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Adam Smith’s Theory of Moral Sentiments:
On Morals and Why They Matter to a
Liberal Society of Free People and Free
Markets
Jerry Evensky
A
dam Smith (1723–1790) held the Chair of Moral Philosophy at Glasgow University from 1752 to 1763. Smith sought to do for moral philosophy what Isaac Newton had done for natural philosophy: to imagine and represent those invisible connecting principles that determine the course of na- ture. Newton’s natural philosophical realm encompassed all in nature that enve- lopes humankind. Smith’s moral philosophical realm was humankind. During his years at Glasgow, Smith lectured on human nature, the develop- ment of societies’ systems of ethics, the evolution of societies’ legal systems and the relationship of these social and political institutions to the wealth of nations. His years of teaching and inquiry at Glasgow established the foundation for his most famous work, An Inquiry into the Nature and Causes of the Wealth of Nations , initially published in 1776, which explores how markets function in a liberal society and the instrumental value of an effective market system to such a society. Early in the Wealth of Nations , Smith famously lays the groundwork for his argument that self-love is the force that drives the market system (1784 [1976a], pp. 26 –27):^1
(^1) Of course, the first edition of The Wealth of Nations was published in 1776. However, quotations in this paper are drawn from the 1784 edition.
y Jerry Evensky is Professor of Economics and Laura J. and L. Douglas Meredith Professor for
Teaching Excellence, Maxwell School of Citizenship and Public Affairs, Syracuse University, Syracuse, New York.
Journal of Economic Perspectives—Volume 19, Number 3—Summer 2005—Pages 109 –
But [while] man has almost constant occasion for the help of his breth- ren,... it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
Since the market system benefits society as a whole, the individual self-love that drives that market system is also instrumentally valuable to society as a whole— even if self-love involves the pursuit of mere “trinkets of frivolous utility.” In Smith’s first great work, The Theory of Moral Sentiments (1790 [1976b] pp. 181–183–184), initially published in 1759, he writes of
... the poor man’s son, whom heaven in its anger has visited with ambition ... [and who thus] sacrifices a real tranquility that is at all time in his power... [for the pursuit of] wealth and greatness [that] are mere trinkets of frivolous utility.... [I ]t is well that nature imposes upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind. It is this which first prompted them to cultivate the ground, to build houses, to found cities and commonwealths, and to invent and improve all the sciences and arts, which ennoble and embellish human life; which have entirely changed the whole face of the globe, have turned the rude forests of nature into agreeable and fertile plains, and made the trackless and barren ocean a new fund of subsistence, and the great high road of communication to the different nations of the earth.
This image of the instrumental value of self-love has become, in modern economics, the fundamental assumption that humans are all of the species homo economicus , motivated entirely by utility-maximizing self-interest. For example, Gary Becker (1976, p. 5) writes in The Economic Approach to Human Behavior : “The combined assumptions of [utility] maximizing behavior, market equilibrium, and stable preferences, used relentlessly and unflinchingly, form the heart of the economic approach as I see it.” But in Smith’s analysis, while self-love is a necessary condition for the unleashing of humankind’s productive energy and creativity, it is not sufficient. Smith recognized—as did many of his predecessors and contemporaries from Thomas Hobbes to the Physiocrats—that an unfettered freedom to pursue
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(Evensky, 2005, chapter 3). “The difference between the genius of the British constitution which protects and governs North America, and that of the mercantile company which oppresses and domineers in the East Indies, cannot perhaps be better illustrated than by the different state of those countries” (Smith, 1784 [1976a], p. 91). Bengal had many resources, but people enjoyed no security. The merchants ran the colony for their own short-term gain, extracting “great fortunes” from the colony by monopolizing access to capital and lending it “to the farmers at forty, fifty, and sixty per cent... [so that] the succeeding crop is mortgaged for the payment” (p. 111). In contrast, citizens in the British American colonies enjoyed the same system of justice as that which benefited the citizens of Great Britain. So notwithstanding the mercantile regulations that constrained the commerce of North American colonial farmers and merchants, the combination of liberty and justice that they enjoyed afforded them security and encouraged their fruitfulness (Smith, 1784 [1976a], p. 540):
That security which the laws in Great Britain give to every man that he shall enjoy the fruits of his own labour, is alone sufficient to make any country flourish, notwithstanding these [mercantile impediments] and twenty other absurd regulations of commerce.... The natural effort of every individual to better his own condition, when suffered to exert itself with freedom and security, is so powerful a principle, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often incumbers its operations.... In Great Britain [and in its American colonies] industry is perfectly secure; and though it is far from being perfectly free, it is as free or freer than in any other part of Europe.
