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Adam Smith
Adam Smith
Nothing but the most exemplary morals can give dignity to a man of small fortune.
Adam Smith ( 16 June 1723 – 17 July 1790 ) was a Scottish -born economist and philosopher , widely considered the father of modern economics.
Contents
Part I[ edit ]
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.
Section I, Chap. I.
Every faculty in one man is the measure by which he judges of the like faculty in another. I judge of your sight by my sight, of your ear by my ear, of your reason by my reason, of your resentment by my resentment, of your love by my love. I neither have, nor can have, any other way of judging about them.
Section I, Chap. III.
Society and conversation, therefore, are the most powerful remedies for restoring the mind to its tranquillity, if, at any time, it has unfortunately lost it; as well as the best preservatives of that equal and happy temper, which is so necessary to self-satisfaction and enjoyment. Men of retirement and speculation, who are apt to sit brooding at home over either grief or resentment, though they may often have more humanity, more generosity, and a nicer sense of honour, yet seldom possess that equality of temper which is so common among men of the world.
Section I, Chap. III.
As to love our neighbour as we love ourselves is the great law of Christianity, so it is the great precept of nature to love ourselves only as we love our neighbour, or what comes to the same thing, as our neighbour is capable of loving us.
Section I, Chap. V.
Hatred and anger are the greatest poison to the happiness of a good mind.
Section II, Chap. III.
This disposition to admire, and almost to worship, the rich and powerful, and to despise or, at least, neglect persons of poor and mean conditions, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.
Section III, Chap. II.
Part II[ edit ]
The man who barely abstains from violating either the person, or the estate, or the reputation of his neighbours, has surely very little positive merit. He fulfils, however, all the rules of what is peculiarly called justice, and does every thing which his equals can with propriety force him to do, or which they can punish him for not doing. We may often fulfil all the rules of justice by sitting still and doing nothing.
Section II, Chap. I.
Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so.
Section II, Chap. II.
In every part of the universe we observe means adjusted with the nicest artifice to the ends which they are intended to produce; and in the mechanism of a plant, or animal body, admire how every thing is contrived for advancing the two great purposes of nature, the support of the individual, and the propagation of the species.
Section II, Chap. III.
Mercy to the guilty is cruelty to the innocent.
Section II, Chap. III.
We are delighted to find a person who values us as we value ourselves, and distinguishes us from the rest of mankind, with an attention not unlike that with which we distinguish ourselves.
Section III, Chap. I.
Part III[ edit ]
Let us suppose that the great empire of China, with all its myriads of inhabitants, was suddenly swallowed up by an earthquake, and let us consider how a man of humanity in Europe, who had no sort of connection with that part of the world, would be affected upon receiving intelligence of this dreadful calamity. He would, I imagine, first of all, express very strongly his sorrow for the misfortune of that unhappy people, he would make many melancholy reflections upon the precariousness of human life, and the vanity of all the labours of man, which could thus be annihilated in a moment. He would too, perhaps, if he was a man of speculation, enter into many reasonings concerning the effects which this disaster might produce upon the commerce of Europe, and the trade and business of the world in general. And when all this fine philosophy was over, when all these humane sentiments had been once fairly expressed, he would pursue his business or his pleasure, take his repose or his diversion, with the same ease and tranquillity, as if no such accident had happened. The most frivolous disaster which could befall himself would occasion a more real disturbance. If he was to lose his little finger to-morrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own. To prevent, therefore, this paltry misfortune to himself, would a man of humanity be willing to sacrifice the lives of a hundred millions of his brethren, provided he had never seen them? Human nature startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it. But what makes this difference? When our passive feelings are almost always so sordid and so selfish, how comes it that our active principles should often be so generous and so noble? When we are always so much more deeply affected by whatever concerns ourselves, than by whatever concerns other men; what is it which prompts the generous, upon all occasions, and the mean upon many, to sacrifice their own interests to the greater interests of others? It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct.
Chap. III.
When the happiness or misery of others depends in any respect upon our conduct, we dare not, as self–love might suggest to us, prefer the interest of one to that of many. The man within immediately calls to us, that we value ourselves too much and other people too little, and that, by doing so, we render ourselves the proper object of the contempt and indignation of our brethren. Neither is this sentiment confined to men of extraordinary magnanimity and virtue. It is deeply impressed upon every tolerably good soldier, who feels that he would become the scorn of his companions, if he could be supposed capable of shrinking from danger, or of hesitating, either to expose or to throw away his life, when the good of the service required it.
Chap. III.
The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another. Avarice over-rates the difference between poverty and riches: ambition, that between a private and a public station: vain-glory, that between obscurity and extensive reputation. The person under the influence of any of those extravagant passions, is not only miserable in his actual situation, but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires. The slightest observation, however, might satisfy him, that, in all the ordinary situations of human life, a well-disposed mind may be equally calm, equally cheerful, and equally contented. Some of those situations may, no doubt, deserve to be preferred to others: but none of them can deserve to be pursued with that passionate ardour which drives us to violate the rules either of prudence or of justice; or to corrupt the future tranquillity of our minds, either by shame from the remembrance of our own folly, or by remorse from the horror of our own injustice.
