AdamSmith

andthe
Wealthof Nations
L I B E R T Y F U N D P R E S E N T S
AdamSmith
andthe
Wealthof Nations
Te a c h e rs Guide for the Film
I have never known much
good done by those who affected
to trade for the public good.
Adam Sm i t h
I have never known much
good done by those who affected
to trade for the public good.
Adam Sm i t h
A BOUT ADAM SMI T H
Adam Smith was bor n in Kir k caldy, Scotland. At four teen ( not an
ear ly age for that time) , h e e nter ed Glasgow Univer sity. Thr ee year s
l a t e r, h e was awar ded a sch olar ship to Oxfo r d Univer sity. It was his
exper ience dur ing this stay at
O x f o r d that was th e basis for
the cr itical r emar ks about uni-
ve rsities found in The We a l t h
of Na tions.
Smith was appointed Pr o f e s s o r
o f Logic at Glasgow in 1751 ,
and shor tly after w a r d s ,
P r ofessor of Mor al Philosophy.
He lectur ed on theology,
ethics, jur ispr udence an d
politica l economy.
In 175 9, his fir st b ook Th e
T h e o ry of Moral Sentiments
establish ed h is r e p u t a t i o n .
He sought to under stand
h uman behavior p r in cipally in
t e r ms o f sympath y, pro p r i e t y,
v i r tue and d uty. He sou ght to
und er st and wh at it was that led us to car e abou t the welfar e of o ther s.
With the publication of Th e Theor y of Mor al Sentiments, he gave less
attention to h is theor ies of mor als, an d mor e to ju r ispr udence and
po litical economy.
In 1763, he made the decision to give up his univer sity post, b ecom-
ing a tutor to the young Duk e o f Buccleuch. The boy an d his mento r
tr a veled mainly in Fr ance, whe r e Smith came to k now many of the
intellectual leader s of the countr y. While on this tr ip, he b egan a
t r eatise o n economics, comp leting it ten year s later. It was pub lished
as The Wealth of Nations, and o n this wor k r ests the continu ing
ack nowledgement of Smith as the father of ec onomics.
He d ied in 1790.
A BOUT THE FIL M
Adam Smith and The Wealth of Nations tr ace s the life, car e e r, and
basic beliefs of one o f histor y s gr eatest thinker s.
Beginning with his fr u gal Sc otch backgr ound, the film examines the
events and influe nces that mad e Smith the father of economics. But
be st of all, the movie looks at Adam Smiths ideas. Pr ovocative idea s,
that culmina ted in the book we called The Wealth of Natio ns. It was
a wor k that r evolutionized the wor ld of econo mics. Many say it r e v o-
lutionized the wor ld itself.
Adam Smith and Th e Wealth of Nations outlines many of the mans
most inter esting and con tr o ver sia l the or ies. For instance, Smith
be lieved that a system of natur al liber ty allowed the self-inter est of
the ind ividual to b e har nessed for the good of society. How?
T h r ough what he called the division of labor and the accumulation
of capital. He ar gued that the fr ee mar ke t is an ingeniou s mec ha-
nism which r e gulate s itself th r ough su pply and demand.
A man of gr eat intellect and wit. Smith was a major for ce in moder n
h i s t o r y. This film shows why.
GE TT ING REA DY
Let your gr oup k now when an d
why theyll be seeing Adam
Smith a nd Th e Wealth of
Nation s. It would be a good
idea for students to p re p a r e for
it, so announce the showing in
plenty of time. You might ask
stu den ts to br ing in n ewspaper
items, cur r ent ads or per t i n e n t
a r ticles, as we ll as in for m a t i o n
on cur r ent ec onomic theor ie s.
You may wish to ask an economist in the community to a ddr e s s
you r adult gr oup. Just be sur e to pr e p a r e your au dience , so theyll
be able to get mor e out of the film at discussion time.
cThe discipline of
colleges and unive r-
sities is in genera l
c o n t r i ved, not for
the benefit of the
student, but for the
ease of the master.d
Adam Sm i t h
IN T RODUCING THE FIL M
You will want to intr oduce the film. It is impor tant to your audienc e
to kno w what they will be seein g and why. Yo u might tell the
g r oup to look for diff e r ent points of inter est, and topics to cover
after the showing. You ma y want to point out that Adam Smith is
c o n s i d e r ed the father of econo mics b ut ther e have be en other
equally influential economists. See if your au dience can name any of
them, or explain their theo ries. Be sur e to let your viewer s kno w
that ther e will be a question and answer per iod after th e showing.
H e r e is an example of the kind of intr oduction yo u might find
e ff e c t i v e :
The film we ar e abou t to see, pr esented by Lib er ty Fun d, Inc., is
called Adam Smith and The Wealth of Nations. It is an intr iguing
look at the man who is consider ed the fathe r of ec onomics. Lets
take a loo k at some of his ideas.
T HE WEA LTH OF NAT IONS
The Wealth of Nationsis a monumental wor k . Cover ing all aspe cts
of e conomic life, it has both br eadth and dep th.
Ad am Smith discu sses suc h subjects as the minute spec ializa tion of
labor in the manufactur e of pins, the late distur ba nces in the
Amer ican co lonie s, the waste-
fulness of the stu den ts life at
O x f o r d, and the statistics on the
h e r r in g c atc h since 1771 ( the
b ook wa s publishe d in 1776) .
After r eading the entir e 900
pages, a r ead er comes away with
a living pictur e of Br itain in the
1 7 7 0 s .
