Adam Smith Father of Modern Economics 1723-1790

Adam Smith was born in 1723 in Kirkcaldy. His father died before he was born. At the age of four, he was briefly kidnapped by Gyspies - but rescued shortly after.

Smith attended the local Burgh School, and attended Glasgow University from the age of 14 studying philosophy. It was through this that Smith gained his life-long love of reason and free speech.

He attended Oxford University at 17, but gave a mediocre performance - giving no indication of what was to come.

After he left University, he returned to Scotland and began delivering lectures in Edinburgh. It was through this that he came into contact with some of the most significant figures in the Scottish Enlightenment. One of these, David Hume, would become one of Smith's closest friends.

Smith was appointed to the chair of Moral Philosophy in 1751, and began work on his first book, "The Theory of Moral Sentiments."

It was from his friendships with Hume and other leading thinkers that he began to question the societies views on money and trade. He returned to his home town of Kirkcaldy, and began to collect his thoughts.

The prominent economic theory of the time was Mercantilism - the belief that that the exchange of wealth has a net-zero effect. That is, for one person to have more, another must have less. The benefits of trade to society were negligible. A nation's wealth was believed to be in its stocks of Gold and Silver. Countries tried to keep imports down and exports up to ensure this figure rose.

Smith disagreed with that, believing that people worked to create more wealth, not to move it from one person to another. In a free exchange of goods, both people consider the item they are receiving to be of higher value that that which they give away. Thus, they both feel "richer" after the exchange. Thus, the net effect of trading is positive.

Smith believed that the more people trade, the richer everyone becomes. Far from increasing wealth, import taxes actually hinder wealth creation - as they slow down the ability of people to trade. He used his brilliant mind test and prove this theory.

Smith also demonstrated that, paradoxically, people acting selfishly in a free-trade society actually benefit the society as a whole. In order to obtain wealth legally, they must render some service to their fellow citizens.

The result was his epic "Wealth of Nations," which was a bestseller - and propelled Smith to fame.

The Wealth of Nations created modern economics as we know it - the systematic analysis of trading. Many say that the book is one of the most important ever written.

The book has been used ever since by economists, politicians and free-trade-supporters. Many argue that we would not be living in such prosperous times if Smith had never published the work.

Adam Smith died in 1790, and was buried in Edinburgh.