Smith, Adam
Smith, Adam
“The Theory of MoralSentiments”
Adam Smith (1723–1790) was born inKirkcaldy, Fifeshire, a fisheries and mining town near Edinburgh. Hewas the son, by a second marriage, of Adam Smith, comptroller of thecustoms at Kirkcaldy, who died early in 1723; his mother, MargaretDouglas, was the daughter of a substantial landowner in Fifeshire.Smith lived with his mother whenever he was in Scotland until herdeath in 1784; he was her only child, and he remained a bacheloruntil his death.
Smith received his elementary schooling inKirkcaldy and entered the University of Glasgow in 1737, graduatingwith an M.A. in 1740. He then went to Oxford University as a Snellfellow at Balliol College, where he stayed until 1746. Beyond thefact that at Glasgow he was a student of Francis Hutcheson, almostnothing is reliably known about his intellectual experiences eitherat Glasgow or at Oxford. From 1746 to 1748 he lived with his motherin Kirkcaldy, presumably continuing his studies and awaiting anopening for a career in some remunerative post. Between 1748 and1751, under the sponsorship of some of the leading intellectuals ofEdinburgh, he gave several successful series of public lectures, onrhetoric and belles-lettres, on jurisprudence, and perhaps onother subjects. On the strength of the reputation gained by theselectures, he was elected in 1751 to the professorship of logic at theUniversity of Glasgow. When the chair of moral philosophy becamevacant later in the same year, he was elected to that superior post,which he occupied until 1763. In 1759 he published his first book,The Theory of Moral Sentiments.
Early in 1764 Smith went toFrance as tutor of the young duke of Buccleuch, stepson and ward of Charles Townshend. Smith remained in France from early in 1764 untillate in 1766, most of the time in Toulouse but for some months inParis, where he saw a good deal of the leading physiocrats and philosophes. He also visited Geneva, where he made the acquaintance of Voltaire. After his return to England in 1766, he was until earlyin 1767 an adviser to Charles Townshend, then chancellor of theexchequer and working on his fatal plan for taxing the American colonies; Smith’s contribution to this plan, if any,is unknown. Endowed with a generous pension for life from the duke of Buccleuch, Smith returned in 1767 to Kirkcaldy, where he remaineduntil early in 1773, working on The Wealth of Nations. From 1773until early in 1776 he was again in London, completing the book butalso advising the government occasionally on economic matters. OnMarch 9, 1776, The Wealth of Nations was finally published,and soon thereafter Smith returned once more to Kirkcaldy. Early in1778, he was appointed a commissioner of customs for Scotland andalso a commissioner of the salt duties. These were not sinecureposts, as has often been alleged, but required his presence inEdinburgh for the greater part of each week throughout the year. Forthe rest of his life, he held these posts and lived in Edinburgh,where he died on July 17, 1790.
Overview of writings
TheTheory of Moral Sentiments and The Wealth of Nations were theonly full-length books that Smith wrote; however, he keptrevising both of them for successive editions, and the additions inthe sixth edition of The Theory of Moral Sentiments, which waspublished only a few weeks before his death, were substantial inextent and importance. He contributed three essays to periodicals in1755 and 1761, and a collection of essays on literary andphilosophical subjects was first published posthumously in 1795(“Essays on Philosophical Subjects” 1963). In 1896Edwin Cannan edited and published a recently found student’sreport of Smith’s economic lectures as given in 1763 at theUniversity of Glasgow (Lectures on Justice . . . 1964). In1963 John M. Lothian edited and published a student’s reporton Smith’s lectures on rhetoric and belles-lettres atGlasgow in 1762/1763 (Lectures on Rhetoric . . . 1963), which he hadshortly before purchased at an auction sale in Scotland. W. S.Howell, in an as yet unpublished manuscript, describes these lecturesas “an important and original revolutionary document in animportant revolution in the history of rhetorical theory,” the“revolution” consisting of the substitution for the oldrhetoric stemming from Aristotle and Cicero of a new rhetoric basedon the new learning of Bacon, Descartes, Locke, and others. At thesame auction Lothian also purchased a student’s report ofSmith’s economic lectures at Glasgow. This report, which isnow in the possession of the University of Glasgow, is substantiallyfuller and also, it has been stated, superior in quality to thatpublished by Cannan in 1896. Smith is said to have lectured also atthe University of Glasgow on nat-ural theology. Shortly beforehis death he supervised the burning of almost all of his manuscripts,some 16 folio volumes.
