The Canon: The Wealth of Nations. By Adam Smith

April 22, 2010

Appointed professor of logic at the University of Glasgow in 1751 at the age of 28, Adam Smith established his academic credentials at a young age. Yet for all his intellectual prowess as a writer, he was not at ease in many of the academic and social situations he encountered. He is reported to have been "silent and awkward (at first) yet within a short time he became fluent, and poured out a series of interesting arguments".

Is it possible to appreciate the impact of Smith by tracing the links between his work and those policy-framers presently sitting at the top of government? Smith was a son of Kirkcaldy in County Fife, now represented in Parliament by Gordon Brown, a long-time admirer of Smith and his legacy. When Alan Greenspan retired from the chairmanship of the Federal Reserve of the United States in 2006, Brown presented him with a case of rare Scotch whisky and a copy of Smith's The Theory of Moral Sentiments, acknowledging him as another Smith devotee.

Does this political pedigree ensure that his ideals underpin economic policy in the UK and the US? Yet we digress: the main aim here is to discuss the contribution of The Wealth of Nations, and its contribution to economic and philosophical thought.

In this, his best-known work, Smith eloquently describes the inextricable link between the aims of the individual and the consequences for society.

He writes: "Every individual is constantly exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of society, which he has in view. But the study of his own advantage leads him to prefer that employment which is most advantageous to society. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it and by directing that industry in such a manner as its produce may be of the greater value, he intends only his own gain."

The logic of this theory can be recognised in modern society and clearly has its appeal. However, this theory cannot be considered in a purely economic sense; Smith viewed this as a philosophical theory, which also required us to consider our fellow beings.

Indeed, The Theory of Moral Sentiments, published prior to The Wealth of Nations, set the scene for this work. The separation of philosophical thinking from economics has occurred subsequently, to the extent that many modern students of economics are unaware of Smith's philosophical heritage.

But in today's global society, the importance of Smith's "fellow feeling" has more resonance than ever. The nature of society and the challenges we currently face in economic and environmental terms may lead us to realise that his theories were not mutually exclusive, but inextricably linked.

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