English to traditional Latin. No wonder he was popular with students and earned the disapproval of Scottish professors. In his student years, Adam Smith read a lot, including the philosophical works of Hugh de Groot[2], Francis Bacon and John Locke[3].
Smith received his Master of Arts in 1740 and entered Balliol College, Oxford University. The young man devoted the next six years to philosophy and literature. Surprisingly, in the future, Adam Smith will call these years the most unhappy and empty. In those days, Oxford was not among the prestigious universities. “If anyone spoils his health at Oxford by excessive work, then let him blame only himself: our only duty is to go to prayer twice a day and twice a week to a lecture” - this is how Adam Smith spoke about studying in one of letters from that time.
However, it was not only a useless pastime. The few Scots in Oxford were taken with hostility and ridiculed. They had to endure unfair treatment by the professors as well. Later, in his Inquiry into the Nature and Causes of the Wealth of Nations,[5] Smith noted the poor quality of English education. He saw the reason in the fact that teachers, regardless of merit, received a generous salary. In addition, the most educated people in those days preferred a more profitable and prestigious spiritual career. Smith left the university ahead of schedule. Without receiving a diploma, he returned to his hometown, where he continued to study, but on his own.

Start of professional activity

In 1748, Smith began lecturing in Edinburgh on rhetoric, belles-lettres, and jurisprudence to large audiences. In 1751, Adam Smith was appointed professor of logic and later professor of ethics at the University of Glasgow.
Adam Smith was a kind and noble man, gentle and compliant, he could not refuse help even to those who were not closest to him. people. He led a quiet, closed life, had few friends. With the closest of them, David Hume [6], Adam was friends for more than 20 years. After Hume's death, Adam Smith developed some of his ideas in his writings.
In 1755 Smith published his first articles in the Edinburgh Review. And four years later, in 1759, his first philosophical work on ethics, The Theory of Moral Sentiments,[8] was published, “dedicated to the study of ethical norms that preserve the integrity of human society”[9]. The book became one of the major works on ethics in the 18th century. It is noteworthy that it was in The Theory of Moral Sentiments that Adam Smith first described "economic man" - driven by selfish interests and the desire for material well-being. The term homos economicus ("economic man") came later, but its creator[10] refers to the work of Adam Smith.

Euro-trip

In 1764, Smith left his teaching career at the University of Glasgow and traveled around Europe as tutor to the young Duke of Buccleuch[eleven], heir to Lord Townsend[12]. The latter, in a letter to the Duke of Buccleuch, described Smith as follows: “Mr. Smith has, besides many virtues, the advantage of being profoundly well-read in matters of government and the laws of our own country[13]. He is intelligent without being overly refined, broadly educated but not superficial. Although he is a scientist, his views on our system of government are not dogmatic or one-sided. Studying with him will allow you to acquire in a short time the knowledge necessary for a serious politician.”
Lord Townsend offered Smith a lifetime salary of £thirty0 a year, and the scientist did not miss the opportunity.
The trip lasted almost three years. During this time, Smith managed to visit Paris, Toulouse, Geneva, get acquainted with the outstanding philosophers and writers of the era: Denis Diderot, Jean d'Alembert, Paul Holbach, Claude Helvetius, Andre Morelle, Francois Voltaire[14]. In Paris, Smith visited many fashionable salons and especially became close to Anne Turgot [15] (see essay 02. Anne Robert Jacques Turgot), with whom he shared the ideas of free trade and non-intervention of the state in the economy. Another significant event for Smith was his acquaintance with the head of the physiocratic school and the court physician Francois Quesnay. Through For several years, Adam Smith devoted his famous work “An Inquiry into the Nature and Causes of the Wealth of Nations” to Kena, who had already died by that time.