Chap. III.
In this consists the difference between the character of a miser and that of a person of exact economy and assiduity. The one is anxious about small matters for their own sake; the other attends to them only in consequence of the scheme of life which he has laid down to himself.
Chap. VI.
Part IV[ edit ]
How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it. All their pockets are stuffed with little conveniences. They contrive new pockets, unknown in the clothes of other people, in order to carry a greater number. They walk about loaded with a multitude of baubles, in weight and sometimes in value not inferior to an ordinary Jew's-box, some of which may sometimes be of some little use, but all of which might at all times be very well spared, and of which the whole utility is certainly not worth the fatigue of bearing the burden.
Chap. I.
In the languor of disease and the weariness of old age, the pleasures of the vain and empty distinctions of greatness disappear. To one, in this situation, they are no longer capable of recommending those toilsome pursuits in which they had formerly engaged him. In his heart he curses ambition, and vainly regrets the ease and the indolence of youth, pleasures which are fled for ever, and which he has foolishly sacrificed for what, when he has got it, can afford him no real satisfaction. In this miserable aspect does greatness appear to every man when reduced either by spleen or disease to observe with attention his own situation, and to consider what it is that is really wanting to his happiness. Power and riches appear then to be, what they are, enormous and operose machines contrived to produce a few trifling conveniencies to the body, consisting of springs the most nice and delicate, which must be kept in order with the most anxious attention, and which, in spite of all our care, are ready every moment to burst into pieces, and to crush in their ruins their unfortunate possessor. ...
But though this splenetic philosophy, which in time of sickness or low spirits is familiar to every man, thus entirely depreciates those great objects of human desire, when in better health and in better humour, we never fail to regard them under a more agreeable aspect. Our imagination, which in pain and sorrow seems to be confined and cooped up within our own persons, in times of ease and prosperity expands itself to every thing around us. We are then charmed with the beauty of that accommodation which reigns in the palaces and economy of the great; and admire how every thing is adapted to promote their ease, to prevent their wants, to gratify their wishes, and to amuse and entertain their most frivolous desires. If we consider the real satisfaction which all these things are capable of affording, by itself and separated from the beauty of that arrangement which is fitted to promote it, it will always appear in the highest degree contemptible and trifling. But we rarely view it in this abstract and philosophical light. We naturally confound it, in our imagination with the order, the regular and harmonious movement of the system, the machine or economy by means of which it is produced. The pleasures of wealth and greatness, when considered in this complex view, strike the imagination as something grand, and beautiful, and noble, of which the attainment is well worth all the toil and anxiety which we are so apt to bestow upon it.
And it is well that nature imposes upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind.
Chap. I.
In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.
Chap. I.
Part V[ edit ]
There is not a negro from the coast of Africa who does not, in this respect, possess a degree of magnanimity which the soul of his sordid master is too often scarce capable of conceiving. Fortune never exerted more cruelly her empire over mankind, than when she subjected those nations of heroes to the refuse of the jails of Europe, to wretches who possess the virtues neither of the countries which they come from, nor of those which they go to, and whose levity, brutality, and baseness, so justly expose them to the contempt of the vanquished.
Chap. II.
Part VI[ edit ]
Every man, as the Stoics used to say, is first and principally recommended to his own care; and every man is certainly, in every respect, fitter and abler to take care of himself than of any other person. Every man feels his own pleasures and his own pains more sensibly than those of other people. The former are the original sensations; the latter the reflected or sympathetic images of those sensations. The former may be said to be the substance; the latter the shadow.
Section II, Chap. I.
The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.
Section II, Chap. II.
The administration of the great system of the universe, however, the care of the universal happiness of all rational and sensible beings, is the business of God and not of man. To man is allotted a much humbler department, but one much more suitable to the weakness of his powers, and to the narrowness of his comprehension; the care of his own happiness, of that of his family, his friends, his country: that he is occupied in contemplating the more sublime, can never be an excuse for his neglecting the more humble department.
Section II, Chap. III.
The man who esteems himself as he ought, and no more than he ought, seldom fails to obtain from other people all the esteem that he himself thinks due. He desires no more than is due to him, and he rests upon it with complete satisfaction.
Section III.
Part VII[ edit ]
The virtue of frugality lies in a middle between avarice and profusion, of which the one consists in an excess, the other in a defect of the proper attention to the objects of self–interest.
Section II, Chap. I.
The Wealth of Nations (1776)[ edit ]
References are to book, chapter, subdivisions and (in some cases), paragraph, as given in the Glasgow edition (see below). Other editions include book and chapter only. Page numbers are included as a locational help.
The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes.
Introduction and Plan of the Work, p. 1.
Among civilized and thriving nations, on the contrary, though a great number of people do no labor at all, many of whom consume the produce of ten times, frequently of a hundred times more labour than the greater part of those who work; yet the produce of the whole labour of the society is so great, that all are often abundantly supplied, and a workman, even of the lowest and poorest order, if he is frugal and industrious, may enjoy a greater share of the necessaries and conveniencies of life than it is possible for any savage to acquire.
Introduction and Plan of the Work, p. 2.
