Adam Smith’s unfinished project
Introduction
Adam Smith says the modern individual “stands at all times in need of the cooperation and assistance of great multitudes” ([1776] 1981, 26). In this evocative phrase, Smith poses a defining problem of modern political economy, namely: how and from whom individuals might obtain the extensive cooperation and assistance they require. Or, conversely, how might the common individual be “induced, by his own choice and from the motives which [determine] his ordinary conduct, to contribute as much as possible to the need of all others” (Hayek [1945] 1948, 12–13)?
For Friedrich Hayek and many classical liberal economists, the singular answer to these questions – the Smithian answer, in their view – is commercial specialization and trade (Hayek [1976] 1978; Friedman 1962; Coase 1976; Heyne [1982] 2008; Boettke 2012). The butcher, baker, and brewer might provide us with our dinner “from their benevolence only” if they happened to be our sons or brothers but we cannot expect such generosity from strangers (Smith [1776] 1981, 26). “The great advantage of the market,” Ronald Coase (1976, 544) explains, “is that it is able to use the strength of self-interest to offset the weakness and partiality of benevolence, so that those who are unknown, unattractive, or unimportant will have their wants served.”
This familiar apologia for commerce is based on an epistemic-cum-ethical division of social relations into two distinct spheres:
Intimate order |
Extended order |
known persons |
unknown persons |
community |
commerce |
taxis |
cosmos |
benevolence |
self-interest |
solidarity |
competition |
concrete needs |
abstract rules |
personal |
impersonal |
Effective aid to strangers is assumed to require on-the-ground knowledge that is difficult if not impossible to attain, whereas market processes enable individuals to overcome their ignorance of others’ needs by leveraging the social knowledge embedded in price and profit signals, hence to be “led by the invisible hand of the market to bring the succor of modern conveniences to the poorest homes [they do] not even know” (Hayek [1976] 1978, 145). Hayek advises persons committed to finding “a proper cure for misfortunes about which we are understandably concerned” (1988, 13) to “[withhold] from the known needy neighbors what they might require in order to serve the unknown needs of thousands of others” (1978, 268) since the latter “[confers] benefits beyond the range of our concrete knowledge” and provides “a greater benefit to the community than most direct ‘altruistic’ action” (1988, 81 and 19).
Hayek, Coase, Boettke, and others ascribe this “two worlds” ontology to Smith himself. They interpret his Wealth of Nations (WN) as a discourse on impersonal commercial cooperation and The Theory of Moral Sentiments (TMS) as a treatise on cooperation within families and other face-to-face communities where “members know one another well” and can “reasonably be expected to take [others’] specific interests and values into account” (Heyne [1993] 2008, 6). Jacob Viner (1972, 82), in his venerable synopsis of WN, affirms this dichotomous view of Smith’s moral philosophy: “In his economic analysis, Smith operates from the categorical premise that economic relations between men are in effect fundamentally impersonal, anonymous, infinitely ‘distant,’ so that the sentiments, with one exception of ‘justice,’ remain dormant.”
My goal in this essay is to build a prima facie case for recasting Smith as a thoroughgoing critic of the “two worlds” vision of commercial society. Smith himself provides no integrated TMS-and-WN theory of commercial society; he “forces the reader to do the labor of unification” (Griswold 1999, 30). Yet by taking seriously the standpoint of contemporary interpreters who regard TMS as the philosophical center of Smith’s thought (Macfie 1967, 75–76) and Smith’s own view of TMS as a “much superior work to [the] Wealth of Nations” (Klein 2012, 243, citing Romily 1840, 404), we can see in his two great works an appreciation of commercial and noncommercial (sympathy-seeking) exchange as engines of human flourishing, and a nascent view of commercial society itself as an institutionally heterogeneous web of “voluntary collaboration” (Hayek [1945] 1948, 23).
Commerce and beneficence?
