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99-541: (Redirected from Great Transformation ) The Great Transformation may refer to: The Great Transformation (book) , a book by Karl Polanyi on the rise of the market economy in England The Great Transformation (Norway) , a period of social change in Norway in the mid-to-late-19th century Great Transformation, a term for collectivization in

198-483: A bit of strategic bribery, they could arrange to have almost anyone they hated imprisoned or even hanged. Economist Joseph Stiglitz favors Polanyi's account of market liberalization, arguing that the failures of "Shock Therapy" in Russia and the failures of IMF reform packages echo Polanyi's arguments. Stiglitz also summarizes the difficulties of "market liberalization" in that it requires unrealistic "flexibility" amongst

297-507: A close relationship with his mother, with whom he lived after his return from France and who died six years before him. Smith was described by several of his contemporaries and biographers as comically absent-minded, with peculiar habits of speech and gait, and a smile of "inexpressible benignity". He was known to talk to himself, a habit that began during his childhood when he would smile in rapt conversation with invisible companions. He also had occasional spells of imaginary illness, and he

396-457: A conflict between The Theory of Moral Sentiments and The Wealth of Nations ; the former emphasises sympathy for others, while the latter focuses on the role of self-interest. In recent years, however, some scholars of Smith's work have argued that no contradiction exists. They contend that in The Theory of Moral Sentiments , Smith develops a theory of psychology in which individuals seek

495-432: A government is duty-bound to provide public services that "support the whole of society" like provide public education, transportation, national defense, a justice system, public safety, and public infrastructure to support commerce. Shortly before his death, Smith had nearly all his manuscripts destroyed. In his last years, he seemed to have been planning two major treatises, one on the theory and history of law and one on

594-441: A greater or smaller proportion to the number of those who are to consume it ... .[B]ut this proportion must in every nation be regulated by two different circumstances; However, Smith added that the "abundance or scantiness of this supply too seems to depend more upon the former of those two circumstances than upon the latter." In The Wealth of Nations , Smith states four maxims of taxation: (1) equality (people must contribute to

693-434: A growth machine secures "The Wealth of Nations". Smith's argument predicted Britain's evolution as the workshop of the world, underselling and outproducing all its competitors. The opening sentences of the "Wealth of Nations" summarise this policy: The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes ... . [T]his produce ... bears

792-411: A large nose, bulging eyes, a protruding lower lip, a nervous twitch, and a speech impediment" and one whose "countenance was manly and agreeable". Smith is said to have acknowledged his looks at one point, saying, "I am a beau in nothing but my books." Smith rarely sat for portraits, so almost all depictions of him created during his lifetime were drawn from memory. The best-known portraits of Smith are

891-546: A limited explanation of long-run movements in society." He argued that while humans are "naturally conditioned by economic factors", human motives are only rarely determined by "material want-satisfaction"; rather, human motives were more social (e.g. desire for security and status) than material. The book was originally published in the United States in 1944 and then in England in 1945 as The Origins of Our Time . It

990-476: A manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for

1089-656: A member of the Philosophical Society of Edinburgh when it received its royal charter, he automatically became one of the founding members of the Royal Society of Edinburgh . From 1787 to 1789, he occupied the honorary position of Lord Rector of the University of Glasgow . Smith died in the northern wing of Panmure House in Edinburgh on 17 July 1790 after a painful illness. His body was buried in

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1188-542: A more sceptical approach to self-interest as driver of behaviour: How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. In relation to Mandeville 's contention that "Private Vices ... may be turned into Public Benefits", Smith's belief that when an individual pursues his self-interest under conditions of justice, he unintentionally promotes

1287-413: A nascent invention, as Polanyi claims, but that they extend further back in time. She also criticizes Polanyi's conceptualization of self-regulating markets whereby any and all government intervention in the markets means the markets are no longer markets. The Great Transformation has been criticized for underplaying power and class relations in its analysis. Polanyi argued, "class interests offer only

1386-560: A number of items necessary to the colonies. Smith discovered the Physiocracy school founded by François Quesnay and discussed with their intellectuals. Physiocrats were opposed to mercantilism , the dominating economic theory of the time, illustrated in their motto Laissez faire et laissez passer, le monde va de lui même! (Let do and let pass, the world goes on by itself!). The wealth of France had been virtually depleted by Louis XIV and Louis XV in ruinous wars, and

