The most influential economist: adam smith
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The Wealth of Nations
[edit] Main article: The Wealth of Nations Disagreement exists 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 (1776). Neoclassical economists emphasise Smith's invisible hand, [90] a concept mentioned in the middle of his work – Book IV, Chapter II – and classical economists believe that Smith stated his programme for promoting the "wealth of nations" in the first sentences, which attributes the growth of wealth and prosperity to the division of labour. He elaborated on the virtue of prudence, which for him meant the relations between people in the private sphere of the economy. It was his plan to further elaborate on the virtue of justice in the third book. [87] Smith used the term "the invisible hand" in "History of Astronomy" [91] referring to "the invisible hand of Jupiter", and once in each of his The Theory of Moral Sentiments [92] (1759) and The Wealth of Nations [93] (1776). This last statement about "an invisible hand" has been interpreted in numerous ways. Later building on the site where Smith wrote The Wealth of Nations As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic 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 domestic 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 cases, 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 public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it. Those who regard that statement as Smith's central message also quote frequently Smith's dictum: [94] 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. However, in The Theory of Moral Sentiments he had a more sceptical approach to self-interest as driver of behaviour: How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. Document Outline
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