Adam Smith (1723–1790) defined the economic system of capitalism and at the same time founded the science of modern economics in his An Inquiry into the Nature and Causes of the Wealth of Nations (1776). He sought to answer the question of how nations grow richer, assuming that human life would improve as nations prospered. He analyzed the importance of the ongoing division of labor in the industrialization process, and argued for free competition based on the profit motive. This would be a system of economic liberty or “laissez faire” (“Let them do it”). He argued that selfishness in acquiring wealth would result in better conditions for all, through the “invisible hand” of the market place.
Adam Smith defined the economic system of capitalism and founded the science of modern economics (iStock).