The week before Thanksgiving 1988, at the end of his presidency, Ronald Reagan took the microphone for his weekly radio address. With his time in office running short, Reagan wanted to express his hopes for the future of the country he had led for eight years.
From the canon of American and world history, who could a president many called “The Great Communicator” draw inspiration from to portray a vision of what made America an exceptional and powerful country? A former president like Washington, Lincoln or Franklin Roosevelt? A world leader like Churchill? Or someone from Reagan’s own days in Hollywood?
What ideas would an outgoing leader give thanks for during the holiday season? America’s military might? Technological advancement? Political and democratic freedom?
Reagan chose a Scottish economist nearly everyone has heard of and almost no one has read — a man whose 900-page treatise on markets and wealth remains one of the most cited, least-finished books in the English language. The Gipper relied on Adam Smith.
Given the holiday theme, Reagan expressed his gratitude for two documents that were, coincidentally, both written in 1776 and that revolutionized the young nation, imprinting themselves into its DNA: the Declaration of Independence and Smith’s masterpiece, “The Wealth of Nations.”
His arguments touch on the very core questions of Western civilization: What does it mean to be human, and what do I owe my community and my neighbor?
Reagan pointed out that among the key complaints against the British Crown that Jefferson listed was “cutting off our trade with all parts of the world.” International trade — the ability to freely exchange goods and services across borders — was a key liberty that King George III was happy to restrict in order to bring the American rebels to heel. Jefferson bristled at the idea that a distant, unrepresentative government should tax its subjects simply for trying to better their station and flourish.
Smith made a similarly radical argument in economics. A nation’s wealth, he insisted, was not the accumulation of gold and silver that so obsessed the Spanish conquistadors, but a country’s productive capacity. And what built that capacity, Smith pointed out, wasn’t conquest or resource extraction — it was cooperation and efficiency.
“It is the maxim of every prudent master of a family,” Smith explained, “never to attempt to make at home what it will cost him more to make than to buy. ... What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.” In other words, if your neighbor grows better wheat than you can, buy his wheat and spend your energy on what you do best. Nations, Smith argued, should trade the same way.
Reagan’s Adam Smith was a free-trader’s Adam Smith, a small-government Adam Smith, a patron saint for the libertarian vision of American exceptionalism. But it is worth asking what Smith himself would have made of that adoption — because the very same book Reagan invoked contains some of the sharpest attacks on concentrated business power ever written by an economist. “People of the same trade seldom meet together, even for merriment and diversion,” Smith warned, “but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Modern antitrust advocates and labor lawyers invoke his work routinely. Smith went further still, writing in “Wealth of Nations” that civil government, insofar as it exists to secure property, is in reality instituted to defend the poor against the rich — a line that sits uneasily with the free-market-patron-saint version of Smith that Reagan invoked, and one that progressive critics of corporate power have leaned on for two centuries since.
How is it that a philosopher in the Scottish Highlands could put his finger on the pulse of debates in a country an ocean away that would rage for 250 years? Smith’s work not only revolutionized the way that countries allocate scarce resources, but his arguments touch on the very core questions of Western civilization: What does it mean to be human, and what do I owe my community and my neighbor?
Harnessing self-interest for good
Adam Smith was born in Scotland in 1723 to a family in Glasgow’s growing middle class. His father was comptroller of customs — a small irony, given that the future economist would spend his life arguing against protectionism. Smith entered the University of Glasgow as a teenager and later studied at Oxford, where his disdain for England’s rigid higher education system only deepened. He returned to Glasgow, where he accepted a position as a professor of moral philosophy — a field that in his day covered something closer to a mix of civics, political science and economics than what we’d now call “philosophy.”
Smith’s early writing centered on a single question: What does it mean to live a virtuous life? The 1750s were a remarkable moment to be a scholar in Glasgow, as a cluster of thinkers kicked off what would come to be called the Scottish Enlightenment. Chief among them was Smith’s closest friend and colleague, David Hume.
