Biography: Adam Smith: Capitalism's Founding Father

Russ Roberts: Yeah. He was an economist. He was willing--he saw that there were tradeoffs. He decided that the benefits outweighed the costs, but, as you point out, that doesn't mean it's all rosy. I think one of the most shocking things about that people who don't know anything about Smith other than his name and a little bit about him would be shocked--its what you just said: that, he really saw wealth and the pursuit of wealth as corrosive and unhealthy. It's fascinating that the so-called father of capitalism felt that way. I just really like that.

Adam Smith (1723—1790) Adam Smith is often identified as the father of modern capitalism

Russ Roberts: And I want to--I want to stand up for Mr. Smith here just a bit. I don't want to overstate this point that a lot of--it's a fact that Hume influenced Smith. Smith, of course, had read Hume. And many ideas that are in Smith are in Hume. And many ideas from other--we wouldn't call them economists. They wouldn't think of themselves as economists. But there are other people writing--Mandeville and others who Smith obviously was influenced by. But I don't want to understate Smith's contribution, either. And so, I want to just--I'm going to make my own sort of summary of it, and then you can chime in or disagree if you'd like. But, I think, often, there's a temptation to see an author's contribution as--in the form of a tweet: 'Oh, yeah. Adam Smith. He understood that specialization was important.' Or, 'Adam Smith had this idea that some systems are self-regulating. What we call the invisible hand.' Or, Adam Smith thought free trade was really good and had a lot of good arguments in favor of it.' And, there's an enormous difference between the Twitter version of a great idea and the actual writing of a great idea. And, as you point out--you use the example from , as an example: Yes, the idea that morality comes from our selves. From human interaction. From sympathy. That was in Hume. So, that's not novel to Smith. But, Smith's is very novel. Smith's treatment of it, an extension of it--his--we'll come back and talk about it a little bit more later, but there are other aspects of--it's a rich book. It's not like you'd read Hume and then, as you're reading Smith, go, 'Oh, I read all this. I knew all this already.' You still learn things from it. So, I always find it interesting when people will show disdain for a book that I particularly like, saying, 'Oh, well, I knew all that before I read it.' Now, I might respond, saying, 'Well, I knew it in the abstract.' Or, 'I knew it, sort of.' But the actual treatment of the author really enriched it for me in a way that shortened version, or the versions I'd read before didn't do. And I think that's extremely important. And it's easy to under-appreciate it.

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10/01/2015 · Known for the treatise, An Inquiry Into the Nature and Causes of the Wealth of Nations, Adam Smith is credited with founding political economics.