Adam Smith Quotes

“What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.”
― Adam Smith

“As these contrasts show, capitalism has undergone enormous changes in the last two and a half centuries. While some of Smith’s basic principles remain valid, they do so only at very general levels.
For example, competition among profit-seeking firms may still be the key driving force of capitalism, as in Smith’s scheme. But it is not between small, anonymous firms which, accepting consumer tastes, fight it out by increasing the efficiency in the use of given technology. Today, competition is among huge multinational companies, with the ability not only to influence prices but to redefine technologies in a short span of time (think about the battle between Apple and Samsung) and to manipulate consumer tastes through brand-image building and advertising.”
― Ha-Joon Chang, Economics: The User's Guide

“I had an eviction notice and a handgun, but I didn’t make any connection between them. Then I read about the invisible hand of the market, and it totally made sense. I wasn’t getting enough work as a musician, and I wasn’t getting hired at different jobs I applied for, so it was time to diversify.”
― Barry Graham, One for My Baby

“However appealing it may be in theory, the benevolent design of Nature rarely works out in practice, requiring intellectual acrobatics on the part of those who invoke it. [Adam] Smith recognizes that a healthy economic circulatory system depends on some government interference. Complete freedom leads to monopolies, giving manufacturers outsize power over prices and politicians, which works to the detriment of the body politic. How to account for monopolies while maintaining an ideal of naturalness? Just call them unnatural. Monopolists, writes Smith, are guilty of selling their commodities "much above the natural price." To regulate them is to force them into accordance with nature—even though monopolies themselves naturally emerge in unregulated economies.”
― Alan Levinovitz, Natural: How Faith in Nature's Goodness Leads to Harmful Fads, Unjust Laws, and Flawed Science

“Liberalism’s fatal hypocrisy […] was to rejoice in the virtuous Jills and Jacks, the neighborhood butchers, bakers and brewers, so as to defend the vile East India Companies, the Facebooks, the Amazons, which know no neighbors, have no partners, respect no moral sentiments [the other book by Adam Smith] and stop at nothing to destroy their competitors.”
― Yanis Varoufakis, Another Now: Dispatches from an Alternative Present

“Smith’s concept of the mercantile system evolved—completely out of context—into the modern concept of mercantilism: a simplistic, blanket economic term used to characterize early modern economic thinkers as proponents of an interventionist, taxing, subsidizing, and warring state whose goal was to simply hoard gold. In 1931, the Swedish economic historian Eli Heckscher, in his monumental study Mercantilism, juxtaposed Colbert’s “mercantile” economics with a pure, laissez-faire system, which he felt Smith embodied, that allowed for individual and commercial freedoms without state intervention. A powerful and simplistic binary continued thereafter, one that informs our own vision of the free market today. We can see it still in Friedman’s work.”
― Jacob Soll, Free Market: The History of an Idea

“[Adam Smith] was above all an ethical thinker. He wrote the two books, The Theory of Moral Sentiments (1759, finishing the much-amended sixth edition just before he died, in 1790) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776, with its own sixth edition, slightly amended, appearing in 1791). Such a meager output would make him a borderline case for tenure nowadays in many universities, and a sure-fire no in most departments of economics. “Good Lord,” the economists would say after a hurried look at his academic credentials, “he didn’t publish any articles in the American Economic Review reporting statistical tests or field experiments or mathematical proofs of existence!”
― Deirdre Nansen McCloskey, Leave Me Alone and I'll Make You Rich: How the Bourgeois Deal Enriched the World

“Smith's defence of the market, like Hume's defence of property systems in general, is primarily socially oriented. It is still a defence of the market: markets need not be opposed to broad community-focused social goals, as the idea of market-socialism makes clear. But it is a big mistake to see it as a right-wing defence of the importance to the individual of their own property. The defence of markets developed by Smith and Hume takes this nuanced view on which my property is justified primarily by what it can do for others. Getting this clear is an important step in our understanding of the contested value of markets.”
― Rowan Cruft, Adam Smith: The Kirkcaldy Papers