Smith clearly had a wide range ofinterests. The evidence available suggests that he reached his basicmethodological and philosophical principles early in his career andthat his destruction of manuscripts before his death was probablymotivated much more by dissatisfaction with their form or with theirincomplete state than by any fundamental change in his views.
Almost everything Smith wrote, in its methodological implicationsif not in its concrete subject matter, has some relevance for socialthought, but it is expedient here to concentrate on the two books hepublished during his lifetime. Many writers, including the presentauthor at an early stage of his study of Smith, have found these twoworks in some measure basically inconsistent. But in much of hiswriting Smith worked from what he called systems and what today wouldbe called models. He was aware that “systems” areincomplete in the factors they take into account. Had he been able tocomplete his total system, he would probably have demonstrated thatthe apparent inconsistencies were often not real ones, but weremerely the consequences of deliberate shifts from one partial modelto another.
In a letter of November 1, 1785, to a Frenchcorrespondent, Smith wrote that he had “. . . two other greatworks upon the anvil; the one is a sort of Philosophical History ofall the different branches of Literature, of Philosophy, Poetry andEloquence; the other is a sort of theory and History of Law andGovernment. . . . But the indolence of old age, tho’ Istruggle violently against it, I feel coming fast upon me, andwhether I shall ever be able to finish either is extremelyuncertain” ([1785] 1896, p. 166). The manuscripts of these two“great works” presumably were among those destroyedshortly before his death.
“The Theory of MoralSentiments”
The first thing to note about The Theory ofMoral Sentiments is its title. It is a “theory”or “system,” that is, it consciously and deliberatelyemploys some measure of patterned abstraction and thus does notprofess to account for all the relevant facts of the real world. Itsprimary concern is only with that part of human psychology which isinvolved in the interrelationships of men living in communities—the“moral sentiments,” that is, the passions,propensities, affections, feelings, whether of approbation or ofdisapproval, aroused by these interrelationships. These sentiments are intermediate, in degree of reflection or“reason” involved, between the basic instincts that manshares with the animals and the calculation or ratiocination ofsophisticated man as a reasoning being. When and how and in whatdegree these sentiments operate Smith discovered through observationof his neighbors, and presumably also, although he apparently neverexplicitly said so, through disciplined introspection exercised onthe assumption that men are substantially alike in their subrationalpsychology.
To show how the sentiments operate to socialize theindividual, to fashion him into a disciplined member of a harmonioussocial group, Smith introduced into his model the concept of“spectators,” distinguishing two main species. Thereis, first, the spectator external to yourself, the“real” spectator, who, by manifesting in some mannerhis sentiment of approval or disapproval of your behavior, exercisesan influence on you. There is, second, the internal spectator,yourself, operating on two distinct levels: first, your imaginationof what the reaction of a hypothetical external spectator would be toyour actual or contemplated behavior; second, your own moraljudgment, the judgment by your own conscience, by “the manwithin your breast,” by the “impartialspectator.” This whole complex mechanism of psychologicalresponse by men to their neighbors’ feelings of approval ordisapproval, which Smith called sympathy, he regarded as the majorfactor in creating and maintaining a socialized community. Itinvolves, according to Smith, not only the desire to win the praiseor approval of others but also the desire to be praiseworthy; whenthe two desires are in conflict, conscience decrees that the lattershall prevail.
Commentators have objected that Smith heredescribed a circular process, operating through sympathy like a setof “mirrors,” and that he failed to explain adequatelyeither what behavior is approved and what is disapproved or theorigin or genesis of the social passions. Yet, at least byimplication, Smith did offer such an explanation. He emphaticallyrejected human reason as the source of these sentiments. Also byimplication he denied that there is a natural evolutionary process inwhich groups with a pattern of sentiments that is predominantlyuseful survive, whereas those groups with a pattern of antisocialsentiments perish. Smith maintained that man is endowed by God withhis moral sentiments and that these sentiments bind men to each otherbecause the deity so made them in its concern for the happiness ofmankind. Smith ridiculed those who attributed to man’s wisdomwhat is really the wisdom of God,or of nature. Here Smith was, ofcourse, invoking “final causes,” or “theinvisible hand.”
