Smith_AdamAdam Smith is often identified as the father of moderncapitalism. While accurate to some extent, this description is bothoverly simplistic and dangerously misleading. On the one hand, it istrue that very few individual books have had as much impact as his AnInquiry into the Nature and Causes of the Wealth of Nations. Hisaccounts of the division of labor and free trade, self-interest inexchange, the limits on government intervention, price, and thegeneral structure of the market, all signify the moment when economicstransitions to the "modern." On the other hand, The Wealth of Nations,as it is most often called, is not a book on economics. Its subject is"political economy," a much more expansive mixture of philosophy,political science, history, economics, anthropology, and sociology.The role of the free market and the laissez-faire structures thatsupport it are but two components of a larger theory of humaninteraction and social history.
Smith was not an economist; he was a philosopher. His first book, TheTheory of Moral Sentiments, sought to describe the natural principlesthat govern morality and the ways in which human beings come to knowthem. How these two books fit together is both one of the mostcontroversial subjects in Smith scholarship and the key tounderstanding his arguments about the market and human activity ingeneral. Historically, this process is made more difficult by theso-called "Adam Smith Problem," a position put forth by small numbersof committed scholars since the late nineteenth century that Smith'stwo books are incompatible. The argument suggests that Smith's work onethics, which supposedly assumed altruistic human motivation,contradicts his political economy, which allegedly assumed egoism.However, most contemporary Smith scholars reject this claim as well asthe description of Smith's account of human motivation it presupposes.
Smith never uses the term "capitalism;" it does not enter intowidespread use until the late nineteenth century. Instead, he uses"commercial society," a phrase that emphasizes his belief that theeconomic is only one component of the human condition. And while, forSmith, a nation's economic "stage" helps define its social andpolitical structures, he is also clear that the moral character of apeople is the ultimate measure of their humanity. To investigateSmith's work, therefore, is to ask many of the great questions that weall struggle with today, including those that emphasize therelationship of morality and economics. Smith asks why individualsshould be moral. He offers models for how people should treatthemselves and others. He argues that scientific method can lead tomoral discovery, and he presents a blueprint for a just society thatconcerns itself with its least well-off members, not just those witheconomic success. Adam Smith's philosophy bears little resemblance tothe libertarian caricature put forth by proponents of laissez fairemarkets who describe humans solely as homo economicus. For Smith, themarket is a mechanism of morality and social support.
1. Life and Influencesa. Early Life and Influences
Adam Smith was born in June, 1723, in Kirkcaldy, a port town on theeastern shore of Scotland; the exact date is unknown. His father, theComptroller and Collector of Customs, died while Smith's mother waspregnant but left the family with adequate resources for theirfinancial well being. Young Adam was educated in a local parish(district) school. In 1737, at the age of thirteen he was sent toGlasgow College after which he attended Baliol College at OxfordUniversity. His positive experiences at school in Kirkcaldy and atGlasgow, combined with his negative reaction to the professors atOxford, would remain a strong influence on his philosophy.
In particular, Smith held his teacher Francis Hutcheson in highesteem. One of the early leaders of the philosophical movement nowcalled the Scottish Enlightenment, Hutcheson was a proponent of moralsense theory, the position that human beings make moral judgmentsusing their sentiments rather than their "rational" capacities.According to Hutcheson, a sense of unity among human beings allows forthe possibility of other-oriented actions even though individuals areoften motivated by self-interest. The moral sense, which is a form ofbenevolence, elicits a feeling of approval in those witnessing moralacts. Hutcheson opposed ethical egoism, the notion that individualsought to be motivated by their own interests ultimately, even whenthey cooperate with others on a common project.
The term "moral sense" was first coined by Sir Anthony Ashley Cooper,Third Earl of Shaftesbury, whose work Smith read and who became afocal point in the Scots' discussion, although he himself was notScottish. Although Shaftesbury did not offer a formal moral sensetheory as Hutcheson did, he describes personal moral deliberation as a"soliloquy," a process of self-division and self-examination similarin form to Hamlet's remarks on suicide. This model of moral reasoningplays an important role in Smith's books.
The Scottish Enlightenment philosophers, or the literati, as theycalled themselves, were a close-knit group who socialized together andwho read, critiqued, and debated each other's work. They met regularlyin social clubs (often at pubs) to discuss politics and philosophy.Shortly after graduating from Oxford, Smith presented public lectureson moral philosophy in Edinburgh, and then, with the assistance of theliterati, he secured his first position as the Chair of Logic atGlasgow University. His closest friendship in the group—and probablyhis most important non-familial relationship throughout his life—waswith David Hume, an older philosopher whose work Smith was chastisedfor reading while at Oxford.
Hume was believed to be an atheist, and his work brought into questionsome of the core beliefs in moral philosophy. In particular, and evenmore so than Hutcheson, Hume's own version of moral sense theorychallenged the assumption that reason was the key human faculty inmoral behavior. He famously asserted that reason is and ought to beslave to the passions, which means that even if the intellect caninform individuals as to what is morally correct, agents will only actif their sentiments incline them to do so. An old proverb tells usthat you can lead a horse to water but that you can't make it drink.Hume analogously argues that while you might be able to teach peoplewhat it means to be moral, only their passions, not their rationalcapacities, can actually inspire them to be ethical. This position hasroots in Aristotle's distinction between moral and intellectualvirtue.
Smith, while never explicitly arguing for Hume's position, nonethelessseems to assume much of it. And while he does not offer a strict moralsense theory, he does adopt Hume's assertion that moral behavior is,at core, the human capacity of sympathy, the faculty that, in Hume'saccount, allows us to approve of others' characters, to "forget ourown interest in our judgments," and to consider those whom "we meetwith in society and conversation" who "are not placed in the samesituation, and have not the same interest with ourselves" (Hume:Treatise, book 3.3.3).b. Smith's Writings
Smith echoes these words throughout A Theory of Moral Sentiments. Inthis book, he embraces Hume's conception of sympathy, but rejects hisskepticism and adds, as we shall see, a new theory of conscience tothe mix. However, focusing on Hume's observations also allow us to seecertain other themes that Smith shares with his Scottish Enlightenmentcohort: in particular, their commitment to empiricism. As with most ofthe other Scottish philosophers, Hume and Smith held that knowledge isacquired through the senses rather than through innate ideas,continuing the legacy of John Locke more so than René Descartes. ForHume, this epistemology would bring into question the connectionbetween cause and effect—our senses, he argued, could only tell usthat certain events followed one another in time, but not that theywere causally related. For Smith, this meant a whole host of differentproblems. He asks, for example, how a person can know another'ssentiments and motivations, as well as how members can use the marketto make "rational" decisions about the propriety of their economicactivity.
At the core of the Scottish project is the attempt to articulate thelaws governing human behavior. Smith and his contemporary AdamFerguson are sometimes credited with being the founders of sociologybecause they, along with the other literati, believed that humanactivities were governed by discoverable principles in the same waythat Newton argued that motion was explainable through principles.Newton, in fact, was a tremendous influence on the Scots' methodology.In an unpublished essay on the history of astronomy, Smith writes thatNewton's system, had "gained the general and complete approbation ofmankind," and that it ought to be considered "the greatest discoverythat ever was made by man." What made it so important? Smith describesit as "the discovery of an immense chain of the most important andsublime truths, all closely connected together, by one capital fact,of the reality of which we have daily experience" (EPS, AstronomyIV.76).
While Smith held the chair of logic at Glasgow University, he lecturedmore on rhetoric than on traditional Aristotelian forms of reasoning.There is a collection of student lecture notes that recount Smith'sdiscussions of style, narrative, and moral propriety in rhetoricalcontexts. These notes, in combination with his essay on astronomy,offer an account of explanation that Smith himself regarded asessentially Newtonian. According to Smith, a theory must first bebelievable; it must soothe anxiety by avoiding any gaps in itsaccount. Again, relying upon a basically Aristotelian model, Smithtells us that the desire to learn, and the theories that result, stemsfrom a series of emotions: surprise at events inspires anxieties thatcause one to wonder about the process. This leads to understanding andadmiration of the acts and principles of nature. By showing that theprinciples governing the heavens also govern the Earth, Newton set anew standard for explanation. A theory must direct the mind with itsnarrative in a way that both corresponds with experience and offerstheoretical accounts that enhance understanding and allow forprediction. The account must fit together systematically without holesor missing information; this last element—avoiding any gaps in thetheory—is, perhaps, the most central element for Smith, and this modelof philosophical explanation unifies both his moral theories and hispolitical economy.
As a young philosopher, Smith experimented with different topics, andthere is a collection of writing fragments to compliment his lecturenotes and early essays. These include brief explorations of "AncientLogics," metaphysics, the senses, physics, aesthetics, the work ofJean-Jacque Rousseau, and other assorted topics. Smith's ScottishEnlightenment contemporaries shared an interest in all of theseissues.
While the works offer a glimpse into Smith's meditations, they are byno means definitive; few of them were ever authorized for publication.Smith was a meticulous writer and, in his own words, "a slow a veryslow workman, who do and undo everything I write at least half a dozenof times before I can be tolerably pleased with it" (Corr. 311). As aresult, he ordered sixteen volumes of unpublished writing burnt uponhis death because, presumably, he did not feel they were adequate forpublic consumption. Smith scholars lament this loss because itobfuscates the blueprint of his system, and there have been severalattempts of late to reconstruct the design of Smith's corpus, againwith the intent of arguing for a particular relationship between hismajor works.
After holding the chair of logic at Glasgow for only one year(1751–1752), Smith was appointed to the Chair of Moral Philosophy, theposition originally held by Hutcheson. He wrote The Theory of MoralSentiments, first published in 1759, while holding this position and,presumably, while testing out many of his discussions in theclassroom. While he spoke very warmly of this period of his life, andwhile he took a deep interest in teaching and mentoring young minds,Smith resigned in 1764 to tutor the Duke of Buccleuch and accompanyhim on his travels.
It was not uncommon for professional teachers to accept positions asprivate tutors. The salary and pensions were often lucrative, and itallowed more flexibility than a busy lecturing schedule might afford.In Smith's case, this position took him to France where he spent twoyears engaged with the philosophes—a tight-knit group of Frenchphilosophers analogous to Smith's own literati—in conversations thatwould make their way into The Wealth of Nations. How influential thephilosophes were in the creation of Smith's political economy is amatter of controversy. Some scholars suggest that Smith's attitudeswere formed as a result of their persuasion while others suggest thatSmith's ideas were solidified much earlier than his trip abroad.Whatever the case, this shows that Smith's interests were aligned, notjust with the Scottish philosophers, but with their Europeancounterparts. Smith's writing was well-received in part because it wasso timely. He was asking the deep questions of the time; his answerswould change the world.
After his travels, Smith returned to his home town of Kirkcaldy tocomplete The Wealth of Nations. It was first published in 1776 and waspraised both by his friends and the general public. In a letterwritten much later, he referred to it as the "very violent attack Ihad made upon the whole commercial system of Great Britain" (Corr.208). The Theory of Moral Sentiments went through six editions inSmith's lifetime, two of which contained major substantive changes andThe Wealth of Nations saw four different editions with more minoralterations. Smith indicated that he thought The Theory of MoralSentiments was a better book, and his on-going attention to itsdetails and adjustments to its theory bear out, at least, that he wasmore committed to refining it. Eventually, Smith moved to Edinburghwith his mother and was appointed commissioner of customs in 1778; hedid not publish anything substantive for the remainder of his life.Adam Smith died on July 17, 1790.
After his death, The Wealth of Nations continued to grow in statureand The Theory of Moral Sentiments began to fade into the background.In the more than two centuries since his death, his published work hasbeen supplemented by the discoveries of his early writing fragments,the student-authored lectures notes on his course in rhetoric andbelles-letters, student-authored lecture notes on jurisprudence, andan early draft of part of The Wealth of Nations, the date of which isestimated to be about 1763. The latter two discoveries help shed lighton the formulation of his most famous work and supply fodder for bothsides of the debate regarding the influence of the philosophes onSmith's political economy.
As stated above, Smith is sometimes credited with being one of theprogenitors of modern sociology, and his lectures on rhetoric havealso been called the blueprint for the invention of the moderndiscipline of English; this largely has to do with their influence onhis student Hugh Blair, whose own lectures on rhetoric wereinstrumental in the formation of that discipline. The Theory of MoralSentiments played an important role in 19th century sentimentalistliterature and was also cited by Mary Wollstonecraft to bolster herargument in A Vindication of the Rights of Women: Smith's moraltheories experienced a revival in the last quarter of the twentiethcentury. Secondary sources on Smith flooded the marketplace andinterest in Smith's work as a whole has reached an entirely newaudience.
There are two noteworthy characteristics of the latest wave ofinterest in Smith. The first is that scholars are interested in howThe Theory of Moral Sentiments and The Wealth of Nations interconnect,not simply in his moral and economic theories as distinct from oneanother. The second is that it is philosophers and not economists whoare primarily interested in Smith's writings. They therefore payspecial attention to where Smith might fit in within the alreadyestablished philosophical canon: How does Smith's work build onHume's? How does it relate to that of his contemporary Immanuel Kant?(It is known that Kant read The Theory of Moral Sentiments, forexample.) To what extent is a sentiment-based moral theory defensible?And, what can one learn about the Scots and eighteenth-centuryphilosophy in general from reading Smith in a historical context?These are but a few of the questions with which Smith's readers nowconcern themselves.2. The Theory of Moral Sentimentsa. Sympathy
Hutcheson, Hume, and Smith were unified by their opposition toarguments put forth by Bernard Mandeville. A Dutch-born philosopherwho relocated to England, Mandeville argued that benevolence does nosocial good whatsoever. His book, The Fable of the Bees: PrivateVices, Public Benefits, tells the whole story. Bad behavior haspositive social impact. Without vice, we would have, for example, nopolice, locksmiths, or other such professionals. Without indulgence,there would be only minimal consumer spending. Virtue, on the otherhand, he argued, has no positive economic benefit and is therefore notto be encouraged.
But Mandeville took this a step further, arguing, as did ThomasHobbes, that moral virtue derives from personal benefit, that humansare essentially selfish, and that all people are in competition withone another. Hobbes was a moral relativist, arguing that "good" isjust a synonym for "that which people desire." Mandeville'srelativism, if it can be called that, is less extreme. While he arguesthat virtue is the intentional act for the good of others with theobjective of achieving that good, he casts doubt on whether or notanyone could actually achieve this standard. Smith seems to treat bothphilosophers as if they argue for the same conclusion; both offercounterpoints to Shaftesbury's approach. Tellingly, Mandeville writeswistfully of Shaftesbury's positive accounts of human motivation,remarking they are "a high Compliment to Human-kind," adding, however,"what Pity it is that they are not true" (Fable, I, 324).
Smith was so opposed to Hobbes's and Mandeville's positions that thevery first sentence of The Theory of Moral Sentiments begins withtheir rejection:
However selfish man may be supposed, there are evidently someprinciples in his nature, which interest him in the fortune of others,and render their happiness necessary to him, though they derivenothing from it except the pleasure of seeing it. (TMS I.i.1.1)
While it is often assumed that people are selfish, Smith argues thatexperience suggests otherwise. People derive pleasure from seeing thehappiness of others because, by design, others concern us. With thisinitial comment, Smith outlines the central themes of his moralphilosophy: human beings are social, we care about others and theircircumstances bring us pleasure or pain. It is only through oursenses, through "seeing," that we acquire knowledge of theirsentiments. Smith's first sentence associates egoism with suppositionor presumption, but scientific "principles" of human activity areassociated with evidence: Newtonianism and empiricism in action.
The Theory of Moral Sentiments (TMS) is a beautifully written book,clear and engaging. With few exceptions, the sentences are easy tofollow, and it is written in a lively manner that speaks of itsrehearsal in the classroom. Smith has a particular flair for examples,both literary and from day-to-day life, and his use of "we" throughoutbrings the reader into direct dialogue with Smith. The book feels likean accurate description of human emotions and experience—there aretimes when it feels phenomenological, although Smith would not haveunderstood this word. He uses repetition to great benefit, remindinghis readers of the central points in his theories while he slowlybuilds their complexity. At only 342 pages (all references are to theGlasgow Editions of his work), the book encompasses a tremendous rangeof themes. Disguised as a work of moral psychology—as a theory ofmoral sentiments alone—it is also a book about social organization,identity construction, normative standards, and the science of humanbehavior as a whole.
Smith tells us that the two questions of moral philosophy are "Whereindoes virtue consist?" and "By what power or faculty in the mind is it,that this character, whatever it be, is recommended to us?" (TMSVII.i.2) In other words, we are to ask what goodness is and how we areto be good. The Theory of Moral Sentiments follows this plan, althoughSmith tackles the second question first, focusing on moral psychologylong before he addresses the normative question of moral standards.For Smith, the core of moral learning and deliberation—the key to thedevelopment of identity itself—is social unity, and social unity isenabled through sympathy.
The term "sympathy" is Hume's, but Smith's friend gives littleindication as to how it was supposed to work or as to its limits. Incontrast, Smith addresses the problem head on, devoting the firstsixty-six pages of TMS to illuminating its workings and most of thenext two hundred elaborating on its nuances. The last part of the book(part VII, "Of Systems of Moral Philosophy") is the most distancedfrom this topic, addressing the history of ethics but, again, only forslightly less than sixty pages. It is noteworthy that while modernwriters almost always place the "literature review" in the beginningof their books, Smith feels that a historical discussion of ethics isonly possible after the work on moral psychology is complete. This islikely because Smith wanted to establish the principles of humanbehavior first so that he could evaluate moral theory in the light ofwhat had been posited.
The Theory of Moral Sentiments is, not surprisingly, both Aristotelianand Newtonian. It is also Stoic in its account of nature andself-command. The first sentence quoted above is a firstprinciple—individuals are not egoistic—and all the rest of the bookfollows from this assertion. And, as with all first principles, whileSmith "assumes" the possibility of other-oriented behavior, the restof the book both derives from its truth and contributes to itsbelievability. Smith's examples, anecdotes, and hypotheticals are allquite believable, and if one is to accept these as accurate depictionsof the human experience, then one must also accept his starting point.Human beings care for others, and altruism, or beneficence as he callsit, is possible.
