Written 249 years ago, the Declaration of Independence encapsulates our principles of freedom and independence. It emphasizes the natural rights of all citizens to enjoy life, liberty and the pursuit of happiness In the same year, the Declaration of Independence appeared so too did a book that spelled out the optimal way for a country to engender the greatest economic happiness for its citizens. “The Wealth of Nations,” by the Scottish moral philosopher Adam Smith, (the term economics had yet to be invented) argued that a free economy, guided by competition and the self-interest of consumers and producers, unencumbered by government regulations, would generate the greatest national wealth, individual prosperity and mutual social benefits for all.
“The Wealth of Nations” emanated from the Scottish Enlightenment, an intellectual and cultural movement spanning 80 years from 1710 to 1790. The movement significantly advanced philosophy, science and economics in the wider world. It shaped much of the thinking of early American leaders. James Madison read Smith’s work as, no doubt, did other signers of the Declaration of Independence. Smith believed that the self-regulating characteristics of the laissez-faire marketplace were essential components of a democratic system of government.
Smith’s work was a refutation of mercantilism, an economic system practiced by many of the wealthy countries of western Europe from the 16th to 18th centuries, where powerful states offered special privileges to their domestic industries. Mercantilism necessitated the exploitation of colonies which supplied the raw materials shipped to the mother country for manufacture. It was mercantilism’s prohibitions of economic self-determination against which the 13 colonies rebelled.
Drawing from the ideals of the Scottish Enlightenment thinkers like David Hume, Smith believed that without government interference, individuals’ self-interest would lead countries to produce products that satisfied consumers’ needs. Further competition, among producers, would ensure that their products would sell at the lowest possible price. Little government involvement was necessary. According to Smith, this self-regulating process would function as “an invisible hand” to promote general economic growth and well-being.
Smith was also the first to articulate the benefits of the “division of labor” pointing out that the most efficient producers optimized output by segmenting the production process among workers with various skills — the production line. He went further by suggesting countries should also practice divisions of labor by specializing in the production of goods and services where they had an economic advantage and then engage in free trade with other countries which exercised their own economic advantages. Accordingly, he deplored regulations and tariffs that interfered with the decisions of companies to specialize in the production of goods.
Adam Smith was not naïve. Just as he saw that government could play favorites and restrict trade inhibiting economic growth, so could businesses. According to Smith, “Men of the same trade seldom meet together that the talk does not turn to a conspiracy against the public.” Therefore, he advocated for important, but limited government involvement to ensure that the concentration of market power was discouraged.
Smith recognized that consumers and businesses, if left to their own self-interest, would produce and consume the optimal amount of goods and services at the lowest possible price. By doing so they would create economic well-being for themselves and wealth for their nation resulting in the greatest prosperity and hence happiness for all.
Shortly after the battles in Lexington and Concord, Smith argued publicly that the time had come for the American colonies to declare independence and to constitutionalize their powers, rights and responsibilities. Smith’s book applied economic thinking to the political and social rights of individuals encapsulated by our Declaration of Independence.
As we begin to celebrate our semiquincentennial and lionize our Declaration of Independence, let us consider the warnings of a Scottish moral philosopher. Smith would hardly condone overregulation of business, nor would he sanction government direct ownership of private businesses like the current proposed Federal purchase of 10% of Intel Corporation. Smith helped lay the foundation for our economy and the wealth that it has created for its citizens. With this in mind, on July 4, 2026, we should each enjoy some haggis with our hot dogs.
This is a contributed opinion column. Michael A. MacDowell is president emeritus of Misericordia University and a trustee of the Calvin K. Kazanjian Economics Foundation. The views expressed in this piece are those of its individual author, and should not be interpreted as reflecting the views of this publication. Do you have a perspective to share? Learn more about how we handle guest opinion submissions at themorningcall.com/opinions.