July 4 (Bloomberg) -- Adam Smith, the father of modern economics, will be honored today with a statue in the center of Edinburgh, the first major public monument to the 18th-century philosopher.

The likeness will be unveiled by Vernon Smith, winner of the 2002 Nobel Prize for economics, at 12:15 p.m. on the Royal Mile in the Scottish capital's Old Town. The statue is within sight of a monument to the philosopher David Hume, a contemporary and friend, and a few minutes' walk from Smith's grave.

The 10-foot (3-meter) bronze work commemorates a Scotsman whose significance has been little recognized in his homeland until now. Former U.S. Federal Reserve Chairman Alan Greenspan noted in his memoirs that a visitor to Smith's grave in 2000 found it strewn with beer cans and debris.

``A lot of people come from all over the world to visit his tomb, but it's difficult to get to and not very impressive,'' Eamonn Butler, director of the London-based Adam Smith Institute, said in an interview. ``There's more of an understanding of him these days. He can be celebrated without it being seen as a political or sectarian thing.''

Butler's group has spent the past five years fund-raising and getting approval for the statue. The idea for it followed a meeting in 2003 with Edinburgh's city council to address the state of his tombstone, which had fallen into disrepair, Butler said. Smith was buried in the Canongate Kirkyard cemetery after his death in 1790 at the age of 67.

Smith's book, ``An Inquiry into the Nature and Causes of the Wealth of Nations,'' was published in 1776 and has influenced modern economists including Greenspan and Milton Friedman. In the book, Smith argued that minimal government interference in commerce would promote human welfare and alleviate poverty.

Greenspan's Tribute

The book ``is one of the great achievements of intellectual history,'' Greenspan wrote in ``The Age of Turbulence,'' his memoir, published last year.

``The pendulum of economic thinking began to swing in Smith's favor in the late 60s, just as I began my public career,'' Greenspan wrote. ``The comeback has been long and slow, particularly in his native land.''

Recognition of Smith is also a rare tribute for an economist in Britain. Westminster's city council, which controls the center of London, has only three economists on a list of 221 monuments, which is dominated by monarchs, politicians and military leaders.

Butler's group raised funding for the statue entirely by private donations, assisted by a letter from former Prime Minister Margaret Thatcher, encouraging the idea of a monument to Smith.

Fund Donors

Vernon Smith was among the donors, Butler said. He won the Nobel Prize for work on establishing laboratory experiments to investigate how people make decisions. Friedman, who also won a Nobel prize in economics and helped shape Thatcher's policies, also contributed to the work. He died in 2006.

The location close to Hume's statue is fitting because of their close association, Butler said.

``They were very, very good friends,'' he said. ``There's a story that Hume gave Smith a copy one of his books when Smith went to Glasgow as a student, and it was confiscated by the authorities because of its irreligious content.''

The sculptor, Alexander Stoddart, was chosen because he made the Hume statue, Butler said. The work, which Butler says is the first major public monument of Smith in the world, conceals one hand beneath his robes in reference to his idea that leaving individuals free to pursue their own self-interest will benefit all of society through the work of an ``invisible hand.''

Prime Minister Gordon Brown's connections to Smith have helped to improve people's understanding of the thinker, Butler said. Brown grew up in Kirkcaldy, Scotland, where Smith was born in 1723 and raised by his widowed mother. He now represents the town in Parliament.

Today's unveiling is Britain's second public recognition of Smith in little more than a year, after the Bank of England unveiled his likeness in 2007 on its new 20-pound ($39.6) banknote, its most-circulated bill.

``It's just a lucky coincidence,'' Butler said.

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net

Last Updated: July 4, 2008 06:08 EDT