Which economist wrote The Wealth Of Nations?
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The Economist The Wealth of Nations Adam Smith
The Economist is an English-language weekly newspaper owned by the Economist Group and edited in offices based in London.    Continuous publication began under founder James Wilson in September 1843. For historical reasons, The Economist refers to itself as a newspaper, but each print edition appears on small glossy paper like a news magazine. In 2006, its average weekly circulation was reported to be 1.5 million, about half of which were sold in the United States.

The publication belongs to the Economist Group. It is 50% owned by the English branch of the Rothschild family and by the Agnelli family through its holding company Exor. The remaining 50% is held by private investors including the editors and staff.   The Rothschilds and the Agnellis are represented on the board of directors.  A board of trustees formally appoints the editor, who cannot be removed without its permission. Although The Economist has a global emphasis and scope, about two-thirds of the 75 staff journalists are based in the City of Westminster, London.  As of March 2014, the Economist Group declared operating profit of £59m.  Previous major shareholders include Pearson PLC. 

The Economist claims that it "is not a chronicle of economics."  It takes an editorial stance of classical and economic liberalism which is supportive of free trade, globalisation, free immigration and cultural liberalism (such as supporting legal recognition for same-sex marriage or drug liberalization). The publication has described itself as "a product of the Caledonian liberalism of Adam Smith and David Hume." 
It targets highly educated readers and claims an audience containing many influential executives and policy-makers.  The newspaper's CEO described this recent global change, which was first noticed in the 1990s and accelerated in the beginning of the 21st century, as a "new age of Mass Intelligence."  

Mission statement

On the contents page of each newsmagazine, The Economists mission statement is written in italics.  It states that The Economist was "First published in September 1843 to take part in 'a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.'" 

History

The Economist was founded by the British businessman and banker James Wilson in 1843, to advance the repeal of the Corn Laws, a system of import tariffs.  A prospectus for the "newspaper," from 5 August 1843 enumerated thirteen areas of coverage that its editors wanted the newspaper to focus on: 
#Original leading articles, in which free-trade principles will be most rigidly applied to all the important questions of the day.
#Articles relating to some practical, commercial, agricultural, or foreign topic of passing interest, such as foreign treaties.
#An article on the elementary principles of political economy, applied to practical experience, covering the laws related to prices, wages, rent, exchange, revenue and taxes.
#Parliamentary reports, with particular focus on commerce, agriculture and free trade.
#Reports and accounts of popular movements advocating free trade.
#General news from the Court of St. James's, the Metropolis, the Provinces, Scotland, and Ireland.
#Commercial topics such as changes in fiscal regulations, the state and prospects of the markets, imports and exports, foreign news, the state of the manufacturing districts, notices of important new mechanical improvements, shipping news, the money market, and the progress of railways and public companies.
#Agricultural topics, including the application of geology and chemistry; notices of new and improved implements, state of crops, markets, prices, foreign markets and prices converted into English money; from time to time, in some detail, the plans pursued in Belgium, Switzerland, and other well-cultivated countries.
#Colonial and foreign topics, including trade, produce, political and fiscal changes, and other matters, including exposés on the evils of restriction and protection, and the advantages of free intercourse and trade.
#Law reports, confined chiefly to areas important to commerce, manufacturing, and agriculture.
#Books, confined chiefly, but not so exclusively, to commerce, manufacturing, and agriculture, and including all treatises on political economy, finance, or taxation.
#A commercial gazette, with prices and statistics of the week.
#Correspondence and inquiries from the newsmagazine's readers.

It has long been respected as "one of the most competent and subtle Western periodicals on public affairs".  The newspaper was a major source of financial and economic information for Karl Marx in the formulation of socialist theory; he wrote: "the London Economist, the European organ of the aristocracy of finance, described most strikingly the attitude of this class." 

Its logo was designed in 1959 by Reynolds Stone.

In January 2012, The Economist launched a new weekly section devoted exclusively to China, the first new country section since the introduction of a section about the United States in 1942. 

In August 2015, The Economist Group bought back 5 million of its shares back (worth $284 million) from Pearson. Pearson's remaining shares (worth $447 million) would be sold to Exor.  

List of editors

The editors of The Economist have been:
* James Wilson 1843–1857 (Herbert Spencer was sub-editor from 1848 to 1853)
* Richard Holt Hutton 1857–1861 
* Walter Bagehot, 1861–1877 
* Daniel Conner Lathbury, 1877–1881 
* Inglis Palgrave, 1877–1883
* Edward Johnstone, 1883–1907 
* Francis Wrigley Hirst, 1907–1916
* Hartley Withers, 1916–1921
* Sir Walter Layton, 1922–1938
* Geoffrey Crowther, 1938–1956
* Donald Tyerman, 1956–1965
* Sir Alastair Burnet, 1965–1974
* Andrew Knight, 1974–1986
* Rupert Pennant-Rea, 1986–1993
* Bill Emmott, 1993–2006
* John Micklethwait, 2006–2014 
* Zanny Minton Beddoes, 2015—present 

Opinions

When the news magazine was founded, the term "economism" denoted what would today be termed "economic liberalism". The Economist generally supports free trade, globalisation,  and free immigration. Activist and journalist George Monbiot has described it as neo-liberal while occasionally accepting the propositions of Keynesian economics where deemed more "reasonable". The news magazine favours a carbon tax to fight global warming.  According to former editor Bill Emmott, "the Economists philosophy has always been liberal, not conservative".  Individual contributors take diverse views. The Economist favours the support, via central banks, of banks and other important corporations. This principle can (in a much more limited form) be traced back to Walter Bagehot, the third editor of The Economist, who argued that the Bank of England should support major banks that got into difficulties. Karl Marx deemed The Economist the "European organ" of "the aristocracy of finance". 

The paper has also supported liberal causes on social issues such as recognition of gay marriages,  legalisation of drugs,  criticizes the U.S. tax model in a recent issue,   and seems to support some government regulation on health issues, such as smoking in public,   as well as bans on spanking children.   The Economist consistently favours guest worker programs, parental choice of school, and amnesties  and once published an "obituary" of God.  The Economist also has a long record of supporting gun control. 

The Economist has endorsed both the Labour Party (in 2005) and the Conservative Party (in 2010 and 2015)   at general election time in Britain, and both Republican and Democratic candidates in the United States. Economist.com puts its stance this way:

The Economist frequently accuses figures and countries of corruption or dishonesty. In recent years, for example, it criticised former World Bank president Paul Wolfowitz; Silvio Berlusconi, Italy's Prime Minister (who dubbed it The Ecommunist);  Laurent-Désiré Kabila, the late president of the Democratic Republic of the Congo; Robert Mugabe, the head of government in Zimbabwe; and, recently, Cristina Fernández de Kirchner, the president of Argentina.  The Economist also called for Bill Clinton's impeachment and, after the emergence of the Abu Ghraib torture and prisoner abuse,  for Donald Rumsfeld's resignation. Though The Economist initially gave vigorous support for the U.S.-led invasion of Iraq, it later called the operation "bungled from the start" and criticised the "almost criminal negligence" of the Bush Administration's handling of the war, while maintaining, , that pulling out in the short term would be irresponsible.  In the 2004 U.S. election, the editors "reluctantly" backed John Kerry.   In the 2008 U.S. election the newsmagazine endorsed Barack Obama, while using the election eve issue's front cover to promote his candidacy.   In the 2012 U.S. election, Barack Obama was again endorsed: the editorial said that they preferred Obama on the economy, foreign policy and health care, but criticised him for running a negative campaign against Romney and for a "poor appreciation of commerce". 

Tone and voice

Though it has many individual columns, by tradition and current practice the magazine ensures a uniform voice—aided by the anonymity of writers—throughout its pages,  as if most articles were written by a single author, which may be perceived to display dry, understated wit, and precise use of language.  

The paper's treatment of economics presumes a working familiarity with fundamental concepts of classical economics. For instance, it does not explain terms like invisible hand, macroeconomics, or demand curve, and may take just six or seven words to explain the theory of comparative advantage. Articles involving economics do not presume any formal training on the part of the reader and aim to be accessible to the educated layman. The newsmagazine usually does not translate short French (and German) quotes or phrases. It does describe the business or nature of even well-known entities, writing, for example, "Goldman Sachs, an investment bank". 

Many articles include some witticism; image captions are often humorous puns and the letters section usually concludes with an odd or light-hearted letter. These efforts at humour have sometimes had a mixed reception. For example, the cover of 20 September 2003 issue, headlined by a story on the WTO ministerial meeting in Cancún, featured a cactus giving the middle finger.  Readers sent both positive and negative letters in response. 

Editorial anonymity

Articles often take a definite editorial stance and almost never carry a byline. Not even the name of the editor (since 2015, Zanny Minton Beddoes ) is printed in the issue. It is a long-standing tradition that an editor's only signed article during their tenure is written on the occasion of their departure from the position. The author of a piece is named in certain circumstances: when notable persons are invited to contribute opinion pieces; when journalists of The Economist compile special reports (previously known as surveys); for the Year in Review special edition; and to highlight a potential conflict of interest over a book review. The names of The Economist editors and correspondents can be located on the media directory pages of the website.  Online blog pieces are signed with the initials of the writer and authors of print stories are allowed to note their authorship from their personal web sites. 

The editors say this is necessary because "collective voice and personality matter more than the identities of individual journalists"  and reflects "a collaborative effort".  In most articles, authors refer to themselves as "your correspondent" or "this reviewer". The writers of the titled opinion columns tend to refer to themselves by the title (hence, a sentence in the "Lexington" column might read "Lexington was informed...").

American author Michael Lewis has criticized the magazine's editorial anonymity, labeling it a means to hide the youth and inexperience of those writing articles. In 1991, Lewis quipped: "The magazine is written by young people pretending to be old people...If American readers got a look at the pimply complexions of their economic gurus, they would cancel their subscriptions in droves".  It should be noted that although individual articles are written anonymously, there is no secrecy over who are The Economist writers, since they publicly disclose it for example on their social networking accounts.  

John Ralston Saul describes The Economist as a "magazine which hides the names of the journalists who write its articles in order to create the illusion that they dispense disinterested truth rather than opinion. This sales technique, reminiscent of pre-Reformation Catholicism, is not surprising in a publication named after the social science most given to wild guesses and imaginary facts presented in the guise of inevitability and exactitude. That it is the Bible of the corporate executive indicates to what extent received wisdom is the daily bread of a managerial civilization".  

Circulation

Each of The Economist issue's official date range is from Saturday to the following Friday. The Economist posts each week's new content online at approximately 2100 Thursday evening UK time, ahead of the official publication date.

In 1877, the newspaper's circulation was 3,700. In 1920, it had risen to 6,000. Circulation increased rapidly after 1945, reaching 100,000 by 1970.

Circulation is audited by the Audit Bureau of Circulations (ABC). From around 30,000 in 1960 it has risen to near 1 million by 2000 and by 2016 to about 1.3 million.  Sales inside North America were in 2007 around 54 percent of the total, with sales in the UK making up 14 percent of the total and continental Europe 19 percent. The Economist claims sales, both by subscription and at newsagents, in over 200 countries. Of its American readers, two out of three make more than $100,000 a year. 

The Economist once boasted about its limited circulation. In the early 1990s it used the slogan "The Economist – not read by millions of people". "Never in the history of journalism has so much been read for so long by so few," wrote Geoffrey Crowther, a former editor. 

The Economist Newspaper Limited is a wholly owned subsidiary of The Economist Group. The publications of the group include the CFO brand family as well as the annual The World in..., the lifestyle bimonthly 1843, European Voice, and Roll Call. Sir Evelyn Robert de Rothschild was Chairman of the company from 1972 to 1989.

Letters

The Economist frequently receives letters from senior businesspeople, politicians, ambassadors, and from spokespeople for various government departments, non-governmental organisations and lobbies. Well-written or witty responses from anyone are considered, and controversial issues frequently produce a torrent of letters. For example, the survey of corporate social responsibility, published January 2005, produced largely critical letters from Oxfam, the World Food Programme, United Nations Global Compact, the Chairman of BT Group, an ex-Director of Shell and the UK Institute of Directors. 

Many of the letters published are critical of its stance or commentary. After The Economist ran a critique of Amnesty International and human rights in general in its issue dated 24 March 2007, its letters page ran a vibrant reply from Amnesty, as well as several other letters in support of the organisation, including one from the head of the United Nations Commission on Human Rights.  Rebuttals from officials within regimes such as the Singapore government are routinely printed, to comply with local right-of-reply laws without compromising editorial independence. 

It is extremely rare for any comment by The Economist to appear alongside any published letter. Letters published in the newsmagazine are typically between 150 and 200 words long (and began with the salutation "Sir" until the editorship of Zanny Minton Beddoes, the first female editor; they now have no salutation). Previous to a change in procedure, all responses to on-line articles were usually published in "The Inbox".  Comments can now be made directly under each article.

Features

The Economists primary focus is world events, politics and business, but it also runs regular sections on science and technology as well as books and the arts. Approximately every two weeks, the publication includes an in-depth special report.  (previously called surveys) on a given topic. The five main categories are Countries and Regions, Business, Finance and Economics, Science and Technology, and Other. Every three months, it publishes a technology report called Technology Quarterly  or TQ, a special section focusing on recent trends and developments in science and technology.

