Smith provided a definition of national wealth and showed how the “whole annual produce of the land and labour of every country … naturally divides itself” among three parts: rent, wages, and profit. Those three divisions were the bases of the “three different orders of people:” those who lived by rent (landowners), those who lived by wages (labore

Government operated through coercion, clumsiness, and deceptive intention; the invisible hand of the market, however, was the realm of freedom, choice, and possibility.

By reworking Smithian concepts like “individualism,” “self-interest,” and “the invisible hand,” thinkers like Hayek, Stigler, and Friedman transformed Smith into an original way of thinking about an individualistic, market-oriented society that was justifiable on social-scientific grounds.

The method and substance that defined Chicago Price Theory evolved over many years, but its central tenet is that prices transmit information about what consumers want to buy and what producers want to sell; prices also reveal the incentives on which people act. Analysis of prices—what determines them, what causes them to change—informs the baselin

What appears to be one of the central, orienting questions for reading Smith in the twenty-first century is a new version of the old Adam Smith Problem: how do we reconcile Smith’s advocacy of the material benefits of the market society he envisioned with his worries about its heavy moral costs?

Stigler’s mark in economics centered on the economic competency—or rather incompetency—of state power. Once man’s behavior was reduced to utility-maximizing self-interest, economists were able to tear down the edifices of government intervention in the economy; they sought “a large role for explicit or implicit prices in the solution of many social

Scholars have long noticed Smith’s worries about the debilitating effects of the division of labor and anxieties attached to the insatiable desire “better one’s condition.”

“Oeconomy in general is the art of providing for all the wants of a family, with prudence and frugality,” Steuart asserted in the first chapter of the work. “What oeconomy is in a family, political economy is in a state … The great art therefore of political economy is, first to adapt the different operations of it to the spirit, manners, habits, a

For Friedman, Smith’s invisible hand was an “instrumental device” whose direct opposite was government.