capitalism. While accurate to some extent, this description is both
overly simplistic and dangerously misleading. On the one hand, it is
true that very few individual books have had as much impact as his An
Inquiry into the Nature and Causes of the Wealth of Nations. His
accounts of the division of labor and free trade, self-interest in
exchange, the limits on government intervention, price, and the
general structure of the market, all signify the moment when economics
transitions 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 that
support it are but two components of a larger theory of human
interaction and social history.
Smith was not an economist; he was a philosopher. His first book, The
Theory of Moral Sentiments, sought to describe the natural principles
that govern morality and the ways in which human beings come to know
them. How these two books fit together is both one of the most
controversial subjects in Smith scholarship and the key to
understanding his arguments about the market and human activity in
general. Historically, this process is made more difficult by the
so-called "Adam Smith Problem," a position put forth by small numbers
of committed scholars since the late nineteenth century that Smith's
two books are incompatible. The argument suggests that Smith's work on
ethics, which supposedly assumed altruistic human motivation,
contradicts his political economy, which allegedly assumed egoism.
However, most contemporary Smith scholars reject this claim as well as
the description of Smith's account of human motivation it presupposes.
Smith never uses the term "capitalism;" it does not enter into
widespread use until the late nineteenth century. Instead, he uses
"commercial society," a phrase that emphasizes his belief that the
economic is only one component of the human condition. And while, for
Smith, a nation's economic "stage" helps define its social and
political structures, he is also clear that the moral character of a
people is the ultimate measure of their humanity. To investigate
Smith's work, therefore, is to ask many of the great questions that we
all struggle with today, including those that emphasize the
relationship of morality and economics. Smith asks why individuals
should be moral. He offers models for how people should treat
themselves and others. He argues that scientific method can lead to
moral discovery, and he presents a blueprint for a just society that
concerns itself with its least well-off members, not just those with
economic success. Adam Smith's philosophy bears little resemblance to
the libertarian caricature put forth by proponents of laissez faire
markets who describe humans solely as homo economicus. For Smith, the
market is a mechanism of morality and social support.
1. Life and Influences
a. Early Life and Influences
Adam Smith was born in June, 1723, in Kirkcaldy, a port town on the
eastern shore of Scotland; the exact date is unknown. His father, the
Comptroller and Collector of Customs, died while Smith's mother was
pregnant but left the family with adequate resources for their
financial well being. Young Adam was educated in a local parish
(district) school. In 1737, at the age of thirteen he was sent to
Glasgow College after which he attended Baliol College at Oxford
University. His positive experiences at school in Kirkcaldy and at
Glasgow, combined with his negative reaction to the professors at
Oxford, would remain a strong influence on his philosophy.
In particular, Smith held his teacher Francis Hutcheson in high
esteem. One of the early leaders of the philosophical movement now
called the Scottish Enlightenment, Hutcheson was a proponent of moral
sense theory, the position that human beings make moral judgments
using their sentiments rather than their "rational" capacities.
According to Hutcheson, a sense of unity among human beings allows for
the possibility of other-oriented actions even though individuals are
often motivated by self-interest. The moral sense, which is a form of
benevolence, elicits a feeling of approval in those witnessing moral
acts. Hutcheson opposed ethical egoism, the notion that individuals
ought to be motivated by their own interests ultimately, even when
they 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 a
focal point in the Scots' discussion, although he himself was not
Scottish. Although Shaftesbury did not offer a formal moral sense
theory as Hutcheson did, he describes personal moral deliberation as a
"soliloquy," a process of self-division and self-examination similar
in form to Hamlet's remarks on suicide. This model of moral reasoning
plays an important role in Smith's books.
The Scottish Enlightenment philosophers, or the literati, as they
called themselves, were a close-knit group who socialized together and
who read, critiqued, and debated each other's work. They met regularly
in social clubs (often at pubs) to discuss politics and philosophy.
Shortly after graduating from Oxford, Smith presented public lectures
on moral philosophy in Edinburgh, and then, with the assistance of the
literati, he secured his first position as the Chair of Logic at
Glasgow University. His closest friendship in the group—and probably
his most important non-familial relationship throughout his life—was
with David Hume, an older philosopher whose work Smith was chastised
for reading while at Oxford.
Hume was believed to be an atheist, and his work brought into question
some of the core beliefs in moral philosophy. In particular, and even
more so than Hutcheson, Hume's own version of moral sense theory
challenged the assumption that reason was the key human faculty in
moral behavior. He famously asserted that reason is and ought to be
slave to the passions, which means that even if the intellect can
inform individuals as to what is morally correct, agents will only act
if their sentiments incline them to do so. An old proverb tells us
that 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 people
what it means to be moral, only their passions, not their rational
capacities, can actually inspire them to be ethical. This position has
roots in Aristotle's distinction between moral and intellectual
virtue.
Smith, while never explicitly arguing for Hume's position, nonetheless
seems to assume much of it. And while he does not offer a strict moral
sense theory, he does adopt Hume's assertion that moral behavior is,
at core, the human capacity of sympathy, the faculty that, in Hume's
account, allows us to approve of others' characters, to "forget our
own interest in our judgments," and to consider those whom "we meet
with in society and conversation" who "are not placed in the same
situation, 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. In
this book, he embraces Hume's conception of sympathy, but rejects his
skepticism and adds, as we shall see, a new theory of conscience to
the mix. However, focusing on Hume's observations also allow us to see
certain other themes that Smith shares with his Scottish Enlightenment
cohort: in particular, their commitment to empiricism. As with most of
the other Scottish philosophers, Hume and Smith held that knowledge is
acquired through the senses rather than through innate ideas,
continuing the legacy of John Locke more so than René Descartes. For
Hume, this epistemology would bring into question the connection
between cause and effect—our senses, he argued, could only tell us
that certain events followed one another in time, but not that they
were causally related. For Smith, this meant a whole host of different
problems. He asks, for example, how a person can know another's
sentiments and motivations, as well as how members can use the market
to make "rational" decisions about the propriety of their economic
activity.
At the core of the Scottish project is the attempt to articulate the
laws governing human behavior. Smith and his contemporary Adam
Ferguson are sometimes credited with being the founders of sociology
because they, along with the other literati, believed that human
activities were governed by discoverable principles in the same way
that 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 that
Newton's system, had "gained the general and complete approbation of
mankind," and that it ought to be considered "the greatest discovery
that ever was made by man." What made it so important? Smith describes
it as "the discovery of an immense chain of the most important and
sublime truths, all closely connected together, by one capital fact,
of the reality of which we have daily experience" (EPS, Astronomy
IV.76).
While Smith held the chair of logic at Glasgow University, he lectured
more on rhetoric than on traditional Aristotelian forms of reasoning.
There is a collection of student lecture notes that recount Smith's
discussions of style, narrative, and moral propriety in rhetorical
contexts. These notes, in combination with his essay on astronomy,
offer an account of explanation that Smith himself regarded as
essentially Newtonian. According to Smith, a theory must first be
believable; it must soothe anxiety by avoiding any gaps in its
account. Again, relying upon a basically Aristotelian model, Smith
tells us that the desire to learn, and the theories that result, stems
from a series of emotions: surprise at events inspires anxieties that
cause one to wonder about the process. This leads to understanding and
admiration of the acts and principles of nature. By showing that the
principles governing the heavens also govern the Earth, Newton set a
new standard for explanation. A theory must direct the mind with its
narrative in a way that both corresponds with experience and offers
theoretical accounts that enhance understanding and allow for
prediction. The account must fit together systematically without holes
or missing information; this last element—avoiding any gaps in the
theory—is, perhaps, the most central element for Smith, and this model
of philosophical explanation unifies both his moral theories and his
political economy.
As a young philosopher, Smith experimented with different topics, and
there is a collection of writing fragments to compliment his lecture
notes and early essays. These include brief explorations of "Ancient
Logics," metaphysics, the senses, physics, aesthetics, the work of
Jean-Jacque Rousseau, and other assorted topics. Smith's Scottish
Enlightenment contemporaries shared an interest in all of these
issues.
While the works offer a glimpse into Smith's meditations, they are by
no means definitive; few of them were ever authorized for publication.
Smith was a meticulous writer and, in his own words, "a slow a very
slow workman, who do and undo everything I write at least half a dozen
of times before I can be tolerably pleased with it" (Corr. 311). As a
result, he ordered sixteen volumes of unpublished writing burnt upon
his death because, presumably, he did not feel they were adequate for
public consumption. Smith scholars lament this loss because it
obfuscates the blueprint of his system, and there have been several
attempts of late to reconstruct the design of Smith's corpus, again
with the intent of arguing for a particular relationship between his
major works.
