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亚当·斯密逝世：１７９０年７月１７日（蘇格蘭 蘇格蘭愛丁堡）
學派／流派：古典經濟學
主要領域：政治哲學、倫理學、經濟學
著名思想：古典經濟學、現代自由市場、勞動分工
受影響於：亞裏士多德、霍布斯、洛剋、哈奇森、休謨、孟德斯鳩
施影響於：馬爾薩斯、李嘉圖、密爾、凱恩斯、馬剋思、恩格斯、美國開國先驅
亞當·斯密（１７２３～１７９０）是經濟學的主要創立者。１７２３年亞當斯密出生在蘇格蘭法夫郡（County Fife）的寇剋卡迪（Kirkcaldy）。亞當·斯密的父親也叫亞當·斯密，是律師、也是蘇格蘭的軍法官和寇剋卡迪的海關監督，在亞當斯密出生前幾個月去世；母親瑪格麗特（Margaret）是法夫郡斯特拉森德利（Strathendry）大地主約翰·道格拉斯（John Douglas）的女兒，亞當斯密一生與母親相依為命，終身未娶。
亞當斯密常想事情想得出神、絲毫不受外物幹擾；有時也因此發生糗事，例如：亞當斯密擔任海關專員時，有次因獨自出神將自己公文上的簽名不自覺寫成前一個簽名者的名字。亞當斯密在陌生環境發表文章或演說時，剛開始會因害羞頻頻口吃，一旦熟悉後便恢復辯纔無礙的氣勢，侃侃而談；而且亞當斯密對喜愛的學問研究起來相當專註、熱情，甚至廢寢忘食。
１７２３～１７４０年間，亞當·斯密在家乡蘇格蘭求學，在格拉斯哥大學（University of Glasgow）時期亞當·斯密完成拉丁語、希臘語、數學和倫理學等課程；１７４０～１７４６年間，赴牛津大學（Colleges at Oxford）求學，但在牛津並未獲得良好的教育，唯一收穫是大量閱讀許多格拉斯哥大學缺乏的書籍。１７５０年後，亞當·斯密在格拉斯哥大學不僅擔任過邏輯學和道德哲學教授，還兼負責學校行政事務，一直到１７６４年離開為止；這時期中，亞當·斯密於１７５９年出版的《道德情操論》獲得學術界極高評價。而後於１７６８年開始着手著述《國傢康富的性質和原因的研究》（簡稱《國富論》）。１７７３年時認為《國富論》已基本完成，但亞當·斯密多花三年時間潤飾此書，１７７６年３月此書出版後引起大衆廣泛的討論，影響所及除了英國本地，連歐洲大陸和美洲也為之瘋狂，因此世人尊稱亞當·斯密為“現代經濟學之父”和“自由企業的守護神”。
１７７８～１７９０年間亞當·斯密與母親和阿姨在愛丁堡定居，１７８７年被選為格拉斯哥大學榮譽校長，也被任命為蘇格蘭的海關和????稅專員。１７８４年斯密出席格拉斯哥大學校長任命儀式，因亞當斯密之母於１７５４年５月去世所以遲未上任；直到１７８７年纔擔任校長職位至１７８９年。亞當斯密在去世前將自己的手稿全數銷毀，於１７９０年７月１７日與世長辭，享年６７歲。
亞當·斯密並不是經濟學說的最早開拓者，他最著名的思想中有許多也並非新穎獨特，但是他首次提出了全面係統的經濟學說，為該領域的發展打下了良好的基礎。因此完全可以說《國富論》是現代政治經濟學研究的起點。
該書的偉大成就之一是摒棄了許多過去的錯誤概念。亞當斯密駁斥了舊的重商主義學說。這種學說片面強調國傢貯備大量金幣的重要性。他否决了重農主義者的土地是價值的主要來源的觀點，提出了勞動的基本重要性。亞當·斯密（分工理論）重點強調勞動分工會引起生産的大量增長，抨擊了阻礙工業發展的一整套腐朽的、武斷的政治限製。
《國富論》的中心思想是看起來似乎雜亂無章的自由市場實際上是個自行調整機製，自動傾嚮於生産社會最迫切需要的貨品種類的數量。例如，如果某種需要的産品供應短缺，其價格自然上升，價格上升會使生産商獲得較高的利潤，由於利潤高，其他生産商也想要生産這種産品。生産增加的結果會緩和原來的供應短缺，而且隨着各個生産商之間的競爭，供應增長會使商品的價格降到“自然價格”即其生産成本。誰都不是有目的地通過消除短缺來幫助社會，但是問題卻解决了。用亞當斯密的話來說，每個人“衹想得到自己的利益”，但是又好像“被一隻無形的手牽着去實現一種他根本無意要實現的目的，……他們促進社會的利益，其效果往往比他們真正想要實現的還要好。”（《國富論》，第四捲第二章）
但是如果自由競爭受到阻障，那衹“無形的手”就不會把工作做得恰到好處。因而亞當斯密相信自由貿易，為堅决反對高關稅而申辯。事實上他堅决反對政府對商業和自由市場的干涉。他聲言這樣的干涉幾乎總要降低經濟效率，最終使公衆付出較高的代價。亞當斯密雖然沒有發明“放任政策”這個術語，但是他為建立這個概念所做的工作比任何其他人都多。
有些人認為亞當·斯密衹不過是一位商業利益的辯護士，但是這種看法是不正確的。他經常反復用最強烈的言辭痛斥壟斷商的活動，堅决要求將其消滅。亞當斯密對現實的商業活動的認識也並非天真幼稚。《國富論》中記有這樣一個典型觀察：“同行人很少聚會，但是他們會談不是策劃出一個對付公衆的陰謀就是炮製出一個掩人耳目提高物價的計劃。”
亞當·斯密的經濟思想體係結構嚴密，論證有力，使經濟思想學派在幾十年內就被拋棄了。實際上亞當·斯密把他們所有的優點都吸入進了自己的體係，同時也係統地披露了他們的缺點。亞當斯密的接班人，包括象托馬斯·馬爾薩斯和大衛·李嘉圖這樣著名的經濟學家對他的體係進行了精心的充實和修正（沒有改變基本綱要），今天被稱為經典經濟學體係。雖然現代經濟學說又增加了新的概念和方法，但這些大體說來是經典經濟學的自然産物。在一定意義上來說，甚至卡爾·馬剋思的經濟學說（自然不是他的政治學說）都可以看作是經典經濟學說的繼續。