Book I[ edit ]
The greatest improvement in the productive powers of labour, and the greatest part of skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour .
Chapter I, p. 7
Plate on pin-making, from Diderot's Encyclopédie (1762)
To take an example, therefore, from a very trifling manufacture, but one in which the division of labour has been very often taken notice of, the trade of a pin-maker: a workman not educated to this business (which the division of labour has rendered a distinct trade, nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. One man draws out the wire; another straights it; a third cuts it; a fourth points it; a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on is a peculiar business; to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. I have seen a small manufactory of this kind, where ten men only were employed, and where some of them consequently performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size. Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth, part of what they are at present capable of performing, in consequence of a proper division and combination of their different operations.
Chapter I, p. 8-9.
This great increase of the quantity of work which, in consequence of the division of labour , the same number of people are capable of performing, is owing to three different circumstances; first, to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many.
Chapter I
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.
They who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.
Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.
Chapter II, p. 14.
The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education.
Chapter II, p. 17.
By nature a philosopher is not in genius and disposition half so different from a street porter, as a mastiff is from a greyhound ,
Chapter II, p. 17.
But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.
Chapter II, p. 19.
For in every country of the world, I believe, the avarice and injustice of princes and sovereign states , abusing the confidence of their subjects, have by degrees diminished the real quantity of metal, which had been originally contained in their coins.
Chapter IV, p. 34.
Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life. But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man's own labour can supply him. The far greater part of them he must derive from the labour of other people, and he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities.
Chapter V.
Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.
Chapter V, p. 38.
In reality, during the continuance of any one regulated proportion, between the respective values of the different values of the different metals in the coin, the value of the most precious metal regulates the value of the whole coin.
Chapter V, p. 50.
The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which the one pays their wages , the other the profits of the employer upon the whole stock of materials and wages which he advanced.
Chapter VI, p. 58.
As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.
Chapter VI, p. 60.
A very poor man may be said in some sense to have a demand for a coach and six; he might like to have it; but his demand is not an effectual demand , as the commodity can never be brought to market in order to satisfy it.
Chapter VII, p. 67.
The natural price, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating.
Chapter VII, p. 69.
Secrets in manufactures are capable of being longer kept than secrets in trade.
Chapter VII, p. 72.
In the long-run the workman may be as necessary to his master as his master is to him, but the necessity is not so immediate.
Chapter VIII, p. 80.
We rarely hear, it has been said, of the combinations of masters, though frequently of those of the workman. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject.
Chapter VIII, p. 80.
A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.
Chapter VIII, p. 81.
China has been long one of the richest, that is, one of the most fertile, best cultivated, most industrious, and most populous countries in the world. It seems, however, to have been long stationary. Marco Polo , who visited it more than five hundred years ago, describes its cultivation, industry, and populousness, almost in the same terms in which they are described by travellers in the present times.
Chapter VIII, p. 86.
The poverty of the lower ranks of people in China far surpasses that of the most beggarly nations of Europe . In the neighbourhood of Canton many hundred, it is commonly said, many thousand families have no habitation on the land, but live constantly in little fishing boats upon the rivers and the canals. The subsistence which they find there is so scanty that they are eager to fish up the nastiest garbage thrown overboard from any European ship. Any carrion, the carcase of a dead dog or cat, for example, though half putrid and stinking, is as welcome to them as the most wholesome food to the people of other countries.
Chapter VIII, p. 86.
Marriage is encouraged in China , not by the profitableness of children, but by the liberty of destroying them.
Chapter VIII, p. 87.
Oatmeal indeed supplies the common people of Scotland with the greatest and best part of their food, which is in general much inferior to that of their neighbours of the same rank in England .
Chapter VIII, p. 91 (Oatmeal in England makes for great horses, in Scotland Great Men).
No society can surely be flourishing and happy, of which the greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.
Chapter VIII, p. 94.
It appears, accordingly, from the experience of all ages and nations, I believe, that the work done by freemen comes cheaper in the end than that performed by slaves.
Chapter VIII.
The liberal reward of labour, therefore, as it is the affect of increasing wealth, so it is the cause of increasing population. To complain of it, is to lament over the necessary effect and cause of the greatest public prosperity.
Chapter VIII, p. 97.
When profit diminishes, merchants are very apt to complain that trade decays; though the diminution of profit is the natural effect of its prosperity, or of a greater stock being employed in it than before.
Chapter IX
A great stock, though with small profits, generally increases faster than a small stock with great profits. Money, says the proverb, makes money. When you have a little, it is often easier to get more. The great difficulty is to get that little.
Chapter IX, p. 111.
Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.
Chapter IX, p. 117.
The establishment of any new manufacture, of any new branch of commerce, or any new practice in agriculture, is always a speculation, from which the projector promises himself extraordinary profits. These profits sometimes are very great, and sometimes, more frequently, perhaps, they are quite otherwise; but in general they bear no regular proportion to those of other older trades in the neighbourhood. If the project succeeds, they are commonly at first very high. When the trade or practice becomes thoroughly established and well known, the competition reduces them to the level of other trades.
The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence.
Chapter X, Part II.
