Adam Smith: How The Theory of Moral Sentiments provides new insights into the intellectual project of the ‘Father of Economics’ !Professor Matthew Watson, Dr Simon Glaze and Dr Chris Clarke, Department of Politics and International Studies !

Published March 2015

As we go about our day-to-day business we are surrounded by ideas associated with Adam Smith. Most people will be at least peripherally aware of this, be it through his face

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ADAM SMITH: HOW THE THEORY OF MORAL SENTIMENTS PROVIDES !NEW INSIGHTS INTO THE INTELLECTUAL PROJECT OF THE ‘FATHER OF ECONOMICS’

The Wealth of Nations, written by Adam Smith and published in 1776, is one of the most immediately recognisable titles in the history of economic thought. Even people who have little specialist knowledge of the subject field can tell you that this is where it began and that this is where economists first started to explore the outer limits of market life. However, Matthew Watson, Simon Glaze and Chris Clarke explain why there is more to that book than often meets the eye. In particular, they suggest that ostensibly hidden layers of meaning can be uncovered by reading it through the lens created by Smith’s earlier published work, The Theory of Moral Sentiments.

on the back of the £20 note, as the man behind the central market concept of ‘the invisible hand’ or through the principle of the division of labour which he used to explain the developments of the Industrial Revolution. But have you ever had the inkling that there is more depth to Smith than this merely peripheral awareness can convey? Three scholars from the Department of Politics and International Studies (PAIS) at the University of Warwick – Professor Matthew Watson, Dr Simon Glaze and Dr Chris Clarke – certainly think there is. Their work shows what more can be discovered when setting out to identify the man behind the myth. They argue that Smith offered much more than a set of handy catchphrases to justify the expansion of the market and retrenchment of the state. He had a moral project which ran much more deeply than this, positioning him somewhat awkwardly at the boundary between optimism and caution as to the future of the human race. Those who want to see beyond the opportunely pinched snippets of Smith’s great works to do justice to their full richness should read on. !In popular knowledge, Smith has come to be seen as the main proponent of the unrestrained spread of the ‘free market’, ‘free trade’ and the exploitation of commercial opportunities reflecting the profit motive alone. But how did Smith, the moral philosopher with a deep suspicion of the way in which the business elite used eighteenth-century governmental structures for their own self-preferment, come to be interpreted in this way? Matthew suggests that each generation of political actors has had their pick of Smith’s work in an attempt to use it to further their own political ends. “There is always a danger that the real secrets of his texts remain unexplored as they become ever more deeply buried under s u b s e q u e n t l a y e r s o f interpretation. Just look at how many times you get told ‘what Adam Smith really meant’ by people whose views bear no real relation to what you find when you open up his books and start reading for yourself”. He specifically remembers the dominant ‘Smithian voice’ of the 1980s, propelled in the UK by the Adam Smith Institute during the rol l -out of Margaret Thatcher’s free market reforms and in the US by lobbyists wearing Adam Smith neckties who stalked the corridors of power in

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ADAM SMITH: HOW THE THEORY OF MORAL SENTIMENTS PROVIDES !NEW INSIGHTS INTO THE INTELLECTUAL PROJECT OF THE ‘FATHER OF ECONOMICS’

Washington making claims against ‘Big Government’. In each case the authority of Smith’s name was sought to give weight to changes which would have been made for straightforwardly ideological purposes in any case. The populist market-promoting meaning that Smith’s work has come to acquire today has resulted especially from the appropriation of his ideas by right-wing politicians during the last 30 years in order to drive market rationalities ever deeper into society. !Letting the Market Rip or Finding a Means for Moral Self-Tutoring? !Matthew reminds us that the culling of “one or two colourful phrases” from a nearly 1,000-page work is never going to lead to a representative account of the subtlety of the analysis as a whole. Smith’s deeply detailed works are full of qualifications, leading to the endless search for institutional solutions consistent with people having done the right thing. Yet, says Matthew, “they are so often stripped down by contemporary politicians to equate simply to the deregulation of markets and to allowing people to do whatever their self-interest dictates within the resulting market environment”. Promoting the ‘invisible hand’ metaphor to the controlling voice in the whole text of the Wealth of Nations symbolises this seemingly indiscriminate selectivity. In truth, it appears only the once in what, by any standards, is a mammoth undertaking. But that seems to matter less to the people who appeal to it today than the political work that it can be made to do in justifying any remotely neoliberal reform that restricts the scope of government intervention. The task of engaging Smith’s work without being unduly distracted by these modern interpretations of what he really said is by no means easy. An open mind and a pair of fresh eyes are needed to break through the fog. !To understand Smith more sensitively, first of all we must recognise that he wrote not one but two seminal works. The Theory of Moral Sentiments was written in 1759, 17 years before the Wealth of Nations, and it provides a much more reliable guide to his economic masterpiece than the claims of today’s economic lobbyists. Chris speaks up very strongly in