在《國富論》中，亞當斯密在一定程度上預見到了馬爾薩斯人口過剩的觀點。雖然李嘉圖和卡爾·馬剋思都堅持認為人口負擔會阻礙工資高出維持生計的水平（所謂的“工資鋼鐵定律”），但是亞當斯密指出在增加生産的情況下工資就會增長。事實已經十分清楚地表明亞當斯密在這一點上正確，而李嘉圖和馬剋思是錯的。
除了亞當·斯密觀點的正確性及對後來理論傢的影響之外就是他對立法和政府政策的影響。《國富論》一書技巧高超，文筆清晰，擁有廣泛的讀者。亞當斯密反對政府干涉商業和商業事務、贊成低關稅和自由貿易的觀點在整個十九世紀對政府政策都有决定性的影響。事實上他對這些政策的影響今天人們仍能感覺出來。
自從亞當斯密以來經濟學有了突飛猛進的發展以致他的一些思想已被擱置一邊，因而人們容易低估他的重要性。但實際上他是使經濟學說成為一門係統科學的主要創立人，因而是人類思想史上的主要人物。
時代背景
１７２３年亞當斯密出生在蘇格蘭法夫郡（County Fife）的寇剋卡迪（Kirkcaldy）。當時的英國可以說是歐洲的先進資本主義國傢。不僅是世界貿易的中心國，尚且是領先其它國傢的工業國。１８世紀前期歐陸的法國和的德國，尚停留在幼稚的封建的傢內工業，或獨立手工業的階段，仍然以這種方式來支配生産。但英國卻不然，已經走入資本主義初級階段，所謂工場手工業已在國內各大都市築下根柢。
中世紀的傢內工業或獨立手工業，工人是分散在各傢各戶，個人在全體作業過程中不過是一個孤立的勞動者。工廠製手工業卻是許多的工人在一個工廠勞動，在一個資本傢的指揮命令下，使用簡單的工具，從事分工的作業。一直到１７６０年以降發生了産業革命，使用機械的大工業出現為止，在産業革命前英國各國各地所實行的，仍然是這種資本主義前期的工廠製手工業。
這位舉世聞名的古典派經濟學的巨匠亞當斯密，生當工廠製手工業和機械製大工業的過渡時期。他的功績就是把當時零星片斷的經濟學學說，經過有體係的整理，使之成為一門分門別類獨立於哲學的大學問。
影響人物
托馬斯·霍布斯（Thomas Hobbes，1588—1697）
霍布斯認為，處於自然狀態中的人們，由於自私自利的本性驅使，在社會生活中必然要發生利益上的衝突。“在沒有一個共同權力使大傢懾服的時候，人們便處在所謂的戰爭狀態中。這種戰爭是每一個人對每一個人的戰爭。為了抑製這種戰爭狀態的發生，社會就要一個超乎社會之上的巨大力量，而國傢就是這種力量的化身。
約翰·洛剋（John Locke，1632.8.29-1704.10.28）
主張公民在與政府簽訂契約時，並沒有放棄自己全部的自然權利，衹是把部分權利出讓給政府，自己保持着那些政府不能干涉的權利。公民交出的那部份權利統一交給由一些人組成的議會，建立議會制度的政府，實行立法與行政兩大職能“分立”的機製，行政服從議會，公民有控製議會的終極權利。必要時，公民可以收回自己交出的那部份權利，解散議會，再把權利交給另一些人，組建新的議會。
哈奇森
在大約14歲時，斯密進入了格拉斯哥大學，在“永恆的”（斯密如此稱呼他）哈奇森的教導下研讀道德哲學。斯密在這個時期發展出他對自由、理性、和言論自由的熱情。
思想背景
一. 哲學家
１曼德費爾（Mandeville, Bernard de, 1670-1731）
２哈啓生（Hutcheson, Francis, 1694-1746）
３休謨（Hume, David 1711-1776）
二. 經濟學家
１樊特林（Vanderlint J. 生年不明，死於一七四零年）
２勃格雷（Berkeley, George 1685-1753）
主要理論
一、分工理論
亞當斯密認為，分工的起源是由人的才能具有自然差異，那是起因於人類獨有的交換與易貨傾嚮，交換及易貨係屬私利行為，其利益决定於分工，假定個人樂於專業化及提高生産力，經由剩餘産品之交換行為，促使個人增加財富，此等過程將擴大社會生産，促進社會繁榮，並達私利與公益之調和。
他列舉製針業來說明。“如果他們各自獨立工作，不專習一種特殊業務，那麽他們不論是誰，絶對不能一日製造二十枚針，說不定一天連一枚也製造不出來。他們不但不能製出今日由適當分工合作而製成的數量的二百四十分之一，就連這數量的四千八百分之一，恐怕也製造不出來。”
分工促進勞動生産力的原因有三：第一，勞動者的技巧因專業而日進；第二，由一種工作轉到另一種工作，通常需損失不少時間，有了分工，就可以免除這種損失；第三，許多簡化勞動和縮減勞動的機械發明，衹有在分工的基礎上方纔可能。
二、貨幣理論
貨幣的首要功能是流通手段，持有人持有貨幣是為了購買其它物品。當物物交換發展到以貨幣為媒介的交換後，商品的價值就用貨幣來衡量。這時，便産生了貨幣的另一功能－價值尺度。亞當斯密也談到貨幣的儲藏功能、支付功能。但是，他特別強調貨幣的流通功能。
三、價值論
提及價值問題，亞當斯密指出，價值涵蓋使用價值與交換價值，前者表示特定財貨之效用，後者表示擁有此一財貨取另一財貨的購買力。進一步指出，具有最大使用價值之財貨，往往不具交換價值，水及鑽石是其著名的例子。不過水與鑽石價值之比較是百年之後邊際效用學派纔圓滿解决此一問題。
