CHAPTER 22
Smith and Ricardo:
Laissez Faire and Free Trade
Adam Smith (1723-1790)
Adam Smith was bom in Kirkcaldy, a small town in Scotland,
in 1723. He entered the University of Glasgow in 1737. He was
offered a scholarship to Oxford, which he accepted, and studied
there for six years. He returned to Scotland and taught Logic and
Moral Philosophy at the University of Glasgow. In 1759 he
published his Theory o f Moral Sentiments which dealt with the
problem of morality and how it related to man’s self interest and
his ability to make moral judgments in contradiction to that
apparent dominant feature of his nature
Smith became famous by virtue of the success, if not contro
versy, that the Theory o f Moral Sentiments inspired. He was
asked to be the tutor of the stepson of Charles Townsend and in
1764 he and the young Duke of Buccleuch left for France. In
France he met Quesnay, the great economist, and was introduced
to many of the principles of the Physiocrats. Smith rejected the
primary claim of the Physiocrats that all wealth sprang from
agriculture, but did accept the idea wealth was the product of
production and did circulate through the economy.
Upon his return to Scotland he worked for several years on his
major work, An Inquiry into the Nature and Causes o f the Wealth
o f Nations, more commonly known as The Wealth o f Nations,
which was published in 1776. During his lifetime Smith met with
and engaged in discussions of moral and economic philosophy
with men like David Hume, Samuel Johnson, Quesnay and Ben
Franklin. Something of a character in life, he was the stereotypi
cal absent minded professor, as well as a great intellect whose
contribution has earned him the title, “The Father of Modem
Capitalism.”
The Wealth o f Nations is divided into five books dealing with
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