James Otteson is a professor of philosophy at the University of Alabama.
Adam Smith was not solely an economist, though that is almost exclusively how he is known today. His Inquiry into the Nature and Causes of the Wealth of Nations (WN) is one of the most important books in the Western tradition. Aside from ushering in the modern market-based economic order, which to varying extents has become the worldwide norm, WN laid out several of the fundamental elements of what has become standard economic theory. The crucial importance of the division of labor, the dependence of specialization on the extent of the available market, the dynamic relation between supply and demand that sets prices, and the generally salutary effects of free trade are all notions that students learn in their first economics class. These topics are all investigated systematically for the first time in Smith’s book.
The argumentative strategy of WN is simple: given the way these elemental factors operate, we should expect that material prosperity will vary indirectly with governmental regulation of the marketplace (the less governmental interference, the greater the prosperity); and when one looks at the historical record—which Smith does in enormous and awesome detail—our expectations are in fact borne out. WN’s conclusion, then, is in the form of a hypothetical imperative: if we want increasing material prosperity, we must decrease governmental interference in the operations of marketplaces.
WN was published in 1776, and the subsequent history of the nations that adopted Smith’s recommendations to the greatest extent—America and England—would seem to have vindicated his argument: no place in the world has seen as much increase in material prosperity, before or since, as post-1776 America and England. Because of its enormous historical influence and the corroboration of its central tenets, then, Smith’s Wealth of Nations has rightfully earned for itself a central place in the canon of great works of the Western tradition.
Smith became quite famous in both Britain and on the continent during his lifetime, but, perhaps surprisingly, not so much for the Wealth of Nations. Rather, it was for his earlier book, first published in 1759, on ethics. The Theory of Moral Sentiments (TMS) was written during an extraordinarily active period in ethical thought. Francis Hutcheson, who founded the so-called sentimentalist school of ethics, was Smith’s teacher; David Hume was Smith’s best friend and intellectual sparring partner; and Immanuel Kant, who read Smith carefully, was about to come onto the scene. It is no exaggeration to say that Smith’s book was able not only to synthesize the important theoretical work done before him, but also to set the program for ethical philosophy for at least a generation after he died in 1790. Since about the middle of the nineteenth century, however, when Smithian economics began to make influential converts, WN has eclipsed TMS in recognition, readership, and, hence, influence.
I think that the inattention to Smith’s first book has been a mistake. TMS is a sufficiently subtle and sophisticated book to merit serious scholarly attention even absent its great influence on moral philosophy during the eighteenth century. Indeed, TMS has another asset that recommends it: as is the case with WN, its argument is, in its essentials, sound. Let me summarize the argument here, then, in the hopes that you will come to see Smith not merely as an economist, but as Smith saw himself, something perhaps grander: a moral philosopher.
Acquiring Moral Standards
Smith’s goal in TMS is to discover by means of empirical investigation the process that explains two phenomena: on the one hand, the adoption by individuals of moral standards by which they judge others; and, on the other, their adoption of moral standards by which they judge themselves. One striking feature about both phenomena is that during their lifetimes people seem to go from having virtually no such standards as children to having standards that are commonly shared with others as adults. What explains this transition?
Smith argues that all human beings innately have something he called a desire for “mutual sympathy” of sentiments. What Smith means is that each of us gets pleasure on seeing his own sentiments echoed in others. It gives us pleasure when, for example, our friends find the same things funny that we do, to the same degree, or we find the same things distasteful as our friends do, to the same degree. Smith thinks it is simply a fact about human nature that we find this mutual accord, or concordance of sentiments—what Smith terms “sympathy”—pleasurable. (And note, incidentally, Smith’s special use of the term “sympathy”: it means harmony or concord with any emotion whatsoever; it does not mean only pity or compassion.) In fact, he thinks this pleasure is one of the finest that human beings experience.
Since everyone finds this pleasurable, everyone seeks it out; and this mutual seeking-out of sympathy of sentiments becomes, for Smith, the engine of social cohesion and the centripetal force, as it were, of human communities. It encourages people not only to enter into groups, alliances, and communities with others (so that they have opportunities to achieve the much-sought-after mutual sympathy of sentiments), but also to form associations of like-minded people (because this increases the chances of actually achieving such a sympathy).
