Adam Smith is one of the most influential figures in modern economics. He was a Scottish researcher, philosopher, and author who lived during the 18th century. He significantly contributed to the rise of the current economic system as his theories of division of labor, capital accumulation, and free trade had an immense impact.
In April of 1723, Adam Smith was born to Margaret Douglas and her second husband, a lawyer named Adam Smith, in Kirkcaldy, Scotland. He went on to the University of Glasgow at the age of 14 and received instruction in social philosophy, economics, and moral philosophy.
After graduating from college in 1740, Smith put his education to use as a traveling tutor for three years, teaching the children of the aristocracy throughout Scotland and France. Upon his return to Scotland, he worked as a professor at the University of Glasgow and later at Balliol College, Oxford.
By 1759, Smith had completed his first major work, 'The Theory of Moral Sentiments.' Later, in 1776, he completed his magnum opus, 'An Inquiry into the Nature and Causes of the Wealth of Nations,' which is still widely referenced in economic theory today.
Smith was also a moral philosopher, notably with his theory on the 'invisible hand.' He argued that behavior influenced by self-interest could be harnessed in such a way that it benefits the public good.
A famous phrase by Adam Smith was, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their self-interest." This phrase demonstrated his belief that self-interest and competition drive economic growth.
In Smith's view, an economy would prosper through the 'division of labor. This concept states that economic productivity increases the more people specialize in a particular task, as they can become more efficient due to their training.
Smith was also a leader and proponent of the 'free market,' based on a few government interventions and lower economic taxes. He believed that the actions, decisions, and activities of individuals, not the government, drove an economy.
Smith appreciated foreign trade and argued that exports and imports could mutually benefit even between two countries. He believed this was possible as it enabled both countries to specialize in producing certain goods and services.
He suggested that taxation and tariffs should be low not to impede the free market. Smith felt that government jobs should be very limited in number and size.
Smith also advocated for education, health care, and charities. He believed these would support a healthy society and economic growth.