Adam Smith completed two major works— The Theory of Moral Sentiments and The Wealth of Nations. His Lectures on Jurisprudence were to be the basis of a third major work. Smith’s analysis of the evolution of liberal market systems, positive law and civic ethics is not segmented among these presentations. Smith envisioned these dimensions of humankind as a simultaneous system within which progress along any one dimension requires complementary progress in the other two (Evensky, 2005, chapters 3 and 4). Smith’s analysis in The Wealth of Nations presumes a system of justice defined and enforced by positive law and civic ethics, but as Smith tells the story, the emergence of that mature system of justice is in turn dependent on humankind’s material progress. Only with material progress is there a surplus sufficient to support a refined division of labor that includes courts of justice, standing armies to defend a nation of citizens engaged in commerce, and the philosophical reflection that informs institutional maturation. Smith’s Lectures on Jurisprudence describe how positive law evolves to facilitate the emergence of liberal, free market society. However, Smith makes clear that this
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institutional maturation can only take societal progress so far. Positive laws are external constraints that must be imposed on individuals by a system of police. As society becomes more complex, if police must be the ultimate source of a society’s security, the freedom that makes progress possible is crushed by the oppressive police state that makes that freedom secure. Ultimately, the cohesiveness and constructiveness of a liberal order depends, according to Smith, not on institutional government but on self-government, on the ethical maturity of the citizenry. “What institution of government,” Smith (1790 [1976b], p. 187) writes, “could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue? All government is but an imperfect remedy for the deficiency of these. Whatever beauty, therefore, can belong to civil government upon account of its utility, must in a far superior degree belong to these.” The emergence and matu- ration of civic ethics is the subject of Smith’s Theory of Moral Sentiments. This essay describes Smith’s analysis of ethics in his Theory of Moral Sentiments : the interaction of our nature and our nurturing that makes common civic ethics possible and the dynamic interaction of individuals and extant societal construc- tions that can lead to ever more mature systems of civic ethics and thus toward those conditions necessary for a constructive, sustainable liberal system.
On the Nature of Our Being and the Ties that Bind
According to Smith, a natural sense of fellow-feeling is the thread that weaves the social fabric together. The opening words of Smith’s Theory of Moral Sentiments (1790 [1976b], p. 9) are “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others... .” Human beings care and wonder about the feelings that fill the hearts of others. But our access to that which another feels is not direct. We are not capable of seeing into the hearts of others. Smith (1790 [1976b], p. 9) writes that we can only conceive of what others feel “by conceiving what we ourselves should feel in the like situation.... [We are but a spectator of that other’s life and it] is by the imagina- tion only that we can form any conception of what are his sensations.” Our imagination looks into the invisible recesses of another’s heart through the window of that person’s passions. Passions are the visible expression of anoth- er’s sentiments, and sentiments are those “affection[s] of the heart, from which any action proceeds” (Smith, 1790 [1976b], p. 18). Our sentiments, residing in the heart of our being, process experience and generate our passions—and in turn our actions. The strength of a passion is determined by the measure of the sentiment that evokes that passion. For example, one who sees another suffering and whose heart holds a large measure of the sentiment of beneficence (sometimes referred to as benevolence) will passionately desire to help that other and will act with great kindness.
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so the spectator’s sympathy is tempered by that distance that the imagination must bridge. Smith (1790 [1976b], p. 22) writes:
The person principally concerned is sensible of this, and at the same time passionately desires a more complete sympathy.... But he can only hope to obtain this by lowering his passion to that pitch, in which the spectators are capable of going along with him.... In order to achieve this concord, as nature teaches the spectators to assume the circumstances of the person principally concerned, so she teaches this last in some measure to assume those of the spectators.... [A]s the reflected passion [of the spectators], which he thus conceives, is much weaker than the original one, it necessarily abates the violence of what he felt before he came into their presence... and to view his situation in this candid and impartial light.