After holding the chair of logic at Glasgow for only one year
(1751–1752), Smith was appointed to the Chair of Moral Philosophy, the
position originally held by Hutcheson. He wrote The Theory of Moral
Sentiments, first published in 1759, while holding this position and,
presumably, while testing out many of his discussions in the
classroom. While he spoke very warmly of this period of his life, and
while he took a deep interest in teaching and mentoring young minds,
Smith resigned in 1764 to tutor the Duke of Buccleuch and accompany
him on his travels.
It was not uncommon for professional teachers to accept positions as
private tutors. The salary and pensions were often lucrative, and it
allowed more flexibility than a busy lecturing schedule might afford.
In Smith's case, this position took him to France where he spent two
years engaged with the philosophes—a tight-knit group of French
philosophers analogous to Smith's own literati—in conversations that
would make their way into The Wealth of Nations. How influential the
philosophes were in the creation of Smith's political economy is a
matter of controversy. Some scholars suggest that Smith's attitudes
were formed as a result of their persuasion while others suggest that
Smith's ideas were solidified much earlier than his trip abroad.
Whatever the case, this shows that Smith's interests were aligned, not
just with the Scottish philosophers, but with their European
counterparts. Smith's writing was well-received in part because it was
so timely. He was asking the deep questions of the time; his answers
would change the world.
After his travels, Smith returned to his home town of Kirkcaldy to
complete The Wealth of Nations. It was first published in 1776 and was
praised both by his friends and the general public. In a letter
written much later, he referred to it as the "very violent attack I
had made upon the whole commercial system of Great Britain" (Corr.
208). The Theory of Moral Sentiments went through six editions in
Smith's lifetime, two of which contained major substantive changes and
The Wealth of Nations saw four different editions with more minor
alterations. Smith indicated that he thought The Theory of Moral
Sentiments was a better book, and his on-going attention to its
details and adjustments to its theory bear out, at least, that he was
more committed to refining it. Eventually, Smith moved to Edinburgh
with his mother and was appointed commissioner of customs in 1778; he
did 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 stature
and The Theory of Moral Sentiments began to fade into the background.
In the more than two centuries since his death, his published work has
been supplemented by the discoveries of his early writing fragments,
the student-authored lectures notes on his course in rhetoric and
belles-letters, student-authored lecture notes on jurisprudence, and
an early draft of part of The Wealth of Nations, the date of which is
estimated to be about 1763. The latter two discoveries help shed light
on the formulation of his most famous work and supply fodder for both
sides of the debate regarding the influence of the philosophes on
Smith's political economy.
As stated above, Smith is sometimes credited with being one of the
progenitors of modern sociology, and his lectures on rhetoric have
also been called the blueprint for the invention of the modern
discipline of English; this largely has to do with their influence on
his student Hugh Blair, whose own lectures on rhetoric were
instrumental in the formation of that discipline. The Theory of Moral
Sentiments played an important role in 19th century sentimentalist
literature and was also cited by Mary Wollstonecraft to bolster her
argument in A Vindication of the Rights of Women: Smith's moral
theories experienced a revival in the last quarter of the twentieth
century. Secondary sources on Smith flooded the marketplace and
interest in Smith's work as a whole has reached an entirely new
audience.
There are two noteworthy characteristics of the latest wave of
interest in Smith. The first is that scholars are interested in how
The Theory of Moral Sentiments and The Wealth of Nations interconnect,
not simply in his moral and economic theories as distinct from one
another. The second is that it is philosophers and not economists who
are primarily interested in Smith's writings. They therefore pay
special attention to where Smith might fit in within the already
established philosophical canon: How does Smith's work build on
Hume's? How does it relate to that of his contemporary Immanuel Kant?
(It is known that Kant read The Theory of Moral Sentiments, for
example.) To what extent is a sentiment-based moral theory defensible?
And, what can one learn about the Scots and eighteenth-century
philosophy in general from reading Smith in a historical context?
These are but a few of the questions with which Smith's readers now
concern themselves.
2. The Theory of Moral Sentiments
a. Sympathy
Hutcheson, Hume, and Smith were unified by their opposition to
arguments put forth by Bernard Mandeville. A Dutch-born philosopher
who relocated to England, Mandeville argued that benevolence does no
social good whatsoever. His book, The Fable of the Bees: Private
Vices, Public Benefits, tells the whole story. Bad behavior has
positive social impact. Without vice, we would have, for example, no
police, locksmiths, or other such professionals. Without indulgence,
there would be only minimal consumer spending. Virtue, on the other
hand, he argued, has no positive economic benefit and is therefore not
to be encouraged.
But Mandeville took this a step further, arguing, as did Thomas
Hobbes, that moral virtue derives from personal benefit, that humans
are essentially selfish, and that all people are in competition with
one another. Hobbes was a moral relativist, arguing that "good" is
just a synonym for "that which people desire." Mandeville's
relativism, if it can be called that, is less extreme. While he argues
that virtue is the intentional act for the good of others with the
objective of achieving that good, he casts doubt on whether or not
anyone could actually achieve this standard. Smith seems to treat both
philosophers as if they argue for the same conclusion; both offer
counterpoints to Shaftesbury's approach. Tellingly, Mandeville writes
wistfully 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 the
very first sentence of The Theory of Moral Sentiments begins with
their rejection:
However selfish man may be supposed, there are evidently some
principles in his nature, which interest him in the fortune of others,
and render their happiness necessary to him, though they derive
nothing from it except the pleasure of seeing it. (TMS I.i.1.1)
While it is often assumed that people are selfish, Smith argues that
experience suggests otherwise. People derive pleasure from seeing the
happiness of others because, by design, others concern us. With this
initial comment, Smith outlines the central themes of his moral
philosophy: human beings are social, we care about others and their
circumstances bring us pleasure or pain. It is only through our
senses, through "seeing," that we acquire knowledge of their
sentiments. Smith's first sentence associates egoism with supposition
or presumption, but scientific "principles" of human activity are
associated 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 to
follow, and it is written in a lively manner that speaks of its
rehearsal in the classroom. Smith has a particular flair for examples,
both literary and from day-to-day life, and his use of "we" throughout
brings the reader into direct dialogue with Smith. The book feels like
an accurate description of human emotions and experience—there are
times when it feels phenomenological, although Smith would not have
understood this word. He uses repetition to great benefit, reminding
his readers of the central points in his theories while he slowly
builds their complexity. At only 342 pages (all references are to the
Glasgow Editions of his work), the book encompasses a tremendous range
of themes. Disguised as a work of moral psychology—as a theory of
moral sentiments alone—it is also a book about social organization,
identity construction, normative standards, and the science of human
behavior as a whole.
Smith tells us that the two questions of moral philosophy are "Wherein
does virtue consist?" and "By what power or faculty in the mind is it,
that this character, whatever it be, is recommended to us?" (TMS
VII.i.2) In other words, we are to ask what goodness is and how we are
to be good. The Theory of Moral Sentiments follows this plan, although
Smith tackles the second question first, focusing on moral psychology
long before he addresses the normative question of moral standards.
For Smith, the core of moral learning and deliberation—the key to the
development of identity itself—is social unity, and social unity is
enabled through sympathy.
The term "sympathy" is Hume's, but Smith's friend gives little
indication as to how it was supposed to work or as to its limits. In
contrast, Smith addresses the problem head on, devoting the first
sixty-six pages of TMS to illuminating its workings and most of the
next two hundred elaborating on its nuances. The last part of the book
(part VII, "Of Systems of Moral Philosophy") is the most distanced
from this topic, addressing the history of ethics but, again, only for
slightly less than sixty pages. It is noteworthy that while modern
writers almost always place the "literature review" in the beginning
of their books, Smith feels that a historical discussion of ethics is
only possible after the work on moral psychology is complete. This is
likely because Smith wanted to establish the principles of human
behavior first so that he could evaluate moral theory in the light of
what had been posited.
The Theory of Moral Sentiments is, not surprisingly, both Aristotelian
and Newtonian. It is also Stoic in its account of nature and
self-command. The first sentence quoted above is a first
principle—individuals are not egoistic—and all the rest of the book
follows from this assertion. And, as with all first principles, while
Smith "assumes" the possibility of other-oriented behavior, the rest
of the book both derives from its truth and contributes to its
believability. Smith's examples, anecdotes, and hypotheticals are all
quite believable, and if one is to accept these as accurate depictions
of the human experience, then one must also accept his starting point.
