The father of economics understood people to be both self-interested and sympathetic to others. Is there a contradiction in Smith’s thought?
The father of economics understood people to be both self-interested and sympathetic to others. Is there a contradiction in Smith's thought?
Adam Smith was born in 1723. This year he turns 300.
To celebrate, National Review Capital Matters offers the Adam Smith 300 series. An essay on Smith will appear monthly throughout 2023, written by various students of Smith’s thought. Smith’s birthday is June 16, so the essays will appear on the 16th day of each month. We are pleased to help curate the series for Capital Matters along with Dominic Pino.
T o begin the series, we reflect on benevolence in Adam Smith. What roles does it play in his thought? The question is worth addressing in light of the common charge of heartlessness levied against those not on the political Left. And it leads us into an apparent contradiction.
The puzzle has been framed as a tension between Smith’s two completed works, The Theory of Moral Sentiments (TMS) and The Wealth of Nations (WN). German scholars in the 19th century discerned conflicting visions of human nature in the books — benevolence and sympathy in TMS, and self-regard in WN — giving rise to the first iteration of “the Adam Smith problem.”
That charge of inconsistency has been overturned by several generations of scholars. Smith understood man as naturally benevolent towards kith and kin, and to operate from reciprocal considerations of self-regard with strangers. His two books might be understood as treating different spheres — the personal (TMS) and the impersonal (WN). There is no inconsistency. But “the Adam Smith problem” is like the heads of the Hydra: Cut one down and two take its place.
In TMS, Smith develops an ethical framework culminating in an exhortation to serve what he calls “universal benevolence.” In WN, he advances what he calls “the liberal plan of equality, liberty, and justice,” which allows each to “pursue his own interest his own way.” That plan authorizes and encourages people to focus on maintaining and improving the health and well-being of themselves, their families, and familiars. Are these aspects of his two works inconsistent? How can Smith at once affirm our moral duty to universal benevolence and encourage us to mostly mind our own business?
A partial resolution comes as we tend to Smith’s insights on the limits of knowledge. Our abilities to improve the situations of others normally depend on knowledge of circumstances. Such knowledge declines very sharply the further we get from our own affairs. If your efforts at a distance are likely to be ineffective, Smith teaches, then focus on where they are effective — close to home, in your spheres of immediate influence.
But the partial resolution prompts the question: Is effective benevolence simply reduced to minding one’s own business? How can this be?
“A Man of Humanity in Europe”
A fuller resolution of Smith’s teachings comes as we distinguish between two seats of benevolence in his philosophy: the real but feeble benevolence in our own breast, and the extensive benevolence and wisdom of God (or a godlike being, for those preferring a less overtly theological reading of Smith).
In a famous paragraph in TMS, Smith presents two related thought experiments, with profoundly different results, that elaborate these two seats. Both thought experiments concern “a man of humanity in Europe,” an earthquake in China, and the loss of the man’s little finger.
The first thought experiment illustrates the feeble arc of our passive sentiments. The man of humanity learns of a terrible earthquake killing “myriads of inhabitants” in China. He expresses his sorrow upon hearing of the distant calamity, but he proceeds about his day largely undisturbed. On anticipating the amputation of his pinky the next day, however, the man is so disturbed he can hardly sleep. The loss of a pinky here looms larger than the occurrence of the tragic earthquake: “[O]ur passive feelings are almost always so sordid and so selfish,” Smith writes.
In the second thought experiment, when the man of humanity is placed in an active situation, the result changes. Smith posits that the man can, by magic, avoid losing his finger altogether by causing a terrible earthquake in China. Does the man of humanity in Europe decide to cause a terrible earthquake to spare his own little finger? “Human nature,” Smith writes, “startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it.”
Why the different outcome? Smith gives his answer:
It is a stronger power, a more forcible motive, which exerts itself [in active situations]. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct. It is he who, whenever we are about to act so as to affect the happiness of others, calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it. . . . It is from him only that we learn the real littleness of ourselves, and of whatever relates to ourselves, and the natural misrepresentations of self-love can be corrected only by the eye of this impartial spectator.
Although he feels but a feeble spark of benevolence, the man of humanity knows that if he were to selfishly choose his own comfort over the lives of millions, his conscience, the man within the breast, would justly condemn him. The judgment of his conscience flows from his estimation of the judgment of God (or a godlike spectator), the seat of universal benevolence. Smith speaks of the conscience as a “representative” of the supreme impartial spectator.
Universal Benevolence and The Wealth of Nations
Discerning the seats of Smithian benevolence helps us better understand the integration of Smith’s project. Smith’s two great works join together as a description of human nature and an exhortation — a sermon, of sorts — to right conduct in light of that nature for the sake of the good of humankind. It is within this program that his classical liberalism comes forth.
We must take humankind as it is. Our benevolence is real but feeble. It quickly declines as we move out of our spheres of familiarity. To declare more than a feeble benevolence is, often, faux benevolence. Recall the results of the passive thought experiment: The loss of but a single little finger loomed larger than the loss of myriads in China.
Yet, even among strangers, we find ourselves subject to conscience, and that subjection brings with it a desire to habituate ourselves to act in a way that serves the common good of humankind — what a universally benevolent being would approve of. To align ourselves with the sentiments and judgments of such a being, we have to contemplate the world and how it works — “the general Rules of Morality,” which, Smith says, “are justly regarded as the Laws of the Deity.” We must contemplate the good of humankind and the mores, habits, practices, and institutions that serve that good. The sciences extend that contemplation, at once refining both our ideas about human flourishing and our understandings of what enables it. These are two important goals of The Wealth of Nations.
The opening chapters of WN lay out the vision of Smith’s political economy, and it is a vision of reciprocity and mutual benefits. It is not from the benevolence of the butcher, the brewer, and the baker that our dinner is served. But it is within a society of relative freedom, enabling and encouraging honest, mundane commercial dealings, that ordinary people enjoy peace and plenty. The culture and institutions of freedom serve universal benevolence.
As we cultivate what Edmund Burke called our “little platoons” — where we have the knowledge to make our goodwill effective — and deal justly and respectfully with others in the marketplace, we practice and encourage stewardship. “Man . . . must necessarily conceive himself as accountable to his fellow creatures before he can form any idea of the Deity, or of the rules by which that Divine Being will judge of his conduct,” Smith wrote in the first edition of TMS.
In allowing each to pursue his interest his own way, within the bounds of justice, we inspirit our fellow humans and unleash dynamism. As we work, trade, and create, we are drawn into a beautifully cooperative enterprise — metaphorically speaking — with millions of our fellow human beings across time, space, and national borders through the division of labor.
Thus benevolence, we see, plays multiple roles in Adam Smith. Humans are by no means devoid of benevolence. But the heavy lifting comes from our natural sense of accountability, through the judgments of our peers and then through conscience, to a being who is universally benevolent. The political economy of WN for Smith is properly conceived as an extension of the ethics of TMS in that it attempts to illustrate the political and social sensibilities that leverage our limited knowledge and affections in service of the good.
In his writings, Smith projects an outlook, a set of sensibilities that recommend certain cultural attitudes and political inclinations. In our times, these sensibilities require rekindling. Three hundred years after Smith’s birth, his outlook still serves as a hearth for us to gather around and edify ourselves.
Daniel B. Klein is an economics professor and JIN Chair at the Mercatus Center at George Mason University and the author of Smithian Morals. Erik W. Matson is a senior research fellow at the Mercatus Center and a lecturer at the Busch School of Business at the Catholic University of America. They co-lead a program on Adam Smith at George Mason University.