By James R. Otteson

Adam Smith's Marketplace of Life
Editions:ePub
ISBN: 9780511610196

Adam Smith wrote two books, one about economics and the other about morality. His Wealth of Nations argues for a largely free-market economy, while his Theory of Moral Sentiments argues that human morality develops out of a mutual sympathy that people seek with one another. How do these books go together? How do markets and morality mix? Adam Smith's Market Place of Life provides a comprehensive examination and interpretation of Smith's moral theory and shows how his conception of the nature of morality applies to his understanding of markets, language and other social institutions.

Considering Smith's notions of natural sympathy, the impartial spectator, human nature, and human conscience the author also addresses the issue of whether Smith thinks that moral judgments enjoy a transcendent sanction. James Otteson sees Smith's theory of morality as an institution that develops unintentionally but nevertheless in an orderly way according to a market model.

Reviews:Richard Kleer on History of Political Economt wrote:

"Though its title suggests otherwise, this book is principally the fruit of a close encounter with the Theory of Moral Sentiments. [...] Otteson has clearly done his homework well; he understands Smithʼs moral philosophy thoroughly and explains it in a clear and straightforward manner. On occasion he also offers useful contrasts with Humeʼs competing account of morals and takes issue with interpretations offered by other historians of Smithʼs moral philosophy. [...] Otteson believes he has advanced beyond the current state of scholarship on three main points. First, he claims to have discovered a scarlet thread, best captured in the concept of a marketplace, running throughout all the parts of Smithʼs intellectual project. [...] Second, Otteson offers a new solution to the celebrated “Adam Smith problem.” In his estimation, previous scholars had never really solved the problem. [...] Finally, Otteson sets the record straight on the role of final causes in Smithʼs moral theory, and on the related question of whether Smith offered an empirical or a normative theory of morals."

Margaret Schabas on Economics and Philosophy wrote:

"Virtually every book on Adam Smith seeks to resolve the seeming inconsistency between his two wonderful and only books, theTheory of Moral Sentiments (1759) and the Wealth of Nations (1776). This one is no exception, although it stands out in a number of respects. Its primary virtue is the clarity and pacing with which it works through the issues. Otteson is rarely rushed in his effort to unpack Smith’s assertions, and is also able, very effectively, to create some dramatic tension before presenting his resolution of Smith’s Jeckyll and Hyde. He also draws some insightful comparisons between Smith and his immediate predecessors (Mandeville, Hutcheson, and Hume most notably) that help to endorse his own interpretation of the texts. While exegetical accounts are not everyone’s cup of tea, this one is highly recommended."

Robert McCarthy on Notre Dame Philosophical Reviews wrote:

"In Adam Smith’s Marketplace of Life, James Otteson offers a thought-provoking approach to the unity of Adam Smith’s philosophical work. [...] That the 'Adam Smith problem' is less intractable than Otteson believes, however, does not detract from the real strength of the book, which is Otteson’s use of the market model to account for the development of unintentional order. That is, the ’impartial spectator’ in moral theory and the ’invisible hand’ in economic theory have similar structures. [...] Also worthy of attention is Otteson’s claim that Smith’s market-based moral theory leads to a “union of, on the one hand, a kind of Burkean conservatism, which tends towards the stability of society, with, on the other hand, a respect for progressive development, which allows for creativity and innovation in society” (p. 322). This is truly one of Smith’s great contributions: he rejects the application of naïve rationalism to society, but provides us with a mechanism by which social change can be both understood and evaluated. Otteson’s particular way of connecting The Theory of Moral Sentiments with The Wealth of Nations does an excellent job of making this clear."


About James R. Otteson

James R. OttesonAccording to Wikipedia, James Otteson (1968) "is an American philosopher and political economist. He is the Thomas W. Smith Presidential Chair in Business Ethics, Professor of Economics, and executive director of the Eudaimonia Institute at Wake Forest University. He is also a Senior Scholar at The Fund for American Studies in Washington, D.C., a Research Professor in the Center for the Philosophy of Freedom and in the Philosophy Department at the University of Arizona, a Visitor of Ralston College, a Research Fellow for the Independent Institute in California, and a director of Ethics and Economics Education of New England. He has taught previously at Yeshiva University, New York University, Georgetown University, and the University of Alabama."