Since July 2007,  there has also been a complete audio edition of the news-magazine available 9pm London time on Thursdays. The audio version of The Economist is produced by the production company Talking Issues. The company records the full text of the news-magazine in mp3 format, including the extra pages in the UK edition. The weekly 130 MB download is free for subscribers and available for a fee for non-subscribers.

The publication's writers adopt a tight style that seeks to include the maximum amount of information in a limited space.  Atlantic Monthly publisher David G. Bradley described the formula as "a consistent world view expressed, consistently, in tight and engaging prose". 

There is a section of economic statistics. Tables such as employment statistics are published each week and there are special statistical features too. It is unique among British weeklies in providing authoritative coverage of official statistics and its rankings of international statistics have been decisive.   In addition, The Economist is known for its Big Mac Index, which it first published in 1986, which uses the price of the hamburger in different countries as an informal measure of the purchasing power of currencies.  

The publication runs several opinion columns whose names reflect their topic:
* Analects (China) — named after The Analects, a collection of Confucian sayings, this column was established in February 2012.
* Bagehot (Britain) — named for Walter Bagehot, 19th-century British constitutional expert and early editor of The Economist. From July 2010  until June 2012  it was written by David Rennie. From July 2015 it has been written by Jeremy Cliffe.
* Bello (Latin America) - named for Andrés Bello, a diplomat, poet, legislator and philosopher, who lived and worked in Chile.  The column was established in January 2014 and is written by Michael Reid.
* Charlemagne (Europe) — named for Charlemagne, Emperor of the Frankish Empire. It is written by Tom Nuttall and earlier it was written by David Rennie (2007-2010) and by Anton La Guardia  (2010-2014).
* Lexington (United States) — named for Lexington, Massachusetts, the site of the beginning of the American Revolutionary War. From June 2010 until May 2012 it was written by Peter David, until his death in a car accident. 
* Buttonwood (Finance) — named for the buttonwood tree where early Wall Street traders gathered. Until September 2006 this was available only as an on-line column, but it is now included in the print edition.  It is written by Philip Coggan.
* Banyan (Asia) — named for the banyan tree, this column was established in April 2009 and focuses on various issues across the Asian continent, and is written by Dominic Ziegler.
* Baobab (Africa & Middle East) — named for the baobab tree, this column was established in July 2010 and focuses on various issues across the African continent.
* Babbage (Technology) — named for the inventor Charles Babbage, this column was established in March 2010 and focuses on various technology related issues.
* Prospero (Books and arts) — named after the character from William Shakespeare's play The Tempest, this column reviews books and focuses on arts-related issues.
* Game Theory (Sport) — named after the science of predicting outcomes in a certain situation this column focuses on "sports major and minor" and "the politics, economics, science and statistics of the games we play and watch".
* Schumpeter (Business) — named for the economist Joseph Schumpeter, this column was established in September 2009 and is written by Adrian Wooldridge.
* Johnson (language) — named for Samuel Johnson, this column returned to the newspaper in 2016 and covers language

Other regular features include:

* Face Value about prominent people in the business world
* Free Exchange a general economics column, frequently based on academic research, replaced the column Economics Focus in January 2012
* An obituary. Since 1997 it has been written by Ann Wroe. 
* sections on science and the arts

The news magazine goes to press on Thursdays, between 6pm and 7pm GMT, and is available on newsstands in many countries the next day. It is printed at seven sites around the world. Known on their website as "This week's print edition", it is available online, albeit with only the first five viewed articles being free (and available to subscribers only mid-October 2009 – 2010).

The Economist published in 2015 its first U.S. college rankings, focused on comparable economical advantages defined as 'the economic value of a university is equal to the gap between how much its students subsequently earn, and how much they might have made had they studied elsewhere'. Based on set of strict criteria sourced from U.S. Department of Education ('College Scorecard") with relevant 'expected earnings' and multiple statistics applied in calculation of 'median earnings' conclusive evaluation method has been applied to run the scorecard’s earnings data through a multiple regression analysis, a common method of measuring the relationships between variables. 

The Economist also produces the annual The World in [Year] publication. It also sponsors a writing award.

The Economist Awards

Innovation Awards

The Economist sponsors the yearly "Economist Innovation Awards", in the categories of bioscience, computing and communications, energy and the environment, social and economic innovation, business-process innovation, consumer products, and a special "no boundaries" category.  The awards have been held since 2002. Nominations are held between 2 and 30 April. The award ceremony is then hosted on 15 November. Choices are based off the following factors: 

* How much revenue their innovation has made their company or its economic impact on a specific good cause or society in general
* The effect their work has had on the marketplace (or if it's created a whole new marketplace altogether)
* The impact their innovation has had on a new type of science or technology

Writing prize

In 1999, The Economist organized a global futurist writing competition, The World in 2050. Co-sponsored by Royal Dutch/Shell, the competition included a first prize of US$20,000 and publication in The Economists annual flagship publication, The World In.  Over 3,000 entries from around the world were submitted via a website set up for the purpose and at various Royal Dutch Shell offices worldwide.

The judging panel included Bill Emmott, Esther Dyson,  Sir Mark Moody-Stuart (then-chairman of Royal Dutch Shell), and Matt Ridley (a British scientist and member of the House of Lords). 

Censorship

Sections of The Economist criticising authoritarian regimes are frequently removed from the magazine by the authorities in those countries. The Economist regularly has difficulties with the ruling party of Singapore (the People's Action Party), which had successfully sued it, in a Singaporean court, for libel. 

The Economist, like many other publications, is subjected to censorship in India whenever it depicts a map of Kashmir. The maps are stamped by Indian Customs officials as being "neither correct, nor authentic". Issues are sometimes delayed, but not stopped or seized. 

On 15 June 2006, Iran banned the sale of The Economist when it published a map labelling the Persian Gulf simply as "Gulf"—a choice that derives its political significance from the Persian Gulf naming dispute. 

In a separate incident, the government of Zimbabwe went further and imprisoned The Economists correspondent there, Andrew Meldrum. The government charged him with violating a statute on "publishing untruth" for writing that a woman was decapitated by supporters of the ruling Zimbabwe African National Union – Patriotic Front party. The decapitation claim was retracted  and allegedly fabricated by the woman's husband. The correspondent was later acquitted, only to receive a deportation order.

On 19 August 2013, The Economist disclosed that the Missouri Department of Corrections had censored its 29 June issue. According to the letter sent by the Department, prisoners were not allowed to receive the issue because "1. it constitutes a threat to the security or discipline of the institution; 2. may facilitate or encourage criminal activity; or 3. may interfere with the rehabilitation of an offender". 

Criticism, accusation and praise

In 1991, James Fallows argued in The Washington Post that The Economist used editorial lines that contradicted the news stories they purported to highlight. In 1999, Andrew Sullivan complained in The New Republic that it uses "marketing genius"  to make up for deficiencies in analysis and original reporting, resulting in "a kind of Reader's Digest"  for America's corporate elite.  Although he acknowledged that the magazine's claim about the dotcom bubble bursting would probably be accurate in the long run (the bubble burst in the US market two years later),  Sullivan pointed out that the magazine greatly exaggerated the danger the US economy was in after the Dow Jones fell to 7,400 during the 1998 Labor Day weekend. He also said that The Economist is editorially constrained because so many scribes graduated from the same college at Oxford University, Magdalen College. The Guardian wrote that "its writers rarely see a political or economic problem that cannot be solved by the trusted three-card trick of privatisation, deregulation and liberalisation". 

In 2008, former editor of Newsweek Jon Meacham, a self-described "fan", criticised The Economist′s focus on analysis over original reporting. 

In 2012, The Economist was accused of hacking into the computer of Bangladesh Supreme Court Justice Mohammed Nizamul Huq, leading to his resignation as the chairman of the International Crimes Tribunal.[http://www.economist.com/blogs/banyan/2012/12/bangladesh Discrepancy in Dhaka], The Economist, 8 December 2012.[http://www.washingtonpost.com/business/bangladesh-crimes-tribunal-accuses-the-economist-magazine-of-hacking-judges-computer/2012/12/09/8f248da2-421e-11e2-8c8f-fbebf7ccab4e_story.html "Economist accused of hacking ICT judge's computer"], Washington Post, 9 December 2012.[http://www.huffingtonpost.com/huff-wires/20121209/as-bangladesh-war-crimes Economist magazine faces contempt in Bangladesh], Huffington Post, 9 December 2012.[http://www.indianexpress.com/news/bangladeshi-war-crimes-tribunal-issues-notice-to-the-economist/1041394 "Bangladeshi war crimes tribunal issues notice to The Economist"], The Indian Express, 6 December 2012.[http://www.thedailystar.net/newDesign/news-details.php?nid
260294 "Tribunal chief's net talks, mail hacked"], Daily Star, 7 December 2012.[http://www.economist.com/news/briefing/21568349-week-chairman-bangladeshs-international-crimes-tribunal-resigned-we-explain The trial of the birth of a nation], The Economist, 15 December 2012. The magazine denied the accusations.

In 2014, the magazine withdrew a harshly-criticised review of a book by Edward Baptist on slavery and American capitalism; The Economist had complained that "[a]lmost all the blacks in his book are victims, almost all the whites villains."  Baptist attributed the harsh review to the magazine's adherence to "free-market fundamentalist" theories, "the idea that everything would be better if measured first and last by its efficiency at producing profit." 

Praise and accolades

In 2005, the Chicago Tribune named it the best English-language magazine noting its strength in international reporting "where it does not feel moved to cover a faraway land only at a time of unmitigated disaster" and that it kept a wall between its reporting and its more conservative editorial policies. 

As the guest on BBC Radio 4's Desert Island Discs on 31 January 2016, Bill Gates confessed to reading The Economist "from cover to cover every week". An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith.  First published in 1776, the book offers one of the world's first collected descriptions of what builds nations' wealth, and is today a fundamental work in classical economics.  By reflecting upon the economics at the beginning of the Industrial Revolution, the book touches upon such broad topics as the division of labour, productivity, and free markets.

History

The Wealth of Nations was published 9 March 1776, during the Scottish Enlightenment and the Scottish Agricultural Revolution.  It influenced a number of authors and economists, as well as governments and organizations. For example, Alexander Hamilton was influenced in part by The Wealth of Nations to write his Report on Manufactures, in which he argued against many of Smith's policies. Interestingly, Hamilton based much of this report on the ideas of Jean-Baptiste Colbert, and it was, in part, Colbert's ideas that Smith responded to with The Wealth of Nations.

Many other authors were influenced by the book and used it as a starting point in their own work, including Jean-Baptiste Say, David Ricardo, Thomas Malthus and, later, Ludwig von Mises. The Russian national poet Aleksandr Pushkin refers to The Wealth of Nations in his 1833 verse-novel Eugene Onegin. 

The Wealth of Nations was the product of seventeen years of notes, and observation of conversation among economists of the time concerning economic and societal conditions during the beginning of the Industrial Revolution, and took Smith ten years to produce.  The result, An Inquiry to the Wealth of Nations, was a treatise which sought to offer a practical application for reformed economic theory to replace the mercantilist and physiocratic economic theories that were becoming less relevant in the time of industrial progress and innovation.  It provided the foundation for new economists, politicians, mathematicians, biologists, and thinkers of all fields to build upon.  Irrespective of historical influence, The Wealth of Nations represented a clear shift in the field of economics, comparable to Sir Isaac Newton's Principia Mathematica for physics, Antoine Lavoisier's Traité Élémentaire de Chimie for chemistry, or Charles Darwin's On the Origin of Species for biology.

Publishing history

Five editions of The Wealth of Nations were published during Smith's lifetime: in 1776, 1778,  1784, 1786, and 1789.  Numerous editions appeared after Smith's death in 1790. To better understand the evolution of the work under Smith's hand, a team led by Edwin Cannan collated the first five editions. The differences were published along with an edited sixth edition in 1904.  They found minor but numerous differences (including the addition of many footnotes) between the first and the second editions, both of which were published in two volumes. The differences between the second and third editions, however, are major: In 1784, Smith annexed these first two editions with the publication of Additions and Corrections to the First and Second Editions of Dr. Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations, and he also had published the three-volume third edition of the Wealth of Nations, which incorporated Additions and Corrections and, for the first time, an index. Among other things, the Additions and Corrections included entirely new sections. The fourth edition, published in 1786, had only slight differences from the third edition, and Smith himself says in the Advertisement at the beginning of the book, "I have made no alterations of any kind." Finally, Cannan notes only trivial differences between the fourth and fifth editions — a set of misprints being removed from the fourth and a different set of misprints being introduced.