favour of reading the two books side-by-side in order to get a glimpse of how S m i t h fl e s h e d o u t h i s “ b ro a d e r philosophical project”. It is in this way that we might adequately understand his views on the human condition. “They’re often viewed as unrelated to each other”,

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ADAM SMITH: HOW THE THEORY OF MORAL SENTIMENTS PROVIDES !NEW INSIGHTS INTO THE INTELLECTUAL PROJECT OF THE ‘FATHER OF ECONOMICS’

"An open mind and a pair of fresh eyes are needed to break through the fog"!

"Smith’s first book tells you just as much about his views on life in commercial society as the second, if not more”!

explains Chris, “but Smith’s first book tells you just as much about his views on life in commercial society as the second, if not more”. Everything that he later said about the scope of markets – when they should be tolerated, when not; what forms they should be allowed to take, what not – flows from his prior construction of the moral limits of human action. !Chris explains how Smith lived in a pre-disciplinary era, well before the stratification of the social sciences into their disparate modern-day forms. “Smith had free rein on the subject matter he could mobilise in the construction of his arguments”, Chris suggests, “and they were all the better for it”. He read and lectured extensively on a broad range of topics from the origins of language, the nature of scientific explanation, the history of legal systems, moral and political philosophy to the economics of his day. His interests even stretched as far as astronomy. This scope of knowledge, difficult to attain in today’s discipl ine-focused academic environment, meant that Smith’s view about human behaviour reflected many different approaches and was therefore far from straightforward. Yet the picture of Smith painted by mainstream economists today is as the advocate of a type of human behaviour guided by simple and universally applicable market rationality. When we take a detailed look at Smith’s writing we discover that he actually saw humans as individuals permanently coming into being as they relate to the social norms in which they find themselves, not as fully formed and robotically spontaneous merchants of self-interest. “Smith was actually very sceptical of those who espoused ‘the interest doctrine’ at his time of writing”, Chris says, “and wanted instead to base his approach to the complex issues of morality and behaviour on his concept of ‘sympathy’”. In a sense, he was inherently hopeful of what humanity could become. His philosophical work was grounded accordingly and with a strong conviction in the human ability to exercise self-command. Smith’s notion of individual self-command implies that every one of us is capable of self-learning and self-tutoring so that we may best navigate the moral dilemmas that we will always face as long as market society persists. The agency he gave to everyone demonstrated that, at least for his day, Smith had a subtle radicalism that he wanted to write into his work. !

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ADAM SMITH: HOW THE THEORY OF MORAL SENTIMENTS PROVIDES !NEW INSIGHTS INTO THE INTELLECTUAL PROJECT OF THE ‘FATHER OF ECONOMICS’