This passage contains the first use of the term “impartial” in The Theory of Moral Sentiments. As we will see, it becomes a central concept in Smith’s representation of moral sentiments. In sum, as we judge others by our sense of harmony with what we imagine to be their sentiments, we know that they are doing the same in judging us. That judgment matters to us. We desire the harmony of others’ sympathy with our sentiments. Thus, we naturally adjust our sentiments toward that measure that will enjoy their sympathy. This natural inclination to desire the sympathy of others and thus to seek a harmony of sentiments with them is the foundation of the social regulation of personal behavior.
On Moral Sentiments
Since sentiments are invisible but their expressions—the passions—are visible, Smith (1790 [1976b]) establishes a general taxonomy of sentiments by examining the categories of passions we observe. These categories are: “ the unsocial Passions ” (p. 34), “ the social Passions ” (p. 38) and “ the selfish Passions ” (p. 40). The unsocial passions are those of “hatred and resentment” (p. 34). They exist to protect us from injury at the hands of others, by making others wary of harming us for fear of exciting these passions. They are, according to Smith, the expression of an underlying sentiment that people have for justice. When unregulated, these unsocial passions can be the most socially destructive of all passions. “There is no passion... concerning whose indulgence we ought so carefully to consult our natural sense of propriety, or so diligently to consider what will be the sentiments of the cool and impartial spectator” (p. 38). The impartial spectator will be sympathetic if and only if this passion reflects a properly measured sentiment of justice. “Too violent a propensity to those detestable passions, renders a person the object of universal dread and abhorrence, who, like a wild beast,
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ought, we think, to be hunted out of all civil society” (p. 40). Here we meet Smith’s “impartial spectator,” a spectator with no vested interest. This impartial observer, first as a real being and then as an abstract conception, is central to Smith’s standard of moral sentiments. The social passions include “all the social and benevolent affections,” includ- ing “[g]enerosity, humanity, kindness, compassion, mutual friendship” (Smith, 1790 [1976b], p. 38). They are the expression of an underlying sentiment people have for beneficence. For Smith, the real pleasures of life derive from these intangibles rather than from material wealth. But even these highly desirable passions can be overdone. Where they are “excessive... [we see] a helplessness in the character of extreme humanity which more than any thing interests our pity” (p. 40). Properly measured, beneficence not only enjoys the complete sympathy of an impartial spectator, it is very much esteemed by that spectator. The mutual kindnesses that spring from this beneficence are the source of the love and friendship that in Smith’s view are the ultimate joys of human society (for examples of Smith’s emphasis on the ultimate importance of friendship, see pp. 39, 41, 225 and 243). There is both an essential consistency and a very important difference between the sentiment of justice that drives the unsocial passions and the sentiment of beneficence that drives the social passions. The standard for assessing these senti- ments is consistent. Properly measured, justice and beneficence enjoy the sympathy of an impartial spectator, and the actions they generate meet the standard of propriety. The important difference between justice and beneficence lies in what people have a right to enforce upon another. Smith (1790 [1976b], pp. 78, 79) explains:
Beneficence is always free, it cannot be extorted by force, the mere want of it exposes to no punishment; because the mere want of beneficence tends to do no real positive evil.... There is, however, another virtue, of which the observance is not left to the freedom of our own wills, which may be extorted by force, and of which the violation exposes to resentment, and consequently to punishment. This virtue is justice: the violation of justice is injury: it does real and positive hurt to some particular persons....