Synopsis

Book I: Of the Causes of Improvement in the productive Powers of Labor

Of the Division of Labour:
Division of labour has caused a greater increase in production than any other factor. This diversification is greatest for nations with more industry and improvement, and is responsible for "universal opulence" in those countries. Agriculture is less amenable than manufacturing to division of labour; hence, rich nations are not so far ahead of poor nations in agriculture as in manufacturing:

"The different seasons of the year set different tasks in agriculture. It is not usually possible for farmers to work constantly at one job throughout the year. This natural limit on specialization makes for lower productivity overall in agriculture than in manufacturing. The wealthiest nations usually outperform their neighbours in both agriculture and manufacturing. However, their comparative superiority in manufacturing is typically greater. Other factors being equal, the wealthiest nations tend to have the best-cultivated lands. They put more capital into the land and its yields per acre are higher. Nonetheless, the net economic gains from investing capital in agriculture tend to be disproportionately lower than the net economic gains from investing in manufacturing. Because of this, the market supply price of corn of the same quality is much the same in wealthy as in poor countries.
At the present day, corn is as cheap in Poland as in France – despite the much greater capital investment in French agriculture over the years. Meanwhile, French corn tends to match English corn in price and quality even though France has lagged behind England in general agricultural investment."  

Of the Principle which gives Occasion to the Division of Labour:
Division of labour arises not from innate wisdom, but from humans' propensity to barter:

"Nobody purposely invented industrial specialization with all its advantages for wealth creation. Rather, specialization evolved gradually – as a by-product of the natural human propensity to truck, barter and exchange one thing for another.
The precise nature of that propensity and its connection to our faculties of reason and speech is beyond the scope of the present enquiry. Here, I simply note that the propensity is common to all human beings and that it is unique to humanity."  

That the Division of Labour is Limited by the Extent of the Market:
Limited opportunity for exchange discourages division of labour. Because "water-carriage" (i.e. transportation) extends the market, division of labour, with its improvements, comes earliest to cities near waterways. Civilization began around the highly navigable Mediterranean Sea.

Of the Origin and Use of Money:
With division of labour, the produce of one's own labour can fill only a small part of one's needs. Different commodities have served as a common medium of exchange, but all nations have finally settled on metals, which are durable and divisible, for this purpose. Before coinage, people had to weigh and assay with each exchange, or risk "the grossest frauds and impositions."  Thus nations began stamping metal, on one side only, to ascertain purity, or on all sides, to stipulate purity and amount.
The quantity of real metal in coins has diminished, due to the "avarice and injustice of princes and sovereign states," enabling them to pay their debts in appearance only, and to the defraudment of creditors."

Of the Real and Nominal Price of Commodities, or of their Price in Labour, and their Price in Money:
In the first two passages Smith gives two conflicting definitions of the relative value of a commodity. Ricardo responded to one of Smith's inconsistencies in the Preface of his "Principles":

The writer, in combating received opinions, has found it necessary to advert more particularly to those passages in the writings of Adam Smith from which he sees reason to differ; but he hopes it will not, on that account, be suspected that he does not, in common with all those who acknowledge the importance of the science of Political Economy, participate in the admiration which the profound work of this celebrated author so justly excites. 

Adam Smith defines the value of commodities by the labour embedded and also by the labour a good commands. Ricardo agrees with the first definition:

"The real price of every thing," says Adam Smith,  "What every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it, or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. That this is really the foundation of the exchangeable value of all things, excepting those which cannot be increased by human industry, is a doctrine of the utmost importance in political economy." 

For Ricardo, the value of reproducible commodities and services reflects the relative difficulties of production counted in labour units: direct labour plus the dated labour of the past embedded in inputs (capital) and corrected by interests. This differs from Smith's second definition of value:

"The value of any commodity ... 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."

Ricardo  disagrees:
"Adam Smith, who so accurately defined the original source of exchangeable value ... speaks of things being more or less valuable, in proportion as they will exchange for more or less of this standard measure. ... [N]ot the quantity of labour bestowed on the production of any object, but the quantity which it can command in the market: as if these were two equivalent expressions..."

Smith's second definition pleases neoclassical economists, who determine value by the utility that a commodity provides a person rather than cost of production as do classical economists.

Of the Component Parts of the Price of Commodities: Smith argues that the price of any product reflects wages, rent of land and "...profit of stock," which compensates the capitalist for risking his resources.

Of the Natural and Market Price of Commodities:

To paraphrase Smith, and the first part of this chapter, when demand exceeds supply, the price goes up. When the supply exceeds demand, the price goes down.

He then goes on to comment on the different avenues that people can take to generate a larger profit than normal. Some of those include: finding a commodity that few others have that allows for a high profit, and being able to keep that secret; Finding a way to produce a unique commodity (The dyer who discovers a unique dye). He also states that the former usually has a short lifespan of high profitability, and the latter has a longer. He also notes that a monopoly is essentially the same as the dyers trade secret, and can thus lead to high profitability for a long time by keeping the supply below the effectual demand.

Of the Wages of Labour: In this section, Smith describes how the wages of labour are dictated primarily by the competition among labourers and masters. When labourers bid against one another for limited opportunities for employment, the wages of labour collectively fall, whereas when employers compete against one another for limited supplies of labour, the wages of labour collectively rise. However, this process of competition is often circumvented by combinations among labourers and among masters. When labourers combine and no longer bid against one another, their wages rise, whereas when masters combine, wages fall. In Smith's day, organised labour was dealt with very harshly by the law.

Smith himself wrote about the "severity" of such laws against worker actions, and made a point to contrast the "clamour" of the "masters" against workers associations, while associations and collusions of the masters "are never heard by the people" though such actions are "always" and "everywhere" taking place:

 "We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate [...] Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy till the moment of execution; and when the workmen yield, as they sometimes do without resistance, though severely felt by them, they are never heard of by other people". In contrast, when workers combine, "the masters [...] never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combination of servants, labourers, and journeymen." 

In societies where the amount of labour exceeds the amount of revenue available for waged labour, competition among workers is greater than the competition among employers, and wages fall. Inversely, where revenue is abundant, labour wages rise. Smith argues that, therefore, labour wages only rise as a result of greater revenue disposed to pay for labour. Smith thought labour the same as any other commodity in this respect:

However, the amount of revenue must increase constantly in proportion to the amount of labour for wages to remain high. Smith illustrates this by juxtaposing England with the North American colonies. In England, there is more revenue than in the colonies, but wages are lower, because more workers flock to new employment opportunities caused by the large amount of revenue— so workers eventually compete against each other as much as they did before. By contrast, as capital continues to flow to the colonial economies at least at the same rate that population increases to "fill out" this excess capital, wages there stay higher than in England.

Smith was highly concerned about the problems of poverty. He writes:

The only way to determine whether a man is rich or poor is to examine the amount of labour he can afford to purchase.
"Labour is the real exchange for commodities".

Smith also describes the relation of cheap years and the production of manufactures versus the production in dear years. He argues that while some examples, such as the linen production in France, show a correlation, another example in Scotland shows the opposite. He concludes that there are too many variables to make any statement about this.

Of the Profits of Stock: In this chapter, Smith uses interest rates as an indicator of the profits of stock. This is because interest can only be paid with the profits of stock, and so creditors will be able to raise rates in proportion to the increase or decrease of the profits of their debtors.

Smith argues that the profits of stock are inversely proportional to the wages of labour, because as more money is spent compensating labour, there is less remaining for personal profit. It follows that, in societies where competition among labourers is greatest relative to competition among employers, profits will be much higher. Smith illustrates this by comparing interest rates in England and Scotland. In England, government laws against usury had kept maximum interest rates very low, but even the maximum rate was believed to be higher than the rate at which money was usually loaned. In Scotland, however, interest rates are much higher. This is the result of a greater proportion of capitalists in England, which offsets some competition among labourers and raises wages.

However, Smith notes that, curiously, interest rates in the colonies are also remarkably high (recall that, in the previous chapter, Smith described how wages in the colonies are higher than in England). Smith attributes this to the fact that, when an empire takes control of a colony, prices for a huge abundance of land and resources are extremely cheap. This allows capitalists to increase his profit, but simultaneously draws many capitalists to the colonies, increasing the wages of labour. As this is done, however, the profits of stock in the mother country rise (or at least cease to fall), as much of it has already flocked offshore.

Of Wages and Profit in the Different Employments of Labour and Stock: Smith repeatedly attacks groups of politically aligned individuals who attempt to use their collective influence to manipulate the government into doing their bidding. At the time, these were referred to as "factions," but are now more commonly called "special interests," a term that can comprise international bankers, corporate conglomerations, outright oligopolies, trade unions and other groups. Indeed, Smith had a particular distrust of the tradesman class. He felt that the members of this class, especially acting together within the guilds they want to form, could constitute a power block and manipulate the state into regulating for special interests against the general interest:

Smith also argues against government subsidies of certain trades, because this will draw many more people to the trade than what would otherwise be normal, collectively lowering their wages.

Chapter 10, part ii, motivates an understanding of the idea of feudalism.

Of the Rent of the Land: Rent, considered as the price paid for the use of land, is naturally the highest the tenant can afford in the actual circumstances of the land. In adjusting lease terms, the landlord endeavours to leave him no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighbourhood. This is evidently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more. Whatever part of the produce, or, what is the same thing, whatever part of its price, is over and above this share, he naturally endeavours to reserve to himself as the rent of his land, which is evidently the highest the tenant can afford to pay in the actual circumstances of the land. Sometimes, indeed, the liberality, more frequently the ignorance, of the landlord, makes him accept of somewhat less than this portion; and sometimes too, though more rarely, the ignorance of the tenant makes him undertake to pay somewhat more, or to content himself with somewhat less, than the ordinary profits of farming stock in the neighbourhood. This portion, however, may still be considered as the natural rent of land, or the rent for which it is naturally meant that land should for the most part be let.

Book II: Of the Nature, Accumulation, and Employment of Stock

Of the Division of Stock:
When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavours by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the labouring poor in all countries.
But when he possesses stock sufficient to maintain him for months or years, he naturally endeavours to derive a revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital. 

Of Money Considered as a particular Branch of the General Stock of the Society:
"From references of the first book, that the price of the greater part of commodities resolves itself into three parts, of which one pays the wages of the labour, another the profits of the stock, and a third the rent of the land which had been employed in producing and bringing them to market: that there are, indeed, some commodities of which the price is made up of two of those parts only, the wages of labour, and the profits of stock: and a very few in which it consists altogether in one, the wages of labour: but that the price of every commodity necessarily resolves itself into some one, or other, or all of these three parts; every part of it which goes neither to rent nor to wages, being necessarily profit to somebody."

Of the Accumulation of Capital, or of Productive and Unproductive Labour:
"One sort of labour adds to the value of the subject upon which it is bestowed: there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour. Thus the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his master's profit. The labour of a menial servant, on the contrary, adds to the value of nothing."

Of Stock Lent at Interest:
"The stock which is lent at interest is always considered as a capital by the lender. He expects that in due time it is to be restored to him, and that in the meantime the borrower is to pay him a certain annual rent for the use of it. The borrower may use it either as a capital, or as a stock reserved for immediate consumption. If he uses it as a capital, he employs it in the maintenance of productive labourers, who reproduce the value with a profit. He can, in this case, both restore the capital and pay the interest without alienating or encroaching upon any other source of revenue. If he uses it as a stock reserved for immediate consumption, he acts the part of a prodigal, and dissipates in the maintenance of the idle what was destined for the support of the industrious. He can, in this case, neither restore the capital nor pay the interest without either alienating or encroaching upon some other source of revenue, such as the property or the rent of land."
The stock which is lent at interest is, no doubt, occasionally employed in both these ways, but in the former much more frequently than in the latter."

Book III: Of the different Progress of Opulence in different Nations

The natural progress of opulence

The natural progress of opulence is the “allocation of capital between cities and the countryside.”   Adam Smith asserts that the optimum economic progress for a country would be to allocate most of its capital to the countryside and then gradually develop the cities.

Long-term economic growth

Adam Smith uses this example to address long term economic growth. Smith states, “As subsistence is, in the nature of things, prior to conveniency and luxury, so the industry which procures the former, must necessarily be prior to that which ministers to the latter.”[http://www.bartleby.com/10/301.html I. Book III. Of the Natural Progress of Opulence. Smith, Adam. 1909–14. Wealth of Nations. The Harvard Classics]  In order for industrial success, subsistence is required first from the countryside. Industry and trade occur in cities while agriculture occurs in the countryside.

Investment

Adam Smith states that if investors were left to their own devices they would, in fact, invest in agriculture primarily because: The man who employs his capital in land, has it more under his view and command, and his fortune is much less liable to accident, than that of the trader, who is obliged frequently to commit it, not only to the winds and the waves, but to the more uncertain elements of human folly and injustice, by giving great credits in distant countries to men, with whose character and situation he can seldom be thoroughly acquainted.

Agricultural jobs

Agricultural work is a more desirable situation than industrial work because the owner is in complete control. Smith states that: In our North American colonies, where uncultivated land is still to be had upon easy terms, no manufactures for distant sale have ever yet been established in any of their towns. When an artificer has acquired a little more stock than is necessary for carrying on his own business in supplying the neighbouring country, he does not, in North America, attempt to establish with it a manufacture for more distant sale, but employs it in the purchase and improvement of uncultivated land. From artificer he becomes planter, and neither the large wages nor the easy subsistence which that country affords to artificers, can bribe him rather to work for other people than for himself. He feels that an artificer is the servant of his customers, from whom he derives his subsistence; but that a planter who cultivates his own land, and derives his necessary subsistence from the labour of his own family, is really a master, and independent of all the world.  Where there is open countryside agriculture is much preferable to industrial occupations and ownership.