Smith on Self-Command and Sympathy !Simon clarifies that self-command, far from meaning the ruthless pursuit of self-interest in the way that pro-market lobbyists suggest, could mean any conscious decision to act more thoughtfully to restrict your conduct to that which does other people no harm. As he notes, “this can be related to Smith’s flexible notion of virtue, which suggests that individuals can be satisfied that they are acting in as virtuous a manner as they are able to g iven part icu lar circumstances, which others may be unaware of”. Smith did not think that all self-conscious action had to be self-interested, nor yet that all self-interest had to be necessarily selfish. These equations seem to be a reading that has developed long after Smith’s time. After all,

in the modern day context how could we perceive the pursuit of self-interest to ever be anyth ing but ru th less ly individualistic? !Smith’s philosophical work reveals that he believed in the human possibility of ‘sympathetic self-interest’. Simon sheds

light on the multiple references that Smith made to situations in which self-interest could rationally be forgone in order to prioritise the common good. In the modern context, such examples could be choosing to pay slightly extra for a more ethically produced good, taking public transport instead of driving or making sure that you did not take advantage of tax avoidance schemes. So, by considering Smith’s broader philosophical project we begin to demystify the populist pro-market readings of Smith that have emerged over the last 30 years. That project preceded the writing of the Wealth of Nations, and in many ways it should also be seen as coming after it too. At the very least, it was the Theory of Moral Sentiments that Smith continued to update late in his life, whilst the text of the Wealth of Nations was edited far less extensively. Consequently, as Simon says, “there is no ‘Adam Smith Problem’, which suggests that there is a fundamental schism between his earlier and later work. Although the Problem has long been discredited in specialist debates, its notion of two incompatible moral and economic ‘Smiths’ that are imagined to reside exclusively

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ADAM SMITH: HOW THE THEORY OF MORAL SENTIMENTS PROVIDES !NEW INSIGHTS INTO THE INTELLECTUAL PROJECT OF THE ‘FATHER OF ECONOMICS’

"Smith did not think that all self-conscious action had to be self-interested, nor yet that all self-interest had to be necessarily selfish"!

within the pages of either book continues to inform popular understandings of his contribution. Yet Smith clearly did not leave his moral philosophy behind when writing the Wealth of Nations.” !Whilst Smith’s work is notable for his hopefulness, he was not without his reservations about the potential corruptibility of human nature. Matthew highlights this double dimension to Smith's work: on the one hand aspirational and optimistic about what was possible, but on the other hand giving warnings about what could result if society was to choose a morally questionable path. “The fact that the practices of moral self-learning might lead to the development of pristine individuals instinctively exhibiting self-command does not mean that they always will do, because there is always the danger that the trappings of a material lifestyle could get instituted as a distorted moral ‘good’ in their own right.” Matthew draws our attention in particular to various passages in the Wealth of Nations where “Smith clearly felt that his whole enlightenment project could fall foul of disreputable individual behaviour”. It was at this point that Smith’s usual polite writing style was replaced by a “distinct spikiness aimed at those who would use governmental structures to deliberately favour themselves, whereby in effect both barrels of the shotgun were loaded and fired”. !The Broader Significance Today !But having said all this, why bother trying to demystify Smith in the first place? Is it just a matter of getting some academic bragging rights? All three of our PAIS scholars think not. They claim that all layers of modern-day society, from the powers-that-be in the Westminster Village to the local bus driver can and need to learn from Smith’s messages. What we see on one side of Smith’s work is optimism that individuals can prepare themselves for a life in market society without needing to give up on the idea of becoming a respectable moral agent. But we also see on the other side of Smith’s work a deep concern about the potential hazards of commodification as they impact on the lives of the individuals who comprise market society. !Simon describes Smith as a non-elitist, low key, man-of-the-people who was opposed to top-down relations of all forms, be that on behalf of government or private enterprise. “In both of his books Smith openly criticises what he perceives to be the ‘arrogance’ of ‘crafty’ politicians who attempt to project their moral standpoints onto others whilst protecting vested interests”, Simon says. “It is therefore ironic that he continues to be invoked by politicians who seek to add intellectual weight to

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ADAM SMITH: HOW THE THEORY OF MORAL SENTIMENTS PROVIDES !NEW INSIGHTS INTO THE INTELLECTUAL PROJECT OF THE ‘FATHER OF ECONOMICS’

"....individuals can prepare themselves for a life in market society without needing to give up on the idea of becoming a respectable moral agent”!

