tax. The nation gave him a sinecure – Commissioner of Customs – on an even grander salary of £600 a year. Smith being Smith, he did not treat the post as a sinecure but was meticulous at actually doing the job. And he offered to give up his £300 a year from the Duke of Buccleuch, though the Duke would hear none of it: with Smith as his teenage tutor and adult friend, he thought it amazing value.
In 1774 Smith bought an elegant town house off the Canongate, in the Old Town of Edinburgh. Here he would entertain leading thinkers from Edinburgh and visitors from further afield. The story – almost true – is that, at one such meeting, he felt unwell and rose, saying: “Gentlemen, I fear we must continue this conversation in another place.” He died shortly after.
In reality, Smith died, aged 67, in the north wing of Panmure House, after a painful illness. He left instructions that his unpublished papers should be burnt, apart from his Essays On Philosophical Subjects and a breathtakingly original work on the philosophy of science, called History Of Astronomy. He was buried just a few yards from his home, in an elegant neoclassical tomb in the Canongate Kirkyard.
On his deathbed, he regretted that he had not done more. He had planned a work on politics, and perhaps another on justice. But with The Wealth Of Nations, he achieved an impact on our lives that lasts even today.