Classical Economists

"A feather will weigh down a scale when there is nothing in the opposite one."

"Thirty or forty proprietors, with incomes answering to between one thousand and five thousand a year, would create a much more effectual demand for the necessaries, conveniences, and luxuries of life, than a single proprietor possessing a hundred thousand a year."

"It is a mere futile process to exchange one set of commodities for another, if the parties; after this new distribution of goods has taken place, are not better off than they were before."

"But such consumption is not consistent with the actual habits of the generality of capitalists. The great object of their lives is to save a fortune, both because it is their duty to make a provision for their families, and because they cannot spend an income with so much comfort to themselves, while they are obliged perhaps to attend a counting house for seven or eight hours a day... ...There must therefore be a considerable class of persons who have both the will and power to consume more material wealth than they produce, or the mercantile classes could not continue profitably to produce so much more than they consume."

"It is also very important to observe, that menial servants are absolutely necessary to make the resources of the higher and middle classes of society efficient in the demand for material products."

"The effect therefore on national wealth of those classes of unproductive consumers which are supported by taxation, must be very various in different countries, and must depend entirely upon the powers of production, and upon the manner in which the taxes are raised in each country."

"If one fourth of the capital of a country were suddenly destroyed, or entirely transferred to a different part of the world, without any other cause occurring of a diminished demand for commodities, this scantiness of capital would certainly occasion great inconvenience to consumers, and great distress among the working classes; but it would be attended with great advantages to the remaining capitalists."

"When Hume and Adam Smith prophesied that a little increase of national debt beyond the then amount of it, would probably occasion bankruptcy; the main cause of their error was the natural one, of not being able to see the vast increase of productive power to which the nation would subsequently obtain."

"Malthus was not wrong in the ways commonly supposed. From his 18th-century perspective, he simply had no basis for seeing the human ability to "overshoot" carrying capacity. It was inconceivable to Malthus that human societies could, by taking advantage of favorable conditions (new technology, abundant fossil fuels), temporarily increase human numbers and appetites above the long-term capacity of environments to provide needed resources and services. But it is inexcusable today not to recognize the way populations can sometimes overshoot sustainable carrying capacity and what happens to them after they have done it."

"Perhaps no economist will ever again so utterly encompass his age as Adam Smith. Certainly none was ever so serene, so devoid of contumacy, so penetratingly critical without rancor, and so optimistic without being utopian."

"For Smith’s encyclopedic scope and knowledge there can be only admiration. It was only in the eighteenth century that so huge, all-embracing, secure, caustic, and profound a book could have been written. Indeed, The Wealth of Nations and The Theory of Moral Sentiments, together with his few other essays, reveal that Smith was much more than just an economist. He was a philosopher-psychologist-historian-sociologist who conceived a vision that included human motives and historic “stages” and economic mechanisms, all of which expressed the plan of the Great Architect of Nature (as Smith called him). From this viewpoint, The Wealth of Nations is more than a masterwork of political economy. It is part of a huge conception of the human adventure itself."

"Upon the whole, I have always considered him, both in his lifetime and since his death, as approaching as nearly to the idea of a perfectly wise and virtuous man, as perhaps the nature of human frailty will permit."

"Even today — in blithe disregard of his actual philosophy — Smith is generally regarded as a conservative economist, whereas in fact, he was more avowedly hostile to the motives of businessmen than most New Deal economists."

"All this may seem somewhat elementary. But consider what Adam Smith has done, with his impetus of self-interest and his regulator of competition. First, he has explained how prices are kept from ranging arbitrarily away from the actual cost of producing a good. Second, he has explained how society can induce its producers of commodities to provide it with what it wants. Third, he has pointed out why high prices are a self-curing disease, for they cause production in those lines to increase. And finally, he has accounted for a basic similarity of incomes at each level of the great producing strata of the nation. In a word, he has found in the mechanism of the market a self-regulating system for society’s orderly provisioning."

"The answer is that Smith saw the all-important division of labor as a once-for-all, not a continuing, process. As has been recently pointed out, he did not see the organizational and technological core of the division of labor as a self-generating process of change, but as a discrete advance that would impart its stimulus and then disappear. Thus, in the very long run the growth momentum of society would come to a halt—Smith once mentions two hundred years as the longest period over which a society could hope to flourish. Thereafter the laborer would return to his subsistence wages, the capitalist to the modest profits of a stable market, and the landlord alone might enjoy a somewhat higher income as food production remained at the levels required by a larger, although no longer growing, population. For all its optimistic boldness, Smith’s vision is bounded, careful, sober—for the long run, even sobering."