One who does not display appropriate beneficence can be “the object of hatred” (p. 79). But only the absence of appropriate justice justifies resentment and its attendant just punishment, which is why Smith (p. 79) argues: “Resentment... is the safeguard of justice... .” With these words, the connection between moral sentiments and a liberal society begins to emerge. Police cannot be the ultimate source of justice, for a police state cannot be a liberal order. A liberal society can only be constructive and sustainable to the degree that the hearts of its citizens embody a properly measured
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an ideal impartial spectator position and know the balance of sentiments consistent with perfect virtue, and if that individual had the self-command necessary to maintain that ideal balance in himself, then he could achieve Smith’s ( [1976b], p. 237) standard of perfect virtue: “The man who acts according to the rules of perfect prudence [that is, mature self-love], of strict justice, and of proper benevolence, may be said to be perfectly virtuous.” Smith’s ideal liberal society would be inhabited by such perfectly virtuous beings. It would be a society in which all could enjoy liberty secured by the rule of justice. It would be a society in which there would be no need for institutional government to police the rules of justice, for in this perfect world citizens would know the ideal measure of justice and would have the self-government, the self- command, to enforce it upon themselves. But as Smith appreciated full well, real human beings do not live in this perfect world. As Waterman (2002, pp. 912–913) writes: “ The Theory of Moral Sentiments
... expounds a detailed psychology according to which human action is motivated by a less-than-perfect balance of ‘sentiments’: self-love, justice, and beneficence or benevolence.” However, while Smith believed that perfection is impossible, he also believed that humankind can make progress. It is important to pause here and distinguish the concept of humankind’s progress from the concept of human improvement. Smith viewed human nature as universal and constant. In his “History of Ancient Logics and Metaphysics,” he (1980, p. 121) writes: “Man is perpetually changing every particle of his body; and every thought in his mind is in continual flux and succession. But humanity, or human nature, is always existent, is always the same... .” However, while our nature is constant, chance, circumstance and the intended and unintended consequences of individuals’ actions can transform the material, institutional, intellectual and ethical conditions of societies and their citizens. This transformation makes humankind’s progress possible. Smith makes this point with respect to philosophy when he asserts in his “History of Ancient Physics” (1980, p. 109): “Let us not despise those ancient philosophers... [who held what we now consider immature ideas. We have] no superior sagacity”—just the advantage of their contributions, along with time and experience. As with philosophy, Smith believed that civic ethics could mature. Maturation in that case implies an ever-closer approximation of the ethical ideal consistent with a liberal order. This possibility, in turn, makes the approximation of that ideal liberal order a plausible human prospect. His analysis of the history of humankind represents this process of progress. Smith describes humankind as having evolved through four progressively more complex and mature stages: hunting and gathering, pasturage, agriculture and, finally, commerce. As humankind progressed through these stages, ever more complex social and political institutions played an essential instrumental role in making that progress possible. They provided security when individuals’ civic ethics
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did not; and by institutionalizing the progress of the past, these institutions served as a foundation for further progress. Smith does not represent humankind’s progress through these stages as an inexorable, linear improvement from the first to the last stage. Rather, the story he tells is of particular societies progressing, stagnating and declining; the emergence of new societal constructs followed by progress, then again stagnation and decline. The progress of humankind emerges from this process because among these societal experiments, more mature societies are, ceteris paribus , more capable of defending themselves. Thus, progress, in the large, is reinforcing (Evensky, 2005, chapter 1). Institutions facilitate this progress, but, ultimately, the achievement of a con- structive and sustainable liberal order of free people and free markets depends not on more mature institutions, but on the progressive maturation of societal norms of justice—and on the acceptance of and the adherence to these norms by the citizenry.
Establishing Social Order: The Development and Inculcation of
Societal Norms
Justice is a sine qua non of the liberal plan for free people and free markets, for without justice there is no security and society degenerates into the Hobbesian war of all against all. Smith (1790 [1976b], p. 85– 86) argues:
All the members of human society stand in need of each others assistance, and are likewise exposed to mutual injuries. Where the necessary assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem, the society flourishes and is happy. All the different members of it are bound together by the agreeable bands of love and affection, and are, as it were, drawn to one common centre of mutual good offices. But though the necessary assistance should not be afforded from such generous and disinterested motives, though among the different members of the society there should be no mutual love and affection, the society, though less happy and agreeable, will not necessarily be dissolved.... Society, however, cannot subsist among those who are at all times ready to hurt and injure one another.... [B]eneficence... is the ornament which embellishes, not the founda- tion of [society].... Justice, on the contrary, is the main pillar that upholds the whole edifice.^3
(^3) As Gary Becker demonstrates, his self-interested individual is capable of altruism. However, Becker’s altruism is not sufficient to provide the justice Smith identifies as a necessary condition for cohesion of liberal society. Beyond genetic connection, the altruism effect diminishes as social distance increases
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These general rules serve as a guide for our behavior when, in the heat of passion, the cool perspective of an impartial spectator is unavailable to us. Educa- tion and experience make the rules immediately accessible to us. Social concur- rence with their content and social/legal sanction for their violation give these rules authority over us. We are not capable of perfection, but we are capable of the citizenship necessary for social cohesion, thanks to the capacity of our society to impress upon us general rules that can guide our behavior.