Human beings care for others, and altruism, or beneficence as he calls
it, is possible.
What is sympathy, then? This is a matter of controversy. Scholars have
regarded it as a faculty, a power, a process, and a feeling. What it
is not, however, is a moral sense in the most literal meaning of the
term. Sympathy is not a sixth capacity that can be grouped with the
five senses. Smith, while influenced by Hutcheson, is openly critical
of his teacher. He argues that moral sense without judgment is
impossible (TMS VII.3.3.8-9), and sympathy is that which allows us to
make judgments about ourselves and others. Sympathy is the foundation
for moral deliberation, Smith argues, and Hutcheson's system has no
room for it.
For Smith, sympathy is more akin to modern empathy, the ability to
relate to someone else's emotions because we have experienced similar
feelings. While contemporary "sympathy" refers only to feeling bad for
a person's suffering, Smith uses it to denote "fellow-feeling with any
passion whatever" (TMS I.i.1.5). It is how a "spectator… changes
places in fancy with… the person principally concerned" (TMS
I.i.1.3-5).
In short, sympathy works as follows: individuals witness the actions
and reactions of others. When doing so, this spectator attempts to
enter into the situation he or she observes and imagines what it is
like to be the actor—the person being watched. (Smith uses actor and
agent interchangeably.) Then, the spectator imagines what he or she
would do as the actor. If the sentiments match up, if the imagined
reaction is analogous to the observed reaction, then the spectator
sympathizes with the original person. If the reactions are
significantly different, then the spectator does not sympathize with
the person. In this context, then, sympathy is a form of moral
approval and lack of sympathy indicates disapproval.
Sympathy is rarely exact. Smith is explicit that the imagined
sentiments are always less intense than the original, but they are
nonetheless close enough to signify agreement. And, most important,
mutual sympathy is pleasurable. By nature's design, people want to
share fellow-feeling with one another and will therefore temper their
actions so as to find common ground. This is further indication of the
social nature of human beings; for Smith, isolation and moral
disagreement is to be avoided. It is also the mechanism that moderates
behavior. Behavior modulation is how individuals learn to act with
moral propriety and within social norms. According to The Theory of
Moral Sentiments, mutual sympathy is the foundation for reward and
punishment.
Smith is insistent, though, that sympathy is not inspired by simply
witnessing the emotions of others even though it "may seem to be
transfused from one man to another, instantaneously, and antecedent to
any knowledge of what excited them in the person principally
concerned" (TMS I.i.1.6). Rather, the spectator gathers information
about the cause of the emotions and about the person being watched.
Only then does he or she ask, given the particular situation and the
facts of this particular agent's life, whether the sentiments are
appropriate. As Smith writes:
When I condole with you for the loss of your only son, in order to
enter into your grief I do not consider what I, a person of such a
character and profession, should suffer, if I had a son, and if that
son was unfortunately to die: but I consider what I should suffer if I
was really you, and I not only change circumstance with you, but I
change persons and characters. My grief, therefore, is entirely upon
your 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. Only
through this faculty can a person enter into the perspective of
another, and only through careful observation and consideration can
someone learn all the necessary information relevant to judge moral
action. We can also see why sympathy is, for Smith, not an egoistic
faculty:
In order to produce this concord, as nature teaches the spectators
to assume the circumstances of the person principally concerned, so
she teaches this last in some measure to assume those of the
spectators. As they are continually placing themselves in his
situation, and thence conceiving emotions similar to what he feels; so
he is as constantly placing himself in theirs, and thence conceiving
some degree of that coolness about his own fortune, with which he is
sensible that they will view it. As they are constantly considering
what they themselves would feel, if they actually were the sufferers,
so he is as constantly led to imagine in what manner he would be
affected if he was only one of the spectators of his own situation. As
their 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 weaker
than the original one, it necessarily abates the violence of what he
felt before he came into their presence, before he began to recollect
in what manner they would be affected by it, and to view his situation
in 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 agents
are too intertwined. One is constantly making the leap from one point
of view to another, and happiness and pleasure are dependant on joint
perspectives. Individuals are only moral, and they only find their own
happiness, from a shared standpoint. Egoism and altruism melt together
for Smith to become a more nuanced and more social type of motivation
that incorporates both self-interest and concern for others at the
same time.
Typical of Smith, the lengthy paragraph cited above leads to at least
two further qualifications. The first is that, as Smith puts it, "we
expect less sympathy from a common acquaintance than from a friend… we
expect still less sympathy from an assembly of strangers" (TMS
I.1.4.10). Because sympathy requires information about events and
people, the more distance we have from those around us, the more
difficult it is for us to sympathize with their more passionate
emotions (and vice versa). Thus, Smith argues, we are to be "more
tranquil" in front of acquaintances and strangers; it is unseemly to
be openly emotional around those who don't know us. This will lead,
eventually, to Smith's discussion of duty in part III—his account of
why we act morally towards those with whom we have no connection
whatsoever.
The second qualification is more complex and revolves around the last
phrase in the paragraph: that one must observe actions in a "candid
and impartial light." If movement toward social norms were the only
component to sympathy, Smith's theory would be a recipe for
homogeneity alone. All sentiments would be modulated to an identical
pitch and society would thereafter condemn only difference. Smith
recognizes, therefore, that there must be instances in which
individuals reject community judgment. They do so via the creation of
an imagined impartial spectator.
b. The Impartial Spectator
Using the imagination, individuals who wish to judge their own actions
create not just analogous emotions but an entire imaginary person who
acts as observer and judge:
When I endeavour to examine my own conduct, when I endeavour to
pass sentence upon it, and either to approve or condemn it, it is
evident that, in all such cases, I divide myself, as it were, into two
persons; and that I, the examiner and judge, represent a different
character from that other I, the person whose conduct is examined into
and judged of. The first is the spectator, whose sentiments with
regard to my own conduct I endeavour to enter into, by placing myself
in his situation, and by considering how it would appear to me, when
seen from that particular point of view. The second is the agent, the
person whom I properly call myself, and of whose conduct, under the
character of a spectator, I was endeavouring to form some opinion. The
first is the judge; the second the person judged of. But that the
judge should, in every respect, be the same with the person judged of,
is as impossible, as that the cause should, in every respect, be the
same with the effect. (TMS III.1.6)
The impartial spectator is the anthropomorphization of the calm and
disinterested self that can be recovered with self control and self
reflection. In today's world, someone might advise us to "take a deep
breath and step back" from a given situation in order to reflect on
our actions more dispassionately. Smith is suggesting the same,
although he is describing it in more detail and in conjunction with
the larger ethical theory that helps us find conclusions once we do
so. Individuals who wish to judge their own actions imaginatively
split themselves into two different people and use this bifurcation as
a substitute for community observation.
Here we see the legacy of Shaftesbury's soliloquy. An actor who wishes
to gauge his or her own behavior has to divide him or herself in the
way that Shaftesbury describes, in the way that Hamlet becomes both
poet and philosopher. We are passionate about our own actions, and
self-deception, according to Smith, is "the source of half the
disorders of human life" (TMS III.4.6). Self-division gives
individuals the ability to see themselves candidly and impartially and
leads us to better self-knowledge. We strive to see ourselves the way
others see us, but we do so while retaining access to the privileged
personal information that others might not have. The community helps
us see past our own biases, but when the community is limited by its
own institutionalized bias or simply by lack of information, the
impartial spectator can override this and allow an agent to find
propriety in the face of a deformed moral system. In the contemporary
world, racism and sexism are examples of insidious biases that prevent
the community from "seeing" pain and injustice. Smith too can be read
as recognizing these prejudices, although he would not have recognized
either the terms or the complicated discourses about them that have
evolved since he wrote two and a half centuries ago. For example, he
cites slavery as an instance of the injustice and ignorance of a
community. He writes:
There is not a Negro from the coast of Africa who does not, in
this respect, possess a degree of magnanimity which the soul of his
sordid master is too often scarce capable of conceiving. Fortune never
exerted more cruelly her empire over mankind, than when she subjected
those nations of heroes to the refuse of the jails of Europe, to
wretches who possess the virtues neither of the countries which they
come 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. Smith
does not imagine the impartial spectator to see from an Archimedean or
God's eye point of view. Because the impartial spectator does not
really exist—because it is created by an individual person's
imagination—it is always subject to the limits of a person's
knowledge. This means that judgment will always be imperfect and those
moral mistakes that are so profoundly interwoven into society or a
person's experience are the hardest to overcome. Change is slow and
society is far from perfect. "Custom," as he calls it, interferes with
social judgment on both the collective and the individual level. There
are 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 very
partial in both cases; but they are apt to be most partial when it is
of 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 all
individuals are limited both by their own experiences and the natural
inadequacies of the human mind. Smith's suggestion, then, is to have
faith in the unfolding of nature, and in the principles that govern
human activity—moral, social, economic, or otherwise. With this in
mind, however, he cautions people against choosing the beauty of
systems over the interest of people. Abstract philosophies and
abstruse religions are not to take precedent over the evidence
provided by experience, Smith argues. Additionally, social engineering
is doomed to fail. Smith argues that one cannot move people around the
way one moves pieces on a chess board. Each person has his or her "own
principle of motion… different from that which the legislature might
choose to impress upon" them (TMS VI.ii.2.18).
