Adam Smith – Better Known As “The Father Of Economics”
Adam Smith’s Early Life
The Scottish economic thinker and moral philosopher, Adam Smith, is known as the “Father of Economics.” Born in Kirkcaldy, a small village in Scotland, Smith was the son of a comptroller and lawyer who died a few months before his birth. The exact birth date of Adam Smith is unknown. However, he got baptized on June 5, 1723, at Kirkcaldy in Scotland.
Adam Smith’s Education
After graduating, Smith, at the age of fourteen, went on to study moral philosophy at the University of Glasgow. Smith greatly influenced by the philosophical and economic views of Francis Hutcheson, his moral philosophy professor. Moreover, the magnetic character of the famous professor seems to be the shaping force of the developments in Adam Smith. Graduating in the year1740, Smith got a scholarship to study in the Balliol College, Oxford. He spent six years of his life at the Balliol College studying European literature. Spending years on self-education in the educational desert of Oxford, Smith got a stronghold on the classical as well as contemporary philosophy.
- In 1748, Smith received public recognition, when he started giving lectures in Edinburgh on belles lettres, jurisprudence, and rhetoric. At the same time, he met his lifelong friend, David Hume, a former student of Francis Hutcheson. In 1751, Smith appointed as a professor at the University of Glasgow. In 1759, The Theory of Moral Sentiments was published, which included his lectures at Glasgow.
- Smith’s ideas and books were readily spread in Britain as well as in France. He also read as well as a reviewed number of works by Rousseau, Voltaire, D’Alembert, and Helvetius. In 1763, Smith got an opportunity to become a tutor for the young duke of Buccleuch. While serving the role of a travelling tutor, he visited France and got to know the intellectual leaders like Helvetius, Turgot, D’Alembert, and Francois Quesnay. His travels helped him in his writing “The Wealth of Nation.” On returning home, he started working on it and got it published in 1766. The book, written for the legislators, is a rich analysis of the ways how self-interest influences the market processes.
- Smith soon became a renowned public figure, which gave him the opportunity to work as a commissioner of customs in Scotland. There, he helped the government in enforcing the legal laws against smuggling. He spent his last 10 years of his life in the government position, along with his continuous efforts to revise the “Theory of Moral Sentiments.”
- In 1790, Adam Smith took his last breath at the age of 67. He lived a modest life and donated a significant portion of his money to charity. The moral justifications of Smith are indeed a legacy for the commercial society. His works are a foundation for the economics and philosophy of the modern world.
Economic Contributions of Adam Smith
Revolutionizing the economic planning with his ideas, Adam Smith is rightfully known as the Father of Economics. Some of his important economic contributions are:
The Wealth of Nations
It is one of the most important works of Adam Smith. Through this work, he popularized many ideas which form the basis of classical economics. The works of Karl Marx, David Ricardo, John Maynard Keynes, and others are great evidence of Smith’s works. His works talk about human society evolution. Smith brings in the concept of modern society, having laissez-faire markets that allow new institutions to conduct market transactions freely.
Gross Domestic Product (GDP)
The ideas of Smith in “The Wealth of Nations” form the basis of the introduction of the Gross Domestic Product. It brought about a transformation in the export and import business. According to Smith, the wealth of a country depends on its level of production as well as commerce. This concept forms the basis of the GDP metric for the measurement of the prosperity of a nation.
Assembly-Line Production Method
The assembly-line production method is yet another economic contribution of Adam Smith. The ideas of Smith in “The Wealth of Nation” were again the motivating factor for the shift from land-based wealth creation to wealth creation by the assembly-line production method. Smith states that the use of division of labour helps in the development of specialization, which, in turn, produces prosperity.
Philosophy of Free Market
The free-market philosophy lowers the role of taxation as well as government intervention in the free market. The concept of “invisible hand” comes from Smith, which helps in guiding the demand and supply forces in an economy. According to Smith, the system can help in the better creation of wealth for the individuals as well as the entire nation. However, Smith also states that an institutional framework is essential for a productive society. But the institution must promote fair and free competition in the market.
The prominent ideas of Smith like division of labour and “invisible hand” for the foundation of today’s economic theories. The legacy of Adam Smith continues to be evident in the modern economy of today.
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