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Adam Smith: Selfishness or Self-Interest?

“Two hundred and thirty years ago,” Harvard economist Edward L. Glaeser recently declared in the New York Times, “Adam Smith made the case for selfishness when he wrote that ‘it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest.’”1 (Emphasis mine)

Glaeser wrote this in a column about Creative Capitalism: A Conversation with Bill Gates, Warren Buffet, and Other Economic Leaders, edited by Michael Kinsey.2 The contributors to this new volume debate Milton Friedman’s influential doctrine that the only social responsibility of business is to increase profits for shareholders within the law, an idea that Microsoft founder Bill Gates rejects.3 Glaeser’s own chapter is titled “The Case for Creative Capitalism.”

Agreeing that he might not do this everywhere, I am disappointed that in this column Glaeser equated selfishness and self-interest. This is because, although he did not use these or other words consistently, Smith explicitly and constantly distinguished the concepts, condemning the first and condoning the second.4

I believe that our frequent failure to follow him in making this distinction, as it relates to what he called “sympathy,” is the most important source of our current economic difficulties. No society can dismiss it without eventually suffering destructive consequences like the ones we are now experiencing. Adam Smith understood the difference between selfishness and self-interest, and so should we.

Smith was born in the Scottish village of Kirkcaldy in the 1723. Reared by his widowed mother, he was fourteen when he launched his academic career with a scholarship at Glasgow University. He eventually studied at Balliol College at Oxford for several years. There he became disenchanted with English university life, the Christian ministry, for which had studied some, and Christianity itself.

He returned to Glasgow University, where he taught logic and moral philosophy and related subjects until he became a private tutor. After this stint, when he and his wealthy student traveled throughout Europe and met a number of its intellectual leaders, he returned to Kirkcaldy and to his writing. He briefly served as Commissioner of Customs, a position that required him to monitor smuggling. Never married, he died on July 19, 1790. He and his friend, David Hume, were leading representatives of the Scottish Enlightenment.

Smith is most remembered for two books: The Theory of Moral Sentiments (1759) and The Wealth of Nations (1776).5 Many have tried to drive a conceptual wedge between them; however, he described them as the first two parts of a three-fold project that he eventually came to realize he would not live long enough to complete (A.1, 2). Also, student notes suggest that he saw no fundamental difference between them.6

Smith held that the moral life begins with feeling, or sentiment, not reason (VII.III.13,14). Of all the sentiments, sympathy, or “fellow feeling,” is especially important (I.I.5). In sympathy, we partly identify with the feelings of others by way of imagination, such that our own sense of well-being depends in some measure on theirs and vice versa.7 Perhaps too optimistically, he held that “the greatest ruffian, the most hardened violator of the laws of society, is not altogether without it” (I.I.1).

“Sympathy, however, cannot, in any sense, be regarded as a selfish principle,” Smith wrote (VII.III.7). He held that when one sympathizes with someone else in imagination one identifies with what that person genuinely feels, not with what one might feel in similar circumstances. Or, when we sympathize with others, to some extent we identify with their actual feelings, not our hypothetical ones. Yet again, when I sympathize with your bereavement, by way of imagination I enter into your grief, not what I suppose mine might be if I had suffered a similar loss. “My grief, therefore, is entirely upon your account,” Smith wrote, “and not in the least upon my own. It is not, therefore, in the least selfish” (I.I.1).

Both Smith’s censure of selfishness, on the one hand, and his approval of self-interest or self-love, on the other, were especially evident in reactions to the views of Bernard Mandeville (ca. 1670–1733), a doctor and philosopher from Holland. Smith faulted the author of the Fable of the Bees for collapsing the two and then seeing “selfishness” everywhere (VII.II.98–106).

Although he wrote that in some of its features Mandeville’s thought “bordered upon the truth,” Smith discussed it under the heading of “licentious systems” that cannot distinguish between vice and virtue. He went on to describe it as “wholly pernicious,” “in almost every respect erroneous,” expressed in “coarse and rustic eloquence,” avowed with “a profligate audaciousness,” “ingenious sophistry,” and a “great fallacy” (VII.II98–106).

Smith objected to Mandeville’s claim that all of our actions are wholly motivated by selfish passions and that one of the most important of these is “vanity,” an intense desire for approval and applause. Smith did not deny that even our most altruistic deeds are motivated in part by some concern for our selves (VII.II.100). His point was that it is doesn’t make sense to condemn this kind of self-interest as a vice and to view the entire mixture of motives as “selfishness.”

