ABSTRACT
Adam Smith, the author of The Wealth of Nations, was born in the Scottish town of Kircaldy in June 1723. The Wealth of Nations provides a framework for understanding the market economy—an economy founded on the principle of supply and demand. Smith argues that the free market is not a chaotic or problematic form of economic life, but actually produces optimal outcomes. Smith warns repeatedly of the dangers of monopoly, where one firm controls supply. When Smith was writing the book, he was arguing against the dominant economic paradigm, or model, of eighteenth-century Europe: that of mercantilism. After the publication of The Wealth of Nations, in which Smith successfully challenged mercantilism, the theory went into a steep decline. Governments, particularly that of Britain, began pursuing global free-trade policies. Following Smith, classical economists argue that markets are preferable to government intervention and should be left to their own devices.
