Adam Smith's views on human nature

IMAGINING OTHER

How Enlightened was the Enlightenment?

Links: Imagining Other Index page

week 4: Rousseau's views on human nature

week 6: Kant's Ethics

Political Philosophy Part 1: Adam Smith

Week 5 Enlightenment views on ‘human nature’:

Adam Smith 1723 – 1790, and the British and Scottish Enlightenments.

Summary:

Introduction: the British Enlightenment

Adam Smith (1723 – 1790)

His ethical ideas

His view of politics and the state

Smith and economic theory

Have Adam Smith’s economic theories been misrepresented?

Other Reactions to the Wealth of Nations:

Conclusion

Extracts.

The ‘British Enlightenment:

Gertrude Himmelfarb (2008) argues that the British Enlightenment was different to the French – and, paradoxically, it was the French who most revered Newton (1643 – 1727) and Locke (1632 – 1704), while the British took a different line. The British were more concerned with moral philosophy for, as Pope (1688 – 1744) put it: ‘The proper study of mankind is man’ and: it is better ‘to adjust the true nature and measures of right and wrong’ than the distance and movements of the planets.

Sabine comments that the philosophy of Adam Smith’s time, as with Locke 100 yrs before, was an odd mixture of empiricism (the basis of scientific method: we find out about the world by observing its behaviour) and a belief in natural law/natural rights, which must be God-given): for Smith, "natural law (God's law)" could be seen in the empirical regularities at work in society [Peng. pp 19 - 20]

A key idea of writers such as Adam Smith, and before him Shaftesbury and others, was that we all have an innate moral sense – a ‘sympathy’ as Smith put it, which allows us to imagine what others are feeling, and which then brings us to sympathise with them, and hence to condemn whatever is making them suffer and praise what is making them happy etc.

This was a step on from Locke and Newton, for Locke – while believing in innate reason, did not believe in an innate moral sense. His Essay Concerning Human Understanding 1690 stated there were no ‘innate practical principles’ ( = moral principles). For Locke, education was essential to bring about moral awareness. Presumably this position was based on his views on learning, which are empiricist: the senses are the main route to our learning…

The Earl of Shaftesbury on the other hand wrote in 1699 An Inquiry Concerning Virtue or Merit: virtue comes form a ‘moral sense’ the ‘sense of right and wrong’ – not from religion, self-interest, sensation or reason. We also had a ‘natural affection’ which he saw as ‘social affection’ virtuous man is motivated by ‘a natural affection for his kind’. Locke was wrong, he argued, to believe that moral sense was learned: this would make it determined by ‘fashion and culture’… (and relative!).

On the other hand, Mandeville’s Fable of the Bees 1705 tried to refute Shaftesbury by arguing that: self-love is the primary motivation of all men, and it can be reduced to pleasure and pain. Fellow feeling and condolence for others was a spurious passion (and one which afflicted the weakest minds the most…) - ‘what we call evil in this world, moral as well as natural, is the grand principle that makes us sociable creatures.’

Smith dismissed these views as ‘licentious’ and ‘wholly pernicious’ – Mandeville was also attacked by Berkeley, Francis Hutcheson, Edward Gibbon…

Hutcheson in 1726 wrote: An Inquiry Concerning the Original of Our ideas of Virtue or Moral Good – he defended Shaftesbury’s ideas (especially the ‘moral sense’) against Mandeville. He was in fact the first to use the expression: “The greatest happiness for the greatest numbers’ NB it was not Helvetius or Bentham! And it was not the same ideas as theirs, because for utilitarians it derives from rational calculations of utility.

Hutcheson argued that fellow-feeling cannot come from self-love, because it involves feeling others’ pain. It was ‘antecedent to reason or instruction’ (GH p 32). Reason alone cannot guide us – we needs our senses in situations where the problem is self-preservation, and we need our moral sense when we need to ‘direct our actions for the good of the whole’.

Even Hume believed in a ‘sentiment’ a ‘moral sense’ a ‘moral taste’ common to all men. A ‘disinterested benevolence’ was an essential quality of human nature (disinterested = divorced from personal relations and affections).

