Thursday, November 24, 2011

Is there a contradiction between Adam Smith’s Wealth of Nations and his Theory of Moral Sentiments?

I would argue that there isn't a contradiction here. As one of the greatest thinkers of the Enlightenment, Adam Smith has been singularly ill-served by many of his most vocal advocates, who've turned him into some kind of free-market zealot or an apostle of "greed is good." In actual fact, Smith's whole philosophy was a good deal more subtle than this caricature would suggest—and it's as a whole that Smith's thought should be evaluated.
That being the case, we will find that there is no real contradiction between the ideas expressed in The Wealth of Nations and those in The Theory of Moral Sentiments. In both works, Smith attempts to demonstrate how apparently conflicting facets of human nature can be combined and shaped for the good of society as a whole. Smith believes that human beings are both self-interested and sympathetic. There's nothing contradictory here, simply an acknowledgement that we are all individuals as well as members of society. The key for Smith is to establish institutions that will maintain the appropriate balance between our individual and social selves.
For instance, in The Wealth of Nations, Smith argues that competition is actually the most tried and trusted method for keeping self-interest in check. If self-interest is allowed to prevail, then the result will be the formation of monopolies, which Smith believes are bad for both the economy and society as a whole. That's why it's a mistake to regard Smith as some kind of rampant individualist, or high priest of libertarianism.
Just as economic competition disciplines those who enter the market-place, commercial interaction cultivates virtue, which is the main focus of The Theory of Moral Sentiments. Virtue requires the approval of others, and such approval is best displayed through adherence to the values of commercial society. If firms and producers engage in practices that do not earn them the respect and approval of others (i.e., behavior that isn't considered virtuous), then they will be unable to flourish. In other words, far from there being a contradiction between virtue and the values of commercial society, they are inextricably linked.


The Wealth of Nations is Adam Smith's best known work, and its subject matter—economic principles—is quite different from The Theory of Moral Sentiments, which dealt with the origins of morality in people. We might see, from a twenty-first century perspective, a number of contradictions between a book that argues for the importance of economic self-interest and one that focuses on individual morality. But if Smith thought there was any contradiction between these two books, he never raised it publicly. Moreover, there are many ways in which the two works are intellectually consistent. In both, Smith uses a heuristic to describe how people reach economic decisions and how they form a system of morality. In The Wealth of Nations, he argues that people are guided by an "invisible hand" of self-interest to make economic decisions, and that the sum total of these decisions—i.e., the economic activity of a nation—will be improved by allowing people to make these decisions without restraint. In The Theory of Moral Sentiments, he claims that people imagine an "impartial spectator" whose judgment guides us toward making moral decisions, based on our sympathy (i.e., the ability to think about feelings) for other people. If people heed the "advice" of the "invisible hand" on the one hand and the "impartial spectator" on the other, society will be better for it. Smith also suggests that both morality and economics are social, and can only be understood in the context of organic, unified systems. But at the same time, these systems are basically aggregates of individual human actions. While he does reject the pursuit of wealth as a means to achieve happiness in The Theory of Moral Sentiments (this, to an extent, contradicts the spirit of The Wealth of Nations), his understanding of morality and economics are at least analogous if not entirely unified.
https://plato.stanford.edu/entries/smith-moral-political/

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