“John Law’s role in resolving the Water Diamond Paradox has been largely forgotten. The name now associated with it is another Scottish economist, Adam Smith. Writing over seventy years after the publication of 'Money and Trade Considered', Smith’s celebrated restatement of the paradox of value, in 'An Inquiry into the Nature and Causes of the Wealth of Nations' is astonishing not for its originality, but for its similarity with John Law’s resolution decades before.”
― Gavin John Adams, John Law: The Lauriston Lecture and Collected Writings

“What [Adam] Smith took from [David] Hume’s demonstration of the limits of reason, the absurdity of superstition, and the primacy of the passions was not a lesson of Buddhist-Stoical indifference but something more like a sense of Epicurean intensity—if we are living in the material world, then let us make it our material.”
― Adam Gopnik

“The Bayesian Invisible Hand
… free-market capitalism and Bayes’ theorem come out of something of the same intellectual tradition. Adam Smith and Thomas Bayes were contemporaries, and both were educated in Scotland and were heavily influenced by the philosopher David Hume. Smith’s 'Invisible hand' might be thought of as a Bayesian process, in which prices are gradually updated in response to changes in supply and demand, eventually reaching some equilibrium. Or, Bayesian reasoning might be thought of as an 'invisible hand' wherein we gradually update and improve our beliefs as we debate our ideas, sometimes placing bets on them when we can’t agree. Both are consensus-seeking processes that take advantage of the wisdom of crowds.
It might follow, then, that markets are an especially good way to make predictions. That’s really what the stock market is: a series of predictions about the future earnings and dividends of a company. My view is that this notion is 'mostly' right 'most' of the time. I advocate the use of betting markets for forecasting economic variables like GDP, for instance. One might expect these markets to improve predictions for the simple reason that they force us to put our money where our mouth is, and create an incentive for our forecasts to be accurate.
Another viewpoint, the efficient-market hypothesis, makes this point much more forcefully: it holds that it is 'impossible' under certain conditions to outpredict markets. This view, which was the orthodoxy in economics departments for several decades, has become unpopular given the recent bubbles and busts in the market, some of which seemed predictable after the fact. But, the theory is more robust than you might think.
And yet, a central premise of this book is that we must accept the fallibility of our judgment if we want to come to more accurate predictions. To the extent that markets are reflections of our collective judgment, they are fallible too. In fact, a market that makes perfect predictions is a logical impossibility.”
― Nate Silver, The Signal and the Noise: Why So Many Predictions Fail—But Some Don't

“Economists have always recognised that some kind of initial accumulation was necessary for the rise of capitalism. Adam Smith called this ‘previous accumulation’, and claimed that it came about because a few people worked really hard and saved their earnings– an idyllic tale that still gets repeated in economics textbooks. But historians see it as naïve. This was no innocent process of saving. It was a process of plunder.”
― Jason Hickel, Less Is More: How Degrowth Will Save the World

“The ethical autonomy the impartial spectator offers us is a deception that has the function of rendering us more profoundly sociable than we were when we were in a state of ethical childhood and dependency. Rousseau once famously remarked that while men were born free, everywhere they were in chains. In Smith’s view the chains were those of the imagination, chains that could be loosened by a common-sense, sceptical awareness of the processes by which the moral personality was formed, but never altogether thrown off. And while Smith’s account of the life of virtue lived under the direction of the impartial spectator might seem to be nothing more than a subtle deception to a Rousseaunian or a Christian, and while this fabric of deception was to trouble him at the end of his life, Smith was to argue that the satisfaction of being able to live sociably under the direction of the impartial spectator was enough for humankind, and enough to encourage the improvement of society and the progress of civilization from the self-evidently wretched condition in which it had hitherto existed.”
― Nicholas Phillipson, Adam Smith: An Enlightened Life

“Leadership is largely ignored by recent liberal theorists. I suspect that the very idea of leadership has a non-egalitarian and authoritarian quality to it, best left to those (inspired by Max Webber) with a fascination for charisma or revolution; or left to fascists or management consultants and organisational psychologists.