"Smith argued in 1776 that the division of labor was the basis for the separation between mental and manual labor, and therefore between natural philosopher and laborer."

"It has been called “the outpouring not only of a great mind, but of a whole epoch.” Yet it is not, in the strict sense of the word, an “original” book. There is a long line of observers before Smith who have approached his understanding of the world: Locke, Steuart, Mandeville, Petty, Cantillon, Turgot, not to mention Quesnay and Hume again. Smith took from all of them: there are over a hundred authors mentioned by name in his treatise. But where others had fished here and there, Smith spread his net wide; where others had clarified this and that issue, Smith illuminated the entire landscape. The Wealth of Nations is not a wholly original book, but it is unquestionably a masterpiece."

"Though in Hume, and also in the works of Bernard Mandeville, we can watch the gradual emergence of the twin concepts of the formations of spontaneous orders and of selective evolution [...], it was Adam Smith and Adam Ferguson who first made systematic use of this approach. Smith's work marks the breakthrough of an evolutionary approach which has progressively displaced the stationary Aristotelian view. The nineteenth-century enthusiast who claimed that the Wealth of Nations was in importance second only to the Bible has often been ridiculed; but he may not have exaggerated so much. Even Aristotle's disciple Thomas Aquinas could not conceal from himself that multae utilitates impedirentur si omnia peccata districte prohiberentur - that much that is useful would be prevented if all sins were strictly prohibited (Summa Theologica, II, ii, q. 78 i)."

"The Wealth of Nations is in no sense a textbook. Adam smith is writing to his age, not to his classroom; he is expounding a doctrine that is meant to be of importance in running an empire, not an abstract treatise for academic distribution. The dragons that he slays (such as the Mercantilist philosophy, which takes over two hundred pages to die) were alive and panting, if a little tired, in his day. And finally, the book is a revolutionary one. To be sure, Smith would hardly have countenanced an upheaval that disordered the gentlemanly classes and enthroned the common poor. But the import of The Wealth of Nations is revolutionary, nonetheless."

"An idea is always older than its name. The idea of cybernetics was used implicitly by the French physiologist, Claude Bernard, in 1878. The scottish physicist, Clerk Maxwell, also used it in 1868 in developing the theory of the steam-engine governor. But long before both of them Adam Smith had just as clearly used the idea in his The Wealth of Nations (1776). The "invisible hand" that regulates prices to a nicety is clearly this idea. In a free market, says Smith in effect, prices are regulated by negative feedback."

"Smith's claim that the selfish human urge to increase private profits is the basis for collective wealth is one of the most revolutionary ideas in human history - revolutionary not just from an economic perspective, but even more so from a moral and political perspective. What Smith says is, in fact, that greed is good, and that by becoming richer I benefit everybody, not just myself. Egoism is altruism."

"Adam Smith was the first to perceive that we have stumbled upon methods of ordering human economic cooperation that exceed the limits of our knowledge and perception. His 'invisible hand' had perhaps better have been described as an invisible or unsurveyable pattern. We are led - for example by the pricing system in market exchange - to do things by circumstances of which we are largely unaware and which produce results that we do not intend. In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get."

"Adam Smith’s laws of the market are basically simple. They tell us that the outcome of a certain kind of behavior in a certain social framework will bring about perfectly definite and foreseeable results. Specifically they show us how the drive of individual self-interest in an environment of similarly motivated individuals will result in competition; and they further demonstrate how competition will result in the provision of those goods that society wants, in the quantities that society desires, and at the prices society is prepared to pay. […] But self-interest is only half the picture. It drives men to action. Something else must prevent the pushing of profit-hungry individuals from holding society up to exorbitant ransom: a community activated only by self-interest would be a community of ruthless profiteers. This regulator is competition, the conflict of the self-interested actors on the marketplace. For each man, out to do his best for himself with no thought of social consequences, is faced with a flock of similarly motivated individuals who are engaged in exactly the same pursuit. Hence, each is only too eager to take advantage of his neighbor’s greed. A man who permits his self-interest to run away with him will find that competitors have slipped in to take his trade away; if he charges too much for his wares or if he refuses to pay as much as everybody else for his workers, he will find himself without buyers in the one case and without employees in the other. Thus very much as in The Theory of Moral Sentiments, the selfish motives of men are transmuted by interaction to yield the most unexpected of results: social harmony."

