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Jun 21, 2010 · When asked “Who is the ‘father’ of modern economics?” most economists answer Adam Smith (A.D. 1723-1790). …

Richard Cantillon: The Founding Father of Modern Economics

_____ is considered by some to be the father of modern economics

In the 18th century, the father of modern economics, Adam Smith, ..
Russ Roberts: I think some of it is--it's personality. I think, from your portraits, Hume was a much more social animal. And Smith was a much more--absent-minded; he's famous for being absent-minded. Tyler Cowen I think has hinted that he might have been autistic. I think he did that on EconTalk a long time ago. So, it could be he was a little uncomfortable with that level of social--he didn't want to go out for dinner every night with his friend. Maybe he wanted to be alone more. I don't know. Maybe he had loyalty to his mom. Who knows? But it's just striking that Hume is always the aggressor and Smith--he's not easily caught. The other thought I had is, you can be friends with someone intellectually like that because through their ideas, right? Someone can influence you in a way, way beyond the dinnertime and conversational experience, through the conversation you have through their books. I always--I use this motif in my book on Adam Smith--the motif: Adam Smith is really kind of friend. Certainly George Stigler, who was a big Smith fan, saw Smith as in some dimension as his friend, in some sense. I say that because I know that--I'm going to tell a--this is a strange anecdote; I think I've never told it. But, Stigler would say that he once had a contest at the U. of Chicago, and one of the questions was: Who was Adam Smith's best friend? And, of course, the answer is David Hume. And yet he would tell with delight that when he asked his, I think his grandchild, granddaughter, who was Smith's best friend, she said, 'You are.' Which is very sweet. But, what I was going to suggest is that in this modern time we're living in where politics are getting not so attractive, and I sometimes find myself wanting to retreat to the 18th century and hang out with Mr. Smith, and I wondered if you have any thoughts, having written a book--you've written a lot on Smith and Hume and Rousseau and others--do you have that feeling? What are your thoughts on that?

Adam Smith: the symbol of laissez-faire economics? | …

Adam Smith (1723—1790) Adam Smith is often identified as the father of modern capitalism
Dennis Rasmussen: Sure. It is. The Scottish Enlightenment, as we now call it, is really one of the intellectual golden ages in the history of thought. So, when Hume and Smith were growing up, Scotland in the early 18th century is synonymous with poverty and barbarism, and a sort of dour, oppressive form of Presbyterianism. But during their lifetime, there's a vibrant new age of economic prosperity, cultural achievement that everybody notices--people in Scotland, people elsewhere--notices how much the country is changed. To the point where there's now even a recent, fairly best-selling--I think it was a best-selling book--called . Which I think is maybe an overstatement, but it's amazing the number of great thinkers and ideas that came out of this period. So, how did this happen? As always with a big cultural, social change like this, I'm sure there are lots of factors involved. I'll just go through a few of them. So, one was the innovative system of parish schools that had made Scotland the most literate society in Europe, maybe in the world, by that time. The educational system also extended to the universities--Glasgow and Aberdeen, to some degree St. Andrews, grew to be some of the very best universities within Europe; lots of reforms within the universities enabled that. There are lots of clubs and debating societies, many of which Hume and Smith were members of. Really a thriving publishing industry. Two of the biggest changes, I think, had to do in the Church and in politics. So, in the Church, there is still lots of conflict within the Church--the Church of Scotland, the Kirk--over the course of the 18th century. But as the century wore on, there's a number of moderate ministers--many of whom were good friends with Hume and Smith--came to take control of the Kirk and made it much more kind of tolerant, much more attuned to the advances in the polite, enlightened world that Hume and Smith were helping to bring into being. Also, the political climate--I think we can't ignore the Union of 1707 that created Great Britain. So, the Union, which is being reconsidered by the Scots recently, led to great--it took a little while; it took a couple of decades--but it led to a great, an economic boom; it gave Scots greater personal freedoms and opportunities. Hume and Smith in particular embraced it with open arms. And so, there are lots of these changes that are going on that made something like this possible.

 

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Russ Roberts: Yeah. He was an economist. He was willing--he saw that there were tradeoffs. He decided that the benefits outweighed the costs, but, as you point out, that doesn't mean it's all rosy. I think one of the most shocking things about that people who don't know anything about Smith other than his name and a little bit about him would be shocked--its what you just said: that, he really saw wealth and the pursuit of wealth as corrosive and unhealthy. It's fascinating that the so-called father of capitalism felt that way. I just really like that.


Russ Roberts: And I want to--I want to stand up for Mr. Smith here just a bit. I don't want to overstate this point that a lot of--it's a fact that Hume influenced Smith. Smith, of course, had read Hume. And many ideas that are in Smith are in Hume. And many ideas from other--we wouldn't call them economists. They wouldn't think of themselves as economists. But there are other people writing--Mandeville and others who Smith obviously was influenced by. But I don't want to understate Smith's contribution, either. And so, I want to just--I'm going to make my own sort of summary of it, and then you can chime in or disagree if you'd like. But, I think, often, there's a temptation to see an author's contribution as--in the form of a tweet: 'Oh, yeah. Adam Smith. He understood that specialization was important.' Or, 'Adam Smith had this idea that some systems are self-regulating. What we call the invisible hand.' Or, Adam Smith thought free trade was really good and had a lot of good arguments in favor of it.' And, there's an enormous difference between the Twitter version of a great idea and the actual writing of a great idea. And, as you point out--you use the example from , as an example: Yes, the idea that morality comes from our selves. From human interaction. From sympathy. That was in Hume. So, that's not novel to Smith. But, Smith's is very novel. Smith's treatment of it, an extension of it--his--we'll come back and talk about it a little bit more later, but there are other aspects of--it's a rich book. It's not like you'd read Hume and then, as you're reading Smith, go, 'Oh, I read all this. I knew all this already.' You still learn things from it. So, I always find it interesting when people will show disdain for a book that I particularly like, saying, 'Oh, well, I knew all that before I read it.' Now, I might respond, saying, 'Well, I knew it in the abstract.' Or, 'I knew it, sort of.' But the actual treatment of the author really enriched it for me in a way that shortened version, or the versions I'd read before didn't do. And I think that's extremely important. And it's easy to under-appreciate it.


Chap 2. Business Org. Flashcards | Quizlet

Russ Roberts: And most people get credit for inventions they didn't actually invent, as you point out many, many times in the book. Or that were invented at the same time by others. But, he said 'Comparative advantage is the one idea in economics that is both un-obvious and true.' There are ideas in economics that are obvious, and ones that are not obvious, but many of them are false. But that's one that--it's really not obvious; it's very [?]. The problem with it is, it wasn't like when Ricardo came up with it, people said, 'Oh, we can trade now. I don't have to be good at something. I can trade because I have a advantage, not an absolutely advantage.' It's just a description. Now, understanding it could help. It could help make the case for free trade, though Adam Smith made a very powerful case for free trade in 1776 without it. If you had to list one economic idea that has been important in human affairs, what would you pick? I have my own favorite, but I'm not sure it's a good answer.