The coarse clay of which the bulk of mankind are formed, cannot be wrought up to such perfection. There is scarce any man, however, who by discipline, education, and example, may not be so impressed with a regard to general rules, as to act upon almost every occasion with tolerable decency, and through the whole of his life to avoid any considerable degree of blame.... [U]pon the tolerable observance of these duties, depends the very existence of human society, which would crumble into nothing if mankind were not generally impressed with a reverence for those important rules of conduct (Smith, 1790 [1976b], pp. 162–163).
At any given time, these general rules exert an invisible force because they represent the existing societal standards of custom. Custom, according to Smith (1790 [1976b], p. 194), is that habit of mind that is formed by the “habitual arrangement of our ideas.” Smith (pp. 194 –206) describes at length the strength of embedded social expectations in the areas of dress, fashion, furniture, music, architecture and human beauty.^4 Just as every society has evolving social expecta- tions in these areas, so too every society develops its unique social construction that embodies established norms of interpersonal behavior that are peculiar to its particular time, place and circumstance. Smith (p. 204) refers to the set of societal
(^4) For example, Smith (1759, p. 199) cites as an example of this sociocentrism the absurdity of European arrogance with respect to definitions of beauty:
What different ideas are formed in different nations concerning the beauty of the human shape and countenance? A fair complexion is a shocking deformity upon the coast of Guinea. Thick lips and a flat nose are a beauty. In some nations long ears that hang down upon the shoulders are the objects of universal admiration. In China if a lady’s foot is so large as to be fit to walk upon, she is regarded as a monster of ugliness. Some of the savage nations in North-America tie four boards round the heads of their children, and thus squeeze them, while the bones are tender and gristly, into a form that is almost perfectly square. Europeans are astonished at the absurd barbarity of this practice, to which some missionaries have imputed the singular stupidity of those nations among whom it prevails. But when they condemn those savages, they do not reflect that the ladies in Europe had, till within these very few years, been endeavouring, for near a century past, to squeeze the beautiful roundness of their natural shape into a square form of the same kind. And that, notwithstanding the many distortions and diseases which this practice was known to occasion, custom had rendered it agreeable among some of the most civilized nations which, perhaps, the world ever beheld.
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norms of a given society, determined primarily by custom and social fashion, as its “golden mean”:
The different situations of different ages and countries are apt... to give different characters to the generality of those who live in them, and their sentiments concerning the particular degree of each quality, that is either blamable or praise-worthy, vary, according to that degree which is usual in their own country, and in their own times.... Every age and country look upon that degree of each quality, which is commonly to be met with in those who are esteemed among themselves, as the golden mean of that particular talent or virtue. And as this varies, according as their different circumstances render different qualities more or less habitual to them, their sentiments concerning the exact propriety of character and behavior vary accordingly.
This conception of the natural order is woven into our being through the process of socialization. Individuals are “familiarized with it from their infancy, custom has rendered it habitual to them, and they are very apt to regard it as, what is called, the way of the world.. .” (Smith, 1790 [1976b], p. 201). But societal norms are peculiar to a particular time and place. Driven by chance, circumstance and the unintended and intended actions of individuals, these social constructions can and do change. While this change is not effected by individual intention, it is affected by it. This point brings us to Smith’s analysis of the role of individuals in this dynamic of change.
The Emergence of Ethical Autonomy and the Evolution of Civic
Ethics
If change is at least in part intentional, how do individuals escape the confines of the “natural order” into which they are born in order to act on it? Smith saw individuals as both social beings and as sovereign beings: “[I ]n the great chess-board of human society, every single piece has a principle of motion of its own.. .” (Smith, 1790 [1976b], p. 234). Even as an individual is shaped by society, the experience, imagination and reason of each person creates a unique perspective from which that person can act on and affect the extant social constructs—including society’s definition of ethical balance. As one thoughtful commentator on Smith’s work puts it (Fleischacker, 1999, pp. 49, 51):
Individual judgments are, ultimately, constitutive of social norms, but social norms are also an indispensable source for individual judgments. Indeed, the process of moral judgment is the means by which individuals most deeply build the views of their society into themselves. Paradoxically, it is precisely by
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In contrast, when we attempt to take the position of an impartial spectator in order to assess our own behavior, we can know our own sentiments— but it takes a great effort to be impartial, for we always have a partial interest in our own circumstance. This fundamental difference of perspective between societal judgment and self-judgment can lead to a dissonance when we feel that society has misjudged us with either excessive praise or blame (Smith, 1790 [1976b], pp. 114, 115):
The most sincere praise can give little pleasure when it cannot be considered as some sort of proof of praise-worthiness.... As ignorant and groundless praise can give no solid joy, no satisfaction that will bear serious examination, so, on the contrary, it often gives real comfort to reflect, that though no praise should actually be bestowed upon us, our conduct, however, has been such as to deserve it....
