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Criticism
Adam Smith's economic theories and publications have been subject to criticism from various academics.

Invisible hand
Nobel Prize-winning economist Joseph E. Stiglitz wrote, on the topic of one of Smith's better-known ideas, "[The] invisible hand ­- the idea that free markets lead to efficiency as if guided by unseen forces -­ is invisible, at least in part, because it is not there." As justification, Stiglitz stated, "individuals systematically behave in ways less rational than orthodox economists believe they do" as demonstrated by Daniel Kahneman's research into judgement and decision making. According to Stiglitz, market participants also have asymmetrical and imperfect information and this inability to make rational, fully-informed decisions profoundly affects the economy. Externalities (defined by Stiglitz as actions which impact others where the perpetrator does not pay) typically lead to sub-optimal markets. For instance, environmental externalities are not prioritised by unregulated markets. Without intervention, markets will produce too much pollution. Stiglitz also explained that most of the important research breakthroughs were funded by governments (e.g. internet) and that markets, by themselves, produce too little basic research. Externalities always exist in markets and therefore some government regulation is required, according to Stiglitz, and therefore there is ongoing debate about the balance between market and government.

Stephen LeRoy, professor emeritus at the University of California, Santa Barbara and a visiting scholar at the Federal Reserve Bank of San Francisco, questioned the relevancy of Smith's invisible hand with regard to current markets, writing, "The single most important proposition in economic theory, first stated by Adam Smith, is that competitive markets do a good job allocating resources. (...) The financial crisis has spurred a debate about the proper balance between markets and government and prompted some scholars to question whether the conditions assumed by Smith...are accurate for modern economies". According to LeRoy, some people think that the financial crisis stemmed mainly from "destructive consequences of factors such as information asymmetries in financial markets".

John D. Bishop, a professor who worked at Trent University, Peterborough, suggested that Smith poses a contradiction when writing about the "invisible hand". According to Bishop, "the interest of business people are in fundamental conflict with the interest of society as a whole, and that business people pursue their personal goal at the expense of the public good". In Smith's book, 'The Wealth of Nations', a passage states, "the interest of merchants and manufacturers were fundamentally opposed of society in general, and they had an inherent tendency to deceive and oppress society while pursuing their own interests."

The Wealth of Nations
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The printer William Strahan wrote on 12 April 1776 that David Hume said The Wealth of Nations required too much thought to be as popular as Edward Gibbon's The History of the Decline and Fall of the Roman Empire. Strahan also wrote: "What you say of Mr. Gibbon's and Dr. Smith's book is exactly just. The former is the most popular work; but the sale of the latter, though not near so rapid, has been more than I could have expected from a work that requires much thought and reflection (qualities that do not abound among modern readers) to peruse to any purpose". In 1812, Robert Southey of the Quarterly Review condemned The Wealth of Nations as a "tedious and hard-hearted book". In 1826, the English radical William Cobbett criticised in his Rural Rides the political economists' hostility to the Poor Law: "Well, amidst all this suffering, there is one good thing; the Scotch political economy is blown to the devil, and the Edinburgh Review and Adam Smith along with it". Fox also found Adam Smith "tedious" and believed that one half of The Wealth of Nations could be "omitted with much benefit to the subject".

Economic anthropologist David Graeber argues that throughout antiquity one can identify many different systems of credit and later monetary exchange, drawing evidence for his argument from historical and also ethnographical records, that the traditional explanation for the origins of monetary economies from primitive bartering systems, as laid out by Adam Smith, does not find empirical support.[70] The author argues that credit systems developed as means of account long before the advent of coinage around 600 BCE, and can still be seen operating in non-monetary economies. The idea of barter, on the other hand, seems only to apply to limited exchanges between societies that had infrequent contact and often in a context of ritualised warfare, rendering its conceptualisation among economists as a myth.[71] As an alternative explanation for the creation of economic life, the author suggests that it originally related to social currencies, closely related to non-market quotidian interactions among a community and based on the "everyday communism" that is based on mutual expectations and responsibilities among individuals. This type of economy is, then, contrasted with the moral foundations of exchange based on formal equality and reciprocity (but not necessarily leading to market relations) and hierarchy, based on clear inequalities that tend to crystallise in customs and castes.

The Theory of Moral Sentiments
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