Adam Smith’s Birthday

Tomorrow, June 16th, we celebrate the birthday of one of the greatest intellects of all time, Adam Smith. He was born on or about June 5th 1723, but in 1752 the calendar was revised and some days were added. So June 16th marks the right time of year. 

We should celebrate that date. Smith was a pioneering economist — the ‘father’ of what we know as economics today. And his great book, The Wealth of Nations, (1776) explained in scientific detail how modern prosperity becomes possible, and how to promote it. 

Before then, people assumed that wealth was fixed — that you got rich only through conquest or getting favours from the king. But Smith showed how wealth was actually created through productive work, innovation, specialisation, trade and commerce. 

We become far more productive when we specialise. Instead of amateurishly trying to make everything for ourselves, we develop specialist skills and can use specialist tools to help us efficiently produce things more plentifully, and with better quality and lower cost. We can then produce a surplus that we can exchange with others.

And both sides benefit from this. Indeed, they would not trade unless they did. The seller might get the money, but the buyer gets the goods and services they want (and want more than the price they part with for them).

True, we have our own interests in mind when we trade. We do not expect the baker or the grocer to feed us out of the goodness of their hearts. But since trade benefits both sides, in pursuing out self interest, we unwittingly promote other people’s interests. We benefit the wider society too — as if, as Smith said, by an ‘invisible hand’.

But Smith was not only a pioneering economist. He also understood that human beings have a natural empathy for one another and want to be liked by others. That, he showed, is what drives our ethical behaviour. It is in our interest, again, to act decently to other people because then we earn from them the respect that our nature as social creates makes us crave.

Smith also thought and wrote about the arts, language, politics, law, scientific method and more. He was really the first social psychologist — fascinated by every facet of the human mind and how they all work together and can be focused in order to promote the happiness and prosperity of ourselves and our species.

In an age where countries strive for superiority rather than mutual prosperity, and politicians seek to control citizens rather than let them use their own judgement about how they should live, it is worth remembering Adam Smith's message that peace, prosperity and contentment comes through the voluntary cooperation of free people.

So yes, we should remember Adam Smith — not just as one of the greatest intellects of all time, but as a guide who showed how we can create a better world.

Eamonn Butler