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ECONOMIC THEORY OF INSTITUTIONS

Professor : Roberto Scazzieri

Student : Cesare Di Timoteo (ID: 0000698400)

LMEC 2014/2015

The Theory of Moral Sentiments by Adam Smith

PART VI “Of the character of Virtue”

1. Introduction

Since the very beginning of this course I decided to create a common thread between my “Theory of

Moral Sentiment”(TMS) selection and my final essay. Therefore, it came naturally to me to pick chapter six of

Adam Smith’s masterpiece for my analysis. I have always been interested in Economics and I strongly believe

that mathematics and quantitative tools alone cannot fully capture this captivating discipline which is centred

around the human being.

In my personal and honest view, “Of the character of virtue” represents a great example of economic

philosophy which tries to explain what kind of forces and feelings drive human actions and how our perception

of reality is not always as rational as it might seem: “The man who acts according to the rules of perfect

prudence, or strict justice, and of proper benevolence, may be said to be perfectly virtuous. But the most perfect

knowledge of those rules will not alone enable him to act in this manner: his own passion are very apt to

mislead him, sometimes to drive him and sometimes to seduce him to violate all the rules which he himself, in

all his sober and cool hours, approves of” (VI.III.2).

Therefore, it is no coincidence that my final essay is entitled “Rationality, Plausible Reasoning and Economic

Behaviour”.

Obviously, it would be too simplistic to constrict this chapter to only this interpretation. As we will see, Smith

develops a variety of topics in part six, some of them not even related to Economics tout court.

In this brief commentary I will proceed as follows: I will first present “the Theory of Moral Sentiments” itself

explaining why this underestimated philosophical treaty is every bit as good as the more fortunate the “Wealth

of Nations”. After that I will deeply analyse chapter six of the TMS outlining the most significant passages in

order to fully comprehend the author’s message and critically provide my personal opinion.

2. The Theory of Moral Sentiments at a glance

Firstly published in 1759, The Theory of Moral Sentiments was constantly revised by Smith. Between

1760 and 1790, six different editions of the book were published. The first edition introduced the concept of

sympathy and interaction, the second the difference between the “man without” and “man within”, up to the

sixth edition which added the chapter devoted to “virtue”. Smith never stopped improving his work and his

philosophy. He even expressed to his publisher embarrassment about the delay caused by the writing of the

new sixth part, but explained that "the subject had grown upon him”.1

In the TMS, Smith explores the social, economical and political conditions of the moral society and its

historical development as part of the process of civilization, laying out a blueprint for the moral foundations

of modernity. Based on observations of human behaviour, he argues that human beings are by nature disposed

to take an interest in other people’s well-being even if their own utility is not affected by it.

His theoretical approach is miles away from the one of Rationalists. For instance, David Hume also emphasises

the role of Sympathy which arises though, from utility and rational thinking. In such a manner sympathy

1 Letter 287, in Correspondence of Adam Smith, ed. E. C. Mossner, Ian Simpson Ross, (New York: Oxford UP, second edition,

1987), pp. 319-20.

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becomes an artificial tool which is used only as an instrument. In Smith’s work instead, sympathy is the

principal engine which drives human actions.

Similarly to Smith, Thomas Hobbes, in the “Leviatan” talks about social order. Otherwise, such a status does

not develop from human interactions and willing, but from necessity and fear.

Finally, while the Cambridge Platonists and the Earl of Shaftesbury specify that the origin of Law is reason,

Smith highlights how the origin of Law comes from immediate sense and feelings.

Ironically, there are indeed some similarities between the Scottish Economist/Philosopher and Bernarde De

Mandeville who is strongly criticised by Smith himself. In the “Fable of the Bees”, in fact, Mandeville though

using different arguments, reach similar conclusion to Smith’s ones: Social Utility is not something the human

being looks for, but it is something they accidentally create.

We now move to define the meaning of Sympathy according to Smith. This concept represents the pillar of

the TMS: sympathy, in the sense of empathy, is the principal trait of the human being. Smith’s man is by

nature, citing Aristotle, a “social animal”.

