Guest Post: Adam Gopnik on Adam Smith's Real Question

In his latest entry, Capital Institute Board Member Peter Kinder reflects on the legacy of Adam Smith and his conceptualization of human nature. Invoking a lively debate in academia called 'the Adam Smith Problem', Peter reminds us that reading The Wealth of Nations with The Theory of Moral Sentiments as context is optimal to understanding Smith.

Peter Kinder writes: 
 

The Oct. 18 New Yorker has an excellent essay on Adam Smith by Adam Gopnik (behind subscription wall). Nominally, it is a favorable review of Adam Smith: An Enlightened Life (Yale Univ. Press, 2010) by Nicholas Phillipson. As with many Gopnik pieces, it provokes many musings. 

Writes Gopnik:

Smith’s real question, it turns out, was not the economist’s question, How do we get richer and poorer?, or even the philosopher’s question, How should one live? It was the modern question, Darwin’s question: How do you find and make order in a world with God?

Gopnik emphasizes the importance of reading The Wealth of Nations (1776) in context, and that context is The Theory of Moral Sentiments (1759). In order, the titles, themselves, tip the answer to Gopnik’s ‘modern question’.

In his earlier book, Adams theorized humans develop ‘inner witnesses’ who gauge their actions. The result: ‘Sympathy isn’t a reflex or a serene internal search;’ Gopnik says, it’s work. And, I’d add, it’s work a ‘village’ takes on followed by the child’s own efforts. Assembling inner witnesses, building character – to use an out-of-fashion phrase – demands hard, Scottish-type work.

Smith’s witness is, says Gopnik, ’the imaginary other we install inside ourselves to watch our own behavior.’ Summarizing Emma Rothschild, he suggests,

All those moral judges are what let the invisible hand act. Our faith, before we get to the market, that our fellow-man is like us and will seek to bargain and wheedle as we do … is primary. The narrow animal instinct is not to trade and exchange and invest; it is to hoard and guard and pillage. The acquired human trait is the market trait, and it depends on trust, sympathy. To see what happens … if there is not … a network of trust, already in place, ‘privatization’ just produces kleptocracy [as recently in the developing world].

Gopnik concludes in a paragraph that bears a close reading twice:

What moved men to make markets was ultimately their love of pleasure and happiness, and who, Smith wondered, could live happily in a society where all the wealth has been confiscated and kept in a few hands? He believed not that markets make men free but that free men move toward markets. The difference is small but decisive; it is most of what we mean by humanism.

 Peter Kinder is a Capital Institute Board Member and a contributor to the Future of Finance Blog. As a founder and former President of KLD Risk Analytics, Peter is a highly respected pioneer in the socially responsible investment movement. To read the rest of his series on Adam Smith, visit The Bell blog.

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