In Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations the term ‘rational’ occurs only twice. Neither of these uses assigns the property of rationality either to human beings or to economic agents. Despite that, Smith is widely recognised as the founder of modern mainstream economics, a science which is defined by the assumption of the rationality of an economic agent. This paper aims to locate and discuss the notion of rationality which is implied by Smith’s (...) work. To achieve that a double-track approach is taken. First, the current paper reconstructs Smith’s general view on human nature which was presented mainly in his earlier book The Theory of Moral Sentiments. This is followed by a discussion of Smith’s theses on selected mechanisms which drive the economy as presented in The Wealth of Nations. (shrink)

The paper examines Robert Sugden’s arguments for contractarian economics, which exclude objective valuation. From a metaethical stance we claim that it is possible and desirable to enrich the axiology of contractarian economics to make it more convincing and applicable. Analyzing Sugden’s argument against paternalism, we show that adopting a richer axiology is compatible with the contractarian framework. Examining Sugden’s claim for redistribution, we demonstrate that explaining the psychological stability of a market economy is problematic without a richer axiology. Considering sweatshop (...) problem, we argue that without a richer axiology, contractarian economists are unable to recognize mutually advantageous exploitation. The paper concludes with the postulates on contractarian economics. (shrink)