2.1 The Concept of Sympathy

At a first look, it might seem that the TMS and the Wealth of Nations have nothing in common. On

the contrary, they both try to give a response to the same question: how can institutions and incentives shape,

channel and balance the conflicting instincts driving human actions in order to promote greater peace and

prosperity?

The man depicted in the TMS is no different to the man of the Wealth of Nations: sympathy, self-interest and

the wish to be well-thought of are his main characteristics. Otherwise, while the latter focuses his attention on

the concept of self-interest/competition, the former underlines, instead, the importance of sympathy.

In the TMS, the development of Smith’s system of ethics and moral structure is based on sympathy. According

to Smith, sympathy is “our fellow feeling with any passion whatever.” Sympathy is considered as one of the

principles of human nature which interest people “in the fortune of others”. Smith begins to develop his idea

of sympathy by employing the characters of the actor and the spectator. In the TMS an actor and the spectator

seek harmony because of getting pleasure from the correspondence of their sentiments. In other words, the

actor and the spectator seek harmony with each other’s emotions due to mutual sympathy.

Smith prescribes actions that merit the impartial spectator’s approval. The desire for approval leads the actor

to adopt those actions. The actor also acts with a sense of duty by applying the same rules to himself. Thanks

to this mechanism, Smith is able to fully explain his moral philosophy: the human being is naturally well

disposed and sympathetic, but he is in need of something or someone to look up for in order not to deviate

from the right path. The interaction between the spectator and the actor, who approves or disapproves the

actor’s passions, creates the behaviours thus becoming the moral structure.

After this short description of the TMS we now move to the analysis of the sixth part of the book: “of the

character of virtue”.

3. Of the Character of Virtue

In this chapter, Smith describes and defines the traits that are necessary for his moral structure and world.

In Smith’s opinion, virtue shapes the “tone and temper, and tenor of conduct, which constitutes the excellent

and praiseworthy character, the character which is the natural object of esteem, honor, and approbation.”

Virtue is the ideal attitude by which we approach our life and that of others since we are interested in our “own

happiness and […] that of other people” (VI.I.1). The fundamental virtues, according to Smith, are prudence,

benevolence and self-command.

If we wanted to create a structure capable of describing part six of the TMS, it would, in my opinion, look

this way:

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The sections, whose part six is composed of (the ones depicted in the graph), are not independent. On the

contrary, they are strongly intertwined. As we will see from my TMS selection, each step of the graph

represents at the same time the cause and the aim of its previous and next step. The relationship between an

actor and the impartial spectator allow also Smith to explain the development of this process.

After this brief introduction of part VI, we start the analysis of some passages extracted from part six. With

respect to the selection presented in class, I reported here fewer passages in order to focus only on some of the

topics that are outlined by Smith in part six. At the end of each section, I will present my commentary.

Therefore, I suggest the reader to jump at the end of each section and read my comments first and then move

to my selection.

Section 1 - Of the character of the individual, so far as it affects his own Happiness; or of Prudence

VI.I.3 As he (the individual)grows up, he soon learns that some care and foresight are necessary

for providing the means of gratifying those natural appetites, of procuring pleasure and avoiding pain.[…]In

the proper direction of this care and foresight consist the art of preserving and increasing what is called the

external fortune.

VI.I.4 Though […] the advantages of external fortune are originally recommended to us, yet we

cannot live long in the world without perceiving that the respect of our equals, our credit and rank in the

society we live in, depend very much upon the degree in which we possess, or are supposed to possess, those

advantages. The desire of becoming the proper objects of this respect, of deserving and obtaining this credit

and rank among our equals, is, perhaps, the strongest of all our desires, and our anxiety to obtain the

advantages of fortune is accordingly much more excited and irritated by this desire, than by that of supplying

all the necessities and conveniencies of the body, which are always very easily supplied.