What is sympathy, then? This is a matter of controversy. Scholars haveregarded it as a faculty, a power, a process, and a feeling. What itis not, however, is a moral sense in the most literal meaning of theterm. Sympathy is not a sixth capacity that can be grouped with thefive senses. Smith, while influenced by Hutcheson, is openly criticalof his teacher. He argues that moral sense without judgment isimpossible (TMS VII.3.3.8-9), and sympathy is that which allows us tomake judgments about ourselves and others. Sympathy is the foundationfor moral deliberation, Smith argues, and Hutcheson's system has noroom for it.
For Smith, sympathy is more akin to modern empathy, the ability torelate to someone else's emotions because we have experienced similarfeelings. While contemporary "sympathy" refers only to feeling bad fora person's suffering, Smith uses it to denote "fellow-feeling with anypassion whatever" (TMS I.i.1.5). It is how a "spectator… changesplaces in fancy with… the person principally concerned" (TMSI.i.1.3-5).
In short, sympathy works as follows: individuals witness the actionsand reactions of others. When doing so, this spectator attempts toenter into the situation he or she observes and imagines what it islike to be the actor—the person being watched. (Smith uses actor andagent interchangeably.) Then, the spectator imagines what he or shewould do as the actor. If the sentiments match up, if the imaginedreaction is analogous to the observed reaction, then the spectatorsympathizes with the original person. If the reactions aresignificantly different, then the spectator does not sympathize withthe person. In this context, then, sympathy is a form of moralapproval and lack of sympathy indicates disapproval.
Sympathy is rarely exact. Smith is explicit that the imaginedsentiments are always less intense than the original, but they arenonetheless close enough to signify agreement. And, most important,mutual sympathy is pleasurable. By nature's design, people want toshare fellow-feeling with one another and will therefore temper theiractions so as to find common ground. This is further indication of thesocial nature of human beings; for Smith, isolation and moraldisagreement is to be avoided. It is also the mechanism that moderatesbehavior. Behavior modulation is how individuals learn to act withmoral propriety and within social norms. According to The Theory ofMoral Sentiments, mutual sympathy is the foundation for reward andpunishment.
Smith is insistent, though, that sympathy is not inspired by simplywitnessing the emotions of others even though it "may seem to betransfused from one man to another, instantaneously, and antecedent toany knowledge of what excited them in the person principallyconcerned" (TMS I.i.1.6). Rather, the spectator gathers informationabout the cause of the emotions and about the person being watched.Only then does he or she ask, given the particular situation and thefacts of this particular agent's life, whether the sentiments areappropriate. As Smith writes:
When I condole with you for the loss of your only son, in order toenter into your grief I do not consider what I, a person of such acharacter and profession, should suffer, if I had a son, and if thatson was unfortunately to die: but I consider what I should suffer if Iwas really you, and I not only change circumstance with you, but Ichange persons and characters. My grief, therefore, is entirely uponyour own account, and not in the least upon my own. (TMS VI.iii.I.4)
We can see here why the imagination is so important to Smith. Onlythrough this faculty can a person enter into the perspective ofanother, and only through careful observation and consideration cansomeone learn all the necessary information relevant to judge moralaction. We can also see why sympathy is, for Smith, not an egoisticfaculty:
In order to produce this concord, as nature teaches the spectatorsto assume the circumstances of the person principally concerned, soshe teaches this last in some measure to assume those of thespectators. As they are continually placing themselves in hissituation, and thence conceiving emotions similar to what he feels; sohe is as constantly placing himself in theirs, and thence conceivingsome degree of that coolness about his own fortune, with which he issensible that they will view it. As they are constantly consideringwhat they themselves would feel, if they actually were the sufferers,so he is as constantly led to imagine in what manner he would beaffected if he was only one of the spectators of his own situation. Astheir sympathy makes them look at it, in some measure, with his eyes,so his sympathy makes him look at it, in some measure, with theirs,especially when in their presence and acting under their observation:and as the reflected passion, which he thus conceives, is much weakerthan the original one, it necessarily abates the violence of what hefelt before he came into their presence, before he began to recollectin what manner they would be affected by it, and to view his situationin this candid and impartial light. (TMS I.i.4.8)
Contrary to the description put forth by the Adam Smith Problem,sympathy cannot be either altruistic or egoistic because the agentsare too intertwined. One is constantly making the leap from one pointof view to another, and happiness and pleasure are dependant on jointperspectives. Individuals are only moral, and they only find their ownhappiness, from a shared standpoint. Egoism and altruism melt togetherfor Smith to become a more nuanced and more social type of motivationthat incorporates both self-interest and concern for others at thesame time.
Typical of Smith, the lengthy paragraph cited above leads to at leasttwo further qualifications. The first is that, as Smith puts it, "weexpect less sympathy from a common acquaintance than from a friend… weexpect still less sympathy from an assembly of strangers" (TMSI.1.4.10). Because sympathy requires information about events andpeople, the more distance we have from those around us, the moredifficult it is for us to sympathize with their more passionateemotions (and vice versa). Thus, Smith argues, we are to be "moretranquil" in front of acquaintances and strangers; it is unseemly tobe openly emotional around those who don't know us. This will lead,eventually, to Smith's discussion of duty in part III—his account ofwhy we act morally towards those with whom we have no connectionwhatsoever.
The second qualification is more complex and revolves around the lastphrase in the paragraph: that one must observe actions in a "candidand impartial light." If movement toward social norms were the onlycomponent to sympathy, Smith's theory would be a recipe forhomogeneity alone. All sentiments would be modulated to an identicalpitch and society would thereafter condemn only difference. Smithrecognizes, therefore, that there must be instances in whichindividuals reject community judgment. They do so via the creation ofan imagined impartial spectator.b. The Impartial Spectator
Using the imagination, individuals who wish to judge their own actionscreate not just analogous emotions but an entire imaginary person whoacts as observer and judge:
When I endeavour to examine my own conduct, when I endeavour topass sentence upon it, and either to approve or condemn it, it isevident that, in all such cases, I divide myself, as it were, into twopersons; and that I, the examiner and judge, represent a differentcharacter from that other I, the person whose conduct is examined intoand judged of. The first is the spectator, whose sentiments withregard to my own conduct I endeavour to enter into, by placing myselfin his situation, and by considering how it would appear to me, whenseen from that particular point of view. The second is the agent, theperson whom I properly call myself, and of whose conduct, under thecharacter of a spectator, I was endeavouring to form some opinion. Thefirst is the judge; the second the person judged of. But that thejudge should, in every respect, be the same with the person judged of,is as impossible, as that the cause should, in every respect, be thesame with the effect. (TMS III.1.6)
The impartial spectator is the anthropomorphization of the calm anddisinterested self that can be recovered with self control and selfreflection. In today's world, someone might advise us to "take a deepbreath and step back" from a given situation in order to reflect onour actions more dispassionately. Smith is suggesting the same,although he is describing it in more detail and in conjunction withthe larger ethical theory that helps us find conclusions once we doso. Individuals who wish to judge their own actions imaginativelysplit themselves into two different people and use this bifurcation asa substitute for community observation.
Here we see the legacy of Shaftesbury's soliloquy. An actor who wishesto gauge his or her own behavior has to divide him or herself in theway that Shaftesbury describes, in the way that Hamlet becomes bothpoet and philosopher. We are passionate about our own actions, andself-deception, according to Smith, is "the source of half thedisorders of human life" (TMS III.4.6). Self-division givesindividuals the ability to see themselves candidly and impartially andleads us to better self-knowledge. We strive to see ourselves the wayothers see us, but we do so while retaining access to the privilegedpersonal information that others might not have. The community helpsus see past our own biases, but when the community is limited by itsown institutionalized bias or simply by lack of information, theimpartial spectator can override this and allow an agent to findpropriety in the face of a deformed moral system. In the contemporaryworld, racism and sexism are examples of insidious biases that preventthe community from "seeing" pain and injustice. Smith too can be readas recognizing these prejudices, although he would not have recognizedeither the terms or the complicated discourses about them that haveevolved since he wrote two and a half centuries ago. For example, hecites slavery as an instance of the injustice and ignorance of acommunity. He writes:
There is not a Negro from the coast of Africa who does not, inthis respect, possess a degree of magnanimity which the soul of hissordid master is too often scarce capable of conceiving. Fortune neverexerted more cruelly her empire over mankind, than when she subjectedthose nations of heroes to the refuse of the jails of Europe, towretches who possess the virtues neither of the countries which theycome from, nor of those which they go to, and whose levity, brutality,and baseness, so justly expose them to the contempt of the vanquished.(TMS V.2.9)
Despite its corrective potential, impartiality has its limits. Smithdoes not imagine the impartial spectator to see from an Archimedean orGod's eye point of view. Because the impartial spectator does notreally exist—because it is created by an individual person'simagination—it is always subject to the limits of a person'sknowledge. This means that judgment will always be imperfect and thosemoral mistakes that are so profoundly interwoven into society or aperson's experience are the hardest to overcome. Change is slow andsociety is far from perfect. "Custom," as he calls it, interferes withsocial judgment on both the collective and the individual level. Thereare two points, according to Smith, when we judge our own actions,before and after we act. As he writes, "Our views are apt to be verypartial in both cases; but they are apt to be most partial when it isof most importance that they should be otherwise" (TMS 111.4.2).Neither of these points is independent of social influence.
Knowledge is imperfect and individuals do the best they can. But allindividuals are limited both by their own experiences and the naturalinadequacies of the human mind. Smith's suggestion, then, is to havefaith in the unfolding of nature, and in the principles that governhuman activity—moral, social, economic, or otherwise. With this inmind, however, he cautions people against choosing the beauty ofsystems over the interest of people. Abstract philosophies andabstruse religions are not to take precedent over the evidenceprovided by experience, Smith argues. Additionally, social engineeringis doomed to fail. Smith argues that one cannot move people around theway one moves pieces on a chess board. Each person has his or her "ownprinciple of motion… different from that which the legislature mightchoose to impress upon" them (TMS VI.ii.2.18).
Smith's caution against the love of systems is a component of Smith'sargument for limited government: "Harmony of minds," Smith argues, isnot possible without "free communication of settlements and opinion,"or, as we would call it today, freedom of expression (TMS VII.iv.27).It also offers a direct connection to Smith's most famous phrase "theinvisible hand." In The Theory of Moral Sentiments, he uses theinvisible hand to describe the conditions that allow for economicjustice. This natural aesthetic love of systems leads people tomanipulate the system of commerce, but this interferes with nature'splan:
The rich only select from the heap what is most precious andagreeable. They consume little more than the poor, and in spite oftheir natural selfishness and rapacity, though they mean only theirown conveniency, though the sole end which they propose from thelabours of all the thousands whom they employ, be the gratification oftheir own vain and insatiable desires, they divide with the poor theproduce of all their improvements. They are led by an invisible handto make nearly the same distribution of the necessaries of life, whichwould have been made, had the earth been divided into equal portionsamong all its inhabitants, and thus without intending it, withoutknowing it, advance the interest of the society, and afford means tothe multiplication of the species. (TMS IV.1.10)
In this passage, Smith argues that "the capacity of [the richperson's] stomach bars no proportion to the immensity of his desires,and will receive no more than that of the meanest peasant" (TMSIV.1.10). Thus, because the rich only select "the best" and becausethey can only consume so much, there ought to be enough resources foreveryone in the world, as if an invisible hand has divided the earthequally amongst all its inhabitants.
As an economic argument, this might have been more convincing inSmith's time, before refrigeration, the industrial revolution, modernbanking practices, and mass accumulation of capital; for a morethorough defense (from Smith's point of view) see the discussion ofThe Wealth of Nations. However, its relevance to the history ofeconomics is based upon his recognition of the role of unintendedconsequences, the presumption that economic growth helps all membersof the society, and the recognition of the independence of the freemarket as a natural force. At present, we can focus on Smith'swarnings about the power of aesthetic attraction. The Newtonianapproach, Smith argues—the search for a coherent narrative withoutgaps that addresses surprise, wonder, and admiration—can lead peopleastray if they prioritize beauty over the evidence. This love of thebeautiful can also deform moral judgments because it causes the massesto over-value the rich, to think the wealthy are happy with their"baubles and trinkets," and thus to pursue extreme wealth at the costof moral goodness: "To attain to this envied situation, the candidatesfor fortune too frequently abandon the paths of virtue; for unhappily,the road which leads to the one and that which leads to the other, liesometimes in very opposite directions" (TMS I.iii.8). Smith is verycritical not only of the rich, but of the moral value society placeson them. Only their wealth makes them different, and this love ofwealth, and of beauty in general, can distort moral judgment anddeform the impartial spectator.
The impartial spectator is a theory of conscience. It providesindividuals with the opportunity to assent to their own standards ofjudgment, which, hopefully, are in general agreement with thestandards of the society that houses them. Difference, as Smithdiscusses in both of his books, is the product of education, economicclass, gender, what we would now call ethnic background, individualexperience, and natural abilities; but Smith argues that the last ofthese, natural abilities, constitute the least of the factors. In hisLectures on Jurisprudence, for example, he argues that there is no"original difference" between individuals (LJ(A) vi.47-48), and in TheWealth of Nations, he writes that "The difference of natural talentsin different men is, in reality, much less than we are aware of…. Thedifference between the most dissimilar characters, between aphilosopher and a street porter, for example, seems to arise not somuch from nature, as from habit, custom and education" (WN I.ii.4).Society and education, hopefully, help to bridge these gaps, and helpto cultivate a unified community where people are encouraged tosympathize with others.
Here is the overlap in Smith's two operative questions. First, oneencounters his account of moral psychology. (How does one come to knowvirtue?) Now one comes face to face with the identification of moralstandards themselves. (Of what does virtue consist?) Smith may looklike a relativist at times: individuals modulate their sentiments totheir community standards, and agreement of individual imaginationsmay falsely seem to be the final arbiter of what is morallyappropriate behavior. With this in mind, there are certainly readerswho will argue that Smith, despite his rejection of Hobbes andMandeville, ends up offering no universally binding moral principles.This, however, forgets Smith's Newtonian approach: observation leadsto the discovery of natural principles that can be repeatedly testedand verified. Furthermore, many scholars argue that Smith was stronglyinfluenced by the classical Stoics. In addition to inheriting theirconcern with the modulation of emotions and the repression of emotionsin public, he also likely thought that moral laws are written intonature's design in just the same way that Newton's laws of motion are.As a result, some Smith scholars (but certainly not all) argue thatSmith is a moral realist, that sympathy is a method of discoveryrather than invention, and that what is to be discovered is correctindependent of the opinions of those who either know or are ignorantof the rules.
Consistent with this interpretation, Smith emphasizes what he termsthe general rules of morality:
…they are ultimately founded upon experience of what, inparticular instances, our moral faculties, our natural sense of meritand propriety, approve, or disapprove of. We do not originally approveor condemn particular actions; because, upon examination, they appearto be agreeable or inconsistent with a certain general rule. Thegeneral rule, on the contrary, is formed, by finding from experience,that all actions of a certain kind, or circumstanced in a certainmanner, are approved or disapproved of. To the man who first saw aninhuman murder, committed from avarice, envy, or unjust resentment,and upon one too that loved and trusted the murderer, who beheld thelast agonies of the dying person, who heard him, with his expiringbreath, complain more of the perfidy and ingratitude of his falsefriend, than of the violence which had been done to him, there couldbe no occasion, in order to conceive how horrible such an action was,that he should reflect, that one of the most sacred rules of conductwas what prohibited the taking away the life of an innocent person,that this was a plain violation of that rule, and consequently a veryblamable action. His detestation of this crime, it is evident, wouldarise instantaneously and antecedent to his having formed to himselfany such general rule. The general rule, on the contrary, which hemight afterwards form, would be founded upon the detestation which hefelt necessarily arise in his own breast, at the thought of this, andevery other particular action of the same kind. (TMS III.4.8)
According to Smith, our sentiments give rise to approval orcondemnation of a moral act. These can be modified over time withadditional information. Eventually, though, spectators, see patternsin the condemnation. They see, for example, that murder is alwayswrong, and therefore derive a sense that this is a general rule. Theybegin, then, to act on the principle rather than on the sentiment.They do not murder, not simply because they detest murder, but becausemurder is wrong in itself. This, again, is Aristotelian in that itrecognizes the interaction between intellectual and moral virtue. Italso shares commonalities with the Kantian deontology that became soinfluential several decades after the publication of TMS. Like Kant,Smith's agents begin to act on principle rather than emotion. UnlikeKant, however, reason in itself does not justify or validate theprinciple, experience does.
Smith does several things in the last excerpt. First, he embraces theNewtonian process of scientific experimentation and explanation. Moralrules are akin to the laws of physics; they can be discovered. Second,Smith anticipates Karl Popper's twentieth-century claim thatscientific truths are established through a process of falsification:we cannot prove what is true, Popper argued. Instead, we discover whatis false and rule it out.c. Virtues, Duty, and Justice
Smith emphasizes a number of virtues along with duty and justice.Self-command, he argues "is not only itself a great virtue, but fromit all the other virtues seem to derive their principle lustre" (TMSVI.iii.11). This should not be surprising since, for Smith, it is onlythrough self-command that agents can modulate their sentiments to thepitch required either by the community or the impartial spectator.Self-command is necessary because "the disposition to anger, hatred,envy, malice, [and] revenge… drive men from one another," while"humanity, kindness, natural affection, friendship, [and] esteem… tendto unite men in society" (TMS VI.iii.15). One can see, then, thenormative content of Smith's virtues—those sentiments that are to becultivated and those that are to be minimized. According to Smith,humans have a natural love for society and can develop neither moralnor aesthetic standards in isolation.
Individuals have a natural desire not only be to be loved, but to beworthy of love: "He desires not only praise, but praiseworthiness,… hedreads not only blame, but blame-worthiness" (TMS III.2.2). Thisspeaks first to the power of the impartial spectator who is a guide toworth when no spectators are around. It also speaks to Smith'sconception of duty, in that it sets a standard of right actionindependent of what communities set forth. Individuals "derive nosatisfaction" from unworthy praise (TMS III.2.5), and doing so is anindication of the perversion of vanity than can be corrected by seeingourselves the way others would, if they knew the whole story.
