Adam Smith

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Adam Smith (1787) AdamSmithsignature.png

Adam Smith [ smɪθ ], FRSA (christened on June 5, jul. / 16th June  1723 greg. In Kirkcaldy , Fife , Scotland ; † 17th July 1790 in Edinburgh ) was a Scottish moral philosopher and Enlightenment and is considered the founder of classical economics .



Smith's mother, Margret Douglas

Far less is known about Smith's life than about his life's work. His father Adam Smith Sr. (1679–1723), lawyer and private secretary to the Count of Loudoun, died before he was born. His mother Margaret Douglas (1694–1784), the second wife of Adam Smith Sr., was the daughter of a wealthy landowner and MP. Adam Smith and his mother developed a very close relationship with one another. It was she who encouraged him in his later training. Adam Smith was baptized in Kirkcaldy on June 16, 1723. Smith is said to have been kidnapped at the age of four. However, the kidnappers lost him in the chase, so he could be brought home after a short time. After all, it is said that he graduated from elementary school in Kirkcaldy. What was known, however, was that even in his youth he would go on lost in thought for hours and that this remained one of his “trademarks”.


Adam Smith studied from the age of 14 from 1737 to 1740 at the University of Glasgow and attended lectures by Francis Hutcheson , who influenced him in both his philosophical and economic considerations. Glasgow was characterized by an economic boom at this time and later served Smith as an object of his economic observations. His good graduation in 1740 earned him a scholarship that enabled him to continue studying.

From 1740 to 1746 he studied philosophy at Balliol College , Oxford. However, he did not feel very well in Oxford, which was then quite tranquil. He found the atmosphere backward compared to Glasgow. He had hardly any friends among his fellow students. In addition to the existing anti-Scottish prejudices, the Jacobite Rebellion in 1745 exacerbated the situation. Again and again he suffered from health problems. In a letter to his mother, for example, he reports "a stubborn scurvy with a tremor of the head".


In 1746 Smith returned to Kirkcaldy. He tried to get a job but couldn't find a suitable one. Due to the good relations of the family on his mother's side and the advocacy of the lawyer and philosopher Lord Kames , he was finally given the opportunity to hold a series of public lectures in Edinburgh in 1748/49, which was then considered a prerequisite for a position as a university lecturer. His subjects were extensive: from English literature and rhetoric to philosophy and jurisprudence. In academic circles, Smith was able to gain a large following. His contemporaries report a huge rush of students, although these lectures were not part of the official curriculum. Hardly anything has survived about the content of the lectures; they could only be reconstructed using notes from the students.

In 1751 (other source: 1750), at the age of only 27, he became professor of logic at the University of Glasgow and in 1752 professor of moral philosophy . So he took over Hutcheson's chair and was better paid. Moral philosophy covered a wide spectrum from theology to political economy to ethics, with Smith's level of instruction being rated as high. His students were 14 to 16 years old. The language of instruction was Latin , but Smith was soon one of the first to teach in English .

During this time he became friends with the philosopher David Hume .

His first major work, Theory of Ethical Sentiments (1759, "The Theory of Moral Sentiments") was a success and quickly made him known. It dealt with human nature and its relationship to society . Not a higher authority, but man himself set his limits. The enlightener Smith therefore had a rather positive view of human behavior and does not accept the somewhat crude worldview that z. B. manifested in Thomas Hobbes ' Leviathan . According to Mario Vargas Llosa , Smith explains "sympathy" as a natural feeling of togetherness and "how interpersonal relationships are formed that allow a society to function instead of breaking apart or imploding"

Educational trip

In 1763 he resigned his professorship and took on the financially lucrative post of tutor to young Henry Scott, 3rd Duke of Buccleuch . He was the stepson of Charles Townshend , who was very impressed by Smith, and was accompanied by Smith from the beginning of 1764 to the end of 1766 on his educational trip to the European continent (France, Switzerland). Those three years of service earned Smith a life annuity of £ 300 annually.

During the first part of this trip, he and his protégé spent a whole year in Toulouse , where there was a large English colony. Since he did not yet have a good command of French, he was unable to gain a foothold in French society in this very important city at the time and he had a lot of leisure. He therefore began to write a book in 1764 ( The Wealth of Nations ).

Further stops on the trip were visits to Voltaire in Geneva and Paris, where his old friend David Hume, who was attaché at the British embassy at the time, introduced him to the Parisian salons. From this time came his personal acquaintance with the economists Turgot and François Quesnay , the leading figures of Physiocratism . This acquaintance was certainly a key experience for his economic studies. The trip had to be abruptly interrupted in 1766 because the Duke's younger brother, who was taking part in this trip, suddenly fell ill and died shortly afterwards.