四、分配理論
亞當斯密的分配論，是即勞動工資、資本利潤及土地地租自然率之决定理論。
亞當斯密指出，儘管雇主擁有抑低工資的力量，工資仍有其最低水平，此一最低水平是勞動者必須能夠維持基本生活，假定社會工人需求增加或工資基金提高，工資將高於最低水平。就另一角度言之，一國國富、資本或所得增加，將促使工資上漲，工資上漲則促進人口增加。
資本利潤之高低如同勞動工資，决定於社會財富之增減，資本增加固可促使工資上漲，卻使利潤為之下降。亞當斯密指出，假定商人投資同一事業，因為彼此相互競爭，自然致使利潤率降低。
地租係指對土地使用所支付的價格。亞當斯密認為，地租高低與土地肥沃程度及市場遠近有關。
五、資本積纍理論
資本纍積是大量進行分工必備的另一要素。分工的擴張與生産效率的提高跟資本的總額成正比。資本的纍積必須在分工之前進行，因為分工需要使用許多特殊的設備與機械料，在在都需要以資本來購取。分工愈細，工具的需要愈多，資本愈顯得重要。透過分工過程，可增加勞動生産量，提高國民所得，增強國民儲蓄意願與能力。
六、賦稅理論
亞當斯密提出四大賦稅原則，即公平、確定、便利、經濟。
公平：一國國民應盡可能按其能力以支持政府，亦即國民應按其在政府保護下所享有的利得比例納稅。
確定：各國民應當繳納的稅捐，須確定並不得隨意變更，繳納時期、繳納方法、應付稅額，都應對納稅人清楚宣示。
便利：一切稅捐，都應在最適合於納稅人的時間與方法收之。
經濟：每一稅捐都應善加設計，務使公民繳付國庫以外，在他的財力上受到最少可能的激動。
學說精華
國富論中的哲學基礎說明要獲得協助，不能衹依賴他人的同情心或利他主義，還要靠激起他人的利己心來實現。“請給我我所要的東西吧，同時，你也可以獲得你所要的東西。”換言之，在經濟生活中，一切行為的原動力主要是利己心而不是同情心或利他主義。
作為一個經濟原動力的利己心，同時也是一個經濟交換的基礎。要從別人那裏獲得自己所需要的東西，必須給別人以他所需要的東西。於是，就有分工、有交換、有價值、有貨幣等等現象産生。人們在利己心的支配下做各種勞動，從而構成了私人財富和社會財富的源泉。將利己心看作人的本性，將經濟活動看作利己心作用的結果，實際上反映了一切經濟現象是客觀的，都受某種自然規律的支配。
既然利己心是人的天性，是自然賦予的，追求個人利益就成了自然之理，對追求個人利益的活動就不應限製，亞當斯密認為私利與公益似由“一隻看不見的手”所引導，一步一步趨嚮和諧與均衡，此乃自然秩序的本質。
影響
《國富論》一書成為了第一本試圖闡述歐洲産業增長和商業發展歷史的著作，也成為了開展現代經濟學科的先驅。它也提供了資本主義和自由貿易最為重要的論述基礎之一，極大的影響了後代的經濟學家。
《國富論》一書的原始版本則存在一些爭議，一些人主張書中的內容曾被竄改的較為溫和，以符合當時某些思想傢如休莫和孟德斯鳩的既定理論。的確，許多斯密的理論都衹簡單地描述歷史的走嚮將會遠離重商主義並朝嚮自由貿易，而當時這種走嚮早已發展了數十年，並且已對政府政策有極大影響。無論如何，斯密的作品廣泛地組織了他們的理論，因此至今仍是經濟學界最為重要而最具影響力的書籍之一。
結論
從亞當斯密的經濟思想可發現：以前學者多研究經濟現象，所稱經濟學不過是特定時代、特定場所的經濟政策，亞當斯密以”人性”為出發點，把普遍性帶入了經濟學的領域，使之成為社會科學。
以前學者以增加人民財富作為富裕國傢的手段，亞當斯密則確立以改善人民生活為主的經濟學觀念。將”國富”的標準，由不生産的“貨幣”與僅生産“純産物”的農業，引入以國民每年勞動生産“物品”總量的增加，亦即國傢所擁有全部交換價值總額的增加為標準。
亞當斯密積極倡導“自由放任”和排除政府幹預經濟事務，促進英國自由貿易政策的實現；一八四六年及１８６０年，“𠔌物條例”（對進口𠔌物徵重稅的法律，１４３６年實施，１８４６年英國首相羅伯特·皮爾予以廢除）與“保護關稅”即相繼被廢除。
作為一位“經濟自由主義”的倡導者，亞當斯密對工商業者的工作甚為贊賞，但對他們的動機不無懷疑。
他批評製造業與貿易者抱有專利的企圖，並謂其利益“從未與公共的利益協調……..通常都在欺騙並壓迫公衆。”“任何由工商業者所建議的新法律，或者新的規章，都應對之特別小心，都不應該不經過長期的、慎密的考慮而即予采用。”同時，亞當斯密對於這群人總想聯合起來，以避免彼此間之競爭的企圖也從未忘懷。他曾如此說：“同行同業的人士是很少會集合在一起的，甚至就是為了娛樂，他們也很少會這樣做，但是，衹要他們在一起聚談，則最後産生的必是一種對大衆不利的陰謀，或是一種哄擡物價的勾當。”
他對農工大衆的利益頗為關懷，同情工人，認為合理工資對占社會多數的工人是必要的。“……各種各類不同的工人，在整個政治社會中占其多數……凡足以改善多數人之生活，便永遠不能視為有害於社會全體。……當社會最大部分的分子窮苦無依，則那個社會斷然不能昌盛而安樂，是以凡耕種五穀以養人、縫製衣服以衣人，及建築房子以居人者，應使他們本身在他們自己的工作內獲有一部分的産品以勉資自養、自衣自居，畢竟是最公道不過的事。”
