Adam smith's nexus: why ethics has to play a major role in the economic theory and practice
| Autor | Klaudijo Klaser |
| Cargo del Autor | Università di Trento, Italia |
| Páginas | 2033-2056 |
— 2033 —
CAPÍTULO 94
ADAM SMITH’S NEXUS:
WHY ETHICS HAS TO PLAY A MAJOR ROLE IN THE
ECONOMIC THEORY AND PRACTICE
KLAUDIJO KLASER
Università di Trento, Italia
ABSTRACT
What is the role of ethics in the economic theory and practice? In order to answer to
this question I look at the relationship between the two main books of Adam Smith,
the Wealth of Nations (WN) and the Theory of Moral Sentiments (TMS). I show how
the ethical system developed in the TMS constitutes the moral apparatus within
which Adam Smith conceived the prototype of the homo oeconomicus, the last one set
at the basis of the whole WN. Thus, according to Smith, the market mechanism can
work on the sole axiom of “self-interest” (WN) if, and only if, we preliminarily as-
sume the moral capacity of “sympathy” (TMS). Analysing Smith’s words I also rein-
force the interpretation according to which the “invisible hand” of the WN, usually
meant to regulate mere market exchanges, has to be interpreted from a broader per-
spective as the “invisible hand” of the “sympathetic but impartial spectator” that
disciplines human behaviour on a more general level. I conclude claiming that this
precise hierarchy – ethics first, then economics – outlined by the father of the eco-
nomic science should be extended to any economic theory and practice.
KEYWORDS
Adam Smith, Economics, Ethics
— 2034 —
INTRODUCTION
Ethical concerns seem to play a larger and larger role in our economic
decisions. Economic theories and practices with a clear moral content
– e.g. social preferences, corporate social responsibility, ethical finance,
sustainable environment or social justice – are becoming increasingly
widespread. However, what is the precise role of ethics in our econom-
ic theories and practices? Ethical concerns in the economic sphere
should be considered nothing new because Adam Smith, traditionally
considered as the father of the economic science, built his well-known
economic theory on a (less well-known) solid framework of ethical
nature. This nexus is evident when we read in conjunction the two
main books of Adam Smith, that is the Wealth of Nations (Smith
1994, 1776, from now WN) and the Theory of Moral Sentiments
(Smith 1976, 1759, from now TMS), which represent the economic
and the ethical sphere respectively.
In order to provide a complete and compelling answer to the above
question I analyse in depth this relationship, starting from a brief re-
construction of the two main books and theories of Adam Smith.
Thus, in Section 1 I linger on Smith’s economic postulates on self-
interest contained in the WN. In Section 2 I outline the dense analysis
concerning the moral principles of sympathy and approval contained
in the TMS. In Section 3 I go through the so-called Adam Smith
Problem, which refers to the idea of a structural disanalogy between
the two books written by Adam Smith, who conceived two distinct,
and apparently irreconcilable, representations of the human nature.
Nowadays almost everybody agrees on the fact that Adam Smith was
not inconsistent and that the Adam Smith Problem is a fictitious
problem raised by who misinterpreted his writings. However, “there is
still no widely agreed version of what it is that links the two texts,
aside from their common author” (Wilson & Dixon 2006, p. 251).
Therefore, it is important to understand in which terms Smith was
consistent, identifying the precise nexus which ties the TSM and the
WN.
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