Conclusion
Scottish economic thought had a profound influence on the development, first of classical economics and then of modern economics. It set the agenda for classical economics in terms of the analysis of the causes of economic growth and distribution, with an attendant focus on population, money, trade and public finance.
The subsequent development of general equilibrium theory was presented as the completion of Smith's analysis of markets in terms of the invisible hand. For many years the social focus of the Theory of Moral Sentiments was contrasted with the self interest of the Wealth of Nations, implying a contradiction (the ‘Adam Smith problem'). Now the consensus among Smith scholars is that the self whose interest Smith studied was a social self, conditioned by social norms. In the meantime, the wider political economy influence of Scottish thought had been acknowledged in an apparently disparate range of developments, such as in the founding of the United States and the work of Marx, Hayek and Keynes. More recently, experimental game theory has drawn new attention to Smith's (1759) theory of social relations.Such disparate developments can be understood in terms of the different interpretations of Scottish thought, and in particular how far this thought was understood in terms of Scottish philosophy. The general equilibrium interpretation of Smith understood his system as something amenable to formalisation, yielding universal laws by means of deduction from axioms. Smith (1795) had himself understood the rhetorical power of deductivism. But the interpretation of Smith's system as an open historical process led to very different developments. Marx adopted the stages approach and much of the analysis of factors of production, while coming to different political conclusions. Hayek focused on Scottish enlightenment epistemology to support his methodologically individualistic analysis of market processes.
Keynes similarly drew on Hume's organicism and the resulting epistemology for his theory of probability. As with Hayek, the implication was that deductive formalism was an inadequate basis for argument.It is uncontroversial to identify Scottish history of thought as having had profound and widespread influence on economics. This applies particularly to the enlightenment period, although Scottish thinkers continued to make contributions after that period and the Scottish approach was revived with the establishment of the discipline in Scottish universities in the nineteenth century. But the alternative deductivist approach which had arisen from other traditions came to dominate the subject. The post-enlightenment contributions from Scotland therefore were misunderstood and devalued by the growing preference for formal mathematical modelling. While realist economic theory designed for application and applied economics continue to be regarded as second-class subsets of the discipline relative to formal deductivist economics, the philosophical grounding which could be provided for realist theory and applied economics by Scottish epistemology is largely ignored. Nevertheless new developments in methodology and theory outside the mainstream are increasingly referring to Scottish epistemology for grounding. While it is to theory that most literature on Scottish economic thought refers, it is the Scottish approach itself which has the potential to forge new developments in economic ideas.