 Hi there, my name is Don Boudreau. I'm a professor of economics at George Mason University and a senior fellow at George Mason's Mercatus Center And I'm here today to talk about Adam Smith and his views on trade and the economy. So let's get started Yes, I do and and for reasons that I gave in in in an earlier remark economics is is a is the study of Society it's it or it is an aspect of the study of society and It's not about numbers It's not about business. It's not about money One of my pet peeves is a economics books that have dollar signs on it gives the wrong impression But what economics is it's not about money at finance is a is a grew out of Economics finance is a very important discipline finances about money I have I have nothing against finance some of my best friends or finance professors and I I applaud them I think they do good work, but economics itself is a a science of society and To be a good science of society you have to study society whole And you have to study The markets yep, just both private markets and and and and political markets James Buchanan one of my great heroes for colleague of mine the first winner at George Mason of a Nobel Prize in economics Vernon Smith being the second both great economists Buchanan one of his most famous essays is a 1960s 1963 Presidential address to the Southern Economic Association title. What should economists do? And he said well what economists should do is is do what Adam Smith said they should do and What that is is study how people Exchange study how people trade Human beings are unique in that we have these complex trades with each other No other species trades with each other the way human beings do nothing. It doesn't come come close that is Probably our single most important unique feature as a species We we we trade all I do is teach economics All my physician does is practice medicine all my grocer does is so Groceries and yet we can we all live fabulously wealthy lives because we specialize and then and then we trade and In it's it's business enough To look at the many different ways that people trade look at the reasons why they trade look at the impediments to trade Look at what can encourage trade trace out how trade Trace out the effects that trade that trade has and and and stop worrying said Buchanan about a Whether or not at the last margin the the you know some particular resource has been allocated exactly exactly Correctly you can in that essay that I just mentioned what should economists do I can tie this it just occurs occurs to me to one of my earliest remarks in this conversation In a way if you can't although he didn't put it in this manner Buchanan was warning economists to Get away from thinking like mercantilists. So it would it would Economically kind of slipped it back into gradually and unawares Starting in the 1870s with the marginal revolution, which was itself as a major major And wonderful intellectual advance But through a series of unfortunate steps Economics had become by mid 20th century That's sort of the science of allocation How our resources allocate how efficiently our resources Allocated and this was done this analysis was done as if Society were like a big household or a big firm with with one set of purposes and So we want to we wanted this is how economists were thinking In the mid 20th century. All right, so we want to kind of pretend that Society has a set of purposes in the second just like like like Matt and Molly each have a set of purposes and Don has a set of purposes Like the the Boudreaux household has a set of purposes So we're going to just pretend that the the society has a set of purposes And you can and said that's not true. Society does not have purposes in the way that an individual has purposes Like a household or a business has purposes Society is just what commercial society is just what emerges when people each of whom has purposes Pursues those purposes by exchanging with each other And you get a very different Approach to policy and approach to doing economics when you recognize that you that this is that the economy should not be analyzed as or presumed to be Something that is meant to to maximize some overall Social utility maximize some social welfare function Adam Smith said mercantilism is bunk That's my summary of he didn't use that word Mercantilism nonsense, right? It's nonsense. It's premised on this notion that all economic activity should be Directed to and hence judged by How well it promotes the national interest Nothing much has changed says Buchanan if instead of the national interest you talk about social welfare there is no such thing as the national interest there is no such thing as social welfare and So forget about Return to studying exchange and trade and what happens when people exchange and trade You're not social engineers to stop trying to be a social engineer Because you're you're you're doing bad science and you will be led to do destructive policy