Adam Smith (1723 – 1790)

Smith's ethical ideas:

In his ethics (“The Theory of Moral Sentiments” 1759…) he tackled questions of: the individual & society, conflict and co-operation, self-interest and altruism.

The opening words (Extract TMS 1) contain a statement of his view on the ability of humans to feel pity, compassion, benevolence, sympathy.

Extract TMS 1. “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others and render their happiness necessary unto him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others when we either see it or are made to conceive it in a lively manner… By the imagination we place ourselves in his situation… we enter, as it were, into his body and become in some measure the same person with him.” (Opening words of TMS)

Note that we do not imagine ourselves feeling the suffering etc of the other, but we ‘become in some measure the same person with him’ – so sympathy is not a selfish principle (a man might also sympathise with a woman’s pain in childbirth…). Also, he says that we have an ‘immediate sense and feeling’ – we do not come to it as a result of reasoning.

He argued that there must be an element of perceived common interest for any

society to function, and that we acquire our moral sense from being in society

(cf. Rousseau):

TMS 2. Were it possible that a human creature could grow up to manhood in some solitary place, without any communication with his own species, he could no more think of his own character, of the propriety or demerit of his own sentiments and conduct, of the beauty or deformity of his own mind, than of the beauty or deformity of his own face. All these are objects which he cannot easily see... and with regard to which he is provided with no mirror which can present them to his view. Bring him into society, and he is immediately provided with the mirror which he wanted before. [from Raphael, D.D.: Adam Smith, Fontana 1985]

TMS 3. We suppose ourselves the spectators of our own behaviour, and endeavour to imagine what effect it would, in this light, produce upon us. This is the only looking-glass by which we can, in some measure, with the eyes of other people, scrutinize the propriety of our own conduct. [TMS I iii (iii) (?)]

- what is right for the individual is also right for society:

Extract TMS 4. Self-preservation and the propagation of the species, are the great ends which Nature seems to have proposed in the formation of all animals... [TMS II i (v)]. Nature, indeed, seems to have happily adjusted our sentiments of approbation and disapprobation, to the conveniency both of the individual and of the society… [TMS IV ii]

[note the emphasis on the species rather than the individual? (cf Locke - Smith is closer to Hayek in seeing society as automatically following from sum of individuals...?) (note Skinner p. 16, on civil soc etc p 29ff)

How are ethical standards formed? [see: Cole and Strauss, Cropsey]

There are four steps in the formation of ethics and social standards:

1. self-judgment

2. imagining effects of our actions on others

3. imagining others' perceptions/assessments of our actions

4. social code and sanctions

To pass to stages 2 and 3 we make use of the idea of an ‘impartial observer’ -so it is not just a question of thinking ‘how would we feel?’ – since that might lead to ‘distortions’ in our judgment of others’ feelings (evidence not here for this).

In other words, the basis of morality is sympathy not abstract reason (but S & C: only rationality can promote freedom...) Here there is a strong contrast with Kant, whose ethical theory we will deal with in week 6.

Smith is therefore attempting to ground ethics in a ‘scientific’, humanist approach: ethics must be derived from "man as man."

It can also be argued (S & C) that this (as against earlier formulations (e.g. Plato: philosophers discover the ethical ‘truth’; the Christian view: God reveals it) represents a ‘democratisation of morality.’ GH makes much of the ‘implicitly democratic character’ of Smith’s political economy (p 67)… after all, she points out, the labourer is the source of value. Smith declares, too, that ‘The difference in natural talents in different men is, in reality, much less than we are aware of… By nature a philosopher is not in genius and disposition half so different from a street porter as a mastiff is from a greyhound, or a greyhound from a spaniel’ (p 69) - in this she believes Smith to be very different to the French philosophes, who were, as I have suggested, explicitly elitist.

(However, Hobbes also declared all to be equal, and the consequences of his philosophical system were far from democratic).

His view of politics and the state:

Although he believed that feelings of sympathy are natural, this not the same as saying that man is a political animal; for Smith politics and justice are

"negative": to do with constraining or punishing, returning evil for evil. They

are therefore not "praiseworthy" – nor are those actions ‘good’ which are

carried out as a result of fear of punishment or a sense of obligation.

