Adam Smith was an 18th century Scottish philosopher who is considered the father of modern economics. He wrote two influential works, The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. Smith introduced three key economic concepts: division of labor which improves productivity by having workers specialize in separate tasks, the invisible hand whereby individual self-interest and competition indirectly promote the greater good, and that a nation's wealth is defined by the total goods and services produced rather than monetary wealth.

1. Three Key Definitions
Dr. Roozbeh Bozorgmanesh
Business Mini-Courses
By Adam Smith

2. Who Was Adam Smith (1723-1790) ?
• A pioneer in political economics
• Also known as “father of capitalism” and “father of
economics”
• Wrote two classic works, The Theory of Moral
Sentiments (1759) and An Inquiry into the Nature and
Causes of the Wealth of Nations (1776)

3. Division of Labor and Specialization
• Organizing work so that each individual worker completes
a separate part of the work.
• Can improve productivity
• Future application in Ford Motor Company

4. Invisible Hand
• Competition + individual self interest would somehow act
as an “invisible hand” to guide resources to their most
productive uses.
• He suggested that the role of government should be limited to
enforcing contracts, granting patents and copyrights
to encourage inventions and new ideas and providing
public works, such as roads and bridges.

5. Wealth of Nations
• Wealth of nations = sum of goods produced by labor (not
the personal finance wealth of those who owned them)

6. Conclusion
• Competition in markets + division of labor + invisible hand
= higher productivity and output
• Smith’s doctrine of laissez-faire marked the beginning of
modern economic thought, and it still serves as the basis
of our free market economy.

7. THANK YOU FOR
FOLLOWING US

8. 2020 RBBCG Presentation©