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Adam Smith (1723–1790)

Smith is known primarily for The Wealth of Nations (1776) — the founding text of modern economics — but his intellectual system begins with The Theory of Moral Sentiments (1759), a work of moral psychology that grounds ethics in sympathy (the capacity to enter imaginatively into another person’s feelings) and the device of the impartial spectator (an internalised perspective from which we judge our own conduct). The two books are not separate programmes; they are parts of a single inquiry into how social order arises from the interaction of self-interested individuals without central direction. In the moral sphere, the impartial spectator coordinates moral judgment without a moral lawgiver. In the economic sphere, the market coordinates production and distribution without a planner — the “invisible hand” by which individuals pursuing their own interest promote the public good without intending it. Smith was Hume’s closest intellectual companion and his direct inheritor in the Scottish Enlightenment tradition.

Life

Born 5 June 1723 in Kirkcaldy, Fife, Scotland. His father (also Adam Smith) was a customs official who died before Smith’s birth. Educated at the University of Glasgow (1737–40) under Francis Hutcheson — the moral-sense philosopher whose lectures shaped Smith’s early commitment to the idea that moral judgment has a natural basis. Then Balliol College, Oxford (1740–46), which Smith found intellectually stagnant — “In the University of Oxford, the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching.”

Lectured on rhetoric and belles-lettres at Edinburgh (1748–51). Professor of logic, then of moral philosophy, at the University of Glasgow (1751–64). The Glasgow years were Smith’s most productive: The Theory of Moral Sentiments was published in 1759 and made his reputation. Resigned his chair to tutor the young Duke of Buccleuch on a Grand Tour of Europe (1764–66); during the tour, in Toulouse, he began writing The Wealth of Nations. Met Voltaire, Turgot, and the Physiocrats in Paris.

An Inquiry into the Nature and Causes of the Wealth of Nations was published in 1776. Appointed Commissioner of Customs in Scotland (1778) — an administrative post he held until his death. Died 17 July 1790 in Edinburgh.

The Theory of Moral Sentiments

The Theory of Moral Sentiments (1759) argues that moral judgment is grounded not in reason (contra Kant) and not in divine command but in the natural human capacity for sympathy — the ability to imaginatively enter into another person’s situation and feel what they feel. We approve of actions that an impartial spectator would approve of; we condemn actions that an impartial spectator would condemn. The impartial spectator is not an external authority; it is an internalised perspective — the viewpoint of a well-informed, disinterested observer whom we construct in imagination and whose judgments we use to regulate our own conduct.

The framework is naturalistic: moral judgment arises from a psychological capacity (sympathy) that human beings share, not from a transcendent moral law. It is also social: the impartial spectator is not a solitary conscience but a product of social interaction — we learn to see ourselves as others see us, and the spectator is the internalised version of that social gaze.

The Wealth of Nations

An Inquiry into the Nature and Causes of the Wealth of Nations (1776) investigates how nations become wealthy — and argues that the answer is not gold, not conquest, but the productivity gains that arise from the division of labour, the accumulation of capital, and the freedom of markets.

The division of labour. The opening example — a pin factory in which the production process is divided into eighteen distinct operations, each performed by a specialised worker — demonstrates that specialisation dramatically increases productivity. The division of labour is limited by the extent of the market: the larger the market, the more finely labour can be divided.

The invisible hand. Smith’s most famous phrase (which appears only three times across his published works). The individual “intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” The market coordinates self-interested actions into socially beneficial outcomes without anyone intending the coordination — a spontaneous-order argument that Hayek later developed.

Smith was not a laissez-faire absolutist. The Wealth of Nations identifies market failures (monopoly, collusion, the undersupply of public goods) and roles for government (defence, justice, public works, and education for those whom the market leaves behind).

Where Smith stops

The “Adam Smith Problem” — the apparent tension between the sympathy-based ethics of Moral Sentiments and the self-interest-based economics of Wealth of Nations — was identified by German scholars in the nineteenth century and has been debated since. The standard resolution: the two books address different domains. Moral Sentiments explains how moral judgment works in face-to-face relationships; Wealth of Nations explains how markets coordinate the actions of strangers who need not share moral sentiments. Whether this resolution is adequate — whether the market can function as Smith describes if the moral sentiments that regulate face-to-face conduct do not also regulate economic conduct — is debated. Amartya Sen has argued that reading Smith as a theorist of pure self-interest misreads him, and that the moral psychology of Moral Sentiments is essential context for Wealth of Nations.

The invisible-hand argument assumes competitive markets with many buyers and sellers, free entry and exit, and no significant externalities. The conditions are strong; the extent to which real economies approximate them is the central question of economics since Smith. The appropriation of Smith by free-market ideology — “the market always works” — overstates what Smith claimed and ignores the qualifications he built in.

Key works

See also: Hume · Hayek · Marx