Adam Smith goes on to say “According to the natural course of things, therefore, the greater part of the capital of every growing society is, first, directed to agriculture, afterwards to manufactures, and last of all to foreign commerce.”  This sequence leads to growth, and therefore opulence.

"The great commerce of every civilised society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of crude for manufactured produce, either immediately, or by the intervention of money, or of some sort of paper which represents money. The country supplies the town with the means of subsistence and the materials of manufacture. The town repays this supply by sending back a part of the manufactured produce to the inhabitants of the country. The town, in which there neither is nor can be any reproduction of substances, may very properly be said to gain its whole wealth and subsistence from the country. We must not, however, upon this account, imagine that the gain of the town is the loss of the country. The gains of both are mutual and reciprocal, and the division of labour is in this, as in all other cases, advantageous to all the different persons employed in the various occupations into which it is subdivided."

Of the Discouragement of Agriculture: Chapter 2's long title is "Of the Discouragement of Agriculture in the Ancient State of Europe after the Fall of the Roman Empire".
"When the German and Scythian nations overran the western provinces of the Roman empire, the confusions which followed so great a revolution lasted for several centuries. The rapine and violence which the barbarians exercised against the ancient inhabitants interrupted the commerce between the towns and the country. The towns were deserted, and the country was left uncultivated, and the western provinces of Europe, which had enjoyed a considerable degree of opulence under the Roman empire, sunk into the lowest state of poverty and barbarism. During the continuance of those confusions, the chiefs and principal leaders of those nations acquired or usurped to themselves the greater part of the lands of those countries. A great part of them was uncultivated; but no part of them, whether cultivated or uncultivated, was left without a proprietor. All of them were engrossed, and the greater part by a few great proprietors.
This original engrossing of uncultivated lands, though a great, might have been but a transitory evil. They might soon have been divided again, and broke into small parcels either by succession or by alienation. The law of primogeniture hindered them from being divided by succession: the introduction of entails prevented their being broke into small parcels by alienation."

Of the Rise and Progress of Cities and Towns, after the Fall of the Roman Empire:
"The inhabitants of cities and towns were, after the fall of the Roman empire, not more favoured than those of the country. They consisted, indeed, of a very different order of people from the first inhabitants of the ancient republics of Greece and Italy. These last were composed chiefly of the proprietors of lands, among whom the public territory was originally divided, and who found it convenient to build their houses in the neighbourhood of one another, and to surround them with a wall, for the sake of common defence. After the fall of the Roman empire, on the contrary, the proprietors of land seem generally to have lived in fortified castles on their own estates, and in the midst of their own tenants and dependants. The towns were chiefly inhabited by tradesmen and mechanics, who seem in those days to have been of servile, or very nearly of servile condition. The privileges which we find granted by ancient charters to the inhabitants of some of the principal towns in Europe sufficiently show what they were before those grants. The people to whom it is granted as a privilege that they might give away their own daughters in marriage without the consent of their lord, that upon their death their own children, and not their lord, should succeed to their goods, and that they might dispose of their own effects by will, must, before those grants, have been either altogether or very nearly in the same state of villanage with the occupiers of land in the country."

How the Commerce of the Towns Contributed to the Improvement of the Country: Smith often harshly criticised those who act purely out of self-interest and greed, and warns that,
"...[a]ll 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." ([https://books.google.co.uk/books?idsPULAAAAYAAJ&dq
wealth+nothing+for+other+people&q%22nothing+for+other+people%22#v
snippet&q%22nothing%20for%20other%20people%22&f
false Book 3, Chapter 4])

Book IV: Of Systems of political Economy

Smith vigorously attacked the antiquated government restrictions he thought hindered industrial expansion. In fact, he attacked most forms of government interference in the economic process, including tariffs, arguing that this creates inefficiency and high prices in the long run. It is believed that this theory influenced government legislation in later years, especially during the 19th century.

Smith advocated a government that was active in sectors other than the economy. He advocated public education for poor adults, a judiciary, and a standing army—institutional systems not directly profitable for private industries.

Of the Principle of the Commercial or Mercantile System: The book has sometimes been described as a critique of mercantilism and a synthesis of the emerging economic thinking of Smith's time. Specifically, The Wealth of Nations attacks, inter alia, two major tenets of mercantilism:
# The idea that protectionist tariffs serve the economic interests of a nation (or indeed any purpose whatsoever) and
# The idea that large reserves of gold bullion or other precious metals are necessary for a country's economic success. This critique of mercantilism was later used by David Ricardo when he laid out his Theory of Comparative Advantage.

Of Restraints upon the Importation: Chapter 2's full title is "Of Restraints upon the Importation from Foreign Countries of such Goods as can be Produced at Home". The "invisible hand" is a frequently referenced theme from the book, although it is specifically mentioned only once.

The metaphor of the "invisible hand" has been widely used out of context.  In the passage above Smith is referring to "the support of domestic industry" and contrasting that support with the importation of goods. Neoclassical economic theory has expanded the metaphor beyond the domestic/foreign manufacture argument to encompass nearly all aspects of economics. 

Of the extraordinary Restraints: Chapter 3's long title is "Of the extraordinary Restraints upon the Importation of Goods of almost all Kinds, from those Countries with which the Balance is supposed to be Disadvantageous".

Of Drawbacks: Merchants and manufacturers are not contented with the monopoly of the home market, but desire likewise the most extensive foreign sale for their goods. Their country has no jurisdiction in foreign nations, and therefore can seldom procure them any monopoly there. They are generally obliged, therefore, to content themselves with petitioning for certain encouragements to exportation.

Of these encouragements what are called Drawbacks seem to be the most reasonable. To allow the merchant to draw back upon exportation, either the whole or a part of whatever excise or inland duty is imposed upon domestic industry, can never occasion the exportation of a greater quantity of goods than what would have been exported had no duty been imposed. Such encouragements do not tend to turn towards any particular employment a greater share of the capital of the country than what would go to that employment of its own accord, but only to hinder the duty from driving away any part of that shares to other employments.

Of Bounties: Bounties upon exportation are, in Great Britain, frequently petitioned for, and sometimes granted to the produce of particular branches of domestic industry. By means of them our merchants and manufacturers, it is pretended, will be enabled to sell their goods as cheap, or cheaper than their rivals in the foreign market. A greater quantity, it is said, will thus be exported, and the balance of trade consequently turned more in favour of our own country. We cannot give our workmen a monopoly in the foreign as we have done in the home market. We cannot force foreigners to buy their goods as we have done our own countrymen. The next best expedient, it has been thought, therefore, is to pay them for buying. It is in this manner that the mercantile system proposes to enrich the whole country, and to put money into all our pockets by means of the balance of trade

Of Treaties of Commerce:
"When a nation binds itself by treaty either to permit the entry of certain goods from one foreign country which it prohibits from all others, or to exempt the goods of one country from duties to which it subjects those of all others, the country, or at least the merchants and manufacturers of the country, whose commerce is so favoured, must necessarily derive great advantage from the treaty. Those merchants and manufacturers enjoy a sort of monopoly in the country which is so indulgent to them. That country becomes a market both more extensive and more advantageous for their goods: more extensive, because the goods of other nations being either excluded or subjected to heavier duties, it takes off a greater quantity of theirs: more advantageous, because the merchants of the favoured country, enjoying a sort of monopoly there, will often sell their goods for a better price than if exposed to the free competition of all other nations."
Such treaties, however, though they may be advantageous to the merchants and manufacturers of the favoured, are necessarily disadvantageous to those of the favouring country. A monopoly is thus granted against them to a foreign nation; and they must frequently buy the foreign goods they have occasion for dearer than if the free competition of other nations was admitted.

Of Colonies:

Of the Motives for establishing new Colonies:
"The interest which occasioned the first settlement of the different European colonies in America and the West Indies was not altogether so plain and distinct as that which directed the establishment of those of ancient Greece and Rome.
All the different states of ancient Greece possessed, each of them, but a very small territory, and when the people in any one of them multiplied beyond what that territory could easily maintain, a part of them were sent in quest of a new habitation in some remote and distant part of the world; warlike neighbours surrounded them on all sides, rendering it difficult for any of them to enlarge their territory at home. The colonies of the Dorians resorted chiefly to Italy and Sicily, which, in the times preceding the foundation of Rome, were inhabited by barbarous and uncivilised nations: those of the Ionians and Eolians, the two other great tribes of the Greeks, to Asia Minor and the islands of the Egean Sea, of which the inhabitants seem at that time to have been pretty much in the same state as those of Sicily and Italy. The mother city, though she considered the colony as a child, at all times entitled to great favour and assistance, and owing in return much gratitude and respect, yet considered it as an emancipated child over whom she pretended to claim no direct authority or jurisdiction. The colony settled its own form of government, enacted its own laws, elected its own magistrates, and made peace or war with its neighbours as an independent state, which had no occasion to wait for the approbation or consent of the mother city. Nothing can be more plain and distinct than the interest which directed every such establishment."

Causes of Prosperity of new Colonies:
"The colony of a civilised nation which takes possession either of a waste country, or of one so thinly inhabited that the natives easily give place to the new settlers, advances more rapidly to wealth and greatness than any other human society.
The colonists carry out with them a knowledge of agriculture and of other useful arts superior to what can grow up of its own accord in the course of many centuries among savage and barbarous nations. They carry out with them, too, the habit of subordination, some notion of the regular government which takes place in their own country, of the system of laws which supports it, and of a regular administration of justice; and they naturally establish something of the same kind in the new settlement."

Of the Advantages which Europe has derived from the Discovery of America, and from that of a Passage to the East Indies by the Cape of Good Hope:
"Such are the advantages which the colonies of America have derived from the policy of Europe. What are those which Europe has derived from the discovery and colonisation of America? Those advantages may be divided, first, into the general advantages which Europe, considered as one great country, has derived from those great events; and, secondly, into the particular advantages which each colonising country has derived from the colonies which particularly belong to it, in consequence of the authority or dominion which it exercises over them.:
The general advantages which Europe, considered as one great country, has derived from the discovery and colonisation of America, consist, first, in the increase of its enjoyments; and, secondly, in the augmentation of its industry.
The surplus produce of America, imported into Europe, furnishes the inhabitants of this great continent with a variety of commodities which they could not otherwise have possessed; some for conveniency and use, some for pleasure, and some for ornament, and thereby contributes to increase their enjoyments."

Conclusion of the Mercantile System: Smith's argument about the international political economy opposed the idea of Mercantilism. While the Mercantile System encouraged each country to hoard gold, while trying to grasp hegemony, Smith argued that free trade eventually makes all actors better off. This argument is the modern 'Free Trade' argument.

Of the Agricultural Systems: Chapter 9's long title is "Of the Agricultural Systems, or of those Systems of Political Economy, which Represent the Produce of Land, as either the Sole or the Principal, Source of the Revenue and Wealth of Every Country".
"That system which represents the produce of land as the sole source of the revenue and wealth of every country has, so far as by that time, never been adopted by any nation, and it at present exists only in the speculations of a few men of great learning and ingenuity in France. It would not, surely, be worthwhile to examine at great length the errors of a system which never has done, and probably never will do, any harm in any part of the world."

Book V: Of the Revenue of the Sovereign or Commonwealth

Smith postulated four "maxims" of taxation: proportionality, transparency, convenience, and efficiency. Some economists interpret Smith's opposition to taxes on transfers of money, such as the Stamp Act, as opposition to capital gains taxes, which did not exist in the 18th century.  Other economists credit Smith as one of the first to advocate a progressive tax.   Smith wrote, "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"  Smith believed that an even "more proper" source of progressive taxation than property taxes was ground rent. Smith wrote that "nothing [could] be more reasonable" than a land value tax.

Of the Expenses of the Sovereign or Commonwealth: Smith uses this chapter to comment on the concept of taxation and expenditure by the state. On taxation Smith wrote,

Smith advocates a tax naturally attached to the "abilities" and habits of each echelon of society.

For the lower echelon, Smith recognised the intellectually erosive effect that the otherwise beneficial division of labour can have on workers, what Marx, though he mainly opposes Smith, later named "alienation,"; therefore, Smith warns of the consequence of government failing to fulfill its proper role, which is to preserve against the innate tendency of human society to fall apart.

Under Smith's model, government involvement in any area other than those stated above negatively impacts economic growth. This is because economic growth is determined by the needs of a free market and the entrepreneurial nature of private persons. A shortage of a product makes its price rise, and so stimulates producers to produce more and attracts new people to that line of production. An excess supply of a product (more of the product than people are willing to buy) drives prices down, and producers refocus energy and money to other areas where there is a need. 

Of the Sources of the General or Public Revenue of the Society: In his discussion of taxes in Book Five, Smith wrote:

He also introduced the distinction between a direct tax, and by implication an indirect tax (although he did not use the word "indirect"):

And further:

This term was later used in United States, Article I, Section 2, Clause 3 of the U.S. Constitution, and James Madison, who wrote much of the Constitution, is known to have read Smith's book.

Of War and Public Debts:

Smith then goes on to say that even if money was set aside from future revenues to pay for the debts of war, it seldom actually gets used to pay down the debt. Politicians are inclined to spend the money on some other scheme that will win the favour of their constituents. Hence, interest payments rise and war debts continue to grow larger, well beyond the end of the war.

