On two publications by adam smith

Throughout a course in competing traditions in economics we were to improve our writing style while providing thorough and detailed responses to thought provoking questions based on texts we read.  I will post my last one in hopes of showing my style improvements in another post.  I would appreciate thoughts and comments!

This is the response I wrote to a question of human nature as portrayed in Adam Smiths The Wealth of Nations and The Theory of Moral Sentiments as part of a course in competing traditions in Economics.

When Adam Smith first published “The theory of Moral Sentiments” in 1759 it laid the moral foundation for his more famous “The Wealth of Nations”.  It did a fantastic job of providing insight into human nature, which does not include the pursuit of wealth or profit.  Smith lays out in the first text that however selfish we perceive each other, everyone enjoys and shares mutual pleasure in providing a good or service without self interest in mind.  Seventeen years later though he offers a fairly different view in that it is difficult for us to expect things free of charge and that individuals are appealing to others self-interest to achieve gains on their end of the deal primarily.  He can hold these two views because through acting on self-interest each individual is providing something of  substance and worth to the other and through natural benevolence is to some degree pleased to see the others physical enjoyment or relief.  Perhaps Smith hasn’t combined the two views entirely because he believes they are worthy of standing on their own and necessary to provide a look into the contrast of our own human nature.

The reader of both quotes is aware that nothing comes free.  He does not get upset when the butcher doesn’t show up at his doorstep every evening with a pig roast in hand followed closely by the baker with a baguette and the brewer with hand crafted ales, each expecting nothing in return.  The reader also understands the feeling of providing help or a material item to someone just to share the feeling of joy.  Smith holds both these views because they are both realistic yet nearly opposite and strives throughout both texts to find common ground between the two views.  No one has lived a life completely devoid of attempt at personal gain nor on the other hand lived a life with the sole goal of profit and great wealth.  There must be some middle ground or level of appropriateness that lies in between the two extremes.

Smith starts us out in chapter one paragraph one of “The theory of Moral Sentiments” telling us that “The greatest ruffian, the most hardened violator of the laws of society is not all together without it”(p.65), speaking on compassion and sympathy towards our fellow humans.  This statement reveals that sympathy, a running theme in “The Theory of Moral Sentiments” is a primal passion, a part of even the most hardened criminals and that those who beat, steal, lie and kill still have a shred of remorse for their victims or fellow humans and possess an awareness of the ever looming impartial spectator.  How can Smith say this with such vigor and certainty?  Perhaps he considered the idea of a being that had absolutely no regard for others, a tyrant in the purest fashion.  If such a person existed what would hold him back from total control and domination?   Or from accumulating wealth beyond reason?  Nothing, but it is sympathy for others, the desire to be worthy of acceptance or praise that holds him back from such activity.

It becomes clear in “The Wealth of Nations” that it is the pursuit of self-interest and personal wealth that furthers the wealth of nations.  Smith makes this clear when he says “it is well that nature imposes upon us in this manner” speaking on the strive for personal wealth because we “cultivate the ground, build houses, found cities and commonwealths”(p.61).  So here he is saying that by pursuing wealth individually, we grow the nation together.  Smith accepts this, he recognizes that it is logical and true, but he struggles with it because it is cannot be the end all of what makes a nation great and wealthy.  If it were that simple we would all be climbing over each other with wide eyes and open hands grabbing at the chance to expand our ever growing gluttonous wealth.  Again we address the issue of Smith holding onto both seemingly conflicting views.  There is extreme difficulty in nailing down the way humans behave and still continue to grow together and individually simultaneously.

Like physics, the goal here is to find common ground to unify certain theories why things interact the way they do.  Unlike physics which involves a large degree of math and even a possible paradigm shift in order to combine the mechanics of our everyday lives to the strangely behaving quantum mechanics, the way humans behave is easier to wrap our minds around.  To combine Smiths theories in the theory of moral sentiments and in the wealth of nations it is logical that perhaps there is a combination of natural benevolence of man and the drive for personal wealth and self-interest that guides the market and allows him to hold both ideas.

There are not rules when it comes to benevolence, sympathy or self-interest.  If there were, life would be quite easy, everyone paying perfect respect to his fellow man at the perfect and most appropriate time.  The degree of sympathy we hold for one another is ever changing, moment to moment, situation to situation.  The degree of sympathy that we hold for someone else depends on distance of relation, on the event, or even what we are personally experiencing at that moment.  Smith says in the theory of moral sentiments that “it is because mankind are disposed to sympathize more entirely with our joy than with our sorrow, that we make parade of our riches and conceal our poverty”(p.78).  This is one of the most astounding statements that visibly worries Smith and makes light of the fact that we are much more likely to sympathize with the wealthy and forget about the poor simply because they are not wealthy.  The rich and famous are not inherently better humans because of their riches, but we view them as having a better life, with more conveniences and luxuries and strive to be like them.   For this reason alone we share the feeling of despair when they fail rather than the poor.  This alone could be why the butcher, the baker and the brewer are not waiting for me when I get home with dinner paid for by their kindness.  Because they do not want to be poor, they want to advance their wealth and make parade of their riches rather than to have to conceal their poverty.

It is clear now that Smith holds both views because there is no measureable connection, no standard or guidebook for situational behavior and interaction among men.  Part of us loves seeing colleagues enjoy the fruits of our labor, but we tend to sympathize with ourselves to a greater degree and enjoy making gains from those same labors.  There is a deep rooted theme in the theory of moral sentiments that stems from the Chinese Earthquake story that Smith details in his writing.  It is that our degree of sympathy for people is very dependent on the strength of our relationships.  We tend to sympathize with ourselves first (prefer our own fingers and bodily extremities) family and friends second, and so on down the line until we reach complete strangers.  Although it is not likely that the local butcher, brewer or baker will show up one night on our doorsteps but it is much more likely relative to anyone of them making an overseas trip to put a smile on a complete stranger’s also somewhat confused face.  Not to mention the language barrier (although I suppose food and beer speak for themselves…).

Smith did not leave us with one final statement combining the two though.  Perhaps after all of that work, revising and rehashing he would have firmly combined the two into the Wealth of Nations; after all it was published 17 years after the theory of moral sentiments and is widely considered Smiths best and most well-known work.  But he didn’t.  I believe that this is on purpose because one final theory would have been too general, too open to misinterpretation.  Just as how in chemistry it is easier to understand where table salt comes from if you have heard of sodium and chlorine, it is easier to understand and interpret Smiths works if you understand both halves of the whole.  Both the benevolence of man and his strive to expand his wealth.

I appreciate that Smith did not pile the two on top of each other but rather kept them separate.  This allows room for discussion and for reflection on the reader’s part in terms of where they fall between the two extremes.  Both quotes are a true look into the behavior of humans when it comes to the market and when it comes to being a civilized moral human being.

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