In the summer of 1776 the young biographer James Boswell visited the philosopher David Hume, who was dying of a stomach illness in Edinburgh. Boswell, a believer, expected to find a frightened man reconsidering his doubts about an afterlife. Instead Hume was calm and cheerful. He joked about what excuses he might give the ferryman of the dead to delay his crossing. When Hume died that August, his friend Adam Smith wrote that he had always considered him as approaching as nearly to the idea of a perfectly wise and virtuous man as perhaps the nature of human frailty will permit. Those two friends stood at the center of one of the most remarkable intellectual flowerings in history.

A small country with large ideas

Scotland in 1700 was poor and on the edge of Europe. After the Union of 1707 joined it to England, it lost its parliament but kept its own church, law and universities. Scotland then had five universities to England's two, and its professors taught in English rather than Latin and welcomed students of modest means. Moderate clergy in the Church of Scotland made room for open inquiry. Clubs such as the Select Society, founded in 1754, brought lawyers, ministers, professors and merchants together to debate. The novelist Tobias Smollett had a character call Edinburgh a hotbed of genius, and the phrase stuck.

Hume, the cheerful skeptic

Hume's Treatise of Human Nature (1739 to 1740) tried to build a science of human nature on observation. He later joked that it fell dead-born from the press. His point was that reason alone cannot justify many of our deepest beliefs, such as the expectation that the future will resemble the past. We rely on custom and habit, and our passions, not reason, set our goals. Hume was repeatedly denied professorships because of his religious skepticism, yet he earned fame and money from a bestselling History of England.

Adam Smith: sympathy and markets

Smith is famous for The Wealth of Nations (1776), but he considered his first book, The Theory of Moral Sentiments (1759), just as important. It explains morality through sympathy, our ability to imagine ourselves in another's place, and through the impartial spectator, an imagined fair observer whose judgment we learn to apply to ourselves. In The Wealth of Nations he argued that the division of labor and open trade make nations richer, and he warned that merchants often conspire against the public. He saw markets and morality as parts of one study of human life.

Society as a natural history

Scottish thinkers also pioneered what we would now call social science. Adam Ferguson's Essay on the History of Civil Society (1767) and the work of John Millar traced how societies develop through stages, often described as hunting, herding, farming and commerce. Ferguson stressed that many institutions are the result of human action but not of human design. No one planned language, money or common law; they grew from countless choices. This insight, later called spontaneous order, influenced economics and sociology.

Science and improvement

The same circles produced practical science. The chemist Joseph Black discovered what he called fixed air, now known as carbon dioxide, and described latent heat. James Watt improved the steam engine while working as an instrument maker at the University of Glasgow. The geologist James Hutton argued from rock formations that the Earth was unimaginably old, finding in its history no vestige of a beginning and no prospect of an end. The first edition of the Encyclopaedia Britannica was published in Edinburgh between 1768 and 1771.

Edinburgh's clubs were famous for their mix of serious talk and heavy drinking. The Poker Club, founded in 1762, was meant to poke up public spirit on the question of a Scottish militia, and members included Hume, Smith and Ferguson. Hume and Smith had met around 1750, and their friendship lasted until Hume's death. Smith served as Hume's literary executor, though he declined to see Hume's most controversial work on religion through the press. Hume's Dialogues Concerning Natural Religion appeared only in 1779, three years after his death, arranged by his nephew.

Worked example: consulting the impartial spectator

Smith's idea can be tested on an ordinary dilemma. A shopkeeper gives you too much change. Nobody would ever know if you kept it. How would Smith's impartial spectator help you decide?

• Step outside yourself: imagine a fair, well-informed observer who has no stake in the money.
• Ask what they would feel: would they approve of you keeping it, or feel the shopkeeper had been wronged?
• Notice self-deception: Smith warned that we are skilled at excusing ourselves. The spectator corrects for that bias.
• Act on the verdict: most people sense the spectator would want the money returned, and many feel a quiet discomfort if they keep it.

Smith believed this inner voice grows from living among other people and seeing ourselves through their eyes. Morality, in his view, is social before it becomes personal.