Hero of the Day - Adam Smith It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard for their own interest.

Adam Smith, a major figure of the Scottish Enlightenment, was a self-taught professor of moral philosophy at the University of Glasgow. His work on a theory of "moral sentiments" preceded and informed his far more influential thinking on economics.

Smith argued that the most productive social system is one in which, with few exceptions, individuals are free to pursue their economic interest. In doing so they naturally tend to benefit others throughout society as well, as if led by an "invisible hand." In recognition of the salutary outcome of this market process, the role of the state should be a limited one.

According to this system of natural liberty, the sovereign [the state] has only three duties to attend to:...first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppressions of every other member of it, or the duty of establishing an exact administration of justice; and thirdly, the duty of maintaining certain public works and public institutions which it can never be for the interest of any individual, or small number of individuals, to erect or maintain.

It's that third "duty" that lets in the monster, but perhaps we can forgive Smith for not envisioning the full implications of his edifice—especially when so many of our alleged leaders and thinkers fail to grasp a single one of them.

With lucky historical resonance, Smith published his Wealth of Nations in 1776. Despite any errors it constitutes a major advance in our understanding of how freedom and the pursuit of self-interest can, together, generate wealth and well-being throughout an economy, improving the lives of all.

Copyright © 2000, The Daily Objectivist - Reprinted with permission of The Daily Objectivist and Davidmbrown.com.

26 Jun 2009