The mechanism, Smith thinks, is this: I desire mutual sympathy of sentiments with you, which leads me to moderate my sentiments to the level that I think, based on my past experience, you are likely to “enter into.” You, on the other hand, because you desire the same thing, also moderate your sentiments to the level you think, based on your past experience, I am likely to enter into. Over time this process trains our sentiments to gravitate toward mutually acceptable levels. Smith’s picture thus has a clear anti-Freudian thrust: it denies the hydraulic picture of human emotions according to which emotions build up “pressure” that must be “released.” Instead, and more plausibly, it conceives of emotions as things that can be controlled and trained by exercising what Smith calls “self-command.” The activity of reciprocal adjustment is then repeated numberless times in every person’s lifetime, as it is between and among the people in one’s community, resulting in the creation of an unintended and largely unconscious system of standards. These standards then become the rules by which we determine in any given case what kind of behavior is, as Smith calls it, “proper” in a situation and what “improper”—meaning what others can reasonably be expected to enter into.
Think of a person laughing too long at a joke: at some point you start to form the judgment that his laughter is simply too much; you judge it, that is, to be “improper.” But how do you know at what point the laughing becomes too much? According to Smith, you know by judging this case against the standards you have unintentionally, and probably unconsciously, developed in conjunction with the members of your community over time. In different situations, the amount of laughter that is acceptable may differ; but in each case our experience with our fellows in similar situations sets the parameters for our judgment of propriety.
The same holds true with attire: there is such a thing as dressing inappropriately—in either direction, as it were: wearing black tie to a beach party, or wearing a bathing suit to a wedding—and your judgment of when a person’s attire becomes inappropriate is a function of the mechanism Smith describes. To take a final example, there is even, Smith thinks, such a thing as too little anger. If a man’s wife is being publicly humiliated by another man, then we think he ought to show anger, or what Smith calls “spirit.” If he does not—if he cowers, without rising to her defense—then we judge him to have acted improperly. The propriety or impropriety of a person’s behavior, then, is constituted by its accordance or discordance with what is recommended by this system of standards.
To facilitate our ability to predict what our own behavior should be (that is, what would enjoy mutual sympathy with others), Smith thinks we learn to adopt the standpoint of an “impartial spectator” from which to judge our own behavior. He believes that in time we come to take the impartial spectator’s judgments as the standard of morality—first for ourselves and then also for others. We have all experienced the unpleasantness of being judged unfairly, that is, on the basis of biased or incomplete information (people who do not know our situation thinking poorly of us). This leads us to desire that others refrain from judging until they know the whole story; but because we all want this, our desire for mutual sympathy of sentiments subtly encourages us to adopt an outside perspective, as it were, in judging our own conduct. That is, because we want others to be able to “enter into” our sentiments, we strive to moderate them to be what we think others will sympathize with; but we can only know what that is if we ask ourselves what the impartial observer would think. The voice of the impartial spectator becomes our second-nature guide of conduct. Indeed, Smith thinks it is what we call our “conscience.” The phrase “let your conscience be your guide” really means to let the imagined impartial spectator be your guide. And because we come to rely on this impartial spectator to give us accurate moral guideposts by which to judge our own behavior, our confidence in his judgments leads us also to employ him to judge others. In this way the impartial spectator becomes the standard of morality.
Let me summarize Smith’s explanation of the process of developing moral standards. Babies have only desires; they have no tincture of remorse, shame, or guilt at desiring something improper. As they grow into children, however, they have the first experience of discipline, which teaches them that others judge them and expect them to behave in particular ways. And they make the shocking, arresting discovery that they are not the most important person in everyone’s life—only in their own. Their desire for mutual sympathy then encourages them to discover what others expect of them and to strive to achieve it. The more experience they have, the better they become at anticipating others’ expectations and hence of behaving in ways that lead to mutual sympathy. The children then develop habits of behavior that reflect what they have learned; what were once rules handed down from on high become internalized principles by which the children routinely order their lives.
As adults, larger and larger experience leads to more and more complicated, internalized principles. These principles now cover a large range of actions and motivations, and they have been revised, corrected, and fine-tuned as necessary. The principles inform Smith’s procedure of making moral judgments: they are the standard against which people judge themselves and others. They are what, in practice, render the moral judgment. A moral judgment, then, is the result of a deduction by which one determines whether a given act or motivation accords with these principles.