But this neglect by liberal theorists comes at a cost. Institutions and procedures are run by imperfect human beings and without ongoing maintenance, care and investment they decay. While I do not claim that 'leadership' is a sufficient response to the challenges of institutional decay and renewal, it may well be a necessary one.”
― Eric Schliesser, The Scottish Enlightenment: Human Nature, Social Theory and Moral Philosophy: Essays in Honour of Christopher J. Berry

“Good grief. Here is an eighteenth-century, middle class Scottish professor [Adam Smith] saying that morality is an accidental by-product of the way human beings adjust their behavior towards each other as they grow up; saying that morality is an emergent phenomenon that arises spontaneously among human beings in a relatively peaceful society; saying that goodness does not need to be taught, let alone associated with the superstitious belief that it would not exist but for the divine origin of an ancient Palestinian carpenter.”
― Matt Ridley, Еволюция на всичко

“Of, course, Chinese economic developments forms the great background for the rise of research into British political economy of the eighteenth century. Chinese policymakers and academics are increasingly interested in economic growth and the nature of international competition and tensions between the different nations. Hume and Smith discussed these questions in the eighteenth century and were a source of guidance for Great Britain in that transformative period. China has been undergoing a massive transformation from a traditional society to a modern one, from an agricultural society to a commercial one, and needs a new kind of political economy and moral philosophy to underpin this. The Scottish thinkers, Hume, Smith and Ferguson and their contemporaries debated political and economic problems and also reflected on the most appropriate ethic for the emergence of commercial society. One of the most striking features of their advice wa that it did not lead to the sort of violent revolution often associated with the French Enlightenment philosophers. On the contrary, they managed to contribute to the development and progress of Great Britain without aligning themselves with revolutionary movements. It is this aspect of their thinking that makes them attractive to many in contemporary China.”
― Zhang Zheng-ping, The Scottish Enlightenment: Human Nature, Social Theory and Moral Philosophy: Essays in Honour of Christopher J. Berry

“The Adam Smith that we know today was shaped by his early life and education in Kirkcaldy and Glasgow. As a bright young man he was able to benefit from gifted teachers, to read widely, and to discuss what he read with the students he spent time with. Smith clearly loved the school, the university, and the clubs and societies in Glasgow and Eddinburgh. They shaped his thinking. But we should also remember that, for all his sociability, Smith also loved to be on his own. When it came time to write the Wealth of Nations he returned to his mother's home and to the solitude of Kirkcaldy. Here he was able to arrange his thoughts during long walks on the beach. It is no surprise that a major section of Book V of the Wealth of Nations ended up being about education. Smith's own education and experience as a teacher shaped his thinking and awareness of how important education is to society.”
― Craig Smith

“There is a story that George Stigler, one of the leading lights of the Chicago School of economists, gave a seminar at the University of St Andrews on Adam Smith. His opening words, "Adam Smith is alive and well, and living in Chicago," invited the heckle, "And how is the prisoner?" Given that as well as being a formidable historian of economics, Stigler was also a fabulist, the story may have got better in the telling.

All the economists who have contributed to this volume have rejected the Chicago reading of Smith. Freeing Stigler's prisoner, they have shown that for Smith, it was impossible to separate economy and society. They have noted that where the Chicago reading emphasised his support for free enterprise and accepted the outcome of markets as being the best possible, Smith instead emphasised the importance of 'commercial society.”
― Robbie Mochrie, Adam Smith: The Kirkcaldy Papers

“Today, Adam Smith is famous as the father of capitalism and an advocate of a central tenet of free market thought: that greed is supposedly good and it drives markets. This was an idea pushed by neoliberal economists, inspired by Friedrich Hayeck and Milton Friedman, who had no knowledge of the history of moral philosophy, or of Scotland. What they missed is that no gentleman of his time could ever espouse greed, least of all a professor of moral philosophy. Indeed, Adam Smith recognized greed as an economic driver, and saw it as necessary, but also realized that it was a problem for society. His work was not an espousal of greed, but rather a response to it. His work was an attempt to find a way to reign in commercial greed to support the agrarian order, which he believed to be inherently more productive than business.”
― Jacob Soll, Adam Smith: The Kirkcaldy Papers