It is hard for some people today tobelieve that Smith’s optimistic deism was completely sincere,and they tend to attribute his exposition of it to prudentialconsiderations or to concessions to a mode of speech called for bythe standards of propriety of the time. But in the“enlightened” Scottish circles of Smith’s timeoptimistic deism, sincerely held, was practically universal. Althoughorthodox Calvinists rejected its optimistic aspect as not religiousenough and David Hume rejected it as calling for too much religiousfaith, aside from Hume, no one among Smith’s teachers,colleagues, friends, or followers is identifiable as a critic ofoptimistic deism.
There may be genuine difficulty in reconcilingSmith’s deistic interpretation of the origin of the moralsentiments with other aspects of his social thought, including someof his specifically economic thought. Smith attributed to providencethe original endowment of mankind with a set of moral sentimentsconducive to the happiness of mankind. But unless he also assumedthat providence intervenes constantly or intermittently to makeappropriate adjustments in these sentiments as the physical or humanenvironment changes through time (for which belief there is noevidence in anything he wrote), Smith would seem to have beenpostulating a static social psychology, at least on the subrationallevel, in what he himself admitted to be in many relevant respects aconstantly changing and evolving world. Smith did recognize theimpact of the variability of custom and fashion on the mode ofoperation of the moral sentiments, but, in spite of this variability,he specifically recognized only one major historical affront to thesystem of moral sentiments—the prevalence of infant exposure in thelater period of ancient Greek civilization. He disposed of thisexception as a temporary aberration, outweighed by the manyoutstanding virtues of Greek civilization at the time. Nowhere did heattempt to explain how antisocial passions and aberrations inconflict with the “Author of Nature’s” designcame into existence. But in keeping with the notion then held by somescientists that there is in nature a self-equilibratingmechanism by which aberrations are prevented from prevailing, anotion having some analogy to the modern scientific notion of“homeostasis,” Smith held that there is an inherenttendency in the moral sentiments to overcome such aberrations.
Smith’s treatment of “justice” in The Theoryof Moral Sentiments is especially important for a properinterpretation of The Wealth of Nations. Smith always usedthe word to mean substantially what Aristotle and the Schoolmen meantby “commutative justice.” Justice is a negative virtue;it consists of refraining from injury to another person and fromtaking or withholding from another what belongs to him. It is thusdistinct from benevolence, friendship, or charity. Smith consideredjustice, so understood, to be the necessary foundation of a viablesociety. It is a moral sentiment and thus finds voluntary or naturalexpression. The natural or spontaneous sentiment of justice is not,however, strong enough in ordinary men to meet the needs of society.Consequently, men have been endowed with the propensity to formulaterules of justice on the basis of their experience and reason, andthey accept these rules for themselves and press them upon others.But even this is inadequate for the needs of society, and thereforegovernment is established, its chief function being the coerciveenforcement of justice on the individual members of the communitythrough law and the magistrates.
The moral sentiments operate atdifferent levels of intensity according to the nature and thestrength of the external stimuli impinging upon men. Smith’sdiscussion here closely parallels Hume’s discussion in ATreatise of Human Nature (1739–1740, book 2, part 2,especially sec. 4) and elsewhere: in describing the way in which thestrength of the “passions” between individuals varieswith the closeness of their relationship with respect to duration,space, kinship, nationality, occupation, rank, and so forth, Humerepeatedly used the term “distance” metaphorically tosignify any factors separating individuals from each other, a usagethat goes back at least to Aristotle and Thomas Aquinas. AlthoughSmith stressed distance in its primary spatial sense as an importantfactor in weakening the intensity of the moral sentiments—“Towhat purpose should we trouble ourselves about the world in the moon?All men, even those at the greatest distance, are no doubt entitledto our good wishes, and our good wishes we naturally give them. Butif, notwithstanding, they should be unfortunate, to give ourselvesany anxiety upon that account seems to be no part of our duty”([1759] 1966, p. 197)—he also used the same idea, if not the actualterm “distance,” for the absence not only of spatialproximity but also of membership in the same family, village, town,province, country, circle of friends, guild or company, church,social class, or some other psychologically unifying bond. In similarmanner he took it for granted that the participants in a large numberof the transactions which occur in the market are (in themetaphorical sense) at an extreme distance from each other; they are,in relation to each other, anonymous, or strangers, so that there islimited occasion for any moral sentiments other than justice to comeinto operation.
