Adam Smith’s pin factory will also be featured on the new twenty-pound note.
So Smith gets his twenty-pounds of fame, a slight twist on Andy Warhol’s observation that everybody would get 15 minutes of fame in the future.*
The story in the Times Online is actually a much better feature on Adam Smith than is available in most of the high school economics books today. A major failing of the texts: They do not feature stories on the economists who make economics tick. Advanced Placement texts are better, but still there is room for improvement. My experience in the classroom is that the lives of the economists provide inspiration and, quite often, quirky historical anchors that help students understand and recall key points of economics. For most high school economics students, such enrichment comes only with the teacher’s providing it apart from the texts and other state- or district-provided materials.
HE WAS awkward, absent-minded and had no head for business, according to his obituary in The Times. But today Adam Smith will have his reputation fixed as the father of modern economics as he becomes the latest historical figure to appear on the £20 note.
Smith, who died in 1790, having lived out his days as a quiet Customs official with his mother, will become the first Scotsman to appear on a Bank of England note when he replaces Edward Elgar next spring.
He was the author of The Wealth of Nations, which made the case for free markets and free trade against the mercantilist philosophy of the 18th century, and which argued that individual self-interest would promote the common good “led by an invisible hand”. His principles became the cornerstone of Britain’s 19th-century industrial might.
Kidnapped by gypsies, never married, lived with his mother — there are enough interesting quirks in Smith’s life to make it stand out, if told with a little flair.
Someone should do a careful and lengthy discussion of the coincidence that Smith’s best known book, Wealth of Nations, was published in 1776, and whether and how it might have affected the development of economic and governmental institutions in the United States after the American Revolution.
Putting Smith’s vivid example of a pin factory on the note is another work of genius. Though familiar to economists, the pin factory illustration is virtually lost on the modern public, and this loss affects economic decisions. The Times article said:
At a time when manufacturing was in its infancy, Smith was the first to recognise the productivity gains from dividing of labour into specialised tasks. Next to the picture will be the quotation, “and the great increase in the quantity of work that results”. Mr King said: “From next spring, when visitors to our country look carefully at their new £20 notes . . . I hope they will absorb the lesson that specialisation in production and trade across the world are the way to improve living standards in all countries. And perhaps when they return home they will press their own politicians to support the opening up of trade, which has been at the heart of the British Government’s efforts to reform the world economy.”
Smith is most famous for his phrase describing the mechanism that regulates prices and supplies in free markets, what he called “an invisible hand.” But his writings are really quite rich in other imagery that makes economics come alive to students. Again, the Times notes:
When Warren Buffett, the world’s second richest man, gave Bill Gates’s charitable foundation $31billion (£16billion), Gates gave him his personal copy of The Wealth of Nations “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” — Chapter 2, The Wealth of Nations
Footnote: * “In the future everyone will be world-famous for fifteen minutes.” Andy Warhol, catalogue of his photo exhibition in Stockholm, 1968.
Tip of the old scrub brush to Amateur Economicst and Curmudgeon.