Adam Smith (1723 – 1790), one of the greatest figures in the Scottish Enlightenment, is significant because he introduced economics as a separate field of study. In his book, The Wealth of Nations (1776), Smith talks about several economic topics, among them self-interest.
Concerning self-interest, he raises the question: is self-interest morally acceptable? His answer is yes. You must have interest in yourself and your family for several reasons. One is because it brings about trade. It is in my self-interest to buy your goods and it is in your self-interest to sell them. We both gain: I the goods, you the money.
Another topic in his book is the ‘invisible hand.’ According to Adam Smith, this hand is what regulates the free market. An example of this is the uniformity of profit. The more production there is, the less profit there is and vice-versa. The fields are balanced when people change from one to another, due to a loss of profit in one caused from too much production. This change, made in their self-interest, is the work of the ‘invisible hand.’
The division of labor is another topic in The Wealth of Nations. Smith says that we profit more from specializing in different fields of study. We maximize the output, therefore producing more. For example, if I am making necklaces, I must pick the beads, arrange the pattern, string the beads and then put on the clasp. However, if we divide these jobs (stages) among specialists, we will produce more and go quicker. This brings about the uniformity of profit, through the invisible hand.
This is a brief overview of a few of Adam Smith’s ideas in The Wealth of Nations.