Adam Smith: Response Essay Jeremy Corren Section 002

How does Adam Smith explain the following concepts and the relationship among them?
● self-interest and sympathy
● division of labor, wealth of a nation, productivity, specialization, gradations of civil society, exchange, and
the market

Adam Smith has been immortalized in intellectual history for his lengthy discourses The Wealth
of Nations and The Theory of Moral Sentiments, works known for revolutionizing and expanding
economic and moral philosophy respectively. Upon looking at both of these texts, the reader comes upon
two comparisons of ideas and definitions. Firstly, it is often assumed the core principles of these two
mammoth works are diametrically opposed, in that the former’s investigation of human sympathy seems
to contradict the latter’s explication of the fundamental role that human self-interest plays in commerce.
However, should the reader closely evaluate each of these books’ claims and arguments, they would find
that Smith’s ideas are laid out in positive opposing terms, or rather, his notions of sympathy and self-
interest exist in tension with one another without mutually obliterating the value of either idea. In addition
to this dichotomy of values, Smith explains in his later work the various components that belong to a
market system and the manner in which these components interact with one another.
We can begin this dialectic by defining sympathy and self-interest, after which we can examine
their relationship as central ideas in Smith’s general philosophy. In his Theory of Moral Sentiments, Smith
describes individuals as being endowed with “moral faculties” that, through “virtuous education,” are
trained to monitor human behavior according to socially approved moral laws, which more or less amount
to the individual’s fulfillment of “duty.” The individual’s obligation to duty exists independently of their
sentiments, as Smith suggests that a man who has received the benefit of another’s actions is obliged by a
“sense of duty” to reciprocate, even if he harbors nothing but “natural coldness” towards the other. But
when Smith turns to economics, he admits that a man will encounter greater success in material
transactions should he “interest [his partner’s] self-love in [his] favor”; in essence, economics must fulfill
the self-interests of both parties involved with exchange. Beyond all of this Smith considers the general
improvement of a nation’s wealth the primary economic goal, while the ultimate goal of moral action, as
conceived by the Deity, is the “happiness of mankind.”
Let us consider the intersection of these ideas. If human commercial exchange is contingent on
the mutual satisfaction of individuals’ self-interests, how can individuals be expected to adhere to moral
demands for sympathy and compassion without recompense? Smith’s portrait of the human spirit seems
to have undergone a transformation from 1759 to 1776. However, it is possible to contextualize and
unpack this contradiction in Smith’s philosophy by accounting for the disparate subject matter of the two
treatises. While his Wealth of Nations describes what he considers the patterns of behavior best suited to
commerce, the Theory of Moral Sentiments establishes the rules of propriety in social and civil
interactions. One can also look at sympathy and self-interest as complementary components of our moral
faculties, by which the individual extends courtesy and compassion to others in times of need or out of
obligation, while at the same time he protects himself in matters of property.
A look at The Wealth of Nation’s establishment of an economic network and the parts of which it
is composed promises a less problematic investigation. Smith argues that “civilized and thriving nations”
derive their wealth from an economic system predicated on the “division of labor.” The division of labor
consists of worker “specialization,” by which laborers in a given industry are separated into branches in
which they repeat simple tasks. Smith proposes that this simplification of duties enhances the focus of the
worker and the improves the productivity of the industry. This first part of the equation yields the
“produce,” a point from which Smith goes on to define exchange of produce in terms of his economic
theory. Commercial exchange results from an aggregation of workers whose specialized labor yields
surpluses of goods, which are in turn used as a means to barter for the goods of other workers, which they
cannot produce themselves. This system establishes a “market” in which specialized workers trade their
goods for others which they cannot obtain through their own labor. Smith attributes this practice to the
human “propensity to truck, barter, and exchange.” Finally, Smith discusses the various gradations of
economic complexity and the manner in which societies can achieve them. In “savage nations,” all
individuals work to provide for themselves and their families by attending to the acquisition of all
necessary kinds of produce: thus, there is an equality of poverty maintained among the peoples. Basic
civilized society, following the feudal model, involves proprietors, owners of land, for whom a mass of
unproductive tenant-laborers work to earn their keep. However, with time, the proprietors reduced the
number of tenants, and inevitably increased the independence of the ones remaining. These last few began
to sell their products in towns, thus becoming dependent on a myriad of customers as opposed to one (the
proprietor). This trend ultimately led to the division of labor and the formation of commercial society, in
which financially secure non-laborers extract profit from the work of laborers in lower social strata.
Needless to say, there are questions to be asked of Smith’s grand economic plan: chiefly, does the
specialization of workers, by which laborers carry out the same simple task thousands of times a day, lead
to a decrease in individual productivity in the long run? Additionally, Smith makes the assumption that as
people pursue their self-interests, an “invisible hand” will “promote an end which was no part of [their]
intention,” namely the benefit of all members in a society. However, as the market has grown from small
domestic centers to complex international hubs of commerce, the individual’s self-interest may lead him
to invest in foreign financial ventures or outsourcing of labor that endow only the individual in question,
but not society at large, with greater wealth.
In spite of these questions, Smith’s Theory of Moral Sentiments and Wealth of Nations lay the
groundwork for much of western moral and economic thought. It seems that the works reflect different
sides of the same coin, as the former seeks to describe and evaluate human behavior from an ethical
standpoint while the latter carries out the same task from an economic standpoint. What ought to be noted
is Smith’s brilliant conception and thorough articulation of moral and social facts that are relevant even
today.