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 impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. 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.
Chapter X, Part II, p. 152.
the competition of the poor takes away from the reward of the rich.
Chapter X, Part II, p. 154.
In England , and in all Roman Catholic countries, the lottery of the church is in reality much more advantageous than is necessary.
Chapter X, Part II, p. 155.
Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.
Chapter x, Part II, p. 168.
Good roads, canals, and navigable rivers, by diminishing the expence of carriage, put the remote parts of the country more nearly upon a level with with those of the neighbourhood of the town. They are upon that the greatest of all improvements.
Chapter XI, Part I, p. 174.
With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eye is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves.
Chapter XI, Part II, p. 202 (See also Thorstein Veblen ).
China is a much richer country than any part of Europe .
Chapter XI, Part III, (First Period) p. 221.
Corn is a necessary, silver is only a superfluity.
Chapter XI, Part III, (First Period) p. 223.
The retinue of a grandee in China or Indostan accordingly is, by all accounts, much more numerous and splendid than that of the richest subjects of Europe.
Chapter XI, Part III, Third Period, p. 240.
It is the natural effect of improvement, however, to diminish gradually the real price of almost all manufactures.
Chapter XI, Part III, (Conclusion..) p. 282.
The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers.
Chapter XI, Part III, Conclusion of the Chapter, p. 292.
The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."
Chapter XI, Part III, Conclusion of the Chapter, p. 292.
Book II[ edit ]
His capital is continually going from him in one shape, and returning to him in another, and it is only by means of such circulation, or successive exchanges, that it can yield him any profit. Such capitals, therefore, may very properly be called circulating capitals.
Chapter I, p. 305.
No fixed capital can yield any revenue but by means of a circulating capital .
Chapter I, p. 311.
A man must be perfectly crazy who, where there is tolerable security, does not employ all the stock which he commands,...
Chapter I, p. 313 (see opportunity cost ).
Thus the labour of a manufacture adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his masters profits. The labour of a menial servant, on the contrary, adds to the value of nothing.
Chapter III, p. 364 (see Proverbs 14-23 KJV).
The annual produce of the land and labour of any nation can be increased in its value by no other means, but by increasing either the number of its productive labourers, or the productive powers of those labourers who had before been employed.
Chapter III, p. 377.
Though the profusion of Government must undoubtedly have retarded the natural progress of England to wealth and improvement, it has not been able to stop it.
Chapter III.
It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expence, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expence, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.
Chapter III, p. 381.
The ancient Egyptians had a superstitious antipathy to the sea; a superstition nearly of the same kind prevails among the Indians ; and the Chinese have never excelled in foreign commerce.
Chapter V, p. 402.
It seldom happens, however, that a great proprietor is a great improver.
Chapter IV, p. 420.
Avarice and injustice are always shortsighted, and they did not foresee how much this regulation must obstruct improvement, and thereby hurt in the long-run the real interest of the landlord.
Chapter II, p. 426-427.
But what all the violence of the feudal institutions could never have effected, the silent and insensible operation of foreign commerce and manufactures gradually brought about.
Chapter IV, p. 448.
By the removal of the unnecessary mouths, and by extracting from the farmer the full value of the farm, a greater surplus, or what is the same thing, the price of a greater surplus, was obtained for the proprietor...
Chapter IV, p. 450 (On Highland Clearances ).
A merchant, it has been said very properly, is not necessarily the citizen of any particular country.
Chapter IV, p. 456.
All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.
Chapter IV, p. 448.
Book IV[ edit ]
POLITICAL economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign.
Introduction, p. 459.
The great affair, we always find, is to get money.
Chapter I, p. 460.
When the profits of trade happen to be greater than ordinary, over-trading becomes a general error both among great and small dealers.
Chapter I, p. 469.
It would be too ridiculous to go about seriously to prove that wealth does not consist in money, or in gold and silver; but in what money purchases, and is valuable only for purchasing. Money no doubt, makes always a part of the national capital ; but it has already been shown that it generally makes but a small part, and always the most unprofitable part of it.
Chapter I, p. 470.
Goods can serve many other purposes besides purchasing money, but money can serve no other purpose besides purchasing goods.
Chapter I, p. 471.
It is not for its own sake that men desire money, but for the sake of what they can purchase with it.
Chapter I, p. 471.
We do not, however, reckon that trade disadvantageous which consists in the exchange of the hard-ware of England for the wines of France;and yet hard-ware is a very durable commodity, and were it not for this continual exportation, might too be accumulated for ages together, to the incredible augmentation of the pots and pans of the country. But it readily occurs that the number of such utensils is in every country necessarily limited by the use which there is for them;that it would be absurd to have more pots and pans than were necessary for cooking the victuals usually consumed there;and that if the quantity of victuals were to increase, the number of pots and pans would readily increase along with it, apart of the increased quantity of victuals being employed in purchasing them, or in maintaining an additional number of workman whose business it was to make them.
Chapter I, p. 471.
The importation of gold and silver is not the principal, much less the sole benefit which a nation derives from its foreign trade .
Chapter I, p. 479.
