Adam Smith, Philosopher and Political Economist: An Interview with James Otteson

June 17, 2011
Posted by Joe Gorra

Much has been written on Adam Smith and his perspective on ” free-market economics.” In an Acton University faculty interview with Professor James Otteson, we discuss various misconceptions about Adam Smith, the salient features of Smith’s anthropology, what Smith got right and what he got wrong, his “marketplace model” of social institutions, and how Smith’s perspective can be utilized for further work by Christian philosophers and theologians.

James R. Otteson is Executive Director of the BB&T Center for the Study of Capitalism and Teaching Professor of Political Economy at Wake Forest University. He is also the Charles G. Koch Senior Fellow at the Fund for American Studies in Washington, DC and author of the most recent book, Adam Smith (Continuum, 2011). You can read more of Otteson’s work by visiting his blog.

Here is an excerpt from our interview:

As you know, some hold various misconceptions about Adam Smith and his work. As someone who has spent a considerable amount of time studying Smith and his objectors, what would you say are the top misconceptions that scholars or non-scholars often assert about him and his work and how would you respond?

Misconceptions of Smith come from both political directions, as it were. Some have portrayed Smith as a doctrinaire laissez-faire libertarian, while others, more recently, have portrayed him as something like a contemporary progressive liberal. Neither is accurate. His review of the available historical and economic evidence led him to conclude that, after providing protection for people’s lives, liberty, and property, minimal government interference in people’s lives led to prosperity for all—including especially the poor. So he was genuinely concerned about the least among us, and his policy recommendations were based primarily on concerns about their welfare. Yet his recommendation of limited government was presumptive, not absolute: It served as a default to which exceptions could be made if the evidence for the particular case warranted it. I call his position “pragmatic classical liberalism.”

What are some of the salient features of Smith’s anthropology that help us understand his “science of man”? Moreover, how should we read Smith’s Wealth of Nations in light of his other works?

Smith accounts for the generation of shared moral standards in the Theory of Moral Sentiments by recourse to something he calls the “desire for mutual sympathy of sentiments.” In this case, “sympathy” does not mean pity: It means a “correspondence” or “harmony” of sentiments. His claim is that we all desire to see our own sentiments echoed in others, and we are chagrined and even pained when we realize our sentiments are not shared by others. Because this desire is mutual, it acts as a centripetal force drawing people into society and community with one another. It also acts as a regulative force disciplining us through rewards and punishments (achieving or failing to achieve mutual sympathy of sentiments, respectively), thereby generating—spontaneously—a moral order that is the product of human action but not of human design. Smith employs a similar “invisible hand” explanatory mechanism in the Wealth of Nations, though there the fundamental driving motivation is not the desire for mutual sympathy of sentiments but the desire of everyone “to better his condition.” The difference is explained by the fact that in the Wealth of Nations Smith is describing our exchanges and transactions with people most of whom we do not know. Unlike our moral communities, people in the marketplace are typically strangers to us; a different set of motivations is therefore appropriate. Smith argues that we are still required to fulfill the rules of justice, but that among strangers the special affections we develop for our friends and loved ones are neither expected nor, therefore, usually appropriate. In both works Smith is trying to understand the creation and development of human social institutions—moral community in TMS and commercial society in WN—and what I call his “marketplace model” applies in both. Because of the different circumstances of interaction among family and friends, on the one hand, and traders in the marketplace, on the other, different motivations are appropriate; the analyses in the books nevertheless integrate into a coherent whole.

To read the full-text of this interview, please click here.