Table of Contents + Abstracts of Chapters

Introduction

The Scottish Enlightenment has received a great deal of scholarly attention over the past few decades, and Adam Smith's work in particular has seen increasing interest. This interest in Smith has been not only from economists but also from political scientists, historians, sociologists, and English professors—but, curiously enough, not philosophers. With only a few notable exceptions (and most of these fairly recent), philosophers have tended to pay little attention to Smith, perhaps believing that anything philosophically interesting Smith might have had to say was probably already said by Hume—and no doubt better. But even putting to one side the influential historical role Smith's work has played, it turns out upon examination that Smith is a surprisingly sophisticated philosopher in his own right, his moral philosophy in particular displaying an impressive subtlety and penetration. Smith hence merits and deserves more attention from philosophers today. This book is one step toward fulfilling that obligation.

Smith's The Theory of Moral Sentiments (TMS) is one of the great works in the history of moral philosophy, and although study of it has formed a central part of this recent scholarship, what is still required is a sustained examination of the book's overall argument, of the model it proposes to account for the growth and development of human institutions, and of the relation this model bears to Smith's other principal works. That is what this I propose to do here. I begin by offering a systematic examination and evaluation of TMS as a philosophical work.

1 - Adam Smith's Moral Theory, Part One: Sympathy and the Impartial Spectator Procedure

Virtually all features of Adam Smith's moral theory can be found in elementary form in the first three chapters of The Theory of Moral Sentiments. One finds there discussions of natural human sympathy, of what I shall call the “impartial spectator procedure,” and of central aspects of Smith's conception of human nature; one finds references to the general rules of morality that guide the human conscience; and one finds hints of Smith's account of human passions that become clear only after one has read the rest of the book. In both TMS and his other central work, An Inquiry into the Nature and Causes of the Wealth of Nations, Smith begins with what he thinks is the central idea of the book: the first chapter of TMS is “Of Sympathy”; the first chapter of WN is “Of the Division of Labor.” The remainders of both of Smith's books are in large part elaborations and extensions of the ideas brought out in rudimentary form in those first short chapters.

2 - Adam Smith's Moral Theory, Part Two: Conscience and Human Nature

Sympathy and the impartial spectator are, for Smith, perhaps the two most important notions to understand if one wishes to understand what gives rise to our moral judgments. Sympathy, or a correspondence between the sentiments of an actor and a spectator, is what one senses or is aware of that prompts a favorable judgment. It is the impartial spectator, however, whose sentiments and judgments correct those of the interested actor and spectator. Indeed, the judgments of the impartial spectator in time assume the role of the ultimate standards of moral judgment, not only for the individual but also for the community at large. The other two main elements of Smith's theory are his explanation of the human phenomenon known as conscience and his conception of human nature. In explaining what the human conscience is and how it develops, Smith puts the rest of his theory to work. Sympathy and the impartial spectator work in concert to create our conscience, and the process of conscience-formation, as well as the natural attraction to sympathy and the impetus to employ the impartial spectator procedure, are all motivated by principles and desires innate in human nature.

In this chapter, I begin by looking at Smith's conception of the human conscience, detailing what it is, how it develops, how it functions, and what role it plays in Smith's moral theory. Then I examine the principal elements of Smith's conception of human nature, which undergirds his entire moral theory.

3 - The Marketplace of Morality

A central aim of Smith's The Theory of Moral Sentiments is to give an account of the process of making moral judgments that is grounded in empirical evidence. He wanted to make a study of human relations in the same way Newton made a study of heavenly bodies—by observing the phenomena and attempting to generate rules that describe their regular behavior. In this chapter I shall argue that an examination of Smith's analysis of human morality in TMS reveals that the rules he has found that describe our moral behavior conform to a determinate model, a model that Smith develops throughout the course of his book. This model is of a market in which free exchanges among participating people give rise, over time, to an unintended system of order. Specifically, Smith understands the nature of moral judgments, including their concomitant features of the impartial spectator procedure and the human conscience, to be the codified results, both at the social and the individual levels, of a coherent and orderly system of morality that is effected by individuals who did not intend to effect it. Put differently, this human institution has developed and is maintained by what I propose to call a “marketplace of morality.”