Last years

Smith's grave in Canongate Kirkyard in Edinburgh

Upon returning to Great Britain, Smith began work on his magnum opus : The Wealth of Nations appeared in 1776 and became an overwhelming success. Translations soon followed, including into German. Smith re-describes the impact of self-interest on society. People tend to trade and barter and want to improve their living conditions. Wealth comes from human labor . Smith explains the importance of division of labor and specialization for prosperity.

Smith spent most of the next eleven years in his native Kirkcaldy. When he was appointed Customs Commissioner for Scotland in 1778, he moved to neighboring Edinburgh . As a customs inspector, Smith was rigorous in the fight against militant tea and brandy smugglers. Letters record how he called the military to help and, together with his colleagues, had old ship hulls set up as troop bases on the coast. Within two years he managed to reorganize the severely ailing Scottish monetary system. During this time he became friends with the chemist Joseph Black and the naturalist and geologist James Hutton . In 1783 he was a founding member of the Royal Society of Edinburgh .

Smith did not live to see the triumph of the steam engine of his friend, inventor James Watt , he died in 1790. After his death, numerous private records were destroyed at Smith's will.

Smith must have matched the image of the "absent-minded professor". There are a number of anecdotes that describe how he led a predominantly spiritual existence. He is said to have talked to himself all his life and was once found in a dressing gown on the street. On the basis of his economically critical views, however, it can also be noted that Smith may not have just made friends among the entrepreneurs who might have had the necessary influence to use falsification to create a bizarre image of his personality about which very little has been passed down anyway create in order to be able to question his theses. On the other hand, Smith is said to have been extremely polite. His friend David Hume described him in a letter: "You will find in him a truly deserving man, although his sedentary, withdrawn way of life has tarnished his demeanor and appearance as a man of the world." Smith made several marriage proposals, all of which were rejected. He built up a sizable private library.



Smith's impact on economics was astounding. His subjects were the role of the division of labor and the role of the free market , the issues of distribution , foreign trade and the role of the state .

Smith's lectures in moral philosophy formed the basis for the publication of his major philosophical work Theory of Ethical Emotions in 1759 . In it he describes the sympathy for fellow human beings as the basis of morality and as the mainspring of human work .

The first page of his major work An Inquiry into the Nature and Causes of the Wealth of Nations

1776, the first edition was published his famous economic magnum opus The Wealth of Nations - An Inquiry into the Nature and Causes (Original title: An Inquiry into the Nature and Causes of the Wealth of Nations ) on which he had worked since his trip to France. The appearance of this book is seen as the birth of English economics, as the economic writings published before Smith were not considered scientific because they were written from the perspective of the state (cameralistic) or certain economic operators (e.g. handbooks for merchants). Some economists see a contradiction between the two works, which is addressed as the Adam Smith problem in the economic literature.

In Wealth of Nations he describes work (Latin industria , English industry , hence the name of the Smith system as an industrial system ) as the source and measure of the value of goods. This marked the beginning of the replacement of nature as the most important resource for the production of goods, because for the physiocrats nature was still the only source of value. In contrast to the view of the mercantilists and physiocrats, all useful work is productive for him (therefore, in Smith's case, the work of an opera singer or a writer is not included). With the French physiocrats, he describes free competition, which is not hindered by strict state intervention, as the basis of a division of labor leading to social wealth. According to Smith, free internal and international traffic not only effects an expedient spatial and temporal distribution of forces and resources, as well as the equalization of prices and profits , but also the best promotion of the common good. The fact that he not only worked effectively as a customs commissioner, but also pleaded for the strictest restriction of foreign trade through the English navigational act, was not a contradiction for him, as he gave national defense a higher priority than prosperity. He did not understand freedom of trade as a principle that should always apply regardless of real economic developments, but also under the current political and economic situations. For example, Smith advocated B. also the same taxation for merchandise imported from abroad, which also burdens domestic production to the same extent. In the book he also dealt for the first time with questions of exchange rate parity , which for him was related to the debt equality between two countries.

Smith was therefore considered the founder of economics as a science , because he connected a social point of view with it. The economy was one of his teaching tasks as a moral philosopher. One of the core Aristotelian questions of philosophical ethics to which Smith devoted himself as a moral philosopher is: "Which is more significant: general, social happiness or personal, individual happiness?" Smith answered them in the wealth of nations with the aid of empirical inferences. His conclusion: The general, social happiness is maximized in that every individual tries to increase his personal happiness within the framework of his social limits. These social boundaries are what he called the “inner judge” who asks every action whether it is socially recognized and legitimized. Smith anticipates Freud's later superego, which was then explained and described in terms of social history by Norbert Elias (Norbert Elias, “About the process of civilization”, 2 vols., Suhrkamp Verlag FFm). The invisible hand , which increases social wealth through market events, also increases general social happiness - even if more or less only by chance. The distribution of goods over the market does not make everyone equally rich, but the servants and day laborers can benefit from the wealth of the landowners and manufacturers, because even the rich cannot eat more than their stomachs can hold. The generalization of the idea of ​​the market into a universal guiding principle cannot therefore invoke Adam Smith and is still controversial today.

