Adam Smith, the great theorist of free trade economics, is revered for his The Wealth of Nations. His companion work, The Theory of Moral Sentiments, is mostly forgotten. Yet it is the more important of the two. In it, Smith sets out why capitalism works best in societies where there are high levels of trust between its participants. When social trust falls, the cost of doing business rises. Even in the late eighteenth century, at the dawn of modern growth, Smith grasped the psychological importance of possessing faith in a better future.
Date Added: 2018 Aug 03