Smith's caution against the love of systems is a component of Smith's
argument for limited government: "Harmony of minds," Smith argues, is
not 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 "the
invisible hand." In The Theory of Moral Sentiments, he uses the
invisible hand to describe the conditions that allow for economic
justice. This natural aesthetic love of systems leads people to
manipulate the system of commerce, but this interferes with nature's
plan:
The rich only select from the heap what is most precious and
agreeable. They consume little more than the poor, and in spite of
their natural selfishness and rapacity, though they mean only their
own conveniency, though the sole end which they propose from the
labours of all the thousands whom they employ, be the gratification of
their own vain and insatiable desires, they divide with the poor the
produce of all their improvements. They are led by an invisible hand
to make nearly the same distribution of the necessaries of life, which
would have been made, had the earth been divided into equal portions
among all its inhabitants, and thus without intending it, without
knowing it, advance the interest of the society, and afford means to
the multiplication of the species. (TMS IV.1.10)
In this passage, Smith argues that "the capacity of [the rich
person's] stomach bars no proportion to the immensity of his desires,
and will receive no more than that of the meanest peasant" (TMS
IV.1.10). Thus, because the rich only select "the best" and because
they can only consume so much, there ought to be enough resources for
everyone in the world, as if an invisible hand has divided the earth
equally amongst all its inhabitants.
As an economic argument, this might have been more convincing in
Smith's time, before refrigeration, the industrial revolution, modern
banking practices, and mass accumulation of capital; for a more
thorough defense (from Smith's point of view) see the discussion of
The Wealth of Nations. However, its relevance to the history of
economics is based upon his recognition of the role of unintended
consequences, the presumption that economic growth helps all members
of the society, and the recognition of the independence of the free
market as a natural force. At present, we can focus on Smith's
warnings about the power of aesthetic attraction. The Newtonian
approach, Smith argues—the search for a coherent narrative without
gaps that addresses surprise, wonder, and admiration—can lead people
astray if they prioritize beauty over the evidence. This love of the
beautiful can also deform moral judgments because it causes the masses
to over-value the rich, to think the wealthy are happy with their
"baubles and trinkets," and thus to pursue extreme wealth at the cost
of moral goodness: "To attain to this envied situation, the candidates
for fortune too frequently abandon the paths of virtue; for unhappily,
the road which leads to the one and that which leads to the other, lie
sometimes in very opposite directions" (TMS I.iii.8). Smith is very
critical not only of the rich, but of the moral value society places
on them. Only their wealth makes them different, and this love of
wealth, and of beauty in general, can distort moral judgment and
deform the impartial spectator.
The impartial spectator is a theory of conscience. It provides
individuals with the opportunity to assent to their own standards of
judgment, which, hopefully, are in general agreement with the
standards of the society that houses them. Difference, as Smith
discusses in both of his books, is the product of education, economic
class, gender, what we would now call ethnic background, individual
experience, and natural abilities; but Smith argues that the last of
these, natural abilities, constitute the least of the factors. In his
Lectures on Jurisprudence, for example, he argues that there is no
"original difference" between individuals (LJ(A) vi.47-48), and in The
Wealth of Nations, he writes that "The difference of natural talents
in different men is, in reality, much less than we are aware of…. The
difference between the most dissimilar characters, between a
philosopher and a street porter, for example, seems to arise not so
much from nature, as from habit, custom and education" (WN I.ii.4).
Society and education, hopefully, help to bridge these gaps, and help
to cultivate a unified community where people are encouraged to
sympathize with others.
Here is the overlap in Smith's two operative questions. First, one
encounters his account of moral psychology. (How does one come to know
virtue?) Now one comes face to face with the identification of moral
standards themselves. (Of what does virtue consist?) Smith may look
like a relativist at times: individuals modulate their sentiments to
their community standards, and agreement of individual imaginations
may falsely seem to be the final arbiter of what is morally
appropriate behavior. With this in mind, there are certainly readers
who will argue that Smith, despite his rejection of Hobbes and
Mandeville, ends up offering no universally binding moral principles.
This, however, forgets Smith's Newtonian approach: observation leads
to the discovery of natural principles that can be repeatedly tested
and verified. Furthermore, many scholars argue that Smith was strongly
influenced by the classical Stoics. In addition to inheriting their
concern with the modulation of emotions and the repression of emotions
in public, he also likely thought that moral laws are written into
nature'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 that
Smith is a moral realist, that sympathy is a method of discovery
rather than invention, and that what is to be discovered is correct
independent of the opinions of those who either know or are ignorant
of the rules.
Consistent with this interpretation, Smith emphasizes what he terms
the general rules of morality:
…they are ultimately founded upon experience of what, in
particular instances, our moral faculties, our natural sense of merit
and propriety, approve, or disapprove of. We do not originally approve
or condemn particular actions; because, upon examination, they appear
to be agreeable or inconsistent with a certain general rule. The
general rule, on the contrary, is formed, by finding from experience,
that all actions of a certain kind, or circumstanced in a certain
manner, are approved or disapproved of. To the man who first saw an
inhuman murder, committed from avarice, envy, or unjust resentment,
and upon one too that loved and trusted the murderer, who beheld the
last agonies of the dying person, who heard him, with his expiring
breath, complain more of the perfidy and ingratitude of his false
friend, than of the violence which had been done to him, there could
be no occasion, in order to conceive how horrible such an action was,
that he should reflect, that one of the most sacred rules of conduct
was what prohibited the taking away the life of an innocent person,
that this was a plain violation of that rule, and consequently a very
blamable action. His detestation of this crime, it is evident, would
arise instantaneously and antecedent to his having formed to himself
any such general rule. The general rule, on the contrary, which he
might afterwards form, would be founded upon the detestation which he
felt necessarily arise in his own breast, at the thought of this, and
every other particular action of the same kind. (TMS III.4.8)
According to Smith, our sentiments give rise to approval or
condemnation of a moral act. These can be modified over time with
additional information. Eventually, though, spectators, see patterns
in the condemnation. They see, for example, that murder is always
wrong, and therefore derive a sense that this is a general rule. They
begin, then, to act on the principle rather than on the sentiment.
They do not murder, not simply because they detest murder, but because
murder is wrong in itself. This, again, is Aristotelian in that it
recognizes the interaction between intellectual and moral virtue. It
also shares commonalities with the Kantian deontology that became so
influential several decades after the publication of TMS. Like Kant,
Smith's agents begin to act on principle rather than emotion. Unlike
Kant, however, reason in itself does not justify or validate the
principle, experience does.
Smith does several things in the last excerpt. First, he embraces the
Newtonian process of scientific experimentation and explanation. Moral
rules are akin to the laws of physics; they can be discovered. Second,
Smith anticipates Karl Popper's twentieth-century claim that
scientific truths are established through a process of falsification:
we cannot prove what is true, Popper argued. Instead, we discover what
is 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 from
it all the other virtues seem to derive their principle lustre" (TMS
VI.iii.11). This should not be surprising since, for Smith, it is only
through self-command that agents can modulate their sentiments to the
pitch 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… tend
to unite men in society" (TMS VI.iii.15). One can see, then, the
normative content of Smith's virtues—those sentiments that are to be
cultivated and those that are to be minimized. According to Smith,
humans have a natural love for society and can develop neither moral
nor aesthetic standards in isolation.