This dissonance between society’s judgment and our own self-judgment can in turn lead to the emergence of autonomy in moral assessment, making possible moral maturation. It is, after all, not the desire for praise or avoidance of blame from others that motivates real virtue, rather the pursuit of virtue is driven by the internal desire to be praiseworthy and the abhorrence of blameworthiness (Smith 1790 [1976b], pp. 116 –117).
Nature, when she formed man for society... endowed him, not only with a desire of being approved of, but with a desire of being what ought to be approved of....... [T]hough a wise man feels little pleasure from praise where he knows there is no praise-worthiness, he often feels the highest in doing what he knows to be praise-worthy, though he knows equally well that no praise is ever to be bestowed upon it.^6
As we depend more on this internal assessment of praiseworthiness and blameworthiness, we become more autonomous in our ethical judgments. Given this new perspective, when we take that imaginary step into an impartial spectator’s position things begin to look different. We are invariably led to imagine not only what would be the socially acceptable response to the circumstance—what would be our duty and would follow custom— but also whether another response seems more
of the action, every court of judicature would become a real inquisition. There would be no safety for the most innocent and circumspect conduct.... Actions, therefore, which either produce actual evil, or attempt to produce it, and thereby put us in the immediate fear of it, are by the Author of nature rendered the only proper and approved objects of human punishment and resentment... .” (^6) This quotation is part of the substantial revision to the sixth edition of The Theory of Moral Sentiments that was completed just before Smith’s death in 1790. In that revision, Smith revisits this section and puts renewed emphasis on his distinction between praise/blame and praiseworthiness/blameworthiness.
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appropriate to us. This application of reason and imagination leads to the emer- gence of ethical standards based on our unique, independent perspective. As Smith (1790 [1976b], pp. 128 –130) describes it:
The all-wise Author of Nature has, in this manner, taught man to respect the sentiments and judgments of his brethren; to be more or less pleased when they approve of his conduct, and to be more or less hurt when they disapprove of it. He has made man, if I may say so, the immediate judge of mankind.... But though man has, in this manner, been rendered the immediate judge of mankind, he has been rendered so only in the first instance; and an appeal lies from his sentence to a much higher tribunal, to the tribunal of their own consciences, to that of the supposed impartial and well-informed spectator, to that of the man within the breast, the great judge and arbiter of their conduct.
Through this development of ethical autonomy, an individual can transcend current societal norms. But societal progress is only possible when the norms themselves, and thus the common standard of civic ethics, progress. Individuals can contribute to this progress, but the process of progress is larger than any one individual. That larger process involves a dynamic interaction between individuals and society. The individual is initially socially constructed by the extant institutions, but then reshapes the extant social construction. That new construction, embodied in the changing shape of the social and political institutions of the times, represents a new societal experiment. When that new shape is more constructive the society makes progress. Progress brings power. But inevitably, either internal corrosion destroys that power or other societies develop more progressive structures and challenge that power. So any given society, to maintain its existence, must evolve into an ever more constructive and powerful model. Here again, the individuals who are shaped by the extant structure can contribute to this progress by acting on the inherited construct. The competition among the societal experiments encourages new experi- ments and rewards those that are constructive. In the large, this process leads to the progress of humankind. In the last, commercial stage of humankind’s progress, Smith envisions the competition among societal experiments as a potentially positive sum game, thus accelerating the process of humankind’s progress—“potentially,” because he believed that while the commercial stage, in the ideal a stage of free people and free markets, held great promise for global improvement, that promise was problematic because the partial interests that come with commerce—the mercantile interests—are a powerful corrosive force that must be overcome for that progress to be realized.
