Adam Smith's Other Work

Adam Smith's Other Work:

Via Arts & Letters Daily, a review of the relevance of Adam Smith's other work, largely forgotten today because of The Wealth of Nations. Yet he also wrote about his Theory of Moral Sentiments:

First, even though Smith was in many ways the pioneering analyst of the need for impartiality and universality in ethics (Moral Sentiments preceded the better-known and much more influential contributions of Immanuel Kant, who refers to Smith generously), he has been fairly comprehensively ignored in contemporary ethics and philosophy....

The spirited attempt to see Smith as an advocate of pure capitalism, with complete reliance on the market mechanism guided by pure profit motive, is altogether misconceived. Smith never used the term "capitalism" (I have certainly not found an instance). More importantly, he was not aiming to be the great champion of the profit-based market mechanism, nor was he arguing against the importance of economic institutions other than the markets.

Smith was convinced of the necessity of a well-functioning market economy, but not of its sufficiency. He argued powerfully against many false diagnoses of the terrible "commissions" of the market economy, and yet nowhere did he deny that the market economy yields important "omissions". He rejected market-excluding interventions, but not market-including interventions aimed at doing those important things that the market may leave undone.

"Market-including interventions" are not a bad approach: they may include things like targeted small business loans designed to help people enter a market for which they are well suited, if they were too poor to afford the entry costs. More locally to Smith's own time, you could read the Colony of Georgia as such an intervention: Sir James Edward Oglethorpe's attempt to give some 'worthy poor' in debtor's prison a chance to build a new life, by giving them land to work.

Of course, Oglethorpe eventually ran afoul of the profit instinct: the clashes he had here had much to do with those who wanted to own, and not merely control, resources. Smith could learn from both impulses: the need to respect the profit instinct as reasonable and moral, but also the need to give a helping hand to those who would work hard, but didn't have the means to get started.