Adam Smith

Summary

Adam Smith, often hailed as the father of modern economics, revolutionized the field with his pioneering ideas in the 18th century. His significance lies in his formulation of the foundational principles of classical economics, particularly through his seminal works, The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations.

In The Wealth of Nations, Smith introduced the concept of the "invisible hand," a metaphor for the self-regulating nature of free markets. He argued that individuals pursuing their self-interest unintentionally contribute to the economic well-being of society, as if guided by an invisible hand. This idea challenged the prevailing mercantilist views of the time, advocating instead for free trade and minimal government intervention in economic affairs.

Smith's exploration of the division of labor highlighted how productivity and efficiency could be vastly improved when tasks are specialized. This principle not only influenced economic theory but also had a profound impact on industrial practices and economic policy.