The old Das Adam Smith Problem is no longer tenable. Few today believe that Smith postulates two contradictory principles of human action: one in the Wealth of Nations and another in the Theory of Moral Sentiments . Nevertheless, an Adam Smith problem of sorts endures: there is still no widely agreed version of what it is that links these two texts, aside from their common author; no widely agreed version of how, if at all, Smith's postulation of self-interest as the (...) organising principle of economic activity fits in with his wider moral-ethical concerns. We argue that the enduring Adam Smith problem may be solved by recourse to a realist perspective that recognises the different levels of social reality to which Smith refers in his discourse. Essential to Smith, we try to show, is the action-theoretic distinction between motive and capacity; between a typology of empirical human acts, on the one hand—self-love and benevolence in Smiths terminology—and the (non-empirical) condition of possibility of all human action—what Smith calls the sympathetic principle—on the other. (shrink)

The Adam Smith problem refers to a claimed inconsistency between the Theory of Moral Sentiments and the Wealth of Nations, regarding the portrayal of human nature in these two books. Previous research predominantly resolved the claimed inconsistency by uncovering virtuous, less selfish character traits in the Wealth of Nations. This article voices caution. I acknowledge – on methodological grounds – fundamental differences regarding the portrayal of human nature in Smith’s behavioral ethics, i.e. the Theory of Moral Sentiments, as compared with (...) Smith’s economic research. The key argument is that Smith’s two books address different research problems and hence do not, need not and cannot adopt the same view of human nature – for methodological reasons, so my argument. Adam Smith scholarship overlooked that Smith himself in considerable degrees understood “economic man” as a heuristic abstraction. I connect to the philosophies of science of Imre Lakatos and Karl Popper. (shrink)

This paper focuses on the treatment of prudence by Adam Smith. Smith was one of the few philosophers to conceive of it as a moral virtue. Smithian prudence is the care of one's own happiness that is limited and ennobled, respectively, by the sense of justice and that of self-command. A reconstruction of Smith's view of prudence helps to clarify three central points in his thought: the interaction between the agent's economic and moral dimensions, the relationship between the self and (...) the other, and the dialectical tension between partiality and impartiality. Furthermore, Smithian prudence is important, in itself, as an approach to the above-mentioned points that is still viable. These three points are recurrent crucial issues in the history of ethics. (shrink)

A market may be defined as a set of competitive relationships in which agents strive, within limits set by ground rules, to better their own economic positions, not necessarily at the expense of other people, but not necessarily not at their expense either. A degree of indifference to the market fates of others is, manifestly, an inevitable feature of the market practice, so defined. But though indifference is clearly logically endemic to markets, it has been denied that selfishness is necessarily (...) involved in the raw competition of market activity. Thus, Hayek maintains that market behaviour is not selfish on the grounds that the market is a competitive non zero-sum ‘wealth-creating game’ in which individuals ‘use their own knowledge for their own ends’ in a system whose operations,viathe ‘Invisible Hand’, also produce unintended benefits for others. But for behaviour to be selfish it clearly need not necessarily disbenefit other people; it is enough that it is pursued, or persisted in, regardless of its effects upon others. And this is precisely what the institutional ‘indifference’ of market activity amounts to. Admittedly individuals who understand the Hayekian logic of the market know that the long-run chances of everyone's benefiting are maximized by acting in a rigorously competitive manner, and so they at least in one sense act with a ‘regard for others’. Butipso factothis category of market agents has an even stronger reason than the ignorantly selfish for disregarding thespecificinterests of all theparticularindividuals with whom they have economically to do. ‘Market selfishness’, the disregard for others' market interests, is thus a logically inevitable feature of market activity. (shrink)

Recent studies have investigated connections between Adam Smith’s economic and philosophical ideas and Catholic Social Teaching (CST). Scholars argue that their common background lies in their respective anthropologies, both endorsing a relational view of human beings. I raise one main concern regarding these analyses. I suggest that the relationality endorsed by Smith lacks a central element present in CST—the other-oriented perspective which is the intentional concern for promoting the good of others. Some key elements of CST, such as love, gift, (...) gratuitousness, and fraternity, find a very different space in Smith’s social view and very little space in his economic view. Moreover, I show how CST relationality is more in accordance with a civil economy view of the market as a place of fraternity and mutual assistance. (shrink)

