About Adam Smith

"Smith was not the greatest defender of free markets, nor was he anywhere near the greatest defender of economic theory. But he was unquestionably the most famous and most influential early defender of free trade and free markets. . . ."

"Smith did make one claim that, in his day, was the most important claim that he made. It laid the foundation of modern economic theory. He claimed that the free market system is autonomous. It would exist apart from legislation by the state. He called this "the system of natural liberty." He described how the free market would work if the state did not intervene to pass special-interest legislation that benefited one group or another."

"The system of natural liberty would maximize the wealth of nations, he said, but far more important, it would maximize the wealth of individuals. The central idea of Adam Smith's book is this argument: the pursuit of individual self-interest, when pursued by all the residents of the nation, will result in an increase of the wealth of the nation. His link between the pursuit of individual self-interest and the maximization of the wealth of their nation is the essence of Smith's logic, and it is also the essence of the argument of most free enterprisers."

"Mercantilism is the system in which politicians gain control over the state, and then use the state to grant monopolies of trade to special interest groups. It was against this outlook that Adam Smith wrote his book."

"To the extent that people say they believe in Adam Smith's concept of the free market, they ought to oppose mercantilism. The problem is this: the mercantilist mentality is best represented in the defense of tariffs. Tariffs are sales taxes imposed on imports of foreign-made goods. Yet most people who insist that they are defenders of the free market, meaning defenders of Adam Smith's economics, are overwhelmingly in favor of tariffs. They think they are free marketers, but they are mercantilist. They think they are defenders of private property, when they are in fact defenders of the welfare state."

- Gary North