The commodities of Europe were almost all new to America, and many of those of America were new to Europe. A new set of exchanges, therefore, began..and which should naturally have proved as advantageous to the new, as it certainly did to the old continent. The savage injustice of the Europeans rendered an event, which ought to have been beneficial to all, ruinous and destructive to several of those unfortunate countries.
Chapter I, p. 481.
No regulation of commerce can increase the quantity of industry in any society beyond what its capital can maintain. It can only divert a part of it into a direction into which it might not otherwise have gone; and it is by no means certain that this artificial direction is likely to be more advantageous to the society than that into which it would have gone of its own accord. Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in his view. But the study of his own advantage naturally, or rather necessarily leads him to prefer that employment which is most advantageous to the society.
Chapter II, p. 486.
As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry , and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.
Chapter II, p. 488-489.
To give the monopoly of the home-market to the produce of domestic industry , in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation.
Chapter II, p. 489.
What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.
Chapter II, p. 490.
Such taxes [upon the necessaries of life], when they have grown up to a certain height, are a curse equal to the barrenness of the earth and the inclemency of the heavens; and yet it is in the richest and most industrious countries that they have been most generally imposed. No other countries could support so great a disorder.
Chapter II, paragraph 36, p. 500.
To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain , is as absurd as to expect that an Oceana or Utopia should never be established in it.
Chapter II, p. 505.
The sneaking arts of underling tradesmen are thus erected into political maxims for the conduct of a great empire; for it is the most underling tradesmen only who make it a rule to employ chiefly their own customers. A great trader purchases his good always where they are cheapest and best, without regard to any little interest of this kind.
Chapter III, Part II, p. 530.
The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit a remedy.
Chapter III, Part II, p. 531.
In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people.
Chapter III, Part II, p. 531.
Mercantile jealousy is excited, and both inflames, and is itself inflamed, by the violence of national animosity:...
Chapter III, Part II, p. 534.
In public, as well as in private expences, great wealth may, perhaps, frequently be admitted as an apology for great folly.
Chapter V, p. 563.
The man who employs either his labour or his stock in a grater variety of ways than his situation renders necessary, can never hurt his neighbour by underselling him. He may hurt himself, and he generally does so. Jack of all trades will never be rich, says the proverb. But the law ought always to trust people with the care of their own interest, as in their local situations they must generally be able to judge better of it than the legislator can do.
Chapter V, Digression, p. 572.
I have no great faith in political arithmetic, and I mean not to warrant the exactness of either of these computations.
Chapter V, p. 577.
To hinder, besides, the farmer from selling his goods at all times to the best market, is evidently to sacrifice the ordinary laws of justice to an idea of public utility, to a sort of reasons of state; an act of legislative authority which ought to be exercised only, which can be pardoned only in cases of the most urgent necessity.
Chapter V, p. 584.
The natural effort of every individual to better his own condition, when suffered to exert itself with freedom and security is so powerful a principle that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often incumbers its operations; though the effect of these obstructions is always more or less either to encroach upon its freedom, or to diminish its security.
Chapter V, paragraph 82.
Of all those expensive and uncertain projects, however, which bring bankruptcy upon the greater part of the people who engage in in them, there is none perhaps more perfectly ruinous than the search after new silver and gold mines. It is perhaps the most disadvantageous lottery in the world, or the one in which the gain of those who draw the prizes bears the least proportion to the loss of those who draw the blanks: for though the prizes are few and the blanks are many, the common price of a ticket is the whole fortune of a very rich man.
Chapter VII, Part First, p. 610.
The government of an exclusive company of merchants is, perhaps, the worst of all governments for any country whatever.
Chapter VII, Part Second, p. 619.
To found a great empire for the sole purpose of raising up a people of customers, may at first appear a project fit only for a nation of shopkeepers . It is however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers.
Chapter VII, Part Third, p. 667.
Monopoly of one kind or another, indeed, seems to be the sole engine of the mercantile system .
Chapter VII, Part Third, p. 684.
Consumption is the sole end and purpose of all production ; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.
Chapter VIII, p. 719.
It cannot be very difficult to determine who have been the contrivers of this whole mercantile system ; not the consumers, we may believe, whose interest has been entirely neglected; but the producers, whose interests has been so carefully attended to; and among this later class our merchants and manufactures have been by far the principal architects. In the mercantile regulations, which have been taken notice of in this chapter, the interest of our manufacturers has been most peculiarly attended to;and the interest, not so much of the consumers, as that of some other sets of producers, has been sacrificed to it.
Chapter VIII, p. 721.
Every system which endeavours, either, by extraordinary encouragements, to draw towards a particular species of industry a greater share of the capital of the society than what would naturally go to it; or, by extraordinary restraints, to force from a particular species of industry some share of the capital which would otherwise be employed in it; is in reality subversive of the great purpose which it means to promote. It retards, instead of accelerating, the progress of the society towards real wealth and greatness; and diminishes, instead of increasing, the real value of the annual produce of its land and labour.
All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society. According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice ; and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expence to any individual, or small number of individuals, though it may frequently do much more than repay it to a great society.
The proper performance of those several duties of the sovereign necessarily supposes a certain expence; and this expence again necessarily requires a certain revenue to support it.