1485-478: A prediction of a socialist society, noting, "after a century of blind 'improvement', man is restoring his 'habitation.'" According to James Ashley Morrison, Polanyi offers a prominent argument in the field of political economy for Britain's decision to depart from the gold standard . Polanyi argues that Britain went off the gold standard due to both deteriorating international economic conditions and pressures from labor, which had grown stronger over time. In 1931,

1584-481: A predominant issue in the development and understanding of what would become classical economic theory. In 1766, Henry Scott's younger brother died in Paris, and Smith's tour as a tutor ended shortly thereafter. Smith returned home that year to Kirkcaldy, and he devoted much of the next decade to writing his magnum opus . There, he befriended Henry Moyes , a young blind man who showed precocious aptitude. Smith secured

1683-490: A proposed basic income system because Polanyi was heavily quoted in a report by Nixon's aide, Martin Anderson , then ultimately providing arguments for various reductions in the welfare state introduced by Ronald Reagan , Bill Clinton and George W. Bush . Economic historians (e.g. Douglass North) have criticized Polanyi's account of the origins of capitalism. Polanyi's account of reciprocity and redistributive systems

1782-531: A result of state intervention, Graeber argues the transition to credit-based markets from societies with separated " spheres of exchange " in gift giving was likely the accidental byproduct of state or temple bureaucracy (temple in the case of Sumer). Graeber also notes that the criminalization of debt supplemented the enclosure movements in the destruction of English communities, since credit between community members had originally reinforced communal ties prior to state intervention: The criminalization of debt, then,

1881-539: A self-defensive measure on the part of society that mitigated the disruption of the most violent period of economic change. Polanyi also remarks that the pre-modern economies of China, the Incan Empire, the Indian Empires, Babylon, Greece, and the various kingdoms of Africa operated on principles of reciprocity and redistribution with a very limited role for markets, especially in settling prices or allocating

1980-462: A self-regulating market economy. The expansion of capitalist institutions with an economically liberal mindset not only changed laws but also fundamentally altered humankind's economic relations; prior to this, markets played a very minor role in human affairs and were not even capable of setting prices because of their diminutive size. It was only after industrialization and the onset of greater state control over newly created market institutions that

2079-405: A tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day. As a reaction to the common policy of protecting national markets and merchants through minimizing imports and maximizing exports, what came to be known as mercantilism , Smith laid the foundations of classical free market economic theory. The Wealth of Nations was a precursor to

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2178-412: A variety of subjects. He was paid £ 300 per year (plus expenses) along with a £300 per year pension; roughly twice his former income as a teacher. Smith first travelled as a tutor to Toulouse , France, where he stayed for a year and a half. According to his own account, he found Toulouse to be somewhat boring, having written to Hume that he "had begun to write a book to pass away the time". After touring

2277-690: A whole are left, like the Substantivists, trying to explain how people are motivated to reproduce society; those who start by looking at individual desires, like the formalists, unable to explain why people chose to maximize some things and not others (or otherwise to account for questions of meaning)." While appreciative of Polanyi's attack on formalism , Graeber attempts to move beyond ethnography and towards understanding how individuals find meaning in their actions, synthesizing insights of Marcel Mauss , Karl Marx , and others. In parallel with Polanyi's account of markets being made internal to society as

2376-595: Is different from Wikidata All article disambiguation pages All disambiguation pages The Great Transformation (book) A distinguishing characteristic of the "Market Society" is that humanity's economic mentalities have been changed. Prior to this, people based their economies on reciprocity and redistribution across personal and communal relationships. As a consequence of industrialization and increasing state influence, competitive markets were created that undermined these previous social tendencies, replacing them with formal institutions that aimed to promote

2475-566: Is inherently changeless and thus cannot explain the emergence of the more specific form of modern capitalism in the 19th century. Deirdre McCloskey has criticized several aspects of the Great Transformation . She notes that Polanyi's account of "pre-market" societies are inconsistent with anthropological evidence which suggests these societies were not as equitable, socially stable, and successful as Polanyi makes them appear to be. McCloskey notes that market-based societies are not