In The Theory of Moral Sentiments, Smithminimized the contribution that even the highly successful pursuit ofwealth or of higher social status makes to the happiness of anindividual. Both in this work and in The Wealth of NationsSmith treated increase in aggregate wealth as a highly worthyobjective for a country, but apparently in only one passage in eitherwork is increase in per capita wealth or income expressly mentionedas a reason for the advantage of an increase in aggregate wealth.Smith attached little importance to an increase above a quite modestlevel of per capita income, but he attributed great value to theincrease of population that an increase in aggregate wealth fostersand supports. With his optimistic view of the amount of happinessordinarily enjoyed even by the poor, Smith believed that growth ofpopulation is ordinarily conducive to growth in the aggregate amountof human happiness. He also found value in increase of aggregatewealth because it makes possible an increase in handsome buildingsand great avenues in the towns, the “magnificence” soextolled by the writers of classical antiquity and of theRenaissance, but he treated these as public rather than individualriches. Smith also included as an advantage of growth of aggregatewealth the progress of aesthetic and intellectual culture and of“civilization” in general, which he associated withcommunal enrichment.
“The Wealth of Nations”
The Wealth of Nations is of great importance for three mainreasons. First, it presents an impressive collection of economicdata, gathered together by Smith from wide reading in publicationsfrom the time of the ancient Greeks and Romans to his own time andfrom acute observation of Britain and France in his own time. Smithused this material to illustrate and support his analysis ofcontemporary economic process, to provide a factual basis for hisfrequent ventures into the philosophy or theory of economicdevelopment, and at times to digress into narrative history presentedwithout any clear relationship to his theoretical endeavors. TheWealth of Nations was heavily drawn on as a reliable source bookfor factual data by several generations of writers on economicmatters, especially, of covrse, in the English-speakingcountries. It is still useful for this purpose.
Second, it wasthe most comprehensive and ambitious attempt up to Smith’stime to present in comprehensive, and at the same timecoordinated, fashion the nature of economic process in apredominantly “individualistic,” or“competitive,” or “market,” or“capitalistic” society, to use modern adjectives. For along time it largely determined the selection of issues and theinitial analytical approach of economists in many countries, evenwhen in their treatment of The Wealth of Nations they weremuch more critics than disciples.
Third, it was an evaluating andcrusading book, which sharply criticized existing society andgovernment and argued strongly for changes in national policy,especially in relation to the extent and nature of governmentintervention in economic matters—domestic, colonial, andinternational. Not immediately, but within a generation, it became apowerful influence on writers on economic policy. Later still, bothdirectly and indirectly through those influenced by it, it became asignificant factor in determining the course of national policy notonly in Britain but in other countries as well. This is much morethan any other economic work has ever achieved; and Smith probablyhas had much more influence than any other economist.
Economic development
Smith was deeply interested in the history, thecauses, and the natural and artificial limitations of what we nowcommonly call “economic development” and what hereferred to as “progress,” “improvement,”“progress of improvement,” and “progress ofopulence.” His treatment of economic development is scatteredthroughout almost the whole work. He put most stress on the followingfactors as favorable to economic development: abundance of naturalresources; technological progress as promoted by extension ofdivision of labor; freedom of private enterprise from its ownpropensity to monopolistic organization; freedom from such hurtfulartificial institutions as primogeniture; and freedom from officialpolicies and practices that act as brakes on individual initiative ormisdirect it. The basic source of economic progress, however, hefound in the striving of individuals to improve their economic statusor their rank in society— “. . . the desire of bettering ourcondition, a desire which . . . comes with us from the womb, andnever leaves us till we go into the grave” ([1776] 1950, p.323). He did not believe that this desire does or should operatewithout restraint. It is disciplined by the sentiment of justice andby governmental enforcement of justice. It has to compete,beneficially or otherwise, with “the passion for presentenjoyment,” which acts as a restraint on accumulation; withindolence; with the occasional “liberality” ofemployersto their workmen and of landlords to their tenants; and with“the pride of man [which] makes him love to domineer,”so that a plantation owner may prefer the service of slaves to thatof freemen even where the latter would be more profitable. All ofthese are factors that are present in a different degree in differentorders of society and in different circumstances. Smith, moreover,saw the desire for individual enrichment and the desire to preserveor improve one’s social status as occasionally coming intoconflict, as, for instance, when one’s rank calls for profuseexpenditure but the preservation or augmentation of one’sestate calls for frugality.