Summing up, if governments can borrow without check, then they are more likely to wage war without check, and the costs of the war spending will burden future generations, since war debts are almost never repaid by the generations that incurred them.

Reception and impact

The first edition of the book sold out in six months.  The printer William Strahan wrote on 12 April 1776 that David Hume had said that The Wealth of Nations required too much thought to be as popular as Edward Gibbon's The History of the Decline and Fall of the Roman Empire. Strahan also wrote: "What you say of Mr. Gibbon's and Dr. Smith's book is exactly just. The former is the most popular work; but the sale of the latter, though not near so rapid, has been more than I could have expected from a work that requires much thought and reflection (qualities that do not abound among modern readers) to peruse to any purpose".  Gibbon wrote to Adam Ferguson on 1 April: "What an excellent work is that with which our common friend Mr. Adam Smith has enriched the public! An extensive science in a single book, and the most profound ideas expressed in the most perspicuous language".  The review of the book in the Annual Register was probably written by Whig MP Edmund Burke. 

Smith's biographer John Rae contends that The Wealth of Nations shaped government policy soon after it was published. In 1777 the Prime Minister, Lord North, in the first budget after the book was published, got the idea for two new taxes from the book: one on man-servants and the other on property sold at auction. The budget of 1778 introduced the inhabited house duty and the malt tax, both recommended by Smith. In 1779 Smith was consulted by politicians Henry Dundas and Lord Carlisle on the subject of giving Ireland free trade. 

The Wealth of Nations was first mentioned in Parliament by the Whig leader Charles James Fox on 11 November 1783: "There was a maxim laid down in an excellent book upon the Wealth of Nations which had been ridiculed for its simplicity, but which was indisputable as to its truth. In that book it was stated that the only way to become rich was to manage matters so as to make one's income exceed one's expenses. This maxim applied equally to an individual and to a nation. The proper line of conduct therefore was by a well-directed economy to retrench every current expense, and to make as large a saving during the peace as possible".  However Fox once told Charles Butler sometime after 1785 that he had never read the book and that "There is something in all these subjects which passes my comprehension; something so wide that I could never embrace them myself nor find any one who did".  In 1796 when Fox was dining with Lord Lauderdale, Lauderdale remarked that they knew nothing of political economy before Adam Smith wrote. "Pooh," replied Fox, "your Adam Smiths are nothing, but" (he added, turning to the company) "that is his love; we must spare him there". Lauderdale replied: "I think he is everything", to which Fox rejoined: "That is a great proof of your affection". Fox also found Adam Smith "tedious" and believed that one half of The Wealth of Nations could be "omitted with much benefit to the subject". 

In an editorial of The Times on 3 August 1787, it was stated: "It is astonishing to consider, how few merchants are acquainted with Smith's Wealth of Nations, or Anderson's History of Commerce, which are certainly books that should be perused by every man who makes trade his pursuit". 

The Wealth of Nations was next mentioned in Parliament by Robert Thornton MP in 1787 to support the Commercial Treaty with France. In the same year George Dempster MP referenced it in the debate on the proposal to farm the post-horse duties and in 1788 by a Mr. Hussy on the Wool Exportation Bill. In 1791 the English radical Thomas Paine wrote in his Rights of Man that "Had Mr. Burke possessed talents similar to the author ‘On the Wealth of Nations,’ he would have comprehended all the parts which enter into, and, by assemblage, form a constitution".  The Prime Minister, William Pitt, praised Smith in the House of Commons on 17 February 1792: "...an author of our own times now unfortunately no more (I mean the author of a celebrated treatise on the Wealth of Nations), whose extensive knowledge of detail, and depth of philosophical research will, I believe, furnish the best solution to every question connected with the history of commerce, or with the systems of political economy".  In the same year it was quoted by Samuel Whitbread MP and Fox (on the division of labour) in the debate on the armament against Russia and also by William Wilberforce in introducing his Bill against the slave trade. It was not mentioned in the House of Lords until 1793, by Lord Lansdowne and Lord Loughbourough. Lansdowne said: "With respect to French principles, as they had been denominated, those principles had been exported from us to France, and could not be said to have originated among the population of the latter country. The new principles of government founded on the abolition of the old feudal system were originally propagated among us by the Dean of Gloucester, Mr. Tucker, and had since been more generally inculcated by Dr. Smith in his work on the Wealth of Nations, which had been recommended as a book necessary for the information of youth by Mr. Dugald Stewart in his Elements of the Philosophy of the Human Mind". Loughborough replied that "in the works of Dean Tucker, Adam Smith, and Mr. Stewart, to which allusion had been made, no doctrines inimical to the principles of civil government, the morals or religion of mankind, were contained, and therefore to trace the errors of the French to these causes was manifestly fallacious".  On 16 May 1797 Pitt said in the debate on the suspension of cash payments by the Bank of England that Smith was "that great author" but his arguments "though always ingenious" were "sometimes injudicious". 

Sir John Mitford, the Solicitor-General, said on 22 December 1798 in speaking on cross-bills (a bill of exchange given in consideration of another bill) that Smith "in his Wealth of Nations, explains the nature and pernicious consequences of this practice with his usual perspicuity and philosophical accuracy".  On 5 December 1800 Lord Warwick said in a debate on the price of corn that:

There was hardly any kind of property on which the law did not impose some restraints and regulations with regard to the sale of them, except that of provisions. This was probably done on the principles laid down by a celebrated and able writer, Doctor Adam Smith, who had maintained that every thing ought to be left to its own level. He knew something of that Gentleman, whose heart he knew was as sound as his head; and he was sure that had he lived to this day and beheld the novel state of wretchedness to which the country was now reduced—a state, which as the like had never occurred before, could never have entered into his mind; that Great Man would have reason to blush for some of the doctrines he had laid down. He would now have abundant opportunities of observing that all those artificial means of enhancing the price of provisions, which he had considered as no way mischievous, were practised at this time to a most alarming extent. He would see the Farmer keeping up his produce while the poor were labouring under all the miseries of want, and he would see Forestallers, Regraters, and all kinds of Middle-men making large profits upon it. 

Lord Grenville replied that "he must remind him, that so far from there having been any difference in the state of the Country when that great man lived, and the present times, his book was first published at a period, previous to which there had been two or three seasons of great dearth and distress; and during those seasons there were speculators without number, who raised an unfounded and unjust clamour against Forestallers and Regraters, and who proposed that a certain price should be fixed on every article: but all their plans were wisely rejected, and the Treatise on the Wealth of Nations, which came forward soon after, pointed out in the clearest light how absurd and futile they must have been".

In 1800 the Anti-Jacobin Review criticised The Wealth of Nations and Robert Southey in 1812 in the Quarterly Review condemned The Wealth of Nations as a "tedious and hard-hearted book". 

In 1803 The Times argued against war with Spain: "She is our best customer; and by the gentle and peaceable stream of commerce, the treasures of the new world flow with greater certainty into English reservoirs, than it could do by the most successful warfare. They come in this way to support our manufactures, to encourage industry, to feed our poor, to pay taxes, to reward ingenuity, to diffuse riches among all classes of people. But for the full understanding of this beneficial circulation of wealth, we must refer to Dr. Adam Smith's incomparable Treatise on the Wealth of Nations".  In 1810 a correspondent writing under the pseudonym of Publicola included at the head of his letter Smith's line that "Exclusive Companies are nuisances in every respect" and called him "that learned writer".  In 1821 The Times quoted Smith's opinion that the interests of corn dealers and the people were the same. 

In 1826 the English radical William Cobbett criticised in his Rural Rides the political economists' hostility to the Poor Law: "Well, amidst all this suffering, there is one good thing; the Scotch political economy is blown to the devil, and the Edinburgh Review and Adam Smith along with it". 

The Radical MP Richard Cobden as a young man studied The Wealth of Nations; his copy is still in the library of his home at Dunford House and there are lively marginal notes on the places where Smith condemns British colonial policy. There are none on the passage about the invisible hand.  Cobden campaigned for free trade in his agitation against the Corn Laws. On 13 October 1843 Cobden quoted (accurately) Smith's protest against the "plain violation of the most sacred property" of every man derived from his labour.  On 8 May 1844 he cited Smith's opposition to slave labour  and on 3 July 1844 claimed that Smith had been misrepresentated by protectionists as a monopolist.  On 8 October 1849 Cobden claimed that he had "gone through the length and breadth of this country, with Adam Smith in my hand, to advocate the principles of Free Trade." He also said he had tried "to popularise to the people of this country, and of the Continent, those arguments with which Adam Smith, David Hume, Ricardo, and every man who has written on this subject, have demonstrated the funding system to be injurious to mankind, and unjust in principle".  Cobden believed it to be morally wrong to lend money to be spent on war. When The Times claimed the political economists were against Cobden on this, Cobden wrote on 16 October 1849: "I can quote Adam Smith whose authority is without appeal now in intellectual circles, it gives one the basis of science upon which to raise appeals to the moral feelings".  When in 1850 the Russian government attempted to raise a loan, ostensibly for the construction of a railway from St. Petersburg to Moscow, but actually to cover the deficit brought about by its war against Hungary, Cobden said on 18 January: "I take my stand on one of the strongest grounds in stating that Adam Smith and other great authorities on political economy are opposed to the very principle of such loans".  In 1863, during Cobden's dispute with The Times over its claims that his fellow Radical John Bright wanted to divide the land of the rich amongst the poor, Cobden read to a friend the passage in the Wealth of Nations which criticised primogeniture and entail. Cobden said that if Bright had been as plain-speaking as Smith, "how he would have been branded as an incendiary and Socialist".  On 23 November 1864 Cobden proclaimed: "If I were five-and-twenty or thirty, instead of, unhappily, twice that number of years, I would take Adam Smith in hand—I would not go beyond him, I would have no politics in it—I would take Adam Smith in hand, and I would have a League for free trade in Land just as we had a League for free trade in Corn. You will find just the same authority in Adam Smith for the one as for the other; and if it were only taken up as it must be taken up to succeed, not as a political, revolutionary, Radical, Chartist notion, but taken up on politico-economic grounds, the agitation would be certain to succeed". 

The Liberal statesman William Ewart Gladstone chaired the meeting of the Political Economy Club to celebrate the centenary of the publication of The Wealth of Nations. 

The Liberal historian Lord Acton believed that The Wealth of Nations gave a "scientific backbone to liberal sentiment"  and that it was the "classic English philosophy of history". 

United States

James Madison, in a speech given in Congress on 2 February 1791, cited The Wealth of Nations in opposing a national bank: "The principal disadvantages consisted in, 1st. banishing the precious metals, by substituting another medium to perform their office: This effect was inevitable. It was admitted by the most enlightened patrons of banks, particularly by Smith on the Wealth of Nations".  Thomas Jefferson, writing to John Norvell on 14 June 1807, claimed that on "the subjects of money & commerce, Smith's Wealth of Nations is the best book to be read, unless Say's Political Economy can be had, which treats the same subject on the same principles, but in a shorter compass & more lucid manner". 

Two views of the "Wealth of Nations"

In the Preface to his edition, Cannan shows that the major part of the "Wealth of Nations" follows Adam Smith’s earlier lectures, but that there are important additions due to his visit to France. These additions were so important for Smith that he puts them at the beginning of his work. For Cannan as a neoclassical economist they are superfluous and not the real Adam Smith: "These changes do not make so much real difference to Smith’s own work as might be supposed; the theory of distribution, though it appears in the title of Book I., is no essential part of the work and could easily be excised ... But to subsequent [classical] economics they were of fundamental importance. They settled the form of economic treatises for a century at least." 

The "Wealth of Nations" is therefore inhomogeneous and consists of the earlier elements of an individualistic strain in the tradition of Aristotle, Puffendorf and Hutcheson,  Smith’s teacher, – elements compatible with a neoclassical theory – and the classical theory Smith learned in France.

Smith’s classical message is what he states at the very beginning: the two ways to create the “Wealth of Nations”. First, make productive labour even more productive by enhancing markets to deepen the division of labour (moving the neoclassical production curve to the right); and second, use more labour productively instead of unproductively, i.e., produce more goods and services that are inputs to the next economic reproduction circle, as opposed to goods used up in final consumption. In the words of Adam Smith:

"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 ... . [T]his produce ... bears a greater or smaller proportion to the number of those who are to consume it ... .[B]ut this proportion must in every nation be regulated by two different circumstances;
* first, by the skill, dexterity, and judgment with which its labour is generally applied; and,
* secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed [emphasis added]." 

Ricardo  repeats this in identical terms. Smith’s and the classical macro-economical distinction between productive and unproductive labour makes no sense within neoclassical micro-economics as any labour or idleness of a Homo economicus maximises his micro-economic “utility” and is therefore productive.

For neoclassical economists Smith’s central message is the Invisible hand  mentioned deep in the books and seen as a proto-neoclassical statement of the neoclassical General equilibrium theory:

"[E]very 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.” 

