Father of Economics, Adam Smith: History, Major Contribution, Legacy
Adam Smith is considered the father of economics due to his revolutionary book The Wealth of Nations (1776), which changed the perspective of society on markets and trade. Free markets, the so-called invisible hand, and division of labour were the most important parts of his theory that individual activities, at least partially, may have a positive impact on society as a whole. It was these ideas that provided the base for modern capitalism and continue to shape policymaking across the world.
Priyanka Agarwal27 Nov, 2025
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Father of Economics, Adam Smith, was a Scottish economist and the founder of modern economics. The main underlying concepts involve the division of labour and the so-called invisible hand, which describe how markets work with minimal government regulation.
Smith's book, entitled "The Wealth of Nations", laid the foundation of capitalism and free markets back in 1776. His ideas on productivity, trade, and self-interest continue to influence and mould economic thought and policies the world over.
Who was Father of Economics?
Adam Smith is regarded as the father of economics in the world. He was a Scottish economist and philosopher who lived in the 18th century. Adam Smith is famous because he founded modern economics as a subject. His ideas revolutionized the way people viewed wealth, work, and money. He wrote important books, such as "The Wealth of Nations" in 1776, which are still read today. His work laid the foundation for economic studies worldwide.
About Adam Smith: The Pioneer of Economics
Adam Smith was regarded as the founder of economics because he gave the subject a well-defined shape and set rules. Prior to Smith, economics was not studied separately as a subject. He indicated how the choices of people and free markets develop the economy naturally. His ideas helped people visualize how money and trade work without too much government control. This changed how nations planned their economies and trade.
Why is Adam Smith known as the Father of Economics?
Adam Smith is referred to as the father of economics for a number of reasons. First, he wrote the first comprehensive book about how economies work, titled "The Wealth of Nations". Second, he introduced seminal concepts, such as the “invisible hand” and the division of labor, that explain how markets work. Third, his belief in free markets and limited interference by governments set the foundation for capitalism. For these reasons, he is considered the father of economics around the world.
Major Contributions of Adam Smith to Economics
Adam Smith is the father of economics and contributed in many big ways. Among them are explanations of:
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How markets work on their own.
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Trade and competition are important.
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How division of work into tasks helps in the production of more goods.
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Why free markets help people and countries grow richer.
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How self-employed individuals can contribute to society in general.
These ideas still influence the thoughts of economic thinkers today.
Adam Smith's Key Economic Ideas
Smith changed economics forever with his ideas. The two most famous are the division of labor and the invisible hand.
Division of Labor
Division of labor means that the work is divided into small parts. Each person does one task. The work becomes faster and better since people become good at what they do.
For example, in a pin factory:
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One cuts the wire.
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Another sharpens the pins.
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Other packages' last pins:
This method greatly increases the number of pins that can be made. Adam Smith explained why the division of labor raises productivity and makes prices fall, helping everyone enjoy more goods at lower costs.
Invisible Hand
The invisible hand is one of the most important concepts that evolved from Adam Smith. It denotes that when individuals act in their own interest, they happen to serve others' interests unwittingly. For instance, a shopkeeper intends to sell goods for an income, whereby they also provide the customers with their needs at fair prices. This happens naturally and pushes the economy in the right direction without literally any government planning.
Legacy and Impact of Adam Smith
The ideas of Adam Smith served as a foundation for classical economics. His insights continue to shape and frame how governments, businesses, and people think about money and markets. Many economic policies and organizations today are based on his principles. Perhaps one of the main reasons he is considered the father of economics can be attributed to his idea that free markets can guide economies.