VI.I.12 In the steadiness of his industry and frugality, in his steadily sacrificing the ease and enjoyment

of the present moment for the probable expectation of the still greater ease and enjoyment of a more distant

but more lasting period of time, the prudent man is always both supported and rewarded by the entire

approbation of the impartial spectator, and of the representative of the impartial spectator, the man within the

breast. […] He cannot therefore but approve, and even applaud, that proper exertion of self-command, which

enables them to act as if their present and their future situation affected them nearly in the same manner in

which they affect him.

In this first section, Smith examines the individual and his main characteristics; for the moment, the individual

is not affected by the presence of others but only by his natural disposition that shapes his desires, appetites

and impulses.

In VI.I.3 this concept is utilised in order to present, in hidden form, the topic of virtue. The term “external

fortune” is intended as a metaphor for describing the path of the individual towards his life. It is up to him to

reach his goal and be virtuous. Everything will depend on how he will behave during the journey: “In the

How we affect other people

happiness (Fellow

Feelings)

The Role of Nature

Universal Benevolence (Me+Others

Self Command

and Propriety

Individual happines

disposition

Actor- The Impartial Spectator

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proper direction of this care and foresight consist the art of preserving and increasing what is called the

external fortune.”

In the following passage (VI.I.4) Smith explain the difference between the Natural needs and the Moral needs.

Those diverse types of necessities are not incompatible, but may get in conflict with each other whether the

individual is not capable of balance them.

In VI.I.6 Smith introduces the very important concept of prudence. It consists of acting so as to secure one's

health, happiness, reputation, and rank in society. Smith highlights here that it is far more damaging to fall in

status than it is to rise in status, which is why a chief concern of prudence is security (VI.I.7). This is also why

it is prudent to be satisfied with one's rank, and thereby achieve both security in life and contentment with what

one has.

In my opinion, the most important passage of the whole section is VI.I.12. Here Smith introduces the figures

of the impartial spectator, the man within the breast and the topic of Self Command. The approval of the

impartial spectator represents the sign for the individual that his behaviour is correct and proper, in a single

world, that he is prudent. Such consent is also supported by the man within: “the prudent man is always both

supported and rewarded by the entire approbation of the impartial spectator, and of the representative of the

impartial spectator, the man within the breast”. The impartial spectator has the power to judge the individual’s

behave and represents a guide to follow.

On the other hand, it is the exertion of self command which allows the individual to act properly. Self

command, which will be extensively explained in section 3 of part VI, is therefore also linked to the concept

of propriety which Smith always reiterates in the whole TMS.

Section 2 - Of the character of the individual, so far as it can affect the Happines of other People

Of the order in which Individuals are recommended by nature to our care and attention

VI.II.4 Every man, as the Stoics used to say, is first and principally recommended to his own care;

and every man is certainly, in every respect, fitter and abler to take care of himself than of any other person.

Every man feels his own pleasures and his own pains more sensibly than those of other people. The former are

the original sensations; the latter the reflected or sympathetic images of those sensations. The former may be

said to be the substance; the latter the shadow.

VI.II.20 This natural disposition to accommodate and to assimilate, as much as we can, our own

sentiments, principles, and feelings, to those which we see fixed and rooted in the persons whom we are obliged

to live and converse a great deal with, is the cause of the contagious effects of both good and bad company.

VI.II.21 But of all attachments to an individual, that which is founded altogether upon the esteem and

approbation of his good conduct and behaviour, confirmed by much experience and long acquaintance, is, by

far, the most respectable. Such friendships, arising not from a constrained sympathy, […] but from a natural

sympathy, […] can exist only among men of virtue. […] Vice is always capricious: virtue only is regular and

orderly. The attachment which is founded upon the love of virtue, as it is certainly, of all attachments, the most

virtuous; so it is likewise the happiest, as well as the most permanent and secure.

Of the order in which Societies are by nature recommended to our Beneficence

VI.II.28 The love of our own nation often disposes us to view, with the most malignant jealousy and

envy, the prosperity and aggrandisement of any other neighbouring nation. […] Each sovereign, expecting

little justice from his neighbours, is disposed to treat them with as little as he expects from them. The regard

for the laws of nations […] is often very little more than mere pretence and profession. From the smallest

interest, upon the slightest provocation, we see those rules every day, either evaded or directly violated without

shame or remorse.