But mor e impor tan t, the r e a d e r
comes away with Smith s pur -
pose: not to ad vance the inter -
ests of an y class, bu t to pr o m o t e
the wea lth o f the entir e nation.
cConsumption is the
sole end and purpose
of all pro d u c t i o nd
Adam Sm i t h
And we alth, as he saw it, consisted of goods which all people could
consume. This wa s a democr atic and for that time, r adical pr in-
ciple that Smith adh er ed to with r emar kable con sistency.
The Wealth of Nationsis no textbook . Smith was wr iting to h is
peer s; he pr oduced a document that he expec ted to be used in the
co nduct of gover nments. The Wealth of Nations pr esents a pe r sua-
sive ar gu men t for a new a ppr oach to economic p olicy.
T HE PRINCIPL ES
Over the year s, Adam Smiths
pr inciples have been discussed
and detailed, and po nder e d and
r ehashed in countless texts. Ye t
few if any of these bo oks
e x p l o r e these pr inciples with the
skill and complex detail foun d in
the The Wealth of Nations.
Th e pr inciple s themse lves? They
a r e r elatively simple . Smith
assumed th at, in economic life,
the main motivating for ce gov-
e r ning mans actions was self-
i n t e r est. He ar gue d tha t, with the
r ight institu tional fr amewor k,
men following their own self-
i n t e r est would ser ve the gen er al
g o o d .
Th is institutional fr amewor k did
no t call fo r extensive gover n m e n t
r egulation. The best pr ogr am is to leave the economic pr o c e s s
alone. This has come to be k nown by a number of labels: fr ee enter -
pr ise, economic libe r alism, non-inte r v e n t i o n .
All of this in now familiar enough. Lar gely thr ough Smiths book,
these pr inciples helped to guide the then r apidly expand ing eco-
nomic activity.
cTo Prohibit the gre a t
people (the Am e r i c a n
colonies), . . . fro m
e m p l oying their stock
(capital) and industry in
the way they judge most
a d vantageous to them-
s e l ves, is a manifest vio-
lation of the most sacre d
rights of mankind.d
Adam Sm i t h
L EA DING A DISCUSSION
One of the most h elp ful par ts o f any film showing is the discussio n
that follows. You may want to use these discussion points a nd pr o j-
ects as the basis fo r you r talk.
A . How did the me r cantile system wor k, and what was th e philos-
ophy behind it?
B . How did the mer cantile system differ fr om the economic sys-
tem Adam Smith advocated?
C . Wh at was the r ole of gover nment in Smiths philosophy?
D . Smith believed the only sour ce of wealth was pr oduc tion r e s u l t i n g
f r o m labor and r e s o u r ces. Have we changed that theor y any? Is it
still much the same? Why?
E . How does the division of la bor br ing abo ut an incr ease in pr o-
du ction? How is it a ffected by the extent of th e ma r ket?
F. How doe s the o per ation of a pr icing system r egu late a mar ket
economy? Why did Adam Smith c onsider that the oper a tion of
the mar ket pr omises the ge ner al good? Why was Adam Smith
op posed to extensive gover n men t r egulation? Do you consider
his views r elevant today?
G . Wh at influence do you thin k the ec ono mic theo r ies of Adam
Smith had on the Amer ican colo nies and the Amer ican r e v o l u-
tion ? Do you think his views could have helped to justify the r e v-
olutio n? Or to pr event it? Why or why not?
H . Can you ide ntify an y of Smiths ideas at wor k in o ur pr e s e n t
s o c i e t y ?
I . As a study pr oject, r e s e a r ch the life o f Ada m Smith to fin d the
me n, ideas, and the po litical and economic ph ilosophies that
influenced the theor ies found in The Wea lth of Nations.
J . Th e Classica l School o f economic thought or iginated with The
Wealth of Nations, and included the wr itings of such English
economists as Ricar do, Malthus, Mill, as well as the Fr ench econ-
omist, Say. Examine the ideas of these men, and compar e them to
the other schools of eco nomic thought such as Mer c a n t i l i s m ,
Ca mer alism, Mar xism a nd that of the Ph ysioc r ats.
K . I have never known much good do ne by those who affected to
tra de in the public inter est. Discuss.
SEL ECT ED MAT ERI A LS :
On the Hi story o f Eco nomi cs :
Economic Theory in Retrospect. Mar k Blaug.
A History of Economic Thought. 3 r d Edition. Er ic Roll, Pr e n t i c e - H a l l ,
no date.
The Unbound Prometheus. David Landes. Cambr idge Univer sity Pr e s s ,
1 9 6 9 .
The Industrial Revolution in the Eighteenth Century. Paul Mantoux,
H a r c o u r t Br ace, 1928.
An Economic History of England: The 18th Century. T.S. Ashton,
Methuen, 1955.
Cambridge Economic History of Euro p e , two volumes. Cambr idge
Univer sity Pr ess, 1952.
F r om the Adam Smith Libr ar y. Rep r ints of Moder n Classics. Augustus M.
K e l l e y. Publish er s, New Yo r k .
Boo ks on the Life o f Adam Smi th:
The Life of Adam Smith. John Rae, 1895
Adam Smith and the Scotland of His Day. C.R. Fay, 1956.
Adam Smith, as Student and Pro f e s s o r. William R. Scott, 1937.
Biographical Memoirs of Adam Smith. Dugald Stewar d. 1793.
M o d e rn Co mme nt o f Adam Smi ths Wo r k :
The Spirit of 76 and Other Essays. Car l Becker, J.M. Clar k,
William E. Dood, 1927.
Adam Smith 1776-1926. J.M. Clar k, Paul H. Douglas, Jacob H. Hollander,
Glen n R. Mor r o w, Melchior Palyi and Jacob Vi n e r, 1928.
Adam Smith: The Man and His Works. E.G. West, 1969.