Smith placed great emphasis on thedivision of labor as a requisite of economic development; he alsostressed the interrelations of the division of labor with technologyand with commerce. He found a subrational or nonutilitarian originfor the resort to specialization (although not for itsintensification) in a “propensity to truck and barter”innate in mankind. Here, following certain predecessors, heidentified three contributions that the division of labor makes toproductivity: by permitting indefinite repetition of simple tasks, itpromotes dexterity; it eliminates the loss of working time involvedin changing from one task to another; it facilitates invention ofmachinery, both by the artisans on the job and by outside observers.Smith stated that extension of the division of labor makes morecapital necessary and therefore makes frugality and accumulationeconomic virtues. He always minimized the differences of innateability or aptitude between different persons and thus gave little orno weight to the advantage claimed for specialization by a continuouschain of writers from ancient Greece on—that it makes possible theassignment of workers to those tasks for which they have the greatestaptitude. Smith pointed out that the division of labor is limited bythe extent of the market and that growth of population bothconstitutes an extension of the market and is made possible by theincrease of aggregate production that results from an extension ofthe division of labor. Growth of population, growth of aggregatewealth and income, and extension of the division of labor are thusexplained as mutually dependent and mutually supporting factors.
Smith recognized, under the influence of Rousseau, that thedivision of labor has a drawback from a humanitarian point of view:the worker as a person tends to be degraded by the monotony of hiswork and the enlistment of only a narrow range of his mentalfaculties. Smith thought, however, that this predicament could beremedied by education. This is one of the reasons that Smithaccepted as a desirable function of government the financing, atpublic expense, of elementary education for the children of the poor.Smith’s discussion was cited by Karl Marx in his presentationof the thesis that a degradation or “alienation” oflabor is a consequence of division of labor, but Marx was unaware ofthe prior treatment of the subject by Rousseau to which Smith wasindebted.
Smith’s belief that the tendency to aggregateimprovement is “natural,” i.e., essentially the productof man’s basic psychology, may have been a factor contributingto his skepticism about the possibility that government may makemajor positive contributions to economic development. While hecharged government in general with operating as a brake on economicprogress, Smith nevertheless remained an optimist. In man’szeal to better his condition, the “wisdom of nature”had provided a counterforce to mistaken government policies andpractices that was sufficiently powerful to make possible, in mostcases, a thriving and prospering economy.
Smith’s eclecticism
It is a common error to interpret The Wealth ofNations as an unqualified eulogy of private enterprise and thebusinessman. It was only private enterprise operating in a fullycompetitive manner that Smith praised. He depicted businessmen ingeneral as having a constant propensity to organize themselves intogroups capable of exercising “monopoly” power, groupsto which he undiscriminatingly attributed the capacity and, byimplication, the will to exact the highest price at which any salescan be made. He also charged businessmen with major responsibilityfor persuading or pressing government to establish special privilegesand legal monopolies for favored groups. Where monopoly isunavoidable, he preferred government to private operation. He hadonly deep and violently phrased scorn for the morals of businessmenorganized in groups either to operate as monopolists or to obtainspecial privileges from government. The Wealth of Nations doeslavish praise on the businessman, but only when he is on his goodbehavior.
Smith’s main merits as an“analytical” or “scientific” theorist, touse modern eulogistic terms for “pure” economic theory,lie in his eclectic spirit. While deliberately resorting toabstraction, he very much doubted that abstraction could provideeither understanding of the real world or, by itself, safe guidancefor the legislator or statesman. On specific points of economicanalysis some predecessors did better than Smith, and he failed toabsorb fully some of the genuinely valuable analyticalcontributionsof Hume, the physiocrats, and Tur-got. If“analytical” as a eulogistic term is to be interpretedstrictly in terms of degree of rigor, internal consistency, and closeanalogy to abstract mathematical operations, Schumpeter’sverdict that “the Wealth of Nations does not contain asingle analytic idea, principle, or method that was entirely new in1776” (Schumpeter 1954, p. 184) is difficult to challenge, andnot merely because valuable ideas that are “entirelynew” are hard to spot in any area of intellectual endeavor.