It should not be surprising that Smith addresses God amidst hisdiscussion of duty:
The all-wise Author of Nature has, in this manner, taught man torespect the sentiments and judgments of his brethren; to be more orless pleased when they approve of his conduct, and to be more or lesshurt when they disapprove of it. He has made man, if I may say so, theimmediate judge of mankind; and has, in this respect, as in manyothers, created him after his own image, and appointed him hisvicegerent upon earth, to superintend the behaviour of his brethren.They are taught by nature, to acknowledge that power and jurisdictionwhich has thus been conferred upon him, to be more or less humbled andmortified when they have incurred his censure, and to be more or lesselated when they have obtained his applause. (TMS III.2.31)
Here Smith makes several points. First, like many of the Scots, aswell as Thomas Jefferson and many of the American founders, Smith wasa deist. While there is controversy amongst scholars about the extentto which God is necessary to Smith's theory, it is likely that hebelieved that God designed the universe and its rules, and thenstepped back as it unfolded. Smith's God is not an interventionist Godand, despite some readers suggesting the contrary, the invisible handis not an indication of God's involvement in creation. It is, instead,just the unfolding of sociological and economic principles. Second,because God is detached from the system, Smith argues that humanbeings are God's regents on earth. It is up to them to be the judgesof their own behavior. Individuals are necessarily most concerned withthemselves first, and are therefore best self-governed. Only then canthey judge others via the moral system Smith describes. While it istrue that, as Smith puts it, the general rules are "justly regarded asthe laws of the deity" (TMS III.v), this seems to be a point ofmotivation, not of metaphysical assertion. If individuals understandthe general rules as stemming from God, then they will follow themwith more certainty and conviction. "The terrors of religion shouldthus enforce the natural sense of duty" (TMS III.5.7), Smith writes,because it inspires people to follow the general rules even if theyare inclined not to do so, and because this support makes religioncompatible with social and political life. Religious fanaticism, asSmith points out in The Wealth of Nations, is one of the great causesof factionalism—the great enemy of political society.
For Smith, the most precise virtue is justice. It is "the main pillarthat upholds the whole edifice" of society (TMS III.ii.4). It is, ashe describes it, "a negative virtue" and the minimal condition forparticipation in the community. Obeying the rules of justice,therefore, result in little praise, but breaking them inspires greatcondemnation:
There is, no doubt, a propriety in the practice of justice, and itmerits, upon that account, all the approbation which is due topropriety. But as it does no real positive good, it is entitled tovery little gratitude. Mere justice is, upon most occasions, but anegative virtue, and only hinders us from hurting our neighbour. Theman who barely abstains from violating either the person, or theestate, or the reputation of his neighbours, has surely very littlepositive merit. He fulfils, however, all the rules of what ispeculiarly called justice, and does every thing which his equals canwith propriety force him to do, or which they can punish him for notdoing. We may often fulfil all the rules of justice by sitting stilland doing nothing. (TMS II.ii.1.9)
Smith's account of justice assumes that individual rights and safetyare core concerns. He writes:
The most sacred laws of justice, therefore, those whose violationseems to call loudest for vengeance and punishment, are the laws whichguard the life and person of our neighbour; the next are those whichguard his property and possessions; and last of all come those whichguard what are called his personal rights, or what is due to him fromthe promises of others. (TMS II.ii.2.3)
His discussion of justice is supplemented in The Wealth of Nations andwould have likely been added to in his proposed work on "the generalprinciples of law and government" that he never completed. Hislectures on jurisprudence give one a hint as to what might have beenin that work, but one must assume that the manuscript was part of thecollection of works burnt upon his death. (It is not even known whatwas actually destroyed, let alone what the works argued.) It isfrustrating for Smith's readers to have such gaps in his theory, andSmith scholars have debated the possible content of his other work andthe way it relates to his first book. It is clear, though, that TheTheory of Moral Sentiments is only one part of Smith's larger system,and one truly understands it only in light of his other writing. It istherefore necessary to switch the discussion from his work on moralphilosophy to his political economy. As will be evident, this break isnot a radical one. The two books are entirely compatible with oneanother and reading one supplements reading the other; both containmoral claims and both make assertions classified as political economy.While their emphases are different much of the time—they are twodifferent books after all—their basic points are more than justharmonious. They depend upon one another for justification.3. An Inquiry into the Nature and Causes of the Wealth of Nationsa. Wealth and Trade
The Wealth of Nations (WN) was published in March of 1776, four monthsbefore the signing of the American Declaration of Independence. It isa much larger book than The Theory of Moral Sentiments—not countingappendices and indices, it runs 947 pages. To the first time reader,therefore, it may seem more daunting than Smith's earlier work, but inmany ways, it is actually a simpler read. As he grew older, Smith'swriting style became more efficient and less flowery, but hisauthorial voice remained conversational. His terms are more strictlydefined in WN than in TMS, and he clearly identifies those positionshe supports and rejects. His economic discussions are not as layeredas his comments on morality, so the interpretive issues are often lesscomplex. The logic of the book is transparent: its organizationalscheme is self-explanatory, and its conclusions are meticulouslysupported with both philosophical argument and economic data. Thereare many who challenge its assertions, of course, but it is hard todeny that Smith's positions in WN are defensible even if, in the end,some may conclude that he is wrong.
The text is divided into five "books" published in one, two, or threebound volumes depending on the edition. The first books outline theimportance of the division of labor and of self-interest. The seconddiscusses the role of stock and capital. The third provides anhistorical account of the rise of wealth from primitive times up untilcommercial society. The fourth discusses the economic growth thatderives from the interaction between urban and rural sectors of acommercial society. The fifth and final book presents the role of thesovereign in a market economy, emphasizing the nature and limits ofgovernmental powers and the means by which political institutions areto be paid for. Smith, along with his Scottish Enlightenmentcontemporaries, juxtaposes different time periods in order to findnormative guidance. As TMS does, The Wealth of Nations contains aphilosophy of history that trusts nature to reveal its logic andpurpose.
This is a remarkable scope, even for a book of its size. Smith'sachievement, however, is not simply the multitude of his discussions,but how he makes it all fit together. His most impressiveaccomplishment in The Wealth of Nations is the presentation of asystem of political economy. Smith makes seemingly disparate elementsinterdependent and consistent. He manages to take his Newtonianapproach and create a narrative of both power and beauty, addressingthe philosophical along with the economic, describing human behaviorand history, and prescribing the best action for economic andpolitical betterment. And, he does so building on a first principlethat was at least as controversial as the sentence that began TheTheory of Moral Sentiments. He begins the introduction by asserting:
The annual labour of every nation is the fund which originallysupplies it with all the necessaries and conveniencies of life whichit annually consumes, and which consist always either in the immediateproduce of that labour, or in what is purchased with that produce fromother nations. (WN intro.1)
The dominant economic theory of Smith's time was mercantilism. It heldthat the wealth of a nation was to be assessed by the amount of moneyand goods within its borders at any given time. Smith calls this"stock." Mercantilists sought to restrict trade because this increasedthe assets within the borders which, in turn, were thought to increasewealth. Smith opposed this, and the sentence cited above shifted thedefinition of national wealth to a different standard: labor.
The main point of The Wealth of Nations is to offer an alternative tomercantilism. Labor brings wealth, Smith argues. The more one laborsthe more one earns. This supplies individuals and the community withtheir necessities, and, with enough money, it offers the means to makelife more convenient and sometimes to pursue additional revenue. Freetrade, Smith argues, rather than diminishing the wealth of the nation,increases it because it provides more occasion for labor and thereforemore occasion to create more wealth. Limited trade keeps the amount ofwealth within the borders relatively constant, but the more trade acountry engages in, the wider the market becomes and the morepotential there is for additional labor and, in turn, additionalwealth. This point leads Smith to divide stock into two parts, thatwhich is used for immediate consumption—the assets that allow a personto acquire necessities—and that which is used to earn additionalrevenue. This latter sum he calls "capital" (WN II.1.2), and the term"capitalism" (which, again, Smith does not use) is derived from itsuse in a commercial system: capital is specifically earmarked forreinvestment and is therefore a major economic engine.
This is, of course, a philosophical point as much as an economic one:Smith asks his readers to reconsider the meaning of wealth itself. Iswealth the money and assets that one has at any given time, or is itthese things combined with the potential to have more, to adjust tocircumstances, and to cultivate the skills to increase such potential?Smith thinks it is the latter. Smith is also concerned specificallywith the distinction between necessities and conveniences. Hisoverarching concern in The Wealth of Nations is the creation of"universal opulence which extends itself to the lowest ranks of thepeople" (WN I.i.10). In other words, Smith believes that a commercialsystem betters the lives for the worst off in society; all individualsshould have the necessities needed to live reasonably well. He is lessconcerned with "conveniences" and "luxuries;" he does not argue for aneconomically egalitarian system. Instead, he argues for a commercialsystem that increases both the general wealth and the particularwealth of the poorest members. He writes:
Is this improvement in the circumstances of the lower ranks of thepeople to be regarded as an advantage or as an inconveniency to thesociety? The answer seems at first sight abundantly plain. Servants,labourers and workmen of different kinds, make up the far greater partof every great political society. But what improves the circumstancesof the greater part can never be regarded as an inconveniency to thewhole. No society can surely be flourishing and happy, of which thefar greater part of the members are poor and miserable. It is butequity, besides, that they who feed, cloath and lodge the whole bodyof the people, should have such a share of the produce of their ownlabour as to be themselves tolerably well fed, cloathed and lodged.(WN I.viii.36)
Smith argues that the key to the betterment of the masses is anincrease in labor, productivity, and workforce. There are two mainfactors that influence this: "the skill, dexterity, and judgment withwhich its labour is generally applied," and "the proportion betweenthe number of those who are employed in useful labour, and that ofthose who are not" (WN intro.3).
Smith repeats the phrase "skill, dexterity and judgment" in the firstparagraph of the body of the book, using it to segue into a discussionof manufacture. Famously, he uses the division of labor to illustratethe efficiency of workers working on complementary specific and narrowtasks. Considering the pin-maker, he suggests that a person who wasrequired to make pins by him or herself could hardly make one pin perday, but if the process were divided into a different task fordifferent people—"one man draws out the wire, another straights it, athird cuts it, a fourth points it, a fifth grinds it at the top forreceiving the head; to make the head requires two or three distinctoperations; to put it on, is a peculiar business, to whiten the pinsis another"—then the factory could make approximately forty-eightthousand pins per day (WN I.i.3).
The increase in efficiency is also an increase in skill and dexterity,and brings with it a clarion call for the importance of specializationin the market. The more focused a worker is on a particular task themore likely they are to create innovation. He offers the followingexample:
In the first fire-engines, a boy was constantly employed to openand shut alternately the communication between the boiler and thecylinder, according as the piston either ascended or descended. One ofthose boys, who loved to play with his companions, observed that, bytying a string from the handle of the valve which opened thiscommunication, to another part of the machine, the valve would openand shut without his assistance, and leave him at liberty to diverthimself with his play-fellows. One of the greatest improvements thathas been made upon this machine, since it was first invented, was inthis manner the discovery of a boy who wanted to save his own labour.(WN I.i.8)
This example of a boy looking to ease his work day, illustrates twoseparate points. The first is the discussion at hand, the importanceof specialization. In a commercial society, Smith argues, narrowemployment becomes the norm: "Each individual becomes more expert inhis own peculiar branch, more work is done upon the whole, and thequantity of science is considerably increased by it" (WN I.i.9).However, the more important point—certainly the more revolutionaryone—is the role of self-interest in economic life. A free marketharnesses personal desires for the betterment not of individuals butof the community.
Echoing but tempering Mandeville's claim about private vices becomingpublic benefits, Smith illustrates that personal needs arecomplementary and not mutually exclusive. Human beings, by nature,have a "propensity to truck, barter, and exchange one thing foranother" (WN I.ii.1). This tendency, which Smith suggests may be oneof the "original principles in human nature," is common to all peopleand drives commercial society forward. In an oft-cited comment, Smithobserves,
It is not from the benevolence of the butcher, the brewer, or thebaker, that we expect our dinner, but from their regard to their ownself-interest. We address ourselves, not to their humanity but totheir self-love, and never talk to them of our own necessities but oftheir advantages. (WN I.ii.2)
Philosophically, this is a tectonic shift in moral prescription.Dominant Christian beliefs had assumed that any self-interested actionwas sinful and shameful; the ideal person was entirely focused on theneeds of others. Smith's commercial society assumes somethingdifferent. It accepts that the person who focuses on his or her ownneeds actually contributes to the public good and that, as a result,such self-interest should be cultivated.
Smith is not a proponent of what would today be called rampantconsumerism. He is critical of the rich in both of his books. Instead,his argument is one that modern advocates of globalization and freetrade will find familiar: when individuals purchase a product, theyhelp more people than they attempted to do so through charity. Hewrites:
Observe the accommodation of the most common artificer orday-labourer in a civilized and thriving country, and you willperceive that the number of people of whose industry a part, thoughbut a small part, has been employed in procuring him thisaccommodation, exceeds all computation. The woollen coat, for example,which covers the day-labourer, as coarse and rough as it may appear,is the produce of the joint labour of a great multitude of workmen.The shepherd, the sorter of the wool, the wool-comber or carder, thedyer, the scribbler, the spinner, the weaver, the fuller, the dresser,with many others, must all join their different arts in order tocomplete even this homely production. How many merchants and carriers,besides, must have been employed in transporting the materials fromsome of those workmen to others who often live in a very distant partof the country! how much commerce and navigation in particular, howmany ship-builders, sailors, sail-makers, rope-makers, must have beenemployed in order to bring together the different drugs made use of bythe dyer, which often come from the remotest corners of the world!What a variety of labour too is necessary in order to produce thetools of the meanest of those workmen! To say nothing of suchcomplicated machines as the ship of the sailor, the mill of thefuller, or even the loom of the weaver, let us consider only what avariety of labour is requisite in order to form that very simplemachine, the shears with which the shepherd clips the wool. The miner,the builder of the furnace for smelting the ore, the feller of thetimber, the burner of the charcoal to be made use of in thesmelting-house, the brick-maker, the brick-layer, the workmen whoattend the furnace, the mill-wright, the forger, the smith, must allof them join their different arts in order to produce them. Were we toexamine, in the same manner, all the different parts of his dress andhousehold furniture, the coarse linen shirt which he wears next hisskin, the shoes which cover his feet, the bed which he lies on, andall the different parts which compose it, the kitchen-grate at whichhe prepares his victuals, the coals which he makes use of for thatpurpose, dug from the bowels of the earth, and brought to him perhapsby a long sea and a long land carriage, all the other utensils of hiskitchen, all the furniture of his table, the knives and forks, theearthen or pewter plates upon which he serves up and divides hisvictuals, the different hands employed in preparing his bread and hisbeer, the glass window which lets in the heat and the light, and keepsout the wind and the rain, with all the knowledge and art requisitefor preparing that beautiful and happy invention, without which thesenorthern parts of the world could scarce have afforded a verycomfortable habitation, together with the tools of all the differentworkmen employed in producing those different conveniencies; if weexamine, I say, all these things, and consider what a variety oflabour is employed about each of them, we shall be sensible thatwithout the assistance and co-operation of many thousands, the verymeanest person in a civilized country could not be provided, evenaccording to what we very falsely imagine, the easy and simple mannerin which he is commonly accommodated. Compared, indeed, with the moreextravagant luxury of the great, his accommodation must no doubtappear extremely simple and easy; and yet it may be true, perhaps,that the accommodation of an European prince does not always so muchexceed that of an industrious and frugal peasant, as the accommodationof the latter exceeds that of many an African king, the absolutemaster of the lives and liberties of ten thousand naked savages. (WNI.i.11)
The length of this excerpt is part of its argumentative power. Smithis not suggesting, simply, that a single purchase benefits a group ofpeople. Instead, he is arguing that once you take seriously themultitude of people whose income is connected to the purchase of thesingle coat, it is hard to even grasp the numbers we are considering.A single purchase brings with it a vast network of laborers.Furthermore, he argues, while one may be critical of the inevitableclass difference of a commercial society, the differential is almostinconsequential compared to the disparity between the "haves" and"have-nots" in a feudal or even the most primitive societies. (Smith'sreference to "a thousand naked savages" is just thoughtless eighteenthcentury racism and can be chalked-up to the rhetoric of the time. Itought to be disregarded and has no impact on the argument itself.) Itis the effect of one minor purchase on the community of economicagents that allows Smith to claim, as he does in TMS, that the goodsof the world are divided equally as if by an invisible hand. ForSmith, the wealthy can purchase nothing without benefiting the poor.
According to The Wealth of Nations, the power of the woolen coat isthe power of the market at work, and its reach extends to nationaleconomic policy as well as personal economic behavior. Smith'scomments relate to his condemnation of social engineering in TheTheory of Moral Sentiments, and he uses the same metaphor—theinvisible hand—to condemn those mercantilists who think that bymanipulating the market, they can improve the lot of individual groupsof people.
But the annual revenue of every society is always precisely equalto the exchangeable value of the whole annual produce of its industry,or rather is precisely the same thing with that exchangeable value. Asevery individual, therefore, endeavours as much as he can both toemploy his capital in the support of domestic industry, and so todirect that industry that its produce may be of the greatest value;every individual necessarily labours to render the annual revenue ofthe society as great as he can. He generally, indeed, neither intendsto promote the public interest, nor knows how much he is promoting it.By preferring the support of domestic to that of foreign industry, heintends only his own security; and by directing that industry in sucha manner as its produce may be of the greatest value, he intends onlyhis own gain, and he is in this, as in many other cases, led by aninvisible hand to promote an end which was no part of his intention.Nor is it always the worse for the society that it was no part of it.By pursuing his own interest he frequently promotes that of thesociety more effectually than when he really intends to promote it. Ihave never known much good done by those who affected to trade for thepublic good. It is an affectation, indeed, not very common amongmerchants, and very few words need be employed in dissuading them fromit. (WN IV.2.9)
Smith begins his comments here with a restatement of the main point ofThe Wealth of Nations: "…the annual revenue of every society is alwaysprecisely equal to the exchangeable value of the whole annual produceof its industry, or rather is precisely the same thing with thatexchangeable value." The income of any community is its labor. Smith'sremarks about the invisible hand suggest that one can do more damageby trying to manipulate the system than by trusting it to work. Thisis the moral power of unintended consequences, as TMS's account of theinvisible hand makes clear as well.
