Economists these days are ten a penny. You can't open a web page, newspaper or turn on the TV or radio without one pontificating at you. Keynesians, Austrians, Marxists, Anarchists... there are as many different schools as there are days in the year.
In the 18th century, however, things were different. The dominant force was mercantilism. Trade was strictly controlled, with high tariffs and taxes. Wealth was measured in how big your pile of stuff was. The fiercest critic of this system was the man known as the “father of modern economics”, Adam Smith. And his hugely influential book, An Enquiry into the Nature and Causes of the Wealth of Nations was published on this day in 1776.
In it, Smith argued that free trade and market competition were fundamental to economic prosperity; trade benefits the buyer just as much as the seller; and wealth isn't necessarily money, it is labour or the amount of it you can buy or command. (It’s not an easy read, however. It runs to 950 pages, and even the Adam Smith Institute admits it is “almost impenetrable” to the modern reader, written as it was in “flowery” language, and containing numerous lengthy digressions.)
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It was revolutionary stuff. Once accepted, the idea of free trade drove massive economic expansion and growth in prosperity. Smith has been an influence on virtually every one of the world's economic systems ever since. Everyone finds something to build on. Even Karl Marx took Smith's idea that labour was wealth and ran with it, though perhaps a little too far for his and many other people's own good.
Government's job, said Smith, was to stay out of commerce, and provide the things a free market is unable to: defence, justice, public works – including infrastructure and education – and “supporting the dignity of the monarch”.
It is ironic, then, that just two years after publishing The Wealth of Nations, he was appointed as commissioner of customs in Scotland, upholding the very tariffs he argued so eloquently against.
-
31 August 1957: the Federation of Malaya declares independence from the UKFeatures On this day in 1957, after ten years of preparation, the Federation of Malaya became an independent nation.
-
13 April 1960: the first satellite navigation system is launched
Features On this day in 1960, Nasa sent the Transit 1B satellite into orbit to provide positioning for the US Navy’s fleet of Polaris ballistic missile submarines.
-
9 April 1838: National Gallery opens in Trafalgar Square
Features On this day in 1838, William Wilkins’ new National Gallery building in Trafalgar Square opened to the public.
-
3 March 1962: British Antarctic Territory is created
Features On this day in 1962, Britain formed the British Antarctic Territory administered from the Falkland Islands.
-
10 March 2000: the dotcom bubble peaks
Features Tech mania fanned by the dawning of the internet age inflated the dotcom bubble to maximum extent, on this day in 2000.
-
8 March 1817: the New York Stock Exchange is formed
Features On this day in 1817, a group of brokers moved out of a New York coffee house to form what would become the biggest stock exchange in the world.
-
7 March 1969: Queen Elizabeth II officially opens the Victoria Line
Features On this day in 1969, Queen Elizabeth II took only her second trip on the tube to officially open the underground’s newest line – the Victoria Line.
-
4 March 1519: Hernan Cortes arrives in Mexico
Features On this day in 1519, Hernan Cortes landed in Mexico before marching on the Aztec capital, Tenochtitlan.
