Adam Smith, the Free Market, and Individual Liberty

By: Arjun Verma

​Adam Smith was a Scottish philosopher during the Enlightenment who revolutionized economics, politics, and sociology, making important contributions that can reframe how we view society today.

​What did he believe?

​Smith’s two main works were both very influential in their respective realms. Smith’s works on moral sentiments articulates a moral view based on the idea that moral virtues influence how humans act. He explains how humans are both self-interested and have compassion for others because they exist in a social world.

Smith’s view is often misinterpreted based on a reading of his second work, Wealth of Nations. It’s often interpreted as implying that humans are only self-interested. However, Smith’s first work indicates that he does believe in the human capacity for empathy and caring for others.
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In Wealth of Nations, Adam Smith argues that human affairs are best left alone. Through this, societal benefit will be optimized as people interact with one another through a system of mutual benefit. Smith uses this to justify why government intervention is unnecessary and actually counterproductive as an “invisible hand” of the free market will actually ensure that the market adjusts itself optimally.

​How can this be applied?

Smith's philosophy, even if correct for individual interactions within a vacuum, seems to ignore the negative external effects that actions can have. For example, lack of regulation may lead to devastating effects on our pristine glaciers, as demonstrated by this photo I took at Glacier Lagoon in Iceland.

​While Adam’s Smith’s economic philosophy has received a lot of criticism for not being able to address the issues of economic inequality and worker exploitation, his philosophy still can offer guidance for the future.

First, people should be able to determine their own way of life without being imposed upon by other people. While some amount of government intervention in economic affairs may be good, the general lesson of letting people have some degree of freedom to become the best version of their self is still valuable. For example, people are often paternalistic to others if they feel superior to them; this is wrong as everyone deserves the freedom to act on their own which can lead to a better overall society.

Second, Smith offers a balance between egoistic self-interest and altruistic helping of others. Both of these are important for living a virtuous life. If one tips too far in either direction, one can fall into the trappings of vices. For example, being too self-interested leads to ignoring the sufferings of others and being complicit or even engaging in unethical acts. On the other hand, being too concerned with others can lead to neglecting one’s own well-being while letting others trample over oneself and abuse one’s kindness.

Overall, by utilizing Adam Smith's philosophy, we can rethink the interactions we have with others and how we regulate our actions; thus, analyzing his beliefs can prove instrumental in improving these facets of everyday life.

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Arjun Verma

Arjun is a current high school junior. He is a captain of his high school's Lincoln Douglas debate team.