The Liberal World of One Classic Scholar and Social Welfare

Lyuben Kirev

Economic Thought journal, 2006, issue 1, 33-56

Abstract: The paper is dedicated to the 230 anniversary of the publication of Adam Smith's masterpiece The Wealth of Nations (March 1776). The object of the study is the liberal world of Smith and social welfare. His contribution as the first founder of the model of “Home Economicus” is pointed out. According to it, personal interests are the basis of the economic activity. Special attention is put on the benefits of the free foreign trade in a micro and macroeconomic context, the negative impact of monopolistic trade companies, the notion of the cosmopolitan character of the capital, justified by Smith. The role that Smith saw for the government is specified. Ideas about externalities, restructuring of the natural monopolies, the government as a bad manager, developed by Smith in an embryonic form, are investigated too. Contrary to some authors, who attribute the concept of the optimal resource allocation to the neo-classics, the paper argues that elements of the idea can be traced to Smith. He deserves to be associated with the predecessors of the institutionalism. The new reading of Smith's works is not only a valuation of his merits and personality, but also an explanation of the present and viewing the future.

JEL-codes: B12 B31 (search for similar items in EconPapers)
Date: 2006
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