This often quoted passage describes the unintentional consequences that come from individuals' pursuit of their "own gain" and security. Smith argued people prefer local industry and are biased against international trade. Ideally, he saw economics as characterised by small local economies interacting with each other and guided by the enlightened self-interest of individuals. This was a reaction against the practices of early transnational corporations (for example: the British East India Company and Muscovy Company), which were mostly unresponsive to local affairs and stewardship of resources. Though the argument is frequently used to justify free-trade policies, The Wealth of Nations was a rebuttal to the scale and effects of chartered monopoly. By positing—now famously—that "self-interest" promotes more just societies, he was prescribing to economies already heavily tilted against individual human agency. For instance, American colonists were permitted to grow cotton but not to manufacture with it. They had to sell cotton to England for processing, then buy it back as clothing. Smith felt opposing large multinational corporations (and the governments that support them), allowed individuals to direct industry "in such a manner as its produce may be of the greatest value." This value comes from the individual's self-interest and leads to a result that is "no part of his intention."

Modern evaluations

George Stigler attributes to Smith "the most important substantive proposition in all of economics" and foundation of resource-allocation theory. It is that, under competition, owners of resources (labour, land, and capital) will use them most profitably, resulting in an equal rate of return in equilibrium for all uses (adjusted for apparent differences arising from such factors as training, trust, hardship, and unemployment).  He also describes Smith's theorem that "the division of labour is limited by the extent of the market" as the "core of a theory of the functions of firm and industry" and a "fundamental principle of economic organisation." 

Paul Samuelson finds in Smith's pluralist use of supply and demand — as applied to wages, rents, and profit – a valid and valuable anticipation of the general equilibrium modelling of Walras a century later. Moreover, Smith's allowance for wage increases in the short and intermediate term from capital accumulation and invention added a realism missed later by Malthus, Ricardo, and Marx in their propounding a rigid subsistence-wage theory of labour supply. 

In noting the last words of the Wealth of Nations,
If any of the provinces of the British empire cannot be made to contribute towards the support of the whole empire, it is surely time that Great Britain should free herself from the expence of defending those provinces in time of war, and of supporting any part of their civil or military establishments in time of peace, and endeavour to accommodate her future views and designs to the real mediocrity of her circumstances. 

Ronald Coase suggests that if Smith's earlier proposal of granting colonies representation in the British parliament proportional to their contributions to public revenues had been followed, "there would have been no 1776, ... America would now be ruling England, and we [in America] would be today celebrating Adam Smith not simply as the author of  the Wealth of Nations, but hailing him as a founding father." 

Mark Blaug argues that it was Smith's achievement to shift the burden of proof against those maintaining that the pursuit of self-interest does not achieve social good. But he notes Smith's relevant attention to definite institutional arrangements and process as disciplining self-interest to widen the scope of the market, accumulate capital, and grow income. 

Libertarian theorist Murray Rothbard, however, disagrees, saying that Smith's influence has blinded economic historians to the writings and theories of economists prior to Smith. He also calls The Wealth of Nations "a huge, sprawling, inchoate, confused tome, rife with vagueness, ambiguity and deep inner contradictions." 

Economic anthropologist David Graeber argues that throughout antiquity, one can identify many different systems of credit and later monetary exchange, drawing evidence for his argument from historical and also ethnographical records, that the traditional explanation for the origins of monetary economies from primitive bartering systems, as laid out by Adam Smith, doesn't find empirical support. The author argues that credit systems developed as means of account long before the advent of coinage around 600 BC, and can still be seen operating in non-monetary economies. The idea of barter, on the other hand, seems only to apply to limited exchanges between societies that had infrequent contact and often in a context of  ritualized warfare, rendering its conceptualization among economists as a myth. As an alternative explanation for the creation of economic life, the author suggests that it originally related to social currencies, closely related to non-market quotidian interactions among a community and based on the "everyday communism" that is based on mutual expectations and responsibilities among individuals. This type of economy is, then, contrasted with the moral foundations of exchange based on formal equality and reciprocity (but not necessarily leading to market relations) and hierarchy, based on clear inequalities that tend to crystallize in customs and castes Adam Smith (16 June 1723 NS (5 June 1723 OS) – 17 July 1790) was a Scottish moral philosopher, pioneer of political economy, and a key figure in the Scottish Enlightenment. 

Smith is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. Smith is cited as the father of modern economics and is still among the most influential thinkers in the field of economics today. 

Smith studied social philosophy at the University of Glasgow and at Balliol College, Oxford, where he was one of the first students to benefit from scholarships set up by fellow Scot, John Snell. After graduating, he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time he wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day.

Smith laid the foundations of classical free market economic theory. The Wealth of Nations was a precursor to the modern academic discipline of economics. In this and other works, he expounded upon how rational self-interest and competition can lead to economic prosperity. Smith was controversial in his own day and his general approach and writing style were often satirised by Tory writers in the moralising tradition of William Hogarth and Jonathan Swift. In 2005, The Wealth of Nations was named among the 100 Best Scottish Books of all time.  The minor planet 12838 Adamsmith was named in his memory.

Biography

Early life

Smith was born in Kirkcaldy, in the County of Fife, in Scotland. His father, also Adam Smith, was a Scottish Writer to the Signet (senior solicitor), advocate, and prosecutor (Judge Advocate) and also served as comptroller of the Customs in Kirkcaldy.  In 1720 he married Margaret Douglas, daughter of the landed Robert Douglas of Strathendry, also in Fife. His father died two months after he was born, leaving his mother a widow.  The date of Smith's baptism into the Church of Scotland at Kirkcaldy was 5 June 1723,  and this has often been treated as if it were also his date of birth,  which is unknown. Although few events in Smith's early childhood are known, the Scottish journalist John Rae, Smith's biographer, recorded that Smith was abducted by gypsies at the age of three and released when others went to rescue him. Smith was close to his mother, who probably encouraged him to pursue his scholarly ambitions.  He attended the Burgh School of Kirkcaldy—characterised by Rae as "one of the best secondary schools of Scotland at that period" —from 1729 to 1737, he learned Latin, mathematics, history, and writing.

Formal education

Smith entered the University of Glasgow when he was fourteen and studied moral philosophy under Francis Hutcheson. Here, Smith developed his passion for liberty, reason, and free speech. In 1740 Smith was the graduate scholar presented to undertake postgraduate studies at Balliol College, Oxford, under the Snell Exhibition. 

Adam Smith considered the teaching at Glasgow to be far superior to that at Oxford, which he found intellectually stifling.  In Book V, Chapter II of The Wealth of Nations, Smith wrote: "In the University of Oxford, the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching."
Smith is also reported to have complained to friends that Oxford officials once discovered him reading a copy of David Hume's Treatise on Human Nature, and they subsequently confiscated his book and punished him severely for reading it.   According to William Robert Scott, "The Oxford of [Smith's] time gave little if any help towards what was to be his lifework."  Nevertheless, Smith took the opportunity while at Oxford to teach himself several subjects by reading many books from the shelves of the large Bodleian Library.  When Smith was not studying on his own, his time at Oxford was not a happy one, according to his letters.  Near the end of his time there, Smith began suffering from shaking fits, probably the symptoms of a nervous breakdown.  He left Oxford University in 1746, before his scholarship ended. 

In Book V of The Wealth of Nations, Smith comments on the low quality of instruction and the meager intellectual activity at English universities, when compared to their Scottish counterparts. He attributes this both to the rich endowments of the colleges at Oxford and Cambridge, which made the income of professors independent of their ability to attract students, and to the fact that distinguished men of letters could make an even more comfortable living as ministers of the Church of England.

Adam Smith's discontent at Oxford might be in part due to the absence of his beloved teacher in Glasgow, Francis Hutcheson. Hutcheson was well regarded as one of the most prominent lecturers at the University of Glasgow in his day and earned the approbation of students, colleagues, and even ordinary residents with the fervor and earnestness of his orations (which he sometimes opened to the public). His lectures endeavoured not merely to teach philosophy but to make his students embody that philosophy in their lives, appropriately acquiring the epithet, the preacher of philosophy. Unlike Smith, Hutcheson was not a system builder; rather it was his magnetic personality and method of lecturing that so influenced his students and caused the greatest of those to reverentially refer to him as "the never to be forgotten Hutcheson" – a title that Smith in all his correspondence used to describe only two people, his good friend David Hume and influential mentor Francis Hutcheson. 

Teaching career

Smith began delivering public lectures in 1748 in Edinburgh, sponsored by the Philosophical Society of Edinburgh under the patronage of Lord Kames.  His lecture topics included rhetoric and belles-lettres,  and later the subject of "the progress of opulence". On this latter topic he first expounded his economic philosophy of "the obvious and simple system of natural liberty". While Smith was not adept at public speaking, his lectures met with success. 

In 1750, he met the philosopher David Hume, who was his senior by more than a decade. In their writings covering history, politics, philosophy, economics, and religion, Smith and Hume shared closer intellectual and personal bonds than with other important figures of the Scottish Enlightenment. 

In 1751, Smith earned a professorship at Glasgow University teaching logic courses, and in 1752 he was elected a member of the Philosophical Society of Edinburgh, having been introduced to the society by Lord Kames. When the head of Moral Philosophy in Glasgow died the next year, Smith took over the position. He worked as an academic for the next thirteen years, which he characterised as "by far the most useful and therefore by far the happiest and most honorable period [of his life]". 

Smith published The Theory of Moral Sentiments in 1759, embodying some of his Glasgow lectures. This work was concerned with how human morality depends on sympathy between agent and spectator, or the individual and other members of society. Smith defined "mutual sympathy" as the basis of moral sentiments. He based his explanation, not on a special "moral sense" as the Third Lord Shaftesbury and Hutcheson had done, nor on utility as Hume did, but on mutual sympathy, a term best captured in modern parlance by the twentieth-century concept of empathy, the capacity to recognise feelings that are being experienced by another being.

Following the publication of The Theory of Moral Sentiments, Smith became so popular that many wealthy students left their schools in other countries to enroll at Glasgow to learn under Smith.  After the publication of The Theory of Moral Sentiments, Smith began to give more attention to jurisprudence and economics in his lectures and less to his theories of morals.  For example, Smith lectured that the cause of increase in national wealth is labour, rather than the nation's quantity of gold or silver, which is the basis for mercantilism, the economic theory that dominated Western European economic policies at the time. 

In 1762, the University of Glasgow conferred on Smith the title of Doctor of Laws (LL.D.). At the end of 1763, he obtained an offer from Charles Townshend – who had been introduced to Smith by David Hume – to tutor his stepson, Henry Scott, the young Duke of Buccleuch. Smith then resigned from his professorship to take the tutoring position. He subsequently attempted to return the fees he had collected from his students because he resigned in the middle of the term, but his students refused. 

Tutoring and travels

Smith's tutoring job entailed touring Europe with Scott, during which time he educated Scott on a variety of subjects – such as proper Polish. He was paid £300 per year (plus expenses) along with a £300 per year pension; roughly twice his former income as a teacher. Smith first travelled as a tutor to Toulouse, France, where he stayed for one and a half years. According to his own account, he found Toulouse to be somewhat boring, having written to Hume that he "had begun to write a book to pass away the time". After touring the south of France, the group moved to Geneva, where Smith met with the philosopher Voltaire. 

From Geneva, the party moved to Paris. Here Smith came to know several great intellectual leaders of the time; invariably having an effect on his future works. This list included: Benjamin Franklin,  Turgot, Jean D'Alembert, André Morellet, Helvétius, and, notably, François Quesnay, the head of the Physiocratic school.  So impressed with his ideas  Smith considered dedicating The Wealth of Nations to him – had Quesnay not died beforehand.  Physiocrats were opposed to mercantilism, the dominating economic theory of the time. Illustrated in their motto Laissez faire et laissez passer, le monde va de lui même! (Let do and let pass, the world goes on by itself!). They were also known to have declared that only agricultural activity produced real wealth; merchants and industrialists (manufacturers) did not. This however, did not represent their true school of thought, but was a mere "smoke screen" manufactured to hide their actual criticisms of the nobility and church; arguing that they made up the only real clients of merchants. 

The wealth of France was virtually destroyed by Louis XIV and Louis XV in ruinous wars,  by aiding the American insurgents against the British, and perhaps most destructive (in terms of public perceptions) was what was seen as the excessive consumption of goods and services deemed to have no economic contribution – unproductive labour. Assuming that nobility and church are essentially detractors from economic growth, the feudal system of agriculture in France was the only sector important to maintain the wealth of the nation. Given that the English economy of the day yielded an income distribution that stood in contrast to that which existed in France, Smith concluded that the teachings and beliefs of Physiocrats were, "with all [their] imperfections [perhaps], the nearest approximation to the truth that has yet been published upon the subject of political economy".  The distinction between productive versus unproductive labour – the physiocratic classe steril – was a predominant issue in the development and understanding of what would become classical economic theory.

Later years

In 1766, Henry Scott's younger brother died in Paris, and Smith's tour as a tutor ended shortly thereafter. Smith returned home that year to Kirkcaldy, and he devoted much of the next ten years to his magnum opus.  There he befriended Henry Moyes, a young blind man who showed precocious aptitude. As well as teaching Moyes, Smith secured the patronage of David Hume and Thomas Reid in the young man's education.  In May 1773, Smith was elected fellow of the Royal Society of London,  and was elected a member of the Literary Club in 1775.  The Wealth of Nations was published in 1776 and was an instant success, selling out its first edition in only six months. 