The virtue of beneficence plays a crucial role in Smith’s theory of noncommercial cooperation. Smith defines beneficence as a virtue that “prompts us to promote [the] happiness of others” ([1790] 1984, 262) by providing care and attention in excess of that required by ordinary prudence or justice. Yet beneficence is not selfless altruism. Like all virtues, it entails a judicious balance between care of self and care for others (304). Smith also (106) associates beneficence with the performance of meritorious “good offices,” in contrast to benevolence, which requires only “good intentions” (Hanley 2009, 183). Further, Smithian beneficence is not condescending but is “marked by the benefactor’s commitment to the moral equality and dignity he shares with other human beings” (Hanley 2009, 204 and 208). In all, Smith assigns two related but distinct meanings to beneficence: as a form of human action and as a virtue possessed by human actors. Beneficence is the performance of good offices that achieve praiseworthy results (a desired “end”) and the acquired habit (a “means”) of performing such actions.
Smith ascribes multiple motives to beneficent action, including fulfillment of social norms and identities, perceived influence over others’ well-being, reciprocal gratitude, and in all cases a desire for the eudaimonic happiness of being “beloved and [knowing] that we deserve to be beloved” ([1790] 1984, 113). The richness of his analysis (especially in TMS Book VI) opens the door to understanding the diverse moral attachments that arise among non-kin and the emergent nature of the order in which individuals are recommended to our care and attention (Lewis 2011).
To begin to see how beneficence and commerce might be theorized as complementary forms of social cooperation, consider these working definitions:
• Social cooperation refers to value-generating (mutually beneficial, positive-sum) transactions that increase the wealth or well-being of a human community.
• Commerce refers to acts of social cooperation that meet but do not exceed the requirements of justice and ordinary prudence – acts performed “as among different merchants, from a sense of [their] utility, without any mutual love or affection … a mercenary exchange of good offices according to an agreed valuation” (Smith [1790] 1984, 86).
• Beneficence refers to acts of social cooperation whose generosity exceeds what justice and ordinary prudence would require, wherein cooperation and assistance are “reciprocally afforded from love, from gratitude, from friendship, and esteem” (Smith [1790] 1984, 85).
Note that beneficence is defined not as pure love but as value creation by noncommercial means. And though conceptually distinct, beneficence and commerce are not assumed to exist as pure types. Just as multiple virtues are generally present in every form of human action (McCloskey 2006, 352–360), commerce and beneficence are assumed to be present in most forms of social cooperation.
Generations of economists, philosophers, and social theorists have recognized the important role of noncommercial benefaction in the social provisioning process (Boulding [1965] 1974). Champions of noncommercial value creation today speak in terms of philanthropy (Arrillaga-Andreessen 2011; Bishop and Green 2010) and social entrepreneurship (Bornstein 2007), broadly defined as “giving anything – time, money, experience, skills, or networks – in any amount to create a better world” (Arrillaga-Andreessen 2011, 1). Analogous notions can be found across the sciences and humanities, where noncommercial goods have been analyzed as public goods (Samuelson 1954; Buchanan 1968), commons (Ostrom 1990; Lohmann 1992), gift (Godbout 1998; Vandevelde 2000), care (Held 2005; Nelson and England 2002; van Staveren 2005), interpersonal relations (Gui and Sugden 2005), peer-to-peer collaboration (Benkler 2006; Lessig 2008), reciprocity (Bruni 2008; Kolm 2008; Gintis et al. 2005; Bowles and Gintis 2011), and social capital (Chamlee-Wright 2010; Lewis and Chamlee-Wright 2008). Also noteworthy are the pioneering works of Kenneth Boulding and Richard Cornuelle, which illuminated the noncommercial dimensions of civil society through their coinage of the terms integrative sector (Boulding 1968) and independent sector (Cornuelle [1965] 1993).
Figure 3.1 Contemporary examples of noncommercial value creation (including commercial/noncommercial hybrids)
How does Adam Smith’s work contribute to these conversations? Smith famously describes beneficence as “less essential to the existence of society than justice,” “the ornament which embellishes, not the foundation which supports the building” ([1790] 1984, 86). Two paragraphs earlier, however, Smith casts the justice/beneficence relationship in a very different light, juxtaposing two kinds of society: (1) a “mercenary society,” propelled by justice and prudence only, with “no mutual love and affection” among the different members, yielding a society that is “less happy and agreeable” but “will not necessarily be dissolved”; and (2) a “flourishing and happy society,” “[w]here the necessary assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem” (85).
