Very few people know that he wrote another book before the Wealth of Nations, one that is actually as important if one wants to understand what Smith was describing. This book is called The Theory of Moral Sentiments.
Smith beleived that the world he was describing was filled with moral agents and he thus first described what those moral sentiments should be and perhaps why.
Unfortunately for us, we have too many people running our economy that Adam Smith would excoriate as immoral, depraved and corrupt.
One of the more famous parts of this little known work describes a parable. Here is the relevant passage (my bold).
Let us suppose that the great empire of China, with all its myriads of inhabitants, was suddenly swallowed up by an earthquake, and let us consider how a man of humanity in Europe, who had no sort of connection with that part of the world, would be affected upon receiving intelligence of this dreadful calamity. He would, I imagine, first of all, express very strongly his sorrow for the misfortune of that unhappy people, he would make many melancholy reflections upon the precariousness of human life, and the vanity of all the labours of man, which could thus be annihilated in a moment. He would too, perhaps, if he was a man of speculation, enter into many reasonings concerning the effects which this disaster might produce upon the commerce of Europe, and the trade and business of the world in general. And when all this fine philosophy was over, when all these humane sentiments had been once fairly expressed, he would pursue his business or his pleasure, take his repose or his diversion, with the same ease and tranquillity, as if no such accident had happened. The most frivolous disaster which could befal himself would occasion a more real disturbance. If he was to lose his little finger to-morrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own. To prevent, therefore, this paltry misfortune to himself, would a man of humanity be willing to sacrifice the lives of a hundred millions of his brethren, provided he had never seen them?
Simply, would you cut off your little finger if you could prevent the death of millions? Would you do something that would hurt yourself, even in the tiniest way, in order to help others?
Or would you be willing to let them all die so you could keep your little finger?
Many people today who follow the laws of capitalism would not hurt themselves to help others. In fact, followers of Ayn Rand would say the entire question itself is immoral. Pure selfishness – what Smith called self-love – is all that should drive capitalism and human interactions.
But if we continue with the rest of Smith’s parable, we see that he described something quite different.
Human nature startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it. But what makes this difference? When our passive feelings are almost always so sordid and so selfish, how comes it that our active principles should often be so generous and so noble? When we are always so much more deeply affected by whatever concerns ourselves, than by whatever concerns other men; what is it which prompts the generous, upon all occasions, and the mean upon many, to sacrifice their own interests to the greater interests of others? It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct. It is he who, whenever we are about to act so as to affect the happiness of others, calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it; and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration. It is from him only that we learn the real littleness of ourselves, and of whatever relates to ourselves, and the natural misrepresentations of self-love can be corrected only by the eye of this impartial spectator. It is he who shows us the propriety of generosity and the deformity of injustice; the propriety of resigning the greatest interests of our own, for the yet greater interests of others, and the deformity of doing the smallest injury to another, in order to obtain the greatest benefit to ourselves. It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble, of the grandeur, and dignity, and superiority of our own characters.
When the happiness or misery of others depends in any respect upon our conduct, we dare not, as self-love might suggest to us, prefer the interest of one to that of many. The man within immediately calls to us, that we value ourselves too much and other people too little, and that, by doing so, we render ourselves the proper object of the contempt and indignation of our brethren.
What a different world he inhabited. He felt that “the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining” the idea of keeping their little finger and letting millions die.
Yet we now have a huge number in our society that not only feel that way, that entertain those ideas but actually act upon that view. Particularly followers of Ayn Rand.
Smith describes what should be more powerful than the selfishness that drives us. Reason, principle, conscience. The recognition that each of us is a small part of a larger whole.
I think these are some of the most inspirational words written by a theorist: “It is he who shows us the propriety of generosity and the deformity of injustice; the propriety of resigning the greatest interests of our own, for the yet greater interests of others, and the deformity of doing the smallest injury to another, in order to obtain the greatest benefit to ourselves.”
The propriety of generosity, The deformity of injustice. Resigning the greatest interests of our own for the greater interests of others.
Smith believed that such moral people would be involved in the capital markets he described. That, in fact, the markets he described required such moral people. I believe he would be horrified at the villainy we have today. At the immoral character of so much of our economic leaders. At the depravity and corruption of of society.
He would be thunderstruck that these purveyors of immorality are not objects of resentment, abhorrence and execration but are actually help up as shining examples to aspire to, as job creators and as those who must be bowed down to.
That is, to me, the sure sign of how far we are from his vision. Our society no longer provides any checks on these villains. We no longer hold them in contempt or despise their activities. They are simply allowed to conitnue hurting all of us for their own purposes.
I don’t think depravity or corruption are the only things involved in our society to explain this. I think just plain stupidity is also an important part. I’d be willing to bet Adam Smith would think the same.
Image: Randy Lemoine