“政府不干涉”對亞當斯密而言，不過是個普通的原則，而不是一條絶對的原則。除政府三任務外（一、鞏固國防，以防止外力的侵犯。二、建立司法組織，以維持社會治安與公道。三、創設公共工程制度，以補救私人企業之不足。），他還贊成政府管理郵政、合法限製利率、國民義務教育，及一切自由業或信用業的執照考試等。他也同意用公共規章以保障國民之有形安全，像是采取衛生措施以預防傳染病的蔓延。
亞當斯密心目中的政府，不是無為的。他心目中的自由，不是無條件的。他曾明白表示：“若一小部分人侵犯天賦的自由權，…….足使社會全體有蒙受危險之於，則可以並且應用政府法律來加以抑製。這與政府之為自由政府或專製政府無關。”
主要著作
一、道德情操論（１７５９）
在亞當斯密生活的那個時代，“道德情操”這一短語，是用來說明人（被設想為在本能上是自私的動物）的令人難以理解的能力，即能判斷剋製私利的能力。因此，亞當私密竭力要證明的是：具有利己主義本性的個人﹝主要是追逐利潤的資本傢﹞是如何在資本主義生産關係和社會關係中控製自己的感情和行為，尤其是自私的感情和行為，從未而建立一個有必要確立行為準則的社會而有規律的活動。亞當斯密在《國富論》中所建立的經濟理論體係，就是以他在《道德情操論》的這些論述為前提的。
《道德情操論》和《國富論》不僅是亞當斯密進行交替創作、修訂再版的兩部著作，而且是其整個寫作計劃和學術思想體係的兩個有機組成部分。《道德情操論》所闡述的主要是倫理道德問題，《國富論》所闡述的主要是經濟發展問題，從現在的觀點看來，這是兩門不同的學科，前者屬於倫理學，後者屬於經濟學。亞當斯密把《國富論》看做是自己在《道德情操論》論述的思想的繼續發揮。《道德情操論》和《國富論》這兩部著作，在論述的語氣、論及範圍的寬窄、細目的製定和着重點上雖有不同，如對利己主義行為的控製上，《道德情操論》寄重托於同情心和正義感，而在《國富論》中則寄希望於競爭機製；但對自利行為得動機的論述，在本質上卻是一致的。在《道德情操論》中，亞當斯密室把“同情”作為判斷核心的，而其作為行為的動機則完全是另一回事。
二、國富論（１７７６）
《國富論》係經濟學鼻祖亞當·斯密的巨著。
第一篇論勞動生産力改善的原因及其生産物在各階級的人們間之自然的分配順序。
第一篇開始說明：各種生産力的最大改善，起因於分工。有分工，纔有貨幣。因為，有了分工，必有交換；有了交換，就要貨幣；所以，貨幣是助長分工所必須的。這樣的議論，自然進展到交換的條件；那就是價值論及價格論。關於價格的研究，謂價格被分為工資、利潤及地租；因此，為了說明價格取决於工資、利潤及地租的比率這一事實，必須講到這些比率的變動。
第二篇論資産的性質、積蓄及用途。第二篇有五大論點：
一論資産的性質及分類；
二論社會總資産中的一種特別部門（即貨幣）及銀行的各種操作以節約貨幣的方法；
三論資本的積蓄及生産與不生産的勞動；
四論利息的升降；
五論資本的各種用途，並予以比較。
第三篇論各國富裕進步的不同。第三篇說明：國富的自然進步，資本是最初用於農業，而後用於各種製造業，最後用於國外貿易。
第四篇論經濟政策與經濟學說之諸體係。即商業體係與農業體係。
第五篇論元首或國傢的收入。並具體說明下列三點：
一，哪些是君主或政府的必要費用；在這些費用當中，哪些該由社會一般人民的奉獻來支應；哪些則該由特別的社會團體或個人來承擔。
二，有哪些不同的方法，可以讓一般社會成員為整個社會應該承擔的費用作出奉獻；這些方法分別有哪些重要的優缺點。
三，最後一點則說明，究竟是什麽理由，使得幾乎所有現代政府都舉債度日；而那種債務，對整個社會的真實財富，亦即，對整個社會土地與勞動每年的産出，會造成什麽影響。
《國富論》中他有下列重要主張：
１個人主義：經濟體製之建構，應以保障個人之生存及發展為原則。因為每個人若能充分發展自我，則社會整體也將獲得進步。
２財産私有製：就是主張私人有權擁有及支配自己的財富。因為如此才能使個人充分發展，同時促進文明的發展。
３追求利潤具有正當性：企業傢投資工商業雖然為了追求利潤，但是在過程中往往産生服務人群、貢獻社會的效果，促進社會進步。
４經濟自由：主張政治中立，不隨便幹預經濟活動，使每個人得按照自己的意志，自由地進行其經濟活動，如此才能有效率。
５價格機能：商品的價格，由市場來决定，如此價格自然會調整恰當，而且資源也會配置得當，結果將始社會效益達到最佳的狀態。
他認為人類有自私利己的天性，因此追求自利並非不道德之事。倘若放任個人自由競爭，人人在此競爭的環境中，不但會憑着自己理性判斷，追求個人最大的利益，同時有一隻“看不見的手（指市場）”使社會資源分配達到最佳狀態。
Smith studied social philosophy at the University of Glasgow and the University of Oxford. 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 returned home and spent the next ten years writing The Wealth of Nations, publishing it in 1776. He died in 1790.
Biography
