A Biography of Adam Smith – Part 9 – On taxation

Over the centuries, economists have contributed little of interest or value on the subject of taxation. In addition to describing forms of taxation, they have generally approached the subject from the point of view of the state as a kindly or not so kindly despot, seeking to maximize its revenue while doing minimum harm to […]

A Biography of Adam Smith – Part 8 – The myth of laissez-faire

If, then, Adam Smith contributed nothing of value to economic thought; if, in fact, he introduced numerous fallacies, including the labour theory of value, and thereby caused a significant deterioration of economic thought from previous French and British economists of the eighteenth century; did he make any positive contribution to economics? A common answer is […]

A Biography of Adam Smith – Part 7 – The theory of money

We have seen that David Hume‘s famous elucidation of the price-specie-flow mechanism in international monetary relations, though attractively written, was itself a deterioration from the pioneering and highly sophisticated analysis of Richard Cantillon. It was, however, better than nothing. Yet, as Jacob Viner put it, ‘One of the mysteries of the history of economic thought’ […]

A Biography of Adam Smith – Part 6 – The theory of distribution

Adam Smith’s theory of distribution was fully as disastrous as his theory of value. Though he was aware of the functions performed by the capitalist, his only venture in explaining the rate of long-run profit was to opine that the greater the ‘amount of stock’ the lower the rate of profit. He arrived at this […]

A Biography of Adam Smith – Part 5 – The theory of value

Adam Smith’s doctrine on value was an unmitigated disaster, and it deepens the mystery in explaining Smith. For in this case, not only was Smith’s theory of value a degeneration from his teacher Hutcheson and indeed from centuries of developed economic thought, but it was also a similar degeneration from Smith’s own previous unpublished lectures. […]

A Biography of Adam Smith – Part 4 – Productive vs. unproductive labour

One of the physiocrats’ more dubious contributions to economic thought was their view that only agriculture was productive, that only agriculture contributed a surplus, a produit net, to the economy. Smith, heavily influenced by the physiocrats, retained the unfortunate concept of ‘productive’ labour, but expanded it from agriculture to material goods in general. For Smith, then, labour […]

A Biography of Adam Smith – Part 3 – The division of labour

It is appropriate to begin a discussion of Smith’s Wealth of Nations with the division of labour, since Smith himself begins there and since for Smith this division had crucial and decisive importance. His teacher Hutcheson had also analysed the importance of the division of labour in the developing economy, as had Hume, Turgot, Mandeville, James Harris […]

A Biography of Adam Smith – Part 2 – The life of Smith

Adam Smith was born in 1723 in the small town of Kirkcaldy, near Edinburgh. His father, also Adam Smith (1679-1723), who died shortly before he was born, was a distinguished judge advocate for Scotland and later comptroller of customs at Kirkcaldy, who had married into a well-to-do local landowning family. Young Smith was therefore raised […]

A Biography of Adam Smith – Part 1 – The mystery of Adam Smith

Adam Smith (1723-90) is a mystery in a puzzle wrapped in an enigma. The mystery is the enormous and unprecedented gap between Smith’s exalted reputation and the reality of his dubious contribution to economic thought. Smith’s reputation almost blinds the sun. From shortly after his own day until very recently, he was thought to have […]