Adam smith's system of political economy presupposes both a mechanical psychology of man and a human wisdom, commonly referred to since the 17th century as science, a wisdom which is neither natural nor acquired, but invented. This invention is the source of smith's system, from which economic liberalism of the 19th century derived its theoretical support and in comparatively recent times the ideology "economic rationalism" has claimed a similar support. To understand modern economic rationalism as ideology one needs to go back to its original source, or sources, to establish its true cognitive status. A principal proponent of the new doctrine is Milton Friedman and as Friedman claims Adam Smith as his preceptor, it is necessary to examine smith's own invention, his science of economics in order to compare this analysis with Friedman's.
Smith’s more rigorous inquiry understands the requirements of Newton's science of mechanics from which it is derived. Smith accepted the foundations of the mechanical psychology of man laid by his predecessors, especially Thomas Hobbes; and also the specific requirements of a mathematical science purporting to make use of functional equations to explain the mechanical character of exchange. Friedman, the thesis contends, did not have an adequate understanding of the philosophical and methodological requirements of an analytical science; but as his solution has practical appeal, his teaching loses any character of a treatise and becomes a political tract leading to an ideology which has no theoretical support.