Smith posits here a spectrum of societies, from “prudence and justice only” to “beneficence only.” His focus is not on the polar extremes but on the golden mean – commerce and beneficence not as alternatives but as complements. Parallel to his discussion of ordinary and superior prudence ([1790] 1984, 216), Smith’s point is that beneficence is an essential element in more civilized forms of commercial society. Indeed, he makes beneficence the line of demarcation separating “flourishing and happy” commercial societies from those that merely “subsist” based on the “mercenary exchange of good offices” (85–86). Justice is a necessary condition for any society; but once a society crosses this subsistence threshold, people generally seek and achieve higher levels of flourishing and happiness.
The complex fusion of mercenary and beneficent modes of cooperation – the motivational and institutional pluralism – implicit in Smith’s vision of the flourishing and happy society is supported by two other pillars of his theory. One is his definition of commercial society as a society in which “every man … lives by exchanging” ([1776] 1981, 37) and the related claim that our human propensity to “truck, barter, and exchange” derives from our “faculties of reason and speech” (25). Across TMS and WN, Smith develops a rich, multifaceted analysis of exchange, including sympathetic exchange, as a social process that emerges from and also cultivates our human capacity to “treat strangers as though they were honorary relatives or friends” (Seabright 2004, 34).
A second pillar is Smith’s notion of a “common centre of mutual good offices” ([1790] 1984, 85), a banking metaphor he employs in TMS and WN to describe the fruits of complex collaboration. In his WN account of the common stock of mutual assistance generated by networks of specialization and trade, Smith writes:
As it is by treaty, by barter, and by purchase, that we obtain from one another the greater part of those mutual good offices which we stand in need of, so it is this same trucking disposition which originally gives occasion to the division of labour … The most dissimilar geniuses are of use to one another; the different produces of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, where every man may purchase whatever part of the produce of other men’s talents he has occasion for.
([1776] 1981, 27, 30)
Similarly, in TMS he describes the societal fund of mutual aid afforded from love, gratitude, friendship, and esteem as a “common centre of mutual good offices” ([1790] 1984, 85). These parallel statements, designating “mutual good offices” as Smith’s general concept of value or wealth, provide an analytic bridge linking his discussions of commercial and noncommercial exchange and highlighting a common premise of TMS and WN, that without “the power or disposition to barter and exchange” (broadly understood), the diverse goals, ideas, and labors of individuals “cannot be brought into a common stock, and do not in the least contribute to the better accommodation and conveniency of the species” ([1776] 1981, 30).
On this interpretation, Smith provides the conceptual architecture for a “humanomic” reconstruction of political economy (McCloskey 2011) in which the extended order of human cooperation is inextricably commercial and noncommercial. Commercial society is one world, one great web of benefaction (“one common centre of mutual good offices”), generated by one integrative complex of commercial and noncommercial exchange.
Social cooperation in TMS
The object of Smith’s TMS is extensive noncommercial cooperation generated though sympathy-based exchange and the ongoing (re)formation of social rules. As in WN, Smith’s analysis is framed by the general problem of all-around interdependence, the fact that “[a]ll the members of human society stand in need of each others assistance” ([1790] 1984, 85), with the added stipulation that humans face a fundamental knowledge problem in their efforts to understand and assist one another. Our senses cannot “carry us beyond our own person,” Smith argues; hence “we have no immediate experience of what other men feel” (9).
The key to overcoming our epistemic isolation and the conceptual cornerstone of Smith’s moral theory is sympathy. Smith defines sympathy not as pity or sorrow but “fellow-feeling with any passion whatever” ([1790] 1984, 10). It is, above all, fellow-feeling, a sense of identification and equality (my fellow, my equal) with others. Smith stresses that sympathy is not merely a passive feeling or imitative reflex. To sympathize is to render an affirmative judgment on the propriety or the merits of the motives and conduct we observe in others and in ourselves. To render these various judgments, we must perform an “imaginary change of situation,” to imagine “what we ourselves should feel in the like situation” (21 and 9).
Smith insists that the capacity for sympathy is not confined to “the virtuous and humane” but is present and ripe for cultivation in all human beings ([1790] 1984, 9). He likewise assumes that all persons are capable of obtaining the sympathy or approbation they desire from others. Acquiring sympathy is not automatic either. Since sympathy requires another person’s positive judgment of our case, and since our individual lifeworlds are idiosyncratic and private, sympathy must be negotiated. We must persuade others that our case warrants their sympathy.