Chapter IX, p. 749.
Wherever there is great property , there is great inequality .
Chapter I, Part II, p. 770.
Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.
Chapter I, Part II, 775.
Upstart greatness is everywhere less respected than ancient greatness.
Chapter I, Part II, p. 773.
Justice, however, never was in reality administered gratis in any country. Lawyers and attornies , at least, must always be paid by the parties; and, if they were not, they would perform their duty still worse than they actually perform it.
Chapter I, Part II, p. 778.
The tolls for the maintenance of a high road, cannot with any safety be made the property of private persons.
Chapter I, Part III, Article I, p. 786 (See also.. Public-private partnerships ).
The Hudson's Bay Company , before their misfortunes in the late war, had been much more fortunate than the Royal African Company .
Chapter I, Part III, p. 806.
That a joint stock company should be able to carry on successfully any branch of foreign trade , when private adventurers can come into any sort of open and fair competition with them, seems contrary to all experience.
Chapter I, Part III, Article I, p. 810.
Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from these rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal to the banking company which attempts it.
Chapter I, Part III, p. 820.
The trade of insurance gives great security to the fortunes of private people, and by dividing among a great many that loss which would ruin an individual, makes it fall light and easy upon the whole society.
Chapter I, Part III, p. 821.
In England, success in the profession of the law leads to some very great objects of ambition; and yet how few men, born to easy fortunes, have ever in this country been emminent in that profession?
Chapter I, Part III, p. 824.
The education of the common people requires, perhaps, in a civilized and commercial society, the attention of the public more than that of people of some rank and fortune.
Chapter I, Part III, p. 845.
For a very small expence the public can facilitate, can encourage, and can even impose upon almost the whole body of the people, the necessity of acquiring those most essential parts of education.
Chapter I, Part III, Article II, p. 847.
Fear is in almost all cases a wretched instrument of government, and ought in particular never to be employed against any order of men who have the smallest pretensions to independency.
Chapter I, Part III, p. 862.
Nothing but the most exemplary morals can give dignity to a man of small fortune.
Chapter I, Part III, Article III, p. 874.
It is unjust that the whole of society should contribute towards an expence of which the benefit is confined to a part of the society.
Chapter I, Part IV, Conclusion, p. 881.
Lands for the purposes of pleasure and magnificence, parks, gardens, public walks, &c. possessions which are every where considered as causes of expence, not as sources of revenue, seem to be the only lands which, in a great and civilized monarchy, ought to belong the crown .
Chapter II, Part I, p. 891.
I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities, that is, in proportion to the revenue which they respectively enjoy under the protection of the state.
Chapter II, Part II, p. 892.
II. The tax which each individual is bound to pay ought to be certain, and not arbitrary.
Chapter II, Part II, p. 892.
III. Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it.
Chapter II Part II, p. 893.
IV. Every tax ought to be contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the public treasury of the state.
Chapter II, Part II, p. 893.
The evident justice and utility of the foregoing maxims have recommended them more or less to the attention of all nations.
Chapter II, Part II, p. 894.
But though empires, like all the other works of men, have all hitherto proved mortal, yet every empire aims at immortality.
Chapter II, Part II, p. 896.
The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
Chapter II, Part II, Article I, p. 911.
Every tax , however, is to the person who pays it a badge, not of slavery but of liberty . It denotes that he is a subject to government, indeed, but that, as he has some property, he cannot himself be the property of a master.
Chapter II, Part II, p. 927.
There is no art which one government sooner learns of another than that of draining money from the pockets of the people.
Chapter II, Part II, Appendix to Articles I and II.
All registers which, it is acknowledged, ought to be kept secret, ought certainly never to exist.
Chapter II, Part II, Appendix to Articles I and II, p. 935.
It may indeed be doubted, whether butcher's meat is any where a necessary of life. Grain and other vegetables, with the help of milk, cheese, and butter, or oil, where butter is not to be had, it is known from experience, can, without any butcher's meat , afford the most plentiful, the most wholesome, the most nourishing, and the most invigorating diet.
Chapter II, Part II, Appendix to Articles I and II.
If a workman can conveniently spare those three halfpence, he buys a pot of porter. If he cannot, he contents himself with a pint, and, as a penny saved is a penny got, he thus gains a farthing by his temperance .
Chapter II, Part II, Article IV, p. 951.
That of beaver skins, of beaver wool, and of gum Senega, has been subjected to higher duties; Great Britain, by the conquest of Canada and Senegal , having got almost the monopoly of those commodities.
Chapter II, Part II, Article IV, p. 954-955.
The value of money is in proportion to the quantity of the necessaries of life which it will purchase.
Chapter II, Part II, Article IV.
But bounty and hospitality very seldom lead to extravagance; though vanity almost always does.
Chapter III, Part V, p. 987.
When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid. The liberation of the public revenue, if it has ever been brought about at all, has always been brought about by bankruptcy; sometimes by an avowed one, but always by a real one, though frequently by a pretend payment.
Chapter III, Part V, p. 1012.
