Adam Smith was born in 1723 in Kirkcaldy, Scotland and became professor of moral philosophy at Glasgow University in 1752. His two great works were The Theory of Moral Sentiments published in 1759 and The Wealth of Nations that was published in 1776. He advocated the benefits of self-interest and profit making within the rule of law and became the father of modern economics.
In The Wealth of Nations, Adam Smith outlined the principle of a market economy. He stated that the competition between buyers and sellers in a marketplace would weed out waste; the economy would prosper as if guided by the “invisible hand” of the market. The freedom to make a profit is in the self-interest of the person making money. It benefits society as a whole because the producer provides something society values. Smith also said that governments should enforce contracts, protect the public against conspiracies to raise prices and provide public works and institutions.
Adam Smith argued in support of free trade and against government regulation of international trade and commerce. Government restrictions on international trade such as taxes, tariffs and quotas were a tax on both consumers and producers, he argued. Free trade promoted efficiency because it fostered competition and a comparative advantage for producers through specialization. This enabled countries to export the things they produce the best and import what they need.
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