Adam Smith, then and now
Adam Smith, der im 18. Jahrhundert lebte, gilt als Begründer der klassischen Nationalökonomie. IAN MCMASTER gibt seine Ideen im Wirtschaftsenglisch von heute wieder.
The Scottish political economist and moral philosopher Adam Smith (1723–1790), whose illustration appears on the cover of this issue of Business Spotlight, is often described as the “father of economics”. Smith’s two classic works are The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776), widely known simply as The Wealth of Nations and regarded as the first modern work of economics.
One of Smith’s key concepts was the “division of labour”, the idea that the production process is more efficient if people specialize in particular tasks. He also argued that countries benefited from specialization and international trade. His most famous concept is the idea that an “invisible hand” coordinates individual self-interest for the common good.
Here, we look at three of Smith’s most famous statements from The Wealth of Nations and provide a summary in simple, clear business language.
1. The advantages of international trade
“…very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?” The Wealth of Nations, Book IV, Chapter II
Summary
We can grow very good wines in Scotland, but they would be about 30 times as expensive as those we can import. So does it make any sense to ban foreign wines, just to support the production of Scottish claret and burgundy?
2. The division of labour
“It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people.”
The Wealth of Nations, Book I, Chapter I
Summary
The division of labour allows us to increase the production of a range of goods. And in a well-run economy, the wealth created also benefits the poorest.
3. The “invisible hand”
“Every individual ... neither intends to promote the public interest, nor knows how much he is promoting it ... he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, 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.”
The Wealth of Nations, Book IV, Chapter II
Summary
People don’t intend to promote the common good. But by working for their own self-interest, they are led by an “invisible hand” to do so — even though they are unaware of this.
Task: Try writing your own simple and clear summaries of other quotes by Adam Smith. You will find a selection here: https:// www.adamsmith.org/adamsmith-quotes