Smith begins the first chapter of Wealth of Nations with an examination of the division of labor, which he believes is central to growing prosperity: "The division of labor is likely to promote and improve the productive forces of labor more than anything else" (WN, chap. 1 ). He shows the effect of the division of labor using the example of pin production - an example he took from the French Encyclopédie. If the division of labor had not turned the needle production into an independent trade with special machines, a worker who was not specially trained in this trade could "certainly not produce twenty needles and perhaps not even one needle a day". In contrast, in a small, specialized factory, ten workers produce around 48,000 pins a day, and thus each worker 4800 pins. "And this enormous increase in production in all trades, as a result of the division of labor, leads in a well-governed state to general prosperity, which is noticeable even in the lowest strata of the population" (WN, Chapter 1).

The division of labor developed on the basis of people's innate tendency to exchange: “Just as negotiating, exchanging and buying is the means to provide each other with almost all useful services we need, the tendency to exchange ultimately also provides the impetus Division of labor. ”According to Adam Smith's observation, only humans have the natural tendency to exchange:“ This characteristic is common to all humans, and it is not found anywhere in the animal world…. Nobody has ever seen a dog honestly and carefully exchanging one bone for another bone with another ... ”(WN, Chapter 2).

The concept of the invisible hand, often associated with Adam Smith, is popular . Smith used this metaphor of the wealth of nations, familiar to his contemporaries, in one place, and that was a chapter on trade restrictions. He shows there that the individual, precisely because he wants to increase his productivity and income out of self-interest, promotes the interests of society more than if he had wanted to promote this interest directly: “In this as well as in many other cases, he becomes of guided by an invisible hand to further a purpose he had no intention of fulfilling ”(fourth book, chap. 2).

He differentiates between the natural price and the price actually paid, the market price . He assumes that common or natural rates for wages, capital gains and basic rent exist in every society . “A commodity is then sold at what is called its natural price, if the price corresponds exactly to the amount that is sufficient, according to natural rates, to pay the rent, wages and capital gains which arise when the product is produced is produced, processed and brought to market. ”By market price , Smith understands“ the actual price at which a commodity is usually sold…. It can either be higher or lower than the natural price or it can be exactly the same ”. If the market price is above the natural price, the supply will increase, since the production of this product is worthwhile. If, on the other hand, it is lower, then it is not sufficient to cover the wages, capital gains or basic rent required for the production of the commodity according to natural rates. The self-interest of the individual workers, businessmen and landowners ensures that supply is increased in the first case and decreased in the second. An excessive market price increases the supply, whereby the market price falls. If the market price is too low, the supply decreases, which in turn increases the market price. "For this reason, the natural price is, as it were, the central one towards which the prices of all goods are constantly striving." This mechanism is usually paraphrased as the invisible hand of the market, Smith himself using the metaphor of the invisible hand elsewhere in the prosperity of nations used.

Monopolies and cartels (e.g. guilds ) that hinder free competition were particularly harmful to Smith. A famous passage in the Wealth of Nations (first book, chapter 10) reads:

“Businesspeople in the same trade seldom get together, even for parties and entertainment, without the conversation ending in a conspiracy against the public or some plan being hatched to raise prices. It is impossible to prevent such gatherings by any law that is practicable or compatible with freedom and justice, yet the law should not give any reason to facilitate such gatherings, much less to make them necessary. "

In Smith's day, despite the certain increase in production he observed, the poverty of large parts of the population was striking. He devotes himself intensively to their investigation. "I have often heard that it is not uncommon in the Scottish Highlands that a mother can only keep two of her twenty children alive" (First Book, Chapter 8; the three other quotations from this).

When it comes to wage negotiations, Smith sees workers in a much weaker position than entrepreneurs. Smith explains this by saying that because of their smaller number, it is much easier for entrepreneurs to unite and form a kind of wage cartel than workers.