This is in contrast (GH) to the ‘civic humanist’ tradition, where virtue etc are

derived from public affairs. Perhaps he would approve of Cameron’s ‘Big

Society’ – i.e. it is in the ‘private realm’ (family etc) that we most naturally act

in an ethical manner.

I would also argue that Smith sets quite high standards of morality:

TMS 5. [The perfection of human nature is] to feel much for others and little for ourselves... to restrain our selfish, and to indulge our benevolent affections... As to love our neighbour as we love ourselves is the great law of Christianity, so it is the great precept of nature to love ourselves only as we love our neighbour, or, what comes to the same thing, as our neighbour is found capable of loving us. [TMS I i (v)]

TMS 6. Mere justice is, upon most occasions, but a negative virtue, and only hinders us from harming our neighbour. The man who barely abstains from violating either the person or the estate, or the reputation, of his neighbours, has surely little positive merit. [TMS II ii (v)]

Another reason for his negative view of politics comes from the fact that, as he saw it, politics is based on reasoning (not feeling…), and on nationalism, which is "arbitrary."

Smith and economic theory:

The Wealth of Nations:

Three key ideas: division of labour, free market enabling self-interest to operate for the common good, hidden hand…

In a ‘system of natural liberty’ i.e. a free market, individuals’ self-interest would operate in such a way that everyone benefited.

Adam Smith is regarded as the first writer to have “explained”, in “The Wealth of Nations” (1776), the workings of what we now call ‘capitalism’. Note that he used the expression “the obvious and simple system of natural liberty” – the word capitalism was not used until Marx’s time.

Smith argued that individual acts (buying and selling), whilst motivated by self-interest, nevertheless promoted the common good, through the “hidden hand” of the market; that is, roughly, by the workings of the laws of supply and demand. For a producer will only sell at a price that will bring a profit, although of course it has to be a price that consumers will accept. Likewise, consumers only make purchases when the price is right for them – they will of course contribute to the wealth of the producers, but their main motive is self-interest. In the end, everyone benefits.

From The Wealth of Nations:

WN 1 As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of greatest value; every individual necessarily labours to render the annual revenue of society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to foreign industry, he intends only his own security; and by directing that industry insuch a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it. [Wealth of Nations (1776) IV ii]

The book was an attack on mercantilism, where national wealth and power was the goal, and the state directed trade etc. In these circumstances men would conspire together, ‘deceive’ and ‘oppress’ each other – whereas the market would give everyone their freedom. (GH p 57).

GH points out also a number of ways in which Smith supported the poor and sought a more just economic system:

- he rejected mercantilism’s tendency to benefit merchants and manufacturers at the expense of the workers (who, he believed, would get a better deal in a free market). This was because mercantilism, says GH, set a maximum wage and not a minimum, based on the prevailing belief that workers kept poor would maintain a favourable balance of trade, and provide a better incentive for them to work hard!

- he believed the labourers should have higher wages because ‘Where wages are high, we shall always find the workmen more active, diligent, and expeditious, than where they are low.’

- he supported taxation of luxuries so that ‘the indolence and vanity of the rich is made to contribute … to the relief of the poor.’

- finally, GH points out that the economy he is describing is one that would promote growth, and cater for higher wages and an increased population, bringing a ‘plentiful subsistence’ which would give the common man the hope of ‘bettering his condition.’

(But it strikes me that he has to demonstrate that a free market would do this more successfully than e.g. mercantilism – I am not sure that GH has given us the arguments that demonstrate this…)

In the market, then, self-love/self-interest promotes the general good, and he saw it as moral (in the market-place).