What Smith relies upon here is not "moral luck" as Bernard Williamswill later call it, but, rather, that nature is logical because itoperates on principles, and, therefore, certain outcomes can bepredicted. Smith recognizes that human beings and their interactionsare part of nature and not to be understood separately from it. As inThe Theory of Moral Sentiments, social and political behavior followsa natural logic. Now Smith makes the same claim for economic acts.Human society is as natural as the people in it, and, as such, Smithrejects the notion of a social contract in both of his books. Therewas never a time that humanity lived outside of society, and politicaldevelopment is the product of evolution (not his term) rather than aradical shift in organization. The state of nature is society forSmith and the Scots, and, therefore, the rules that govern the systemnecessitate certain outcomes.b. History and Labor
Smith's account of history describes human civilization as movingthrough four different stages, time periods that contain nations ofhunters, nations of shepherds, agricultural nations, and, finallycommercial societies (WN V.i.a, see, also, LJ(A) i.27; see also LJ(B)25, 27, 149, 233). This is progress, Smith insists, and each form ofsociety is superior to the previous one. It is also natural. This ishow the system is designed to operate; history has a logic to it.Obviously, this account, in fact all of The Wealth of Nations, wasvery influential for Karl Marx. It marks the important beginning ofwhat would be called social science—Smith's successor to the Chair ofMoral Philosophy, Adam Ferguson, is often identified as the founder ofmodern sociology—and is representative of the project the ScottishEnlightenment thinkers referred to as "the science of man."
Smith's discussion of history illustrates two other important points.First, he argues that the primary economic tension, and, as a result,the primary economic engine, in any given society can be found in theinteraction between "the inhabitants of the town and those of thecountry" (WN III.i.1). According to Smith, agricultural lands supplythe means of sustenance for any given society and urban populationsprovide the means of manufacture. Urban areas refine and advance themeans of production and return some of its produce to rural people. Ineach of the stages, the town and country have a different relationshipwith each other, but they always interact.
Here, Smith is indebted to the physiocrats, French economists whobelieved that agricultural labor was the primary measure of nationalwealth. Smith accepted their notion that productive labor was acomponent of the wealth of nations but rejected their notion that onlyagricultural labor should be counted as value. He argues, instead,that if one group had to be regarded as more important, it would bethe country since it provides food for the masses, but that it wouldbe a mistake to regard one's gain as the other's loss or that theirrelationship is essentially hierarchical: "the gains of both aremutual and reciprocal, and the division of labour is in this, as inall other cases, advantageous to all the different persons employed inthe various occupations into which it is subdivided" (WN III.i.1).
Again, there are philosophical issues here. First, is what one is toregard as labor; second is what counts towards economic value.Additionally, Smith is showing how the division of labor works on alarge scale; it is not just for pin factories. Rather, differentpopulations can be dedicated to different tasks for everyone'sbenefit. (This might be an anticipation of David Ricardo's notion of"comparative advantage.") A commercial system is an integrated one andthe invisible hand ensures that what benefits one group can alsobenefit another. Again, the butcher, brewer, and baker gain theirlivelihood by manufacturing the lunch of their customers.
Returning to Smith's account of history, Smith also argues thathistorical moments and their economic arrangements help determine theform of government. As the economic stage changes, so does the form ofgovernment. Economics and politics are intertwined, Smith observes,and a feudal system could not have a republican government as is foundin commercial societies. What Smith does here, again, is anticipateMarx's dialectical materialism, showing how history influenceseconomic and political options, but, of course, he does not take itnearly as far as the German does close to a century later.
Given the diversity of human experience—WN's stage theory of historyhelps account for difference—Smith is motivated to seek unifyingstandards that can help translate economic value betweencircumstances. Two examples are his discussions of price and hisparadox of value. Within these discussions, Smith seeks an adequatemeasure of "worth" for goods and services. Consumers look at prices togauge value, but there are good and bad amounts; which is which is notalways transparent. Some items are marked too expensive for theiractual value and some are a bargain. In developing a system to accountfor this interaction, Smith offers a range of different types ofprices, but the two most important are natural price—the price thatcovers all the necessary costs of manufacture—and the market price,what a commodity actually goes for on the market. When the market andthe natural prices are identical, the market is functioning well: "thenatural price, therefore, is, as it were, the central price to whichthe prices of all commodities are continually gravitating" (WNI.vii.15).
Here, the term "gravitating" indicates, yet again, that there areprinciples that guide the economic system, and a properly functioningmarketplace—one in which individuals are in "perfect liberty"—willhave the natural and market prices coincide (WN i.vii.30). (Smithdefines perfect liberty as a condition under which a person "maychange his trade as often as he pleases" (WN I.vii.6)). Whether thisis a normative value, whether for Smith the natural price is betterthan other prices, and whether the market price of a commodity shouldbe in alignment with the natural price, is a matter of debate.
Following the question of worth, Smith poses the paradox of value. Heexplains: "Nothing is more useful than water: but it will purchasescarce any thing; scarce anything can be had in exchange for it. Adiamond, on the contrary, has scarce any value in use; but a verygreat quantity of other goods may frequently be had in exchange forit" (WN I.iv.13). Smith's question is straightforward: why is water somuch cheaper than diamonds when it is so much more important foreveryday life?
Obviously, we are tempted to argue that scarcity plays a role in thesolution to this paradox; water is more valuable than diamonds to aperson dying of thirst. For Smith, however, value, here, is generalutility and it seems problematic to Smith that the more usefulcommodity has the lower market price. His solution, then, is todistinguish between two types of value, "value in use" and "value inexchange"—the former is the commodity's utility and the latter is whatit can be exchanged for in the market. Dividing the two analyticallyallows consumers to evaluate the goods both in terms of scarcity andin terms of usefulness. However, Smith is also searching for anormative or objective core in a fluctuating and contextual system, aswith the role of impartiality in his moral system. Scarcity would notsolve this problem because that, too, is fluctuating; usefulness islargely subjective and depends on an individual's priorities andcircumstance. Smith seeks a more universal criterion and looks towardslabor to anchor his notion of value: "labour," he writes, "is the realmeasure of the exchangeable value of all commodities" (WN I.v).
What Smith means by this is unclear and a matter of controversy. Whatseems likely, though, is that one person's labor in any given societyis not significantly different from another person's. Humancapabilities do not change radically from one time period or locationto another, and their labor, therefore, can be compared: "thedifference of natural talents in different men is, in reality, muchless than we are aware of." He elaborates:
Labour, therefore, it appears evidently, is the only universal, aswell as the only accurate measure of value, or the only standard bywhich we can compare the values of different commodities at all timesand at all places. We cannot estimate, it is allowed, the real valueof different commodities from century to century by the quantities ofsilver which were given for them. We cannot estimate it from year toyear by the quantities of corn. By the quantities of labour we can,with the greatest accuracy, estimate it both from century to centuryand from year to year. From century to century, corn is a bettermeasure than silver, because, from century to century, equalquantities of corn will command the same quantity of labour morenearly than equal quantities of silver. From year to year, on thecontrary, silver is a better measure than corn, because equalquantities of it will more nearly command the same quantity of labour.(WN I.v.17)
In other words, for example, a lone person can only lift so much wheatat one go, and while some people are stronger than others, thedifferences between them don't make that much difference. Therefore,Smith seems to believe, the value of any object can be universallymeasured by the amount of labor that any person in any society mighthave to exert in order to acquire that object. While this is notnecessarily a satisfying standard to all—many economists argue thatthe labor theory of value has been surpassed—it does, again, rootSmith's objectivity in impartiality. The "any person" quality of theimpartial spectator is analogous to the "any laborer" standard Smithseems to use as a value measure.
Ultimately, according to Smith, a properly functioning market is onein which all these conditions—price, value, progress, efficiency,specialization, and universal opulence (wealth)—all work together toprovide economic agents with a means to exchange accurately and freelyas their self-interest motivates them. None of these conditions can bemet if the government does not act appropriately, or if it overstepsits justified boundaries.c. Political Economy
The Wealth of Nations is a work of political economy. It is concernedwith much more than the mechanisms of exchange. It is also concernedwith the ideal form of government for commercial advancement and thepursuit of self-interest. This is where Smith's reputation as alaissez faire theorist comes in. He is arguing for a system, as hecalls it, of "natural liberty," one in which the market largelygoverns itself as is free from excessive state intervention (recallSmith's use of the invisible hand in TMS). As he explains, there areonly three proper roles for the sovereign: to protect a society frominvasion by outside forces, to enforce justice and protect citizensfrom one another, and "thirdly, the duty of erecting and maintainingcertain publick works and certain publick institutions, which it cannever be for the interest of any individual, or small number ofindividuals, to erect and maintain; because the profit could neverrepay the expence to any individual or small number of individuals,though it may frequently do much more than repay it to a greatsociety" (WN IV.ix).
Each of the responsibilities of the sovereign contains its owncontroversies. Regarding the first, protecting society, Smith debatedwith others as to whether a citizen militia or a standing army wasbetter suited for the job, rooting his discussion, as usual, in adetailed history of the military in different stages of society (WNV.1.a). Given the nature of specialization, it should not besurprising that Smith favored the army (WN V.1.a.28). The nature ofjustice—the second role of the sovereign—is also complicated, andSmith never fully articulated his theory of what justice is and how itought to be maintained, although, as we have seen, he was liberal inhis assumptions of the rights of individuals against the imposition ofgovernment on matters of conscience and debate. In his chapter on "theexpence of justice" (WN V.i.b), he discusses the nature of humansubordination and why human beings like to impose themselves on oneanother. However, it is the third role of the sovereign—themaintenance of works that are too expensive for individuals to erectand maintain, or what are called "natural monopolies"—that is the mostcontroversial.
It is this last book—ostensibly about the expenditures ofgovernment—that shows most clearly what Smith had in mind politically;the government plays a much stronger role in society than is oftenasserted. In particular, book five addresses the importance ofuniversal education and social unity. Smith calls for religioustolerance and social regulation against extremism. For Smith, religionis an exceptionally fractious force in society because individualstend to regard theological leaders as having more authority thanpolitical ones. This leads to fragmentation and social discord.
The discussion of "public goods" includes an elaborate discussion oftoll roads, which, on the face of it, may seem to be a boring topic,but actually includes a fascinating account of why tolls should bebased on the value of transported goods rather than on weight. This isSmith's attempt to protect the poor—expensive goods are usuallylighter than cheaper goods—think of diamonds compared to water—and ifweight were the standard for tolls, justified, perhaps, by the wearand tear that the heavier goods cause, the poor would carry an undueshare of transportation costs (WN V.i.d). However, the most intriguingsections of Book Five contain his two discussions of education (WNV.i.f–V.i.g). The first articulates the role of education for youthand the second describes the role of education for "people of allages."
The government has no small interest in maintaining schools to teachbasic knowledge and skills to young people. While some of the expenseis born by parents, much of this is to be paid for by society as awhole (WN V.i.f.54-55). The government also has a duty to educateadults, both to help counter superstition and to remedy the effects ofthe division of labor. Regarding the first, an educated population ismore resistant to the claims of extremist religions. Smith alsoadvocates public scrutiny of religious assertions in an attempt tomoderate their practices. This, of course, echoes Smith's moral theoryin which the impartial spectator moderates the more extreme sentimentsof moral agents. Finally, Smith insists that those who govern abandonassociations with religious sects so that their loyalties do notconflict.
Regarding the second purpose of education for all ages, and again,anticipating Marx, Smith recognizes that the division of labor isdestructive towards an individual's intellect. Without education, "thetorpor" (inactivity) of the worker's mind:
renders him, not only incapable of relishing or bearing a part inany rational conversation, but of conceiving any generous, noble, ortender sentiment, and consequently of forming any just judgmentconcerning many even of the ordinary duties of private life. Of thegreat and extensive interests of his country, he is altogetherincapable of judging; and unless very particular pains have been takento render him otherwise, he is equally incapable of defending hiscountry in war…. His dexterity at his own particular trade seems, inthis manner, to be acquired at the expence of his intellectual,social, and martial virtues. But in every improved and civilizedsociety this is the state into which the labouring poor, that is, thegreat body of the people, must necessarily fall, unless governmenttakes some pains to prevent it. (WN V.i.f.50)
Education helps individuals overcome the monotony of day to day life.It helps them be better citizens, better soldiers, and more moralpeople; the intellect and the imagination are essential to moraljudgment. No person can accurately sympathize if his or her mind isvacant and unskilled.
We see here that Smith is concerned about the poor throughout TheWealth of Nations. We also see the connections between his moraltheory and his political economy. It is impossible to truly understandwhy Smith makes the political claims he does without connecting themto his moral claims, and vice versa. His call for universal wealth oropulence and his justification of limited government are themselvesmoral arguments as much as they are economic ones. This is why theAdam Smith Problem doesn't make sense and why contemporary Smithscholars are so focused on showing the systematic elements of Smith'sphilosophy. Without seeing how each of the parts fit together, oneloses the power behind his reasoning—reasoning that inspired as muchchange as any other work in the history of the Western tradition. Ofcourse, Smith has his detractors and his critics. He is making claimsand building on assumptions that many challenge. But Smith has hisdefenders too, and, as history bears out, Smith is still an importantvoice in the investigation of how society ought to be organized andwhat principles govern human behavior, inquiry, and morality. The latetwentieth century revival in Smith's studies underscores that Smith'sphilosophy may be as important now as it ever was.4. References and Further Reading
All references are to The Glasgow Edition of the Correspondence andWorks of Adam Smith, the definitive edition of his works. Onlineversions of much of these can be found at The Library of Economics andLiberty.a. Work by Smith
* [TMS] Theory of Moral Sentiments. Ed. A.L. Macfie and D.D.Raphael. Indianapolis: Liberty Press, 1982. o First published in 1759; subsequent editions in 1761(significantly revised), 1767, 1774, 1781, and 1790 (significantlyrevised with entirely new section). * [WN] An Inquiry into the Nature and Causes of the Wealth ofNations. 2 vols. Ed. R.H. Campbell and A.S. Skinner. Indianapolis:Liberty Press, 1976. o First published in 1776; subsequent editions in 1778, 1784(significantly revised), 1786, 1789. * [LJ] Lectures on Jurisprudence. Ed. R.L. Meek and D.D. Raphael.Indianapolis: Liberty Press, 1982. o Contains two sets of lectures, LJ(A), dated 1762–3 andLJ(B) dated 1766. * [LRBL] The Lectures on Rhetoric and Belles Lettres. Ed. J.C.Bryce. Indianapolis: Liberty Press, 1985. o Edition also contains the fragment: "ConsiderationsConcerning the First Formation of Languages" in LRBL. Lecture dates,1762–1763. * [EPS] Essays on Philosophical Subjects. Ed. W.P.D. Wightman andJ.C. Bryce. Indianapolis: Liberty Press, 1982. o Contains the essays and fragments: "The Principles WhichLead and Direct Philosophical Enquires Illustrated by the History ofAstronomy," "The Principles Which Lead and Direct PhilosophicalEnquires Illustrated by the History of Ancient Physics,""ThePrinciples which lead and direct Philosophical EnquiriesIllustrated by the History of the Ancient Logics and Metaphysics," "Ofthe External Senses," "Of the Nature of that Imitation which takesplace in what are called The Imitative Arts," "Of the Affinity betweenMusic, Dancing, and Poetry," "Of the Affinity between certain Englishand Italian Verses," Contributions to the Edinburgh Review of 1755-56,Review of Johnson's Dictionary, A Letter to the Authors of theEdinburgh Review, Preface and Dedication to William Hamilton's Poemson Several Occasions 261 and Dugald Stewart's "Account of the Life andWritings of Adam Smith, LL.D." First published in 1795. * [Corr.] Correspondence of Adam Smith. Ed. E.C. Mossner and I.S.Ross. Indianapolis: Liberty Press, 1987.
b. Companion Volumes to the Glasgow Edition
* Index to the Works of Adam Smith. Ed K. Haakonssen and A.S.Skinner. Indianapolis,: Liberty Press, 2002. * Essays on Adam Smith. Edited by A.S. Skinner and Thomas Wilson.Oxford: Oxford University Press, 1976. * Life of Adam Smith. I.S. Ross. Oxford: Oxford University Press, 1995.
c. Introductions and Works for a General Audience
* Berry, Christopher J. The Social Theory of the ScottishEnlightenment. Edinburgh: Edinburgh University Press, 1997. * Fleischacker, Samuel. On Adam Smith's Wealth of Nations.Princeton: Princeton University Press, 2004. * Haakonssen, K. (ed.) The Cambridge Companion to Adam Smith.Cambridge: Cambridge University Press, 2006. * Muller, Jerry Z. Adam Smith in His Time and Ours. Princeton:Princeton University Press, 1993. * Otteson, James R. Adam Smith: Selected Philosophical Writings(Library of Scottish Philosophy). Exeter: Imprint Academic, 2004. * Weinstein, Jack Russell. On Adam Smith. Belmont: Wadsworth, 2001. * Raphael, D.D. Adam Smith (Past Masters). Oxford: OxfordUniversity Press, 1986.
d. Recommended Books for Specialists
Any issue of the journal The Adam Smith Review will be of interest toSmith's readers. Volume 2 (2007) has a special symposium on Smith'snotion of rational choice (economic deliberation), and Volume 3 (2008)will have a special symposium on Smith and education. Both may deservespecial attention.
* Campbell, T.D. Adam Smith's Science of Morals. New Jersey:Rowman and Littlefield, 1971. * Cropsey, Joseph. Polity and Economy: An Interpretation of thePrinciples of Adam Smith (With Further Thoughts on the Principles ofAdam Smith) (Revised Edition). Chicago: St. Augustine's Press, 2001. * Evensky, J. Adam Smith's Moral Philosophy. Cambridge: CambridgeUniversity Press, 2005. * Force, Pierre. Self-interest before Adam Smith. Cambridge:Cambridge University Press, 2003. * Griswold, Charles L. Jr. Adam Smith and the Virtues ofEnlightenment. Cambridge: Cambridge University Press, 1999. * Haakonssen, Knud (ed.). Adam Smith (The International Library ofCritical Essays in the History of Philosophy. Aldershot:Ashgate/Dartmouth Publishing, 1998. * Haakonssen, Knud. The Science of A Legislator. Cambridge:Cambridge University Press, 1981. * Montes, Leonidas. Adam Smith in Context. New York: PalgraveMacMillan, 2004. * Otteson, James. Adam Smith's Marketplace of Life. Cambridge:Cambridge University Press, 2002. * Raphael, D.D. The Impartial Spectator. Oxford: Oxford UniversityPress, 2007. * Scott, William Robert. Adam Smith as Student and Professor. NewYork: Augusts M. Kelley, 1965. * Teichgraeber, Richard. Free Trade and Moral Philosophy:Rethinking the Sources of Adam Smith's Wealth of Nations. Durham, DukeUniversity Press, 1986.