The rulers of Great Britain have, for more than a century past, amused the people with the imagination that they possessed a great empire on the west side of the Atlantic. This empire , however, has hitherto existed in imagination only.
Chapter III, Part V, p. 1032 (Last Page).
Noam Chomsky (1995) Class Warfare , p. 19-23.
The key insight of Adam Smith's Wealth of Nations is misleadingly simple: if an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.
Milton Friedman , Free to Choose: A Personal Statement (1981), p. 5.
The greatest of Scotchmen was the first economist , Adam Smith .
John Kenneth Galbraith (1977) The Age of Uncertainty , Chapter 1, p. 13.
Adam Smith was the first to perceive that we have stumbled upon methods of ordering human economic cooperation that exceed the limits of our knowledge and perception. His ` invisible hand ' had perhaps better have been described as an invisible or unsurveyable pattern. We are led - for example by the pricing system in market exchange - to do things by circumstances of which we are largely unaware and which produce results that we do not intend. In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get.
Friedrich Hayek , The Fatal Conceit, Ch. 1: Between Instinct and Reason.
Though in Hume, and also in the works of Bernard Mandeville, we can watch the gradual emergence of the twin concepts of the formations of spontaneous orders and of selective evolution (see Hayek, 1967/78:250, 1963/67:106-121 and 1967/78a:249-266), it was Adam Smith and Adam Ferguson who first made systematic use of this approach. Smith's work marks the breakthrough of an evolutionary approach which has progressively displaced the stationary Aristotelian view. The nineteenth-century enthusiast who claimed that the Wealth of Nations was in importance second only to the Bible has often been ridiculed; but he may not have exaggerated so much. Even Aristotle's disciple Thomas Aquinas could not conceal from himself that multae utilitates impedirentur si omnia peccata districte prohiberentur - that much that is useful would be prevented if all sins were strictly prohibited (Summa Theologica, II, ii, q. 78 i).
Friedrich Hayek , The Fatal Conceit (1988), Appendix A: 'Natural' Versus 'Artificial'.
Even today — in blithe disregard of his actual philosophy — Smith is generally regarded as a conservative economist, whereas in fact, he was more avowedly hostile to the motives of businessmen than most New Deal economists.
Robert Heilbroner , in The Worldly Philosophers (1953), Chapter III, p. 62.
Upon the whole, I have always considered him, both in his lifetime and since his death, as approaching as nearly to the idea of a perfectly wise and virtuous man, as perhaps the nature of human frailty will permit.
On David Hume , in a letter To William Strachan , Esq., Kirkaldy , Fifeshire (9 November 1776).
Smith argued in 1776 that the division of labor was the basis for the separation between mental and manual labor, and therefore between natural philosopher and laborer.
Myles W. Jackson, Spectrum of Belief: Joseph Von Fraunhofer and the Craft of Precision Optics (2000).
While discussing what it is that makes the “pleasures of wealth and greatness ... strike the imagination as something grand and beautiful,” [Adam Smith] remarks that “in the languor of disease and the weariness of old age” we cease to be so impressed, for we then take note of the fact that the acquisition of wealth and greatness leaves their possessors “always as much, and sometimes more exposed than before, to anxiety, to fear, and to sorrow, to diseases, to danger, and to death” (The Theory of Moral Sentiments IV, chapter I). But to allow our attention to dwell on this is, on Smith’s view, misguided.
To do so is to embrace a “splenetic philosophy,” the effect of “sickness or low spirits” upon an imagination “which in pain and sorrow seems to be confined,” so that we are no longer “charmed with the beauty of that accommodation which reigns in the palaces and economy of the great.” The imagination of those “in better health or in better humor” fosters what may, Smith concedes, be no more than seductive illusions about the pleasures of wealth and greatness, but they are economically beneficial illusions. “It is this deception which rouses and keeps in continual motion the industry of mankind.” So even someone as perceptive as Smith, when he does pause to recognize the perspectives of ill health and old age, finds reason at once to put them on one side. And in so doing Smith speaks for moral philosophy in general.
Alasdair MacIntyre , Dependent Rational Animals (1999), p. 2
What strikes one here above all is the crudely empirical conception of profit derived from the outlook of the ordinary capitalist, which wholly contradicts the better esoteric understanding of Adam Smith .
Karl Marx (1867) Das Kapital , Volume II, Chapter X, p. 202.
Smith "wrote that the ultimate goal of business is not to make a profit. Profit is just the means. The goal is general welfare."
Walter Wink (1992) Engaging the powers: Discernment and resistance in a world of domination., Vol. 3. HSRC Press, p. 68.
Adam Smith was the first academic economist; and his career is not very different from that of many economists in the last hundred and fifty years.
Eric Roll (1938) A History Of Economic Thought, Chapter IV, p. 144.
To have never done any thing but make the eighteenth part of a pin, is a sorry account for a human being to give of his existence.
Jean-Baptiste Say (1803) A Treatise On Political Economy. (Fourth Edition, 1855), Book I, Chapter VIII, p. 98.
The global reach of Smith's moral and political reasoning is quite a distinctive feature of his thought, but it is strongly supplemented by his belief that all human beings are born with similar potential and, most importantly for policymaking, that the inequalities in the world reflect socially generated, rather than natural, disparities.