VI.II.29 The love of our own country seems not to be derived from the love of mankind[…] We do not

love our country merely as a part of the great society of mankind: we love it for its own sake, and independently

of any such consideration.

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VI.II.35 It may often, however, be hard to convince him (the statesman) that the prosperity and

preservation of the state require any diminution of the powers, privileges, and immunities of his own particular

order or society. This partiality, though it may sometimes be unjust, may not, upon that account, be useless. It

checks the spirit of innovation. It tends to preserve whatever is the established balance among the different

orders and societies into which the state is divided; and while it sometimes appears to obstruct some alterations

of government which may be fashionable and popular at the time, it contributes in reality to the stability and

permanency of the whole system.

VI.II.36 The love of our country seems, in ordinary cases, to involve in it two different principles; first,

a certain respect and reverence for that constitution or form of government which is actually established; and

secondly, an earnest desire to render the condition of our fellow-citizens as safe, respectable, and happy as

we can.

Of universal of Benevolence

VI.II.45 This universal benevolence, how noble and generous soever, can be the source of no solid

happiness to any man who is not thoroughly convinced that all the inhabitants of the universe, the meanest as

well as the greatest, are under the immediate care and protection of that great, benevolent, and all-wise Being,

who directs all the movements of nature; and who is determined, by his own unalterable perfections, to

maintain in it, at all times, the greatest possible quantity of happiness.

VI.II.48 The idea of that divine Being, whose benevolence and wisdom have, from all eternity, contrived

and conducted the immense machine of the universe, so as at all times to produce the greatest possible quantity

of happiness, is certainly of all the objects of human contemplation by far the most sublime. […] The man

whom we believe to be principally occupied in this sublime contemplation, seldom fails to be the object of our

highest veneration.

VI.II.49 The administration of the great system of the universe, however, the care of the universal

happiness of all rational and sensible beings, is the business of God and not of man. To man is allotted a much

humbler department, but one much more suitable to the weakness of his powers, and to the narrowness of his

comprehension; the care of his own happiness, of that of his family, his friends, his country.

In his discussion of one's character in relation to other people, Smith designates tiers by which one feels warmth

of affection for different people and nations. Regarding people, we are obviously most sensitive to ourselves

since “Every man feels his own pleasure and his own pain more sensibly than those of other people”(VI.II.4).

Beyond that, we are closest to people in terms of the sentiment, affection, and understanding we cultivate based

on the time we spend with them. We are naturally closest to our children, then to our parents, then to other

blood relations and earliest friends (VI.II.6). He also emphasizes that we are most disposed to be beneficent

towards those who have shown us kindness in the past. This is because mutual kindness and sympathy are

conducive to security and mutual well-being (VI.II.10). According to Smith though, the most respectable type

of attachment does not start from a constrained sympathy or necessitudo but it is founded upon the esteem and

the approbation of good conduct and behavior: “Such sympathy, arising from natural sympathy can exist only

among men of virtue”(VI.II.21).

Once again, Smith specifies how the virtuous man differs from the regular man and which characteristics are

needed in order to be virtuous. The regular man, in fact, has a “natural disposition to accommodate and to

assimilate, as much as he can, his own sentiments, principles, and feelings, to those which he sees fixed and

rooted in the persons whom he is obliged to live and converse a great deal with” (VI.II.20). Unfortunately,

since this type of relation derives from constrained sympathy, it represents “the cause of the contagious effects

of both good and bad company”(VI.II.20).

Regarding warmth towards nations, our strongest sentiment is, of course, directed toward our own

nation(VI.II.27). Smith says that it is often the case with less-enlightened men that they resent nations

surrounding theirs, a feeling motivated by insecurity and rival sentiments. This is not the case with wiser men,

who are more secure and less paranoid. People are generally more impartial when considering nations which

are distant from their own, because those nations are not directly relevant to their lives ((VI.II.28).).

