All this may seem somewhat elementary. But consider what Adam Smith has done, with his impetus of self-interest and his regulator of competition. First, he has explained how prices are kept from ranging arbitrarily away from the actual cost of producing a good. Second, he has explained how society can induce its producers of commodities to provide it with what it wants. Third, he has pointed out why high prices are a self-curing disease, for they cause production in those lines to increase. And finally, he has accounted for a basic similarity of incomes at each level of the great producing strata of the nation. In a word, he has found in the mechanism of the market a self-regulating system for society’s orderly provisioning.

Adam Smith’s laws of the market are basically simple. They tell us that the outcome of a certain kind of behavior in a certain social framework will bring about perfectly definite and foreseeable results. Specifically they show us how the drive of individual self-interest in an environment of similarly motivated individuals will result in competition; and they further demonstrate how competition will result in the provision of those goods that society wants, in the quantities that society desires, and at the prices society is prepared to pay. […] But self-interest is only half the picture. It drives men to action. Something else must prevent the pushing of profit-hungry individuals from holding society up to exorbitant ransom: a community activated only by self-interest would be a community of ruthless profiteers. This regulator is competition, the conflict of the self-interested actors on the marketplace. For each man, out to do his best for himself with no thought of social consequences, is faced with a flock of similarly motivated individuals who are engaged in exactly the same pursuit. Hence, each is only too eager to take advantage of his neighbor’s greed. A man who permits his self-interest to run away with him will find that competitors have slipped in to take his trade away; if he charges too much for his wares or if he refuses to pay as much as everybody else for his workers, he will find himself without buyers in the one case and without employees in the other. Thus very much as in The Theory of Moral Sentiments, the selfish motives of men are transmuted by interaction to yield the most unexpected of results: social harmony.

The Wealth of Nations is in no sense a textbook. Adam smith is writing to his age, not to his classroom; he is expounding a doctrine that is meant to be of importance in running an empire, not an abstract treatise for academic distribution. The dragons that he slays (such as the Mercantilist philosophy, which takes over two hundred pages to die) were alive and panting, if a little tired, in his day. And finally, the book is a revolutionary one. To be sure, Smith would hardly have countenanced an upheaval that disordered the gentlemanly classes and enthroned the common poor. But the import of The Wealth of Nations is revolutionary, nonetheless.

It has been called “the outpouring not only of a great mind, but of a whole epoch.” Yet it is not, in the strict sense of the word, an “original” book. There is a long line of observers before Smith who have approached his understanding of the world: Locke, Steuart, Mandeville, Petty, Cantillon, Turgot, not to mention Quesnay and Hume again. Smith took from all of them: there are over a hundred authors mentioned by name in his treatise. But where others had fished here and there, Smith spread his net wide; where others had clarified this and that issue, Smith illuminated the entire landscape. The Wealth of Nations is not a wholly original book, but it is unquestionably a masterpiece.

Though in Hume, and also in the works of Bernard Mandeville, we can watch the gradual emergence of the twin concepts of the formations of spontaneous orders and of selective evolution [...], it was Adam Smith and Adam Ferguson who first made systematic use of this approach. Smith's work marks the breakthrough of an evolutionary approach which has progressively displaced the stationary Aristotelian view. The nineteenth-century enthusiast who claimed that the Wealth of Nations was in importance second only to the Bible has often been ridiculed; but he may not have exaggerated so much. Even Aristotle's disciple Thomas Aquinas could not conceal from himself that multae utilitates impedirentur si omnia peccata districte prohiberentur - that much that is useful would be prevented if all sins were strictly prohibited (Summa Theologica, II, ii, q. 78 i).

An idea is always older than its name. The idea of cybernetics was used implicitly by the French physiologist, Claude Bernard, in 1878. The scottish physicist, Clerk Maxwell, also used it in 1868 in developing the theory of the steam-engine governor. But long before both of them Adam Smith had just as clearly used the idea in his The Wealth of Nations (1776). The "invisible hand" that regulates prices to a nicety is clearly this idea. In a free market, says Smith in effect, prices are regulated by negative feedback.

Smith's claim that the selfish human urge to increase private profits is the basis for collective wealth is one of the most revolutionary ideas in human history - revolutionary not just from an economic perspective, but even more so from a moral and political perspective. What Smith says is, in fact, that greed is good, and that by becoming richer I benefit everybody, not just myself. Egoism is altruism.

Now, sir, I stand here in the land where Adam Smith was born, the parent and patriarch of political economy—the man who first taught us that in our intercourse with other nations, as well as among ourselves, it was better to have our hands free than to have our hands and arms in manacles—who taught the great doctrines of Free Trade, and who has imbued the world with these doctrines.

What an excellent work is that with which our common friend, Mr Adam Smith, has enriched the public!—an extensive science in a single book, and the most profound ideas expressed in the most perspicuous language.

The greatest of Scotchmen was the first economist, Adam Smith.