Friday, December 6, 2019

5 Interesting Facts About Adam Smith

Adam Smith
Look around at America’s capitalist economy. Do you know who came up with many of the theories and ideas that form the basis for capitalism? You guessed it: 
Adam Smith. 
Also known as The Father of Economics, Adam Smith was a pioneering figure in political economy. Below are five facts you should know about the Scottish economist and author of The Wealth of Nations and The Theory of Moral Sentiments

1. He Got His Face on Money

It’s not every historical figure that gets to grace a country’s currency. Adam Smith, because of his far-reaching works on economic theory and philosophy, was given the honor. Unfortunately, he never knew about it. Smith’s writings were vital in forming economic law in the British Isles.  Because of this, he has been a highly respected figure in the UK. In 1891, Clydesdale Bank in Scotland placed his portrait on £50 notes. The Bank of England followed suit in bestowing the honor in 2007, printing his picture on the more regularly used £20 bills. Smith was the first Scotsman to be honored on English money. 

2. He was a Bibliophile

Or a person who collects or has a great love of books. With a personal collection of around 1500 books, he had an entire library that covered a wide variety of subjects. Smith read voraciously across numerous disciplines, from nature and science to Greek and English literature. Smith was so well-read he became known for his command of English and Greek. He also paid impeccable attention to grammatical detail in both languages. If he’d lived in our day and age, he would have been part of the grammar police.

3. He was Photo Shy

While there were no cameras in the 1700s, the popular option was to have your picture painted. Sittings for portraits were usually reserved for the rich and famous because they had the money to pay for them. Smith, however, was not a fan. The philosopher rarely sat still long enough for a portrait artist to paint a good resemblance of his face. In fact, most artists who drew or painted pictures of the famous Father of Economics did so from memory. It probably had less to do with his humility and more to do with what he felt were rather poor looks.

4. He Encouraged Individual Freedom and Charity

To say Smith was ahead of his time is an understatement. He lived in an age where social class dictated who dined well and who had a potato for dinner. The system of feudalism was still in place all over Europe, and the concept of life, liberty, and the pursuit of happiness had not become mainstream. When he wrote his classic book titled The Wealth of Nations, he advocated for a free society. He proposed the theory that social wellbeing came from individual freedom. Smith believed that it was beneficial for individuals in a community to learn how to work and live together. He claimed that people would then learn how to bargain, trade, buy, and sell. Smith argued that this concept worked in a nation’s favor. With fewer restrictions placed upon a nation’s citizens, those citizens could prosper. When individuals flourished, Smith argued that the nation would prosper, as well. He favored an open, competitive marketplace with a free exchange. Sound a bit like U.S. economic theory? It should!
To balance out his idea of self-interest, Smith encouraged charity to be directed toward the downtrodden. He believed that if individuals succeeded monetarily, they would be able to view the less fortunate with sympathy. Due to an abundance of goods, the desire to share those goods and help the poor would arise. He thought the desire to help a fellow man resided in the nature of every person. The more a person was able to aide their neighbor, the more apt they were to do it. But to be charitable, one had to make money.
For Smith, self-interest and charity cycle back and forth. Self-interest demands one to make money.  For example, you do not purchase a 6.5 creedmoor scope from an optic company because they like you. It’s in their (and your) self-interest to sell you their products. However, because you have purchased their products and have given them money in exchange, the optic company can then give of their profit to help others. 
In addition to personal freedom, Smith also argued for a limited government. He believed government should allow people to run their business affairs in the way they saw fit. He believed that governments could be better used controlling institutions such as education and defense.

5. He came up with GDP

Undoubtedly, one of the most significant concepts Adam Smith produced was the way nations measure their wealth. In Smith’s day, countries measured their wealth based on how much gold and silver they had stored in their coffers. Smith presented the theory that a nation’s wealth should be calculated based on the levels of production and commerce rather than stored-up gold coins. His approach created what we know today as the GDP or gross domestic product.
Ever since Adam Smith shared the virtues of the division labor, international trade (and trade agreements) expanded. Imports and exports increased, and nations began looking at their total wealth a little bit differently. Countries around the world still use the GDP to measure the economic wealth and vitality of their nation to this day.

Author Bio:
Richard Douglas is a firearms expert and educator, and a lover of economics. His work has appeared on large publications like The National Interest, Daily Caller, American Shooting Journal, SOFREP and more. In his free time, he reviews various optics on his Scopes Field blog.

1 comment:

  1. There's too much adulation of Smith. Rothbard did a nice job of balancing this out in his "History of Economic Thought" book.