Adam Smith (1723-1790) was born in Kirkcaldy and brought up by his mother who later kept house for him for most of his life. He entered Glasgow University at the age of 14, a not unusual age for the time. He was interested in mathematics and natural philosophy (physics) but was particularly influenced by Francis Hutcheson who was Professor of Moral Philosophy at the time. Indeed, Hutcheson's lectures on ethics, jurisprudence and economics were the basis of Smith's later writings on the subject.
Smith proceeded to Balliol College, Oxford, on a scholarship. The inspiring teaching of Hutcheson at Glasgow University contrasted markedly with his experience at Oxford. In
The Wealth of Nations, he wrote: 'In the University of Oxford, the greater part of the public professors have, for these many years, given up even the pretence of teaching'. After Oxford, Smith was appointed to the Chair of Logic and Rhetoric at Glasgow University in 1751, and transferred the following year to the Chair of Moral Philosophy. His lectures on ethics eventually became
The Theory of Moral Sentiments.
Smith's period in Glasgow gave him opportunities to have discussions with the merchants of the town and he was a regular participant in various discussion groups. His knowledge was much widened when he left Glasgow in 1764 as a tutor to the Duke of Buccleuch and spent two years in Toulouse, Paris and Geneva, where he met Voltaire and many of the leading philosophical and economic thinkers in Europe. He returned to his mother's house in Kirkcaldy to work on his book. Finally,
The Wealth of Nations appeared in 1776, and was an instant success.
In 1777, he was appointed Commissioner of Customs in Edinburgh, but he continued to revise his major works, and had ambitious projects, never completed, for 'a sort of philosophical history'. He died in 1790 at the age of 67 and is buried in the Canongate churchyard in Edinburgh. He was a very sociable man and had many friends, especially David Hume. It is known that he was twice in love, but never married.
Smith is widely admired for
The Wealth of Nations, but it must be stressed that he wrote on many subjects. For example, an early work entitled
The History of Astronomy illustrates the importance which Smith (following Hutcheson and Hume) placed on 'sentiment' and the imagination. Smith concludes that 'Philosophy (ie science), therefore, may be regarded as one of those arts which address themselves to the imagination'. It should be stressed that this is a radical view of science. It is saying that the ultimate stimulus to scientific inquiry is not utility but laying open 'the concealed connections that unite the various appearances of nature'.
In
The Theory of Moral Sentiments we find a complex theory with many interesting examples and illustrations. The two key concepts in his theory are 'sympathy' and 'the impartial spectator'. He employs 'sympathy' as a semi-technical term to explain the origin and nature of our judgements of moral approval and disapproval. Sympathy in Smith's sense is a socialising bond. We learn from experience how others react and we have a desire that our feelings should correspond to how they would react in similar situations. This leads us to damp down our more violent reactions and leads to the virtue of self-command. On this and throughout his works, Smith was influenced by the Stoics.
When we make a moral judgement on another person's behaviour, we may find it very difficult to be disinterested. Smith invokes the impartial spectator to deal with this problem. He imagines someone isolated from society. Such a person cannot judge his own actions. But 'bring him into society and he is immediately provided with the mirror which he wanted before'. Smith is again bringing out the social nature of morality.
In sum, we can say that Smith is providing a sociological account of ethics: his theory is a contribution to the science of human nature. In other words, he is not telling us how we ought to make moral judgements or what moral standards ought to be used, but how we in fact make moral judgements. This naturalist approach is a unifying principle throughout his writings.
The Wealth of Nations takes as its opening and central idea the division of labour, on which economic growth depends. But, since human beings have a 'propensity to truck, barter and exchange one thing for another', this 'propensity' leads to the creation of markets, and they become the means of economic growth.
One of Smith's main aims is to discover the laws of the market, but a second aim is to recommend free trade, or what was later called an economic laissez-faire policy, so that markets can grow. Smith, then, has both a sociological aim – to discover how markets in fact work – and a normative aim – to recommend free trade.
In pursuing the first aim, Smith notes that the exchange of goods soon gives way to the use of a standard unit of exchange – money – and once money is introduced goods can be priced. But 'price' is an ambiguous concept and Smith distinguishes between the 'real' price (or value) of goods and their 'nominal' price (or price in money).
Marxists and others have made much of this distinction, but for the workings of the economic system it is the 'nominal' price which is important. The price which people are willing to pay for goods will depend on how much they want them – the demand for them – but the cost of supplying the goods will turn (Smith argues) on three factors: the wages of the workers who produce the goods; the profit of the owners; the rent charged by owners of the land.
Smith maintains that there is a difference between what he calls the 'natural price' or price in the long-term and the 'market price' or price in the short-term. This distinction leads him to one of his crucial claims: 'The natural price, therefore, is, as it were, the central price, to which the price of all commodities are continually gravitating'.
In other words, the demand side will in the long-term be in a state of equilibrium with the supply side (as affected by the three factors mentioned). The underlying force which maintains this equilibrium is the self-interested nature of economic exchange in the market.
The self-interested nature of the market-place can lead (Smith claims) to a universal benefit. In making this claim, Smith re-introduces a concept he had previously used in the
Moral Sentiments. In economic exchange, every individual 'neither intends to promote the public interest, nor knows how much he is promoting it... he intends only his own gain, and he is... led by an invisible hand to promote an end which was no part of his intention'.
In making this claim, Smith was influenced by two sets of ideas. Firstly, Stoic ideas (which greatly influenced all his thinking) concerning the harmonising of natural liberty and natural justice in the concept of natural law. 'Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest in his own way.' But secondly, Smith stresses empirical ideas concerning the need for free trade if the market is to expand.
It is in his advocacy of free trade that he pursues the second aim of
The Wealth of Nations. He argues that free trade encourages nations to specialise in the sort of production they are good at, and he draws attention to the disadvantages of protectionist measures. But he has reservations about free trade. Protectionist measures can be used for self-defence and imported goods can be taxed if similar domestic goods are taxed.
Significantly, for more recent controversies, he sets limits to laissez-faire for domestic policies. Smith was fully aware of and indeed pessimistic about the effects of industrialisation. Thus, speaking of a workman, he says: 'His dexterity at his own particular trade seems to be acquired at the expense of his intellectual, social and martial virtues… this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it'. Later, he speaks of a workman suffering 'a sort of mental mutilation, deformity and wretchedness'. The advocacy that a government should take 'some pains' here can surely be interpreted as the ascription to a government of duties of social welfare.
Finally, a common criticism of Smith is that the 'self-interest' which is the foundation of
The Wealth of Nations is inconsistent with the 'sympathy' which underlies the
Moral Sentiments. But the 'self-interest' of economics is self-interest in an economic transaction, not in other human relationships.
The Theory of Moral Sentiments was very well received by the best judges of the age, such as David Hume and Edmund Burke. The University of Glasgow, in its Resolution accepting his resignation from the Chair of Moral Philosophy in 1764, noted that
The Theory of Moral Sentiments had 'recommended him to the esteem of men of taste and literature throughout Europe'. Little needs to be said about the international influence of
The Wealth of Nations, which is indisputably the single most influential book of political economy ever written.
Robin Downie is Emeritus Professor of Moral Philosophy at the University of Glasgow
