Smith, Adam

(redirected from smith)
Also found in: Dictionary, Thesaurus, Medical, Acronyms, Encyclopedia, Wikipedia.

Adam Smith

A Scottish philosopher who is credited with developing most of the ideas of modern economics. Smith believed that economies work most efficiently when economic actors attempt to maximize their own self-interests, and that doing so tends to maximize the interests of society as a whole. He also coined the term Invisible Hand, which is a metaphor for the free market. He published a number of influential works, most notably the Theory of Moral Sentiments and the Wealth of Nations. He lived from 1723 to 1790.

Smith, Adam

(1723–90) a Scottish economist whose writings formed the basis of CLASSICAL ECONOMICS. Smith's most famous book, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), stressed the benefits of division of labour, discussed the need for SPECIALIZATION and exchange, and outlined the workings of the market mechanism (PRICE SYSTEM). Smith argued that if producers were free to seek profits by providing goods and services, then the ‘invisible hand’ of market forces would ensure that the right goods and services were produced. Provided that markets were free of government regulation, then in this LAISSEZ FAIRE environment competition would organize production in ways that would increase public wellbeing.

In competitive markets, producers would compete to sell more goods, forcing prices down to the lowest level that would cover production costs and allow normal profit to be made. Furthermore, if certain goods were scarce, buyers would offer higher prices, drawing more producers into these industries and swelling supply. In this manner, production in the market system would be driven by what consumers wanted.

Smith's outline of the market mechanism described the new economic system that was beginning to emerge in the newly industrializing Western countries. For the system to work, however, Smith acknowledged that two important conditions needed to be met:

  1. markets needed to be free of government intervention, without the close government regulation of economic activity as had prevailed prior to Smith's day;
  2. the self-seeking behaviour of producers could only be harnessed to the common good where competition prevailed, and Smith was deeply suspicious of MONOPOLIES, considering them to be conspiracies against the consumer. See PRIVATE-ENTERPRISE SYSTEM.
References in classic literature ?
She left it to himself to recollect, that Mrs Smith was not the only widow in Bath between thirty and forty, with little to live on, and no sirname of dignity.
As it is, you were some hundreds of yards away and can tell me even less than Miss Smith.
Next morning, we had a note from Miss Smith, recounting shortly and accurately the very incidents which I had seen, but the pith of the letter lay in the postscript:
The tall lad, standing in the porch, turned his bleared eyes from the publican to the smith and back again as if considering whom he ought to fight now.
Smith shrugged his shoulders and helped himself to a cigarette.
White Fang was in Grey Beaver's camp when Beauty Smith first visited it.
Then it was that Beauty Smith had talk with him again about the sale of White Fang; but this time the price offered was in bottles, not dollars, and Grey Beaver's ears were more eager to hear.
Smith had not been effected without a shock--that much one must recognize.
Smith I believe was afraid of his daughter's quietness though of course he interpreted it in his own way.
As the creature approached him, jabbering in a most discomposing manner, Smith (unaware that he was being addressed as 'gracious lord,' and ad- jured in God's name to afford food and shelter) kept on speaking firmly but gently to it, and re- treating all the time into the other yard.
The smith walked out of his yard with the same long and easy stride, and returned to his two friends from Greenford, who were indeed friends of nearly everyone present.
The smith might have struck the big blow, but would not have chosen the little hammer.