Smith was not an economist; he was a philosopher. His first book, TheTheory of Moral Sentiments, sought to describe the natural principlesthat govern morality and the ways in which human beings come to knowthem. How these two books fit together is both one of the mostcontroversial subjects in Smith scholarship and the key tounderstanding his arguments about the market and human activity ingeneral. Historically, this process is made more difficult by theso-called "Adam Smith Problem," a position put forth by small numbersof committed scholars since the late nineteenth century that Smith'stwo books are incompatible. The argument suggests that Smith's work onethics, which supposedly assumed altruistic human motivation,contradicts his political economy, which allegedly assumed egoism.However, most contemporary Smith scholars reject this claim as well asthe description of Smith's account of human motivation it presupposes.
Smith never uses the term "capitalism;" it does not enter intowidespread use until the late nineteenth century. Instead, he uses"commercial society," a phrase that emphasizes his belief that theeconomic is only one component of the human condition. And while, forSmith, a nation's economic "stage" helps define its social andpolitical structures, he is also clear that the moral character of apeople is the ultimate measure of their humanity. To investigateSmith's work, therefore, is to ask many of the great questions that weall struggle with today, including those that emphasize therelationship of morality and economics. Smith asks why individualsshould be moral. He offers models for how people should treatthemselves and others. He argues that scientific method can lead tomoral discovery, and he presents a blueprint for a just society thatconcerns itself with its least well-off members, not just those witheconomic success. Adam Smith's philosophy bears little resemblance tothe libertarian caricature put forth by proponents of laissez fairemarkets who describe humans solely as homo economicus. For Smith, themarket is a mechanism of morality and social support.
1. Life and Influencesa. Early Life and Influences
Adam Smith was born in June, 1723, in Kirkcaldy, a port town on theeastern shore of Scotland; the exact date is unknown. His father, theComptroller and Collector of Customs, died while Smith's mother waspregnant but left the family with adequate resources for theirfinancial well being. Young Adam was educated in a local parish(district) school. In 1737, at the age of thirteen he was sent toGlasgow College after which he attended Baliol College at OxfordUniversity. His positive experiences at school in Kirkcaldy and atGlasgow, combined with his negative reaction to the professors atOxford, would remain a strong influence on his philosophy.
In particular, Smith held his teacher Francis Hutcheson in highesteem. One of the early leaders of the philosophical movement nowcalled the Scottish Enlightenment, Hutcheson was a proponent of moralsense theory, the position that human beings make moral judgmentsusing their sentiments rather than their "rational" capacities.According to Hutcheson, a sense of unity among human beings allows forthe possibility of other-oriented actions even though individuals areoften motivated by self-interest. The moral sense, which is a form ofbenevolence, elicits a feeling of approval in those witnessing moralacts. Hutcheson opposed ethical egoism, the notion that individualsought to be motivated by their own interests ultimately, even whenthey cooperate with others on a common project.
The term "moral sense" was first coined by Sir Anthony Ashley Cooper,Third Earl of Shaftesbury, whose work Smith read and who became afocal point in the Scots' discussion, although he himself was notScottish. Although Shaftesbury did not offer a formal moral sensetheory as Hutcheson did, he describes personal moral deliberation as a"soliloquy," a process of self-division and self-examination similarin form to Hamlet's remarks on suicide. This model of moral reasoningplays an important role in Smith's books.
The Scottish Enlightenment philosophers, or the literati, as theycalled themselves, were a close-knit group who socialized together andwho read, critiqued, and debated each other's work. They met regularlyin social clubs (often at pubs) to discuss politics and philosophy.Shortly after graduating from Oxford, Smith presented public lectureson moral philosophy in Edinburgh, and then, with the assistance of theliterati, he secured his first position as the Chair of Logic atGlasgow University. His closest friendship in the group—and probablyhis most important non-familial relationship throughout his life—waswith David Hume, an older philosopher whose work Smith was chastisedfor reading while at Oxford.
Hume was believed to be an atheist, and his work brought into questionsome of the core beliefs in moral philosophy. In particular, and evenmore so than Hutcheson, Hume's own version of moral sense theorychallenged the assumption that reason was the key human faculty inmoral behavior. He famously asserted that reason is and ought to beslave to the passions, which means that even if the intellect caninform individuals as to what is morally correct, agents will only actif their sentiments incline them to do so. An old proverb tells usthat you can lead a horse to water but that you can't make it drink.Hume analogously argues that while you might be able to teach peoplewhat it means to be moral, only their passions, not their rationalcapacities, can actually inspire them to be ethical. This position hasroots in Aristotle's distinction between moral and intellectualvirtue.
Smith, while never explicitly arguing for Hume's position, nonethelessseems to assume much of it. And while he does not offer a strict moralsense theory, he does adopt Hume's assertion that moral behavior is,at core, the human capacity of sympathy, the faculty that, in Hume'saccount, allows us to approve of others' characters, to "forget ourown interest in our judgments," and to consider those whom "we meetwith in society and conversation" who "are not placed in the samesituation, and have not the same interest with ourselves" (Hume:Treatise, book 3.3.3).b. Smith's Writings
Smith echoes these words throughout A Theory of Moral Sentiments. Inthis book, he embraces Hume's conception of sympathy, but rejects hisskepticism and adds, as we shall see, a new theory of conscience tothe mix. However, focusing on Hume's observations also allow us to seecertain other themes that Smith shares with his Scottish Enlightenmentcohort: in particular, their commitment to empiricism. As with most ofthe other Scottish philosophers, Hume and Smith held that knowledge isacquired through the senses rather than through innate ideas,continuing the legacy of John Locke more so than René Descartes. ForHume, this epistemology would bring into question the connectionbetween cause and effect—our senses, he argued, could only tell usthat certain events followed one another in time, but not that theywere causally related. For Smith, this meant a whole host of differentproblems. He asks, for example, how a person can know another'ssentiments and motivations, as well as how members can use the marketto make "rational" decisions about the propriety of their economicactivity.
At the core of the Scottish project is the attempt to articulate thelaws governing human behavior. Smith and his contemporary AdamFerguson are sometimes credited with being the founders of sociologybecause they, along with the other literati, believed that humanactivities were governed by discoverable principles in the same waythat Newton argued that motion was explainable through principles.Newton, in fact, was a tremendous influence on the Scots' methodology.In an unpublished essay on the history of astronomy, Smith writes thatNewton's system, had "gained the general and complete approbation ofmankind," and that it ought to be considered "the greatest discoverythat ever was made by man." What made it so important? Smith describesit as "the discovery of an immense chain of the most important andsublime truths, all closely connected together, by one capital fact,of the reality of which we have daily experience" (EPS, AstronomyIV.76).
While Smith held the chair of logic at Glasgow University, he lecturedmore on rhetoric than on traditional Aristotelian forms of reasoning.There is a collection of student lecture notes that recount Smith'sdiscussions of style, narrative, and moral propriety in rhetoricalcontexts. These notes, in combination with his essay on astronomy,offer an account of explanation that Smith himself regarded asessentially Newtonian. According to Smith, a theory must first bebelievable; it must soothe anxiety by avoiding any gaps in itsaccount. Again, relying upon a basically Aristotelian model, Smithtells us that the desire to learn, and the theories that result, stemsfrom a series of emotions: surprise at events inspires anxieties thatcause one to wonder about the process. This leads to understanding andadmiration of the acts and principles of nature. By showing that theprinciples governing the heavens also govern the Earth, Newton set anew standard for explanation. A theory must direct the mind with itsnarrative in a way that both corresponds with experience and offerstheoretical accounts that enhance understanding and allow forprediction. The account must fit together systematically without holesor missing information; this last element—avoiding any gaps in thetheory—is, perhaps, the most central element for Smith, and this modelof philosophical explanation unifies both his moral theories and hispolitical economy.
As a young philosopher, Smith experimented with different topics, andthere is a collection of writing fragments to compliment his lecturenotes and early essays. These include brief explorations of "AncientLogics," metaphysics, the senses, physics, aesthetics, the work ofJean-Jacque Rousseau, and other assorted topics. Smith's ScottishEnlightenment contemporaries shared an interest in all of theseissues.
While the works offer a glimpse into Smith's meditations, they are byno means definitive; few of them were ever authorized for publication.Smith was a meticulous writer and, in his own words, "a slow a veryslow workman, who do and undo everything I write at least half a dozenof times before I can be tolerably pleased with it" (Corr. 311). As aresult, he ordered sixteen volumes of unpublished writing burnt uponhis death because, presumably, he did not feel they were adequate forpublic consumption. Smith scholars lament this loss because itobfuscates the blueprint of his system, and there have been severalattempts of late to reconstruct the design of Smith's corpus, againwith the intent of arguing for a particular relationship between hismajor works.
After holding the chair of logic at Glasgow for only one year(1751–1752), Smith was appointed to the Chair of Moral Philosophy, theposition originally held by Hutcheson. He wrote The Theory of MoralSentiments, first published in 1759, while holding this position and,presumably, while testing out many of his discussions in theclassroom. While he spoke very warmly of this period of his life, andwhile he took a deep interest in teaching and mentoring young minds,Smith resigned in 1764 to tutor the Duke of Buccleuch and accompanyhim on his travels.
It was not uncommon for professional teachers to accept positions asprivate tutors. The salary and pensions were often lucrative, and itallowed more flexibility than a busy lecturing schedule might afford.In Smith's case, this position took him to France where he spent twoyears engaged with the philosophes—a tight-knit group of Frenchphilosophers analogous to Smith's own literati—in conversations thatwould make their way into The Wealth of Nations. How influential thephilosophes were in the creation of Smith's political economy is amatter of controversy. Some scholars suggest that Smith's attitudeswere formed as a result of their persuasion while others suggest thatSmith's ideas were solidified much earlier than his trip abroad.Whatever the case, this shows that Smith's interests were aligned, notjust with the Scottish philosophers, but with their Europeancounterparts. Smith's writing was well-received in part because it wasso timely. He was asking the deep questions of the time; his answerswould change the world.
After his travels, Smith returned to his home town of Kirkcaldy tocomplete The Wealth of Nations. It was first published in 1776 and waspraised both by his friends and the general public. In a letterwritten much later, he referred to it as the "very violent attack Ihad made upon the whole commercial system of Great Britain" (Corr.208). The Theory of Moral Sentiments went through six editions inSmith's lifetime, two of which contained major substantive changes andThe Wealth of Nations saw four different editions with more minoralterations. Smith indicated that he thought The Theory of MoralSentiments was a better book, and his on-going attention to itsdetails and adjustments to its theory bear out, at least, that he wasmore committed to refining it. Eventually, Smith moved to Edinburghwith his mother and was appointed commissioner of customs in 1778; hedid not publish anything substantive for the remainder of his life.Adam Smith died on July 17, 1790.
After his death, The Wealth of Nations continued to grow in statureand The Theory of Moral Sentiments began to fade into the background.In the more than two centuries since his death, his published work hasbeen supplemented by the discoveries of his early writing fragments,the student-authored lectures notes on his course in rhetoric andbelles-letters, student-authored lecture notes on jurisprudence, andan early draft of part of The Wealth of Nations, the date of which isestimated to be about 1763. The latter two discoveries help shed lighton the formulation of his most famous work and supply fodder for bothsides of the debate regarding the influence of the philosophes onSmith's political economy.
As stated above, Smith is sometimes credited with being one of theprogenitors of modern sociology, and his lectures on rhetoric havealso been called the blueprint for the invention of the moderndiscipline of English; this largely has to do with their influence onhis student Hugh Blair, whose own lectures on rhetoric wereinstrumental in the formation of that discipline. The Theory of MoralSentiments played an important role in 19th century sentimentalistliterature and was also cited by Mary Wollstonecraft to bolster herargument in A Vindication of the Rights of Women: Smith's moraltheories experienced a revival in the last quarter of the twentiethcentury. Secondary sources on Smith flooded the marketplace andinterest in Smith's work as a whole has reached an entirely newaudience.
There are two noteworthy characteristics of the latest wave ofinterest in Smith. The first is that scholars are interested in howThe Theory of Moral Sentiments and The Wealth of Nations interconnect,not simply in his moral and economic theories as distinct from oneanother. The second is that it is philosophers and not economists whoare primarily interested in Smith's writings. They therefore payspecial attention to where Smith might fit in within the alreadyestablished philosophical canon: How does Smith's work build onHume's? How does it relate to that of his contemporary Immanuel Kant?(It is known that Kant read The Theory of Moral Sentiments, forexample.) To what extent is a sentiment-based moral theory defensible?And, what can one learn about the Scots and eighteenth-centuryphilosophy in general from reading Smith in a historical context?These are but a few of the questions with which Smith's readers nowconcern themselves.2. The Theory of Moral Sentimentsa. Sympathy
Hutcheson, Hume, and Smith were unified by their opposition toarguments put forth by Bernard Mandeville. A Dutch-born philosopherwho relocated to England, Mandeville argued that benevolence does nosocial good whatsoever. His book, The Fable of the Bees: PrivateVices, Public Benefits, tells the whole story. Bad behavior haspositive social impact. Without vice, we would have, for example, nopolice, locksmiths, or other such professionals. Without indulgence,there would be only minimal consumer spending. Virtue, on the otherhand, he argued, has no positive economic benefit and is therefore notto be encouraged.
But Mandeville took this a step further, arguing, as did ThomasHobbes, that moral virtue derives from personal benefit, that humansare essentially selfish, and that all people are in competition withone another. Hobbes was a moral relativist, arguing that "good" isjust a synonym for "that which people desire." Mandeville'srelativism, if it can be called that, is less extreme. While he arguesthat virtue is the intentional act for the good of others with theobjective of achieving that good, he casts doubt on whether or notanyone could actually achieve this standard. Smith seems to treat bothphilosophers as if they argue for the same conclusion; both offercounterpoints to Shaftesbury's approach. Tellingly, Mandeville writeswistfully of Shaftesbury's positive accounts of human motivation,remarking they are "a high Compliment to Human-kind," adding, however,"what Pity it is that they are not true" (Fable, I, 324).
Smith was so opposed to Hobbes's and Mandeville's positions that thevery first sentence of The Theory of Moral Sentiments begins withtheir rejection:
However selfish man may be supposed, there are evidently someprinciples in his nature, which interest him in the fortune of others,and render their happiness necessary to him, though they derivenothing from it except the pleasure of seeing it. (TMS I.i.1.1)
While it is often assumed that people are selfish, Smith argues thatexperience suggests otherwise. People derive pleasure from seeing thehappiness of others because, by design, others concern us. With thisinitial comment, Smith outlines the central themes of his moralphilosophy: human beings are social, we care about others and theircircumstances bring us pleasure or pain. It is only through oursenses, through "seeing," that we acquire knowledge of theirsentiments. Smith's first sentence associates egoism with suppositionor presumption, but scientific "principles" of human activity areassociated with evidence: Newtonianism and empiricism in action.
The Theory of Moral Sentiments (TMS) is a beautifully written book,clear and engaging. With few exceptions, the sentences are easy tofollow, and it is written in a lively manner that speaks of itsrehearsal in the classroom. Smith has a particular flair for examples,both literary and from day-to-day life, and his use of "we" throughoutbrings the reader into direct dialogue with Smith. The book feels likean accurate description of human emotions and experience—there aretimes when it feels phenomenological, although Smith would not haveunderstood this word. He uses repetition to great benefit, remindinghis readers of the central points in his theories while he slowlybuilds their complexity. At only 342 pages (all references are to theGlasgow Editions of his work), the book encompasses a tremendous rangeof themes. Disguised as a work of moral psychology—as a theory ofmoral sentiments alone—it is also a book about social organization,identity construction, normative standards, and the science of humanbehavior as a whole.
Smith tells us that the two questions of moral philosophy are "Whereindoes virtue consist?" and "By what power or faculty in the mind is it,that this character, whatever it be, is recommended to us?" (TMSVII.i.2) In other words, we are to ask what goodness is and how we areto be good. The Theory of Moral Sentiments follows this plan, althoughSmith tackles the second question first, focusing on moral psychologylong before he addresses the normative question of moral standards.For Smith, the core of moral learning and deliberation—the key to thedevelopment of identity itself—is social unity, and social unity isenabled through sympathy.
The term "sympathy" is Hume's, but Smith's friend gives littleindication as to how it was supposed to work or as to its limits. Incontrast, Smith addresses the problem head on, devoting the firstsixty-six pages of TMS to illuminating its workings and most of thenext two hundred elaborating on its nuances. The last part of the book(part VII, "Of Systems of Moral Philosophy") is the most distancedfrom this topic, addressing the history of ethics but, again, only forslightly less than sixty pages. It is noteworthy that while modernwriters almost always place the "literature review" in the beginningof their books, Smith feels that a historical discussion of ethics isonly possible after the work on moral psychology is complete. This islikely because Smith wanted to establish the principles of humanbehavior first so that he could evaluate moral theory in the light ofwhat had been posited.
The Theory of Moral Sentiments is, not surprisingly, both Aristotelianand Newtonian. It is also Stoic in its account of nature andself-command. The first sentence quoted above is a firstprinciple—individuals are not egoistic—and all the rest of the bookfollows from this assertion. And, as with all first principles, whileSmith "assumes" the possibility of other-oriented behavior, the restof the book both derives from its truth and contributes to itsbelievability. Smith's examples, anecdotes, and hypotheticals are allquite believable, and if one is to accept these as accurate depictionsof the human experience, then one must also accept his starting point.Human beings care for others, and altruism, or beneficence as he callsit, is possible.
What is sympathy, then? This is a matter of controversy. Scholars haveregarded it as a faculty, a power, a process, and a feeling. What itis not, however, is a moral sense in the most literal meaning of theterm. Sympathy is not a sixth capacity that can be grouped with thefive senses. Smith, while influenced by Hutcheson, is openly criticalof his teacher. He argues that moral sense without judgment isimpossible (TMS VII.3.3.8-9), and sympathy is that which allows us tomake judgments about ourselves and others. Sympathy is the foundationfor moral deliberation, Smith argues, and Hutcheson's system has noroom for it.
