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Text 4A.

World of money of Adam Smith

After two centuries, Adam Smith remains a towering figure in the history of economic thought. Known primarily for a single work, An Inquiry into the nature an causes of the Wealth of Nations (1776), the first comprehensive system of political writings constitute only the capstone to an overarching view of political and social evolution. If his masterwork is viewed in relation to his earlier lectures on moral philosophy and government, as well as to allusions in The Theory of Moral Sentiments (1759) to a work he hoped to write on "the general principles of law and government, and of the different revolutions they have undergone in the different ages and periods of society", then The Wealth of Nations may be seen not merely as a treatise on economics but as a partial exposition of a much larger scheme of historical evolution.

1. The Theory of Moral Sentiments

In 1759 Smith Published his first work, The Theory of Moral Sentiments. Didactic, exhortative, and analytic by turns, The Theory lays the psychological foundation on which The Wealth of Nations was later to be built. In it Smith described the principles of "human nature", which, together with the leading philosophers of his time, he took as a universal and unchanging datum from which social institutions, as well as social behavior, could be deduced.

One question in particular interested Smith in The Theory of Moral Sentiments. This was a problem that had attracted a number of Scottish philosophers before him. The question was the source of the ability to form moral judgments, including judgments on one's own behavior. He wrote in his Moral Sentiments the famous observation that he was to repeat later in The Wealth of Nations: that self-seeking men are often "led by an invisible hand... without knowing it, without intending it, to advance the interest of the society".

2. The Wealth of Nations

The Wealth of Nations was finally completed and published in 1776. Despite its renown as the first great work in political economy. The Wealth of Nations is in fact a continuation of the philosophical theme begun in The Theory of Moral Sentiments. The book discusses the relationship between freedom and order, analyses economic processes, and attacks the British mercantile system's limits on free trade. All three aspects are woven together to create a unified social theory.

The book dealt with the basic problem of how social order and human progress can be possible in a society where individuals follow their own self-interests. Smith argued that this individualism led to order and progress. In order to make money, people produce things that other people are willing to buy. Buyers spend money for those things that they need or want most. When buyers and sellers meet in the market, a pattern of production develops that results in social harmony. Smith said that all this would happen without any conscious control or direction, "as if by an invisible hand".

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