Early life
Smith was born to Margaret Douglas at Kirkcaldy, Fife, Scotland. His father, also named Adam Smith, was a lawyer, civil servant, and widower who married Margaret Douglas in 1720 and died two months before Smith was born. Although the exact date of Smith's birth is unknown, his baptism was recorded on 5 June 1723 at Kirkcaldy. Though few events in Smith's early childhood is cracked, Scottish journalist and Smith's biographer John Rae recorded that Smith was abducted by gypsies at the age of four and released when others went to rescue him.[N 1] Smith was close to his mother, who likely 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. While there, Smith studied Latin, mathematics, history, and writing.
A plaque of Smith
A commemorative plaque for Smith is located at Smith's home town of Kirkcaldy.
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 awarded the Snell exhibition and left to attend Balliol College, Oxford.
Smith considered the teaching at Glasgow 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 Oxford 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 at Oxford, 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.
Teaching career
Smith began delivering public lectures in 1748 at 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.
A man posing for a painting
David Hume was a friend and contemporary of Smith.
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. When the head of Moral Philosophy died the next year, Smith took over the position. He worked as an academic for the next thirteen years, which he characterized 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 "sympathy" as the feeling of moral sentiments. He bases 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 sympathy. 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 labor, 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.
A drawing of a man sitting down
François Quesnay, one of the leaders of the Physiocratic school of thought
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, and 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 travel