For Smith, sympathy is more akin to modern empathy, the ability torelate to someone else's emotions because we have experienced similarfeelings. While contemporary "sympathy" refers only to feeling bad fora person's suffering, Smith uses it to denote "fellow-feeling with anypassion whatever" (TMS I.i.1.5). It is how a "spectator… changesplaces in fancy with… the person principally concerned" (TMSI.i.1.3-5).
In short, sympathy works as follows: individuals witness the actionsand reactions of others. When doing so, this spectator attempts toenter into the situation he or she observes and imagines what it islike to be the actor—the person being watched. (Smith uses actor andagent interchangeably.) Then, the spectator imagines what he or shewould do as the actor. If the sentiments match up, if the imaginedreaction is analogous to the observed reaction, then the spectatorsympathizes with the original person. If the reactions aresignificantly different, then the spectator does not sympathize withthe person. In this context, then, sympathy is a form of moralapproval and lack of sympathy indicates disapproval.
Sympathy is rarely exact. Smith is explicit that the imaginedsentiments are always less intense than the original, but they arenonetheless close enough to signify agreement. And, most important,mutual sympathy is pleasurable. By nature's design, people want toshare fellow-feeling with one another and will therefore temper theiractions so as to find common ground. This is further indication of thesocial nature of human beings; for Smith, isolation and moraldisagreement is to be avoided. It is also the mechanism that moderatesbehavior. Behavior modulation is how individuals learn to act withmoral propriety and within social norms. According to The Theory ofMoral Sentiments, mutual sympathy is the foundation for reward andpunishment.
Smith is insistent, though, that sympathy is not inspired by simplywitnessing the emotions of others even though it "may seem to betransfused from one man to another, instantaneously, and antecedent toany knowledge of what excited them in the person principallyconcerned" (TMS I.i.1.6). Rather, the spectator gathers informationabout the cause of the emotions and about the person being watched.Only then does he or she ask, given the particular situation and thefacts of this particular agent's life, whether the sentiments areappropriate. As Smith writes:
When I condole with you for the loss of your only son, in order toenter into your grief I do not consider what I, a person of such acharacter and profession, should suffer, if I had a son, and if thatson was unfortunately to die: but I consider what I should suffer if Iwas really you, and I not only change circumstance with you, but Ichange persons and characters. My grief, therefore, is entirely uponyour own account, and not in the least upon my own. (TMS VI.iii.I.4)
We can see here why the imagination is so important to Smith. Onlythrough this faculty can a person enter into the perspective ofanother, and only through careful observation and consideration cansomeone learn all the necessary information relevant to judge moralaction. We can also see why sympathy is, for Smith, not an egoisticfaculty:
In order to produce this concord, as nature teaches the spectatorsto assume the circumstances of the person principally concerned, soshe teaches this last in some measure to assume those of thespectators. As they are continually placing themselves in hissituation, and thence conceiving emotions similar to what he feels; sohe is as constantly placing himself in theirs, and thence conceivingsome degree of that coolness about his own fortune, with which he issensible that they will view it. As they are constantly consideringwhat they themselves would feel, if they actually were the sufferers,so he is as constantly led to imagine in what manner he would beaffected if he was only one of the spectators of his own situation. Astheir sympathy makes them look at it, in some measure, with his eyes,so his sympathy makes him look at it, in some measure, with theirs,especially when in their presence and acting under their observation:and as the reflected passion, which he thus conceives, is much weakerthan the original one, it necessarily abates the violence of what hefelt before he came into their presence, before he began to recollectin what manner they would be affected by it, and to view his situationin this candid and impartial light. (TMS I.i.4.8)
Contrary to the description put forth by the Adam Smith Problem,sympathy cannot be either altruistic or egoistic because the agentsare too intertwined. One is constantly making the leap from one pointof view to another, and happiness and pleasure are dependant on jointperspectives. Individuals are only moral, and they only find their ownhappiness, from a shared standpoint. Egoism and altruism melt togetherfor Smith to become a more nuanced and more social type of motivationthat incorporates both self-interest and concern for others at thesame time.
Typical of Smith, the lengthy paragraph cited above leads to at leasttwo further qualifications. The first is that, as Smith puts it, "weexpect less sympathy from a common acquaintance than from a friend… weexpect still less sympathy from an assembly of strangers" (TMSI.1.4.10). Because sympathy requires information about events andpeople, the more distance we have from those around us, the moredifficult it is for us to sympathize with their more passionateemotions (and vice versa). Thus, Smith argues, we are to be "moretranquil" in front of acquaintances and strangers; it is unseemly tobe openly emotional around those who don't know us. This will lead,eventually, to Smith's discussion of duty in part III—his account ofwhy we act morally towards those with whom we have no connectionwhatsoever.
The second qualification is more complex and revolves around the lastphrase in the paragraph: that one must observe actions in a "candidand impartial light." If movement toward social norms were the onlycomponent to sympathy, Smith's theory would be a recipe forhomogeneity alone. All sentiments would be modulated to an identicalpitch and society would thereafter condemn only difference. Smithrecognizes, therefore, that there must be instances in whichindividuals reject community judgment. They do so via the creation ofan imagined impartial spectator.b. The Impartial Spectator
Using the imagination, individuals who wish to judge their own actionscreate not just analogous emotions but an entire imaginary person whoacts as observer and judge:
When I endeavour to examine my own conduct, when I endeavour topass sentence upon it, and either to approve or condemn it, it isevident that, in all such cases, I divide myself, as it were, into twopersons; and that I, the examiner and judge, represent a differentcharacter from that other I, the person whose conduct is examined intoand judged of. The first is the spectator, whose sentiments withregard to my own conduct I endeavour to enter into, by placing myselfin his situation, and by considering how it would appear to me, whenseen from that particular point of view. The second is the agent, theperson whom I properly call myself, and of whose conduct, under thecharacter of a spectator, I was endeavouring to form some opinion. Thefirst is the judge; the second the person judged of. But that thejudge should, in every respect, be the same with the person judged of,is as impossible, as that the cause should, in every respect, be thesame with the effect. (TMS III.1.6)
The impartial spectator is the anthropomorphization of the calm anddisinterested self that can be recovered with self control and selfreflection. In today's world, someone might advise us to "take a deepbreath and step back" from a given situation in order to reflect onour actions more dispassionately. Smith is suggesting the same,although he is describing it in more detail and in conjunction withthe larger ethical theory that helps us find conclusions once we doso. Individuals who wish to judge their own actions imaginativelysplit themselves into two different people and use this bifurcation asa substitute for community observation.
Here we see the legacy of Shaftesbury's soliloquy. An actor who wishesto gauge his or her own behavior has to divide him or herself in theway that Shaftesbury describes, in the way that Hamlet becomes bothpoet and philosopher. We are passionate about our own actions, andself-deception, according to Smith, is "the source of half thedisorders of human life" (TMS III.4.6). Self-division givesindividuals the ability to see themselves candidly and impartially andleads us to better self-knowledge. We strive to see ourselves the wayothers see us, but we do so while retaining access to the privilegedpersonal information that others might not have. The community helpsus see past our own biases, but when the community is limited by itsown institutionalized bias or simply by lack of information, theimpartial spectator can override this and allow an agent to findpropriety in the face of a deformed moral system. In the contemporaryworld, racism and sexism are examples of insidious biases that preventthe community from "seeing" pain and injustice. Smith too can be readas recognizing these prejudices, although he would not have recognizedeither the terms or the complicated discourses about them that haveevolved since he wrote two and a half centuries ago. For example, hecites slavery as an instance of the injustice and ignorance of acommunity. He writes:
There is not a Negro from the coast of Africa who does not, inthis respect, possess a degree of magnanimity which the soul of hissordid master is too often scarce capable of conceiving. Fortune neverexerted more cruelly her empire over mankind, than when she subjectedthose nations of heroes to the refuse of the jails of Europe, towretches who possess the virtues neither of the countries which theycome from, nor of those which they go to, and whose levity, brutality,and baseness, so justly expose them to the contempt of the vanquished.(TMS V.2.9)
Despite its corrective potential, impartiality has its limits. Smithdoes not imagine the impartial spectator to see from an Archimedean orGod's eye point of view. Because the impartial spectator does notreally exist—because it is created by an individual person'simagination—it is always subject to the limits of a person'sknowledge. This means that judgment will always be imperfect and thosemoral mistakes that are so profoundly interwoven into society or aperson's experience are the hardest to overcome. Change is slow andsociety is far from perfect. "Custom," as he calls it, interferes withsocial judgment on both the collective and the individual level. Thereare two points, according to Smith, when we judge our own actions,before and after we act. As he writes, "Our views are apt to be verypartial in both cases; but they are apt to be most partial when it isof most importance that they should be otherwise" (TMS 111.4.2).Neither of these points is independent of social influence.
Knowledge is imperfect and individuals do the best they can. But allindividuals are limited both by their own experiences and the naturalinadequacies of the human mind. Smith's suggestion, then, is to havefaith in the unfolding of nature, and in the principles that governhuman activity—moral, social, economic, or otherwise. With this inmind, however, he cautions people against choosing the beauty ofsystems over the interest of people. Abstract philosophies andabstruse religions are not to take precedent over the evidenceprovided by experience, Smith argues. Additionally, social engineeringis doomed to fail. Smith argues that one cannot move people around theway one moves pieces on a chess board. Each person has his or her "ownprinciple of motion… different from that which the legislature mightchoose to impress upon" them (TMS VI.ii.2.18).
Smith's caution against the love of systems is a component of Smith'sargument for limited government: "Harmony of minds," Smith argues, isnot possible without "free communication of settlements and opinion,"or, as we would call it today, freedom of expression (TMS VII.iv.27).It also offers a direct connection to Smith's most famous phrase "theinvisible hand." In The Theory of Moral Sentiments, he uses theinvisible hand to describe the conditions that allow for economicjustice. This natural aesthetic love of systems leads people tomanipulate the system of commerce, but this interferes with nature'splan:
The rich only select from the heap what is most precious andagreeable. They consume little more than the poor, and in spite oftheir natural selfishness and rapacity, though they mean only theirown conveniency, though the sole end which they propose from thelabours of all the thousands whom they employ, be the gratification oftheir own vain and insatiable desires, they divide with the poor theproduce of all their improvements. They are led by an invisible handto make nearly the same distribution of the necessaries of life, whichwould have been made, had the earth been divided into equal portionsamong all its inhabitants, and thus without intending it, withoutknowing it, advance the interest of the society, and afford means tothe multiplication of the species. (TMS IV.1.10)
In this passage, Smith argues that "the capacity of [the richperson's] stomach bars no proportion to the immensity of his desires,and will receive no more than that of the meanest peasant" (TMSIV.1.10). Thus, because the rich only select "the best" and becausethey can only consume so much, there ought to be enough resources foreveryone in the world, as if an invisible hand has divided the earthequally amongst all its inhabitants.
As an economic argument, this might have been more convincing inSmith's time, before refrigeration, the industrial revolution, modernbanking practices, and mass accumulation of capital; for a morethorough defense (from Smith's point of view) see the discussion ofThe Wealth of Nations. However, its relevance to the history ofeconomics is based upon his recognition of the role of unintendedconsequences, the presumption that economic growth helps all membersof the society, and the recognition of the independence of the freemarket as a natural force. At present, we can focus on Smith'swarnings about the power of aesthetic attraction. The Newtonianapproach, Smith argues—the search for a coherent narrative withoutgaps that addresses surprise, wonder, and admiration—can lead peopleastray if they prioritize beauty over the evidence. This love of thebeautiful can also deform moral judgments because it causes the massesto over-value the rich, to think the wealthy are happy with their"baubles and trinkets," and thus to pursue extreme wealth at the costof moral goodness: "To attain to this envied situation, the candidatesfor fortune too frequently abandon the paths of virtue; for unhappily,the road which leads to the one and that which leads to the other, liesometimes in very opposite directions" (TMS I.iii.8). Smith is verycritical not only of the rich, but of the moral value society placeson them. Only their wealth makes them different, and this love ofwealth, and of beauty in general, can distort moral judgment anddeform the impartial spectator.
The impartial spectator is a theory of conscience. It providesindividuals with the opportunity to assent to their own standards ofjudgment, which, hopefully, are in general agreement with thestandards of the society that houses them. Difference, as Smithdiscusses in both of his books, is the product of education, economicclass, gender, what we would now call ethnic background, individualexperience, and natural abilities; but Smith argues that the last ofthese, natural abilities, constitute the least of the factors. In hisLectures on Jurisprudence, for example, he argues that there is no"original difference" between individuals (LJ(A) vi.47-48), and in TheWealth of Nations, he writes that "The difference of natural talentsin different men is, in reality, much less than we are aware of…. Thedifference between the most dissimilar characters, between aphilosopher and a street porter, for example, seems to arise not somuch from nature, as from habit, custom and education" (WN I.ii.4).Society and education, hopefully, help to bridge these gaps, and helpto cultivate a unified community where people are encouraged tosympathize with others.
Here is the overlap in Smith's two operative questions. First, oneencounters his account of moral psychology. (How does one come to knowvirtue?) Now one comes face to face with the identification of moralstandards themselves. (Of what does virtue consist?) Smith may looklike a relativist at times: individuals modulate their sentiments totheir community standards, and agreement of individual imaginationsmay falsely seem to be the final arbiter of what is morallyappropriate behavior. With this in mind, there are certainly readerswho will argue that Smith, despite his rejection of Hobbes andMandeville, ends up offering no universally binding moral principles.This, however, forgets Smith's Newtonian approach: observation leadsto the discovery of natural principles that can be repeatedly testedand verified. Furthermore, many scholars argue that Smith was stronglyinfluenced by the classical Stoics. In addition to inheriting theirconcern with the modulation of emotions and the repression of emotionsin public, he also likely thought that moral laws are written intonature's design in just the same way that Newton's laws of motion are.As a result, some Smith scholars (but certainly not all) argue thatSmith is a moral realist, that sympathy is a method of discoveryrather than invention, and that what is to be discovered is correctindependent of the opinions of those who either know or are ignorantof the rules.
Consistent with this interpretation, Smith emphasizes what he termsthe general rules of morality:
…they are ultimately founded upon experience of what, inparticular instances, our moral faculties, our natural sense of meritand propriety, approve, or disapprove of. We do not originally approveor condemn particular actions; because, upon examination, they appearto be agreeable or inconsistent with a certain general rule. Thegeneral rule, on the contrary, is formed, by finding from experience,that all actions of a certain kind, or circumstanced in a certainmanner, are approved or disapproved of. To the man who first saw aninhuman murder, committed from avarice, envy, or unjust resentment,and upon one too that loved and trusted the murderer, who beheld thelast agonies of the dying person, who heard him, with his expiringbreath, complain more of the perfidy and ingratitude of his falsefriend, than of the violence which had been done to him, there couldbe no occasion, in order to conceive how horrible such an action was,that he should reflect, that one of the most sacred rules of conductwas what prohibited the taking away the life of an innocent person,that this was a plain violation of that rule, and consequently a veryblamable action. His detestation of this crime, it is evident, wouldarise instantaneously and antecedent to his having formed to himselfany such general rule. The general rule, on the contrary, which hemight afterwards form, would be founded upon the detestation which hefelt necessarily arise in his own breast, at the thought of this, andevery other particular action of the same kind. (TMS III.4.8)
According to Smith, our sentiments give rise to approval orcondemnation of a moral act. These can be modified over time withadditional information. Eventually, though, spectators, see patternsin the condemnation. They see, for example, that murder is alwayswrong, and therefore derive a sense that this is a general rule. Theybegin, then, to act on the principle rather than on the sentiment.They do not murder, not simply because they detest murder, but becausemurder is wrong in itself. This, again, is Aristotelian in that itrecognizes the interaction between intellectual and moral virtue. Italso shares commonalities with the Kantian deontology that became soinfluential several decades after the publication of TMS. Like Kant,Smith's agents begin to act on principle rather than emotion. UnlikeKant, however, reason in itself does not justify or validate theprinciple, experience does.
Smith does several things in the last excerpt. First, he embraces theNewtonian process of scientific experimentation and explanation. Moralrules are akin to the laws of physics; they can be discovered. Second,Smith anticipates Karl Popper's twentieth-century claim thatscientific truths are established through a process of falsification:we cannot prove what is true, Popper argued. Instead, we discover whatis false and rule it out.c. Virtues, Duty, and Justice
Smith emphasizes a number of virtues along with duty and justice.Self-command, he argues "is not only itself a great virtue, but fromit all the other virtues seem to derive their principle lustre" (TMSVI.iii.11). This should not be surprising since, for Smith, it is onlythrough self-command that agents can modulate their sentiments to thepitch required either by the community or the impartial spectator.Self-command is necessary because "the disposition to anger, hatred,envy, malice, [and] revenge… drive men from one another," while"humanity, kindness, natural affection, friendship, [and] esteem… tendto unite men in society" (TMS VI.iii.15). One can see, then, thenormative content of Smith's virtues—those sentiments that are to becultivated and those that are to be minimized. According to Smith,humans have a natural love for society and can develop neither moralnor aesthetic standards in isolation.
Individuals have a natural desire not only be to be loved, but to beworthy of love: "He desires not only praise, but praiseworthiness,… hedreads not only blame, but blame-worthiness" (TMS III.2.2). Thisspeaks first to the power of the impartial spectator who is a guide toworth when no spectators are around. It also speaks to Smith'sconception of duty, in that it sets a standard of right actionindependent of what communities set forth. Individuals "derive nosatisfaction" from unworthy praise (TMS III.2.5), and doing so is anindication of the perversion of vanity than can be corrected by seeingourselves the way others would, if they knew the whole story.
