Adam Smith’s thoughts on productivity, division of labor, capital accumulation, trade, and institutions remain relevant for understanding today’s global economic conditions. According to Prof. Soner Baskaya, Professor of Economics at the Adam Smith Business School, University of Glasgow, productivity is the foundation of a nation’s wealth.
However, productivity depends on a country’s ability to specialize and divide labor, which is influenced by market size, economic connectivity, and institutions that support productive activities.
“Adam Smith always sees productivity as the source of national wealth,” said Soner at the SBM ITB Industrial Summit 2026, held by the School of Business and Management, Bandung Institute of Technology, and the University of Glasgow in Jakarta, August 19-20, 2026.
The forum, themed “Wealth of Nations: An International Forum Commemorating the Intellectual Legacy of Adam Smith,” brought together academics, industry leaders, regulators, policymakers, and professionals to discuss Indonesia’s economic transformation amidst global uncertainty.
In addition to Soner, the event was also attended by Agung Wicaksono, Director of Transformation and Sustainability at PT Pertamina (Persero), Anggito Abimanyu, Chairman of the Deposit Insurance Corporation (LPS), and Prof. Deddy Priatmodjo Koesrindartoto, Head of the Business Risk and Finance Expertise Group at SBM ITB.
Adam Smith’s thinking served as a foundation for discussing several Indonesia’s challenges, from productivity, investment, energy transformation, and financial stability to growth inclusiveness. Its relevance is heightened as the world faces trade fragmentation, geopolitical tensions, changing supply chains, and uncertain capital flows.
According to Soner, the challenge is not simply maintaining economic openness but also building the capacity to absorb shocks. Economic resilience, he asserted, does not mean being free from shocks but rather having the ability to withstand and adapt to them.
“The shocks are all around us; they are beyond our control. The only thing we need to learn is how to live with them.”
The financial system therefore plays a role in ensuring capital flows to productive activities. However, Soner emphasized the need for healthy competition and adequate regulation to prevent credit expansion from creating excessive risk.
“Competition, but not unregulated competition,” he said.
Energy Transformation and Productive Capital
Agung Wicaksono linked Pertamina’s business and energy transformation to two principles of Adam Smith: productive capital formation and productive specialization.
“Adam Smith has a key principle on improving productivity and two key principles: productive capital formation and productive specialization,” Agung said.
Pertamina is implementing this by strengthening its core business while developing future energy businesses. In addition to maintaining its oil, refinery, and energy retail businesses, the company is expanding its portfolio to geothermal, solar energy, biofuels, and carbon capture and storage (CCS) and carbon capture, utilization, and storage (CCUS) technologies.
“This is the future we are going to pursue, building and enhancing our low-carbon business,” he said.
The transformation is also directed at downstreaming and a circular economy. One example is the development of sustainable aviation fuel (SAF) based on used cooking oil. Pertamina is developing a pilot project to link the collection of used cooking oil from the Free Nutritional Meal (Makan Bergizi Gratis/MBG) program kitchen to the co-processing process at the Cilacap Refinery.
“This is not only downstreaming, but also a circular economy,” said Agung.
A similar approach is being taken to utilize urban waste as an energy source. Environmental issues, according to Agung, can be transformed into economic opportunities through innovation and the development of new value chains.
Growth for Whom?
Prof. Deddy Priatmodjo Koesrindartoto reminded us that Adam Smith should not be interpreted solely through the concepts of the free market and the invisible hand. His thinking also encompasses education, trust, market structure, institutions, access to capital, and the distribution of prosperity.
According to Deddy, the challenge towards a Golden Indonesia 2045 is not only achieving growth targets or increasing gross domestic product, but ensuring that communities across all regions and levels feel the benefits.
Ultimately, economic development must address a more fundamental question: not just how large Indonesia’s economy will be in 2045, but who will benefit from that growth.
