Adam Smith Quotes

Quotes from Adam Smith - Adam Smith Institute http://www.adamsmith.org/smith/quotes.htm

1 of 10 12-07-2006 15:07

Go

The Wisdom of Adam Smith (1723-1790)

Click item to fast-forward through the page.Adam Smith on:

Human nature and economic growthThe invisible handThe division of labourThe profusion of governmentPlanning, regulation and subsidiesTaxationPrivatizationMonopoly and competitionDemand and valueThe distribution of wealthBanking and capital accumulationFree trade and the burden of AmericaDavid Hume

Purchase Adam Smith booksThe books from which these quotes were taken, together with Adam Smith's other works, can be purchased via the bibliography page. Intellectual biographies and books about Adam Smith are also available.

Click here for the Adam Smith bibliography.

Click here to search Amazon.co.uk for Adam Smith books.

Click here to visit the Amazon.co.uk site.

Human nature economic growth:

The uniform, constant and uninterrupted effort of every man to better his condition, the principle from whichpublic and national, as well as private opulence is originally derived, is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration. Like the unknown principle of animal life, it frequently restores health and vigour to the constitution, in spite, not only of the disease, but of the absurd prescriptions of the doctor.

The Wealth of Nations, Book II Chapter III

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace,easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.

Lecture in 1755, quoted by Dugald Stewart

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attendedto, only so far as it may be necessary for promoting that of the consumer.

Search the site!

ASI Introduction News & Events Our Work Students Publications Get home


2 of 10 12-07-2006 15:07

The Wealth of Nations, Book IV Chapter VIII

Man was made for action, and to promote by the exertion of his faculties such changes in the externalcircumstances both of himself and others, as may seem most favourable to the happiness of all.

The Theory of Moral Sentiments, Part II Section III Chapter 3

Such is the delicacy of man alone, that no object is produced to his liking. He finds that in everything there isneed for improvement.... The whole industry of human life is employed not in procuring the supply of our three humble necessities, food, clothes and lodging, but in procuring the conveniences of it according to the nicety and delicacy of our tastes.

Lectures on Justice, Policy, Revenue and Arms

Back to top

The invisible hand:

Every individual...generally, indeed, neither intends to promote the public interest, nor knows how much he ispromoting 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 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.

The Wealth of Nations, Book IV Chapter II

The rich ... divide with the poor the produce of all their improvements. They are led by an invisible hand to makenearly the same distribution of the necessaries of life which would have been made, had the earth been divided into equal proportions among all its inhabitants.

The Theory of Moral Sentiments, Part IV Chapter 1

Man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from theirbenevolence only.

The Wealth of Nations, Book I Chapter 1

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from theirregard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.

The Wealth of Nations, Book I Chapter II

No benevolent man ever lost altogether the fruits of his benevolence.

The Theory of Moral Sentiments, Part VI Section II Chapter I

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest himin the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.


3 of 10 12-07-2006 15:07

The Theory of Moral Sentiments, Part I Section I Chapter I

Back to top

The division of labour:

The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity andjudgement with which it is any where directed, or applied, seem to have been the effects of the division of labour.

The Wealth of Nations, Book I, Chapter I

The difference between the most dissimilar characters, between a philosopher and a common street porter, forexample, seems to arise not so much from nature, as from habit, custom, and educa-tion.

The Wealth of Nations, Book I, Chapter II

As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division mustalways be limited by the extent of that power, or, in other words, by the extent of the market.

The Wealth of Nations, Book I, Chapter III

A gardener who cultivates his own garden with his own hands, united in his own person the three differentcharacters, of landlord, farmer, and labourer. His produce, therefore, should pay him the rent of the first, the profit of the second, and the wages of the third.

The Wealth of Nations, Book I, Chapter VI

The whole annual produce of the land and labour of every country...naturally divides itself into three parts; therent of the land, the wages of labour, and the profits of stock.

The Wealth of Nations, Book I, Chapter XI

Back to top

The profusion of government:

In the midst of all the exactions of government, capital has been silently and gradually accumulated by theprivate frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition. It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress of England towards opulence and improvement in almost all former times...