In both his major works Smith repeatedly amended his system,bringing into his discussion some hitherto neglected variable, somefresh observation of fact, some new objective. He has been rightlycharged by critics with resorting profusely to such qualifications as“perhaps,” “generally,” and “inmost cases,” with the consequence that his models are nottight or rigorous. It is arguable, however, by those who, if forcedto choose, prefer realism, or at least the pursuit of it, to rigorand elegance of analysis, that both of his major works are on thewhole made better by the qualifications he sprinkled in their pagesand that he would have made them still better, although stilluntidier, if he had used even more qualifying adjectives or phrases.He would at least have made it harder for later critics to use shortquotations, out of context or stripped of their qualifications, toshow his inability to avoid flagrant self-contradiction.
The question of the relation of relative labor input to exchangevalue is one instance where Smith appears repeatedly to have shiftedfrom one belief to another; however, it may be that actually he wasonly shifting from one abstraction to another, while decorating hisexposition (in a manner common then and not unknown now) withtraditional maxims exalting the role of labor—maxims whosefamiliarity alone made them seem to carry logical or empiricalweight. Smith can be quoted in support of all of the followingpropositions: that labor is the sole “source” of marketvalue; that labor is the sole regulator of exchange value; that laborhas, among the elements entering into production, a peculiar andperhaps even an exclusive value-creating power; that therelative values of different commodities are, or should be,proportional to their labor-time costs or to their wage costs;that all incomes are extracted from the product of labor. For someeconomists any one of these propositions suffices to label itsexponent a “labor theory of value” theorist. It seemssafer, nevertheless, not to attribute to Smith much more than thebelief that in commercial or capitalist economies relativelabor-time costs per unit of product have a large part in the determination of the exchange values of differentcommodities, and relative wage-costs even more.
Economic policy
The separation of normative fromnon-normative, or policy, economics was a late development inthe history of economics, and even today it is hard to fully executethis separation because many of the standard terms used in economicanalysis carry with them an almost automatic normative or evaluativeimplication: for example, “productive,”“utility,” “value,”“equilibrium.” Prior to Smith’s time it was rarefor any writer to attempt to distinguish between, on the one hand,the study of economics in the purely “scientific” senseof the pursuit of understanding for its own sake, and, on the otherhand, the use of economic analysis as an instrument for theformulation or evaluation of national economic policy. (RichardCantillon was one of the few who did make this distinction.)
WhenSmith wrote The Wealth of Nations the term “politicaleconomy” was already in wide use. It was used with someambiguity, but predominantly with emphasis on“political,” indicating reference to national policy.The term “economics” was rarely used by itself exceptin its original Greek meaning of household management. When Smithchose as the title of his book An Inquiry Into the Nature andCauses of The Wealth of Nations instead of something like“Principles of Political Economy,” it may be surmisedthat he did so because he thought of his book as including both anobjective study of processes and causes, such as would be the subjectmatter of a treatise on physics or physiology, and a discussion of“political economy” proper, or an evaluative orhortatory treatment of governmental economic policy. Smith used theterm “political economy” a dozen or so times, and everytime, except perhaps once, he meant the economic policy of a nation.Since Smith generally took a dim view of the benefits to be derivedfrom national economic policy, political economy must for him havebeen nearly synonymous with “economic poison.”
Smith, of course, was not an exponent of philosophical anarchism,which apparently had nowhere been systematically expounded beforeWilliam Godwin’s Enquiry Concerning Political Justice(1793). If Smith had adopted the term“laissez-faire” as an appropriate label for hisown policy views, he undoubtedly would not have interpreted itliterally as a condemnation of all government interference with theactivities of private individuals. He was as emphatic as he could beon the vital need for government enforcement of justice,and there isevidence in The Wealth of Nations that he would have includedin this function not only the formulation of rules of justice and theprovision of machinery for the punishment of their infraction, butalso the prevention of certain infractions by such enactments asstandardization of weights and measures, requirements thatcommodities offered for sale be so stamped as to indicate theirquality, and the establishment of building standards that wouldhinder individuals from subjecting others to the risk of fire or toother hazards to their property or their personal safety. Smithassigned to government the care of the defense of the communityagainst foreign aggression or internal disorder and the levy of taxesto finance these activities. He also conceded to government theprovision of those services needed by the community which could notpractically be entrusted to private enterprise, because of the scaleon which they had to be carried out or for other special reasons. Onat least two issues—a “standing” or professionalarmy versus a militia and the autonomy of the East IndiaCompany—Smith expressed a strong preference for governmentalcontrol in addition to or instead of private management. In general,where monopoly was unavoidable, he much preferred that it be underpublic rather than private control.