In 1778, Smith was appointed to a post as commissioner of customs in Scotland and went to live with his mother in Panmure House in Edinburgh's Canongate.  Five years later, as a member of the Philosophical Society of Edinburgh when it received its royal charter, he automatically became one of the founding members of the Royal Society of Edinburgh,  and from 1787 to 1789 he occupied the honorary position of Lord Rector of the University of Glasgow.  He died in the northern wing of Panmure House in Edinburgh on 17 July 1790 after a painful illness and was buried in the Canongate Kirkyard.  On his death bed, Smith expressed disappointment that he had not achieved more. 

Smith's literary executors were two friends from the Scottish academic world: the physicist and chemist Joseph Black, and the pioneering geologist James Hutton.  Smith left behind many notes and some unpublished material, but gave instructions to destroy anything that was not fit for publication.  He mentioned an early unpublished History of Astronomy as probably suitable, and it duly appeared in 1795, along with other material such as Essays on Philosophical Subjects.

Smith's library went by his will to David Douglas, Lord Reston (son of his cousin Colonel Robert Douglas of Strathendry, Fife), who lived with Smith. It was eventually divided between his two surviving children, Cecilia Margaret (Mrs. Cunningham) and David Anne (Mrs. Bannerman). On the death of her husband, the Rev. W. B. Cunningham of Prestonpans in 1878, Mrs. Cunningham sold some of the books. The remainder passed to her son, Professor Robert Oliver Cunningham of Queen's College, Belfast, who presented a part to the library of Queen's College. After his death the remaining books were sold. On the death of Mrs. Bannerman in 1879 her portion of the library went intact to the New College (of the Free Church), Edinburgh.

Personality and beliefs

Character

Not much is known about Smith's personal views beyond what can be deduced from his published articles. His personal papers were destroyed after his death at his request. He never married,  and seems to have maintained a close relationship with his mother, with whom he lived after his return from France and who died six years before his own death. 

Smith was described by several of his contemporaries and biographers as comically absent-minded, with peculiar habits of speech and gait, and a smile of "inexpressible benignity".  He was known to talk to himself, a habit that began during his childhood when he would smile in rapt conversation with invisible companions.  He also had occasional spells of imaginary illness, and he is reported to have had books and papers placed in tall stacks in his study. According to one story, Smith took Charles Townshend on a tour of a tanning factory, and while discussing free trade, Smith walked into a huge tanning pit from which he needed help to escape.  He is also said to have put bread and butter into a teapot, drunk the concoction, and declared it to be the worst cup of tea he ever had. According to another account, Smith distractedly went out walking in his nightgown and ended up 15 mi outside of town, before nearby church bells brought him back to reality.

James Boswell who was a student of Smith's at Glasgow University, and later knew him at the Literary Club, says that Smith thought that speaking about his ideas in conversation might reduce the sale of his books, and so his conversation was unimpressive. According to Boswell, he once told Sir Joshua Reynolds that 'he made it a rule when in company never to talk of what he understood'. 

Smith has been alternately described as someone who "had a large nose, bulging eyes, a protruding lower lip, a nervous twitch, and a speech impediment" and one whose "countenance was manly and agreeable."  Smith is said to have acknowledged his looks at one point, saying, "I am a beau in nothing but my books." Smith rarely sat for portraits,  so almost all depictions of him created during his lifetime were drawn from memory. The best-known portraits of Smith are the profile by James Tassie and two etchings by John Kay.  The line engravings produced for the covers of 19th century reprints of The Wealth of Nations were based largely on Tassie's medallion. 

Religious views

There has been considerable scholarly debate about the nature of Smith's religious views. Smith's father had shown a strong interest in Christianity and belonged to the moderate wing of the Church of Scotland.  The fact that Adam Smith received the Snell Exhibition suggests that he may have gone to Oxford with the intention of pursuing a career in the Church of England. 

Anglo-American economist Ronald Coase has challenged the view that Smith was a deist, based on the fact that Smith's writings never explicitly invoke God as an explanation of the harmonies of the natural or the human worlds.  According to Coase, though Smith does sometimes refer to the "Great Architect of the Universe", later scholars such as Jacob Viner have "very much exaggerated the extent to which Adam Smith was committed to a belief in a personal God",  a belief for which Coase finds little evidence in passages such as the one in the Wealth of Nations in which Smith writes that the curiosity of mankind about the "great phenomena of nature", such as "the generation, the life, growth and dissolution of plants and animals", has led men to "enquire into their causes", and that "superstition first attempted to satisfy this curiosity, by referring all those wonderful appearances to the immediate agency of the gods. Philosophy afterwards endeavoured to account for them, from more familiar causes, or from such as mankind were better acquainted with than the agency of the gods".

Some other authors argue that Smith's social and economic philosophy is inherently theological and that his entire model of social order is logically dependent on the notion of God's action in nature. 

Smith was also a close friend and later the executor of David Hume, who was commonly characterised in his own time as an atheist.  The publication in 1777 of Smith's letter to William Strahan, in which he described Hume's courage in the face of death in spite of his irreligiosity, attracted considerable controversy. 

Published works

The Theory of Moral Sentiments

In 1759, Smith published his first work, The Theory of Moral Sentiments, sold by co-publishers Andrew Millar of London and Alexander Kincaid of Edinburgh.  Smith continued making extensive revisions to the book, up until his death. Although The Wealth of Nations is widely regarded as Smith's most influential work, it is believed that Smith himself considered The Theory of Moral Sentiments to be a superior work. 

In the work, Smith critically examines the moral thinking of his time, and suggests that conscience arises from dynamic and interactive social relationships through which people seek "mutual sympathy of sentiments."  His goal in writing the work was to explain the source of mankind's ability to form moral judgement, given that people begin life with no moral sentiments at all. Smith proposes a theory of sympathy, in which the act of observing others and seeing the judgements they form of both others and oneself makes people aware of themselves and how others perceive their behavior. The feedback we receive from perceiving (or imagining) others' judgements creates an incentive to achieve "mutual sympathy of sentiments" with them and leads people to develop habits, and then principles, of behavior, which come to constitute one's conscience. 

Some scholars have perceived a conflict between The Theory of Moral Sentiments and The Wealth of Nations; the former emphasises sympathy for others, while the latter focuses on the role of self-interest.  In recent years, however, some scholars    of Smith's work have argued that no contradiction exists. They claim that in The Theory of Moral Sentiments, Smith develops a theory of psychology in which individuals seek the approval of the "impartial spectator" as a result of a natural desire to have outside observers sympathise with their sentiments. Rather than viewing The Theory of Moral Sentiments and The Wealth of Nations as presenting incompatible views of human nature, some Smith scholars regard the works as emphasising different aspects of human nature that vary depending on the situation. Otteson argues that both books are Newtonian in their methodology and deploy a similar "market model" for explaining the creation and development of large-scale human social orders, including morality, economics, as well as language.  Ekelund and Hebert offer a differing view, observing that self-interest is present in both works and that "in the former, sympathy is the moral faculty that holds self-interest in check, whereas in the latter, competition is the economic faculty that restrains self-interest." 

The Wealth of Nations

There is disagreement between classical and neoclassical economists about the central message of Smith's most influential work: An Inquiry into the Nature and Causes of the Wealth of Nations (1776). Neoclassical economists emphasise Smith's invisible hand,  a concept mentioned in the middle of his work – Book IV, Chapter II – and classical economists believe that Smith stated his programme for promoting the "wealth of nations" in the first sentences, which attributes the growth of wealth and prosperity to the division of labour.

Smith used the term "the invisible hand" in "History of Astronomy"  referring to "the invisible hand of Jupiter," and once in each of his The Theory of Moral Sentiments  (1759) and The Wealth of Nations  (1776). This last statement about "an invisible hand" has been interpreted in numerous ways.

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.

Those who regard that statement as Smith's central message also quote frequently Smith's dictum: 

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.

Smith's statement about the benefits of "an invisible hand" may be meant to answer Mandeville's contention that "Private Vices ... may be turned into Public Benefits".  It shows Smith's belief that when an individual pursues his self-interest under conditions of justice, he unintentionally promotes the good of society. Self-interested competition in the free market, he argued, would tend to benefit society as a whole by keeping prices low, while still building in an incentive for a wide variety of goods and services. Nevertheless, he was wary of businessmen and warned of their "conspiracy against the public or in some other contrivance to raise prices".  Again and again, Smith warned of the collusive nature of business interests, which may form cabals or monopolies, fixing the highest price "which can be squeezed out of the buyers".  Smith also warned that a business-dominated political system would allow a conspiracy of businesses and industry against consumers, with the former scheming to influence politics and legislation. Smith states that the interest of manufacturers and merchants "...in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public...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 be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention."  Thus Smith's chief worry seems to be when business is given special protections or privileges from government; by contrast, in the absence of such special political favours, he believed that business activities were generally beneficial to the whole society:

It is the great multiplication of the production of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of society. (The Wealth of Nations, I.i.10)

The neoclassical interest in Smith's statement about "an invisible hand" originates in the possibility to see it as a precursor of neoclassical economics and its General Equilibrium concept. Samuelson's "Economics" refers 6 times to Smith's "invisible hand". To emphasise this relation, Samuelson  quotes Smith's "invisible hand" statement putting "general interest" where Smith wrote "public interest". Samuelson  concluded: "Smith was unable to prove the essence of his invisible-hand doctrine. Indeed, until the 1940s no one knew how to prove, even to state properly, the kernel of truth in this proposition about perfectly competitive market."

Very differently, classical economists see in Smith's first sentences his programme to promote "The Wealth of Nations". Taking up the physiocratical concept of the economy as a circular process means that to have growth the inputs of period2 must excel the inputs of period1. Therefore, the outputs of period1 not used or usable as input of period2 are regarded as unproductive labour as they do not contribute to growth. This is what Smith had heard in France from, among others, Quesnay. To this French insight that unproductive labour should be pushed back to use labour more productively, Smith added his own proposal, that productive labour should be made even more productive by deepening the division of labour. Smith argued that deepening the division of labour under competition leads to greater productivity, which leads to lower prices and thus an increasing standard of living—"general plenty" and "universal opulence"—for all. Extended markets and increased production lead to continuous reorganisation of production and inventing new ways of producing, which lead to further increased production, lower prices, and increased standards of living. Smith's central message is therefore that under dynamic competition a growth machine secures "The Wealth of Nations". Smith's argument predicted Britain's evolution as the workshop of the world, underselling and outproducing all its competitors. The opening sentences of the "Wealth of Nations" summarise this policy:

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 ... . [T]his produce ... bears a greater or smaller proportion to the number of those who are to consume it ... .[B]ut this proportion must in every nation be regulated by two different circumstances;
* first, by the skill, dexterity, and judgment with which its labour is generally applied; and,
* secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed [emphasis added]. 

Smith added, however, that the "abundance or scantiness of this supply too seems to depend more upon the former of those two circumstances than upon the latter." 

Criticism and dissent

Alfred Marshall criticised Smith's definition of economy on several points. He argued that man should be equally important as money, services are as important as goods, and that there must be an emphasis on human welfare, instead of just wealth. The "invisible hand" only works well when both production and consumption operates in free markets, with small ("atomistic") producers and consumers allowing supply and demand to fluctuate and equilibrate. In conditions of monopoly and oligopoly, the "invisible hand" fails. Nobel Prize-winning economist Joseph E. Stiglitz says, on the topic of one of Smith's better known ideas: "the reason that the invisible hand often seems invisible is that it is often not there." 

Other works

Shortly before his death, Smith had nearly all his manuscripts destroyed. In his last years, he seemed to have been planning two major treatises, one on the theory and history of law and one on the sciences and arts. The posthumously published Essays on Philosophical Subjects, a history of astronomy down to Smith's own era, plus some thoughts on ancient physics and metaphysics, probably contain parts of what would have been the latter treatise. Lectures on Jurisprudence were notes taken from Smith's early lectures, plus an early draft of The Wealth of Nations, published as part of the 1976 Glasgow Edition of the works and correspondence of Smith. Other works, including some published posthumously, include Lectures on Justice, Police, Revenue, and Arms (1763) (first published in 1896); and Essays on Philosophical Subjects (1795). 

Legacy

In economics and moral philosophy

The Wealth of Nations was a precursor to the modern academic discipline of economics. In this and other works, Smith expounded how rational self-interest and competition can lead to economic prosperity. Smith was controversial in his own day and his general approach and writing style were often satirised by Tory writers in the moralising tradition of Hogarth and Swift, as a discussion at the University of Winchester suggests.  In 2005, The Wealth of Nations was named among the 100 Best Scottish Books of all time. Former UK Prime Minister Margaret Thatcher, it is said, used to carry a copy of the book in her handbag. 

In light of the arguments put forward by Smith and other economic theorists in Britain, academic belief in mercantalism began to decline in Britain in the late 18th century. During the Industrial Revolution, Britain embraced free trade and Smith's laissez-faire economics, and via the British Empire, used its power to spread a broadly liberal economic model around the world, characterised by open markets, and relatively barrier free domestic and international trade. 

