By publishing in 1776 An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith founded the science of political economy.
So significant were the effects of this book for the modern world that it has been described as one of the most important ever written. It is referred to in every history of the subject.
The basic doctrine of The Wealth of Nations was that labour is the only source of a nation's wealth. Smith advocated division of labour in the productive process, stressed the importance of individual enterprise and argued the benefits of free trade. The true wealth of a nation, he held, lay not in gold but in the achievement of an abundance of the necessities of life. He warned against unnecessary intervention by the state in this process.
Smith was born in Kirkcaldy, Fife, and his boyhood friends included the Adam brothers, destined to achieve their own fame as architects. As a child, Smith demonstrated an absence of mind which was to be a characteristic throughout his life. He was educated at Glasgow and Oxford, and in 1751 was appointed Professor of Logic at Glasgow University. Eight years later he published his Theory of Moral Sentiments, which established his reputation as an author.
The Wealth of Nations, which had been about ten years in the writing, was an immediate success and secured Smith's financial future. In the following year he made his home in Panmure House, which still stands in the Canongate. There he entertained his friends regularly, including such figures of the Enlightenment as the physicist Joseph Black, James Hutton the geologist, and David Hume( see link to david hume