Smith's tutoring job entailed touring Europe with Scott while teaching him subjects including proper Polish. He was paid £300 per year plus expenses along with £300 per year pension, which was roughly twice his former income as a teacher. Smith first traveled as a tutor to Toulouse, France, where he stayed for a year and a half. According to accounts, he found Toulouse to be very boring, and he wrote 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.
After staying in Geneva, the party went to Paris, where Smith came to know intellectual leaders such as Benjamin Franklin, Turgot, Jean D'Alembert, André Morellet, Helvétius and, in particular, Francois Quesnay, the head of the Physiocratic school, whose ideas impressed him so that he considered dedicating Quesnay his The Wealth of Nations had he not died earlier. The physiocrats opposed mercantilism, the dominating economic theory at the time, by taking up the motto Laissez faire et laissez passer, le monde va de lui même! (Let do and let pass, the world goes on by itself!). They also declared that only agriculture produced wealth, and that merchants and manufacturers did not. But this and their praising nature and a natural style of life was a necessary smoke screen, because criticising openly the consumption pattern of nobility and church – the only clients merchants and manufacturers had after Louis XIV and Louis XV ruined France by lost wars, help to the American insurgents against the British, and above all the excessive consumption of unproductive labour – labour which does not contribute to economic reproduction – would have been lethal. And if nobility and church are disposable for economic reproduction including those who work for them, in feudal France agriculture was the only sector important to maintain the society. As English distribution of income differed sharply from French, this was not fully understood by Adam Smith who concluded that their teachings are "with all its imperfections [perhaps] the nearest approximation to the truth that has yet been published upon the subject of political economy". The distinction of productive versus unproductive labour – the physiocratic classe steril – became the central issue to the development approach of classical economics.
