He gained some notoriety from this, but his seminal work was An Inquiry into the Nature and Causes of he Wealth of Nations (1 776), which propelled him into the annals of history. The Wealth of Nations, as the document came to be called, chronicled the development of industry in Europe. He is responsible for popularizing many Of the ideas that underpin the school Of thought that became known as capitalism. Smith came to be associated with laissez-fairer, the philosophy of minimizing the role of government in free markets, and the idea that the “invisible hand” of supply and demand is responsible for guiding markets and nations.
Smith pioneered the concept that each person, by acting in their own elf-interest, actually helps to create the best outcome for all. “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest. ” (Adam Smith, Wealth of Nations, Book 1, Chapter 2) Today, the invisible-hand theory is often presented not only as a natural phenomenon that guides free markets towards efficiency, but also as a justification for the states which thrive and become “winners” and those that are not as successful and are therefore “losers”.
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Thus Smith’s ideas not only became the foundation of capitalism, but the cornerstone of Western encroach. Smith died on July 1 9, 1 790, but the ideas he promoted continue to affect our political institutions and inform our political decisions to this day. Smith’s famous ‘invisible hand’ principle in Wealth of Nations presents us with something of a paradox: a citizen, while acting solely in their own self-interest, is often “guided by an invisible hand” to promote the good for society, and this is often more effective than when they purposefully try to promote it.
Wealth of Nations is a book with a with a clear morality, though that was not how it was received for some time. Smith is in fact is often demonic (particularly by Marx) as the creator of the “economic man”: a brutish caricature who is driven by a selfish desire for profit and personal gerrymandering. This still exists today in some quarters, though another, more temperate view of Smith’s work has emerged in more recent interpretations. In point of fact, he said in The Theory of Moral Sentiments that man has an inherent compassion and bias towards co-??operation. How selfish so ever man may be supposed, there are evidently some principles in his nature which interest him in the fortunes of others, and render their peppiness necessary to him, though he derives nothing from it except the pleasure of seeing it. ” Adam Smith himself, was known as a optimist and a generous person. He famously returned the tuition to all of his students at the University of Glasgow when he took the position of tutor to a young Duke.
That said, there is a theme of callous indifference in the aggregate that runs though Wealth of Nations, but the view of man as a creature devoted exclusively to self-interest is only half the story: Smith was trying to show that purely self-interested activity in the aggregate could have beneficial results for society writ large. It is important to divine the truth of the kind of a person Smith was so that we can see his theories concerning the market economy (which his name will always be associated with) with clear eyes.
Smith saw economic liberty as a moral cause, a way to create harmony in a sea of conflicting interests. The invisible hand was not a cruel master, weeded out the strong from the weak, but rather it is a framework where every participant had due regard for everyone else’s usefulness and had due respect for individual sovereignty. In a way, Smith was espousing a universal truth that the love of freedom necessitates a love for your fellow man; animally the love of power is its antithesis. It is important to appreciate Smith ‘s attachment to the liberty, the purpose of wealth in fact was to expand liberty.
His great book is some respects a treatise on superiority of economic efficiency as a producer of wealth which in turn produces liberty. This can be seen as an implicit justification of free market systems as a means to political freedom, and not just for a privileged minority, but for the common man as well. Some contemporary economists often assume the invisible hand is only about people acting out Of pure self-interest, but Smith rejected the cynical Hobnails view that nature is simply a ‘War of all against all. He believed in a more with Locked principle: that people are by their nature cooperative as well as competitive. Another false idea about Smith is that the principle underlying his invisible hand is self-preservation comes first. A more refined view would be that individual citizens are better able that anyone else understand their own needs (certainly not than government officials! ). After all, it is a given that people are “more deeply interested in whatever immediately concerns themselves” than in what concerns other people.
After the self is the concern for family, friends, neighborhood, nation, and finally the world at large. From Smith’s perspective, my freedom to seek my own self-interest necessarily includes a similar freedom for everyone else. Thus, there is a certain moral justice inherent in the concept of liberty. In summary Smith’s reputation as a hard-nosed capitalist is misguided. He fully recognized the compassion and cooperation that is necessary for maximum efficiency in an economy. Any view which would attribute the worst excesses of Capitalism to him is a t best misguided and at worst disingenuous.