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Adam Smith

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grant.w.underwood Posted: Fri, Jul 20 2012 8:49 AM

I've ordered Adam Smith's 'wealth of nations' from amazon yesterday and I'm excited about finally reading it. I've never read anything by him yet, but obviously heard and been taught things .  From everything I've learned it doesn't sound like he is that much different from Austrian school of economic thought.  Is there something fundamentally different in his theory of economics than tHe Austrian?  I don't understand why the Austrian school doesn't give him a lot of credit other than for the invisible hand. 


Also to avoid a future post very similar:  same questions about Thomas sowell.  I know much less about him, but I've heard him talk about a couple of his books, and wondering what's different about his theory.  Also any recommendation of one of his books?

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uhhh, there are a lot of differences.  Smith is one of the first significant intellectual steps away from traditional monarchical mercantilism.  So, there are broad reasons that link Smith to say Menger, but not really details.  The economic theories before the 1870s have a fundamental deductive difference in perspective than the ones after (the marginal revolution).

Sowell has a lot of differences as well.  He is more of a mainline conservative economist.  He may be a little less apologetic to tthe neoclassical economics, but he is not an Austrian.

I am curious, what edition of the book did you get?  I am thinking of getting a comprehensive edition myself (probably the Liberty Fund edition, but maybe the Modern Library).

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I bought the hard cover modern library.  

Ya I guess I would mean in my question comparisons to menger than say rothbard or anything relatively modern or what the Austrian school is today.  Does he say anything about his theory of money?


Sowell- that's what I figured he was.  Just when he makes a tv appearance he just keeps it simple and say he believes in free markets.  

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Neodoxy replied on Fri, Jul 20 2012 10:53 AM

Smith, while definitely worth studying from a historical point of view can't really be compared to Austrian economists, because there are indeed  many fundamental differences, although it should be remembered that this is in large part exactly because full blown Austrianism (that is to say sort of "figured out" with Mises' Human Action) didn't come about until a century and  a half later. But here's a brief list of differences:

  1. Theory of value
  2. Theory of prices
  3. Emphasis on selfishness
  4. Radical subjectivism vs. a general lack of methodology at all
  5. Focus on empiricism
  6. Monopoly theory
  7. Price theory
  8. Focus on the entrepreneur (a concept Smith didn't even grasp)
  9. Focus on the importance of money
  10. Wage theory
  11. Focus on/ theory of the harmful effects of government intervention
  12. Emphasis on capital (although this is much more of a commonality than just about anything else listed here)
  13. Respect for free markets
  14. Theory of competition

So while superficially they may seem similar they are very, very different. Indeed Smith and Mises are probably a lot further apart than Smith and Marx.

As for Sowell I'm not really familiar with much about his economic views past his basic ideas, but I know he's not an Austrian and I think he's a lot more mainstream than the school is, which usually means thinking that investors are pretty much perfect rational (and the idiocy that is the efficient market hypothesis), and that recessions are somehow solvable on free market grounds while not denying the basic premise of Keynes.


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Adam Smith:




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Neo -  thanks.  I guess it will be more of an interesting read than I thought and give me some understanding where other schools of thought get their ideas.

Smiling - awesome thanks.

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Thomas Sowell is psuedo-Austrian, as well as a psuedo-Chicagoan.

He has been heavily influenced by members of both schools, though throughout his career he socialized more with the Chicago school, with the likes of Friedman and Stigler.

Obviously the primary difference between the two schools is money and banking, on that front, Sowell appears to agree with the Austrians when it is brought up, however he hardly focuses on that area.

Overall he has been a great intellectual leader for free market economics in general.

As my signature indicates, I am a big fan of him and Walter Williams. This post actually inspired me to create an account and respond; previously I lurked from time to time.


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