Adam Smith - Work

Adam Smith's main work was 'The Wealth of Nations' (actually its proper title was 'An Inquiry into the Nature and Causes of the Wealth of Nations', but we've got lazier these days!). He wrote it in five books and it was published in 1776. In the work he stressed the benefits of division of labour (specialisation) and its need, and outlined the workings of the market mechanism (price system).

Perhaps the concept most associated with him is the 'invisible hand'. This was not a personal physical problem of Adam Smith's but referred to the operation of market forces. He argued that markets would guide economic activity and act like an invisible hand allocating resources. Prices would be the main means to do this. Prices would rise when there was a shortage of something and fall when it was plentiful. For more details on this follow the link below to 'theories'.

To illustrate his points about specialisation he used the example of pin-making. If one man tried to carry out all the operation necessary to make a pin - drawing the wire, cutting it, sharpening it ..... - he would be able to make very few. However, specialisation would lead to a much greater output of pins as each part of the process would be carried out much quicker.

Biography | Work | Theories