Adam Smith

Adam Smith was an influential Scottish economist, philosopher and central figure of the Scottish Enlightenment whose works laid the intellectual foundations of classical political economy. Best known for The Theory of Moral Sentiments (1759) and The Wealth of Nations (1776), he helped establish economics as a systematic discipline and provided enduring concepts such as absolute advantage, division of labour and the role of self-interest within competitive markets. His writings sought explanations in natural social, political and economic forces rather than divine design, contributing significantly to modern economic thought.

Background and Early Life

Smith was born in Kirkcaldy, Fife, in 1723, and although his exact birthdate is unknown, his baptism was recorded on 5 June 1723. His father, also named Adam Smith, served as a legal advocate and customs officer, but died shortly before his son’s birth, leaving Smith’s mother, Margaret Douglas, to raise him. Smith developed a close relationship with her, and she strongly supported his academic ambitions.
Relatively little reliable information exists about his early childhood, though one anecdote recorded by later biographers recounts that he was briefly abducted by travelling Romani people at the age of three, only to be quickly rescued. From 1729 to 1737 he attended the Burgh School of Kirkcaldy, a reputable institution where he studied Latin, mathematics, history and writing, forming the basis of the intellectual development that would later characterise his academic career.

Formal Education and Intellectual Formation

At the age of fourteen Smith enrolled at the University of Glasgow, where he studied moral philosophy under Francis Hutcheson. Glasgow was a thriving centre of Enlightenment thought, and Smith absorbed key ideas about liberty, reason, natural rights and freedom of expression. His years there were formative, shaping his approach to moral philosophy and political economy.
In 1740 he was awarded a Snell Exhibition scholarship to pursue further study at Balliol College, Oxford. Smith found Oxford intellectually restrictive, and his letters reveal dissatisfaction with the quality of teaching and the atmosphere of academic complacency. He nonetheless made valuable use of the Bodleian Library to educate himself through extensive reading, an experience that shaped his wider interests in history, jurisprudence and economics.
Smith stayed at Oxford until 1746, leaving prematurely after periods of illness, possibly related to stress or nervous exhaustion. Reflecting on these years in The Wealth of Nations, he contrasted the vibrancy of Scottish universities with what he perceived as the intellectual stagnation of institutions in England.

Academic Career in Scotland

In 1748 Smith began delivering public lectures in Edinburgh under the patronage of the Philosophical Society of Edinburgh. His early lectures focused on rhetoric, belles-lettres and the progress of opulence, marking the beginnings of his economic thinking. These lectures attracted significant attention and cemented his reputation within intellectual circles.
In 1751 he was appointed Professor of Logic at the University of Glasgow, and the following year became a member of the Philosophical Society of Edinburgh. Shortly afterwards he succeeded to the Chair of Moral Philosophy at Glasgow, a position he held for thirteen productive years. Smith later described this period as the happiest and most useful of his life.
At Glasgow, he lectured on ethics, jurisprudence, political economy and social theory. His 1759 publication The Theory of Moral Sentiments emerged from these lectures. The work developed a sophisticated account of morality based on mutual sympathy—comparable to the modern notion of empathy—exploring how individuals judge actions through the imagined perspective of an impartial spectator. This approach distinguished him from earlier moral sense theorists and signalled a shift away from the utilitarian framework associated with David Hume.
The wide influence of The Theory of Moral Sentiments attracted students from across Europe to Glasgow, solidifying Smith’s reputation as a leading thinker of the Enlightenment.

European Travels and Further Intellectual Development

In 1763 Smith accepted a prestigious tutoring appointment from the Chancellor of the Exchequer, Charles Townshend, to instruct his stepson Henry Scott, 3rd Duke of Buccleuch. Smith resigned from his professorship in 1764 to take up this role, attempting unsuccessfully to return the portion of his teaching fees for the incomplete term—a gesture his students refused, reflecting his popularity.
His position enabled him to travel widely across Europe, including France, Switzerland and other centres of Enlightenment thought. During this period he met distinguished intellectuals such as François Quesnay, Anne-Robert-Jacques Turgot and other leaders of the Physiocratic school. These encounters enriched his understanding of economic production, agriculture and industry, and contributed to the development of the ideas later expressed in The Wealth of Nations.

Economic Philosophy and Major Contributions

Smith’s reaction to prevalent mercantilist policies—where states sought to accumulate wealth by restricting imports and promoting exports—formed the backdrop to his economic theory. He countered the mercantilist belief that national wealth lay in stocks of gold and silver, arguing instead that labour was the true source of a nation’s productive capacity.
His most significant contributions include:

• Division of labour: He argued that productivity increases when tasks are broken into specialised operations, providing his famous example of the pin factory to illustrate dramatic improvements in efficiency.
• Absolute advantage: Smith proposed that countries benefit from specialising in goods they can produce more efficiently than others, laying early foundations for modern trade theory.
• Rational self-interest: He theorised that individuals pursuing their own interests, within a framework of competition and justice, indirectly promote economic prosperity for society—an idea often summarised through the metaphor of the “invisible hand”.
• Critique of mercantilism: Smith rejected the notion that state intervention should dominate economic life, instead advocating for freer markets underpinned by competition and limited regulation.

This body of thought positioned The Wealth of Nations as the first comprehensive account of political economy and established Smith as a foundational figure in the discipline.

The Wealth of Nations and its Impact

Published in 1776, An Inquiry into the Nature and Causes of the Wealth of Nations became Smith’s magnum opus and marked the formal birth of classical economics. The work examined the structure of markets, the dynamics of capital, the importance of free exchange and the role of government in ensuring justice and maintaining public goods.
Smith’s analysis ranged across topics such as taxation, public expenditure, monetary theory and the functioning of labour markets. His rejection of divine explanations for economic structures and his emphasis on empirical observation distinguished his work from earlier interpretations of wealth and power.
The Wealth of Nations also influenced political movements advocating economic liberalisation and inspired later economists including David Ricardo, John Stuart Mill and, indirectly, Karl Marx.
Smith’s writing style, however, did not always meet universal approval; some contemporaries satirised his methodical and sometimes dense prose, though his intellectual influence remained undeniable.

Later Life and Legacy

After returning to Britain from his European travels, Smith lived modestly and devoted much of his time to revision of his earlier work, particularly The Theory of Moral Sentiments, which he updated in several later editions. He continued to correspond with leading thinkers and remained engaged in intellectual life until his death in 1790.
Smith’s legacy extends well beyond economics. His moral philosophy, jurisprudence and political theory continue to shape debates in ethics, governance and public policy. His twin emphasis on sympathy and rational self-interest reflects a nuanced understanding of human behaviour, while his economic theories underpin many aspects of modern economic analysis.