It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense... They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.

The Wealth of Nations, Book II, Chapter III


4 of 10 12-07-2006 15:07

Great nations are never impoverished by private, though they sometimes are by public prodigality andmisconduct. The whole, or almost the whole public revenue, is in most countries employed in maintaining unproductive hands... Such people, as they them-selves produce nothing, are all maintained by the produce of other men's labour... Those unproductive hands, who should be maintained by a part only of the spare revenue of the people, may consume so great a share of their whole revenue, and thereby oblige so great a number to encroach upon their capitals, upon the funds destined for the maintenance of productive labour, that all the frugality and good conduct of individuals may not be able to compensate the waste and degradation of produce occasioned by this violent and forced encroachment.


The statesman who should attempt to direct private people in what manner they ought to employ their capitals,would not only load himself with a most unnecessary attention, but assume an author-ity which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a many who had folly and presump-tion enough to fancy himself fit to exercise it.

The Wealth of Nations, Book IV, Chapter II

According to the system of natural liberty, the sovereign has only three duties to attend to ... first, the duty ofprotecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, so far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice, and thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain...

The Wealth of Nations, Book IV, Chapter IX

Though the profusion of government must, undoubtedly, have retarded the natural progress of England towardswealth and improvement, it has not be able to stop it.

The Wealth of Nations, Book II Chapter III

If a nation could not prosper without the enjoyment of perfect liberty and perfect justice, there is not in the world anation which could ever have prospered.


The man of system, on the contrary, is apt to be very wise in his own conceit, and is often so enamoured with thesupposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests or the strong prejudices which may oppose it: he seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board; he does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If thosetwo principles coincide and act in the same direction, the game of human society will go on earily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

Some general, and even systematical, idea of the perfection of policy and law, many no doubt be necessary for directing the views of the statesman. But to insist upon establishing, and upon establishing all at once, and in spite of all opposition, everything which that idea may seem to require, must often be the highest degree of arrogance. It is to erect his own judgment into the supreme standard of right and wrong. It is to fancy himself the only wise and worthy man in the commonwealth, and that his fellow-citizens should accommodate themselves to him, and not he to them. It is upon this account that of all political speculators sovereign princes are by far the


5 of 10 12-07-2006 15:07

most dangerous.

The Theory of Moral Sentiments, Part VI, Section II, Chapter 2

Back to top

Planning, regulation, and subsidies:

[The man of system] seems to imagine that he can arrange the different members of a great society with asmuch ease as the hand arranges the different pieces upon a chess-board; he does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single pieces has a principle of motion of its own, altogether different from that which the legislator might choose to impress upon it.

The Theory of Moral Sentiments, Part VI, Section II, Chapter 2

The natural effort of every individual to better his own condition ... is so powerful, that it is alone, and without anyassistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.

The Wealth of Nations Book IV Chapter V Section IV

To judge whether a workman is fit to be employed, may surely be trusted to the discretion of the employerswhose interest it so much concerns. The affected anxiety of the law-giver lest they should employ and improper person, is evidently as impertinent as it is oppressive.

The Wealth of Nations, Book I Chapter X

The real and effectual discipline which is exercised over a workman is ... that of his customers. It is the fear oflosing their employment which restrains his frauds and corrects his negligence.

The Wealth of Nations, Book I Chapter X

The bounty to the white-herring fishery is a tonnage bounty; and is proportioned to the burden of the ship, not toher diligence or success in the fishery; and it has, I am afraid, been too common for vessels to fit out for the sole purpose of catching, not the fish, but the bounty.

The Wealth of Nations, Book IV, Chapter V

Back to top

Taxation:

The Wealth of Nations, Book V Chapter II Part II Appendix to Articles I and II

I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible,in proportion to their respective abilities...

II. The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other


6 of 10 12-07-2006 15:07

person...

III. Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay...

IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the treasury of the state.

