To mark the 250th anniversary of the publication of Adam Smith’s The Wealth of Nations, the IEA is today publishing a new paper revisiting the genius of the great Scottish economist and philosophy by Mark Skousen.
It argues that The Wealth of Nations remains one of the most important guides to prosperity ever written, and that Smith’s core model has been vindicated by modern evidence Governments today, with their high taxes, sprawling regulation and pandering to special interests, would have horrified Smith as a return to the mercantilism he spent his career dismantling.
“Smith’s unique achievement in perfecting this ‘invisible hand’ doctrine must be considered one of the greatest triumphs in modern history.”
In the Wealth of Nations, Adam Smith argues that individuals pursuing their own self-interest can promote the public good when channelled through his ‘system of natural liberty.’
Smith’s ‘system of natural liberty’ depends on three pillars — maximum individual liberty, tempered by justice (rule of law) and robust competition.
Competition acts as a moral regulator by disciplining greed and channelling self-interest into socially beneficial outcomes.
Smith strongly opposed mercantilism and governmentgranted monopolies, arguing that economic freedom and free trade generate greater prosperity.
Modern evidence, such as the Economic Freedom Index, supports Smith’s prediction that societies with greater economic liberty achieve faster growth and higher living standards.
The Scottish philosopher’s model achieves a hat trick: maximum liberty, individual improvement, and public benefit, all at the same time.
Mark Skousen, PhD, is a presidential fellow at Chapman University, where he holds the Doti-Spogli Chair of Free Enterprise. He is also the Macroeconomist Strategist at the Oxford Club, and author of over 25 books, including The Making of Modern Economics, which makes Adam Smith the hero of modern economics.