2574-634: Is reported to have had books and papers placed in tall stacks in his study. According to one story, Smith took Charles Townshend on a tour of a tanning factory, and while discussing free trade , Smith walked into a huge tanning pit from which he needed help to escape. He is also said to have put bread and butter into a teapot, drunk the concoction, and declared it to be the worst cup of tea he had ever had. According to another account, Smith distractedly went out walking in his nightgown and ended up 15 miles (24 km) outside of town, before nearby church bells brought him back to reality. James Boswell , who

2673-455: Is what Smith had heard in France from, among others, François Quesnay , whose ideas Smith was so impressed by that he might have dedicated The Wealth of Nations to him had he not died beforehand. To this French insight that unproductive labour should be reduced to use labour more productively, Smith added his own proposal, that productive labour should be made even more productive by deepening

2772-550: The Burgh School of Kirkcaldy —characterised by Rae as "one of the best secondary schools of Scotland at that period" —from 1729 to 1737, he learned Latin , mathematics, history, and writing. Smith entered the University of Glasgow at age 14 and studied moral philosophy under Francis Hutcheson . Here he developed his passion for the philosophical concepts of reason , civilian liberties , and free speech . In 1740, he

2871-949: The Canongate Kirkyard . On his deathbed, Smith expressed disappointment that he had not achieved more. Smith's literary executors were two friends from the Scottish academic world: the physicist and chemist Joseph Black and the pioneering geologist James Hutton . Smith left behind many notes and some unpublished material, but gave instructions to destroy anything that was not fit for publication. He mentioned an early unpublished History of Astronomy as probably suitable, and it duly appeared in 1795, along with other material such as Essays on Philosophical Subjects . Smith's library went by his will to David Douglas, Lord Reston (son of his cousin Colonel Robert Douglas of Strathendry, Fife), who lived with Smith. It

2970-502: The Church of England . Smith began delivering public lectures in 1748 at the University of Edinburgh , sponsored by the Philosophical Society of Edinburgh under the patronage of Lord Kames . His lecture topics included rhetoric and belles-lettres , and later the subject of "the progress of opulence". On this latter topic, he first expounded his economic philosophy of "the obvious and simple system of natural liberty ". While Smith

3069-530: The Church of Scotland at Kirkcaldy was 5 June 1723 and this has often been treated as if it were also his date of birth, which is unknown. Although few events in Smith's early childhood are known, the Scottish journalist John Rae , Smith's biographer, recorded that Smith was abducted by Romani at the age of three and released when others went to rescue him. Smith was close to his mother, who probably encouraged him to pursue his scholarly ambitions. He attended

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3168-609: The Labour Party found itself faced with a dire dilemma: either reduce social services or let currency exchange rates collapse. Since it could not decide on one alternative or the other, there was a government crisis, and the "traditional parties" decided both to cut social services and to abolish the gold standard. Labor opposed the gold standard because maintaining it meant that the British government had to implement austerity. James Ashley Morrison found many later explanations for

3267-653: The Scottish Enlightenment . Seen by some as "The Father of Economics" or "The Father of Capitalism", he wrote two classic works, The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter, often abbreviated as The Wealth of Nations , is considered his magnum opus and the first modern work that treats economics as a comprehensive system and an academic discipline. Smith refuses to explain

3366-625: The Speenhamland system as reliant on several myths (increased poverty, increased population growth and increased unrest, as well as "'the pauperization of the masses,' who 'almost lost their human shape';" "basic income did not introduce a floor, he contended, but a ceiling") and the flawed Royal Commission into the Operation of the Poor Laws 1832 . Both Bregman and Corey Robin credited Polanyi's view with Richard Nixon moving away from

3465-556: The division of labour . Smith argued that deepening the division of labour under competition leads to greater productivity, which leads to lower prices and thus an increasing standard of living—"general plenty" and "universal opulence"—for all. Extended markets and increased production lead to the continuous reorganisation of production and the invention of new ways of producing, which in turn lead to further increased production, lower prices, and improved standards of living. Smith's central message is, therefore, that under dynamic competition,

3564-509: The " Great Architect of the Universe ", later scholars such as Jacob Viner have "very much exaggerated the extent to which Adam Smith was committed to a belief in a personal God", a belief for which Coase finds little evidence in passages such as the one in the Wealth of Nations in which Smith writes that the curiosity of mankind about the "great phenomena of nature", such as "the generation,

