Adam Smith

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Revision as of 18:53, 18 January 2010

Adam Smith was a 18th-century British economist often considered to be one of the fathers of modern economics. His 1776 work An Inquiry into the Nature and Causes of the Wealth of Nations contains several important ideas that continue to be relevant in contemporary politics and social science, such as the "invisible hand" that he thought guided "free" markets.

Smith's views

Smith is often invoked by anti-government conservatives and supply-side economics advocates, despite the fact that Smith's actual beliefs are considerably more moderate than they are often portrayed. One of Smith's more famous quotes is:

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is im-possible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and jus-tice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."

This quote basically states that business people love to form cartels to increase profits.

Amartya Sen, in an article for the Financial Times, notes "It is often overlooked that Smith did not take the pure market mechanism to be a free-standing performer of excellence, nor did he take the profit motive to be all that is needed." In addition, Smith supported the government intervening for the purposes of universal education or poverty relief, something agreed upon more by the center-left than conservatives.[1]

Footnotes

  1. http://www.ft.com/cms/s/0/8f2829fa-0daf-11de-8ea3-0000779fd2ac.html?nclick_check=1 "Adam Smith's market never stood alone," Amatya Sen
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