The ‘hidden hand’ – which appears both in WN and TMS (Extract TMS – is a metaphor for the unintended consequences of individual actions. In TMS it ensures the distribution of the necessaries of life, in WN it increases the revenues of society. It is not teleological (as Hegel) nor does it suggest a ‘general good’ (as did Rousseau), rather Smith’s general interest was ‘simply the totality of interests of all the people who constituted society’. (GH p 59)

What has come to be called the "hidden hand of market" (quote ) - i.e. the fact that supply and demand, through the market, leads to the sale of a good at the price "it is worth" (covering the costs of rent, labour etc) - can perhaps be seen as analogous to the "impartial and well-informed spectator"? (Macfie...Bus Org and Comp Trad). Alternatively it can be seen as equating with God... (Heilbroner)

However, I would point out that there is a logical link in Smith’s thinking : he criticises the tendency to see benefits in wealth which are in fact illusory; then he states that this desire for more, and this envy of the rich, is what drives the economic system; however, in my view (against GH) it should be clear from this that he is not saying that the system is morally just.

TMS 7. This disposition to admire, and almost to worship, the rich and powerful, and to despise or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks in the order of society, is, at the same time, the great and most universal cause of the corruption or our moral sentiments. [TMS I iii (iii)]

TMS 8. In what constitutes the real happiness of life, [the poor and obscure] are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for. [TMS IV]

TMS 9. And it is well that nature imposes upon us in this manner. It is this deception which arouses and keeps in continual motion the industry of mankind...

It is to no purpose that the proud and unfeeling landlord views his extensive fields, and without a thought for the wants of his brethren, in imagination consumes himself the whole harvest that grows upon the. The homely and vulgar proverb, that the eye is larger than the belly, was never more fully verified than with regard to him. The capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute (my emphasis) among those who prepare [....] that little which he himself makes use of, among those who fit up the palace in which this little is to be consumed [....] all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice. The produce of the soil maintains at all times nearly that number of inhabitants which it is capable of maintaining. The rich ... consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements.. They are necessarily led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interests of society and afford means to the multiplication of the species. [TMS IV]

Have Adam Smith’s economic theories been misrepresented?

Smith is often cited by those who wish to defend the “free market” against

“distortions” such as trade union activity, and state intervention; also his ideas,

through ‘classical political economy’ were used later to justify opposition to

legislation to improve workers’ conditions etc. (Heilb. p 70, Samuel Kydd p

40...). But it is probably not true that he would have opposed such legislation.

It is often forgotten, or glossed over, that:

(a) in his portrayal of capitalism he recognised that it had severe failings (such as alienation of the worker by excessive division of labour) – see GH p 62 – 62…

(b) he saw the need (GH argues this is to put right what he has just described – though the excessive division of labour that a competitive economy produces is surely something that no amount of state-run services can put right) for the state to provide for services (education, health) that were not such as could be run by the market, and he argued the need for fair business practices (not just ‘competition’), and for the courts if necessary to promote/ensure this. (cf now..) [quote p 39....

GH also (p 64 – 5) criticises Marx’s proposals for education tied to work as being ‘primitive and regressive’ – and she says he reduced humans to ‘working animals’ where labor is the very essence of man. I am not sure this is justified, since Marx is writing of the kind of education that would be needed in a socialist society – whereas elsewhere he was reluctant to try to describe how a future system would work in such detail. Her point that the early writings of Marx do address the issues of alienation as an inevitable by-product of the division of labour is one I would agree with, however.

(c) he did not trust businessmen (when they got together, he said, they would plot against the consumer e.g. to fix prices…! ), and he actually said that self-interest frequently promotes the common good, etc – however, the word "frequently" has been omitted in translations…

(d) he actually oppose both monopolies and the then new-fangled joint-stock companies with limited liability (he opposed them on the basis that businesses ran best when controlled by the owner, whose self-interest would ensure they were successful – limited liability, and in fact the widespread distribution of shareholders, so that they did not control the business, would militate against commercial success) and

(e) he said that society can easily produce our needs; most production therefore

is for wealth and power – in contrast, as noted, Smith favoured "prudence,

parsimony and productivity." His account of the division of labour, where each does what he is good at, and we satisfy our needs without each of us having to be good at everything, stresses its role in promoting production - more goods, not more money... [He also believed that more specialisation means more interdependence (Cole p 32)].

(f) he acknowledged that too much self-interest leads to selfishness, which in

society is prevented by family ties, neighbours etc; these factors don't work in

the economy.

