What are the Moral Sentiments of Capitalism according to Adam Smith?

Question

Despite his legacy as the father of capitalism and authority on jurisprudence especially toward the end of his career, Adam Smith is usually known in ethics and philosophy classes by his classic The Theory of Moral Sentiments. In the way Aristotle’s Nicomachean Ethics is meant as a prelude to the Politics and The Athenian Constitution, I have read Smith’s seminal work in morality as a precursor to the economics and social philosophy laid out in The Wealth of Nations. Although Smith doesn't say so explicitly, I believe these seemingly separate works are constructed around the same indispensable principles and interests. It came as a shock to learn that many of the principles affirmed in both of these works seem to be greatly at odds with the conventional wisdom about capitalism, from its opponents and advocates alike. As Noam Chomsky wrote: “He's pre-capitalist, a figure of the Enlightenment. What we would call capitalism he despised…”

The crux of Smith’s theory of justice developed in Moral Sentiments lies at the heart of the Wealth of Nations: “To hurt in any degree the interest of any one order of citizens, for no other purpose but to promote that of some other, is evidently contrary to that justice and equality of treatment which the sovereign owes to all the different orders of his subjects” (WN IV.viii.30).

Rather than being a symbol for free markets Smith’s philosophy is more consistent with the themes of the Scottish Enlightenment and a critique on the abuses of crony capitalism (a term he never used). Should we accept this caricature of Smith or are the principles of sympathy, imagination, and intuition (all contributing to his articulation of justice) compatible with the self-interested value or the evangelical globalization being outsourced by capitalist?

Answer 1

There's a paragraph that, if the book is to be summarized, seems to summarize it well (and is a favorite of Russ Roberts, who recently wrote a book about Adam Smith):

Man naturally desires, not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love. He naturally dreads, not only to be hated, but to be hateful; or to be that thing which is the natural and proper object of hatred. He desires, not only praise, but praiseworthiness; or to be that thing which, though it should be praised by nobody, is, however, the natural and proper object of praise. He dreads, not only blame, but blameworthiness; or to be that thing which, though, it should be blamed by nobody, is, however, the natural and proper object of blame.

So, as jobermark pointed out, one should never reduce anyone to a caricature. However, the question from the OP seems to be, in what ways do that caricature fail to explain who Smith is? From the Theory of Moral Sentiments, one can conclude that Smith was not in favor of a cut-throat, profit-at-all-costs existence of society. Rather, Smith acknowledged these two sometimes competing, sometimes cooperating urges that each person has: to benefit one's self and to benefit others one interacts with.

I haven't read enough Smith to know this for a fact, but I know many philosophers since have concluded (based on Smith and based on other independent sources) that the appropriate mechanism for a society is a free-market capitalism in which people are bound by some idea of virtue (treating others with respect, worrying about reputation, etc.).

Answer 2

The contrast between Smith's moral philosophy and economic sociology has been noted by many, most especially Marx. Smith's work arrived at a radical historical crossroads, prior to the French Revolution and Kant, which makes it especially precarious to deal with it retrospectively.

As Smith's contemporary and friend Hume noted, you can't get an "ought" from an "is." So their "metaphysical" and prescriptive work divided from their historical and "descriptive" work. A separation that still marks the Anglo-American "fact-value" divide.

Smith, Hume, and Locke before them were still disputing old forms of authority. The "free" market, like "free" reading of the printed bible, was opposed to the absolutism of centralized state pricing, usually in favor of the land-owning class. Marx, who was a great reader of Smith and Ricardo, agreed that capitalism was a great liberating advance, but not a moral advance.

Smith agreed that "labor" would be reduced to its lowest possible value under capitalism, but that in the end labor's situation would progress out of "savagery." Marx was more historically relativistic, and witnessed the industrial mass wretchedness of labor. For this later Enlightenment critique, Smith's reliance on "human sympathy" was too "universal" and simply did not comport with the dynamism and flux of his historical, "descriptive" work.

While I am something of a neo-Marxist, this remains one of those abiding and unsettled disputes where in fact, philosophy really does matter. Certainly, Smith is no defender of the inherent "morality" of modern capitalism. For that, one must look to Mises and the abhorrent Austrians. As an interesting side note, Smith disliked the idea of a limited liability stock "corporation," while Marx thought is was an advance towards a more socialized economics.