It should not be surprising that Smith addresses God amidst hisdiscussion of duty:
The all-wise Author of Nature has, in this manner, taught man torespect the sentiments and judgments of his brethren; to be more orless pleased when they approve of his conduct, and to be more or lesshurt when they disapprove of it. He has made man, if I may say so, theimmediate judge of mankind; and has, in this respect, as in manyothers, created him after his own image, and appointed him hisvicegerent upon earth, to superintend the behaviour of his brethren.They are taught by nature, to acknowledge that power and jurisdictionwhich has thus been conferred upon him, to be more or less humbled andmortified when they have incurred his censure, and to be more or lesselated when they have obtained his applause. (TMS III.2.31)
Here Smith makes several points. First, like many of the Scots, aswell as Thomas Jefferson and many of the American founders, Smith wasa deist. While there is controversy amongst scholars about the extentto which God is necessary to Smith's theory, it is likely that hebelieved that God designed the universe and its rules, and thenstepped back as it unfolded. Smith's God is not an interventionist Godand, despite some readers suggesting the contrary, the invisible handis not an indication of God's involvement in creation. It is, instead,just the unfolding of sociological and economic principles. Second,because God is detached from the system, Smith argues that humanbeings are God's regents on earth. It is up to them to be the judgesof their own behavior. Individuals are necessarily most concerned withthemselves first, and are therefore best self-governed. Only then canthey judge others via the moral system Smith describes. While it istrue that, as Smith puts it, the general rules are "justly regarded asthe laws of the deity" (TMS III.v), this seems to be a point ofmotivation, not of metaphysical assertion. If individuals understandthe general rules as stemming from God, then they will follow themwith more certainty and conviction. "The terrors of religion shouldthus enforce the natural sense of duty" (TMS III.5.7), Smith writes,because it inspires people to follow the general rules even if theyare inclined not to do so, and because this support makes religioncompatible with social and political life. Religious fanaticism, asSmith points out in The Wealth of Nations, is one of the great causesof factionalism—the great enemy of political society.
For Smith, the most precise virtue is justice. It is "the main pillarthat upholds the whole edifice" of society (TMS III.ii.4). It is, ashe describes it, "a negative virtue" and the minimal condition forparticipation in the community. Obeying the rules of justice,therefore, result in little praise, but breaking them inspires greatcondemnation:
There is, no doubt, a propriety in the practice of justice, and itmerits, upon that account, all the approbation which is due topropriety. But as it does no real positive good, it is entitled tovery little gratitude. Mere justice is, upon most occasions, but anegative virtue, and only hinders us from hurting our neighbour. Theman who barely abstains from violating either the person, or theestate, or the reputation of his neighbours, has surely very littlepositive merit. He fulfils, however, all the rules of what ispeculiarly called justice, and does every thing which his equals canwith propriety force him to do, or which they can punish him for notdoing. We may often fulfil all the rules of justice by sitting stilland doing nothing. (TMS II.ii.1.9)
Smith's account of justice assumes that individual rights and safetyare core concerns. He writes:
The most sacred laws of justice, therefore, those whose violationseems to call loudest for vengeance and punishment, are the laws whichguard the life and person of our neighbour; the next are those whichguard his property and possessions; and last of all come those whichguard what are called his personal rights, or what is due to him fromthe promises of others. (TMS II.ii.2.3)
His discussion of justice is supplemented in The Wealth of Nations andwould have likely been added to in his proposed work on "the generalprinciples of law and government" that he never completed. Hislectures on jurisprudence give one a hint as to what might have beenin that work, but one must assume that the manuscript was part of thecollection of works burnt upon his death. (It is not even known whatwas actually destroyed, let alone what the works argued.) It isfrustrating for Smith's readers to have such gaps in his theory, andSmith scholars have debated the possible content of his other work andthe way it relates to his first book. It is clear, though, that TheTheory of Moral Sentiments is only one part of Smith's larger system,and one truly understands it only in light of his other writing. It istherefore necessary to switch the discussion from his work on moralphilosophy to his political economy. As will be evident, this break isnot a radical one. The two books are entirely compatible with oneanother and reading one supplements reading the other; both containmoral claims and both make assertions classified as political economy.While their emphases are different much of the time—they are twodifferent books after all—their basic points are more than justharmonious. They depend upon one another for justification.3. An Inquiry into the Nature and Causes of the Wealth of Nationsa. Wealth and Trade
The Wealth of Nations (WN) was published in March of 1776, four monthsbefore the signing of the American Declaration of Independence. It isa much larger book than The Theory of Moral Sentiments—not countingappendices and indices, it runs 947 pages. To the first time reader,therefore, it may seem more daunting than Smith's earlier work, but inmany ways, it is actually a simpler read. As he grew older, Smith'swriting style became more efficient and less flowery, but hisauthorial voice remained conversational. His terms are more strictlydefined in WN than in TMS, and he clearly identifies those positionshe supports and rejects. His economic discussions are not as layeredas his comments on morality, so the interpretive issues are often lesscomplex. The logic of the book is transparent: its organizationalscheme is self-explanatory, and its conclusions are meticulouslysupported with both philosophical argument and economic data. Thereare many who challenge its assertions, of course, but it is hard todeny that Smith's positions in WN are defensible even if, in the end,some may conclude that he is wrong.
The text is divided into five "books" published in one, two, or threebound volumes depending on the edition. The first books outline theimportance of the division of labor and of self-interest. The seconddiscusses the role of stock and capital. The third provides anhistorical account of the rise of wealth from primitive times up untilcommercial society. The fourth discusses the economic growth thatderives from the interaction between urban and rural sectors of acommercial society. The fifth and final book presents the role of thesovereign in a market economy, emphasizing the nature and limits ofgovernmental powers and the means by which political institutions areto be paid for. Smith, along with his Scottish Enlightenmentcontemporaries, juxtaposes different time periods in order to findnormative guidance. As TMS does, The Wealth of Nations contains aphilosophy of history that trusts nature to reveal its logic andpurpose.
This is a remarkable scope, even for a book of its size. Smith'sachievement, however, is not simply the multitude of his discussions,but how he makes it all fit together. His most impressiveaccomplishment in The Wealth of Nations is the presentation of asystem of political economy. Smith makes seemingly disparate elementsinterdependent and consistent. He manages to take his Newtonianapproach and create a narrative of both power and beauty, addressingthe philosophical along with the economic, describing human behaviorand history, and prescribing the best action for economic andpolitical betterment. And, he does so building on a first principlethat was at least as controversial as the sentence that began TheTheory of Moral Sentiments. He begins the introduction by asserting:
The annual labour of every nation is the fund which originallysupplies it with all the necessaries and conveniencies of life whichit annually consumes, and which consist always either in the immediateproduce of that labour, or in what is purchased with that produce fromother nations. (WN intro.1)
The dominant economic theory of Smith's time was mercantilism. It heldthat the wealth of a nation was to be assessed by the amount of moneyand goods within its borders at any given time. Smith calls this"stock." Mercantilists sought to restrict trade because this increasedthe assets within the borders which, in turn, were thought to increasewealth. Smith opposed this, and the sentence cited above shifted thedefinition of national wealth to a different standard: labor.
The main point of The Wealth of Nations is to offer an alternative tomercantilism. Labor brings wealth, Smith argues. The more one laborsthe more one earns. This supplies individuals and the community withtheir necessities, and, with enough money, it offers the means to makelife more convenient and sometimes to pursue additional revenue. Freetrade, Smith argues, rather than diminishing the wealth of the nation,increases it because it provides more occasion for labor and thereforemore occasion to create more wealth. Limited trade keeps the amount ofwealth within the borders relatively constant, but the more trade acountry engages in, the wider the market becomes and the morepotential there is for additional labor and, in turn, additionalwealth. This point leads Smith to divide stock into two parts, thatwhich is used for immediate consumption—the assets that allow a personto acquire necessities—and that which is used to earn additionalrevenue. This latter sum he calls "capital" (WN II.1.2), and the term"capitalism" (which, again, Smith does not use) is derived from itsuse in a commercial system: capital is specifically earmarked forreinvestment and is therefore a major economic engine.
This is, of course, a philosophical point as much as an economic one:Smith asks his readers to reconsider the meaning of wealth itself. Iswealth the money and assets that one has at any given time, or is itthese things combined with the potential to have more, to adjust tocircumstances, and to cultivate the skills to increase such potential?Smith thinks it is the latter. Smith is also concerned specificallywith the distinction between necessities and conveniences. Hisoverarching concern in The Wealth of Nations is the creation of"universal opulence which extends itself to the lowest ranks of thepeople" (WN I.i.10). In other words, Smith believes that a commercialsystem betters the lives for the worst off in society; all individualsshould have the necessities needed to live reasonably well. He is lessconcerned with "conveniences" and "luxuries;" he does not argue for aneconomically egalitarian system. Instead, he argues for a commercialsystem that increases both the general wealth and the particularwealth of the poorest members. He writes:
Is this improvement in the circumstances of the lower ranks of thepeople to be regarded as an advantage or as an inconveniency to thesociety? The answer seems at first sight abundantly plain. Servants,labourers and workmen of different kinds, make up the far greater partof every great political society. But what improves the circumstancesof the greater part can never be regarded as an inconveniency to thewhole. No society can surely be flourishing and happy, of which thefar greater part of the members are poor and miserable. It is butequity, besides, that they who feed, cloath and lodge the whole bodyof the people, should have such a share of the produce of their ownlabour as to be themselves tolerably well fed, cloathed and lodged.(WN I.viii.36)
Smith argues that the key to the betterment of the masses is anincrease in labor, productivity, and workforce. There are two mainfactors that influence this: "the skill, dexterity, and judgment withwhich its labour is generally applied," and "the proportion betweenthe number of those who are employed in useful labour, and that ofthose who are not" (WN intro.3).
Smith repeats the phrase "skill, dexterity and judgment" in the firstparagraph of the body of the book, using it to segue into a discussionof manufacture. Famously, he uses the division of labor to illustratethe efficiency of workers working on complementary specific and narrowtasks. Considering the pin-maker, he suggests that a person who wasrequired to make pins by him or herself could hardly make one pin perday, but if the process were divided into a different task fordifferent people—"one man draws out the wire, another straights it, athird cuts it, a fourth points it, a fifth grinds it at the top forreceiving the head; to make the head requires two or three distinctoperations; to put it on, is a peculiar business, to whiten the pinsis another"—then the factory could make approximately forty-eightthousand pins per day (WN I.i.3).
The increase in efficiency is also an increase in skill and dexterity,and brings with it a clarion call for the importance of specializationin the market. The more focused a worker is on a particular task themore likely they are to create innovation. He offers the followingexample:
In the first fire-engines, a boy was constantly employed to openand shut alternately the communication between the boiler and thecylinder, according as the piston either ascended or descended. One ofthose boys, who loved to play with his companions, observed that, bytying a string from the handle of the valve which opened thiscommunication, to another part of the machine, the valve would openand shut without his assistance, and leave him at liberty to diverthimself with his play-fellows. One of the greatest improvements thathas been made upon this machine, since it was first invented, was inthis manner the discovery of a boy who wanted to save his own labour.(WN I.i.8)
This example of a boy looking to ease his work day, illustrates twoseparate points. The first is the discussion at hand, the importanceof specialization. In a commercial society, Smith argues, narrowemployment becomes the norm: "Each individual becomes more expert inhis own peculiar branch, more work is done upon the whole, and thequantity of science is considerably increased by it" (WN I.i.9).However, the more important point—certainly the more revolutionaryone—is the role of self-interest in economic life. A free marketharnesses personal desires for the betterment not of individuals butof the community.
Echoing but tempering Mandeville's claim about private vices becomingpublic benefits, Smith illustrates that personal needs arecomplementary and not mutually exclusive. Human beings, by nature,have a "propensity to truck, barter, and exchange one thing foranother" (WN I.ii.1). This tendency, which Smith suggests may be oneof the "original principles in human nature," is common to all peopleand drives commercial society forward. In an oft-cited comment, Smithobserves,
It is not from the benevolence of the butcher, the brewer, or thebaker, that we expect our dinner, but from their regard to their ownself-interest. We address ourselves, not to their humanity but totheir self-love, and never talk to them of our own necessities but oftheir advantages. (WN I.ii.2)
Philosophically, this is a tectonic shift in moral prescription.Dominant Christian beliefs had assumed that any self-interested actionwas sinful and shameful; the ideal person was entirely focused on theneeds of others. Smith's commercial society assumes somethingdifferent. It accepts that the person who focuses on his or her ownneeds actually contributes to the public good and that, as a result,such self-interest should be cultivated.
Smith is not a proponent of what would today be called rampantconsumerism. He is critical of the rich in both of his books. Instead,his argument is one that modern advocates of globalization and freetrade will find familiar: when individuals purchase a product, theyhelp more people than they attempted to do so through charity. Hewrites:
Observe the accommodation of the most common artificer orday-labourer in a civilized and thriving country, and you willperceive that the number of people of whose industry a part, thoughbut a small part, has been employed in procuring him thisaccommodation, exceeds all computation. The woollen coat, for example,which covers the day-labourer, as coarse and rough as it may appear,is the produce of the joint labour of a great multitude of workmen.The shepherd, the sorter of the wool, the wool-comber or carder, thedyer, the scribbler, the spinner, the weaver, the fuller, the dresser,with many others, must all join their different arts in order tocomplete even this homely production. How many merchants and carriers,besides, must have been employed in transporting the materials fromsome of those workmen to others who often live in a very distant partof the country! how much commerce and navigation in particular, howmany ship-builders, sailors, sail-makers, rope-makers, must have beenemployed in order to bring together the different drugs made use of bythe dyer, which often come from the remotest corners of the world!What a variety of labour too is necessary in order to produce thetools of the meanest of those workmen! To say nothing of suchcomplicated machines as the ship of the sailor, the mill of thefuller, or even the loom of the weaver, let us consider only what avariety of labour is requisite in order to form that very simplemachine, the shears with which the shepherd clips the wool. The miner,the builder of the furnace for smelting the ore, the feller of thetimber, the burner of the charcoal to be made use of in thesmelting-house, the brick-maker, the brick-layer, the workmen whoattend the furnace, the mill-wright, the forger, the smith, must allof them join their different arts in order to produce them. Were we toexamine, in the same manner, all the different parts of his dress andhousehold furniture, the coarse linen shirt which he wears next hisskin, the shoes which cover his feet, the bed which he lies on, andall the different parts which compose it, the kitchen-grate at whichhe prepares his victuals, the coals which he makes use of for thatpurpose, dug from the bowels of the earth, and brought to him perhapsby a long sea and a long land carriage, all the other utensils of hiskitchen, all the furniture of his table, the knives and forks, theearthen or pewter plates upon which he serves up and divides hisvictuals, the different hands employed in preparing his bread and hisbeer, the glass window which lets in the heat and the light, and keepsout the wind and the rain, with all the knowledge and art requisitefor preparing that beautiful and happy invention, without which thesenorthern parts of the world could scarce have afforded a verycomfortable habitation, together with the tools of all the differentworkmen employed in producing those different conveniencies; if weexamine, I say, all these things, and consider what a variety oflabour is employed about each of them, we shall be sensible thatwithout the assistance and co-operation of many thousands, the verymeanest person in a civilized country could not be provided, evenaccording to what we very falsely imagine, the easy and simple mannerin which he is commonly accommodated. Compared, indeed, with the moreextravagant luxury of the great, his accommodation must no doubtappear extremely simple and easy; and yet it may be true, perhaps,that the accommodation of an European prince does not always so muchexceed that of an industrious and frugal peasant, as the accommodationof the latter exceeds that of many an African king, the absolutemaster of the lives and liberties of ten thousand naked savages. (WNI.i.11)
The length of this excerpt is part of its argumentative power. Smithis not suggesting, simply, that a single purchase benefits a group ofpeople. Instead, he is arguing that once you take seriously themultitude of people whose income is connected to the purchase of thesingle coat, it is hard to even grasp the numbers we are considering.A single purchase brings with it a vast network of laborers.Furthermore, he argues, while one may be critical of the inevitableclass difference of a commercial society, the differential is almostinconsequential compared to the disparity between the "haves" and"have-nots" in a feudal or even the most primitive societies. (Smith'sreference to "a thousand naked savages" is just thoughtless eighteenthcentury racism and can be chalked-up to the rhetoric of the time. Itought to be disregarded and has no impact on the argument itself.) Itis the effect of one minor purchase on the community of economicagents that allows Smith to claim, as he does in TMS, that the goodsof the world are divided equally as if by an invisible hand. ForSmith, the wealthy can purchase nothing without benefiting the poor.
According to The Wealth of Nations, the power of the woolen coat isthe power of the market at work, and its reach extends to nationaleconomic policy as well as personal economic behavior. Smith'scomments relate to his condemnation of social engineering in TheTheory of Moral Sentiments, and he uses the same metaphor—theinvisible hand—to condemn those mercantilists who think that bymanipulating the market, they can improve the lot of individual groupsof people.
But the annual revenue of every society is always precisely equalto the exchangeable value of the whole annual produce of its industry,or rather is precisely the same thing with that exchangeable value. Asevery individual, therefore, endeavours as much as he can both toemploy his capital in the support of domestic industry, and so todirect that industry that its produce may be of the greatest value;every individual necessarily labours to render the annual revenue ofthe society as great as he can. He generally, indeed, neither intendsto promote the public interest, nor knows how much he is promoting it.By preferring the support of domestic to that of foreign industry, heintends only his own security; and by directing that industry in sucha manner as its produce may be of the greatest value, he intends onlyhis own gain, and he is in this, as in many other cases, led by aninvisible hand to promote an end which was no part of his intention.Nor is it always the worse for the society that it was no part of it.By pursuing his own interest he frequently promotes that of thesociety more effectually than when he really intends to promote it. Ihave never known much good done by those who affected to trade for thepublic good. It is an affectation, indeed, not very common amongmerchants, and very few words need be employed in dissuading them fromit. (WN IV.2.9)
Smith begins his comments here with a restatement of the main point ofThe Wealth of Nations: "…the annual revenue of every society is alwaysprecisely equal to the exchangeable value of the whole annual produceof its industry, or rather is precisely the same thing with thatexchangeable value." The income of any community is its labor. Smith'sremarks about the invisible hand suggest that one can do more damageby trying to manipulate the system than by trusting it to work. Thisis the moral power of unintended consequences, as TMS's account of theinvisible hand makes clear as well.