“But whoever fancies that the masters seldom combine, understands just as little about the world as about this matter. The masters are always and everywhere in a kind of tacit, but continuous and uniform agreement not to let the wages rise above its current rate ... Sometimes the masters also enter into special alliances in order to push the wages even below its rate. "

Workers hardly succeeded in joining forces of this kind, partly because of their large number and also because workers' associations were forbidden by law at the time. However, Smith was also critical of groups of workers:

“Often, however, such connections (among the masters) are resisted by an opposing defensive connection of the workers, indeed sometimes they agree to meet without such a challenge to raise the price of their work by themselves. Their usual pretext is now the dear price of food, now the great profit which the masters get from their work. But whether these connections are offensive or defensive, they will be noticeable enough at any time. In order to bring the matter to a quick decision, they always shout loudly and sometimes commit the most violent acts of violence and mistreatment. They are desperate and act with all the folly and debauchery of desperate people who either starve to death or must terrify their masters in such a way that they immediately consent to their desire. The masters, for their part, behave no less noisy on such occasions, ceaselessly and urgently calling for the assistance of the authorities and demanding the strict execution of the laws which are given with such great intransigence against the associations of servants, workers and journeymen. Hence the workers very seldom benefit from these violent and impetuous connections, which are rather partly through the intervention of the authorities, partly through the superior perseverance of the masters, partly through the fact that the greater part of the workers is forced to deal with the daily routine Subordinate for the sake of maintenance, usually have no other end than the punishment or ruin of the ringleaders. "

Smith advocates the free labor market, where supply and demand determine wages:

“There are, however, certain circumstances which give workers an advantage and enable them to raise their wages far above what is evidently the lowest that is compatible with the most common humanity. If in a country the demand for those who live on wages - workers, journeymen, servants of all kinds - grows continuously, if every following year gives a greater number of the same employment than the previous one, the workers have no reason to increase of wages to connect. The lack of hands creates competition among the masters who, in order to get workers, drive each other up and thus automatically make the masters' natural agreement not to let wages rise ineffective. "

Wage increases are, according to Smith, a necessary consequence of economic growth, whereby it is not the absolute level of national income but rather its steady rise that is decisive: “It follows that it is not the affluent countries in which wages are highest, but those that are develop fastest or get rich quickest ”. Smith explains this using the example of North America, which was rising at the time. Wages there were higher than in England, which was then richer at the time. Based on his observations at the time, Smith examines the relationship between wage levels and population trends. “People are dependent on their work for a living, and their wages must be at least high enough that they can survive on it. In most cases it has to be even higher, since otherwise it would not be possible for the worker to have a family; his shift would then die out with the first generation. ”When the pay for work rises, the poor can better care for their children and consequently raise more of them. “It should not be overlooked, however, that this can only be done to the extent that the demand [of employers] for work increases. [...] If wages were to stay below the required level, the labor shortage would soon push them up again. On the other hand, if it were ever higher, the excessive increase would very soon depress it again to the necessary height. In one case the market would be undersupplied with workers, in the other oversupplied, so that the market forces would level the wages at a level that corresponds to the respective conditions in the country. "Smith rejects a statutory fixing of wages:" Like us experience seems to teach, one can never reasonably determine its amount [= the amount of wages] by law, although this is often claimed ”(quotations from WN, First Book, Chapter 8).

Smith is characterized by his empirical and historical approach. All of his conclusions are always backed up by observations and, in some cases, intensive source study on past price developments (see Ian Simpson Ross: Adam Smith. Chapter 14).

Other publications by Adam Smith include A Dictionary of the English Language by Samuel Johnson, which he published anonymously in 1755 , and several essays under the title Essays on Philosophical Subjects , which were published in 1795 after his death. Smith burned all of his notes and manuscripts in the presence of his friends. He wanted to prevent leaving the world with something unfinished.

Capital markets

Smith was against a general ban on interest: "As experience shows, the ban on interest has increased the evil of usury, instead of preventing it" (2nd book, chapter 4). However, he considered the statutory fixing of a maximum interest rate, as was the case in England during his time, to be entirely sensible. In his view, this statutory maximum interest rate should always be somewhat above the usual market interest rate that debtors usually pay for lending money. If it were set at a lower level, this statutory interest rate would have the same or almost as harmful effect as a general interest ban.

However, the statutory maximum interest rate should not be too much above the usual market interest rate. "If it were 8 or 10% in England, for example, the loan money would largely go to dubious business people and plan makers (original English: prodigals and projectors), since only they would be willing to pay this high interest" (2nd book , Chapter 4). This reflects Smith's experience with the capital market bubble at the beginning of the 18th century, the so-called " South Sea Bubble ". He believed that a maximum interest rate prevents a country's capital from being withdrawn from those solid businessmen who are most likely to use it for profit and gain. “Wherever the legal interest rate is set just a little above the lowest market rate, the lenders prefer the solid businessmen to the others, because they receive almost as much interest as they risk taking from the dubious ones, and their money is also invested much more safely is. "

State theory

Smith saw social prosperity best realized in a system of natural freedom . Quesnay's demand for freedom of trade, in order to make grain more expensive and thereby help agriculture, turns into the utopia of free trade that increases the country's prosperity.

