[The Pocket Liberal] Adam Smith

"The Invisible Hand"

Adam Smith (1723–1790)

- Born in Kirkcaldy, Scotland

- Studied at the University of Glasgow and the University of Oxford

- Appointed professor at the University of Glasgow in 1751

- Traveled across continental Europe from 1764 to 1776, after which he published The Wealth of Nations

- Major works: The Theory of Moral Sentiments (1759), The Wealth of Nations (1776)

“(Every individual) neither intends to promote the public interest, nor knows how much he is promoting it. ... He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”

- From The Wealth of Nations -

Smith argued that we can expect our dinner not from the benevolence of the butcher, the brewer, or the baker, but from their pursuit of their own interest. By interpreting human self-interest in a positive and constructive way, he opened the door to an ethical justification of the free market economy.

Smith believed that the pursuit of individual interest is morally justified because it also contributes to the interest of society as a whole. Therefore, individuals’ own decisions should be respected, and no third party, including the government, should attempt to interfere with them. This is because each individual is far better able than any politician or legislator to judge, in light of his own circumstances, which field would be best to invest in and which goods would yield the greatest profit if produced.

Smith identified the source of a nation’s wealth and rising living standards in the division of labor and specialization. Using the example of a pin factory, he explained that if a single worker handled every step of the process alone, he could not make even 20 pins a day no matter how hard he worked. But if the entire production process were broken down into smaller tasks and divided among workers, each worker could produce an average of 4,800 pins.

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Original title: [주머니 속의 자유주의자 ] 아담 스미스(Adam Smith)

Author: Center for Free Enterprise (CFE)

Date: 2005-12-20

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=22&idx=10662