Sympathetic exchange between actor (demander) and spectator (supplier) is thus a process of persuasion and compromise. If the demander is unable to obtain the sympathy she seeks, she can modify the terms of her proposal until she and the spectator strike a mutually agreeable “concord” ([1790] 1984, 22). This exchange process generates knowledge and value (“mutual good offices”) for both parties. Just as the spectator must exercise his sympathetic imagination in order judge the actor’s case, the actor too must try to imagine how her situation will appear to the spectator (21–22). In so doing, both parties gain valuable knowledge of self and others and enhanced capacities for obtaining and providing sympathy in other situations.
Smith’s discussion of bilateral exchange between actor and spectator sets the stage for the main event in TMS: the shift from this person-to-person mode of sympathetic exchange to an impersonal mode in which the spectator is no longer a ‘partial’ spectator but a neutral, well-informed third party, an “impartial spectator” ([1790] 1984, 24). The impartial spectator serves as a social mirror to the actor. In response to the actor’s tacit bids for sympathy, the impartial spectator issues positive and negative feedback in accord with evolved social rules and norms, enabling the actor to “[view] himself in the light in which he is conscious that others will view him” and encouraging him to “humble the arrogance of his self-love, and bring it down to something which other men can go along with” ([1790] 1984, 83).
In short, pace Otteson (2002), we find a deep congruence between the impartial spectator of TMS and the commercial market of WN as engines of social learning. The impartial spectator plays a coordinating role, nudging each individual toward mutually beneficial compromises between their interests and the interests of others ([1790] 1984, 134). General rules and norms of propriety and merit tell actors which motives and forms of conduct are valued and how much. The impartial spectator communicates these socio-cultural “price structures,” telling individuals how the world at large is likely to judge them. In this way, Smith’s TMS shows how evolved rules and norms serve as knowledge surrogates in a manner analogous to market prices, providing valuable feedback that enables us to cooperate more effectively with others, even without detailed knowledge of others’ needs and difficulties.
Like market prices, social rules and norms are subject to ceaseless pressures for change. As Otteson explains (2002, 101–133), Smith conceives the relationship between actors and impartial spectators as a two-way conversation. Working from the premise that each individual is free to judge the prevailing rules of his or her society, Smith argues that “general rules of morality … are ultimately founded upon experience of what, in particular instances, our moral faculties, our natural sense of merit and propriety, approve, or disapprove of” ([1790] 1984, 159). Based on our “continual observations upon the conduct of others,” we “form to ourselves certain general rules concerning what is fit and proper either to be done or to be avoided” (159). Social rules emerge and evolve from these case-by-case assessments, becoming operative “standards of judgment” (160). Implicit in Smith’s theory is the important role of constitutional entrepreneurs who perceive gaps or inconsistencies in the prevailing value structure and respond by introducing new or revised rules, fueling competition over social rules and thus providing a civilizing check on inhumane customs and traditions.
Beneficence unbound
A key premise of the Hayek–Coase interpretation of TMS and WN is that Smith embraced the Stoic view of the human condition according to which “human affection and care are ordered spatially around the self in a concentric pattern” (Forman-Barzilai 2011, 8). Smith seems to affirm this view in the memorable opening paragraph of TMS VI ([1790] 1984, 219):
Every man, as the Stoics used to say, is first and principally recommended to his own care … After himself, the members of his own family, those who usually live in the same house with him, his parents, his children, his brothers and sisters, are naturally the objects of his warmest affections. They are naturally and usually the persons upon whose happiness or misery his conduct must have the greatest influence. He is more habituated to sympathize with them. He knows better how everything is likely to affect them, and his sympathy with them is more precise and determinate, than it can be with the greater part of other people.
Yet after granting this stylized fact as a starting point for his Book VI discussion of the virtues, Smith proceeds to undercut and deviate from the Stoic anthropology in numerous ways, particularly in his discussion of beneficence. Smith’s appropriation of the Stoic concentric circles premise is thus undoubtedly, as Forman-Barzilai (2011, 8) argues, “conflicted and incomplete.”