Hume and his circle were, in part, reacting against the better-known Enlightenment sweeping France earlier in the century. French thinkers like Voltaire and Rousseau argued that reason was the apex of human capability, and that logic would eventually displace the superstitions of the medieval church — that human nature could progress toward something like perfection, fit for full self-governance by the enlightened. These ideas fueled arguments for overthrowing the French monarchy outright; a bloody future that led to Napoleon and war.
Hume and Smith were skeptical. They worried that casting off tradition and institutions so radically would lead not to enlightenment but to anarchy — extinguishing liberty rather than expanding it. Their counterargument was that human nature is fixed and people are driven primarily not by logic but by emotion. A functioning society, in their view, needed safeguards to cool the passions of the crowd, and institutions to transmit hard-won values across generations.
Where Hume’s writing focused on political systems built to preserve liberty, Smith noticed the same dynamics at work in personal and economic life. In 1759, he published the book he would later call his best work: “The Theory of Moral Sentiments.” Its central claim was that human beings are, at bottom, emotional creatures — driven by passion and self-interest.
But Smith believed that force could be harnessed for good. Where many modern readers hear “self-interest” and think “selfishness,” Smith meant something closer to the opposite: “Man naturally desires, not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love.”
The idea at the heart of that line: People don’t just want praise from their community — they want to actually deserve it. The trouble is, we often don’t know how to become someone worthy of that esteem. That’s where institutions — religious and civic ones especially — come in: They model and reinforce shared values that spring from this desire, giving people a path toward it.
Institutions, for Smith, aren’t the source of human values — they’re the guardrails that keep a society on the road toward those values. He believed government’s core job was enforcing justice: fair play, the rule of law, a level playing field. Everyday people, meanwhile, doing their best to build good lives every day, power the engine of the free enterprise system. Smith held that neighbors would look after the poor, too — some out of genuine altruism, some because incentives pushed them that way — with government’s role being to make sure everyone had a fair shot, even as free will, talent and choice still determined where they ended up.
How is it that a philosopher in the Scottish Highlands could put his finger on the pulse of debates in a country an ocean away that would rage for 250 years?
Today, Smith is seen as a prophet of pure self-interest — Gordon Gekko’s “greed is good,” with a powdered wig. That’s not quite right. Smith’s view was that a society built on shared values and a working sense of justice creates the conditions for economic growth and for taking care of the disadvantaged — not one or the other.
His first use of the phrase “invisible hand” makes the point. Imagining a wealthy, self-absorbed landlord who employs farmers to work his land, Smith argued that even a man with no warmth toward his workers at all would still “be led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made had the earth been divided into equal portions among all its inhabitants — and thus, without intending it, without knowing it, advance the interest of society.”
But Smith didn’t think private philanthropy alone could solve inequality or handle problems that require coordination at the community level — public education, infrastructure, common defense all needed government. At the same time, he was wary of handing bureaucracy too much confidence in its own wisdom. While government can solve collective action problems, it has incomplete information and can lose touch with the governed.
“The man of system ... is often so enamoured with the supposed beauty of his own ideal plan of government that he cannot suffer the smallest deviation from any part of it. ... He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard.”
Smith wasn’t the libertarian patron saint he’s often made out to be — but his deep suspicion of concentrated power, rooted in a belief that all of us are flawed and fallible, wasn’t so different from the argument James Madison would make a few decades later while drafting the U.S. Constitution.
Among Smith’s fans? The founding fathers
In 1759, the same year Smith’s book made him a rising star across the continent, David Hume welcomed two visitors from across the Atlantic to Edinburgh: Benjamin Franklin and his son William, touring Scotland for the first time. That September, Smith and a circle of friends sat down to dinner with them. Smith and Franklin took to each other immediately and stayed in contact for years afterward.
A few years later, after a long stretch teaching at Glasgow, Smith was offered a different kind of education: a tour of Europe as traveling tutor to the young Duke of Buccleuch, a position arranged by the Duke’s stepfather, Charles Townshend — a prominent politician who would later become Chancellor of the Exchequer. The tour opened Smith’s eyes to a much larger world. Why did one country specialize so heavily in one kind of good, and its neighbor in something else entirely? What determined the standard of living in the towns and hovels he passed through? And how should his own country handle the fast-growing, increasingly restless colonies of its expanding empire?