(g) (see quote 6) the "corruption of our natural sentiments" that goes with the

motivation to produce more – this to me is a very significant ethical statement,

clearly criticising the market system for not being a result of sympathy.

(h) most importantly, as noted above, he had an ethical theory and, when he revised the TMS towards the end of his life, he added a chapter ‘Of the corruption of our moral sentiments which is occasioned by this disposition to admire the rich and the great, and to despise or neglect persons of poor and mean condition.’ (Extract 7)

All this suggests to me that he would have been horrified to hear people use his name to defend unbridled competition in the market as it occurs today. However, if Smith would have objected (as I do!) to the oligopolies and monopolies – not to mention the financial speculation – that are inherent in today’s ‘market capitalism,’ the question then is: can the market now be opened up and re-structured so that it ensures the ‘freedom’ that Smith saw as essential to its working in a just and fair way?

GH’s main conclusion – p 66 – seems to be that Smith’s importance lies in his linking economic, political, civil and religious freedom. And, taking points from Cropsey: ‘he advocated capitalism for the sake of freedom.’

I wonder if we still can go along with this, given the behaviour of market economies with regard to individual freedom in recent decades?

Other Reactions to the Wealth of Nations:

Smith’s Wealth of Nations was influential, and Burke, Paine, Gibbon and others said they agreed with it… (!)

Others saw a contradiction between the two books, and argued the W of N must be a refutation of the TMS: John Ruskin disliked WN, and

E.P.Thompson said the WN was ‘disinfested of intrusive moral imperatives’ because that was the consequence of his doctrine.

Schumpeter, on the other hand, thought WN was not sufficiently de-moralised…

Conclusion:

One way of reconciling WN with TMS is to argue that the market will only work fairly if we are motivated primarily by sympathy. But what a different market it would be!

(In a similar fashion we might argue that Rousseau’s idea of the general will could only work given humans with a (high?) degree of sensibilité – my own view on this is that they would need to be like Rousseau himself!!)

At the very least I think we could criticise Smith for not being able to suggest any alternative to the market… however, how many of us can see beyond the economic and political system we live in (the ‘tyranny of the present’, in Cicero’s words)? Perhaps if he had been able to envisage an alternative he would have put it forward.

Needless to say, this debate over the comparative importance of the individual and of society – and how to maximise the good of society (by state management, or by individual freedom) is still going on today!

Finally it can be argued that Smith reveals a paradox, or a contradiction,

within this liberal/capitalist kind of society, where self-deceiving, greedy and

selfish individuals, seeking status and power, actually promote the common

good: that is, “social production" is driven by “private consumption (and

private greed)". Marx was to take up and build his theory on a similar

‘contradiction’– that is, the contradiction between social production and private ownership.

Extracts:

From The Wealth of Nations:

From the Theory of Moral Sentiments (TMS):

TMS 1. “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others and render their happiness necessary unto him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others when we either see it or are made to conceive it in a lively manner… By the imagination we place ourselves in his situation… we enter, as it were, into his body and become in some measure the same person with him.” (Opening words of TMS)

TMS 4. Self-preservation and the propagation of the species, are the great ends which Nature seems to have proposed in the formation of all animals... [TMS II i (v)]. Nature, indeed, seems to have happily adjusted our sentiments of approbation and disapprobation, to the conveniency both of the individual and of the society… [TMS IV ii]

TMS 9. And it is well that nature imposes upon us in this manner. It is this deception which arouses and keeps in continual motion the industry of mankind...

It is to no purpose that the proud and unfeeling landlord views his extensive fields, and without a thought for the wants of his brethren, in imagination consumes himself the whole harvest that grows upon the. The homely and vulgar proverb, that the eye is larger than the belly, was never more fully verified than with regard to him. The capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute among those who prepare [....] that little which he himself makes use of, among those who fit up the palace in which this little is to be consumed [....] all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice. The produce of the soil maintains at all times nearly that number of inhabitants which it is capable of maintaining. The rich ... consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements.. They are necessarily led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interests of society and afford means to the multiplication of the species. [TMS IV]