About Adam Smith

Eamonn Butler's Condensed Wealth of Nations, which includes a section on The Theory of Moral Sentiments, is available to download here.

Why Adam Smith is important


The old view of economics

In Smith’s day, people saw national wealth in terms of a country’s stock of gold and silver. Importing goods from abroad was seen as damaging because it meant that this wealth must be given up to pay for them; exporting goods was seen as good because these precious metals came back.

So countries maintained a vast network of controls to prevent this metal wealth draining out – taxes on imports, subsidies to exporters, and protection for domestic industries. The same protectionism ruled at home too. Cities prevented artisans from other towns moving in to ply their trade; manufacturers and merchants petitioned the king for protective monopolies; labour-saving devices were banned as a threat to existing producers.

The productivity of free exchange




Social order based on freedom




The psychology of ethics


Self-interest and virtue

Some people wonder how the self-interest that drives Smith’s economic system can be squared with the ‘sympathy’ that drive his ethics. Here is his answer:


In other words, human nature is complex. We are self-interested, but we also like to help others too. Smith’s books are complementary: they show how self-interested human beings can live together peacefully (in the moral sphere) and productively (in the economic).

The Wealth Of Nations is no endorsement of economic greed, as sometimes caricatured. Self-interest may drive the economy, but that is a force for good – provided there is genuinely open competition and no coercion. And it is the poor that economic and social freedom benefits most.