3663-567: The 1940s, no one knew how to prove, even to state properly, the kernel of truth in this proposition about perfectly competitive market." Conversely, classical economists see in Smith's first sentences his programme to promote "The Wealth of Nations". Using the physiocratical concept of the economy as a circular process, to secure growth the inputs of Period 2 must exceed the inputs of Period 1. Therefore, those outputs of Period 1 which are not used or usable as inputs of Period 2 are regarded as unproductive labour, as they do not contribute to growth. This

3762-502: The 20th century. Polanyi argued that the development of the modern state went hand in hand with the development of modern market economies and that these two changes were inextricably linked in history. Essential to the change from a premodern economy to a market economy was the altering of human economic mentalities away from their grounding in local social relationships and institutions, and into transactions idealized as "rational" and set apart from their previous social context. Prior to

3861-484: The 20th-century concept of empathy , the capacity to recognise feelings that are being experienced by another being. Following the publication of The Theory of Moral Sentiments , Smith became so popular that many wealthy students left their schools in other countries to enroll at Glasgow to learn under Smith. At this time, Smith began to give more attention to jurisprudence and economics in his lectures and less to his theories of morals. For example, Smith lectured that

3960-463: The Market Society, markets had a very limited role in society and were confined almost entirely to long-distance trade. As Polanyi wrote, "the same bias which made Adam Smith 's generation view primeval man as bent on barter and truck induced their successors to disavow all interest in early man, as he was now known not to have indulged in those laudable passions." The modern market economy

4059-704: The Soviet Union Great Plan for the Transformation of Nature , a later Stalinist policy Topics referred to by the same term [REDACTED] This disambiguation page lists articles associated with the title The Great Transformation . If an internal link led you here, you may wish to change the link to point directly to the intended article. Retrieved from " https://en.wikipedia.org/w/index.php?title=The_Great_Transformation&oldid=892174616 " Category : Disambiguation pages Hidden categories: Short description

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4158-523: The absence of such special political favours, he believed that business activities were generally beneficial to the whole society: It is the great multiplication of the production of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in

4257-456: The approval of the "impartial spectator" as a result of a natural desire to have outside observers sympathise with their sentiments. Rather than viewing The Theory of Moral Sentiments and The Wealth of Nations as presenting incompatible views of human nature, some Smith scholars regard the works as emphasising different aspects of human nature that vary depending on the situation. In the first part – The Theory of Moral Sentiments – he laid down

4356-597: The austerity necessary to defend gold. Based on Bronislaw Malinowski 's ethnological work on the Kula ring exchange in the Trobriand Islands , Polanyi makes the distinction between markets as an auxiliary tool for ease of exchange of goods and market societies. Market societies are those where markets are the paramount institution for the exchange of goods through price mechanisms. Polanyi argues that there are three general types of economic systems that existed before

4455-453: The book until his death. Although The Wealth of Nations is widely regarded as Smith's most influential work, Smith himself is believed to have considered The Theory of Moral Sentiments to be a superior work. In the work, Smith critically examines the moral thinking of his time, and suggests that conscience arises from dynamic and interactive social relationships through which people seek "mutual sympathy of sentiments." His goal in writing

4554-592: The cause of increase in national wealth is labour, rather than the nation's quantity of gold or silver, which is the basis for mercantilism , the economic theory that dominated Western European economic policies at the time. In 1762, the University of Glasgow conferred on Smith the title of Doctor of Laws (LL.D.). At the end of 1763, he obtained an offer from British chancellor of the Exchequer Charles Townshend —who had been introduced to Smith by David Hume—to tutor his stepson, Henry Scott ,

4653-411: The central message of Smith's most influential work: An Inquiry into the Nature and Causes of the Wealth of Nations (1776). Neoclassical economists emphasise Smith's invisible hand , a concept mentioned in the middle of his work – Book IV, Chapter II – and classical economists believe that Smith stated his programme for promoting the "wealth of nations" in the first sentences, which attributes

4752-507: The collapse of the gold standard very much resemble the Polanyian argument, which he summarized as follows: Developments in the global economy, particularly after World War I, made maintaining the gold standard increasingly painful. Diminished international cooperation combined with Britain’s relative economic decline to exacerbate its difficulties. At the same time, a newly empowered working class harnessed evolving “social purpose” to resist

4851-423: The construction of a "self-regulating" market necessitates the separation of society into economic and political realms. Polanyi does not deny that the self-regulating market has brought "unheard of material wealth", but he suggests that this is too narrow a focus. The market, once it considers land, labor and money as fictitious commodities , and including them "means to subordinate the substance of society itself to