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the distorting influence of the mercantile interests on the British experiment in liberal society. In 1784, having served for a number of years as a Commissioner of Customs and thus having seen from the inside how these mercantile interests worked to secure their advantages through legislation, Smith (1784 [1976a]) published a revised edition of The Wealth of Nations. In that revision, he writes that this partial, mercantile interest has expanded its power through sophistry and persuasion and, when those have failed, by intimidation (p. 471):
This monopoly has so much increased the number of some particular tribes of them, that, like an overgrown standing army, they have become formidable to the government, and upon many occasions intimidate the legislature. The member of parliament who supports every proposal for strengthening this monopoly, is sure to acquire not only the reputation of understanding trade, but great popularity and influence with an order of men whose numbers and wealth render them of great importance. If he opposes them, on the contrary, and still more if he has authority enough to be able to thwart them, neither the most acknowledged probity, nor the highest rank, nor the greatest publick services can protect him from the most infamous abuse and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists.
Because of these powerful interests, Britain was burdened by what should have been a wonderful opportunity: the globalization of trade. The opening of the east and west gave Europe access to markets that spanned the globe. Since an expansion of the extent of the market is both a prerequisite for the ever-finer division of labor and an opportunity to generate the capital to finance those improvements, a new era of global trade for Europe could have been a great benefit, directly and indirectly, to all the nations of Europe. But while nominally meant to “enrich a great nation” (Smith, 1784 [1976a], 627), the mercantile colonial policies were in fact “frequently more hurtful to the countries in favour of which they are estab- lished than to those against which they are established” (pp. 627– 628):
After all the unjust attempts, therefore, of every country in Europe to engross to itself the whole advantages of the trade of its own colonies, no country has yet been able to engross to itself any thing but the expence of supporting in time of peace and of defending in time of war the oppressive authority which it assumes over them.
In the new Part VI of The Theory of Moral Sentiments , Smith (1790 [1976b], pp. 231–232) appeals to the active virtue of those who would be leaders to look beyond the partial interests of faction and rise to the level of a statesman.
The leader of the successful party... if he has authority enough to prevail upon his own friends to act with proper temper and moderation (which he
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frequently has not), may sometimes render to his country a service much more essential and important than the greatest victories and the most exten- sive conquests [of the patriot]. He may re-establish and improve the consti- tution, and from the very doubtful and ambiguous character of the leader of a party, he may assume the greatest and noblest of all characters, that of the reformer and legislator of a great state; and, by the wisdom of his institutions, secure the internal tranquillity and happiness of his fellow-citizens for many succeeding generations
But beware, Smith (p. 234) reminds the potential leader, of the arrogance of power:
The man of system... [is] very wise in his own conceit; and... [is] often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it.... [Do not] imagine that... the different members of a great society [can be arranged] with as much ease as the hand arranges the different pieces upon a chess- board.... Some general, and even systematical, idea of the perfection of policy and law, may no doubt be necessary for directing the views of the statesman. But to insist upon establishing, and upon establishing all at once, and in spite of all opposition, every thing which that idea may seem to require, must often be the highest degree of arrogance.... It is to fancy himself the only wise and worthy man in the commonwealth, and that his fellow-citizens should accommodate themselves to him and not he to them.
Extolling the virtues of the classic statesman, Smith (1790 [1976b], p. 233) cites Solon, one of the ancient Greek heroes from Plutarch’s Lives who is sometimes known as the “lawmaker of Athens,” as a model:
The man whose public spirit is prompted altogether by humanity and be- nevolence... [w]hen he cannot establish the right, he will not disdain to ameliorate the wrong; but like Solon, when he cannot establish the best system of laws, he will endeavour to establish the best that the people can bear.
As he matured, Smith came to believe that the virtuous statesman may be instrumentally necessary to help guide societal progress toward the realization of what he referred to in The Wealth of Nations (p. 664) as the “liberal plan of equality, liberty and justice.” But from the initial publication of The Theory of Moral Sentiments in 1759 to the last revision of that work in the year he died, 1790, the foundation of Smith’s moral philosophical vision never changed. If a society of free people and free markets is to avoid the Hobbesian abyss, justice must be enforced not by
128 Journal of Economic Perspectives