It was on this trip, restless in a French drawing room, that Smith began scratching out the manuscript that would occupy the next decade of his life — and that would arrive in print in 1776, the same spring the American colonies he’d been puzzling over declared their independence.
Given where and when Smith lived, “The Wealth of Nations” is an extraordinary book that turns many conventional ideas about the economy on their head. Smith derides mercantilism, the reigning economic system of the British Empire. Mercantilism held that trade and markets were zero-sum, and that to retain power and influence, a monarch should tightly control economic activity and hoard wealth in the form of gold and silver. A mercantilist monarch (like King George III) would limit international trade, protect domestic industries from foreign competition, extract resources from colonies and lesser powers, and have the sovereign take a stake in preferred private companies like the East India Company.
The point of Smith’s book was to carefully dismantle the mercantilist ideology of his time. First, Smith saw trade — on the international or individual level — as positive-sum, meaning these transactions only happen when they’re mutually beneficial. Millions of people trying to do their best every day create marketplaces that solve the problems of strangers they may never meet. As Smith famously wrote:
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”
Like the “invisible hand,” this famous line is often misunderstood. The butcher and the baker need to feed their own families; they need some way to contribute so that they, too, can survive. Markets and prices give them the incentive to discover their talents and offer them to their communities. Customers may be buying bread and meat in this instance, but they’ll turn around and supply their own time, talents and effort toward another community problem. These unknown, disparate groups only choose to cooperate when it helps both sides.
But who should make what, for whom and where? Smith imagines a pin factory where a manager decides whether to have a complete team of workers make each entire pin, or to let workers specialize in one part of the operation and collaborate along a production line:
“I have seen a small manufactory of this kind where ten men only were employed ... (they) could make among them upwards of forty-eight thousand pins in a day. ... But if they had all wrought separately and independently, ... they certainly could not each of them have made twenty, perhaps not one pin in a day.”
Smith does not argue that some workers were naturally gifted at wire-cutting and others at head-forming — it was that repetition itself builds skill. Practice one narrow motion all day, and you’ll get faster at it than someone splitting their attention across 18 different tasks ever could.
Smith extended that same logic from the factory floor to international trade. If specialization made 10 pinmakers more productive than 10 generalists, the same should hold for nations: A country ought to make what it can produce most efficiently and trade for the rest, rather than trying to produce everything itself behind a wall of tariffs. Tariffs and protectionism, in Smith’s view, shrank the very productive dynamism — wages, wealth and human flourishing — that free exchange could generate.
Smith’s “Wealth of Nations” created the intellectual framework for the economic boom of the next two centuries, and his ideas spread quickly across the Atlantic. Smith took notice of the American Revolution, arguing that the British crown should either grant the colonies full representation or let them go. The unruly colonists loved him for it.
Jefferson kept a full set of Smith’s volumes at Monticello, later calling “The Wealth of Nations” simply “the best book extant.” Franklin continued to meet with Smith and Hume while in London, and Madison would go on to echo some of Smith’s economic logic while defending the new Constitution.
Smith’s ideas are uniquely American. The balance between individual liberty and solving communal problems would challenge the new country just as it did Smith’s own thinking about what makes a good life. Smith’s key insight into the benevolent but flawed nature of mankind shows that markets, liberty and smart public policy combine to promote what Jefferson would call “the pursuit of happiness.” A nation’s true wealth isn’t in its stockpile of gold, or in extracting resources from others, but in the ingenuity, entrepreneurship and virtue of its people.
Who is the true heir to Adam Smith? Reagan claimed him. So have the critics of the monopolies Smith despised. Perhaps, like the founding documents themselves, no one side can make a full claim on Adam Smith, and that is what makes his insights so relevant for a republic that has lasted 250 years.
Michael S. Kofoed is an associate professor of economics at the University of Tennessee, Knoxville, and a research fellow at the Institute of Labor Economics.
This story appears in the October 2026 issue of Deseret Magazine under the headline “Will the Real Adam Smith Please Stand up?” Learn more about how to subscribe.