His state theory assumes that the division of labor makes the relations of production so complicated that individual planning by the state no longer makes sense and it is better to allow private interests to be pursued, which would best serve the creation of social wealth.

The logical consequence is a civil constitutional state that does not perceive its own interests, but only provides social framework conditions. According to Smith, the state has four central tasks:

  1. Organization of national defense;
  2. Protecting every member of society from injustice and oppression;
  3. Establishment and maintenance of public institutions, the establishment or maintenance of which by private parties would not be possible, but which are nevertheless important for the general public, for example teaching and transport;
  4. Enforcement of private property.

Securing universal education through the state was a very important issue for Smith, as he saw the dangers of the division of labor he advocated. This means the dumbing down of workers who only carry out a few movements. The state should make school education accessible to the "common people" (WN, Fifth Book, Chapter 1):

“The education of the lower classes in a civilized and trading society may require the attention of the state more than the education of the noble and wealthy. Distinguished and wealthy youths have usually already reached their eighteenth or nineteenth year before they enter a special business, office or trade through which they want to earn honor in the world. So they have enough time beforehand to acquire all the skills that will allow them to commend themselves to public respect or make themselves worthy of them, or at least to prepare for their acquisition ... The state can facilitate the learning of these subjects by teaching in every parish or Districts have set up a small school in which the children are taught for such a low school fee that even the meanest day laborer can afford it. The teacher has to be paid in part, but only in part, by the state, because if he were to be paid entirely or even mainly by him, he could soon learn to neglect his official duties ... The state can encourage learning the most essential Subjects of instruction when he gives small bonuses and decorations to the children of the common people who excel at them. The state can make the learning of those subjects of instruction an indispensable condition for people from the common people class, if it subjects everyone to an examination in them before he is allowed to obtain guild rights or to establish himself commercially in a village or town. "

This required education enables the common man to climb out of his birth situation, which he can achieve through his own diligence. Smith spoke out in favor of competition at universities (WN, Book Five, Chapter 1):

“The mild endowments of all kinds of scholarships attract a certain number of students to particular schools, regardless of whether the schools are good or not. If it were left to the students who enjoy such mild endowments to choose which school they want to choose, this liberation could perhaps serve to arouse competition among the various schools. An ordinance, however, which forbids even the independent members of each individual teaching institution to leave them and to go to another without having previously sought and received the permission of the teaching institution they want to leave to go to another, has to suppress this competition. "

From today's perspective it is remarkable that Smith, even in contrast to many of his contemporaries such as James Stewart, did not see a primary state task in securing employment. Smith assumed that with free trade, the labor and capital of a country migrate to where they are used comparatively cheaply. This happens when domestic producers are no longer competitive compared to cheaper or qualitatively superior imports. Domestic producers are thereby induced to produce more efficiently than before or to switch to production of other goods in which they are competitive. Some domestic producers will go bankrupt. These mechanisms lead to labor and capital migrating to other branches of industry - an effect of the international division of labor.

It is quite clear to him that this is a mechanism that cannot be mastered with the same ease for all those involved: While the investor can shift his money from one business to the other without major problems, it is for the entrepreneur, who cannot himself is only a merchant, but has built up a more complicated division of labor, just as it is much less easy to change for the worker, who has developed an attachment to the place of work, his people and his environment, and in any case always associated with higher losses, if not at all by dismissal with unemployment. Therefore, Smith is open to temporary subsidies to businesses affected by foreign trade.

With Smith there are ethical reasons that make it politically necessary to reduce tariffs only slowly and considerately when an industry that was previously protected from foreign competition had developed so well that it had employed large numbers of workers. Because "a sudden lifting of the high tariffs and import bans could lead to such a rapid flooding of the domestic market with the same but cheaper foreign goods that overnight thousands of our compatriots would see themselves deprived of their jobs and thus of their livelihood". He is also looking for a just solution for the entrepreneurs: “The entrepreneur of a large manufacture would undoubtedly suffer very considerable losses if the domestic market were suddenly opened up to foreign competitors and he should be forced to give up his business. That part of his capital that he has hitherto used to buy raw materials and to pay the wages of his workers should probably find an investment in other trades without any difficulty worth mentioning, but he could well invest the other part in workshops and machines hardly sell without significant loss. Out of consideration for its legitimate interests, it is therefore necessary to never make such changes suddenly, but slowly, gradually and only after a correspondingly long notice period. "

The central function of the state remains to protect private property from encroachment and to ensure compliance with contracts. Smith, however, lived in the age of European mercantilism , which was mainly centered on the control of foreign trade and thus interventionism , against which Smith argued heavily. Nevertheless, Smith considered the mercantilism practiced in England at the time to be generally more liberal than those in many neighboring countries such as France.