First, the levying of it may require a great number of officers... Secondly, it may obstruct the industry of the people, and discourage them from...business... Thirdly, by the forfeitures and other penalties which those unfortunate individ-uals incur who attempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have received from the employment of their capitals... Fourthly, by subjecting the people to the frequent visits and the odious examination of the tax-gatherers, it may expose them to much unnecessary trouble...

The Wealth of Nations, Book V Chapter II Pt II

Back to top

Privatization:

In every great monarchy of Europe the sale of the crown lands would produce a very large sum of money, which,if applied to the payment of the public debts, would deliver from mortgage a much greater revenue than any which those lands have ever afforded to the crown...When the crown lands had become private property, they would, in the course of a few years, become well-improved and well-cultivated...the revenue which the crown derives from the duties of customs and excise, would necessarily increase with the revenue and consumption of the people.

The Wealth of Nations, I Book V Chapter II Part II

Public services are never better performed than when their reward comes in consequence of their beingperformed, and is proportioned to the diligence employed in performing them.

The Wealth of Nations,

Princes, however, have frequently engaged in many other mercantile projects, and have been willing, like privatepersons, to mend their fortunes by becoming adventurers in the common branches of trade. They have scarce ever succeeded. The profusion with which the affairs of princes are always managed, renders it almost impossible that they should. The agents of a prince regard the wealth of their master as inexhaustible; are careless at what price they buy; are careless at what price they sell; are careless at what expense they transport his goods from one place to another... No two characters seem more inconsistent than those of trader and sovereign.

The Wealth of Nations, Book V, Chapter II, Part I

The great object of the political economy of every country, is to increase the riches and power of that country.

The Wealth of Nations, Book II, Chapter V

As soon as the land of any country has all become private property, the landlords, like all other men, love to reapwhere they never sowed, and demand a rent even for its natural produce.

The Wealth of Nations, Book I Chapter VI


7 of 10 12-07-2006 15:07

Back to top

Monopoly and competition

Monopoly...is a great enemy to good management.

The Wealth of Nations, Book I Chapter XI Part I

The monopolists, by keeping the market constantly understocked, by never fully supplying the effectual demand,sell their commo-dities much above the natural price.

The Wealth of Nations, Book I, Chapter VII

The price of monopoly is upon every occasion the highest which can be got.


People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends ina conspiracy against the public, or in some contrivance to raise prices. It is im-possible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and jus-tice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a public register, facilitates such assemblies...

A regulation which enables those of the same trade to tax themselves in order to provide for their poor, their sick, their widows, and orphans, by giving them a common interest to manage, renders such assemblies necessary.

An incorporation not only renders them necessary, but makes the act of the majority binding upon the whole.

The Wealth of Nations, Book I, Chapter X

To widen the market and to narrow the competition is always the interest of the dealers ... The proposal of anynew law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted, till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.

The Wealth of Nations, Book I Chapter XI

The natural price, or the price of free competition ... is the lowest which can be taken, not upon every occasionindeed, but for any considerable time together...[It] is the lowest which the sellers can commonly afford to take, and at the same time continue their business.


In a free trade an effectual combination cannot be established by the unanimous consent of every single trader,and it cannot last longer than every single trader continues of the same mind.

The Wealth of Nations,, Book I, Chapter X


8 of 10 12-07-2006 15:07

In every profession, the exertion of the greater part of those who exercise it, is always in proportion to thenecessity they are under of making that exertion... and, where competition is free, the rivalship of competitors, who are all endeavouring to justle one another out of employment, obliges every man to endeavour to execute his work with a certain degree of exactness... Rivalship and emulation render excellency, even in mean profes-sions, an object of ambition, and frequently occasion the very greatest exertions.

The Wealth of Nations, Book V, Chapter I, Park III, Article III

Back to top

Demand and value:

A very poor man may be said in some sense to have a demand for a coach and six; he might live to have it; buthis demand is not an effectual demand, and the commodity can never be brought to market in order to satisfy it.


The desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of theconveniences and ornaments of building, dress, equipage and household furniture, seems to have no limit or certain boundary.