Nevertheless, it is as anexponent of free enterprise; free trade; noninterference ofgovernment in the individual’s choice of occupation,residence, or investment; freedom for the individual to make hiseconomic decisions of all kinds in response to the price movements offree and fully competitive markets—in short, of“economic liberalism” or“laissez-faire,” as these terms were used in thenineteenth century—that Smith made his chief mark on thehistory of economics and on the economic and social history of theWestern world.
These economic freedoms were to Smith“natural rights,” essential constituents of the dignityof man. He also valued them from a utilitarian point of view, asgiving maximum scope for incentives to industry and to efficiency. Inthe international sphere he saw in them the most solid factorsworking to bring peace between nations. Modern economists findSmith’s arguments oversimplified and perhaps also tooemotional and one-sided. But many of them still acknowledge astrong influence of his writings on their system of values and gladlycontinue to do homage to his name.
Jacob Viner
[For the historical context of Smith’s work, seeEconomic thought, article onMERCANTILISTTHOUGHT; and the biographies ofCantillon;hume;Mandeville;for discussion of the subsequent development of his ideas, seeLaissez-faire;and the biographies ofBastiat; Lauderdale; Ricardo;Say.]
WORKS BY SMITH
(1759) 1966 The Theory of Moral Sentiments. New York:Kelley.
(1776) 1950 An Inquiry Into the Nature and Causes of The Wealth of Nations. Edited by Edwin Cannan. London: Methuen.? A two-volume paper back edition was published in 1963by Irwin.
(1785) 1896 [Letter to the Due de la Rochefoucauld.]Economic Journal 6:165–166.
Essays on Philosophical Subjects. Volume 5, pages 49— 399 in Adam Smith, The Worksof Adam Smith. Aalen (Netherlands): Zeller, 1963.
Lectureson Justice, Police, Revenue and Arms, Delivered in the University of Glasgow . . . Reported by a Student in 1763. Edited by EdwinCannan. New York: Kelley, 1964. ? The Cannan edition was firstpublished in 1896.
Lectures on Rhetoric and Belles Lettres,Delivered in the University of Glasgow . . . Reported by aStudent in 1762–63. Edited by John M. Lothian. London and NewYork: Nelson, 1963.
The Works of Adam Smith. 5 vols. Aalen(Netherlands): Zeller, 1963.
SUPPLEMENTARY BIBLIOGRAPHY
Adam Smith, 1776–1926: Lectures. 1928 Univ. of Chicago Press.? Contains lectures by John Maurice Clark and others tocommemorate the sesquicentennial of the publication of The Wealthof Nations.
Bittermann, Henry J. 1940 Adam Smith’sEmpiricism and the Law of Nature. Journal of Political Economy 48:487–520, 703–734.
Bonar, James (1894) 1932A Catalogue of the Library of Adam Smith. 2d ed. London:Macmillan.
Godwin, William (1793) 1946 Enquiry ConcerningPolitical Justice and Its Influence on Morals and Happiness. 3ded., rev. 3 vols. Univ. of Toronto Press.
Harvard University, Graduate School of Business Administration, Baker Library, Kresslibrary of Business and Economics 1939 The Vanderblue Memorial Collection of Smithiana. Boston, Mass.: The Library.
Hume, David (1739–1740) 1958 A Treatise of Human Nature.Edited by L. A. Selby-Bigge. Oxford: Clarendon. ?Reprinted from the original edition and edited with an analyticalindex.
Macfie, A. L. 1959 Adam Smith’s Moral Sentiments as Foundation for His Wealth of Nations. Oxford Economic PapersNew Series 11:209–228.
Macfie, A. L. 1961 AdamSmith’s Theory of Moral Sentiments. Scottish Journal ofPolitical Economy 8:12–27.
Rae, John (1895) 1965Life of Adam Smith. With an introduction and guide by Jacob Vlner. New York: Kelley.
Rosenberg, Nathan 1965 Adam Smith on the Division of Labour: Two Views or One? Economica New Series32:127–139.
Schumpeter, Joseph A. (1954) 1960 Historyof Economic Analysis. Edited by E. B. Schumpeter. New York:Oxford Univ. Press.
Scott, William R. 1937 Adam Smith asStudent and Professor. Glasgow: Jackson.
Spengler, Joseph J.1959 Adam Smith’s Theory of Economic Growth. SouthernEconomic Journal 25:397–415; 26:1–12.