4950-471: The creation and development of large-scale human social orders, including morality, economics, as well as language. Ekelund and Hebert offer a differing view, observing that self-interest is present in both works and that "in the former, sympathy is the moral faculty that holds self-interest in check, whereas in the latter, competition is the economic faculty that restrains self-interest." Disagreement exists between classical and neoclassical economists about

5049-402: The distribution of wealth and power in terms of God's will and instead appeals to natural, political, social, economic, legal, environmental and technological factors and the interactions among them. Among other economic theories, the work introduced Smith's idea of absolute advantage . Smith studied social philosophy at the University of Glasgow and at Balliol College, Oxford , where he

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5148-495: The economy. For this reason, The Great Transformation is a key work in the fields of political economy and international political economy . Polanyi began writing The Great Transformation in England in the late 1930s. He completed the book in the United States during World War II. He set out to explain the economic and social collapse of the 19th century, as well as the transformations that Polanyi had witnessed during

5247-559: The fact that he received the Snell Exhibition suggests that he may have gone to Oxford with the intention of pursuing a career in the Church of England. Anglo-American economist Ronald Coase challenged the view that Smith was a deist , based on the fact that Smith's writings never explicitly invoke God as an explanation of the harmonies of the natural or the human worlds. According to Coase, though Smith does sometimes refer to

5346-468: The factors of production. The book also presented his belief that market society is unsustainable because it is fatally destructive to human nature and the natural contexts it inhabits. Polanyi attempted to turn the tables on the orthodox liberal account of the rise of capitalism by arguing that "laissez-faire was planned", whereas social protectionism was a spontaneous reaction to the social dislocation imposed by an unrestrained free market . He argues that

5445-424: The foundation of his vision of humanity and society. In the second – The Wealth of Nations – he elaborated on the virtue of prudence, which for him meant the relations between people in the private sphere of the economy. It was his plan to further elaborate on the virtue of justice in the third book. Otteson argues that both books are Newtonian in their methodology and deploy a similar "market model" for explaining

5544-516: The gods". Some authors argue that Smith's social and economic philosophy is inherently theological and that his entire model of social order is logically dependent on the notion of God's action in nature. Brendan Long argues that Smith was a theist , whereas according to professor Gavin Kennedy, Smith was "in some sense" a Christian. Smith was also a close friend of David Hume , who, despite debate about his religious views in modern scholarship ,

5643-485: The good of society. Self-interested competition in the free market, he argued, would tend to benefit society as a whole by keeping prices low, while still building in an incentive for a wide variety of goods and services. Nevertheless, he was wary of businessmen and warned of their "conspiracy against the public or in some other contrivance to raise prices." Again and again, Smith warned of the collusive nature of business interests, which may form cabals or monopolies , fixing

5742-665: The growth of wealth and prosperity to the division of labour. He elaborated on the virtue of prudence, which for him meant the relations between people in the private sphere of the economy. He planned to further elaborate on the virtue of justice in the third book. Smith used the term "the invisible hand" in "History of Astronomy" referring to "the invisible hand of Jupiter", and once in each of his The Theory of Moral Sentiments (1759) and The Wealth of Nations (1776). This last statement about "an invisible hand" has been interpreted in numerous ways. As every individual, therefore, endeavours as much as he can both to employ his capital in

5841-444: The highest price "which can be squeezed out of the buyers." Smith also warned that a business-dominated political system would allow a conspiracy of businesses and industry against consumers, with the former scheming to influence politics and legislation. Smith states that the interest of manufacturers and merchants "in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of

5940-507: The laws of the market." This, he argues, results in massive social dislocation, and spontaneous moves by society to protect itself. In effect, Polanyi argues that once the free market attempts to separate itself from the fabric of society, social protectionism is society's natural response, which he calls the " double movement ." Polanyi did not see economics as a subject closed off from other fields of enquiry, indeed he saw economic and social problems as inherently linked. He ended his work with

6039-402: The life, growth, and dissolution of plants and animals", has led men to "enquire into their causes", and that "superstition first attempted to satisfy this curiosity, by referring all those wonderful appearances to the immediate agency of the gods. Philosophy afterwards endeavoured to account for them, from more familiar causes, or from such as mankind were better acquainted with than the agency of