In modern economics, the use of sympathy and empathy shows significant ambiguity. Sympathy has been used in two different senses. First, it refers to cases where the concern for others directly affects an individual's own welfare . Second, the term has served the purposes of welfare economics, where it is associated with interpersonal comparisons of the extended sympathy type, that is, comparisons between one's own situation in a social state and someone else's in a different social state . On the (...) other hand, empathy has been used interchangeably with sympathy either to render the idea of interdependent utility functions , or to convey the imaginative process of imagining oneself in someone else's place. (shrink)

The Scottish sentimentalist Francis Hutcheson and the Chinese Confucianist Mencius give benevolence (ren) a key place in their respective moral theories, as the first and foundational virtue. Leaving aside differences in style and method, my purpose in this essay is to underline this similarity by focusing on four common features: first, benevolence springs from compassion, an innate and universal feeling shared by all human beings; second, its objects are not only human beings but also animals; third, it is sensitive to (...) proximity; and finally, it has to be constantly cultivated in order to become a character trait. I will conclude with some brief remarks as to how this understanding of benevolence as rooted in feeling rather than reason, and in personal rather than impersonal relationships, helps to illuminate part of the discussion in moral philosophy today. (shrink)

Adam Smith (1723–90) provided a novel and subtle account of the new social physics that emerged to accommodate the economic changes taking place in his time. This article explores Smith’s views on the effect of commercialization on friendship, and then questions one prominent interpretation of his approach, that of Allan Silver. Against the contested reading, we argue that the new ‘strangership’ described by Smith is not warm, but rather, cool-friendship enhancing. We suggest that Cicero’s treatment of friendship illuminates Smith’s views (...) on this topic. (shrink)

Motivation crowding out can lead to a reduction of ‘higher’ virtues, such as altruism or public spirit, in market contexts. This article discusses the role of virtue in the moral and economic theory of Adam Smith. It argues that because Smith’s account of commercial society is based on ‘lower’ virtue, ‘higher’ virtue has a precarious place in it; this phenomenon is structurally similar to motivation crowding out. The article analyzes and systematizes the ways in which Smith builds on ‘contrivances of (...) nature’ in order to solve the problems of limited self-command and limited knowledge. As recent research has shown, a clear separation of different social spheres can help to reduce the risk of motivation crowding out and preserve a place for ‘higher virtue’ in commercial society. The conclusion reflects on the performative power of economics, arguing that the one-sided focus on models of ‘economic man’ should be embedded in a larger context. (shrink)

“Das Adam Smith Problem” is the name given by eighteenth-century German scholars to the question of how to reconcile the role of self-interest in the Wealth of Nations with Smith’s advocacy of sympathy in Theory of Moral Sentiments. As the discipline of economics developed, it focused on the interaction of selfish agents, pursuing their private interests. However, behavioral economists have rediscovered the existence and importance of multiple motivations, and a new Das Adam Smith Problem has arisen, of how to accommodate (...) self-regarding and pro-social motivations in a single system. This question is particularly important because of evidence of motivation crowding, where paying people can backfire, with payments achieving the opposite effects of those intended. Psychologists have proposed a mechanism for the crowding out of “intrinsic motivations” for doing a task, when payment is used to incentivize effort. However, they argue that pro-social motivations are different from these intrinsic motivations, implying that crowding out of pro-social motivations requires a different mechanism. In this essay I present an answer to the new Das Adam Smith problem, proposing a mechanism that can underpin the crowding out of both pro-social and intrinsic motivations, whereby motivations are prompted by frames and motivation crowding is underpinned by the crowding out of frames. I explore some of the implications of this mechanism for research and policy. (shrink)

In modern economics, the use of sympathy and empathy shows significant ambiguity. Sympathy has been used in two different senses. First, it refers to cases where the concern for others directly affects an individual's own welfare. Second, the term has served the purposes of welfare economics, where it is associated with interpersonal comparisons of the extended sympathy type, that is, comparisons between one's own situation in a social state and someone else's in a different social state. On the other hand, (...) empathy has been used interchangeably with sympathy either to render the idea of interdependent utility functions, or to convey the imaginative process of imagining oneself in someone else's place. (shrink)

Adam Smith rejected Mandeville's invisible-hand doctrine of 'private vices, publick benefits'. In The Theory of Moral Sentiments his model of the 'impartial spectator' is driven not by sympathy for other people, but by their approbation. The innate capacity for sympathy makes approbation credible. Approbation needs to be authenticated, and in Smith's model authentication relies on innate virtue, which is not realistic. An alternative model of 'regard' makes use of signalling and is more pragmatic. Modern versions of the invisible hand in (...) rational choice theory and neo- liberalism are shown to be radical departures from the ethical legacy of Enlightenment and utilitarian economics, and are not consistent with Adam Smith's own position. (shrink)