Individuals have a natural desire not only be to be loved, but to be
worthy of love: "He desires not only praise, but praiseworthiness,… he
dreads not only blame, but blame-worthiness" (TMS III.2.2). This
speaks first to the power of the impartial spectator who is a guide to
worth when no spectators are around. It also speaks to Smith's
conception of duty, in that it sets a standard of right action
independent of what communities set forth. Individuals "derive no
satisfaction" from unworthy praise (TMS III.2.5), and doing so is an
indication of the perversion of vanity than can be corrected by seeing
ourselves the way others would, if they knew the whole story.
It should not be surprising that Smith addresses God amidst his
discussion of duty:
The all-wise Author of Nature has, in this manner, taught man to
respect the sentiments and judgments of his brethren; to be more or
less pleased when they approve of his conduct, and to be more or less
hurt when they disapprove of it. He has made man, if I may say so, the
immediate judge of mankind; and has, in this respect, as in many
others, created him after his own image, and appointed him his
vicegerent upon earth, to superintend the behaviour of his brethren.
They are taught by nature, to acknowledge that power and jurisdiction
which has thus been conferred upon him, to be more or less humbled and
mortified when they have incurred his censure, and to be more or less
elated when they have obtained his applause. (TMS III.2.31)
Here Smith makes several points. First, like many of the Scots, as
well as Thomas Jefferson and many of the American founders, Smith was
a deist. While there is controversy amongst scholars about the extent
to which God is necessary to Smith's theory, it is likely that he
believed that God designed the universe and its rules, and then
stepped back as it unfolded. Smith's God is not an interventionist God
and, despite some readers suggesting the contrary, the invisible hand
is 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 human
beings are God's regents on earth. It is up to them to be the judges
of their own behavior. Individuals are necessarily most concerned with
themselves first, and are therefore best self-governed. Only then can
they judge others via the moral system Smith describes. While it is
true that, as Smith puts it, the general rules are "justly regarded as
the laws of the deity" (TMS III.v), this seems to be a point of
motivation, not of metaphysical assertion. If individuals understand
the general rules as stemming from God, then they will follow them
with more certainty and conviction. "The terrors of religion should
thus enforce the natural sense of duty" (TMS III.5.7), Smith writes,
because it inspires people to follow the general rules even if they
are inclined not to do so, and because this support makes religion
compatible with social and political life. Religious fanaticism, as
Smith points out in The Wealth of Nations, is one of the great causes
of factionalism—the great enemy of political society.
For Smith, the most precise virtue is justice. It is "the main pillar
that upholds the whole edifice" of society (TMS III.ii.4). It is, as
he describes it, "a negative virtue" and the minimal condition for
participation in the community. Obeying the rules of justice,
therefore, result in little praise, but breaking them inspires great
condemnation:
There is, no doubt, a propriety in the practice of justice, and it
merits, upon that account, all the approbation which is due to
propriety. But as it does no real positive good, it is entitled to
very little gratitude. Mere justice is, upon most occasions, but a
negative virtue, and only hinders us from hurting our neighbour. The
man who barely abstains from violating either the person, or the
estate, or the reputation of his neighbours, has surely very little
positive merit. He fulfils, however, all the rules of what is
peculiarly called justice, and does every thing which his equals can
with propriety force him to do, or which they can punish him for not
doing. We may often fulfil all the rules of justice by sitting still
and doing nothing. (TMS II.ii.1.9)
Smith's account of justice assumes that individual rights and safety
are core concerns. He writes:
The most sacred laws of justice, therefore, those whose violation
seems to call loudest for vengeance and punishment, are the laws which
guard the life and person of our neighbour; the next are those which
guard his property and possessions; and last of all come those which
guard what are called his personal rights, or what is due to him from
the promises of others. (TMS II.ii.2.3)
His discussion of justice is supplemented in The Wealth of Nations and
would have likely been added to in his proposed work on "the general
principles of law and government" that he never completed. His
lectures on jurisprudence give one a hint as to what might have been
in that work, but one must assume that the manuscript was part of the
collection of works burnt upon his death. (It is not even known what
was actually destroyed, let alone what the works argued.) It is
frustrating for Smith's readers to have such gaps in his theory, and
Smith scholars have debated the possible content of his other work and
the way it relates to his first book. It is clear, though, that The
Theory 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 is
therefore necessary to switch the discussion from his work on moral
philosophy to his political economy. As will be evident, this break is
not a radical one. The two books are entirely compatible with one
another and reading one supplements reading the other; both contain
moral claims and both make assertions classified as political economy.
While their emphases are different much of the time—they are two
different books after all—their basic points are more than just
harmonious. They depend upon one another for justification.
3. An Inquiry into the Nature and Causes of the Wealth of Nations
a. Wealth and Trade
The Wealth of Nations (WN) was published in March of 1776, four months
before the signing of the American Declaration of Independence. It is
a much larger book than The Theory of Moral Sentiments—not counting
appendices and indices, it runs 947 pages. To the first time reader,
therefore, it may seem more daunting than Smith's earlier work, but in
many ways, it is actually a simpler read. As he grew older, Smith's
writing style became more efficient and less flowery, but his
authorial voice remained conversational. His terms are more strictly
defined in WN than in TMS, and he clearly identifies those positions
he supports and rejects. His economic discussions are not as layered
as his comments on morality, so the interpretive issues are often less
complex. The logic of the book is transparent: its organizational
scheme is self-explanatory, and its conclusions are meticulously
supported with both philosophical argument and economic data. There
are many who challenge its assertions, of course, but it is hard to
deny 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 three
bound volumes depending on the edition. The first books outline the
importance of the division of labor and of self-interest. The second
discusses the role of stock and capital. The third provides an
historical account of the rise of wealth from primitive times up until
commercial society. The fourth discusses the economic growth that
derives from the interaction between urban and rural sectors of a
commercial society. The fifth and final book presents the role of the
sovereign in a market economy, emphasizing the nature and limits of
governmental powers and the means by which political institutions are
to be paid for. Smith, along with his Scottish Enlightenment
contemporaries, juxtaposes different time periods in order to find
normative guidance. As TMS does, The Wealth of Nations contains a
philosophy of history that trusts nature to reveal its logic and
purpose.
This is a remarkable scope, even for a book of its size. Smith's
achievement, however, is not simply the multitude of his discussions,
but how he makes it all fit together. His most impressive
accomplishment in The Wealth of Nations is the presentation of a
system of political economy. Smith makes seemingly disparate elements
interdependent and consistent. He manages to take his Newtonian
approach and create a narrative of both power and beauty, addressing
the philosophical along with the economic, describing human behavior
and history, and prescribing the best action for economic and
political betterment. And, he does so building on a first principle
that was at least as controversial as the sentence that began The
Theory of Moral Sentiments. He begins the introduction by asserting:
The annual labour of every nation is the fund which originally
supplies it with all the necessaries and conveniencies of life which
it annually consumes, and which consist always either in the immediate
produce of that labour, or in what is purchased with that produce from
other nations. (WN intro.1)
The dominant economic theory of Smith's time was mercantilism. It held
that the wealth of a nation was to be assessed by the amount of money
and goods within its borders at any given time. Smith calls this
"stock." Mercantilists sought to restrict trade because this increased
the assets within the borders which, in turn, were thought to increase
wealth. Smith opposed this, and the sentence cited above shifted the
definition of national wealth to a different standard: labor.
The main point of The Wealth of Nations is to offer an alternative to
mercantilism. Labor brings wealth, Smith argues. The more one labors
the more one earns. This supplies individuals and the community with
their necessities, and, with enough money, it offers the means to make
life more convenient and sometimes to pursue additional revenue. Free
trade, Smith argues, rather than diminishing the wealth of the nation,
increases it because it provides more occasion for labor and therefore
more occasion to create more wealth. Limited trade keeps the amount of
wealth within the borders relatively constant, but the more trade a
country engages in, the wider the market becomes and the more
potential there is for additional labor and, in turn, additional
wealth. This point leads Smith to divide stock into two parts, that
which is used for immediate consumption—the assets that allow a person
to acquire necessities—and that which is used to earn additional
revenue. This latter sum he calls "capital" (WN II.1.2), and the term
"capitalism" (which, again, Smith does not use) is derived from its
use in a commercial system: capital is specifically earmarked for
reinvestment 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. Is
wealth the money and assets that one has at any given time, or is it
these things combined with the potential to have more, to adjust to
circumstances, and to cultivate the skills to increase such potential?
