Abstract
Among business ethicists, Adam Smith is widely viewed as the defender of an amoral if not anti-moral economics in which individuals’ pursuit of their private self-interest is converted by an ‘invisible hand’ into shared economic prosperity. This is often justified by reference to a select few quotations from The Wealth of Nations. We use new empirical methods to investigate what Smith actually had to say, firstly about the relationship between free market institutions and individuals’ moral virtues, and secondly about the further relationship between virtues and societal flourishing. We show with more quantitative precision than traditional scholarship that the invisible hand reading dramatically misrepresents both the nuance and the sum of Smith’s analysis. Smith paid a great deal of attention to a flourishing society’s dependence on virtues, including the non-self-regarding virtues of justice and benevolence, and he worried also about their fragility in the face of the changed incentives and social conditions of commercial society.
Highlights
Adam Smith is widely viewed as the defender of an amoral if not anti-moral ‘greed is good’ utilitarian school of economics in which the private selfinterested actions of individuals are translated by the invisible hand of the free market price mechanism into public prosperity
The misreading of Smith is somewhat self-sustaining, since the picture it presents of his ideas is so intellectually and morally unappealing that few business ethicists have been motivated to dig into the professional secondary literature or read him themselves
We aim to contribute to that effort of recovering the real Adam Smith for business ethics: the professor of moral philosophy who studied the classics and debated the ethics of the new commercial society with contemporaries like Rousseau, Hume, and Mandeville
Summary
Adam Smith is widely viewed as the defender of an amoral if not anti-moral ‘greed is good’ utilitarian school of economics in which the private selfinterested actions of individuals are translated by the invisible hand of the free market price mechanism into public prosperity. Despite a slew of scholarly research in the history of ideas that almost universally condemns this reading of Smith, it remains dominant in both business ethics scholarly literature (as analyzed by Hühn and Dierksmeier 2016) and textbooks (including recent ones like Crane and Matten 2016; Velasquez 2014).. The misreading of Smith is somewhat self-sustaining, since the picture it presents of his ideas is so intellectually and morally unappealing that few business ethicists have been motivated to dig into the professional secondary literature or read him themselves.. Smith’s analysis wrongly assumes that every human being is motivated only by a “natural” and self-interested desire for profit. At least in The Wealth of Nations, assumes that in all dealings a person “intends only his own gain.” Human nature follows the rule of “economic rationality”. (Velasquez 2014, 180–81)
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