Adam Smith, the mother of modern economics
Talking about the source of a nation's wealth

Adam Smith, the mother of modern economics, proposed the labor theory of value, which states that the source of a nation's wealth is human labor.
Smith's liberal economics is linked to neoliberalism today.
However, his ideas also provide a starting point for solving the problems of the capitalist economy represented by neoliberalism.
This is because, in his book, The Wealth of Nations, ‘human labor’ and ‘the anthropology of labor’ occupy the greatest proportion.


This book is a guide to the world of Adam Smith's thought and The Wealth of Nations by Professor Jae-Yu Lee, a philosopher who has studied and researched political economy, human beings, labor, and value issues.
Smith said that the people who drive the economy are motivated by self-love.
Narcissism is empathy, and empathy manifests itself in labor.
Through this empathy and labor, each individual can live as a free being, free from the conflicts of interest between them (hostile competition and the inevitable product of this competition, monopoly).
Smith wrote The Wealth of Nations while dreaming of this kind of free life.

Essentially, The Wealth of Nations is known as the work that first established the theory of classical bourgeois (capitalist) economics.
The core of classical economics is known as the 'night watch state' and 'laissez-faire'.
A night watchman state means minimizing the state or government's intervention in the market, and laissez-faire is a 'market fundamentalism' that leaves everything to the free will of the market.
However, today's neoliberalism is worsening the problems of the capitalist economy rather than solving them, such as the decline in regular employment, the expansion of non-regular employment, and the deepening gap between the rich and the poor.
Author Lee Jae-yu attempts to reveal that, contrary to popular belief, Smith's ideas in "The Wealth of Nations" provide a starting point for resolving the problems of the capitalist economy, represented by neoliberalism (market fundamentalism).

Humor is a mental attitude, and living one's own life proactively is the process of establishing one's own philosophical worldview.
The establishment of a philosophical worldview begins with doubting everything one takes for granted.
What kind of humor did Adam Smith develop through "The Wealth of Nations"? What did he doubt while establishing his own identity? Isn't clarifying my own humor the very meaning of reading the classics? Let's begin our journey to discover that meaning.

---From the "Preface"

The atomized and selfish view of humanity and the emergence of an absolute state and capital based on the social contract are two sides of the same coin in the modern philosophical worldview.
Modern philosophy is divided into an empiricist worldview and a rationalist worldview.
The empiricist worldview is linked to a selfish view of humanity, and the rationalist worldview is linked to the emergence of absolute states and capital.
However, Adam Smith, like Hume, was based on a modern worldview, but he tried to distance himself from the empiricist and rationalist worldviews.
The human relationship that emerged as a result of this is one of empathy.
And based on this view of humanity, he discussed 'laissez-faire' ('invisible hand', 'night watchman'), 'division of labor', and the labor theory of value and the relationship between wages, profit, and land rent in 'The Wealth of Nations'.

---From "Chapter 1: Adam Smith, the Mother of Modern Economics"

Like David Hume, for Adam Smith, humans were not beings who lived in the reality of nature, but in the reality created by their own minds and imaginations.
The emotions, which Hume and Smith called passion and sentiment, were for both men a more plausible source of action and a more certain object of experience than reason.
Based on this, Smith published his first book, The Theory of Moral Sentiments, a compilation of his ethical writings in 1759.

---From "Chapter 1: Adam Smith, the Mother of Modern Economics"

Finally, on March 9, 1776, The Wealth of Nations was published in two quarto volumes.
The original title of this first edition was An Inquiry into the Nature and Causes of the Wealth of Nations, and the price was 1 pound 16 shillings.
The book went through five editions during Smith's lifetime, and was quickly translated into German, French, Danish, and other foreign languages.


The augmented edition was published as a separate volume in November 1784.
The expanded edition allowed Smith to address sensitive current affairs of the time, particularly the serious corruption and tyranny of the East India Company in India, making The Wealth of Nations a vivid work that is in touch with reality.
The new edition, consisting of 24,000 words in 13 chapters, opposed wheat and herring subsidies and supported free trade with France.

---From "Chapter 1: Adam Smith, the Mother of Modern Economics"

What Smith considered most important was the wealth and social benefit of all citizens.
Therefore, his economics is based on an ideological foundation that is quite different from the market-fundamentalist laissez-faire (which is called neoliberalism today) advocated by modern bourgeois economics and the resulting monopolization of wealth by a small number of people.
The book that clearly shows these differences is 『The Wealth of Nations』.
And as long as The Wealth of Nations emerges as a solution to the problems of neoliberalism advocated by modern bourgeois economics, The Wealth of Nations will remain a living classic.

---From "Chapter 1: Adam Smith, the Mother of Modern Economics"

If Adam Smith had seen the excessive and poor working conditions and frequent industrial accidents in South Korea today, he would have made a moral appeal to South Korea's capitalists (employers) to have 'reason and humanity.'
However, it is questionable whether his appeal, which regarded the laws of capitalist economics as 'natural laws', would have resonated with employers.
This is because capitalists, who are agents of the laws of nature (the laws of capitalist economics), cannot be evaluated as ‘good’ or ‘bad’ capitalists, as Marx said.
In other words, capitalists are also beings who have no choice but to follow the laws of capitalism.
So how can workers be guaranteed "rational and humane" rest? To answer this question, shouldn't we first consider whether the economic laws of capitalism are truly "immutable" and "natural laws"?
---From "Chapter 2: Reading The Wealth of Nations"

Adam Smith says that physiocracy is very meaningful and “justified.”
In other words, he says that physiocracy is valid because “the wealth of nations is not composed of the non-consumable precious metal called money, but of consumable goods that are annually reproduced by the labor of the society,” such as rice, sweets, clothes, and shoes, and because “complete freedom” (pp. 837-838) in trade with foreign countries is the only thing that maximizes wealth.

---From "Chapter 2: Reading The Wealth of Nations"

Adam Smith's Theory of Moral Sentiments (1759) discusses the basis of human moral sentiments.
The basis of moral sentiments is human empathy, which means feeling joy or sorrow when witnessing the joy or sorrow of others.
When we feel this kind of empathy, we can become happy.
However, the standard for this empathy is the 'impartial spectator'.
An impartial observer determines whether one's actions are selfish or allow for harmonious relationships with others.
This impartial observer leads to the 'invisible hand' in The Wealth of Nations.

---From "Chapter 3: Milestones of Philosophy"