"He now and then revisited London. The last time he was there, he had engaged to dine with Lord Melville, then Mr Dundas, at Wimbledon; Mr Pitt, Mr Grenville, Mr Addington, afterwards Lord Sidmouth, and some other of his lordship's friends were there. Dr Smith happened to come late, and the company had sat down to dinner. The moment, however, he came into the room, the company all rose up; he made an apology for being late, and entreated them to sit down. "No," said the gentlemen, "we will stand till you are seated, for we are all your scholars.""

"The key insight of Adam Smith's Wealth of Nations is misleadingly simple: if an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another."

"I have found one just man in Gomorrah—Adam Smith, author of the Wealth of Nations. He was the Duke of Buccleuch's tutor, is a wise and deep philosopher, and although made commissioner of the customs here by the Duke and Lord Advocate, is what I call an honest fellow. He wrote a most kind as well as elegant letter to Burke on his resignation, as I believe I told you before; and on my mentioning it to him, he told me he was the only man here who spoke out for the Rockinghams."

"The greatest of Scotchmen was the first economist, Adam Smith."

"If I were five-and-twenty or thirty, instead of, unhappily, twice that number of years, I would take Adam Smith in hand—I would not go beyond him, I would have no politics in it—I would take Adam Smith in hand, and I would have a League for free trade in Land just as we had a League for free trade in Corn. You will find just the same authority in Adam Smith for the one as for the other; and if it were only taken up as it must be taken up to succeed, not as a political, revolutionary, Radical, Chartist notion, but taken up on politico-economic grounds, the agitation would be certain to succeed; and if you apply free trade in land and to labour too—that is, by getting rid of those abominable restrictions in your parish settlements, and the like—then, I say, the men who do that will have done for England probably more than we have been able to do by making free trade in corn."

"About this time two others, men of great talents and learning, promoted the cause of the injured Africans, by the manner in which they introduced them to notice in their respective works. Dr. Adam Smith, in his Theory of Moral Sentiments, had, so early as the year 1759, held them up in an honourable, and their tyrants in a degrading light. "There is not a Negro from the coast of Africa, who does not, in this respect, possess a degree of magnanimity which the soul of his sordid master is too often scarce capable of conceiving. Fortune never exerted more cruelly her empire over mankind, than when she subjected those nations of heroes to the refuse of the gaols of Europe, to wretches who possess the virtue neither of the countries they came from, nor of those they go to, and whose levity, brutality, and baseness so justly expose them to the contempt of the vanquished." And now, in 1776, in his Wealth of Nations he showed in a forcible manner (for he appealed to the interest of those concerned,) the dearness of African labour; or the impolicy of employing slaves."

"Adam Smith, had treated forestalling as an imaginary evil! Adam Smith, whom I knew well, was a man of investigation, knowledge, and sagacity; with a heart overflowing with benevolence and sociability; but he was strong tinctured with French Philosophy and systime! To mention two circumstances, in which I cannot be mistaken, because spoken to myself, and although contradictory to the sentiments that I had expressed, not spoken in publick, where men often sport opinions for argument, but in the familiarity of individual conversation, where the unreserved sentiments are spoke. These were "That the Christian Religion debased the human mind;" and that "Sodomy was a thing in itself indifferent." The considerate part of mankind will think that the opinions of such a man, or of any man, are not to be admitted as infallible dogmas; but to be fairly weighed, before they are adopted."

"What an excellent work is that with which our common friend, Mr Adam Smith, has enriched the public!—an extensive science in a single book, and the most profound ideas expressed in the most perspicuous language."

"I had by then re-read Wealth of Nations and, equally important, its companion volume, Theory of Moral Sentiments, and had begun to realize the enormity of the con trick which the Adam Smith Institute was seeking to play on the unsuspecting British people, now being dazzled by the self-certainties of the counter-revolutionaries. I had been put on to his track by my old friend Harold Lever... he expounded to me one of his favourite themes: Adam Smith was the most misquoted writer in history. Those who distorted his message for their own ends had never read him properly. Harold then juxtaposed two quotations: the first being the famous one in which Adam Smith declares that politicians mislead themselves when they imagine they can arrange the "different members of a great society" like pieces on a chess board to do their economic will. They will follow their own motivations – self-interest and self-love... But Harold's second quotation put a different light on things. "Government has a duty", Smith wrote, "of erecting and maintaining certain public works and certain public institutions" vital to the running of "a great society", which would never be provided by individuals because "the profit would never repay the expense to an individual"."

"An excellent digest of all that is valuable in former Oeconomical writers with many valuable corrective Observations."