Smith’s analysis of the way in which people and communities come to have common moral standards is intriguing—and, indeed, may in large part be true. This alone would recommend it for serious consideration. But Smith’s examination of human morality reveals a model for explaining the development and maintenance of large-scale human institutions generally—which would mean that the book’s import is yet greater than initially thought. I call Smith’s model a “marketplace model.” Let me sketch it briefly, drawing on the discussion so far.
First, Smith argues that moral judgments, along with the rules by which we render them, develop in the way I have described, without an overall, pre-arranged plan. They arise and grow into a shared, common system of morality—a general consensus regarding the nature of virtue, or what Smith calls propriety and merit—on the basis of countless individual judgments made in countless particular situations.
Second, Smith argues that as we grow from infants to children to adults we develop increasingly sophisticated principles of action and judgment, which enable us to assess and judge an increasingly diverse range of actions and motivations.
Third, what seem when we are children to be isolated and haphazard interactions with others lead as we grow older to habits of behavior; as adults the habits solidify into principles that guide what we call our “conscience.”
Fourth, people’s interests, experiences, and environments change slowly enough to allow long-standing associations and institutions to arise, which give a firm foundation to the rules, standards, and protocols that both set the parameters for the initial creation of these associations and in turn are supported by them. (These “associations” would today include everything from Elks clubs, YMCAs, and Boy Scouts, to the American Medical Association, the National Academy of Sciences, and even the Catholic Church.)
Smith next argues that the development of personal moral standards, of a conscience and the impartial spectator procedure, and of the accepted moral standards of a community all depend on the regular associations people make with one another. It is in these associations, in the daily intercourse people have with one another, that they encourage each other to discover and adopt rules of behavior and judgment that will lead to mutual sympathy. Without such interactions with others, Smith argues, people would have no occasion to pursue such rules, and hence they would not. In that case moral judgments would not be made at all, and people would not, as a Robinson Crusoe would not, have thoughts about virtue or vice, propriety, or impropriety. (Smith, in fact, speaks of a “solitary islander,” who, with no “societal mirror” by which to view his actions, does not think of the virtue or vice of his actions—just as he would not think about the “beauty or deformity” of his physical appearance.)
Finally, a person’s (largely unconscious) adoption of general rules, development of a conscience, and employment of the impartial spectator procedure are motivated by a fundamental, innate desire—the desire for mutual sympathy. This desire is the sine qua non for Smith’s theory of moral sentiments: without it, there would have been no reason to devise rules that enable people to achieve it, and, on Smith’s theory, there would therefore have been no moral standards at all.
The model at work in TMS, then, comprises four central structural features: a system of order arising unintentionally from the actions of individuals (Smith was the first person to develop and work out the notion of what Hayek made famous two centuries later as “spontaneous order”), an unconscious and slow development of rules by which the system operates, the system’s dependence on regular exchange among freely associating people, and a system that receives its initial and ongoing impetus from the desires of the people who make use of it. These four central features of Smith’s account are, I would like to suggest, also the central characteristic features of an economic market. We can, then, accurately view Smith’s conception of the system of interactions in which moral standards develop as a marketplace of morals.
By calling Smith’s model a “marketplace” model, I already suggest in what way Smith’s analysis can explain areas of human life outside of moral judgment-making. The first and most obvious application is to economic marketplaces, where the model Smith sets out in TMS matches up perfectly. Another application is to the human institution of languages. In an early essay titled “Considerations Concerning the First Formation of Languages,” Smith lays out how he suspects languages first came into being and how they change over time. The processes he describes in that essay are instances of the processes he set out at greater length in TMS, and his model for language change foreshadows in important ways contemporary theories about language change—a remarkable feat considering that linguistics was only in its infancy at the time. In fact, the three areas of morality, economics, and linguistics can be mapped onto one another quite nicely in terms of the four central features I listed above:
I can now suggest why Smith’s analysis in TMS is of general applicability: the model it constructs for explaining the development of moral standards can be fruitfully employed to understand not only the development of morality, economic markets, and languages, but indeed the development of all human social institutions. It can, for example, account for the accepted protocols of behavior in a fifteenth-century Indian bazaar as well as those of late-twentieth-century American business; it can explain why certain forms of address and speech are peculiarly acceptable among academic professors, on the one hand, and among inner-city gang members, on the other; it can explain why Americans think the English are stuffy and why the English think Americans are loose. Smith’s model is thus extraordinarily powerful, and its scope may be coterminous with the whole of human social activity itself.