“...the idea that Smith can somehow be seen as representative of modern capitalism is a stretch. He was a man of his time, in the very particular society of oligarchic, 18th century Scotland. It was a world in which he thrived precisely by not fighting the status quo, but rather by making a proposal for harnessing greed, while keeping merchants in their social place and celebrating the ruling class of the time, and trying to envision a way in which it could play a part in a modernizing economy. In many ways, he got it right. While capitalism flourished in 18th century Scotland, the landed elite remained firmly in place and has managed to do so to this very day. In that aspect, Smith was quite visionary.”
― Jacob Soll, Adam Smith: The Kirkcaldy Papers

“Reading The Wealth of Nations as an attack against lobbying from special interest groups and cronyism suggests that for Smith the violence and inefficiencies of rent seeking mercantilist policies cause harm and are unjust.

For Smith, rent seeking and state capture by special interest groups is not only inefficient, but uses the (actual) "blood and treasure" of fellow citizens to enrich a few merchants under the false pretence of enriching the country. The Wealth of Nations can therefore be read as a moral condemnation of mercantilist policies: unjust policies are also inefficient policies.”
― Maria Pia Paganelli, Adam Smith: The Kirkcaldy Papers

“Ultimately, the most powerful way to rebalance the interests of private owners and the common good is by shifting the focus towards taxes on wealth - that is, asking those who have accummulated substantial assets down the years (or with inherited wealth, down the centuries) to make a fairer contribution. The case is indisputable: since 2008, average earnings have hardly risen, while the amount of wealth held by the better-off has sky-rocketed. Clearly paying for shocks such as the 2008 crash or the Covid-19 pandemic should not fall solely on those dependent on their immediate income. A Land Value Tax could also play an important role: a policy that would be difficult to evade, and would tackle the vast windfall profits that come from the development of land. It's an idea that has long enjoyed support from all sides of the political spectrum, including Winston Churchill, as well as from economists as divergent as Milton Friedman, Adam Smith and J.K. Galbraith. Given its elegant simplicity and essential fairness, the fact that it has not been introduced in England is a case-book example of the landowners' ability to block reform.”
― Caroline Lucas, Another England: How to Reclaim Our National Story

“Samuel Gregg: Smith’s experiments have also provided considerable evidence that, as he wrote in a 1994 paper, “economic agents can achieve efficient outcomes which are not part of their intention.” Many will recognize this as one of the central claims of The Wealth of Nations, the book written by Smith’s famous namesake two and a half centuries ago. Interestingly, Adam Smith’s argument was not one that Vernon Smith had been inclined to accept before beginning his experimental research. As the latter went on to say in his 1994 paper, fey outside of the Austrian and Chicago traditions believed it, circa 1956. Certainly, I was not primed to believe it, having been raised by a socialist mother, and further handicapped (in this regard) by a Harvard education.” Given, however, what his experiments revealed about what he called “the error in my thinking,” Smith changed his mind. Truth was what mattered—not ego or preexisting ideological commitments.”
― Vernon L. Smith, The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics

“Samuel Gregg: Smith underscores, however, that the Scots also focused on another form of rationality: the reasonableness that is embodied and conveyed through time by un-designed habits, customs, and rules. We often do not fully understand the importance of such traditions, as Edmund Burke noted, until we dispose of them. A hallmark of Smith’s work is his study of how such knowledge helps to mold political and economic outcomes.
One Means by which such knowledge has been conveyed through time, Smith states, is religion. In a long footnote to his Nobel lecture, Smith stressed religion’s role in shaping the morality needed for cohesive social behavior.”
― Vernon L. Smith, The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics

“In his 2001 book, Economics as Religion, economist Robert Nelson recounted the ways in which economics came to operate in society with its own religion-like structure. Nelson argues that modern economics has operated in many ways as a secularized version of Protestant theology in which the primary evil is economics scarcity and in which deliverance from this evil (and the attainment of heaven on earth) will come through application of economic science to promote efficiency (and fairness) in production and distribution. In this worldview, economists, as technical advisors to governmental managers, serve as a new “scientific” priesthood effecting a secular salvation of human society through the application of constructivist reason, the sort of reasoning that seeks to deliberately design choices and institutions to generate what are perceived as “optimal” outcomes.
Here, then, within the very discipline to which Vernon Smith has devoted his life’s work, there seems to be a persistent tendency if not to outright materialism then to a reduction of human rationality within constructivist constraints. As Smith acknowledges, “predominantly, both economists and psychologists are reluctant to allow that naive and unsophisticated agents can achieve socially optimal ends without a comprehensive understanding of the whole, as well as their individual parts, implemented by deliberate action. There is no magic.”
― Vernon L. Smith, The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics

“I think we have put a lot of emphasis on, of course, material wellbeing. By human economic betterment we mean material betterment. That’s economic enterprise, and that’s what Adam Smith worked out in his second book. But the first book had to do with human social betterment—all the things we do to make our lives better because we grow up in a social world. We learn in growing up that some actions are hurtful to others and they resent it, and some actions are beneficial to others, and they feel good about that and they tend to reward the beneficial actions. Those two sources account for a lot of the norms that we live by. Also, Adam Smith understood that—and I think this is remarkable—he understood that the downside was potentially far greater than the upside. So there is a fundamental asymmetry between gain and loss. And he didn’t just postulate that; he derived it from the idea there is an asymmetry between our joy and our sorrow. He got it from more fundamental considerations. Psychologists did not discover that until some 150 to 200 years later.”
― Vernon L. Smith, The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics

“Gregg: I notice you did not use the word greed in that answer. When many people hear “self-interest,” they think “greed”. So are you suggesting that a Smithian approach actually has nothing to do with greed at all when it comes to self-interest properly understood?
Smith: It’s not a matter of greed. It’s a matter of, as Smith says, the individual being fitter than anyone else to take care of himself or herself in terms of knowing what he or she wants and in making judgments about that. And so, knowing that other people are also self-interested, I know what action I take would be hurtful to them. And then I take that into account. In other words, being self-interested is an input to our socializing process. There are many experimental economists and behavioral economists who want to explain that with a utility function so that if I am other-regarding, it’s because I am taking into account your reward as well as mine. Adam Smith says no. Adam Smith is right. It is not in the utility function. That’s the difference between an emphasis on outcomes and process.”
― Vernon L. Smith, The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics

“Gregg: What do you think is the most significant thing that people of faith can offer to the world of economic science?
Smith: It’s that virtue must be part of the way we approach everything. In Adam Smith, virtue was self-command. That idea is that in maturation, people are always marking. When we cross their space, they are marking to us what they resent or the things that they like. We learn, then, these forms of virtue that all have Christian roots. In a time of chaos and violence and evil the ultimate answers to our society’s problems must come down to individuals and their moral responsibilities. Yes, it is important that there are rules of society and that our laws be consistent with that, but law only works if you enforce it. But there is no way you can enforce everything. The nice thing about a country like the United States is that you can still pick up a newspaper form in front of the drug store before the store opens and just leave the money for it: You can go to a farm vegetable stand when no one is there, see the vegetables with the prices, take your vegetables and leave your money. That’s self-command.”
― Vernon L. Smith, The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics

“[Según Adam Smith] Los verdaderos líderes son aquellos que, al encontrarse entre ellos, moderan el fanatismo de sus representados, lo "rebajan" para hacerlo compatible con el resto de la sociedad.”
― Mariano Grondona, Los pensadores de la libertad

“The best guide I know of is political economist Thomas Ferguson’s “investment theory of politics,” mentioned above, the thesis that to a good first approximation, we can understand elections to be occasions in which groups of investors coalesce to control the state, a very good predictor of policy over a long period, as he shows. For 2008, we would therefore anticipate that the interests of the financial industries, the major funders (who preferred Obama to McCain), would be “most peculiarly attended to” by government policy, in accord with Adam Smith’s maxim. And so we find.”
― Noam Chomsky, Hopes and Prospects