Every year around the anniversary of the publication of The Wealth of Nations (1776), economists and commentators repeat a familiar story: Adam Smith—the Scottish moral philosopher—is celebrated as the father, or even the inventor, of economics. In this telling, Smith stands at the beginning of a scientific tradition, single-handedly discovering the principles of the market economy and the virtues of free trade.

But this story is less history than myth.

As Murray Rothbard observed in his monumental history of economic thought, the idea that Smith created economics reflects a deeply misleading way of understanding intellectual history. The “Great Man” narrative has long dominated textbook accounts of economic thought. In reality, economics did not begin with Smith, and many of the most important insights associated with him were already well understood long before The Wealth of Nations appeared.

Indeed, by the mid-18th century, economic analysis had already reached remarkable sophistication.

Long before Smith put pen to paper, thinkers across Europe had been grappling with the nature of markets, prices, money, and trade. The late Spanish scholastics of the 16th century had developed sophisticated theories of subjective value and market price formation. They argued that the “just price” was simply the price emerging from voluntary exchange in the marketplace:........

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