This is not to say that the model as Smith presents it is perfect or flawless. One possible problem is its almost exclusive reliance on the desire for mutual sympathy of sentiments: although this desire may well be a foundational element of human nature, it seems clear that there are also other motivating desires. Thus one might object that Smith’s picture of human motivation may be too simplistic. On the other hand, I see no reason to think that a richer view of the range of human motivation would necessarily be incompatible with the formal elements of Smith’s model. As long as people still strive to satisfy the desires that motivate them, and as long as the satisfaction of those desires requires the presence and sometime cooperation of others, Smith’s model would still seem to hold.
Another possible problem is that the moral standards that develop in the way Smith describes would not seem to have any ultimate sanction—they would seem justified, that is, solely because their peculiar historical course of social interaction produced them. That would seem to imply a cultural moral relativism that many—including me—find distasteful. It is a disputed point among Smith scholars whether he in fact thought that moral judgments had any kind of transcendent justification. I think the fact that they issue from natural human desires and needs begins to lend them objectivity, as does Smith’s claim that these “natural” desires and needs were implanted in us by God—which would mean that the moral standards that unintentionally arise by their operation actually reflect the will of God.
Some scholars maintain, however, that Smithian moral standards, like the standards of etiquette, are simply a matter of convention driven by their relative utility at satisfying local, contingent, or changing desires. But I would point to what Smith actually said, and it seems to me that human nature is enough of a constant to anchor a “middle-way” objectivism—between personal subjectivism and absolutely transcendent objectivism—that is sufficient to answer most worries about relativism.
Smith’s Theory of Moral Sentiments is thus full of far-reaching possibilities. One astonishing surprise is that, although published exactly 100 years before Darwin’s Origin of Species in 1859, TMS’s examination of the way in which these systems of unintended order, as I call them, develop and change over time adumbrates in substantial part the way in which Darwin’s theory explains the development and change of species. If recent work in what is called “sociobiology”—the field of inquiry that attempts to explain large parts of human social behavior by employing evolutionary insights—has merit, then Smith’s TMS, which is the first book in the Western tradition to try to work out such a view, might well have been on to something important indeed.
Thus The Theory of Moral Sentiments has had enormous historical influence, is subtle and sophisticated, develops an account of morality that is plausible and persuasive, and works out a model for explaining human interaction that is powerful enough to encompass virtually the entire range of human life. On top of that, some recent empirical research suggests his theory might be true. I can think of little else a book would need to be included as one of the greatest works of the Western tradition. I therefore commend it to you for your consideration, and I hope you will think of Smith not merely as an economist, but rather as he thought of himself: a moral philosopher. 
- Motivating Desire
- TMS: the “pleasure of mutual sympathy” of sentiments;
- WN: the “natural effort of every individual to better his own condition”;
- “Languages”: the desire to make our “mutual wants intelligible to each other.”
- TMS: rules determining propriety and merit;
- WN: protocols protecting private property, contractual agreements, and voluntary exchanges;
- “Languages”: rules of grammar, pronunciation, and so on.
Market (medium or arena of exchange)
- TMS: mutual exchange of personal sentiments and moral judgments;
- WN: exchange of private goods and services;
- “Languages”: verbal communication.
Resulting “Unintended System of Order”
- TMS: commonly shared standards of morality and moral judgment;
- WN: economy (large-scale network of exchanges of goods and services);
- “Languages”: language.
- For contemporary evidence substantiating Smith’s conclusions, see the annually updated Economic Freedom of the World compilation, available at www.freetheworld.com/release.html.
- For a recent study supporting this claim, see David S. Landes, The Wealth and Poverty of Nations: Why Some Are So Rich and Some Are So Poor (New York: Norton, 1999).
- For further discussion of this claim, see James R. Otteson, “Adam Smith’s Marketplace of Morals,” Archiv für Geschichte der Philosophie (forthcoming).
- Two examples are Rudi Keller, On Language Change: The Invisible Hand in Language (London: Routledge, 1994) and Steven Pinker, The Language Instinct: How the Mind Creates Language (New York: Harper-Collins, 1995).
- A classic statement of this view is E. O. Wilson’s On Human Nature (Cambridge, Mass.: Harvard University Press, 1978); a more recent treatment that draws explicitly on Smith’s work is James Q. Wilson, The Moral Sense (New York: Free Press, 1993).