The genius of Adam Smith
Think tank: Institute of Economic Affairs
Author(s): Mark Skousen
March 9, 2026
This report from UK think tank the Institute of Economic Affairs marks the 250th anniversary of the publication of Adam Smith’s Wealth of Nations.
In the Wealth of Nations, Adam Smith argues that individuals pursuing their own self-interest can promote the public good when channelled through his ‘system of natural liberty.’ Smith’s ‘system of natural liberty’ depends on three pillars — maximum individual liberty, tempered by justice (rule of law) and robust competition.
Competition acts as a moral regulator by disciplining greed and channelling self-interest into socially beneficial outcomes.
Smith strongly opposed mercantilism and governmentgranted monopolies, arguing that economic freedom and free trade generate greater prosperity.
Modern evidence, such as the Economic Freedom Index, supports Smith’s prediction that societies with greater economic liberty achieve faster growth and higher living standards.
The Scottish philosopher’s model achieves a hat trick: maximum liberty, individual improvement and public benefit, all at the same time.