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6138-427: The low quality of instruction and the meager intellectual activity at English universities , when compared to their Scottish counterparts. He attributes this both to the rich endowments of the colleges at Oxford and Cambridge , which made the income of professors independent of their ability to attract students, and to the fact that distinguished men of letters could make an even more comfortable living as ministers of

6237-401: The market at market-determined prices instead of allocated according to tradition, redistribution, or reciprocity. This was both a change of human institutions and human nature. His empirical case in large part relied upon analysis of the Speenhamland laws, which he saw not only as the last attempt of the squirearchy to preserve the traditional system of production and social order but also

6336-543: The modern academic discipline of economics. In this and other works, he developed the concept of division of labour and expounded upon how rational self-interest and competition can lead to economic prosperity. Smith was controversial in his day and his general approach and writing style were often satirised by writers such as Horace Walpole . Smith was born in Kirkcaldy , in Fife , Scotland. His father, Adam Smith senior,

6435-667: The myth of human nature's propensity toward rational free trade became widespread. However, Polanyi asserts instead that "man's economy, as a rule, is submerged in his social relationships," and he therefore proposes an alternative ethnographic economic approach called " substantivism ", in opposition to "formalism", both terms coined by Polanyi in future work. On a broader theoretical level, The Great Transformation argues that markets cannot solely be understood through economic theory. Rather, markets are embedded in social and political logics, which makes it necessary for economic analysts to take into account politics when trying to understand

6534-487: The opportunity while at Oxford to teach himself several subjects by reading many books from the shelves of the large Bodleian Library . When Smith was not studying on his own, his time at Oxford was not a happy one, according to his letters. Near the end of his time there, he began suffering from shaking fits, probably the symptoms of a nervous breakdown. He left Oxford University in 1746, before his scholarship ended. In Book V of The Wealth of Nations , Smith comments on

6633-468: The past forty years." They suggest that "the ideology that free markets can replace government is just as utopian and dangerous" as the idea that Communism will result in the withering away of the state. In Toward an Anthropological Theory of Value : The False Coin of Our Own Dreams , anthropologist David Graeber offers compliments to Polanyi's text and theories. Graeber attacks formalists and substantivists alike: "those who start by looking at society as

6732-714: The patronage of David Hume and Thomas Reid in the young man's education. In May 1767, Smith was elected fellow of the Royal Society of London , and was elected a member of the Literary Club in 1775. The Wealth of Nations was published in 1776 and was an instant success, selling out its first edition in only six months. In 1778, Smith was appointed to a post as commissioner of customs in Scotland and went to live with his mother (who died in 1784) in Panmure House in Edinburgh's Canongate . Five years later, as

6831-480: The poor. Charles Kindleberger praised the book, saying it "is a useful corrective to the economic interpretation of the world, and should be read more and more by economists, particularly those of the Chicago school." He did however argue that not everything in the book should be taken as accurate. Polanyi's argument is often cited as the "Polanyian moment", "Polanyi Moment" or "Polanyi's moment", which indicates

6930-430: The possibility of seeing it as a precursor of neoclassical economics and its concept of general equilibrium ; Samuelson 's "Economics" refers six times to Smith's "invisible hand". To emphasise this connection, Samuelson quotes Smith's "invisible hand" statement substituting "general interest" for "public interest". Samuelson concludes: "Smith was unable to prove the essence of his invisible-hand doctrine. Indeed, until

7029-422: The pretence of teaching." Smith is also reported to have complained to friends that Oxford officials once discovered him reading a copy of David Hume's A Treatise of Human Nature , and they subsequently confiscated his book and punished him severely for reading it. According to William Robert Scott, "The Oxford of [Smith's] time gave little if any help towards what was to be his lifework." Nevertheless, he took

7128-477: The profile by James Tassie and two etchings by John Kay . The line engravings produced for the covers of 19th-century reprints of The Wealth of Nations were based largely on Tassie's medallion. Considerable scholarly debate has occurred about the nature of Smith's religious views. His father had shown a strong interest in Christianity and belonged to the moderate wing of the Church of Scotland , and

7227-433: The public ... The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never be adopted till after having been long and carefully examined, not only with the most scrupulous but with the most suspicious attention." Thus Smith's chief worry seems to be when business is given special protections or privileges from government; by contrast, in