Life's work

After returning to Britain in 1767, Smith devoted himself entirely to work on The Wealth of Nations. He settled in his parents' old house in Kirkcaldy and spent six years almost completely alone. The only company he had was a secretary, to whom he dictated texts (Smith himself could not write because of severe pain in his hand). From 1773 to 1776 he lived in London, where he completed his work.
The fundamental work "Study on the Nature and Causes of the Wealth of Nations" entered the history of economic thought forever and was reprinted five times during the author's lifetime. It is believed that this work of Adam Smith gave rise to a new science - political economy. Perhaps there is an exaggeration here - this is what the famous economist Mark Blaug[16] says: “Adam Smith should not be portrayed as the founder of political economy. Cantillon, Quesnet, and Turgot are more likely to be awarded this honor. But even Cantillon's Essays, Quesnet's articles, Turgot's Meditations are at best lengthy pamphlets, a dress rehearsal of science, but not yet science itself. “An Inquiry into the Nature and Causes of the Wealth of Nations” is the first full-fledged work in economic science that sets out the general basis of science: the theory of production and distribution, then an analysis of the operation of these abstract principles on historical material, and, finally, a number of examples of their application in economic policy, and all this work is imbued with the lofty idea of ​​"an obvious and simple system of natural liberty," towards which, as it seemed to Adam Smith, the whole world was moving.
The treatise consists of five books, but only the first two of them, devoted to the theoretical foundations of economy, are of interest today [17].
The central category in the work is labor, which is called the main source of wealth and the measure of the exchange value of a commodity.
Adam Smith put forward the theory of labor value. At the same time, unlike David Ricardo (see essay 04. David Ricardo) and Karl Marx (see essay 06. Karl Marx), Adam Smith had in mind not the amount of labor spent on production, but the amount of labor that can be purchase for this product. Smith also for the first time separated "use value" (value for the consumer, benefit) from "exchange value" (regulating relations in exchange). He revealed the mechanism of fluctuations in the "market price" for which the goods are sold, relative to the "natural price" - the actual cost of the goods (labor is its measure). The market price may not coincide with the natural, it is determined only by the interaction of supply and demand.
Another issue that Adam Smith raises in his work is the formation of the value of a commodity. In his opinion, it includes three components: rent, wages and profit. At the same time, the growth of labor productivity of workers causes an increase in wages and rents, but reduces the share of profit in value added. Smith divides the entire public good into two components: capital used to expand production, and funds for non-productive consumption[18].
Adam Smith considered the most important engine of economic progress to be the division of labor, which allows increasing productivity, considering it as a general form of economic cooperation in the interests of the wealth of nations. Undoubtedly, philosophers have previously spoken of the important role of specialization. However, it was Smith who defined the boundaries of the division of labor by the scale of the market, thereby forming an economic law based on abstract reasoning.
Speaking of The Wealth of Nations, one cannot fail to mention the “soul” of the work, its central motif – the “invisible hand of the market”, famous among economists. The author describes an "economic man" who, "when pursuing his own interests, often serves the interests of society more effectively than when he strives to do so." The "invisible hand" - the spontaneous action of objective economic laws - directs him "to a goal that was not at all part of his intentions." No person can influence the market structure determined by these laws - a person is free only to choose from the offered goods at the offered prices, based on the greatest benefit for himself. Collectively, however, it is these individual decisions that determine prices.
Smith's "invisible hand" conceals one of the fundamental concepts of economic science: a person who increases his own well-being also increases the public; acting rationally from an economic point of view, a person always pursues his interests, increasing own material well-being.
Adam Smith explains this situation simply: a person who seeks to increase his wealth will certainly provide services to other people, enter into labor relations, which leads to an increase in social well-being, to the development of society, although at first glance everyone cares only about their own interests.
Adam Smith, like many thinkers of the time, criticized the policy of mercantilism, which consisted in the artificial support of certain industries by the state. He was also an ardent opponent of another practice characteristic of mercantilism - ensuring a positive trade balance in international trade through various restrictive measures. He believed that such measures impede the free circulation of money. He clearly showed the unsuitability of old views in the new reality and offered an economic model more suitable