Smith thinks it is the latter. Smith is also concerned specifically
with the distinction between necessities and conveniences. His
overarching concern in The Wealth of Nations is the creation of
"universal opulence which extends itself to the lowest ranks of the
people" (WN I.i.10). In other words, Smith believes that a commercial
system betters the lives for the worst off in society; all individuals
should have the necessities needed to live reasonably well. He is less
concerned with "conveniences" and "luxuries;" he does not argue for an
economically egalitarian system. Instead, he argues for a commercial
system that increases both the general wealth and the particular
wealth of the poorest members. He writes:
Is this improvement in the circumstances of the lower ranks of the
people to be regarded as an advantage or as an inconveniency to the
society? The answer seems at first sight abundantly plain. Servants,
labourers and workmen of different kinds, make up the far greater part
of every great political society. But what improves the circumstances
of the greater part can never be regarded as an inconveniency to the
whole. No society can surely be flourishing and happy, of which the
far greater part of the members are poor and miserable. It is but
equity, besides, that they who feed, cloath and lodge the whole body
of the people, should have such a share of the produce of their own
labour 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 an
increase in labor, productivity, and workforce. There are two main
factors that influence this: "the skill, dexterity, and judgment with
which its labour is generally applied," and "the proportion between
the number of those who are employed in useful labour, and that of
those who are not" (WN intro.3).
Smith repeats the phrase "skill, dexterity and judgment" in the first
paragraph of the body of the book, using it to segue into a discussion
of manufacture. Famously, he uses the division of labor to illustrate
the efficiency of workers working on complementary specific and narrow
tasks. Considering the pin-maker, he suggests that a person who was
required to make pins by him or herself could hardly make one pin per
day, but if the process were divided into a different task for
different people—"one man draws out the wire, another straights it, a
third cuts it, a fourth points it, a fifth grinds it at the top for
receiving the head; to make the head requires two or three distinct
operations; to put it on, is a peculiar business, to whiten the pins
is another"—then the factory could make approximately forty-eight
thousand 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 specialization
in the market. The more focused a worker is on a particular task the
more likely they are to create innovation. He offers the following
example:
In the first fire-engines, a boy was constantly employed to open
and shut alternately the communication between the boiler and the
cylinder, according as the piston either ascended or descended. One of
those boys, who loved to play with his companions, observed that, by
tying a string from the handle of the valve which opened this
communication, to another part of the machine, the valve would open
and shut without his assistance, and leave him at liberty to divert
himself with his play-fellows. One of the greatest improvements that
has been made upon this machine, since it was first invented, was in
this 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 two
separate points. The first is the discussion at hand, the importance
of specialization. In a commercial society, Smith argues, narrow
employment becomes the norm: "Each individual becomes more expert in
his own peculiar branch, more work is done upon the whole, and the
quantity of science is considerably increased by it" (WN I.i.9).
However, the more important point—certainly the more revolutionary
one—is the role of self-interest in economic life. A free market
harnesses personal desires for the betterment not of individuals but
of the community.
Echoing but tempering Mandeville's claim about private vices becoming
public benefits, Smith illustrates that personal needs are
complementary and not mutually exclusive. Human beings, by nature,
have a "propensity to truck, barter, and exchange one thing for
another" (WN I.ii.1). This tendency, which Smith suggests may be one
of the "original principles in human nature," is common to all people
and drives commercial society forward. In an oft-cited comment, Smith
observes,
It is not from the benevolence of the butcher, the brewer, or the
baker, that we expect our dinner, but from their regard to their own
self-interest. We address ourselves, not to their humanity but to
their self-love, and never talk to them of our own necessities but of
their advantages. (WN I.ii.2)
Philosophically, this is a tectonic shift in moral prescription.
Dominant Christian beliefs had assumed that any self-interested action
was sinful and shameful; the ideal person was entirely focused on the
needs of others. Smith's commercial society assumes something
different. It accepts that the person who focuses on his or her own
needs 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 rampant
consumerism. He is critical of the rich in both of his books. Instead,
his argument is one that modern advocates of globalization and free
trade will find familiar: when individuals purchase a product, they
help more people than they attempted to do so through charity. He
writes:
Observe the accommodation of the most common artificer or
day-labourer in a civilized and thriving country, and you will
perceive that the number of people of whose industry a part, though
but a small part, has been employed in procuring him this
accommodation, 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, the
dyer, the scribbler, the spinner, the weaver, the fuller, the dresser,
with many others, must all join their different arts in order to
complete even this homely production. How many merchants and carriers,
besides, must have been employed in transporting the materials from
some of those workmen to others who often live in a very distant part
of the country! how much commerce and navigation in particular, how
many ship-builders, sailors, sail-makers, rope-makers, must have been
employed in order to bring together the different drugs made use of by
the dyer, which often come from the remotest corners of the world!
What a variety of labour too is necessary in order to produce the
tools of the meanest of those workmen! To say nothing of such
complicated machines as the ship of the sailor, the mill of the
fuller, or even the loom of the weaver, let us consider only what a
variety of labour is requisite in order to form that very simple
machine, the shears with which the shepherd clips the wool. The miner,
the builder of the furnace for smelting the ore, the feller of the
timber, the burner of the charcoal to be made use of in the
smelting-house, the brick-maker, the brick-layer, the workmen who
attend the furnace, the mill-wright, the forger, the smith, must all
of them join their different arts in order to produce them. Were we to
examine, in the same manner, all the different parts of his dress and
household furniture, the coarse linen shirt which he wears next his
skin, the shoes which cover his feet, the bed which he lies on, and
all the different parts which compose it, the kitchen-grate at which
he prepares his victuals, the coals which he makes use of for that
purpose, dug from the bowels of the earth, and brought to him perhaps
by a long sea and a long land carriage, all the other utensils of his
kitchen, all the furniture of his table, the knives and forks, the
earthen or pewter plates upon which he serves up and divides his
victuals, the different hands employed in preparing his bread and his
beer, the glass window which lets in the heat and the light, and keeps
out the wind and the rain, with all the knowledge and art requisite
for preparing that beautiful and happy invention, without which these
northern parts of the world could scarce have afforded a very
comfortable habitation, together with the tools of all the different
workmen employed in producing those different conveniencies; if we
examine, I say, all these things, and consider what a variety of
labour is employed about each of them, we shall be sensible that
without the assistance and co-operation of many thousands, the very
meanest person in a civilized country could not be provided, even
according to what we very falsely imagine, the easy and simple manner
in which he is commonly accommodated. Compared, indeed, with the more
extravagant luxury of the great, his accommodation must no doubt
appear extremely simple and easy; and yet it may be true, perhaps,
that the accommodation of an European prince does not always so much
exceed that of an industrious and frugal peasant, as the accommodation
of the latter exceeds that of many an African king, the absolute
master of the lives and liberties of ten thousand naked savages. (WN
I.i.11)
The length of this excerpt is part of its argumentative power. Smith
is not suggesting, simply, that a single purchase benefits a group of
people. Instead, he is arguing that once you take seriously the
multitude of people whose income is connected to the purchase of the
single 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 inevitable
class difference of a commercial society, the differential is almost
inconsequential compared to the disparity between the "haves" and
"have-nots" in a feudal or even the most primitive societies. (Smith's
reference to "a thousand naked savages" is just thoughtless eighteenth
century racism and can be chalked-up to the rhetoric of the time. It
ought to be disregarded and has no impact on the argument itself.) It
is the effect of one minor purchase on the community of economic
agents that allows Smith to claim, as he does in TMS, that the goods
of the world are divided equally as if by an invisible hand. For
Smith, the wealthy can purchase nothing without benefiting the poor.
According to The Wealth of Nations, the power of the woolen coat is
the power of the market at work, and its reach extends to national
economic policy as well as personal economic behavior. Smith's
comments relate to his condemnation of social engineering in The
Theory of Moral Sentiments, and he uses the same metaphor—the
invisible hand—to condemn those mercantilists who think that by
manipulating the market, they can improve the lot of individual groups
of people.
But the annual revenue of every society is always precisely equal
to the exchangeable value of the whole annual produce of its industry,
or rather is precisely the same thing with that exchangeable value. As
every individual, therefore, endeavours as much as he can both to
employ his capital in the support of domestic industry, and so to
direct that industry that its produce may be of the greatest value;
every individual necessarily labours to render the annual revenue of
the society as great as he can. He generally, indeed, neither intends
to promote the public interest, nor knows how much he is promoting it.
