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Introduction

The Theory of Moral Sentiments, Adam Smith’s first book, was published in early 1759. Smith, then a young professor at the University of Glasgow, had some understandable anxiety about the public reception of the book, which was based on his quite radical lectures. On April 12, 1759, Smith heard from his friend David Hume in London about how the book was doing. If Smith was, Hume told him, prepared for “the worst,” then he must now be given “the melancholy News” that unfortunately “the Public seem disposed to applaud [your book] extremely.” “It was looked for by the foolish People with some Impatience; and the Mob of Literati are beginning already to be very loud in its Praises.” This light-hearted intimation of the early success of Smith’s first book would be followed by serious critical acclaim, bringing immediate success to one of the truly outstanding books in the intellectual history of the world.

This introduction is concerned specifically with the continued relevance of that remarkable monograph, which was published a quarter of a millennium ago. Even though Smith’s investigations and analyses have had a profound impact on the world, especially the economic world, there is still much to learn from them. As it happens, after its immediate success, Moral Sentiments went into something of an eclipse from the beginning of the nineteenth century, and Smith was increasingly seen almost exclusively as the author of his second book that transformed the subject of economics, An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776. The neglect of Moral Sentiments, which has lasted through the nineteenth and the twentieth centuries, has had two rather unfortunate effects.

First, even though Smith was, in many ways, the pioneering analyst of the need for impartiality and universality in ethics (the Moral Sentiments preceded the better-known and much more influential contributions of Immanuel Kant, who refers to Smith generously), he has been fairly comprehensively ignored in contemporary ethics and philosophy.

Second, since the ideas presented in The Wealth of Nations have been interpreted largely without reference to the framework of thought already developed in the Moral Sentiments (on which Smith substantially draws in The Wealth of Nations), the typical understanding of The Wealth of Nations has been constrained, to the detriment of economics as a subject. The neglect applies, among other issues, to the appreciation of the demands of rationality, the need for recognizing the plurality of human motivations, the connections between ethics and economics, and the co-dependent—rather than free-standing—role of institutions in general and free markets in particular in the functioning of the economy.

THE MORAL SENTIMENTS AND THE WEALTH OF NATIONS

Not only are Smith’s two books related, but his ideas in them also had something of a common origin. Smith had been appointed to the professorship of logic at the University of Glasgow in 1751, but he moved to the chair of moral philosophy the following year and held that position until 1764. His lectures on the subject not only contained the material on which the Moral Sentiments would draw, but as one of his students—John Millar, who later became professor of law at Glasgow—noted, the last part of his four-part lecture series also “contained the substance of the work he afterwards published under the title of An Inquiry into the Nature and Causes of the Wealth of Nations.”

Given the pervasive interdependence of these two books, it is amazing that many Smith commentators have been inclined to see a huge dichotomy between the two. Indeed, there is quite a voluminous literature on what has been called the “Adam Smith problem,”1 the common element of which is the fanciful belief that there is an inconsistency between Smith’s arguments presented in the Moral Sentiments, which “attributed conduct to sympathy,” and in The Wealth of Nations, which allegedly saw behavior as “being based on selfishness.” A recurrently asked question has been: Why did Smith abandon his earlier approach when he came to write The Wealth of Nations?

In fact, Smith never abandoned what he presented in the Moral Sentiments. Rather, he continued to advance that perspective, with many additional illustrations, even as he was engaged in presenting The Wealth of Nations.2 The first version of the Moral Sentiments, published in 1759, was revised in the second edition in 1761, in the third in 1767, and in the fourth in 1774. Then, five years after the publication of The Wealth of Nations, came the fifth edition of Moral Sentiments, followed by a final—and much extended—edition, the sixth, in 1790, shortly before Smith’s death the same year. It is interesting to note that Smith’s first book, the Moral Sentiments , was also his last, in the form of the much-expanded sixth edition, with The Wealth of Nations coming in between.3 Indeed in the “Advertisement” to the final edition of Moral Sentiments, Smith recollected the promise he had made in the earlier editions “to give an account of the general principles of law and government, and of the different revolutions they have undergone in the different ages and periods of society.” He went on to say that in The Wealth of Nations, “I have partly executed this promise.”

In each book Smith talks about a variety of human motivations, including both sympathy and self-love, and also many other concerns that drive human beings.4 If self-love is of special relevance in seeking some particular explanation—for example, why people seek trade—then other motivations have important roles in explaining other types of choices—for example, work discipline and a commitment to obeying good rules and to treating others with respect and honour. The role of self-love in explaining particular economic phenomena does nothing to reduce the relevance of different motivations in the understanding of other economic regularities.

SYMPATHY AND SELF-LOVE

There is a strong tradition in the economic literature that has tended to assume—indeed, assert—that Smith believed “self-interest dominates the majority of men,” to quote the distinguished economist George Stigler, who took this belief, which he championed, to be “on Smithian lines.” A great many economists were—and some still are—evidently quite enchanted by something that has come to be called “rational choice theory,” in which rationality is identified with intelligently pursuing self-interest. Further, following that fashion in modern economics, a whole generation of rational choice political analysts and of experts in so-called “law and economics” have been cheerfully practicing the same narrow art. And they have been citing Smith in alleged support of their cramped and simplistic theory of human rationality.

The conviction that Smith believed in the dominating presence—and also the rationality—of human selfishness has even found its way into English literature via a limerick by Stephen Leacock, who was both a professional economist and a talented literary writer:

Adam, Adam, Adam Smith
Listen what I charge you with!
Didn’t you say
In a class one day
That selfishness was bound to pay?
Of all doctrines that was the Pith.
Wasn’t it, wasn’t it, wasn’t it, Smith?

In contrast, the Moral Sentiments actually begins with the following observation:

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it. . . . That we often derive sorrow from the sorrow of others, is of a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous and humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.

While some men are born small and some achieve smallness, it is clear enough that Smith has had much smallness thrust upon him.

Smith famously discussed that to explain the motivation for economic exchange in the market, we do not have to invoke any objective other than the pursuit of self-interest. In his most famous and widely quoted passage from The Wealth of Nations, he wrote: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love.”5 Unfortunately, in the tradition of interpreting Smith as the guru of selfishness or self-love (as he often called it—not with great admiration), the reading of his writings does not seem to go much beyond those few lines, even though that discussion is addressed only to one very specific issue, namely exchange (rather than distribution or production) and, in particular, the motivation underlying exchange (rather than what makes normal exchanges sustainable, such as trust and confidence between the two parties). In the rest of Smith’s writings there are extensive discussions of the role of other motivations that influence human action and behavior.

ECONOMICS AND THE LIMITATIONS OF THE PROFIT MOTIVE

Beyond self-love, Smith discussed how the functioning of the economic systems in general and of the markets in particular can be helped enormously by other motives. There are two distinct propositions here. The first is one of epistemology, concerning the fact that human beings are not guided only by self-gain or even prudence. The second is one of practical reason, involving the claim that there are good ethical and practical grounds for encouraging motives other than self interest—whether in the crude form of self-love or in the refined form of prudence.