From “dull” to “cheerful”: the relevance of Adam Smith for today

Abstract

Purpose – Is there a secret recipe for economic growth? Design/methodology/approach – No, there is no recipe, but we can extrapolate some pieces of advice from Adam Smith. Findings – An economy can leave behind its “dull” stagnant state and grow when its markets expand, when the productivity of its workers increases thanks to high compensations, which are seen as incentives to work harder and when lobbying and cronyism are kept at bay. Luck plays a role too, but these three ingredients are necessary, even if not sufficient, for an economy to grow and thus be “cheerful.” Originality/value – These three aspects – expansion of market, liberal compensation of workers and lobbying – especially combined, have often been underestimated in Smith’s understanding of the possible sources of economic growth.

Keywords

• Adam Smith
• Economic growth
• Luck
• Access to market
• Fair compensation
• Special interest groups