Adam Smith: Providing Morality in a Free Market Economy

Adam Smith’s Theory of Moral Sentiments (TMS) and Wealth of Nations (WN) appear to suffer from an irresolvable tension: TMS extols human sympathy whereas WN extols the consequences of self-interest. This paper takes a comprehensive approach, adding to scholarship on what has become known as the “Adam Smith Problem.” There are traditionally four different approaches to the “Adam Smith Problem” in the secondary literature; economic, political, moral, and “principles” approach. Through a textual analysis of TMS and WN that focuses on prudence, the nature of happiness and Smith’s rhetorical style, this inconsistency between his two texts disappears. The emphasis Smith places on prudence in WN can only be properly understood when one considers its foundations in sympathy found in TMS. In surveying the secondary literature, a second, larger question emerges on how to reconcile Smith’s economic, political, and moral thought more generally. It becomes probable Smith favors economic and political structures fundamentally for moral reasons suggesting that WN and his Lectures on Jurisprudence must be read subsequent to TMS. This also suggests that political and economic institutions are built upon a base informed by morality. By demonstrating the integral connection between morality and markets, Smith provides his reader with the means to critique educators, economists, and skeptics of capitalism. One such skeptic of free markets is Michael Sandel, who, in his book “What Money Can’t Buy: The Moral Limits of Markets,” rejects the trend of “market triumphalism” based on two objections: the corruption objection and the fairness objection. Arguing for the moral interpretation of Smith, the paper seeks to respond to Sandel’s objections from Smith’s point of view, appealing to his definitions of beneficence and justice