Adam Smith was held in high regard by some of the great British politicians of his time. On his return from France he became an advisor to the British Chancellor of the Exchequer. In 1787, he met multiple times with Prime Minister William Pitt, who was an ardent admirer of the wealth of nations and a passionate advocate of Smith's free trade principles (see DD Raphael, Adam Smith ). Adam Smith was also friends with the American founding father Benjamin Franklin . During Franklin's stay in London, he discussed with him (and others) every chapter of the then planned work Wealth of Nations . Adam Smith was also an employee of the Scottish merchant Andrew Cochrane of Brighouse (1693–1777) founded Political Economy Club , where Smith also received economic information, which he brought with him in his work "The Wealth of Nations".

Adam Smith heavily criticized the colonial policies of England and other European states, especially Spain: “Folly and injustice were apparently the predominant motives and determined the first plans for the establishment of the colonies: the folly of chasing gold and silver, and the injustice of owning a land to desire whose innocent natives were far from ever offending a European ”( Prosperity of Nations , fourth book, chap. 7 ). In contrast to the mercantilists, Smith saw no state task in supporting gold and silver imports. For him it was not even certain that the amounts of gold that flooded in via Spain from South America would be beneficial for Europe at all: it made gold products such as jewelry and silver cutlery more affordable; on the other hand, the use of gold as a means of payment has been diminished. You had to carry larger amounts of gold with you in order to have the same purchasing power (WN, 4th book, chapter 1).

Smith argued in favor of the abolition of slavery for both moral and economic reasons: "Experience at all times and in all races shows, I believe, that the work of a slave is ultimately the most expensive." Only very profitable Plantations like tobacco or sugar can (still) bear the high costs of slavery, says Smith. The reason why the work of slaves is sometimes preferred to that of free men is the pride that makes man domineering and leads to nothing more offending him than having to condescend to convince subordinates ( prosperity of nations , third book, chapter 2: “The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors”). Also in Book Four, Chapter 7, Smith noted that slaves enjoy more protection in a state with an arbitrary government than in a free one:

“If the law protects the slave to some degree against the violence of his master, it will be more closely obeyed in a colony whose government is largely arbitrary than in one where it is entirely free. In every country where the unfortunate law of slavery applies, the authorities, when they protect the slave, interfere more or less in the administration of the master's private property and may do so in a free country where the master is either a member of a colonial assembly or is a voter of such a member, only allow himself with the greatest caution and caution. "

Smith's writings, among others, formed the theoretical foundation of later Manchester liberalism .


Joseph Schumpeter writes of Smith's work in History of Economic Analysis (1954) that it “does not contain a single analytical idea, method or principle that was entirely new in 1776.” Schumpeter also titled Smith's contribution to The Theory economic development as historical sociology without economic relevance.

The greatest criticism of Smith and the 170 years of Smith research was probably formulated by Murray Rothbard in his work published in 1995. According to Rothbard, Smith enjoys a reputation as an exponent of the free market economy completely wrongly. The central criticism is Smith's conclusion that value is determined by the objective cost of production and not by the subjective assessment of the consumer. With this elementary mistake Smith is said to have formed the theoretical foundation for Marxism and, moreover, negated the progress of his talented predecessors and put economics on the wrong path.

Adam Smith

Adam Smith was very critical of limited liability companies, especially public limited companies. PJ O'Rourke therefore noted that Smith had not foreseen the great importance that public companies would later attain and had therefore misjudged this institution. The criticism relates to a passage in the fifth book in the wealth of nations. Accordingly, shareholders seldom understand the business of the company. Public companies are run by directors who manage other people's money. "Therefore, negligence and waste in the management of such a company must always prevail more or less" (WN, fifth book, 1st chapter, part 3). PJ O'Rourke also notes that Adam Smith did not foresee the extent of the industrial revolution, which essentially began after his death. This although Adam Smith was friends with James Watt and admired his invention. According to PJ O'Rourke, Smith did not foresee the industrial revolution because, in his opinion, it had already taken place during his lifetime.

James Buchan criticizes Smith for describing a static world in which neither population growth nor population decrease nor innovative entrepreneurs occur. Smith describes innovation solely in terms of incremental improvements. Entrepreneurs who introduce pioneering inventions, such as Thomas Edison, who are often at the center of modern economic analysis, are dismissed by Smith as "projectors" who generally waste tight capital on unprofitable ideas.

