Tuesday, July 8, 2008

The Genius of Adam Smith

On July 4th, outside St. Giles' Cathedral in Edinburgh, Professor Vernon Smith of George Mason University unveiled a statue of the Scottish intellectual known as "the father of economics," Adam Smith.

National Post (Canada) columnist Peter Foster noted the occasion by writing that Adam Smith has at long last received the memorial he deserves. All too often demonized as the "father of capitalism" and the exploitation the working class, Foster says Smith "was very much concerned with improving the lot of ordinary people."

Foster wrote, "In The Wealth of Nations, [Smith] pointed to the remarkable social -- and international -- benefits of self-interested interaction through trade and the division of labour. He noted that participants appeared to be guided by an "Invisible Hand" to produce a good that was "no part of their intention." This truism has been the centrepiece of attacks on the capitalist system as motivated by "greed" and "selfishness" and thus morally indefensible. But the merely obvious observation that Smith's famous "butcher, brewer and baker" are serving us primarily in their own interests in no way detracts from the value of that service, nor implies that they are rendered heartless by their business dealings."

While we are reflecting on Adam Smith's legacy, it may be helpful to listen to P.J. O'Rourke's summary of his experiences and insights while reading every word (and there are a lot of them) of The Wealth of Nations.

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