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Economist Adam Smith: Theory & Biography

Instructor: Dr. Douglas Hawks

Douglas has two master's degrees (MPA & MBA) and is currently working on his PhD in Higher Education Administration.

Many modern economists consider Adam Smith the Father of Capitalism. In this lesson, you'll learn about his life, education, work, and accomplishments. After the lesson, you can test your knowledge with a short quiz.

Early Life and Education

Adam Smith was born in 1723 in Scotland. He was named after his father, a lawyer, but never knew him as his father died two months after Smith was born. Little is known about Smith's early childhood except that he was able to attend a prestigious preparatory school. When he was 14, he was accepted into the University of Glasgow where he studied social philosophy. He graduated with top honors when he was 17, after which he headed to Oxford for further education. Smith didn't finish his Oxford degree because he felt the English schools weren't as good as his Scottish alma mater.

Career

Almost all of Smith's career was spent at the University of Glasgow as a professor teaching law, rhetoric, economics, and philosophy. Later in his career, after publishing his first book, wealthy and influential leaders sought him out as tutors for their sons. Through his tutoring he came in contact with and was influenced by some of the great thinkers of the 18th century, including David Hume, Benjamin Franklin, and Francois Quesnay.

While Smith left his mark through the influence he had on his students and those he tutored, his lasting influence on the field of economics came through his published books. Smith published two books during his life, both of which were immediately successful. The Theory of Moral Sentiments was published in 1759 and The Wealth of Nations was published in 1776. He had many more notes and essays that weren't published, but he demanded that anything not good enough to be published be burned after his death.

A portrait of Adam Smith

The Wealth of Nations

In 1776, the book that would make Smith, to many, the father of capitalism, was published in England. The Wealth of Nations is actually five books but it is usually combined into two volumes - 1,100 pages of economic theory from the perspective of an 18th-century moral philosopher.

The Wealth of Nations introduced and discussed many economic concepts and theories, and one must read the entire book to grasp the full detail and context of Smith's theory, but there are three concepts that are frequently cited. While they may seem obvious now, in the pre-Industrial Revolution era when Smith lived, they were innovative and insightful. These three concepts are the division of labor, the invisible hand(a metaphor for the self-regulation of the market), and free markets. Taken together, these three ideas form the cornerstone of capitalism. For more detail on this book, take a look at this lesson.

The Theory of Moral Sentiments

While The Wealth of Nations is the most well-known of Smith's works, Smith thought his first published work, The Theory of Moral Sentiments (1759), was better. The Theory of Moral Sentiments focuses more on the individual, and the cognitive and emotional processes we go through as we establish social relationships and decide how to interact with social institutions. Some people see The Wealth of Nations and The Theory of Moral Sentiments as completely opposite philosophies, but Smith was always clear that The Wealth of Nations discusses the ideals of an economic system while The Theory of Moral Sentiments is intended for more personal reflection and application.

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