People Tend to Act Out of Perceived Self Interest Fact
It isn’t true that everyone acts out of self interest, but generally people tend to act in accord with their perceived self interest and “moral sentiments.”
Adam Smith
Adam Smith was a Scottish philosopher whose theories lay the foundation of modern economics, thus Smith can be considered “the father of modern economics”.
Smith’s capitalist manifesto The Wealth of Nations (1776) applies years of research on economic systems to Smith’s moral philosophy which he laid out in The Theory of Moral Sentiments. The main theme of the books can be summarized as, “self-interest and sympathy work as an invisible hand that guides an economy, with minimal state intervention needed. The result is wealth for a nation, which is better measured by commerce and production, than by stores of gold”.
The concept being that (somewhat regulated) free-market capitalism was a better game-plan for city-states than the alternative of having everything controlled by Aristocrats and Monarchs. Unfortunately Smith is often applied out of context, to support the idea of unregulated free-market capitalism and crony capitalism, which were the main things he warned against in his works (see “masters” and habits of politicians in the Wealth of Nations).
- The Theory of Moral Sentiments (1759) – (Read 1759 version online) (Revised 1790 Version Read Online) (Summary) (Buy Now
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- An Inquiry into the Nature and Causes of The Wealth of Nations (1776) – (Read Online) (Summary) (Buy Now
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Factoids tagged with "Adam Smith"
Work Creates Private Property and Economic Value Fact
As John Locke and Adam Smith elude, physical work creates private property and gives possessions exchange-value (value in a trade).
America Has a Capitalist Economic System Fact
America’s economic system meets the definition of capitalism, but not pure free market capitalism. America has a mixed-market economy.
Adam Smith is the Father of Modern Economics Fact
Adam Smith can be considered the father of modern economics due to his influential works which explore the mechanics of morality, markets, and capitalism in an industrialized society.
Blog Posts tagged with "Adam Smith"
What is Classical Liberalism?
Classical liberalism is the ideology of liberties, rights, individualism, reason, and tolerance that comes in a political and economic form.
Neoliberalism Explained
Neoliberalism is an economically-minded evolution of classical liberalism focused on deregulation, trade, and the private market. It is a “middle way” or “third way” between liberalism and conservatism.
Adam Smith as a Moral Philosopher
We explain Adam Smith as a Moral Philosopher, and explore how his Theory of Moral Sentiments connects to his economic theory from The Wealth of Nations.
The Age of Enlightenment and the Birth of Liberalism
Classical liberalism arose in opposition to state-imposed religion and aristocracy in the 1600 – 1700’s during the Age of Enlightenment in Europe and America.
The Basic Types of Political Parties
On this page, we look at political parties from a historical perspective to better understand the underlying left-right politics all political parties are based on.
What is “the Invisible Hand”?
“The invisible hand” is a term used by Adam Smith to describe the theory that self-interest leads to social and economic benefits in a free-market.
Wealth and Income Inequality
We explain economic inequality from a historical perspective, and then consider the effects of wealth inequality and income inequality in America today.
The Point of Life is Happiness
We present a discussion on “the meaning of life as happiness,”the Greatest Happiness Theory,” “the Good Life,”the Pursuit of Happiness,” and Virtue Theory.