Summary

• In the Wealth of Nations, Adam Smith argues that individuals pursuing their own self-interest can promote the public good when channelled through his ‘system of natural liberty.’


• Smith’s ‘system of natural liberty’ depends on three pillars — maximum individual liberty, tempered by justice (rule of law) and robust competition.


• Competition acts as a moral regulator by disciplining greed and channelling self-interest into socially beneficial outcomes.


• Smith strongly opposed mercantilism and governmentgranted monopolies, arguing that economic freedom and free trade generate greater prosperity.


• Modern evidence, such as the Economic Freedom Index, supports Smith’s prediction that societies with greater economic liberty achieve faster growth and higher living standards.


• The Scottish philosopher’s model achieves a hat trick: maximum liberty, individual improvement, and public benefit, all at the same time.