By preferring the support of domestic to that of foreign industry, he
intends only his own security; and by directing that industry in such
a manner as its produce may be of the greatest value, he intends only
his own gain, and he is in this, as in many other cases, led by an
invisible 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 the
society more effectually than when he really intends to promote it. I
have never known much good done by those who affected to trade for the
public good. It is an affectation, indeed, not very common among
merchants, and very few words need be employed in dissuading them from
it. (WN IV.2.9)
Smith begins his comments here with a restatement of the main point of
The Wealth of Nations: "…the annual revenue of every society is always
precisely equal to the exchangeable value of the whole annual produce
of its industry, or rather is precisely the same thing with that
exchangeable value." The income of any community is its labor. Smith's
remarks about the invisible hand suggest that one can do more damage
by trying to manipulate the system than by trusting it to work. This
is the moral power of unintended consequences, as TMS's account of the
invisible hand makes clear as well.
What Smith relies upon here is not "moral luck" as Bernard Williams
will later call it, but, rather, that nature is logical because it
operates on principles, and, therefore, certain outcomes can be
predicted. Smith recognizes that human beings and their interactions
are part of nature and not to be understood separately from it. As in
The Theory of Moral Sentiments, social and political behavior follows
a natural logic. Now Smith makes the same claim for economic acts.
Human society is as natural as the people in it, and, as such, Smith
rejects the notion of a social contract in both of his books. There
was never a time that humanity lived outside of society, and political
development is the product of evolution (not his term) rather than a
radical shift in organization. The state of nature is society for
Smith and the Scots, and, therefore, the rules that govern the system
necessitate certain outcomes.
b. History and Labor
Smith's account of history describes human civilization as moving
through four different stages, time periods that contain nations of
hunters, nations of shepherds, agricultural nations, and, finally
commercial 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 of
society is superior to the previous one. It is also natural. This is
how the system is designed to operate; history has a logic to it.
Obviously, this account, in fact all of The Wealth of Nations, was
very influential for Karl Marx. It marks the important beginning of
what would be called social science—Smith's successor to the Chair of
Moral Philosophy, Adam Ferguson, is often identified as the founder of
modern sociology—and is representative of the project the Scottish
Enlightenment 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 the
interaction between "the inhabitants of the town and those of the
country" (WN III.i.1). According to Smith, agricultural lands supply
the means of sustenance for any given society and urban populations
provide the means of manufacture. Urban areas refine and advance the
means of production and return some of its produce to rural people. In
each of the stages, the town and country have a different relationship
with each other, but they always interact.
Here, Smith is indebted to the physiocrats, French economists who
believed that agricultural labor was the primary measure of national
wealth. Smith accepted their notion that productive labor was a
component of the wealth of nations but rejected their notion that only
agricultural labor should be counted as value. He argues, instead,
that if one group had to be regarded as more important, it would be
the country since it provides food for the masses, but that it would
be a mistake to regard one's gain as the other's loss or that their
relationship is essentially hierarchical: "the gains of both are
mutual and reciprocal, and the division of labour is in this, as in
all other cases, advantageous to all the different persons employed in
the various occupations into which it is subdivided" (WN III.i.1).
Again, there are philosophical issues here. First, is what one is to
regard as labor; second is what counts towards economic value.
Additionally, Smith is showing how the division of labor works on a
large scale; it is not just for pin factories. Rather, different
populations can be dedicated to different tasks for everyone's
benefit. (This might be an anticipation of David Ricardo's notion of
"comparative advantage.") A commercial system is an integrated one and
the invisible hand ensures that what benefits one group can also
benefit another. Again, the butcher, brewer, and baker gain their
livelihood by manufacturing the lunch of their customers.
Returning to Smith's account of history, Smith also argues that
historical moments and their economic arrangements help determine the
form of government. As the economic stage changes, so does the form of
government. Economics and politics are intertwined, Smith observes,
and a feudal system could not have a republican government as is found
in commercial societies. What Smith does here, again, is anticipate
Marx's dialectical materialism, showing how history influences
economic and political options, but, of course, he does not take it
nearly as far as the German does close to a century later.
Given the diversity of human experience—WN's stage theory of history
helps account for difference—Smith is motivated to seek unifying
standards that can help translate economic value between
circumstances. Two examples are his discussions of price and his
paradox of value. Within these discussions, Smith seeks an adequate
measure of "worth" for goods and services. Consumers look at prices to
gauge value, but there are good and bad amounts; which is which is not
always transparent. Some items are marked too expensive for their
actual value and some are a bargain. In developing a system to account
for this interaction, Smith offers a range of different types of
prices, but the two most important are natural price—the price that
covers all the necessary costs of manufacture—and the market price,
what a commodity actually goes for on the market. When the market and
the natural prices are identical, the market is functioning well: "the
natural price, therefore, is, as it were, the central price to which
the prices of all commodities are continually gravitating" (WN
I.vii.15).
Here, the term "gravitating" indicates, yet again, that there are
principles that guide the economic system, and a properly functioning
marketplace—one in which individuals are in "perfect liberty"—will
have the natural and market prices coincide (WN i.vii.30). (Smith
defines perfect liberty as a condition under which a person "may
change his trade as often as he pleases" (WN I.vii.6)). Whether this
is a normative value, whether for Smith the natural price is better
than other prices, and whether the market price of a commodity should
be in alignment with the natural price, is a matter of debate.
Following the question of worth, Smith poses the paradox of value. He
explains: "Nothing is more useful than water: but it will purchase
scarce any thing; scarce anything can be had in exchange for it. A
diamond, on the contrary, has scarce any value in use; but a very
great quantity of other goods may frequently be had in exchange for
it" (WN I.iv.13). Smith's question is straightforward: why is water so
much cheaper than diamonds when it is so much more important for
everyday life?
Obviously, we are tempted to argue that scarcity plays a role in the
solution to this paradox; water is more valuable than diamonds to a
person dying of thirst. For Smith, however, value, here, is general
utility and it seems problematic to Smith that the more useful
commodity has the lower market price. His solution, then, is to
distinguish between two types of value, "value in use" and "value in
exchange"—the former is the commodity's utility and the latter is what
it can be exchanged for in the market. Dividing the two analytically
allows consumers to evaluate the goods both in terms of scarcity and
in terms of usefulness. However, Smith is also searching for a
normative or objective core in a fluctuating and contextual system, as
with the role of impartiality in his moral system. Scarcity would not
solve this problem because that, too, is fluctuating; usefulness is
largely subjective and depends on an individual's priorities and
circumstance. Smith seeks a more universal criterion and looks towards
labor to anchor his notion of value: "labour," he writes, "is the real
measure of the exchangeable value of all commodities" (WN I.v).
What Smith means by this is unclear and a matter of controversy. What
seems likely, though, is that one person's labor in any given society
is not significantly different from another person's. Human
capabilities do not change radically from one time period or location
to another, and their labor, therefore, can be compared: "the
difference of natural talents in different men is, in reality, much
less than we are aware of." He elaborates:
Labour, therefore, it appears evidently, is the only universal, as
well as the only accurate measure of value, or the only standard by
which we can compare the values of different commodities at all times
and at all places. We cannot estimate, it is allowed, the real value
of different commodities from century to century by the quantities of
silver which were given for them. We cannot estimate it from year to
year by the quantities of corn. By the quantities of labour we can,
with the greatest accuracy, estimate it both from century to century
and from year to year. From century to century, corn is a better
measure than silver, because, from century to century, equal
quantities of corn will command the same quantity of labour more
nearly than equal quantities of silver. From year to year, on the
contrary, silver is a better measure than corn, because equal
quantities 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 wheat
at one go, and while some people are stronger than others, the
differences between them don't make that much difference. Therefore,
Smith seems to believe, the value of any object can be universally
measured by the amount of labor that any person in any society might
have to exert in order to acquire that object. While this is not
necessarily a satisfying standard to all—many economists argue that
the labor theory of value has been surpassed—it does, again, root
Smith's objectivity in impartiality. The "any person" quality of the
impartial spectator is analogous to the "any laborer" standard Smith
seems to use as a value measure.