Smith also distinguishes between the love of mankind and the love of our nation; those two sentiments are not

related at all and are motivated by very different causes (VI.II.29)

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In VI.II.30 we discover something more about Smith’s political ideas and philosophy. In his opinion, a good

statesman should always possess the “spirit of innovation” capable to maintain the internal balance of power

but also to modify what needs to be changed.

Within a country, people are most loyal to whatever form of government or organization their society follows.

Love of country is divided between respect for the established system of government and a desire to make the

government and general state as secure and satisfying as possible (VI.II.36). A lack of propriety can cause the

latter of these desires to overpower the former, causing corrupt factions to form and to distort the political and

moral landscape with extreme agendas. When factions come into conflict, whichever is victorious has the

luxury of regarding its beliefs as morally justified, and of labeling the losers as heretics. In such an

environment, true wise men are isolated from factions and become outcasts.

The last chapter of section 3, entitled “Of Universal of Benevolence” is with no doubt, one of the most

interesting passage of part VI. As an extension of the love of virtue, Smith declares that Nature has formed

men for mutual kindness, and that “kindness is the parent of kindness.” He makes it clear that the evolution of

virtue comes from a universal benevolence that knows no bounds, and is interwoven with a Divine Creator.

“The idea of that divine Being whose benevolence and wisdom have form all eternity contrived and conducted

the immense machine of the universe so as at all times to produce the greatest possible quality of happiness is

certainly of all the objects of human contemplation by far the most sublime.” Here Smith gives the impartial

spectator the authority of God. This grandiose identification with the deity supports the perfectionistic

idealization of his hierarchy, and is the fundamental defensive position to his moral structure. In this chapter

Smith seems to exasperate its moral philosophy underlying the existence of a God whose business cannot be

comprehended and administrated by men (VI.II.49). Otherwise, without his appeal to an absolute authority as

the rational to his system, the defensive justification of his structure would not work.

Section 3 - Of Self-command

VI.III.1 The man who acts according to the rules of perfect prudence, of strict justice, and of proper

benevolence, may be said to be perfectly virtuous. But the most perfect knowledge of those rules will not alone

enable him to act in this manner: his own passions are very apt to mislead him; sometimes to drive him and

sometimes to seduce him to violate all the rules which he himself, in all his sober and cool hours, approves of.

The most perfect knowledge, if it is not supported by the most perfect self-command, will not always enable

him to do his duty.

VI.III.2 Some of the best of the ancient moralists seem to have considered those passions as divided

into two different classes: first, into those which it requires a considerable exertion of self-command to restrain

even for a single moment; and secondly, into those which it is easy to restrain for a single moment, or even for

a short period of time; but which, by their continual and almost incessant solicitations, are, in the course of a

life, very apt to mislead into great deviations.

VI.III.14 The point of propriety, the degree of any passion which the impartial spectator approves of, is

differently situated in different passions[…] It may be laid down as a general rule, that the passions which

the spectator is most disposed to sympathize with, and in which, upon that account, the point of propriety may

be said to stand high, are those of which the immediate feeling or sensation is more or less agreeable to the

person principally concerned: and that, on the contrary, the passions which the spectator is least disposed to

sympathize with, and in which, upon that account, the point of propriety may be said to stand low, are those

of which the immediate feeling or sensation is more or less disagreeable, or even painful, to the person

principally concerned.

VI.III.23 In estimating our own merit, in judging of our own character and conduct, there are two

different standards to which we naturally compare them. The one is the idea of exact propriety and perfection,

so far as we are each of us capable of comprehending that idea. The other is that degree of approximation to

this idea which is commonly attained in the world, and which the greater part of our friends and companions,

of our rivals and competitors, may have actually arrived at. We very seldom (I am disposed to think, we never)

attempt to judge of ourselves without giving more or less attention to both these different standards.

