Adam Smith, one of the most outstanding and influential thinkers in modern history, was born on June 5, 1723 in the Scottish town of Kirkcaldy. Few people left such a strong and useful legacy to humanity as he did.
He wrote only two books: The Theory of Moral Sentiments (1759) and The Wealth of Nations: An Inquiry into Nature and Its Causes (1776). However, these two works have made a huge contribution to mankind’s overcoming of the state of almost universal poverty and its transition to a long era of prosperity and improvement of the human condition.
The publication of the book on the wealth of nations became a revolutionary event – an intellectual upheaval felt by the whole world. The work presents the economic system that existed at that time in all European countries and Western colonies. The detailed and pervasive economic regulations that burdened the British economy in the 18th century were well known and often circumvented, as were systems of economic control in other countries. But while many people were unhappy and complaining, Adam Smith questioned the very idea of regulation, giving birth to a new branch of knowledge: economic science (economy).
Smith studied at the universities of Glasgow and Oxford, and then taught moral philosophy at the universities of Edinburgh and Glasgow. The book “Theory of Moral Sentiments” was written and published during the period when he was a professor of the latter (1751-1763).
However, Adam Smith’s ideas changed the world. While European governments regulated, controlled and restricted economic life, an important intellectual and ideological revolution took place in the background. Although the Napoleonic Wars devastated Europe, some people read The Wealth of Nations, and by the end of the Napoleonic Wars, Adam Smith’s ideas were quite well known and influential among liberal thinkers. It is true that government policy did not immediately reflect this spread of ideas about economic freedom. In the first stage, protectionism intensified even more, especially in Great Britain, where the so-called “grain laws” operated (Corn Laws) sharply limited the import of wheat from abroad to protect the interests of landowners (lessors).
But beginning in the 1820s and 1830s, a group of supporters of free trade emerged that later became the Corn Law Repeal League (Anti-Corn Law League). With determination, dynamism, and argumentation largely inspired by the ideas of Adam Smith, this coalition succeeded in 1846 in removing almost all protectionist restrictions on agriculture. The victory was quickly followed by the relaxation and abolition of restrictions on the import of goods and raw materials used in industry.
In the period 1850-1880, the tendency to strengthen economic freedom and liberalize foreign currencies spread impressively in other parts of Europe, as well as in North America. As a result of the global expansion of the British Empire in the 19th century, the principles and practices of free trade, investment and labor migration spread throughout the “civilized world”, which they transformed into a global space of freedom and economic prosperity. By the end of the 19th century, most economists and politicians realized that the increasing internationalization of trade and culture, resulting from the free movement of people and goods, freedom of association, and freedom of travel, created mutual benefits for all parties involved.
However, protectionist, interventionist, and militarist ideas and policies made a comeback in the late 19th and early 20th centuries as a result of measures taken by some political leaders in Western countries to change the role of the state in society. Thus, Bismarck – in Germany, Gladstone and Disraeli – in Great Britain, and after him F. Roosevelt – in the USA imposed the idea of state responsibility for the welfare of the population. This new type of state was called the “welfare state” (Socialmember) or “welfare state” (General welfare state).
Nevertheless, Adam Smith’s ideas, and especially his conception of what he called in The Wealth of Nations a “system of natural liberty,” have repeatedly inspired throughout the last century all who have worked to preserve or restore economic liberty.
According to Smith, the role and responsibility of government in a system of natural liberty is national defense, domestic peace, and justice administered through the courts and the police. He believes that the government has other prerogatives, which modern economic science calls “public goods.” Thus, the government has the task of organizing and financing primary education so that citizens are literate and informed.
It is quite obvious that by the standards of the modern era, when governments intervene in almost every sphere of social and economic life, Adam Smith’s list of governmental functions appears limited in both number and scope. His concept is a fundamentally free society in which each person should be empowered to plan and live his own life as he sees fit, according to his own goals and aspirations, and through peaceful and free association with other people.
That people should be regarded as having “natural freedom” to live their lives as they see fit, free from government interference and control, raises the question of how coordination is achieved among multitudes of people who depend on each other in the simplest needs and luxuries needed in everyday life. Adam Smith outlines the reasons why such coordination is possible based on individual incentives and social mechanisms. In his opinion, people always need the help of others – and would wait for it in vain if we relied only on their good will:
(Man-nn) They would have a much better chance of success if they could channel their ego in his favor and show them that it was in their own interest to do for him what he wanted. Anyone who sets out to bargain with another on any subject is basically offering just that. Give me what I want and I’ll give you what you want, actually the meaning of this proposition is the way in which we get from others most of their goods that we need. We do not expect to receive our dinners because of the benevolence of the butcher, the brewer, or the baker, but because they pursue their own interests. We appeal not to their humanity, but to their self-love – and we never talk to them about our needs, but about their preferences. (Wealth of Nations, Publica, 2011, p. 80). _
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Source: Hot News
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