James Buchan as well as Helen Winter & Thomas Rommel criticize the fact that Smith almost completely ignores the importance of women as participants in business life. In this way, H. Winter & T. Rommel remarks, weakening in a certain way, a general understanding of the 18th century, which did not see femininity as socially equivalent.

Adam Smith attacked very thoroughly all the restrictions with which mercantilist states hindered the cross-border movement of goods and capital. Alan Wolfe noted that, oddly enough, Smith has almost nowhere argued in favor of removing barriers to emigration and immigration. Aside from a side note in the section on the better bargaining position of workers in the North American colonies, nowhere does the Wealth of Nations provide a detailed examination of the benefits of allowing workers to seek the best work opportunities across borders.

Smith argues extensively in the prosperity of nations with historical examples, but his approach does not correspond to historical orthodoxy from the point of view of RH Campbell and AS Skinner. The historical material used by Smith is meaningful only to make his analyzes understandable. This becomes problematic in cases where the historical material is central to Smith's reasoning. At the end of the first chapter of the third book, he writes: “According to the natural course of things, in every developing country capital is first directed primarily into agriculture, later into industry and, last but not least, into foreign trade. So natural is this order of things that in every country I believe it has been followed to some extent. ”In the next paragraph, Smith turns this“ natural course of things ”on its head in the face of actual historical facts:

“Although this natural development should have taken place to a certain extent in every country, it has in many ways been completely reversed in all modern states of Europe. Foreign trade in some cities has imported all the finer manufactured goods or those suitable for long-distance trade. Together, trade and foreign trade initiated the decisive progress in agriculture. "

In the next two chapters of the third book, the "historian" Smith explains how the increase in prosperity has occurred in a manner different from the "natural course." It becomes clear here that when using the wealth of nations as a historical source, certain tensions between the analytical “speculative” representation of historical development and the “orthodox” historiography must be taken into account.

Alan Greenspan says it is amazing that our ideas about the effectiveness of the market and free competition today are essentially contained in the thoughts of Adam Smith. Greenspan describes Smith's wealth of nations as one of the greatest achievements in intellectual history.

Amartya Sen called the contribution of Smith's wealth of nations to our understanding of what later came to be called capitalism monumental. His findings are important to this day. According to Sen, Smith did not consider the pure market mechanism to be sufficient. For the functioning of a market economy, trust between the actors, including the banks, is also essential. Smith explained in his work the mechanisms that lead to this trust being sometimes disturbed. Sen said he would not find the current problems facing companies and banks puzzling.


Monument to Adam Smith in front of St. Giles Cathedral in Edinburgh

Smith adorns the new 20 pound sterling banknote of the Bank of England, introduced on October 30, 2006 and issued on March 13, 2007 . His portrait had previously appeared on a £ 50 banknote in a Scottish bank. In Edinburgh, since July 2008, a memorial to Adam Smith has been commemorating not far from St. Giles Cathedral.

In memory of Smith, the National Association for Business Economics has awarded the Adam Smith Prize since 1982 and the Ecological-Social Market Economy Forum (FÖS) has awarded the Adam Smith Prize for market-based environmental policy since 2004 .


Inquiry into the nature and causes of the wealth of nations , 1922


  • Inquiry into the nature and causes of national wealth: newly translated from the English 4th edition. Original title: An inquiry into the nature and causes of the wealth of nations . Published in 3 volumes. Korn, Breslau [u. a.] 1799 digitized