4 - The “Adam Smith Problem”

By the time August Oncken published his article in 1897, the scholarly tide was already beginning to turn regarding the so-called Adam Smith Problem. During the previous half-century or so, several commentators had developed and pressed what the German scholars called the Umschwungstheorie, which held that Adam Smith the moral philosopher, who had originally thought that human relations were based on a “sympathy” people felt for one another, at some point became Adam Smith the economist, who thought that self-interest was what motivated them. A series of nineteenth-century scholars had argued that there were, after all, two Adam Smiths, not one. The problem was exacerbated by the fact that Smith had produced several editions of The Theory of Moral Sentiments during his lifetime, including a final, substantially revised edition only months before he died (and thus some fifteen years after the first publication of The Wealth of Nations). How could one take Smith seriously if he not only failed to realize his fundamental conversion in philosophical outlook, but also failed to recognize the two distinct views when he was revising them side by side? The conclusion many nineteenth-century scholars drew was that Smith's two books were simply inconsistent. Smith may have been a great economist, but he was no philosopher.

5 - The Market Model and the Familiarity Principle: Solving the “Adam Smith Problem”

The Adam Smith Problem is not of merely historical significance. It is a problem also for us today because it highlights the tension between moral injunctions to beneficence and other virtues, on the one hand, and the seeming amorality of economic markets on the other. If a large portion of the relations people have with other people take place within the context of the market's extended economic order, and if the Smith of WN is right that people's actions in such contexts are informed by their self-interested pursuits, then it is no small matter of concern how moral virtues that are approved in other contexts apply here. If the Smith of TMS is right, one does not—or should not—check one's morality at the marketplace door. Thus the matter of how morality mixes with markets must still be addressed.

Before one can consider that larger problem, however, we must first contend with Adam Smith's version. The core of this problem, as I argued in Chapter 4, is not just the fact that the two books seem to have little obvious connection between them, but also the apparently conflicting pictures of proper human motivation Smith gives in TMS, on the one hand, and in WN, on the other. In TMS, Smith argues that a person should properly be motivated by a balance of self-interest and benevolence, as determined by the judgment of the impartial spectator.

6 - Justifying Smithian Moral Standards

Adam Smith thinks that human beings are born with a large package of instincts, abilities, desires, and propensities that are channeled or influenced, but not created, by their environment. All of us, for example, have an innate capacity to experience anger, resentment, joy, happiness, sadness, hunger, thirst, and sexual attraction, among many other things. The peculiarities of one's environment determine and limit the range of which particular things will be the objects of one's desires and aversions, as well as under which particular circumstances one will feel or act on various motivations. But the desires, aversions, and motivations themselves are given by our nature. The characteristic of human nature that Smith thinks principally bears on moral standards and moral judgments is, as we have seen, the desire for mutual sympathy, though other characteristics—like one's natural partiality for oneself and the natural interest one has in the fortunes of others—play important roles as well.

7 - The Unintended Order of Human Social Life: Language, Marketplaces, and Morality

In the last few decades interest in Adam Smith's noneconomic writings has burgeoned. One area of Smith's work that has particularly enjoyed this increased interest is that concerned with language, rhetoric, and belles lettres, though his early essay on the development of languages has seen relatively little attention. This essay deserves attention, however, because upon examination it reveals hints of the same model for understanding the growth and development of human institutions that I have argued Smith employs as the conceptual foundation of his later The Theory of Moral Sentiments and in The Wealth of Nations. Indeed, it may be the case that Smith thought his market model was the key to understanding the development and maintenance of all large-scale human institutions. In the absence of explicit textual evidence of such an intention, however, I will limit my claim to this: the market model is at work in the essay on language, in TMS, and in WN, as well as, to varying extents, in some of Smith's other works, and the model can moreover serve as an organizing principle for understanding his examinations of human institutions generally.

In this chapter, I would like to examine Smith's short essay on languages, as well as resume the discussion of his argument in WN, and show how Smith's market model is at work in each of them. I shall also take a somewhat briefer look at some indications of this model elsewhere in Smith.

Conclusion

Let me close my study by introducing several brief considerations that were not appropriate to introduce into previous chapters. I begin with a short summary of the main parts of Smith's moral theory, as I see it. I then make two general observations about the theory: one relates to an aspect of the Adam Smith Problem, and the other is connected with what I think is an important omission in Smith's theory as he presents it. In the third section, I look at some recent work that tends to support parts of Smith's conception of human nature—and by extension, perhaps, his explanation of the development of moral standards. Finally, I close with a few words about what I think Smith's most important contribution to moral philosophy is. I say something about Smith's use of this contribution in comparison to others who have used it and a word about this contribution's plausibility in the context of contemporary moral thought.