The crucial question becomes: What is the spatial/ethical range of Smithian sympathy? Does it extend beyond the intimate order? Can it enable ordinary persons to render effective help to distant others? Smith addresses these issues in his well-known “Empire of China” parable. The story unfolds in three parts. Smith initially frames the issue as follows:
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 connexion with that part of the world, would be affected upon receiving intelligence of this dreadful calamity.
([1790] 1984, 136)
Smith asserts that in the absence of any “connection with that part of the world,” the man of humanity would feel only fleeting sympathy for the disaster victims:
[W]hen all [his] 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 tranquility, as if no such accident had happened. The most frivolous disaster which could befal [sic] himself would occasion a more real disturbance. If he was to lose his little finger tomorrow, he would not sleep tonight; 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.
(Ibid., 136–137, emphasis added)
Some commentators, presupposing the “concentric circles” view of Smith’s moral theory, reduce the entirety of Smith’s argument to this initial stage (Singer 2009, 50). But the parable’s main lessons only emerge after Smith asks a second question: “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?” Smith answers “no,” but then poses his ultimate question:
[W]hat 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 “that feeble spark of benevolence which Nature has lighted up in the human heart,” Smith argues. Rather, it is the voice and authority of the impartial spectator.
It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct … 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 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.
Resisting once more the spurious equation of conscience with benevolence, Smith concludes:
[U]pon many occasions … [what] prompts us to the practice of those divine virtues is not the love of our neighbor, it is not the love of mankind … 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.
([1790] 1984, 137)
This parable captures, in microcosm, the logic of Smith’s theory of sympathy, virtue, and care. All four cardinal virtues (prudence, beneficence, justice, and self-command) are in play; and Smith affirms his general premise that all persons, not just “men of extraordinary magnanimity and virtue,” possess the full suite of virtues ([1790] 1984, 138). The central lesson, however, is that the actor’s sense of duty – inspired by “the propriety of generosity” (beneficence) and “the deformity of injustice” (justice) and rendered active by his self-command – is triggered by the man’s awareness of his influence over the welfare of the distant Chinese. Initially he was powerless to prevent or ameliorate their suffering. But once in a position “to affect the happiness of others,” his conscience and dignity compel him to sacrifice his little finger (137–138). A secondary lesson lies in Smith’s claim that the man’s sacrifice is motivated more by the “superiority of his own character” than by any real empathy or concern. The ethical shallowness of the actor’s response reflects the premises of Smith’s parable, namely: (1) “he never saw them” and (2) he had “no connection to that part of world,” hence no reservoir of gratitude or fellow-feeling for the imperiled strangers; hence (3) the man’s only connection to them is his supposed ability to prevent the disaster by sacrificing his finger.
Figure 3.2 Engines of extended sympathy
Together, the Empire of China story and Smith’s discussion of the virtues in TMS VI provide the elements for a robust theory of “extended sympathy” beyond the intimate order. As described in Figure 3.2, Smith posits three overlapping sets of circumstances that singly or in combination activate a person’s conscience or sense of duty, signaling a change of circumstances and urging the individual to reassess and possibly reallocate their “limited powers of beneficence.”
Potency
In contrast to the ethical atomism of the neoclassical “perfect competition” model that many undergraduate textbooks identify as Smith’s invisible hand theory (Milgate 2009), Smith assumes that actors are conscious of their influence – their causal potency – over others’ well-being within certain domains. He further assumes that our beneficent inclinations are generally “stronger or weaker in proportion as our beneficence is more or less necessary, or can be more or less useful” ([1790] 1984, 218). Hence, other factors being equal, we are inclined to give more in situations where we discover ways to make a positive difference in the lives of others.
Reciprocity
Smith highlights our ingrained human propensity to extend beneficence to persons “whose beneficence we have ourselves already experienced” and the multiple ways in which this reciprocating impulse is reinforced by the intrinsic rewards of conscience (“the sympathetic gratitude of the impartial spectator”) and the extrinsic recompense of others.
No benevolent man ever lost altogether the fruits of his benevolence. If he does not always gather them from the persons from whom he ought to have gathered them, he seldom fails to gather them, and with a tenfold increase, from other people.