7326-581: The public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it. Those who regard that statement as Smith's central message also quote frequently Smith's dictum: It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. However, in The Theory of Moral Sentiments he had

7425-706: The remaining books were sold. On the death of Mrs. Bannerman in 1879, her portion of the library went intact to the New College (of the Free Church) in Edinburgh and the collection was transferred to the University of Edinburgh Main Library in 1972. Not much is known about Smith's personal views beyond what can be deduced from his published articles. His personal papers were destroyed after his death, per his request. He never married, and seems to have maintained

7524-447: The rise of a market society: reciprocity, redistribution, and householding: These three forms were not mutually exclusive, nor were they mutually exclusive of markets for the exchange of goods. The main distinction is that these three forms of economic organization were based around the social aspects of the society they operated in and were explicitly tied to those social relationships. Polanyi argued that these economic forms depended on

7623-510: The same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of society. ( The Wealth of Nations, I.i.10) The neoclassical interest in Smith's statement about "an invisible hand" originates in

7722-407: The sciences and arts. The posthumously published Essays on Philosophical Subjects , a history of astronomy down to Smith's own era, plus some thoughts on ancient physics and metaphysics , probably contain parts of what would have been the latter treatise. Lectures on Jurisprudence were notes taken from Smith's early lectures, plus an early draft of The Wealth of Nations , published as part of

7821-403: The social principles of symmetry, centricity, and autarchy (self-sufficiency). Markets existed as an auxiliary avenue for the exchange of goods that were otherwise not obtainable. The book has influenced scholars such as Marshall Sahlins , Immanuel Wallerstein , James C. Scott , E.P. Thompson , and Douglass North . John Ruggie , who called the Great Transformation a "magisterial work",

7920-638: The south of France, the group moved to Geneva , where Smith met with the philosopher Voltaire . From Geneva, the party moved to Paris. Here, Smith met American publisher and diplomat Benjamin Franklin , who a few years later would lead the opposition in the American colonies against four British resolutions from Charles Townshend (in history known as the Townshend Acts ), which threatened American colonial self-government and imposed revenue duties on

8019-461: The support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such

8118-449: The support of the government in proportion to their abilities), (2) certainty (the time, manner, and quantity of tax imposed must be certain, transparent, and not arbitrary), (3) convenience for taxpayers, and (4) economy in tax collection. According to Smith, "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more in that proportion". Smith wrote that

8217-659: The time when social protectionism starts to surpass marketization and thus reversing the direction of the double movement . This term has been used to describe the situation after the Great Recession in 2008 the COVID-19 pandemic . Gemici compared the Polanyi Moment to the Minsky moment , the moment of a sudden collapse in the market. Rutger Bregman , writing for Jacobin , criticized Polanyi's account of

8316-658: The work was to explain the source of mankind's ability to form moral judgment, given that people begin life with no moral sentiments at all. Smith proposes a theory of sympathy, in which the act of observing others and seeing the judgments they form of both others and oneself makes people aware of themselves and how others perceive their behaviour. The feedback received by an individual from perceiving (or imagining) others' judgment creates an incentive to achieve "mutual sympathy of sentiments" with them and leads people to develop habits, and then principles, of behaviour, which come to constitute one's conscience. Some scholars have perceived

8415-414: The young Duke of Buccleuch as preparation for a career in international politics. Smith resigned from his professorship in 1764 to take the tutoring position. He subsequently attempted to return the fees he had collected from his students because he had resigned partway through the term, but his students refused. Smith's tutoring job entailed touring Europe with Scott, during which time he educated Scott on

8514-587: Was a Scottish Writer to the Signet (senior solicitor ), advocate and prosecutor (judge advocate) and also served as comptroller of the customs in Kirkcaldy. Smith's mother was born Margaret Douglas, daughter of the landed Robert Douglas of Strathendry, also in Fife; she married Smith's father in 1720. Two months before Smith was born, his father died, leaving his mother a widow. The date of Smith's baptism into

8613-432: Was a student of Smith's at Glasgow University, and later knew him at the Literary Club , says that Smith thought that speaking about his ideas in conversation might reduce the sale of his books, so his conversation was unimpressive. According to Boswell, he once told Sir Joshua Reynolds , that "he made it a rule when in company never to talk of what he understood". Smith has been alternatively described as someone who "had