The Wealth of Nations, Book I, Chapter XI, Part II

By necessaries I understand, not only the commodities which are indispensably necessary for the support of life,but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without.

The Wealth of Nations, Book V, Chapter II, Part II

[Value] is adjusted...not by any accurate measure, but by the higgling and bargaining of the market, according tothat sort of rough equality which, though not exact, is sufficient for carrying on the business of common life.

The Wealth of Nations,, Book I, Chapter V

Back to top

The distribution of wealth:

What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole.No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.

The Wealth of Nations, Book I Chapter VIII

No complaint ... is more common than that of a scarcity of money.

The Wealth of Nations, Book IV, Chapter I

Back to top


9 of 10 12-07-2006 15:07

Banking and capital accumulation:

The judicious operations of banking, by substituting paper in the room of a great part of this gold and silver,enables the country to convert a great part of this dead stock into active and productive stock.

The Wealth of Nations, Book II, Chapter II

In exchanging the complete manufacture ... something must be given for the profits of the undertaker whohazards his stock in this adventure.

The Wealth of Nations, Book I, Chapter VI

Capitals are increased by parsimony, and diminished by prodigality and misconduct.


Parsimony, and not industry, is the immediate cause of the increase of capital. Industry, indeed, provides thesubject which parsimony accumulates. But whatever industry might acquire, if parsimony did not save and store up, the capital would never be the greater.


The proprietor of stock is necessarily a citizen of the world, and is not necessarily attached to any particularcountry. He would be apt to abandon the country in which he was exposed to a vexatious inquisition, in order to be assessed to a burdensome tax, and would remove his stock to some other country where he could either carry on his business, or enjoy his fortune more at his ease. By removing his stock he would put an end to all the industry which it had maintained in the country which he left. Stock cultivates land; stock employs labour. A tax which tended to drive away stock from any particular country, would so far tend to dry up every source of revenue, both to the sovereign and to the society. Not only the profits of stock, but the rent of land and the wages of labour, would necessarily be more or less diminished by its removal.

The Wealth of Nations, Book V, Chapter II

Back to top

Free trade and the burden of America:

By means of glasses, hotbeds, and hotwalls, very good grapes can be raised in Scotland, and very good winetoo can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?

The Wealth of Nations, Book IV, Chapter II

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him moreto make than to buy...What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.



10 of 10 12-07-2006 15:07

To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as toexpect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the public, but what is much more unconquerable, the private interest of many individuals, irresistibly oppose it.


The property which every man has in his own labour; as it is the original foundation of all other property, so it isthe most sacred and inviolable… To hinder him from employing this strength and dexterity in what manner hethinks proper without injury to his neighbour is a plain violation of this most sacred property.

The Wealth of Nations, Book I, Chapter X, Part II

All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious andsimple system of natural liberty establishes itself of its own accord. Every man...is left perfectly free to pursue his own interest in his own way.... The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society.


A great empire has been established for the sole purpose of raising up a nation of customers who should beobliged to buy from the shops or our different producers all the goods which these could supply them. For the sake of that little enhancement of price which this monopoly might afford our producers, the home-consumers have been burdened with the whole expense of maintaining and defending that empire. For this purpose, and for this purpose only, in the last two wars, more than a hundred and seventy millions has been contracted over and above all that had been expended for the same purpose in former wards. The interest of this debt alone is not only grater than the whole extraordinary profit, which, if it ever could be pretended, was made by the monopoly of the colony trade, but than the whole value of that trade, or than the whole value of the goods, which at an average have been annually exported to the colonies.

The Wealth of Nations, Book IV, Chapter VIII

Back to top

David Hume:

Thus died our most excellent, and never to be forgotten friend; concerning whose philosophical opinions menwill, no doubt, judge variously...but concerning whose character and conduct there can scarce be a difference of opinion... 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.

Letter to William Strahan, 9 November 1776.

Back to top

Created and Maintained by: Cyberpoint Limited Copyright 1995-2003: Adam Smith Institute

Documents

Adam Smith Quotes