Adam Smith did not write as much about welfare issues, as defined in this volume, as many other thinkers but what he had to say about the division of labour, competition, the invisible hand of the market, economic growth and the limited role of government has had a deep and lasting influence on welfare debates.

His central message was that the unfettered operation of the market was enough to produce the economic growth that was necessary to satisfy the needs of all as well as the demand for luxuries by the few. Any intervention by the state in public affairs should be restricted to those few areas where it was either unprofitable or extremely difficult for the private market to provide. Large-scale government intervention in economic affairs was detrimental to economic growth and hence to human welfare.

Human nature

Although Adam Smith is generally seen as the founder of economics, he saw himself as a philosopher and held an academic chair in moral philosophy. He examined many aspects of economics philosophically and he certainly had a lot to say on the subject of human nature. Smith's theoretical edifice was based on a value system concerning human nature, which he made quite explicit both in his first book – The Theory of Moral Sentiments (1759) – and in his major book – The Wealth of Nations (1776) – a book that has become a classic not only in the field of economics but in the entire spectrum of the social sciences.

Smith was unequivocally on the side of those, like Hobbes and Rousseau, who believed and argued that differences in innate ability are, on the whole, minimal and that any such differences in life are mostly the result of the environment – family upbringing and education. He rejected the Aristotelian view of marked innate ability differences among human beings. His reason for doing so was that neither parents nor others notice any remarkable differences among children up to the age of eight years; it is only after that age, when children enter very different occupations, that differences in their talents appear and these seem to grow wider with the years ‘till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance’ (Smith, 1776a, p 120).