What Smith relies upon here is not "moral luck" as Bernard Williamswill later call it, but, rather, that nature is logical because itoperates on principles, and, therefore, certain outcomes can bepredicted. Smith recognizes that human beings and their interactionsare part of nature and not to be understood separately from it. As inThe Theory of Moral Sentiments, social and political behavior followsa natural logic. Now Smith makes the same claim for economic acts.Human society is as natural as the people in it, and, as such, Smithrejects the notion of a social contract in both of his books. Therewas never a time that humanity lived outside of society, and politicaldevelopment is the product of evolution (not his term) rather than aradical shift in organization. The state of nature is society forSmith and the Scots, and, therefore, the rules that govern the systemnecessitate certain outcomes.b. History and Labor
Smith's account of history describes human civilization as movingthrough four different stages, time periods that contain nations ofhunters, nations of shepherds, agricultural nations, and, finallycommercial societies (WN V.i.a, see, also, LJ(A) i.27; see also LJ(B)25, 27, 149, 233). This is progress, Smith insists, and each form ofsociety is superior to the previous one. It is also natural. This ishow the system is designed to operate; history has a logic to it.Obviously, this account, in fact all of The Wealth of Nations, wasvery influential for Karl Marx. It marks the important beginning ofwhat would be called social science—Smith's successor to the Chair ofMoral Philosophy, Adam Ferguson, is often identified as the founder ofmodern sociology—and is representative of the project the ScottishEnlightenment thinkers referred to as "the science of man."
Smith's discussion of history illustrates two other important points.First, he argues that the primary economic tension, and, as a result,the primary economic engine, in any given society can be found in theinteraction between "the inhabitants of the town and those of thecountry" (WN III.i.1). According to Smith, agricultural lands supplythe means of sustenance for any given society and urban populationsprovide the means of manufacture. Urban areas refine and advance themeans of production and return some of its produce to rural people. Ineach of the stages, the town and country have a different relationshipwith each other, but they always interact.
Here, Smith is indebted to the physiocrats, French economists whobelieved that agricultural labor was the primary measure of nationalwealth. Smith accepted their notion that productive labor was acomponent of the wealth of nations but rejected their notion that onlyagricultural labor should be counted as value. He argues, instead,that if one group had to be regarded as more important, it would bethe country since it provides food for the masses, but that it wouldbe a mistake to regard one's gain as the other's loss or that theirrelationship is essentially hierarchical: "the gains of both aremutual and reciprocal, and the division of labour is in this, as inall other cases, advantageous to all the different persons employed inthe various occupations into which it is subdivided" (WN III.i.1).
Again, there are philosophical issues here. First, is what one is toregard as labor; second is what counts towards economic value.Additionally, Smith is showing how the division of labor works on alarge scale; it is not just for pin factories. Rather, differentpopulations can be dedicated to different tasks for everyone'sbenefit. (This might be an anticipation of David Ricardo's notion of"comparative advantage.") A commercial system is an integrated one andthe invisible hand ensures that what benefits one group can alsobenefit another. Again, the butcher, brewer, and baker gain theirlivelihood by manufacturing the lunch of their customers.
Returning to Smith's account of history, Smith also argues thathistorical moments and their economic arrangements help determine theform of government. As the economic stage changes, so does the form ofgovernment. Economics and politics are intertwined, Smith observes,and a feudal system could not have a republican government as is foundin commercial societies. What Smith does here, again, is anticipateMarx's dialectical materialism, showing how history influenceseconomic and political options, but, of course, he does not take itnearly as far as the German does close to a century later.
Given the diversity of human experience—WN's stage theory of historyhelps account for difference—Smith is motivated to seek unifyingstandards that can help translate economic value betweencircumstances. Two examples are his discussions of price and hisparadox of value. Within these discussions, Smith seeks an adequatemeasure of "worth" for goods and services. Consumers look at prices togauge value, but there are good and bad amounts; which is which is notalways transparent. Some items are marked too expensive for theiractual value and some are a bargain. In developing a system to accountfor this interaction, Smith offers a range of different types ofprices, but the two most important are natural price—the price thatcovers all the necessary costs of manufacture—and the market price,what a commodity actually goes for on the market. When the market andthe natural prices are identical, the market is functioning well: "thenatural price, therefore, is, as it were, the central price to whichthe prices of all commodities are continually gravitating" (WNI.vii.15).
Here, the term "gravitating" indicates, yet again, that there areprinciples that guide the economic system, and a properly functioningmarketplace—one in which individuals are in "perfect liberty"—willhave the natural and market prices coincide (WN i.vii.30). (Smithdefines perfect liberty as a condition under which a person "maychange his trade as often as he pleases" (WN I.vii.6)). Whether thisis a normative value, whether for Smith the natural price is betterthan other prices, and whether the market price of a commodity shouldbe in alignment with the natural price, is a matter of debate.
Following the question of worth, Smith poses the paradox of value. Heexplains: "Nothing is more useful than water: but it will purchasescarce any thing; scarce anything can be had in exchange for it. Adiamond, on the contrary, has scarce any value in use; but a verygreat quantity of other goods may frequently be had in exchange forit" (WN I.iv.13). Smith's question is straightforward: why is water somuch cheaper than diamonds when it is so much more important foreveryday life?
Obviously, we are tempted to argue that scarcity plays a role in thesolution to this paradox; water is more valuable than diamonds to aperson dying of thirst. For Smith, however, value, here, is generalutility and it seems problematic to Smith that the more usefulcommodity has the lower market price. His solution, then, is todistinguish between two types of value, "value in use" and "value inexchange"—the former is the commodity's utility and the latter is whatit can be exchanged for in the market. Dividing the two analyticallyallows consumers to evaluate the goods both in terms of scarcity andin terms of usefulness. However, Smith is also searching for anormative or objective core in a fluctuating and contextual system, aswith the role of impartiality in his moral system. Scarcity would notsolve this problem because that, too, is fluctuating; usefulness islargely subjective and depends on an individual's priorities andcircumstance. Smith seeks a more universal criterion and looks towardslabor to anchor his notion of value: "labour," he writes, "is the realmeasure of the exchangeable value of all commodities" (WN I.v).
What Smith means by this is unclear and a matter of controversy. Whatseems likely, though, is that one person's labor in any given societyis not significantly different from another person's. Humancapabilities do not change radically from one time period or locationto another, and their labor, therefore, can be compared: "thedifference of natural talents in different men is, in reality, muchless than we are aware of." He elaborates:
Labour, therefore, it appears evidently, is the only universal, aswell as the only accurate measure of value, or the only standard bywhich we can compare the values of different commodities at all timesand at all places. We cannot estimate, it is allowed, the real valueof different commodities from century to century by the quantities ofsilver which were given for them. We cannot estimate it from year toyear by the quantities of corn. By the quantities of labour we can,with the greatest accuracy, estimate it both from century to centuryand from year to year. From century to century, corn is a bettermeasure than silver, because, from century to century, equalquantities of corn will command the same quantity of labour morenearly than equal quantities of silver. From year to year, on thecontrary, silver is a better measure than corn, because equalquantities of it will more nearly command the same quantity of labour.(WN I.v.17)
In other words, for example, a lone person can only lift so much wheatat one go, and while some people are stronger than others, thedifferences between them don't make that much difference. Therefore,Smith seems to believe, the value of any object can be universallymeasured by the amount of labor that any person in any society mighthave to exert in order to acquire that object. While this is notnecessarily a satisfying standard to all—many economists argue thatthe labor theory of value has been surpassed—it does, again, rootSmith's objectivity in impartiality. The "any person" quality of theimpartial spectator is analogous to the "any laborer" standard Smithseems to use as a value measure.
Ultimately, according to Smith, a properly functioning market is onein which all these conditions—price, value, progress, efficiency,specialization, and universal opulence (wealth)—all work together toprovide economic agents with a means to exchange accurately and freelyas their self-interest motivates them. None of these conditions can bemet if the government does not act appropriately, or if it overstepsits justified boundaries.c. Political Economy
The Wealth of Nations is a work of political economy. It is concernedwith much more than the mechanisms of exchange. It is also concernedwith the ideal form of government for commercial advancement and thepursuit of self-interest. This is where Smith's reputation as alaissez faire theorist comes in. He is arguing for a system, as hecalls it, of "natural liberty," one in which the market largelygoverns itself as is free from excessive state intervention (recallSmith's use of the invisible hand in TMS). As he explains, there areonly three proper roles for the sovereign: to protect a society frominvasion by outside forces, to enforce justice and protect citizensfrom one another, and "thirdly, the duty of erecting and maintainingcertain publick works and certain publick institutions, which it cannever be for the interest of any individual, or small number ofindividuals, to erect and maintain; because the profit could neverrepay the expence to any individual or small number of individuals,though it may frequently do much more than repay it to a greatsociety" (WN IV.ix).
Each of the responsibilities of the sovereign contains its owncontroversies. Regarding the first, protecting society, Smith debatedwith others as to whether a citizen militia or a standing army wasbetter suited for the job, rooting his discussion, as usual, in adetailed history of the military in different stages of society (WNV.1.a). Given the nature of specialization, it should not besurprising that Smith favored the army (WN V.1.a.28). The nature ofjustice—the second role of the sovereign—is also complicated, andSmith never fully articulated his theory of what justice is and how itought to be maintained, although, as we have seen, he was liberal inhis assumptions of the rights of individuals against the imposition ofgovernment on matters of conscience and debate. In his chapter on "theexpence of justice" (WN V.i.b), he discusses the nature of humansubordination and why human beings like to impose themselves on oneanother. However, it is the third role of the sovereign—themaintenance of works that are too expensive for individuals to erectand maintain, or what are called "natural monopolies"—that is the mostcontroversial.
It is this last book—ostensibly about the expenditures ofgovernment—that shows most clearly what Smith had in mind politically;the government plays a much stronger role in society than is oftenasserted. In particular, book five addresses the importance ofuniversal education and social unity. Smith calls for religioustolerance and social regulation against extremism. For Smith, religionis an exceptionally fractious force in society because individualstend to regard theological leaders as having more authority thanpolitical ones. This leads to fragmentation and social discord.
The discussion of "public goods" includes an elaborate discussion oftoll roads, which, on the face of it, may seem to be a boring topic,but actually includes a fascinating account of why tolls should bebased on the value of transported goods rather than on weight. This isSmith's attempt to protect the poor—expensive goods are usuallylighter than cheaper goods—think of diamonds compared to water—and ifweight were the standard for tolls, justified, perhaps, by the wearand tear that the heavier goods cause, the poor would carry an undueshare of transportation costs (WN V.i.d). However, the most intriguingsections of Book Five contain his two discussions of education (WNV.i.f–V.i.g). The first articulates the role of education for youthand the second describes the role of education for "people of allages."
The government has no small interest in maintaining schools to teachbasic knowledge and skills to young people. While some of the expenseis born by parents, much of this is to be paid for by society as awhole (WN V.i.f.54-55). The government also has a duty to educateadults, both to help counter superstition and to remedy the effects ofthe division of labor. Regarding the first, an educated population ismore resistant to the claims of extremist religions. Smith alsoadvocates public scrutiny of religious assertions in an attempt tomoderate their practices. This, of course, echoes Smith's moral theoryin which the impartial spectator moderates the more extreme sentimentsof moral agents. Finally, Smith insists that those who govern abandonassociations with religious sects so that their loyalties do notconflict.
Regarding the second purpose of education for all ages, and again,anticipating Marx, Smith recognizes that the division of labor isdestructive towards an individual's intellect. Without education, "thetorpor" (inactivity) of the worker's mind:
renders him, not only incapable of relishing or bearing a part inany rational conversation, but of conceiving any generous, noble, ortender sentiment, and consequently of forming any just judgmentconcerning many even of the ordinary duties of private life. Of thegreat and extensive interests of his country, he is altogetherincapable of judging; and unless very particular pains have been takento render him otherwise, he is equally incapable of defending hiscountry in war…. His dexterity at his own particular trade seems, inthis manner, to be acquired at the expence of his intellectual,social, and martial virtues. But in every improved and civilizedsociety this is the state into which the labouring poor, that is, thegreat body of the people, must necessarily fall, unless governmenttakes some pains to prevent it. (WN V.i.f.50)
Education helps individuals overcome the monotony of day to day life.It helps them be better citizens, better soldiers, and more moralpeople; the intellect and the imagination are essential to moraljudgment. No person can accurately sympathize if his or her mind isvacant and unskilled.
We see here that Smith is concerned about the poor throughout TheWealth of Nations. We also see the connections between his moraltheory and his political economy. It is impossible to truly understandwhy Smith makes the political claims he does without connecting themto his moral claims, and vice versa. His call for universal wealth oropulence and his justification of limited government are themselvesmoral arguments as much as they are economic ones. This is why theAdam Smith Problem doesn't make sense and why contemporary Smithscholars are so focused on showing the systematic elements of Smith'sphilosophy. Without seeing how each of the parts fit together, oneloses the power behind his reasoning—reasoning that inspired as muchchange as any other work in the history of the Western tradition. Ofcourse, Smith has his detractors and his critics. He is making claimsand building on assumptions that many challenge. But Smith has hisdefenders too, and, as history bears out, Smith is still an importantvoice in the investigation of how society ought to be organized andwhat principles govern human behavior, inquiry, and morality. The latetwentieth century revival in Smith's studies underscores that Smith'sphilosophy may be as important now as it ever was.4. References and Further Reading
All references are to The Glasgow Edition of the Correspondence andWorks of Adam Smith, the definitive edition of his works. Onlineversions of much of these can be found at The Library of Economics andLiberty.a. Work by Smith
* [TMS] Theory of Moral Sentiments. Ed. A.L. Macfie and D.D.Raphael. Indianapolis: Liberty Press, 1982. o First published in 1759; subsequent editions in 1761(significantly revised), 1767, 1774, 1781, and 1790 (significantlyrevised with entirely new section). * [WN] An Inquiry into the Nature and Causes of the Wealth ofNations. 2 vols. Ed. R.H. Campbell and A.S. Skinner. Indianapolis:Liberty Press, 1976. o First published in 1776; subsequent editions in 1778, 1784(significantly revised), 1786, 1789. * [LJ] Lectures on Jurisprudence. Ed. R.L. Meek and D.D. Raphael.Indianapolis: Liberty Press, 1982. o Contains two sets of lectures, LJ(A), dated 1762–3 andLJ(B) dated 1766. * [LRBL] The Lectures on Rhetoric and Belles Lettres. Ed. J.C.Bryce. Indianapolis: Liberty Press, 1985. o Edition also contains the fragment: "ConsiderationsConcerning the First Formation of Languages" in LRBL. Lecture dates,1762–1763. * [EPS] Essays on Philosophical Subjects. Ed. W.P.D. Wightman andJ.C. Bryce. Indianapolis: Liberty Press, 1982. o Contains the essays and fragments: "The Principles WhichLead and Direct Philosophical Enquires Illustrated by the History ofAstronomy," "The Principles Which Lead and Direct PhilosophicalEnquires Illustrated by the History of Ancient Physics,""ThePrinciples which lead and direct Philosophical EnquiriesIllustrated by the History of the Ancient Logics and Metaphysics," "Ofthe External Senses," "Of the Nature of that Imitation which takesplace in what are called The Imitative Arts," "Of the Affinity betweenMusic, Dancing, and Poetry," "Of the Affinity between certain Englishand Italian Verses," Contributions to the Edinburgh Review of 1755-56,Review of Johnson's Dictionary, A Letter to the Authors of theEdinburgh Review, Preface and Dedication to William Hamilton's Poemson Several Occasions 261 and Dugald Stewart's "Account of the Life andWritings of Adam Smith, LL.D." First published in 1795. * [Corr.] Correspondence of Adam Smith. Ed. E.C. Mossner and I.S.Ross. Indianapolis: Liberty Press, 1987.
b. Companion Volumes to the Glasgow Edition
* Index to the Works of Adam Smith. Ed K. Haakonssen and A.S.Skinner. Indianapolis,: Liberty Press, 2002. * Essays on Adam Smith. Edited by A.S. Skinner and Thomas Wilson.Oxford: Oxford University Press, 1976. * Life of Adam Smith. I.S. Ross. Oxford: Oxford University Press, 1995.
c. Introductions and Works for a General Audience
* Berry, Christopher J. The Social Theory of the ScottishEnlightenment. Edinburgh: Edinburgh University Press, 1997. * Fleischacker, Samuel. On Adam Smith's Wealth of Nations.Princeton: Princeton University Press, 2004. * Haakonssen, K. (ed.) The Cambridge Companion to Adam Smith.Cambridge: Cambridge University Press, 2006. * Muller, Jerry Z. Adam Smith in His Time and Ours. Princeton:Princeton University Press, 1993. * Otteson, James R. Adam Smith: Selected Philosophical Writings(Library of Scottish Philosophy). Exeter: Imprint Academic, 2004. * Weinstein, Jack Russell. On Adam Smith. Belmont: Wadsworth, 2001. * Raphael, D.D. Adam Smith (Past Masters). Oxford: OxfordUniversity Press, 1986.
d. Recommended Books for Specialists
Any issue of the journal The Adam Smith Review will be of interest toSmith's readers. Volume 2 (2007) has a special symposium on Smith'snotion of rational choice (economic deliberation), and Volume 3 (2008)will have a special symposium on Smith and education. Both may deservespecial attention.
* Campbell, T.D. Adam Smith's Science of Morals. New Jersey:Rowman and Littlefield, 1971. * Cropsey, Joseph. Polity and Economy: An Interpretation of thePrinciples of Adam Smith (With Further Thoughts on the Principles ofAdam Smith) (Revised Edition). Chicago: St. Augustine's Press, 2001. * Evensky, J. Adam Smith's Moral Philosophy. Cambridge: CambridgeUniversity Press, 2005. * Force, Pierre. Self-interest before Adam Smith. Cambridge:Cambridge University Press, 2003. * Griswold, Charles L. Jr. Adam Smith and the Virtues ofEnlightenment. Cambridge: Cambridge University Press, 1999. * Haakonssen, Knud (ed.). Adam Smith (The International Library ofCritical Essays in the History of Philosophy. Aldershot:Ashgate/Dartmouth Publishing, 1998. * Haakonssen, Knud. The Science of A Legislator. Cambridge:Cambridge University Press, 1981. * Montes, Leonidas. Adam Smith in Context. New York: PalgraveMacMillan, 2004. * Otteson, James. Adam Smith's Marketplace of Life. Cambridge:Cambridge University Press, 2002. * Raphael, D.D. The Impartial Spectator. Oxford: Oxford UniversityPress, 2007. * Scott, William Robert. Adam Smith as Student and Professor. NewYork: Augusts M. Kelley, 1965. * Teichgraeber, Richard. Free Trade and Moral Philosophy:Rethinking the Sources of Adam Smith's Wealth of Nations. Durham, DukeUniversity Press, 1986.
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