Later year
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 himself, 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 the 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, he 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 belief
Character
An enamel paste medallion, depicting a man's head facing the right
James Tassie's enamel paste medallion of Smith provided the model for many engravings and portraits which remain today.
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, who is often described as a prototypical absent-minded professor, is considered by historians to have been an eccentric but benevolent intellectual, 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 speak to himself and 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.
Various anecdotes have discussed his absent-minded nature. In 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. Another episode records that he put bread and butter into a teapot, drank the concoction, and declared it to be the worst cup of tea he ever had. In another example, Smith went out walking and daydreaming in his nightgown and ended up 15 miles (24 km) outside town before nearby church bells brought him back to reality.
A drawing of a man standing up, with one hand holding a cane and the other pointing at a book
Portrait of Smith by John Kay, 1790
Smith, who is reported to have been an odd-looking fellow, has been described as someone who "had a large nose, bulging eyes, a protruding lower lip, a nervous twitch, and a speech impediment". 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 view
There has been considerable scholarly debate about the nature of Smith's religious views. Smith's father had a strong interest in Christianity and belonged to the moderate wing of the Church of Scotland. In addition to the fact that he received the Snell Exhibition, Smith may have also moved to England with the intention of pursuing a career in the Church of England. At Oxford, Smith rejected Christianity and it is generally believed that he returned to Scotland as a deist.
Economist Ronald Coase has challenged the view that Smith was a deist, stating that while Smith may have referred to the "Great Architect of the Universe" in his works, other scholars have "very much exaggerated the extent to which Adam Smith was committed to a belief in a personal God". He based this on analysis of a remark in The Wealth of Nations where 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". Coase also notes Smith's observation that "[s]uperstition first attempted to satisfy this curiosity, by referring all those wonderful appearances to the immediate agency of the gods."
Published work
The Theory of Moral Sentiment
Main article: The Theory of Moral Sentiment
In 1759, Smith published his first work, The Theory of Moral Sentiments. He continued making extensive revisions to the book, up until his death.[N 2] 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 social relationships. His goal in writing the work was to explain the source of mankind's ability to form moral judgements, in spite of man's natural inclinations towards self-interest. Smith proposes a theory of sympathy, in which the act of observing others makes people aware of themselves and the morality of their own behavior.
Scholars have traditionally perceived a conflict between The Theory of Moral Sentiments and The Wealth of Nations; the former emphasizes sympathy for others, while the latter focuses on the role of self-interest. In recent years, however, most 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 sympathize with them. Rather than viewing The Wealth of Nations and The Theory of Moral Sentiments as presenting incompatible views of human nature, most Smith scholars regard the works as emphasizing different aspects of human nature that vary depending on the situation. The Wealth of Nations draws on situations where man's morality is likely to play a smaller role, such as the laborer involved in pin-making, whereas The Theory of Moral Sentiments focuses on situations where man's morality is likely to play a dominant role among more personal exchanges.
These views ignore that Smith's visit to France (1764–66) changed radically his former views and that The Wealth of Nations is an inhomogeneous convolute of his former lectures and of what Quesnay taught him. Before his voyage to France in the "Theory of Moral Sentiments" (1759) Adam Smith refers to an "invisible hand" which procures that the gluttony of the rich helps the poor as the stomach of rich is so limited that they have to spend their fortune on servants. After his visit to France, Smith considers in the "Wealth of Nations" (1776) the gluttony of the rich as unproductive labour. The micro-economical/psychological view in the tradition of Aristotle, Puffendorf and Hutcheson, Smith's teacher, – elements compatible with a neoclassical theory – chanced to the macro-economical view of the classical theory Smith learned in France.[clarification needed]
The Wealth of Nation
Main article: The Wealth of Nation
A brown building
Later building on the site where Smith wrote The Wealth of Nation
There is a fundamental dissent 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. 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 how to promote the "Wealth of Nations" in the first sentences.