8712-458: Was commonly characterised in his own time as an atheist . The publication in 1777 of Smith's letter to William Strahan , in which he described Hume's courage in the face of death in spite of his irreligiosity, attracted considerable controversy. In 1759, Smith published his first work, The Theory of Moral Sentiments, sold by co-publishers Andrew Millar of London and Alexander Kincaid of Edinburgh. Smith continued making extensive revisions to

8811-486: Was concerned with how human morality depends on sympathy between agent and spectator, or the individual and other members of society. Smith defined "mutual sympathy" as the basis of moral sentiments . He based his explanation, not on a special "moral sense" as the Third Lord Shaftesbury and Hutcheson had done, nor on utility as Hume did, but on mutual sympathy, a term best captured in modern parlance by

8910-556: Was elected a member of the Philosophical Society of Edinburgh, having been introduced to the society by Lord Kames. When the head of Moral Philosophy in Glasgow died the next year, Smith took over the position. He worked as an academic for the next 13 years, which he characterised as "by far the most useful and therefore by far the happiest and most honorable period [of his life]". Smith published The Theory of Moral Sentiments in 1759, embodying some of his Glasgow lectures. This work

9009-497: Was eventually divided between his two surviving children, Cecilia Margaret (Mrs. Cunningham) and David Anne (Mrs. Bannerman). On the death in 1878 of her husband, the Reverend W. B. Cunningham of Prestonpans, Mrs. Cunningham sold some of the books. The remainder passed to her son, Professor Robert Oliver Cunningham of Queen's College, Belfast, who presented a part to the library of Queen's College. After his death,

9108-447: Was forced by the powerful modern state, which was needed to push changes in social structure, and in what aspects of human nature were amplified and encouraged, which allowed for a competitive capitalist economy to emerge. For Polanyi, these changes implied the destruction of the basic social order that had reigned throughout pre-modern history. Central to the change was that factors of production, such as land and labor, would now be sold on

9207-630: Was further exhausted in aiding the American revolutionary soldiers , against the British. Given that the British economy of the day yielded an income distribution that stood in contrast to that which existed in France, Smith concluded that "with all its imperfections, [the Physiocratic school] is perhaps the nearest approximation to the truth that has yet been published upon the subject of political economy." The distinction between productive versus unproductive labour—the physiocratic classe steril —was

9306-501: Was influenced by the work in coining the term Embedded liberalism for the Bretton Woods system of the post-World War II period. The sociologists Fred L. Block and Margaret Somers argue that Polanyi's analysis could help explain why the resurgence of free market ideas has resulted in "such manifest failures as persistent unemployment, widening inequality, and the severe financial crises that have stressed Western economies over

9405-547: Was not adept at public speaking , his lectures met with success. In 1750, Smith met the philosopher David Hume, who was his senior by more than a decade. In their writings covering history, politics, philosophy, economics, and religion, Smith and Hume shared closer intellectual and personal bonds than with other important figures of the Scottish Enlightenment. In 1751, Smith earned a professorship at Glasgow University teaching logic courses, and in 1752, he

9504-451: Was one of the first students to benefit from scholarships set up by fellow Scot John Snell . After graduating, he delivered a successful series of public lectures at the University of Edinburgh , leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow, teaching moral philosophy and during this time, wrote and published The Theory of Moral Sentiments . In his later life, he took

9603-456: Was reissued by Beacon Press as a paperback in 1957 and as a 2nd edition with a foreword by Nobel Prize-winning economist Joseph Stiglitz in 2001. Adam Smith This is an accepted version of this page Adam Smith FRS FRSE FRSA (baptised 16 June [ O.S. 5 June] 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during

9702-487: Was the criminalization of the very basis of human society. It cannot be overemphasized that in a small community, everyone normally was both lender and borrower. One can only imagine the tensions and temptations that must have existed in a community—and communities, much though they are based on love, in fact, because they are based on love, will always also be full of hatred, rivalry and passion—when it became clear that with sufficiently clever scheming, manipulation, and perhaps

9801-502: Was the graduate scholar presented to undertake postgraduate studies at Balliol College, Oxford , under the Snell Exhibition . Smith considered the teaching at Glasgow to be far superior to that at Oxford, which he found intellectually stifling. In Book V, Chapter II of The Wealth of Nations , he wrote: "In the University of Oxford, the greater part of the public professors have, for these many years, given up altogether even

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