([1790] 1984, 225)
Smith’s notion of reciprocity also encompasses a broader logic of tit-for-tat retaliation:
As every man doth, so shall it be done to him, and retaliation seems to be the great law which is dictated to us by Nature. Beneficence and generosity we think due to the generous and beneficent. Those whose hearts never open to the feelings of humanity, should, we think, be shut out, in the same manner, from the affections of all their fellow-creatures, and be allowed to live in the midst of society, as in a great desert where there is nobody to care for them, or to inquire after them.
([1790] 1984, 82)
Smith designates two categories of person recommended to our beneficence by a sympathy-based identification or fellow-feeling. One is persons “distinguished by their extraordinary situation; the greatly fortunate and the greatly unfortunate, the rich and the powerful, the poor and the wretched” ([1790] 1984, 225). The other is defined broadly as persons “who most resemble ourselves” ([1762–3] 1982, 184), with whom we share a common identity as members of particular groups. Smith cites “colleagues in the office,” “partners in trade,” “neighbours,” and persons “to whom we attach ourselves [as] the natural and proper objects of esteem and approbation” ([1790] 1984, 224–225). However, the general category of persons “who most resemble ourselves” would also include persons recommended to us by shared bonds of culture, ethnicity, race, nationality, ideology, gender, class, or other forms of affinity through which we come to regard fellow members as part of “us.” Smith assumes that our shared sense of community or belonging will inspire added degrees of sympathy for these persons. The shared identity and added sympathy serve as a knowledge surrogate, a means of imagining the lives of our fellows. In this sense “[a] common identity can substitute for face-to-face relations” (Offer 1997, 468).
Competing claims on our limited beneficence
Smith acknowledges the endless ethical dilemmas inherent in these multiple objects of sympathy and beneficence, but claims “[w]e shall stand in need of no casuistic rules to direct our conduct” as we negotiate these competing claims. When such conflicts arise, individuals are capable of resolving them by exercising their own ethical judgment:
When those different beneficent affections happen to draw different ways, to determine by any precise rules in what cases we ought to comply with the one, and in what with the other, is, perhaps, altogether impossible … [and] must be left altogether to the decision of the man within the breast, the supposed impartial spectator, the great judge and arbiter of our conduct. If we place ourselves completely in his situation, if we really view ourselves with his eyes, and as he views us, and listen with diligent and reverential attention to what he suggests to us, his voice will never deceive us.
([1790] 1984, 227)
Eccentric, not concentric
Smith upholds the Burkean view that our active duties must not exceed “our very limited powers of beneficence” (Smith [1790] 1984, 218). Yet by emphasizing the multiple avenues by which persons about whom we know relatively little are “called … to our benevolent attention and good offices” (225), he casts ethical proximity as an emergent property of human interaction, a result whose characteristics cannot be deduced from properties of its constituent elements (Lewis 2011). Borrowing James Buchanan’s powerful phrase, Smith suggests that the order in which individuals are “recommended to our beneficence” is not a predetermined order based on blood ties or geographic proximity but “an order defined in the process of its emergence” (Buchanan 1982), shaped by the shifting interests, associations, and judgments that constitute our “natural affections” and moral imaginations.
Smith’s analysis thus conforms less to a “concentric circles” view of sympathy and beneficence and more to an image of what William Connolly (2002) calls “eccentric” connections: “‘cross-cutting allegiances’ that ‘exceed,’ ‘complicate’ and often ‘compromise’ the concentric connections of place that governed in the ages when people lived slow, local lives” (Forman-Barzilai 2011, 5–6). By describing Smith as an “eccentric circles” theorist, I do not mean to suggest that he sees ethical geographies as random or ever-more-cosmopolitan. Clearly, Smith believes that important differences generally exist between the types and intensities of care people are willing and able to provide for distant and intimate others. What Smith invites is a more fine-grained, social-scientific analysis of “distance” and “proximity,” to examine the variable forms of cooperation and assistance that emerge from connections animated by reciprocity, identity, or causal potency (“when the happiness or misery of others depends in any respect upon our conduct” [Smith (1790) 1984, 137–138]).
