Something happened to humans over the past couple of hundred years. From having been largely stagnant for thousands of years, population, life expectancy and material comfort all took a dramatic and sustained uptick starting around 1700.
That’s amazing and, what’s also amazing is…
nobody quite knows why this explosion in human progress happened when it did.
But we do have an excellent on-the-ground observer of it. In 1776 Adam Smith published “An Inquiry into the Nature and Causes of the Wealth of Nations“.
Enlightenment
Smith was an insightful thinker – he was professor of Moral Philosophy at the University of Glasgow and his first great work is a lively analysis of friendship and what he calls “fellow feeling”.
His analysis in the Wealth of Nations upended an intuitive consensus that what made a nation rich was its stock of precious metals. (Check out this learned radio documentary: BBC Radio 4 – In Our Time, Mercantilism).
Smith’s ideas in the Wealth of Nations did not merely document nations’ path to prosperity; they also served as a roadmap that nations follow today e.g. the President of the US has a Council of Economic Advisors.
By shifting the narrative from one of “let’s race the Spanish, Dutch etc. to exploit the gold of the Americas, India etc.” to one of “let’s refine production processes such that each input is set to its most productive use”, Smith shaped the modern world for the better.
Adam Smith’s tacit, largely uncelebrated role in shaping today’s world is implicit in a quote from another insightful economist, John Maynard Keynes: “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” Read “defunct” as dead rather than as irrelevant. If you have not previously heard of Smith it is because his worldview that voluntary exchange trumps coerced extraction has become so ubiquitous and unchallenged as to be taken for granted.
Smith – Founder of Foundries
One of my favourite things about Smith is that he was not merely a leading thinker. There is also a strong case to be made that he was also one of the world’s most influential venture capitalists. When he was working at the University of Glasgow he recognized value in the tinkering of an underemployed mechanic who had just repaired some astonomical devices. Smith and two other professors funded the man to set up a small workshop within the university in 1757. Within a few years the man had repaired the university’s Newcomen steam engine and, in 1865, had a spark of genius while crossing Glasgow Green on how to make the steam engine much more efficient and reliable. The man, James Watt, and his product, the Watt steam engine, would transform the economy, landscape and social structure of Britain and introduce the modern age.
It is a particular priviledge to be an academic economist working in Scotland right now as we celebrate this week 300 years ago the birth of Adam Smith – and hence our discipline. We in Stirling are especially lucky that we can visit the key Smith landmarks: his birthplace in Kirkcaldy, Fife; his university in Glasgow and Edinburgh, the site of his sparky conversations with his great friend David Hume.
Check out these events to the mark the occasion of Smith’s birth: University of Glasgow – Explore – Adam Smith 300 Year Anniversary