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ECONOMICS, THEN AND NOW
By JOSEPH NOLAN, Visiting Instructor, Business Administration, Flagler College
Delivered at Flagler Forum, St. Augustine, Florida, November 17, 1994
AN economist finds it a refreshing change to be invited to peruse the past, because we are usually asked to fathom the present and forecast the future. The distinguished British banker, Lord Rothschild, put his finger on the difficulty of economic forecasting when he was asked by a young lady what was likely to happen to the world economy in the year ahead.
"My dear," he replied, "there are only two people in the whole world who could answer that. One is a junior bureaucrat in the Treasury Department in Washington, and the other is a very junior associate in the Bank of England. Unfortunately, they disagree."
There is little disagreement among economists today, however, that Adam Smith is a towering figure in economic history, and that his seminal book "The Wealth of Nations," even after 200 years, is still the most widely known title of an economics work. By telling us why a market economy is best able to accommodate the economic needs of consumers, and how to think about the role of government in a market system, Smith provided the most lucid explanation and the most compelling defense of capitalism. As economist Robert Heilbroner said,
"His vision became the prescription for the spectacles of subsequent generations."
Far more than a historical figure, Adam Smith probably enjoys a greater measure of popularity today than ever before -- known to more people with a higher approval rating. Random House recently published a new Modern Library edition of his book. Disciples proudly wear the Adam Smith necktie, with the bewigged head of capitalism's founding father, as a sign that they are CPC -- Conservatively Politically Correct. This is a practice begun during the Reagan administration when young White House aides sported the tie to signify that they were "true believers" in Reaganomics.
What I'd like to do this morning is to look with you first at the man himself, then at his book, and finally at Adam Smith's significance in our contemporary world where people of widely differing views invoke his name in support of their cause.
Adam Smith, The Man
The patron saint of the market system was a shy, mild-mannered lad who grew up in Kircaldy, Scotland, a small port town just across the Firth of Forth from Edinburgh. At the age of four, he was kidnapped by a band of gypsies who held him for a while and then abandoned him by the roadside. One biographer later ventured the opinion that "he would have made, I fear, a very poor gypsy."
Be that as it may, he did make an outstandingly fine student, first at the University of Glasgow and later at Oxford where he won a scholarship. Like many college students, he complained about his professors. It even happens occasionally here at Flagler.
"In the University of Oxford," he wrote, "the greater part of the professors have for these many years given up altogether even the pretense of teaching." Universities he said, had …