  • Katrin Marçal: Who Cooked Adam Smith's Dinner? A Story of Women and Economics. 2016, Pegasus.
  • Michael S. Aßländer : Adam Smith for an introduction. Series: To the introduction, 341. Junius, Hamburg 2007, ISBN 978-3-88506-641-5 .
  • Reinhard Blomert: Adam Smith's trip to France or the emergence of political economy . The Other Library, 2012.
  • Thomas Rommel, Helen Winter: Adam Smith for Beginners: "The Prosperity of Nations". dtv, Munich 1999, ISBN 3-423-30708-0 (an introduction to reading. Original edition, dtv non-fiction / culture & history 30708).
  • Thomas Rommel: The self-interest from Mandeville to Smith. Economic thinking in selected writings from the 18th century. Series: Anglistische Forschungen, 367. Winter, Heidelberg 2006, ISBN 3-8253-5239-0 (also habilitation paper at the University of Tübingen 2000).
  • Karl Ballestrem: Adam Smith . Series: Beck'sche series: Denker, 561. CH Beck, Munich 2001, ISBN 3-406-45976-5 .
  • Peter Bendixen : The dream of the prosperity of nations. Critique of Economic Reason, Facultas / Wiener Universitätsverlag, Vienna 2005, ISBN 3-85114-887-8 .
  • Norbert Waszek : Adam Smith in Germany, 1776-1832. In: Hiroshi Mizuta, Chuhei Sugiyama (eds.): Adam Smith: International Perspectives. Macmillan, London; St. Martin's Press, New York 1993, ISBN 0-312-08937-6 , pp. 163-180.
  • Bernd Otto Weitz: Important economists. Oldenbourg, Munich 2008, ISBN 978-3-486-58222-2 .
  • Ian Simpson Ross: Adam Smith. Life and work (original title: The Life of Adam Smith. Translated by Hans Günther Holl). Publishing house economy and finance, Düsseldorf 1998, ISBN 3-87881-123-3 .
  • Patric Jake O'Rourke: Adam Smith. From the prosperity of the nations. dtv, Munich 2008, ISBN 978-3-423-34459-3 (= books that changed the world ).
  • David Daiches Raphael: Adam Smith. Campus, Frankfurt am Main 1991, ISBN 3-593-34487-4 .
  • Eleonore Kalisch: From the economy of passions to the passion of economy. Adam Smith and the Actor-Spectator Culture in the 18th Century. Avinus, Berlin 2006, ISBN 3-930064-68-5 .
  • Nicholas Philippson: Adam Smith. To Enlightened Life. Yale University Press , 2010, ISBN 978-0-300-16927-0 .
  • Siegmund Feilbogen : Smith and Turgot. A contribution to the history and theory of economics. Vienna 1892 (Reprint Geneva 1970).
  • Gerhard Streminger: Adam Smith. Prosperity and Morality - A Biography . CH Beck, 2017, ISBN 978-3-406-70659-2 .
  • Smith, Adam . In: Encyclopædia Britannica . 11th edition. tape 25 : Shuválov - Subliminal Self . London 1911, p. 254–258 (English, full text [ Wikisource ]).

Web links

Wikisource: Author: Adam Smith  - Sources and full texts (English)
Commons : Adam Smith  - Collection of pictures, videos and audio files

Individual evidence

  1. ^ Gerhard Streminger: Adam Smith. Prosperity and morality. A biography. Munich 2017, p. 17f.
  2. Scottish jests and Anecdotes: To Which are Added, A Selection of Choice English and Irish jests of Robert Chambers , Verlag W. Tait, 1832, page 97
  3. Mario Vargas Llosa : The Distractions of Mr. Smith - The Scottish economist Adam Smith has explained better than anyone why certain countries advance and others fall behind. And where the border between civilization and barbarism really lies (Header) Switzerland on the weekend , April 8, 2017, page 20
  4. Reinhard Blomert: Adam Smith's trip to France . The Other Library, 2012
  5. ^ Fellows Directory. Biographical Index: Former RSE Fellows 1783–2002. (PDF) Royal Society of Edinburgh, accessed April 8, 2020 .
  6. 7th requirement of development policy.
  7. Christoph Helferich: History of Philosophy: From the Beginnings to the Present and Eastern Thinking . Springer-Verlag, 2016, ISBN 978-3-476-00760-5 , pp. 202 .
  8. Adam Smith, On the Wealth of Nations: An Inquiry into Its Nature and Causes. 1776. (Reprint: Beck Verlag, Munich 1974, p. 371.
  9. ^ PJ O'Rourke: On The Wealth of Nations. New York, 2007, ISBN 978-0-87113-949-8 , pp. 82-83.
  10. James Buchan: The Autentic ADAM Smith. New York 2006, ISBN 0-393-32994-1 , p. 119.
  11. Helen Winter, Thomas Rommel: Adam Smith for Beginners: The Prosperity of Nations. 3rd edition, Munich 2006, pp. 143-146.
  12. ^ Alan Wolfe: The Future of Liberalism. 1st edition, New York 2009, p. 202.
  13. RH Campbell, AS Skinner: An inquiry into the nature and causes of the wealth on nations. Indianapolis 1979, pp. 50-60.
  14. ^ Alan Greenspan: The Age of Turbulence. Penguin Books, 2008, pp. 260-261.
  15. Amartya Sen: Capitalism Beyond the Crisis. In: The New York Review of Books. Volume 56, Number 5, March 26, 2009
  16. Vannessa Allen: Why not Winston: Anger as little known Scot gets on new note. In: Daily Mirror. October 31, 2006, p. 17.
  18. with a detailed primary bibliography
  19. How good that Adam Smith was a Scot. In: Frankfurter Allgemeine Sonntagszeitung , September 26, 2010, p. 38.