Smith held that this mistake allowed people like Mandeville to make it seem “that there is vice even in the use of a clean shirt, or of a convenient habitation” (VII.II.103). Only if we think along these exaggerated lines can we agree with Mandeville that “private vices are public benefits,” he contended (VII.II.104). Smith reserved the word vanity for unearned or unjustified praise. With Mandeville in mind, he stated that, far from being a private vice, “self-love may frequently be a virtuous motive of action” (VII.II.100).

Smith wrote that we benefit from the self-interest of the butcher, brewer, and baker. He did not say selfishness! Even if this choice of words was pure happenstance, the conceptual difference is vital.

It is clear from Smith’s writings as a whole that, because they are self-interested, the butcher, brewer, and baker look out for themselves; however, because they are not selfish, they also care for their customers. What’s more, in “sympathy” they care for their customers for their customers’ sakes, not merely their own, and they know for certain that this is not something they can fake.

This is what good business is all about! Although Smith did not appeal to it, those who remember from Scripture that we are all members of one body (1 Cor. 12:1–31) need not be astonished.8

In our next column, we will look at what Adam Smith said about benevolence, another important word in his famous statement about the butcher, brewer, and baker.

Notes and References

1. This is the third in a series of columns on ethical aspects of the current financial crisis. The first two were “Capitalism: What Were Its Moral Strengths and Weaknesses?” and Milton Friedman: Master of Disaster”? Glaeser’s article is titled, “Can Businesses Do Well and Good?” and it was published in the January 6, 2009, issue of the New York Times.

2. Michael Kinsey, ed., Creative Capitalism: A Conversation with Bill Gates, Warren Buffet, and Other Economic Leaders (New York: Simon and Schuster, 2008).

3. Milton Friedman, “The Social Responsibility of Business Is to Increase Its Profits,” New York Times Magazine, Sept. 30, 1970. in W. Michael Hoffman and Robert E. Frederick, eds., Business Ethics: Readings and Cases in Corporate Morality, 3d ed. (New York: McGraw-Hill, 1995), 138; and Capitalism and Freedom (Chicago: University of Chicago Press, 1962), 133, 134.

4. For example, Smith sometimes condemned “excessive selfishness” or “sordid selfishness,” which presumably differed in his thinking from, say, “controlled selfishness” or “appealing selfishness.” In any case, the context always makes his meaning clear.

I am learning much from the Web Site and Blog of Gavin Kennedy, a specialist in Adam Smith’s thought at Edinburgh, Scotland. I recommend them highly and I am grateful for Kennedy’s daily commentaries. Yet because what follows is from my own reading and thinking, he is not responsible for any errors of fact or good judgment.

5. Adam Smith, The Theory of Moral Sentiments, 6th ed. (London: A. Miller, 1790) and The Wealth of Nations, 5th ed., (London: Methuen, 1904). Both of these books are available in full with excellent search capacities on the Internet at the Library of Economics and Liberty.

Smith numbered the material in these books by Parts or Books, Chapters, and Paragraphs. Therefore, I.II.3 means Part 1, Chapter 2, and Paragraph 3. “A” means “Advertisement,” what he called “Preface.”

6. For a thorough and judicious study of this debate’s history, please see Ingrid Peters-Fransen in “The Canon in the History of the Adam Smith Problem,” in Evelyn L. Forget and Sandra Peart, eds., in Reflections on the Classical Canon in Economics: Essays in Honor of Samuel Hollander (New York: Routledge Press, 2000), 168—84.

7. Some wonder if Smith described how things are or prescribed how they ought to be, a question that is especially urgent in view of the warnings of his friend, David Hume, against trying to derive an “ought” from nothing but an “is.” One answer is that Smith’s method was inductive. He held that the best way to come up with moral norms is to analyze many experientially and ethically satisfying cases (VII.III.13). Among other places, we can see that assertions can be both descriptive and prescriptive in the declarations of parents, such as “We don’t use profanity in this house!” Most children do not hear this as merely information!

8. Paul applies this metaphor to the Christian community; however, the whole of Scripture allows us to apply it more generally as well.

David Larson teaches in the School of Religion at Loma Linda University.

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