The Scotch economist and moral philosopher Adam Smith (1723-1790) believed that in a laissez-faire economy the impulse of self-interest would work toward the public welfare.
Adam Smith was born on June 5, 1723, at Kirkcaldy. His father had died 2 months before his birth, and a strong and lifelong attachment developed between him and his mother. As an infant, Smith was kidnaped, but he was soon rescued. At the age of 14 he enrolled in the University of Glasgow, where he remained for 3 years. The lectures of Francis Hutcheson exerted a strong influence on him. In 1740 he transferred to Balliol College, Oxford, where he remained for almost 7 years, receiving the bachelor of arts degree in 1744. Returning then to Kirkcaldy, he devoted himself to his studies and gave a series of lectures on English literature. In 1748 he moved to Edinburgh, where he became a friend of David Hume, whose skepticism he did not share.
Theory of Moral Sentiments
In 1751 Smith became professor of logic at the University of Glasgow and the following year professor of moral philosophy. Eight years later he published his Theory of Moral Sentiments. Smith's central notion in this work is that moral principles have social feeling or sympathy as their basis. Sympathy is a common or analogous feeling that an individual may have with the affections or feelings of another person. The source of this fellow feeling is not so much one's observation of the expressed emotion of another person as one's thought of the situation that the other person confronts. Sympathy usually requires knowledge of the cause of the emotion to be shared. If one approves of another's passions as suitable to their objects, he thereby sympathizes with that person.
Sympathy is the basis for one's judging of the appropriateness and merit of the feelings and actions issuing from these feelings. If the affections of the person involved in a situation are analogous to the emotions of the spectator, then those affections are appropriate. The merit of a feeling or an action flowing from a feeling is its worthiness of reward. If a feeling or an action is worthy of reward, it has moral merit. One's awareness of merit derives from one's sympathy with the gratitude of the person benefited by the action. One's sense of merit, then, is a derivative of the feeling of gratitude which is manifested in the situation by the person who has been helped.
Smith warns that each person must exercise impartiality of judgment in relation to his own feelings and behavior. Well aware of the human tendency to overlook one's own moral failings and the self-deceit in which individuals often engage, Smith argues that each person must scrutinize his own feelings and behavior with the same strictness he employs when considering those of others. Such an impartial appraisal is possible because a person's conscience enables him to compare his own feelings with those of others. Conscience and sympathy, then, working together provide moral guidance for man so that the individual can control his own feelings and have a sensibility for the affections of others.
The Wealth of Nations
In 1764 Smith resigned his professorship to take up duties as a traveling tutor for the young Duke of Buccleuch and his brother. Carrying out this responsibility, he spent 2 years on the Continent. In Toulouse he began writing his best-known work, An Inquiry into the Nature and Causes of the Wealth of Nations. While in Paris he met Denis Diderot, Claude Adrien Helvétius, Baron Paul d'Holbach, François Quesnay, A.R.J. Turgot, and Jacques Necker. These thinkers doubtless had some influence on him. His life abroad came to an abrupt end when one of his charges was killed.
Smith then settled in Kirkcaldy with his mother. He continued to work on The Wealth of Nations, which was finally published in 1776. His mother died at the age of 90, and Smith was grief-stricken. In 1778 he was made customs commissioner, and in 1784 he became a fellow of the Royal Society of Edinburgh. Smith apparently spent some time in London, where he became a friend of Benjamin Franklin. On his deathbed he demanded that most of his manuscript writings be destroyed. He died on July 17, 1790.
The Wealth of Nations, easily the best known of Smith's writings, is a mixture of descriptions, historical accounts, and recommendations. The wealth of a nation, Smith insists, is to be gauged by the number and variety of consumable goods it can command. Free trade is essential for the maximum development of wealth for any nation because through such trade a variety of goods becomes possible.
Smith assumes that if each person pursues his own interest the general welfare of all will be fostered. He objects to governmental control, although he acknowledges that some restrictions are required. The capitalist invariably produces and sells consumable goods in order to meet the greatest needs of the people. In so fulfilling his own interest, the capitalist automatically promotes the general welfare. In the economic sphere, says Smith, the individual acts in terms of his own interest rather than in terms of sympathy. Thus, Smith made no attempt to bring into harmony his economic and moral theories.
Further Reading on Adam Smith
John Rae, Life of Adam Smith (1895), is still useful and was reprinted (1965) with an introductory essay by Jacob Viner which details the recent scholarship on Smith. William R. Scott, Adam Smith as Student and Professor (1937), focuses on Smith's personality. Other biographies include Eli Ginzberg, The House of Adam Smith (1934); Sir Alexander Gray, Adam Smith (1948); and the not entirely successful work of E.G. West, Adam Smith (1969). Robert L. Heilbroner, The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers (1953; 3d ed. 1967), has a vivid profile of Smith and his times. Smith's place in the history of economics is assessed in Charles Gide and Charles Rist, A History of Economic Doctrines from the Time of the Physiocrats to the Present Day (trans., 2d ed. 1948), and Joseph Schumpeter, History of Economic Analysis (1954).