The breadth and depth of Adam Smith's thought over 200 years ago still provide powerful lessons today. Were he present, he would applaud much of what has transpired in the organization of economic life, particularly in the U.S. economy and its thrust toward individual achievement and relatively free markets for goods and services, capital, and labor. However, he would also be deeply troubled by recent trends toward consolidation, particularly in the financial sector, and the emergence of "too-big-to-fail" as an argument for government to weaken the discipline of markets.
I greatly appreciate receiving from you the Adam Smith Award. It is a cognition that I will always cherish. To be recognized by you, the leading organization of business economists, is a great honor, indeed. While in my own career I have occasionally had responsibilities involving a number of activities in banking, I have always taken great satisfaction and pride in my role as an economist. To be identified through this award with Adam Smith was far beyond my aspirations when I graduated college and started in my first job as a credit analyst in an industrial bank over fifty years ago.
Who Was Adam Smith?
Adam Smith was a remarkable individual. He left an indelible imprint on economic thought. He differed in many ways from the modern-day economist. As measured by our contemporary standards, Adam Smith was not a trained economist. He did not have a PhD in economics. None was actually available at the time. Instead, he studied mathematics, the natural sciences, philosophy, and classical writings. These groundings probably contributed to the comprehensiveness of his economic thought.
He became professor of moral philosophy at the age of twenty-seven at Glasgow University, where he delved into questions raised by moral philosophy and political economy. He became a very popular teacher. As one historian noted, "a multitude of students from a great distance resorted to the University merely upon his account." Today, the emphasis by many academicians is first on research and then on their interplay with students. Of course, research is important to advance economic knowledge. Nevertheless , greater weight should be given today to the teaching merits of a professor. When we think back to our college days, most often we remember outstanding lectures, the extraordinary capacity of a professor to simplify complex matters, and the professor who spent time with us individually.
Publish or perish still seems to be in the forefront of academic life. This is a market-driven phenomenon, which Adam Smith would readily acknowledge. Publications help to establish a national identity while teaching reaches only a local student audience, but Adam Smith actually published only two works. The first was The Theory of Moral Sentiment when he was thirty-six years old and then The Wealth of Nations when he was fifty-three. The first brought him considerable renown. But, what did he write about? In The Theory of Moral Sentiment, he expounded on such matters as the propriety of action, the objects of reward and punishment, on the character of virtue, and on the system of philosophy. These are hardly the subjects economists would delve into today. Nevertheless, his views on these subjects provided the foundation for the thoughts he expressed in his landmark book, The Wealth of Nations--a book full of great insights written in a grand style without the mathematical equations that we tend to insert in our learned journals.
Among other things, Adam Smith believed that it was part of human nature to strive for economic growth and that this could best be achieved through unfettered competition, the division of labor, and free trade. As we all know, Adam Smith had a circumscribed role for government. He limited it to protecting society from violence and invasions, to protecting every member of society from injustice or oppression, and to providing certain public works and institutions. …