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Self-command is emphasized throughout the TMS as “not only itself a great virtue, but from it all the other

virtues seem to derive their principle luster.” One of the principle acts of self-command is bringing down our

emotional expressions to what others and in particular the impartial spectator can enter into. Throughout this

section Smith makes the argument for self-command in relation to one’s life. In particular he focuses on the

emotions of fear and anger which require the greatest exercise of virtue. Indeed he sees the spontaneous

indulgence of these and of other such emotions as vanity. Consistent with his meticulous observations and

exacting prescriptions, he also orders the passions in terms of their difficulty to contain. On the one hand, anger

and fear require the highest degree of virtuous self-command while the restraint of affection requires less. On

the other hand, the exercise of virtue is intended to provide harmony within the individual and harmony within

the greater society. Smith puts it clearly: “The virtues of prudence, justice and beneficence have no tendency

to produce any but the most agreeable effects. Regard to those effects as in originally recommends them to the

actor so does it afterwards to the impartial spectator. In our approbation of all those virtues our sense of the

agreeable effects of their utility either to the person who exercises them or to some other persons joins with

our sense of their propriety and constitutes always a considerable frequently the greater part of that

approbation.”(VI.III.14)

Chapter 3 probably represents the reason why I picked part VI of the TMS for my analysis. As outlined in the

introduction, in my final essay I will discuss the economical concept of rationality and how it fits reality. In

“Of Self Command” I actually found my starting point for my long essay. Smith here is actually talking about

the coexistence of two different types of rationality inside every man: a perfect rationality and, citing H. Simon,

a bounded one. “Some of the best of the ancient moralists seem to have considered those passions as divided

into two different classes: first, into those which it requires a considerable exertion of self-command to restrain

even for a single moment; and secondly, into those which it is easy to restrain for a single moment, or even for

a short period of time; but which, by their continual and almost incessant solicitations, are, in the course of a

life, very apt to mislead into great deviations”(VI.III.2). Smith is perfectly aware that every man tries his best

in order to act rational, but there are external factors such as the environment as well as internal factors, such

as sentiments and passions which are “very apt to mislead him” (VI.III.2). Smith actually anticipates a concept

that it will be, years later, exposed by Vernon Smith in “Constructivist and Ecological rationality in

Economics”. While most economists are up to recognize only constructivist rationality or ecological

rationality, Adam and Vernon outline the existence of both types of rationality in ourselves.

Conclusion of the sixth part

VI.III.54 Concern for our own happiness recommends to us the virtue of prudence: concern for that of

other people, the virtues of justice and beneficence; of which, the one restrains us from hurting, the other

prompts us to promote that happiness.

VI.III.59 The virtues of prudence, justice, and beneficence, have no tendency to produce any but the

most agreeable effects. […] In our approbation of all those virtues, our sense of their agreeable effects, of

their utility, either to the person who exercises them, or to some other persons, joins with our sense of their

propriety, and constitutes always a considerable, frequently the greater part of that approbation.

VI.III.60 But in our approbation of the virtues of self-command, complacency with their effects

sometimes constitutes no part, and frequently but a small part, of that approbation. Those effects may

sometimes be agreeable, and sometimes disagreeable; and though our approbation is no doubt stronger in the

former case, it is by no means altogether destroyed in the latter. […] In that, and in all the other virtues of

self-command, the splendid and dazzling quality seems always to be the greatness and steadiness of the

exertion, and the strong sense of propriety which is necessary in order to make and to maintain that exertion.

4. Conclusion

In part VI, Smith skilfully intellectualizes the exercise of virtue and moralizes the hierarchy of virtuous

acts. This structure is rationalized through the appeal, and the identification of a deity to support his structure:

the impartial spectator. Moreover, Self-command is an important structural component of virtue and dictates

the behaviour of the human being who tries to rightly deal with his impulses and interactions.

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Smith creates a perfectly functioning system where every part of it is well connected and responding: a full

rounded circle where there is no weakest link but everything is where it is for a reason.

The TMS contains principles that are related to several disciplines, from Political Science to Economics, from

Sociology to Philosophy. If the Wealth of Nations represent the cornerstone of Neoclassical Economics, the

TMS is the compendium that fully capture the complexity and the variety of the Social Science.