The strength of weak duties
Smith never lost sight of our “very limited powers of beneficence” ([1790] 1984, 218) or the destructive potential of the factional dynamics engendered by the human thirst for sympathy (Levy and Peart 2009a, 2009b). Persons in the heat of coalitional battle lose touch with their better judgment as factions become echo chambers, cut off from the critical give-and-take of competing perspectives and depriving actors of impartial feedback on the (im)propriety or (in)justice of their thoughts and actions. Smith also emphasizes our human propensity to lionize superiors and denigrate those of inferior rank (Hanley 2009, 50), and the myriad forms of parochialism that incline us to give preferential regard to certain types of persons over others. For example, he would be unsurprised by critics of contemporary philanthropy who claim that certain groups or problems (e.g., those with identifiable victims) tend to receive disparate shares of public attention and help while others remain faceless statistical abstractions (Atkins and Aguilar 2012).
At the same time, Smith would reject the Hayek–Boettke premise that commercial cooperation alone provides an institutional structure capable of channeling the limited knowledge and coalitional tendencies of human actors into effective social cooperation (Boettke 2012). In fact, Smith posits a host of noncommercial motives and feedback loops that serve to inspire and guide beneficent action, and which foster growth in individuals’ beneficent desires and capacities over time.
Figure 3.3 The virtuous cycle of beneficent action
The most powerful source of corrective feedback to beneficent actors is the ongoing competition for their limited supplies of attention, care, time, money, and other resources. As new knowledge and circumstances create new overlaps and conflicts among each person’s “eccentric circles of sympathy,” individuals assess the opportunity costs of their current commitments and allocate greater care and attention to persons or projects where they feel the greatest senses of duty, joy, commitment, or efficacy. As Chamlee-Wright (2010) argues, corrective feedback need not take the form of calculable prices in order to spur entrepreneurial discovery and cooperative adjustment.
Beneficent action is also a positive-sum process, generating extrinsic rewards and profitable returns from one’s impartial spectator (the “consciousness of deserved reward” [(1790) 1984, 86]). This “wealth,” in turn, sets in motion a humanomic growth process, a virtuous cycle in which beneficent action fuels the extension and refinement of our humane capabilities and vice versa, as described in Figure 3.3.
The first phase of this cycle – beneficent action increasing individuals’ stocks of virtue, knowledge, and happiness – is corroborated by experimental evidence from positive psychologists Martin Seligman and Jonathan Haidt, who find significant differences in the level and quality of eudaimonic happiness obtained by individuals who engaged in philanthropic activities vs. activities classified as “fun” (Seligman 2002, 9; Haidt 2006, 97–98, 173–174). Such actions expand givers’ “humane capital” along several dimensions, including increases in their local and tacit knowledge of where and how their beneficent resources might be most effectively invested and the cultivation of what Amy Kass calls the philanthropos tropos: a disposition to promote the happiness and well-being of others (Kass 2005, 20). The humane capital of recipients is similarly augmented: enriched by gifts received, inspired by gratitude, and better informed about how to deploy their own resources to promote the happiness of others. In the second phase of the cycle, donors’ and recipients’ higher levels of humane capital expand their potential for sustained giving and civic engagement (Gable and Haidt 2005). As Seligman reports:
In the laboratory, children and adults who are happy display more empathy and are willing to donate more money to others in need. When we are happy, we are less self-focused, we like others more, and we want to share our good fortune even with strangers. When we are down, though, we become distrustful, turn inward, and focus defensively on our own needs.
(2002, 43; see also Haidt 2006, 173–174)
This simple circuit helps us to envision how noncommercial action and interaction can become a generative process of discovery and human betterment. It suggests that “our powers of beneficence” as individuals and communities, though always limited, are not a fixed pie. Note that beneficence figures prominently in both parts of the noncommercial growth loop, affirming Smith’s dual definition of beneficence as (1) good deeds that achieve praiseworthy results and (2) the learned habit (virtue) of performing such deeds.
The larger point of the foregoing argument is that Adam Smith’s moral philosophy celebrates what Mark Granovetter (1973) might call the strength of weak duties: the humanomic quest for meaning, happiness, love, gratitude, admiration, autonomy, and growth that inspires all manner of creative, committed efforts to serve others (Cornuelle [1965] 1993; McCloskey 2006). From a classical liberal point of view, the very weakness of beneficence as an informal duty which “cannot, among equals, be extorted by force” (Smith [1790] 1984, 78, 80) and whose reach is constrained by individuals’ limited concerns, knowledge, and imagination can also be seen as its unique and enduring strength, as a wellspring of private initiative and collaboration.