Smith used the term "the invisible hand" in "History of Astronomy" referring to "the invisible hand of Jupiter" and twice – each time with a different meaning – the term "an invisible hand": in The Theory of Moral Sentiments (1759) and in The Wealth of Nations (1776). This last statement about "an invisible hand" has been interpreted as "the invisible hand" in numerous ways. It is therefore important to read the original:
As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestick 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 domestiek 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 eases, 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 publick good. [emphasis added].
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.
The first page of a book
The first page of The Wealth of Nations, 1776 London edition
Smith's statement about the benefits of "an invisible hand" is certainly 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, he indirectly 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 true laissez-faire economy would quickly become 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."
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 emphasize this relation Samuelson quotes Smith's "invisible hand" statement putting "general interest" where Smith wrote "publick 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." And it was then when neoclassical economics was revived in Chicago from oblivion and Samuelson entered the scene.
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 period are regarded as unproductive labor as they do not contribute to growth. This is what Smith had learned in France with Quesnay. To this French insight that unproductive labor should be pushed back to use more labor productively, Smith added his own proposal, that productive labor should be made even more productive by deepening the division of labor. Deepening the division of labor means under competition lower prices and thereby extended markets. Extended markets and increased production lead to a new step of reorganising production and inventing new ways of producing which again lower prices, etc., etc.. Smith's central message is therefore that under dynamic competition a growth machine secures "The Wealth of Nations". It predicted England's evolution as the workshop of the World, underselling all its competitors. The opening sentences of the "Wealth of Nations" summarize this policy:
The annual labor 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 labor 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's "Wealth of Nations" offers many insights other theories disagree. It argues that agriculture offers fewer possibilities to a division of labour, raising its prices compared with industry. [Us-American and European agriculture is therefore subsidised]. To Smith, the genius and the natural talents of men are no natural dispositions which have to be paid for according to comparative advantages. "It is not upon many occasions so much the cause, as the effect of the division of labour." Competition should reduce the prices of these "talents". Smith suspects manufacturers of mischief and trusts landowners and labourers – as consumers – to represent the common good. [Ricardo mistrusts landowners as earners of a monopoly income.]
Other work
A burial
Smith's burial place in Canongate Kirkyard
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); A Treatise on Public Opulence (1764) (first published in 1937); and Essays on Philosophical Subjects (1795).
Legacy
A statue of a man standing up
A statue of Smith on Edinburgh's Royal Mile built through private donations and organised by the Adam Smith Institute
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 satirized by Tory writers in the moralizing tradition of Hogarth and Swift, as a discussion at the University of Winchester suggests.
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 (for example labor, 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 modeling of Walras a century later. 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.
On the other hand, Joseph Schumpeter dismissed Smith's contributions as unoriginal, saying "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 labor that went into its production. This contrasts with the modern understanding of mainstream economics, that the value of a thing is determined by what one is willing to give up to obtain the thing.
A brown building
The Adam Smith Theatre in Kirkcaldy
The body of theory later termed "neoclassical economics" or "marginalism" formed from about 1870 to 1910. The term "economics" was popularized 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 systematized 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, his opposition to slavery, colonialism, and empire[clarification needed] was emphasized, as were his statements about high wages for the poor, and his views that a common street porter was not intellectually inferior to a philosopher.
A bank note depicting a man's head facing to the right
This £20 note was issued by the Bank of England and features Smith.
Portraits, monuments, and banknote
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 feet (3.0 m)-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.
As a symbol of free market economic
A sculpture of an upside down cone
Adam Smith's Spinning Top, sculpture by Jim Sanborn at Cleveland State University
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, 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".
However, 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."
Moreover, in this passage Smith goes on to specify progressive, not flat, taxation:
"The rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion"
Smith even specifically named taxes that he thought should be required by the state among them luxury goods taxes and tax on rent. He believed that tax laws should be as transparent as possible and that each individual should pay a "certain amount, and not arbitrary," in addition to paying this tax at the time "most likely to be convenient for the contributor to pay it". Smith goes on to state that:
"Every tax, however, is, to the person who pays it, a badge, not of slavery, but of liberty."
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 defense 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 public education and religious institutions as providing general benefit to the society. 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 was in favor of retaliatory tariffs and believed that they would eventually bring down the price of goods. He even stated in Wealth of Nations:
"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."
Noam Chomsky has argued[N 3] that several aspects of Smith's thought have been misrepresented and falsified by contemporary ideology, including Smith's reasons for supporting markets and Smith's views on corporations. Chomsky argues that Smith supported markets in the belief that they would lead to equality, and that Smith opposed wage labor and corporations. 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 defense.