Adam Smith did for economic liberalism what John Locke had done for political liberalism, namely, to lay the philosophical foundations on which others would build a distinctive liberal tradition. Smith’s ideas, however, have permeated the western political tradition to the extent where not only liberals but also other contemporary schools of thought claim to be his disciples. As a consequence, the widespread appeal of Smith’s economic theories of free trade, the division of labour and the principle of individual initiative has helped to obscure the rich body of political liberalism to be found in his work. Adam Smith, far from being a laissez-faire doctrinaire, aimed to demonstrate that a liberal polity can enjoy the benefits of individual liberty and a free market economy, but need not – and ought not to – neglect social cohesion and basic human needs.
Smith was born in Kirkcaldy, near Edinburgh. The exact date of his birth is unknown, though it may possibly coincide with the date of his baptism, 5 June 1723. Earlier that year his father, a customs officer, had died and Smith was raised by his mother, Margaret Douglas, and guardians appointed in his father’s will. At the age of fourteen, he matriculated at Glasgow University where he was educated in logic, physics and philosophy. After being nominated Snell Exhibitioner in 1740, he went to Balliol College, Oxford. Not surprisingly, given the dismal reputation that Oxford’s teachers had in the eighteenth century, Smith spent most of his six years at Balliol studying on his own, reading widely in classics, philosophy, jurisprudence and literature.
On returning to Scotland in 1746, Smith’s academic studies soon bore fruit. He began to deliver public lectures in rhetoric, philosophy and jurisprudence in Edinburgh and, in 1751, was appointed Professor of Logic at Glasgow University. Only a year later he became Professor of Moral Philosophy, teaching theology, moral philosophy and jurisprudence for the next twelve years. It was the last of these subjects which allowed him to include in his teaching aspects of politics and economics and, alongside his philosophical studies, to develop a life-long interest in political economy. His academic reputation, however, was initially to be built on the basis of his philosophical work. Smith’s first book, The Theory of Moral Sentiments, was published in 1759. The treatise critically examined the moral thinking of the time and set out Smith’s own theory of moral behaviour and judgement, based on an innate human desire to sympathise with others and arrive at impartial moral judgements. According to Smith, conscience arises from social relationships.
In 1764 Smith decided to leave Glasgow University for good and take up an invitation to travel abroad with the third Duke of Buccleuch. The position as travelling tutor offered Smith not only a higher annual income, including a life-long pension, but also an opportunity to find more time for his economic writings and to meet leading French thinkers of the Enlightenment. In Geneva, Smith was introduced to Voltaire, whose literary and political achievements he greatly admired. During his stay in Paris in 1766, Smith participated in the discussions of a group of liberal economists, the physiocrats; their leading figure, Quesnay, became a close friend of Smith’s. Although both Smith and Quesnay criticised the mercantilists belief in state interference with foreign trade and capital flows as a way of augmenting national wealth, Smith disagreed with the physiocrats’ emphasis on agriculture as the solely productive occupation.
While Smith used his stay in France in order to broaden his economic understanding, he had already worked out the basic principles of his liberal economic doctrine before embarking on the journey. After his return to Scotland at the end of 1766, he began work on his second book which, eventually, was to gain him world-wide fame as one of the most eminent liberal thinkers of all time. In 1776, An Inquiry Into the Nature and Causes of the Wealth of Nations was published to great success and world-wide acclaim. Only five chapters long, the book introduced original concepts such as the division of labour into specialist skills, individual enterprise, a common international currency and what today is known as a market-led economy.
As a result of the success of this economic theory and his reputation as a university administrator, Smith was offered the position of Commissioner of Customs in Edinburgh, which he took up in 1777. During his years in public office, he continued his economic, political and philosophical studies and worked on further editions of his two books. In addition, he embarked on two new projects, to write a history of philosophy and a theory of law and politics; these efforts, however, remained unfinished. At Smith’s request, most of his handwritten notes on these subjects were posthumously destroyed. Apart from his two published works, only a small number of philosophical essays, lectures on rhetoric and literature as well as student notes from his lectures on jurisprudence survived. Adam Smith died on 17 July 1790, in Edinburgh. His political and economic liberalism lived on to change the world.
The most recent and authoritative biography of Adam Smith is Ian Simpson Ross The Life of Adam Smith (Clarendon Press, 1995).
Robert Falkner was a Politics lecturer at New College, Oxford at the time of writing this piece. He is the author of A Conservative Economist? The Political Liberalism of Adam Smith Revisited (1997).