ADAM SMITH ON THE PROCESS OF CIVILIZATION AND THE ROLE OF COUNTERFACTUAL REASONING

This paper examines Adam Smith’s use of counterfactual reasoning in his analysis of the “process of civilization” and its implications for modern economics. Smith, influenced by Isaac Newton, Robert Simson, Francis Hutcheson, and David Hume, employed counterfactual reasoning to critique the Mercantile System by comparing actual economic developments with the “natural course of events.” His physiocratic bias limited his engagement with emerging industrial advancements, yet his methodological contributions remain significant. Smith’s focus on “what if?” questions in policy discussions continues to shape modern economic thought, despite some limitations in fully realizing his theoretical framework.