In an interview on Economic Development

Tell me about your first choice, The Wealth of Nations by Adam Smith. 

The reason I included The Wealth of Nations in my choices is because I see this as one of the major books in the world of development economics. At the time Adam Smith was writing Britain was a developing economy. It was around the time of the Industrial Revolution. And there are many things in the book which remain important even today. Often this work is misinterpreted. For example, he is widely cited as a market fundamentalist which he was not. He is regarded as the guru of greed – greed that is supposed to propel a capitalist economy, which is quite the opposite of his intention, as you can read from parts of this work and his preceding book, The Theory of Moral Sentiments. 

The problem is, he is always quoted from a very small part of The Wealth of Nations in which he is trying to explain economic exchange. But the rest of the book and the other book are about the whole plurality of human motivations. When he is explaining economic exchange he is saying self-interest alone is enough to get an exchange. But he is talking about what is the minimum assumption on which one can get an economic exchange rather than that this is what human beings are like, which is what many people took it to mean. 

Economic exchange is only one part of the subject of economics; another part is how goods are distributed, and he showed a great deal of concern for the poor. He wasn’t happy with how poverty relief in Britain was being carried out at the time. He was also in favour of free education. Once you concentrate on the other parts of his work you see he is focusing on economic development which is about improving the living standards of the masses of poor people.