"True, Smith was a firm believer in the market economy, but he was not a doctrinaire advocate of laissez-faire. His ideas for the role of government were obviously limited by the stage of development reached in the eighteenth century, when the state's activities comprised mainly defence, maintenance of the rule of law and the provision and construction of a transport system of roads, bridges and canals. But in one field he was prepared for the government to intervene to the point of being dictatorial – education. This sprang from his recognition of the social costs of the market economy. The growing phenomenon of the division of labour led, he maintained, to the mental mutilation of those condemned to spend their working lives on a few simple and repetitive operations, which bred "torpor of the mind". And he added, "In every improved and civilized society this is the state into which the labouring poor, that is the great body of the people, must necessarily fall, unless government takes some pains to prevent it." The discovery of these words came like a breath of fresh mountain air. This was William Morris and Ruskin all over again. Why were we socialists allowing the Thatcherites to disguise and distort these revelations of the dangers and inadequacies of the market economy? We were the real custodians of the "great society"."

"Adam Smith, who has strong claim to being both the Adam and the Smith of systematic economics, was a professor of moral philosophy and it was at that forge that economics was made."

"Mr. Burke talked in very high terms of Dr. Adam Smith; praised the clearness and depth of his understanding, his profound and extensive learning, and the vast accession that had accrued to British literature and philosophy from these exertions, and described his heart as being equally good with his head and his manners as peculiarly pleasing. Mr. Smith, he said, told him, after they had conversed on subjects of political economy, that he was the only man, who, without communication, thought on these topics exactly as he did."

"[T]he simple fact is, of course, that in normal trade all parties gain; there exist mutual gains from trade. The great contribution of Adam Smith lay in his popularization of this simple point, but the full import of this conception for democratic political theory does not seem to have yet been appreciated."

"He's pre-capitalist, a figure of the Enlightenment. What we would call capitalism he despised. People read snippets of Adam Smith, the few phrases they teach in school. Everybody reads the first paragraph of The Wealth of Nations where he talks about how wonderful the division of labor is. But not many people get to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be. And therefore in any civilized society the government is going to have to take some measures to prevent division of labor from proceeding to its limits."

"Now, sir, I stand here in the land where Adam Smith was born, the parent and patriarch of political economy—the man who first taught us that in our intercourse with other nations, as well as among ourselves, it was better to have our hands free than to have our hands and arms in manacles—who taught the great doctrines of Free Trade, and who has imbued the world with these doctrines."

"It is worth remembering that Adam Smith, the founder of classical economics, was first and foremost a philosopher. He strove to be a moralist and in doing so, became an economist. When he published The Theory of Moral Sentiments in 1759, modern capitalism was just getting under way. Smith was entranced by the sweeping changes wrought by this new force, but it wasn’t just the numbers that interested him. It was the human effect, the fact that economic forces were vastly changing the way a person thought and behaved in a given situation. What might lead one person to cheat or steal while another didn’t? How would one person’s seemingly innocuous choice, good or bad, affect a great number of people down the line? In Smith’s era, cause and effect had begun to wildly accelerate; incentives were magnified tenfold. The gravity and shock of these changes were as overwhelming to the citizens of his time as the gravity and shock of modern life may seem to us today."

"But bounty and hospitality very seldom lead to extravagance; though vanity almost always does."

"The value of money is in proportion to the quantity of the necessaries of life which it will purchase."

"When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid. The liberation of the public revenue, if it has ever been brought about at all, has always been brought about by bankruptcy; sometimes by an avowed one, but always by a real one, though frequently by a pretend payment."

"If a workman can conveniently spare those three halfpence, he buys a pot of porter. If he cannot, he contents himself with a pint, and, as a penny saved is a penny got, he thus gains a farthing by his temperance."

"It may indeed be doubted, whether butcher's meat is any where a necessary of life. Grain and other vegetables, with the help of milk, cheese, and butter, or oil, where butter is not to be had, it is known from experience, can, without any butcher's meat, afford the most plentiful, the most wholesome, the most nourishing, and the most invigorating diet."

"That of beaver skins, of beaver wool, and of gum Senega, has been subjected to higher duties; Great Britain, by the conquest of Canada and Senegal, having got almost the monopoly of those commodities."

"The rulers of Great Britain have, for more than a century past, amused the people with the imagination that they possessed a great empire on the west side of the Atlantic. This empire, however, has hitherto existed in imagination only."

"Every tax, however, is to the person who pays it a badge, not of slavery but of liberty. It denotes that he is a subject to government, indeed, but that, as he has some property, he cannot himself be the property of a master."

"The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

"There is no art which one government sooner learns of another than that of draining money from the pockets of the people."