Ultimately, according to Smith, a properly functioning market is one
in which all these conditions—price, value, progress, efficiency,
specialization, and universal opulence (wealth)—all work together to
provide economic agents with a means to exchange accurately and freely
as their self-interest motivates them. None of these conditions can be
met if the government does not act appropriately, or if it oversteps
its justified boundaries.
c. Political Economy
The Wealth of Nations is a work of political economy. It is concerned
with much more than the mechanisms of exchange. It is also concerned
with the ideal form of government for commercial advancement and the
pursuit of self-interest. This is where Smith's reputation as a
laissez faire theorist comes in. He is arguing for a system, as he
calls it, of "natural liberty," one in which the market largely
governs itself as is free from excessive state intervention (recall
Smith's use of the invisible hand in TMS). As he explains, there are
only three proper roles for the sovereign: to protect a society from
invasion by outside forces, to enforce justice and protect citizens
from one another, and "thirdly, the duty of erecting and maintaining
certain publick works and certain publick institutions, which it can
never be for the interest of any individual, or small number of
individuals, to erect and maintain; because the profit could never
repay the expence to any individual or small number of individuals,
though it may frequently do much more than repay it to a great
society" (WN IV.ix).
Each of the responsibilities of the sovereign contains its own
controversies. Regarding the first, protecting society, Smith debated
with others as to whether a citizen militia or a standing army was
better suited for the job, rooting his discussion, as usual, in a
detailed history of the military in different stages of society (WN
V.1.a). Given the nature of specialization, it should not be
surprising that Smith favored the army (WN V.1.a.28). The nature of
justice—the second role of the sovereign—is also complicated, and
Smith never fully articulated his theory of what justice is and how it
ought to be maintained, although, as we have seen, he was liberal in
his assumptions of the rights of individuals against the imposition of
government on matters of conscience and debate. In his chapter on "the
expence of justice" (WN V.i.b), he discusses the nature of human
subordination and why human beings like to impose themselves on one
another. However, it is the third role of the sovereign—the
maintenance of works that are too expensive for individuals to erect
and maintain, or what are called "natural monopolies"—that is the most
controversial.
It is this last book—ostensibly about the expenditures of
government—that shows most clearly what Smith had in mind politically;
the government plays a much stronger role in society than is often
asserted. In particular, book five addresses the importance of
universal education and social unity. Smith calls for religious
tolerance and social regulation against extremism. For Smith, religion
is an exceptionally fractious force in society because individuals
tend to regard theological leaders as having more authority than
political ones. This leads to fragmentation and social discord.
The discussion of "public goods" includes an elaborate discussion of
toll roads, which, on the face of it, may seem to be a boring topic,
but actually includes a fascinating account of why tolls should be
based on the value of transported goods rather than on weight. This is
Smith's attempt to protect the poor—expensive goods are usually
lighter than cheaper goods—think of diamonds compared to water—and if
weight were the standard for tolls, justified, perhaps, by the wear
and tear that the heavier goods cause, the poor would carry an undue
share of transportation costs (WN V.i.d). However, the most intriguing
sections of Book Five contain his two discussions of education (WN
V.i.f–V.i.g). The first articulates the role of education for youth
and the second describes the role of education for "people of all
ages."
The government has no small interest in maintaining schools to teach
basic knowledge and skills to young people. While some of the expense
is born by parents, much of this is to be paid for by society as a
whole (WN V.i.f.54-55). The government also has a duty to educate
adults, both to help counter superstition and to remedy the effects of
the division of labor. Regarding the first, an educated population is
more resistant to the claims of extremist religions. Smith also
advocates public scrutiny of religious assertions in an attempt to
moderate their practices. This, of course, echoes Smith's moral theory
in which the impartial spectator moderates the more extreme sentiments
of moral agents. Finally, Smith insists that those who govern abandon
associations with religious sects so that their loyalties do not
conflict.
Regarding the second purpose of education for all ages, and again,
anticipating Marx, Smith recognizes that the division of labor is
destructive towards an individual's intellect. Without education, "the
torpor" (inactivity) of the worker's mind:
renders him, not only incapable of relishing or bearing a part in
any rational conversation, but of conceiving any generous, noble, or
tender sentiment, and consequently of forming any just judgment
concerning many even of the ordinary duties of private life. Of the
great and extensive interests of his country, he is altogether
incapable of judging; and unless very particular pains have been taken
to render him otherwise, he is equally incapable of defending his
country in war…. His dexterity at his own particular trade seems, in
this manner, to be acquired at the expence of his intellectual,
social, and martial virtues. But in every improved and civilized
society this is the state into which the labouring poor, that is, the
great body of the people, must necessarily fall, unless government
takes 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 moral
people; the intellect and the imagination are essential to moral
judgment. No person can accurately sympathize if his or her mind is
vacant and unskilled.
We see here that Smith is concerned about the poor throughout The
Wealth of Nations. We also see the connections between his moral
theory and his political economy. It is impossible to truly understand
why Smith makes the political claims he does without connecting them
to his moral claims, and vice versa. His call for universal wealth or
opulence and his justification of limited government are themselves
moral arguments as much as they are economic ones. This is why the
Adam Smith Problem doesn't make sense and why contemporary Smith
scholars are so focused on showing the systematic elements of Smith's
philosophy. Without seeing how each of the parts fit together, one
loses the power behind his reasoning—reasoning that inspired as much
change as any other work in the history of the Western tradition. Of
course, Smith has his detractors and his critics. He is making claims
and building on assumptions that many challenge. But Smith has his
defenders too, and, as history bears out, Smith is still an important
voice in the investigation of how society ought to be organized and
what principles govern human behavior, inquiry, and morality. The late
twentieth century revival in Smith's studies underscores that Smith's
philosophy may be as important now as it ever was.
4. References and Further Reading
All references are to The Glasgow Edition of the Correspondence and
Works of Adam Smith, the definitive edition of his works. Online
versions of much of these can be found at The Library of Economics and
Liberty.
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 (significantly
revised with entirely new section).
* [WN] An Inquiry into the Nature and Causes of the Wealth of
Nations. 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 and
LJ(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: "Considerations
Concerning the First Formation of Languages" in LRBL. Lecture dates,
1762–1763.
* [EPS] Essays on Philosophical Subjects. Ed. W.P.D. Wightman and
J.C. Bryce. Indianapolis: Liberty Press, 1982.
o Contains the essays and fragments: "The Principles Which
Lead and Direct Philosophical Enquires Illustrated by the History of
Astronomy," "The Principles Which Lead and Direct Philosophical
Enquires Illustrated by the History of Ancient Physics,"
"ThePrinciples which lead and direct Philosophical Enquiries
Illustrated by the History of the Ancient Logics and Metaphysics," "Of
the External Senses," "Of the Nature of that Imitation which takes
place in what are called The Imitative Arts," "Of the Affinity between
Music, Dancing, and Poetry," "Of the Affinity between certain English
and Italian Verses," Contributions to the Edinburgh Review of 1755-56,
Review of Johnson's Dictionary, A Letter to the Authors of the
Edinburgh Review, Preface and Dedication to William Hamilton's Poems
on Several Occasions 261 and Dugald Stewart's "Account of the Life and
Writings 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 Scottish
Enlightenment. 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: Oxford
University Press, 1986.
d. Recommended Books for Specialists
Any issue of the journal The Adam Smith Review will be of interest to
Smith's readers. Volume 2 (2007) has a special symposium on Smith's
notion of rational choice (economic deliberation), and Volume 3 (2008)
will have a special symposium on Smith and education. Both may deserve
special attention.
* Campbell, T.D. Adam Smith's Science of Morals. New Jersey:
Rowman and Littlefield, 1971.
* Cropsey, Joseph. Polity and Economy: An Interpretation of the
Principles of Adam Smith (With Further Thoughts on the Principles of
Adam Smith) (Revised Edition). Chicago: St. Augustine's Press, 2001.
* Evensky, J. Adam Smith's Moral Philosophy. Cambridge: Cambridge
University Press, 2005.
* Force, Pierre. Self-interest before Adam Smith. Cambridge:
Cambridge University Press, 2003.
* Griswold, Charles L. Jr. Adam Smith and the Virtues of
Enlightenment. Cambridge: Cambridge University Press, 1999.
* Haakonssen, Knud (ed.). Adam Smith (The International Library of
Critical 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: Palgrave
MacMillan, 2004.
* Otteson, James. Adam Smith's Marketplace of Life. Cambridge:
Cambridge University Press, 2002.
* Raphael, D.D. The Impartial Spectator. Oxford: Oxford University
Press, 2007.
* Scott, William Robert. Adam Smith as Student and Professor. New
York: Augusts M. Kelley, 1965.
* Teichgraeber, Richard. Free Trade and Moral Philosophy:
Rethinking the Sources of Adam Smith's Wealth of Nations. Durham, Duke
University Press, 1986.
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