One of the most persistent errors repeated about capitalism is that capitalism is based on greed. Are there greedy, selfish people who use capitalism to their advantage? You bet! Greed and selfishness are part of the human condition and will be reflected in any economic system. This is not the question. The question is whether or not capitalism is inherently based on greed.
When I challenge the idea that capitalism is based on greed, I not infrequently get incredulous reactions. “Adam Smith himself taught that everyone acting selfishly would create greatest common good!” they insist. (Deep sigh.) The confusion centers on the term “self-interest.” In our day, self-interest is often used as a synonym for selfishness. Not so, 250 years ago when Smith was writing. For him, self-interest merely meant taking an interest in, and being responsible for, your self.
Smith wrote two major books in his life. An Inquiry into the Nature and Causes of the Wealth of Nations is his work on economics, published 1776. It is the one people most frequently identify him with. But Smith also published in 1759, The Theory of Moral Sentiments. He published later editions after 1776 with minor edits. This book was on moral philosophy. Many scholars agree that these two books were intended to be seen as a unit, informing each other.
Earlier this year, Robert A. Black, professor of economics at Houghton College, published a lengthy article called What did Adam Smith Say About Self-Love?. (Journal of Markets and Morality, Volume 9, Number 1, Spring, 2006. 7-34.) Near the beginning of this article, Black gives an excellent overview of Smith’s basic thoughts about various moral sentiments. I quote him at length below. (“TMS” stands for “Theory of Moral Sentiments” and the specific edition Black is using is the reproduction of the 1790 sixth edition with introduction and editing by D. D. Raphael and A. L. MacFie Clarendon Press: Oxford, 1976.)
Selfishness means to attend to one’s own interests without regard to, or at the expense of, others. Self-interest and self-love, which Smith uses interchangeably at times, probably for variety of expression, mean attending to one’s own interests but not necessarily at other’s expense. Adam West (1969, 95) notes that Smith, in TMS, viewed self-love in the context of Christ’s admonition to “love your neighbor as your self” (see TMS 25). More precisely, Smith saw self-love as a Stoic virtue. “Every man, as the Stoics used to say, is first and principally recommended to his own care; and every man is certainly, in every respect, fitter and abler to take care of himself than any other person” (TMS, 219). The Christian virtue was a corresponding and equal love for one’s neighbor (see the editors’ note 1 in TMS, 23-24).
Sympathy, for Smith, meant the “fellow feeling with any passion” (as opposed to feeling only “pity and compassion” for others; see TMS, 10). Feelings for another’s passion, whether joyous or tragic, start with feelings for one’s own passions. For Smith, self-interest and sympathy are not opposites. One’s “sympathies” are by nature first and foremost with himself and then with “the members of his own family” and with his “earliest friendships” (TMS, 219). Personal sympathy could extend beyond immediate family and close friends, and social sympathy could reach beyond one’s own nation, but the feelings diminish as the reach extends. The greater is the reach of one’s sympathies, the greater is the virtue.
As the editor of TMS describe, sympathy and self-interest are not comparable but operate at different levels: one is governor and the other a motivator. “Sympathy is the core of Smith’s explanation of moral judgment. The motive to action [such as self-interest] is an entirely different matter” (TMS 21-22). To sympathize with the social passions of “generosity, humanity, kindness, compassion, mutual friendship and esteem, all of the social and affections, is virtuous" (TMS, 38). To disapprove of unsocial passions of “hatred and resentment” or to sympathize with the victim of unsocial passions are both virtuous (TMS, 34). Another virtue for Smith is to control our own passions, including the “selfish passions” of our own “grief and joy.” The “self passions” of one’s own “grief and joy” are neither as virtuous as the social passions nor as disagreeable as the unsocial passions (TMS, 40).
Propriety in sympathy and behavior is to be average or to conform to usual standards of appropriateness, while virtue is to be exceptional in goodness (and vice is to be exceptional in badness.) Propriety for Smith is to control our passions and sympathies in such a way as to meet the usual expectations of the impartial spectator (TMS, 25-26). Virtue consists in controlling our own passions and regulating our sympathies for others in such a way as to excite the gratitude and love of others in an exceptional manner (TMS, 113). Propriety, then, is to love others as we love ourselves, while virtue is to exercise a higher level of self-control. As Smith says, “perfection of human nature” is “to feel much for others and little for ourselves…to restrain our selfish, and to indulge our benevolent affections” (TMS, 25). Effectively controlling the passions “much beyond … [the sensibility] possessed by the rude vulgar of mankind” is to exercise “self command” (TMS, 25)
It is an “impartial spectator” within by which we compare our own interests with those of others: “it is only consulting this judge within, that we can ever make any proper comparison between our interests and those of other people” (TMS, 134). By an experienced “imagination” we give proper weight to the interests of others in such an evaluation. The impartial spectator with has complete knowledge of our own motives, as well as sufficient experience of the passions and interest of others, to render an informed and unbiased judgment. “It is from him only that we learn of the real littleness of our selves and love can be corrected only by the eye of this impartial spectator” (TMS, 137). Them impartial spectator prefers the general happiness to that of the self: “We dare not, as self-love might suggest to us, prefer the interest of the one to the interest of the many” (TMS, 138).
One more term prudence, further reveals the link in Smith’s thought between self-love and either virtue or vice. “Security… is the first and the principal objective of prudence. It is averse to expose our health, our fortune, our rank, our reputation, to any sort of hazard” (TMS, 213). Prudence is risk averse, “rather cautious than enterprising, and more anxious to preserve the advantages, we already possess, than forward to prompt us to the acquisition of still greater advantages” (TMS, 213) Prudence is a virtue when it promotes our self-love without harming another, “yet it never is considered as one, either of the most endearing, or of the most ennobling of virtues” (TMS, 216), “Mere imprudence, or the want of capacity to take care of oneself, is” a vice, to be pitied but not hated. (TMS, 216)
Equipped with these definitions and distinctions, we can compare various interpretations of the passage on self-love. Most commentators do not approach the extreme of accusing Smith of advocating pure selfishness, but none seems to fully capture what Smith actually stated. (8-10)
Finally, I add two more quotes from TMS:
And hence it is, that to feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature; and can alone produce among mankind that harmony of sentiments and passions in which consists their whole grace and propriety. As to love our neighbour as we love ourselves is the great law of Christianity, so it is the great precept of nature to love ourselves only as we love our neighbour, or what comes to the same thing, as our neighbour is capable of loving us. (Section 1, Chapter 5, Paragraph 5)
And:
The wise and virtuous man is at all times willing that his own private interest should be sacrificed to the public interest of his own particular order or society. He is at all times willing, too, that the interest of this order or society should be sacrificed to the greater interest of the state or sovereignty, of which it is only a subordinate part. He should, therefore, be equally willing that all those inferior interests should be sacrificed to the greater interest of the universe, to the interest of that great society of all sensible and intelligent beings, of which God himself is the immediate administrator and director. If he is deeply impressed with the habitual and thorough conviction that this benevolent and all-wise Being can admit into the system of his government, no partial evil which is not necessary for the universal good, he must consider all the misfortunes which may befal himself, his friends, his society, or his country, as necessary for the prosperity of the universe, and therefore as what he ought, not only to submit to with resignation, but as what he himself, if he had known all the connexions and dependencies of things, ought sincerely and devoutly to have wished for. (Section 4, Chapter 3, Paragraph 3)
Capitalism is not grounded in selfishness!
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