George Stigler attributes to Smith "the most important substantive proposition in all of economics". It is that, under competition, owners of resources (for example labour, land, and capital) will use them most profitably, resulting in an equal rate of return in equilibrium for all uses, adjusted for apparent differences arising from such factors as training, trust, hardship, and unemployment. 

Paul Samuelson finds in Smith's pluralist use of supply and demand as applied to wages, rents, profit a valid and valuable anticipation of the general equilibrium modelling of Walras a century later. Smith's allowance for wage increases in the short and intermediate term from capital accumulation and invention contrasted with Malthus, Ricardo, and Karl Marx in their propounding a rigid subsistence–wage theory of labour supply. 

Joseph Schumpeter criticised Smith for a lack of technical rigor, yet he argued that this enabled Smith's writings to appeal to wider audiences: "His very limitation made for success. Had he been more brilliant, he would not have been taken so seriously. Had he dug more deeply, had he unearthed more recondite truth, had he used more difficult and ingenious methods, he would not have been understood. But he had no such ambitions; in fact he disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along." 

Classical economists presented competing theories of those of Smith, termed the "labour theory of value". Later Marxian economics descending from classical economics also use Smith's labour theories, in part. The first volume of Karl Marx's major work, Capital, was published in German in 1867. In it, Marx focused on the labour theory of value and what he considered to be the exploitation of labour by capital.   The labour theory of value held that the value of a thing was determined by the labour that went into its production. This contrasts with the modern contention of neoclassical economics, that the value of a thing is determined by what one is willing to give up to obtain the thing.

The body of theory later termed "neoclassical economics" or "marginalism" formed from about 1870 to 1910. The term "economics" was popularised by such neoclassical economists as Alfred Marshall as a concise synonym for "economic science" and a substitute for the earlier, broader term "political economy" used by Smith.   This corresponded to the influence on the subject of mathematical methods used in the natural sciences.  Neoclassical economics systematised supply and demand as joint determinants of price and quantity in market equilibrium, affecting both the allocation of output and the distribution of income. It dispensed with the labour theory of value of which Smith was most famously identified with in classical economics, in favour of a marginal utility theory of value on the demand side and a more general theory of costs on the supply side. 

The bicentennial anniversary of the publication of The Wealth of Nations was celebrated in 1976, resulting in increased interest for The Theory of Moral Sentiments and his other works throughout academia. After 1976, Smith was more likely to be represented as the author of both The Wealth of Nations and The Theory of Moral Sentiments, and thereby as the founder of a moral philosophy and the science of economics. His homo economicus or "economic man" was also more often represented as a moral person. Additionally, economists David Levy and Sandra Peart in "The Secret History of the Dismal Science" point to his opposition to hierarchy and beliefs in inequality, including racial inequality, and provide additional support for those who point to Smith's opposition to slavery, colonialism, and empire.  They show the caricatures of Smith drawn by the opponents of views on hierarchy and inequality in this online article. Emphasised also are Smith's statements of the need for high wages for the poor, and the efforts to keep wages low. In The "Vanity of the Philosopher: From Equality to Hierarchy in Postclassical Economics", Peart and Levy also cite Smith's view that a common street porter was not intellectually inferior to a philosopher,  and point to the need for greater appreciation of the public views in discussions of science and other subjects now considered to be technical. They also cite Smith's opposition to the often expressed view that science is superior to common sense. 

Smith also explained the relationship between growth of private property and civil government:

"Men may live together in society with some tolerable degree of security, though there is no civil magistrate to protect them from the injustice of those passions. But avarice and ambition in the rich, in the poor the hatred of labour and the love of present ease and enjoyment, are the passions which prompt to invade property, passions much more steady in their operation, and much more universal in their influence. Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it. The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days' labour, civil government is not so necessary. Civil government supposes a certain subordination. But as the necessity of civil government gradually grows up with the acquisition of valuable property, so the principal causes which naturally introduce subordination gradually grow up with the growth of that valuable property. (...) Men of inferior wealth combine to defend those of superior wealth in the possession of their property, in order that men of superior wealth may combine to defend them in the possession of theirs. All the inferior shepherds and herdsmen feel that the security of their own herds and flocks depends upon the security of those of the great shepherd or herdsman; that the maintenance of their lesser authority depends upon that of his greater authority, and that upon their subordination to him depends his power of keeping their inferiors in subordination to them. They constitute a sort of little nobility, who feel themselves interested to defend the property and to support the authority of their own little sovereign in order that he may be able to defend their property and to support their authority. 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." (Source: The Wealth of Nations, Book 5, Chapter 1, Part 2)

In British Imperial debates

Smith's [http://www.econlib.org/library/Smith/smWN17.html#B.IV,%20Ch.7,%20Of%20Colonies chapter on colonies] in turn would help shape British imperial debates from the mid-nineteenth century onward. The Wealth of Nations would become an ambiguous text regarding the imperial question. In his chapter on colonies, Smith pondered how to solve the crisis developing across the Atlantic among the empire's thirteen American colonies. He offered two different proposals for easing tensions. The first proposal called for giving the colonies their independence and, by thus parting on a friendly basis, Britain would be able to develop and maintain a free-trade relationship with them, and possibly even an informal military alliance. Smith's second proposal called for a theoretical imperial federation that would bring the colonies and the metropole closer together through an imperial parliamentary system and imperial free trade. 

Smith's most prominent disciple in nineteenth-century Britain, peace advocate Richard Cobden, preferred the first proposal. Cobden would lead the Anti-Corn Law League in overturning the Corn Laws in 1846, shifting Britain to a policy of free trade and empire "on the cheap" for decades to come. This hands-off approach toward the British Empire would become known as Cobdenism or the Manchester School.  By the turn of the century, however, advocates of Smith's second proposal such as Joseph Shield Nicholson would become ever more vocal in opposing Cobdenism, calling instead for imperial federation.  As Marc-William Palen notes: "On the one hand, Adam Smith’s late nineteenth and early twentieth-century Cobdenite adherents used his theories to argue for gradual imperial devolution and empire ‘on the cheap’. On the other, various proponents of imperial federation throughout the British World sought to use Smith’s theories to overturn the predominant Cobdenite hands-off imperial approach and instead, with a firm grip, bring the empire closer than ever before."  Smith's ideas thus played an important part in subsequent debates over the British Empire.

Portraits, monuments, and banknotes

Smith has been commemorated in the UK on banknotes printed by two different banks; his portrait has appeared since 1981 on the £50 notes issued by the Clydesdale Bank in Scotland,   and in March 2007 Smith's image also appeared on the new series of £20 notes issued by the Bank of England, making him the first Scotsman to feature on an English banknote. 

A large-scale memorial of Smith by Alexander Stoddart was unveiled on 4 July 2008 in Edinburgh. It is a 10 ft-tall bronze sculpture and it stands above the Royal Mile outside St Giles' Cathedral in Parliament Square, near the Mercat cross.  20th-century sculptor Jim Sanborn (best known for the Kryptos sculpture at the United States Central Intelligence Agency) has created multiple pieces which feature Smith's work. At Central Connecticut State University is Circulating Capital, a tall cylinder which features an extract from The Wealth of Nations on the lower half, and on the upper half, some of the same text but represented in binary code.  At the University of North Carolina at Charlotte, outside the Belk College of Business Administration, is Adam Smith's Spinning Top.   Another Smith sculpture is at Cleveland State University.  He also appears as the narrator in the 2013 play The Low Road, centred on a proponent on laissez-faire economics in the late eighteenth century but dealing obliquely with the financial crisis of 2007–2008 and the recession which followed – in the premiere production, he was portrayed by Bill Paterson.

Residence

Adam Smith resided at Panmure house from 1778–90. This residence has now been purchased by the Edinburgh Business School at Heriot Watt University and fundraising has begun to restore it.   Part of the Northern end of the original building appears to have been demolished in the 19th century to make way for an iron foundry.

As a symbol of free market economics

Smith has been celebrated by advocates of free market policies as the founder of free market economics, a view reflected in the naming of bodies such as the Adam Smith Institute in London, the Adam Smith Society  and the Australian Adam Smith Club,  and in terms such as the Adam Smith necktie. 

Alan Greenspan argues that, while Smith did not coin the term laissez-faire, "it was left to Adam Smith to identify the more-general set of principles that brought conceptual clarity to the seeming chaos of market transactions". Greenspan continues that The Wealth of Nations was "one of the great achievements in human intellectual history".  P. J. O'Rourke describes Smith as the "founder of free market economics". 

Other writers have argued that Smith's support for laissez-faire (which in French means leave alone) has been overstated. Herbert Stein wrote that the people who "wear an Adam Smith necktie" do it to "make a statement of their devotion to the idea of free markets and limited government", and that this misrepresents Smith's ideas. Stein writes that Smith "was not pure or doctrinaire about this idea. He viewed government intervention in the market with great skepticism...yet he was prepared to accept or propose qualifications to that policy in the specific cases where he judged that their net effect would be beneficial and would not undermine the basically free character of the system. He did not wear the Adam Smith necktie." In Stein's reading, The Wealth of Nations could justify the Food and Drug Administration, the Consumer Product Safety Commission, mandatory employer health benefits, environmentalism, and "discriminatory taxation to deter improper or luxurious behavior". 

Similarly, Vivienne Brown stated in The Economic Journal that in the 20th century United States, Reaganomics supporters, the Wall Street Journal, and other similar sources have spread among the general public a partial and misleading vision of Smith, portraying him as an "extreme dogmatic defender of laissez-faire capitalism and supply-side economics".  In fact, The Wealth of Nations includes the following statement on the payment of taxes:

"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." 

Some commentators have argued that Smith's works show support for a progressive, not flat, income tax and that he specifically named taxes that he thought should be required by the state, among them luxury goods taxes and tax on rent.  Yet Smith argued for the "impossibility of taxing the people, in proportion to their economic revenue, by any capitation" (The Wealth of Nations, V.ii.k.1). Smith argued that taxes should principally go toward protecting "justice" and "certain publick institutions" that were necessary for the benefit of all of society but that could not be provided by private enterprise (The Wealth of Nations, IV.ix.51).

Additionally, Smith outlined the proper expenses of the government in The Wealth of Nations, Book V, Ch. I. Included in his requirements of a government is to enforce contracts and provide justice system, grant patents and copy rights, provide public goods such as infrastructure, provide national defence and regulate banking. It was the role of the government to provide goods "of such a nature that the profit could never repay the expense to any individual" such as roads, bridges, canals, and harbours. He also encouraged invention and new ideas through his patent enforcement and support of infant industry monopolies. He supported partial public subsidies for elementary education, and he believed that competition among religious institutions would provide general benefit to the society. In such cases, however, Smith argued for local rather than centralised control: "Even those publick works which are of such a nature that they cannot afford any revenue for maintaining themselves . . . are always better maintained by a local or provincial revenue, under the management of a local and provincial administration, than by the general revenue of the state" (Wealth of Nations, V.i.d.18). Finally he outlined how the government should support the dignity of the monarch or chief magistrate, such that they are equal or above the public in fashion. He even states that monarchs should be provided for in a greater fashion than magistrates of a republic because "we naturally expect more splendor in the court of a king than in the mansion-house of a doge".  In addition, he allowed that in some specific circumstances retaliatory tariffs may be beneficial:

"The recovery of a great foreign market will generally more than compensate the transitory inconvenience of paying dearer during a short time for some sorts of goods." 

He added, however, that in general a retaliatory tariff "seems a bad method of compensating the injury done to certain classes of our people, to do another injury ourselves, not only to those classes, but to almost all the other classes of them" (The Wealth of Nations, IV.ii.39).

Economic historians such as Jacob Viner regard Smith as a strong advocate of free markets and limited government (what Smith called "natural liberty") but not as a dogmatic supporter of laissez-faire. 

Economist Daniel Klein believes using the term "free market economics" or "free market economist" to identify the ideas of Smith is too general and slightly misleading. Klein offers six characteristics central to the identity of Smith's economic thought and argues that a new name is needed to give a more accurate depiction of the "Smithian" identity.   Economist David Ricardo set straight some of the misunderstandings about Smith's thoughts on free market. Most people still fall victim to the thinking that Smith was a free market economist without exception, though he was not. Ricardo pointed out that Smith was in support of helping infant industries. Smith believed that the government should subsidise newly formed industry, but he did fear that when the infant industry grew into adulthood it would be unwilling to surrender the government help.  Smith also supported tariffs on imported goods to counteract an internal tax on the same good. Smith also fell to pressure in supporting some tariffs in support for national defence.

Some have also claimed, Emma Rothschild among them, that Smith would have supported a minimum wage,  although there is no direct textual evidence supporting the claim. Indeed, Smith wrote:

"The price of labour, it must be observed, cannot be ascertained very accurately anywhere, different prices being often paid at the same place and for the same sort of labour, not only according to the different abilities of the workmen, but according to the easiness or hardness of the masters. Where wages are not regulated by law, all that we can pretend to determine is what are the most usual; and experience seems to show that law can never regulate them properly, though it has often pretended to do so." (Source: The Wealth of Nations, Book 1, Chapter 8)

Smith also noted a rough equality of bargaining power: 
A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. 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.
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