| Adam Smith was the founder of economics as a
distinct field of study. He wrote only one book on the subject — The Wealth of
Nations, published in 1776. Smith was 53 years old at the time. His friend David
Hume found the book such hard going that he doubted many people would read it.
But Hume was wrong — people have been reading it for more than 200 years
now. The Wealth of Nations, in Smith's view, was the result not of accumulating gold or silver, as many of that time believed, but of ordinary people working and trading in free markets. To Smith, the remarkable thing about the wealth produced by a market economy is that it does not result from any organized plan, rather, it is the unintended outcome of the actions of many people, each of whom is pursuing the incentives the market offers with his or her own interests in mind. "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, every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. 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 a part of his intention". Much of the discipline of economics as it has developed over two centuries consists of elaboration of ideas found in Smith's work. The idea of the "invisible hand" of market incentives that channels people's efforts in directions that are beneficial to their neighbors remains one of the most durable of Smith's contributions. |