their own efforts to foster specific forms of behaviour through interventions into individuals’ lives on moral grounds whilst rejecting state interventions into the market on ideological ones”. The pristine Smithian moral agent therefore might be seen as a

democratising agent envisioned long before the coming of mass democracy. This should give us all pause for thought about our potential culpability in top-down violations of the modern-day market society. Whether this is manifested in the hyper-consumerist tendencies we manifest at the expense of developing world producers, the exploitative zero hour labour contracts we impose on our own workers, the oligopolistic supermarket industries that crowd out local producers, the toxic financial products that we direct at the vulnerable, or whatever it is, the list goes on almost endlessly. All three of our PAIS scholars say that it is especially important for those who misappropriate Smith’s message in order to condone market violations to remember that what today we experience as market society is by no means a natural state of affairs. Markets may be made to take many forms, and the one-dimensional markets we have today display a lack of political imagination in the way that they are set up routinely to promote a distinctly un-Smithian individual self-interest. !Smith’s ideas of moral self-tutoring and moral self-learning, by contrast, gave a radical

degree of agency to every person to make their own decisions about whether to affirm the general direction of market society. His message was that each and every one of us has not only the potential

but also possibly the duty, in Matthew’s words, to “understand ourselves in relation to these broad economic structures”. “Importantly,” he continues, “that understanding is not as

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ADAM SMITH: HOW THE THEORY OF MORAL SENTIMENTS PROVIDES !NEW INSIGHTS INTO THE INTELLECTUAL PROJECT OF THE ‘FATHER OF ECONOMICS’

"...the one-dimensional markets we have today display a lack of political imagination in the way that they are set up routinely to promote a distinctly un-Smithian individual self-interest"!

"we are the authors of our own society"!!

victim of faceless economic forces but as an active agent of the structures within which we find ourselves. Embracing Smith’s optimism in human nature allows us to explore the boundaries of our personal complicity in reproducing economic structures that do harm to other people.” The realisations that come with this open-eyed interaction with the world will lead us all to an important truth: that is, that “we are the authors of our own society”. The responsibility that comes attached to such a message should be apparent to us all. !Matthew Watson is Professor of Political Economy at Warwick and currently holds a three-year ESRC Professorial Fellowship. His research interests lie with political economy, ‘the market’ and understanding what it means to live life as a market-bound economic agent. His research is designed to understand the multiple ways in which the market economy becomes embedded in everyday experience: as a set of institutions designed to naturalise behaviour, as an ideological blueprint for the common sense of society, as formal practices manifesting routinely reproduced exchange relations, as evolving ideas incorporated into the history of economic thought, as reflections in popular culture, and as something to organise political resistance against. !

Chris Clarke is Assistant Professor in Political Economy at Warwick. His research interests are in the politics of financial markets, the ethics of Anglo-American economic citizenship, the history of economic ideas, particularly the work of Adam Smith, and the political economy of peer-to-peer (P2P) lending. He has been awarded a three-year Leverhulme Early Career Fellowship to pursue work specifically on the topic of P2P lending in the UK. His monograph Sympathetic Political Economy and Liberal Market Governance: Adam Smith in Question, Global Finance in Crisis will appear in the Routledge/RIPE

book series later in 2015. !Simon Glaze is a Teaching Fellow in International Political Economy. His research interests centre upon academic and political articulations of individual economic rationality. He has recently published an article on Smith’s relevance to contemporary international political economy in New Political

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ADAM SMITH: HOW THE THEORY OF MORAL SENTIMENTS PROVIDES !NEW INSIGHTS INTO THE INTELLECTUAL PROJECT OF THE ‘FATHER OF ECONOMICS’

http://www2.warwick.ac.uk/fac/soc/

http://www2.warwick.ac.uk/fac/soc/

https://www2.warwick.ac.uk/fac/soc/

Economy, and is currently writing a book on what uses of Smith by leading politicians and academics can tell us about their assumptions regarding individuals’ motivations and the ongoing development of liberal capitalism since his lifetime.

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ADAM SMITH: HOW THE THEORY OF MORAL SENTIMENTS PROVIDES !NEW INSIGHTS INTO THE INTELLECTUAL PROJECT OF THE ‘FATHER OF ECONOMICS’