There is a vision here that has a remarkably current ring. The continuing global relevance of Smith's ideas is quite astonishing, and it is a tribute to the power of his mind that this global vision is so forcefully presented by someone who, a quarter of a millennium ago, lived most of his life in considerable seclusion in a tiny coastal Scottish town. Smith's analyses and explorations are of critical importance for any society in the world in which issues of morals, politics and economics receive attention. The Theory of Moral Sentiments is a global manifesto of profound significance to the interdependent world in which we live.
Amartya Sen , " The economist manifesto ", New Statesman (23 April 2010)
Smith distinguishes with great sophistication the different kinds of reasons people have in taking an interest in the lives of others, separating out sympathy, generosity, public spirit and other motivations. Even though he acknowledged the role of mental attitudes and predispositions, he went on to discuss how reasoning, which is at the heart of rationality, must have a big role in preventing us from being – consciously or unconsciously – too self-centred, or thoughtlessly uncaring.
Amartya Sen , “Values and Justice”, Journal of Economic Methodology, Vol. 19, No. 2, June 2012, 101–108.
Smith had no illusion that this would be easy to do, nor did he suffer from the delusion that such an exercise would, in any sense, be perfect. But he did have the conviction that the exercise could still be very useful, and the best should not be made into an enemy of the good.
Amartya Sen , “Values and Justice”, Journal of Economic Methodology, Vol. 19, No. 2, June 2012, 101–108.
Today, classical political economy is often identified by contemporary economists with the quantity theory of money and the so-called “doctrine of free trade,” but historically there was in fact a large and variable set of positions on both within the classical orbit. And, in contrast to Marx's characterization of its scope and origins, the beginnings of a systematic classical political economy have been associated first and foremost with the work of the eighteenth-century Scottish philosopher, Adam Smith. In terms of illuminating our understanding of the significance of classical political economy for the history of political thought, its origins are identified with the time period roughly between 1750 and 1867, and with a group of economic thinkers drawing upon and revising Smith's Wealth of Nations as a basis for analyzing the production, distribution, and exchange of commodities in the market of commercial society, and later within industrial capitalism.
Shannon C. Stimson , "Classical Political Economy", in Coole, Diana H.; Gibbons, Michael; Ellis, Elisabeth et al., The encyclopedia of political thought (2014)
Thus, the original core components of classical political economy enumerated in Smith's Wealth of Nations, and transformed in the economic theorizing of later classicals – that is, until John Maynard Keynes chose in The General Theory of Employment, Interest and Money (1936) to alter retrospectively the referent of this denotation to include any “orthodox” (non-Marxist) economist who was a quantity theorist – comprised a set of conceptual tools for analyzing and understanding the operation of market and later capitalist production and exchange.
Shannon C. Stimson , "Classical Political Economy", in Coole, Diana H.; Gibbons, Michael; Ellis, Elisabeth et al., The encyclopedia of political thought (2014)
In generating the first ever systematic account of the market mechanism in commercial society, Smith's political economy drew not only on his critical reflections of the unsytematic nature of earlier economic writing, but equally on his didactic revisions of earlier natural law and natural jurisprudence traditions as well as the empirically suggestive but unsystematic historical inductive method of tracing the progress of civil society previously introduced by thinkers such as the great Montesquieu. These revisions can be linked directly to Smith's political thinking. It may be questioned whether Adam Smith can be said to have developed a political theory. Certainly, it has been and yet remains a subject of debate. Unquestionably, however, Smith isolated important political concerns and made political conceptual contributions which he linked systematically to his theory of commercial society and the conduct of the market.
Shannon C. Stimson , "Classical Political Economy", in Coole, Diana H.; Gibbons, Michael; Ellis, Elisabeth et al., The encyclopedia of political thought (2014)
In short, the mercantilists were preoccupied with the transfer of wealth, whether by export surpluses, imperialism, or slavery— all of which benefit some at the expense of others. Adam Smith was concerned with the creation of wealth, which is not a zero-sum process. Smith rejected government intervention in the economy to help merchants— the source of the name “mercantilism”— and instead advocated free markets along the lines of the French economists, the Physiocrats, who had coined the term laissez faire. ... The most fundamental difference between Adam Smith and the mercantilists was that Smith did not regard gold as being wealth. The very title of his book— The Wealth of Nations— raised the fundamental question of what wealth consisted of. Smith argued that wealth consisted of the goods and services which determined the standard of living of the people— the whole people, who to Smith constituted the nation. Smith rejected both imperialism and slavery— on economic grounds as well as moral grounds, ... Although Adam Smith is today often regarded as a “conservative” figure, he in fact attacked some of the dominant ideas and interests of his own times. Moreover, the idea of a spontaneously self-equilibrating system— the market economy— first developed by the Physiocrats and later made part of the tradition of classical economics by Adam Smith, represented a radically new departure, not only in analysis of social causation but also in seeing a reduced role for political, intellectual, or other elites as guides or controllers of the masses.
Thomas Sowell , Basic Economics, 4th ed. (2010), Ch. 25. The History of Economics.