Adam Smith was not altogether sanguine about sympathy-based cooperation. He readily acknowledged that the “strength” of weak duties may be good or bad – productive or corrosive of social order – depending on the rules and norms taken up by culturally imbued agents. For Smith this is not a damning indictment, however, since social interdependence in his view always cuts both ways, as “[a]ll the members of human society stand in need of each other’s assistance, and are likewise exposed to mutual injuries” ([1790] 1984, 85). He remained to the end a sober optimist about commerce, despite growing concerns about the corruptibility of commercial actors. He strikes a similarly hopeful balance of realism and idealism in TMS, never losing sight of the humbler and nobler aspects of the human condition and leaving us finally with a vision of the liberal-commercial prospect that offers a glass half full.
A new Smithian economics
Much as Boulding (1969), Sen (1977), Brown (1994), Young (1997), Griswold (1999), Otteson (2002), Montes (2004), Evensky (2005), McCloskey (2006), Hanley (2009), Forman-Barzilai (2011), Klein (2012), and others have recast the once axiomatic view of Smith’s economics as “a stupendous palace erected upon the granite of self-interest” (Stigler 1971, 265), the “commerce and justice only” view of the institutional infrastructure of commercial society stands in need of substantive revision, on the strength of Smith’s own arguments suggesting that a “commerce and justice plus beneficence” society would be happier, more robust, and more conducive to human flourishing.
Adam Smith could not begin to fathom the transglobal torrents of words, images, commodities, and sympathies through which social cooperation occurs today. Yet I suspect he would feel at home with a description of twenty-first-century commercial society as a “networked society … of individuals connected with each other in a mesh of loosely knit, overlapping, flat connections” (Benkler 2006, 376), wherein individuals are “induced … to contribute as much as possible to the need of all others” (Hayek [1945] 1948, 12–13) via a broad spectrum of beneficence-infused processes of “loving, befriending, helping, sharing, and otherwise intertwining our lives with others” (Haidt 2006, 134), including but not limited to market competition.
The old interpretation of Smithian economics is characteristically monist:
• the individual: one human nature (narrow self-interest)
• the economy: one cooperative institution (markets; specialization and trade)
• Adam Smith: one ideological position (Chicago School free-market economics).
The new Smithian economics, visibly emergent since 1990 and more faithful to the letter and spirit of Smith’s writings, is philosophically pluralist:
• the individual: multiple motives; variable mixtures of self- and other-regarding behavior
• the economy: complex web of commercial and noncommercial cooperation
• Adam Smith: an ideologically diverse conversation in which “more liberal elements of the left and right sides of the old political spectrum” can “work together to articulate a new vision of the free society” (Lavoie 1994, 283).
For twenty-first-century economists, Smith’s most valuable gift and challenge may be his provocative effort to rethink the Stoic concept of oikeio¯sis, commonly translated as the act or process of “appropriation or ownership, of making something one’s own … [or] of something coming to belong to oneself” (Montes 2004, 89). In light of the preceding discussion, oikeio¯sis seems an apt description of Smith’s object of analysis in TMS and WN: the processes and results of exchange whereby individuals learn to “treat strangers as though they were honorary relatives or friends” (Seabright 2004, 34). Hayek famously celebrates commerce as oikeio¯sis, the catallactic communalism in which “to exchange” means “to receive into the community” and “to turn from enemy into friend” (Hayek 1988, 112). Yet Hayek fails to recognize the oikeio¯sis of sympathy and beneficence: individuals attending to the “humbler department” of taking care of their own (Smith [1790] 1984, 237), apportioning their good offices to persons and projects they have adopted as “their own,” on whose behalf they are willing to assume some measure of responsibility. An economics (oikonomos) that encompasses both forms of oikeio¯sis, the commercial and the beneficent, might finally become a science of exchange that is properly Smithian.
Acknowledgments
Preliminary versions of this paper were presented at St. Lawrence University, King’s College London, and Texas Christian University. I am grateful to Lenore Ealy, Paul Lewis, Ted Burczak, Steve Horwitz, Emily Chamlee-Wright, Charles Hamilton, Dave Elder-Vass, Darren Middleton, and my TCU History of Economic Thought students for their thoughtful engagement and generous encouragement of my ideas.
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