Over time, many individuals have presented a myriad of theories that have contributed to requisite

developments of many nations’ economic systems and revolutionized the method of production,

distribution, and consumption of products. However, none have had a lasting and prevalent impact like

Adam Smith. From his theory about division of labour to the discovery of the laissez-faire concept, Smith

has helped us to comprehend the significance of free markets - an integration of a structure for economic

activities to emerge into the material world and optimize output with minimal government intervention -

primarily through his literary works.1

Smith’s first of two books that brought him widespread acclaim, The theory of moral sentiments, was

published in 1759. 2 Through this, he completely changed people’s view on economics by explicating that

it deserved careful, long-term studying to understand the trends which subsist amongst people as well as

their implications on markets. He was the first moral philosopher to realize that instead of treating

economics as a branch of moral philosophy, it should be regarded as a social science. Furthermore, he

emphasized the importance of building and preserving the institutions that preserve people’s negative

rights. He postulated that they’re essential for individuals to live and interact appropriately in a civil

society.3

1
The School of Life, POLITICAL THEORY - Adam Smith. 2014. https://www.youtube.com/watch?

v=ejJRhn53X2M&t=321s (accessed 3 January 2021).

2
L Reed. Adam Smith: Ideas Change the World | Lawrence W. Reed. Fee.org. 2021.

https://fee.org/articles/the-wealth-of-everyone/ (accessed 2 January 2021).

3
L Kiesling. The Theory of Moral Sentiments (1759). Moralmarkets.org. 2021.

https://www.moralmarkets.org/book/theory-moral-sentiments/ (accessed 3 January 2021).

from feudalism to a government-constrained enterprise to a market-determined one, also gained

worldwide attention. 4 In contrast to prior beliefs, he helped people notice that society would benefit if all

stakeholders promoted self-interest and government intervention was minimized. 5 This approach,

commonly known as laissez-faire, is now used by economists across the globe.

Within this free market he promoted, Smith also found a protective mechanism that helps reconcile the

disruptive possibilities of humans who purely follow their self-interest which we refer to as competition.

Now, it’s encouraged to maximize production and incentivise stakeholders in society to increase

efficiency. Smith’s views have undoubtedly influenced the support of competition through methods such

as monopoly regulations and antitrust laws in modern society.6 This belief applies to foreign competition

as well. Unlike the system of trade during mercantilism, where the foreign exchange of commodities was

discouraged, Smith supported international trade as it would mutually aid both sides involved. Because of

Smith’s work, most countries today use trade to facilitate growth and ensure their survival. 7
4
R Heilbroner. Adam Smith - The Wealth of Nations. Encyclopedia Britannica. 2021.

https://www.britannica.com/biography/Adam-Smith/The-Wealth-of-Nations (accessed 3 January 2021).

5
J Weinstein .Smith, Adam | Internet Encyclopedia of Philosophy. Iep.utm.edu. 2021.

https://iep.utm.edu/smith/ (accessed 2 January 2021).

6
A Lipsky. Protecting consumers by promoting competition. Federal Trade Commission. 2017.

https://www.ftc.gov/news-events/blogs/competition-matters/2017/03/protecting-consumers-promoting-

competition (accessed 3 January 2021).

7
J Blenma. Adam Smith and The Wealth of Nations. Investopedia. 2021.

https://www.investopedia.com/updates/adam-smith-wealth-of-
Finally, one of Smith’s greatest contributions was the introduction of the division of labor, which involves

the separation of the production process and employing workers to specialize in a specific task. He

discovered that compared to prior methods where specialization was not utilized, division of labor was

substantially more efficient which is why currently, it’s used in almost every industry. Gradually, this

concept was even used as a tool to expedite economic growth within countries. 8

To conclude, Adam Smith has created a considerable impact on society predominantly through his

published works. Numerous ideas introduced by Smith are used in the contemporary world like the

laissez-faire concept, division of labour as well as his thoughts on the significance of trade and certain

institutions which have unarguably made society better off. The success of globalization and trade in our

time serve as testimony to Smith’s lasting legacy. He’s widely considered to be responsible for our era’s

spreading prosperity and opulence.

Reference list

Blenma, J. Adam Smith and The Wealth of Nations. Investopedia. 2021.

https://www.investopedia.com/updates/adam-smith-wealth-of-nations/#:~:text=Extending%20upon

%20self%2Dinterest%20in,saving%20machinery%20and%20encourage%20innovation (accessed 3

January 2021).

8
J Blink & I Dortan. The evolution of economic thinking. IB Diploma Programme: Economics Course

Companion. J Blink & I Dortan (ed). Oxford. 2021. pp. 26-38.

Companion. J Blink & I Dortan (ed), Oxford, 2021, pp. 26-38.

Heilbroner, R. Adam Smith - The Wealth of Nations. Encyclopedia Britannica. 2021.

https://www.britannica.com/biography/Adam-Smith/The-Wealth-of-Nations (accessed 3 January 2021).

Kiesling, L. The Theory of Moral Sentiments (1759). in Moralmarkets.org. 2021.

https://www.moralmarkets.org/book/theory-moral-sentiments/ (accessed 3 January 2021).

Lipsky, A. Protecting consumers by promoting competition. Federal Trade Commission. 2017.

https://www.ftc.gov/news-events/blogs/competition-matters/2017/03/protecting-consumers-promoting-

competition (accessed 3 January 2021).

Reed, L. Adam Smith: Ideas Change the World | Lawrence W. Reed. Fee.org. 2021.

https://fee.org/articles/the-wealth-of-everyone/ (accessed 2 January 2021).

The School of Life. POLITICAL THEORY - Adam Smith. 2014. https://www.youtube.com/watch?

v=ejJRhn53X2M&t=321s (accessed 3 January 2021).

Weinstein, J. Smith, Adam | Internet Encyclopedia of Philosophy. Iep.utm.edu. 2021.

https://iep.utm.edu/smith/ (accessed 2 January 2021).