“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrow of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous and humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.”
Adam Smith, The Theory of Moral Sentiments (London: A. Millar, Sixth edition, 1790; first published, 1759) Part I. Of the Propriety of Action, Section I. Of the Sense of Propriety in paragraph I.I.1.
“Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that. When an animal wants to obtain something either of a man or of another animal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a spaniel endeavours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him.
Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will.
He has not time, however, to do this upon every occasion. In civilized society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: Methuen and Co., Ltd., ed. Edwin Cannan, Fifth edition, 1904; first published, 1776), Book I, Chapter 2, “Of the Principle which gives Occasion to the Division of Labour”, paragraph I.2.2.
Adam Smith (1723 – 1790) was of course the great Scottish moral philosopher and some might say father of modern economics. He was one of the key figures of the intellectual movement known as the Scottish Enlightenment.
Smith wrote two great books, The Theory of Moral Sentiments (1959) and The Wealth of Nations (1776). For two centuries economists and others, beginning with some minor German scholars in the nineteenth century and coming down to the present day, have commented on what some call “the Adam Smith problem”, that is, what appears to be a puzzling conflict between the essential themes of these two books. The Adam Smith problem has been raised again by Bill Gates in his recent speech at Davos and, commenting on Gates’ remarks and the problem, by Clive Crook, Gavin Kennedy and others.
Moral Sentiments is a book about the history of ethics. In it, Smith reviews the ideas of moral philosophers from Greco-Roman times until his own, and focuses on mankind’s ability to form moral judgments in spite of his self-centeredness. In his review, he stresses the importance of the “sympathy” one man feels for another – of seeing oneself in the other person’s shoes – and how the sentiments of sympathy form a moral bond among members of a community rooted in three cardinal virtues – “Prudence, Justice, and Benevolence”. Prudence, to Smith, is the intelligent care of one’s own health, wealth, and happiness. It is the wise management of one’s private affairs, and he saw it as a moral virtue. By Justice, Smith means an individual’s attitude and behavior toward another human being, reflected in “a scrupulous refusal ever to hurt or injure anyone else, in the pursuit of one’s own interest or advantage”. Justice in his view was the virtue of treating others fairly. Benevolence was going beyond simple Justice into positive efforts to help another. To Smith’s mind, benevolence was a lesser virtue and, although desirable, was not central to what he called an “agreeable” society. In short, it is the “sympathy” of one man for another that forms the basis for a common morality and yields a moral climate and legal framework for a stable, just and prosperous society.
The Wealth of Nations is a book about the history of economic ideas and a critique of political economy. As such there is a striking change in tone and focus away from expressions of sentiments and piety and toward hard-headed realism and a discussion of the economics of production, exchange, and distribution, and the problems of increasing material output from a reluctant earth and harsh world of scarcity meeting never ending and never satisfied wants. Here the emphasis is on the need for efficient production that advances the economic welfare of society and all its members. Smith stresses that the “natural” propensities of man, working through their intelligence, experience and growing knowledge, impelled and directed by their “self-interest” yet controlled and limited by their “sympathy” for others, yields both economic advance and political freedom. It is the market – the invisible hand, to use Smith’s metaphor – that not only guides production and consumption to its highest level but harmonizes the self-interest of each individual with the general interest of society as a whole. In Smith’s mind, it can do so precisely because markets are predicated on the moral virtues of Prudence, Justice and Benevolence.
The debate we see today about “the Adam Smith problem” is not about two books written by a long dead author. It is about the moral basis of Capitalism. Is Capitalism a system, as its critics contend, devoid of a moral foundation which allows rapacious exploiters of the weak and the poor to amass wealth and power to oppress others? Or is it system, as its supporters say, which presumes each and every one of us has both an inner dynamic that impels us forward to accomplish great things and a moral compass that checks our selfish ambitions through the operation of the impersonal mechanism we call markets?
To Smith, ordinary profit-seeking commerce carried out in a manner consistent with the rules of Prudence, enforced by known and stated laws of Justice, and encouraged by acts of private and public Benevolence leads to the most agreeable society. Equally, while not objecting to either property or wealth, Smith objected to the idea that the pursuit of wealth as the primary purpose of life. He argued that a modest income is all a person really needs and that the accumulation of wealth as an end in itself left a human being a moral shell.
I would say the two books are not at all at odds with each other and that Smith understood very well the true nature the economic system he set out to describe. I would also say that his words about the ultimate purpose of life are even more true than his comments on philosophy or economics.
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