The Impartial Spectator and the Moral Teachings of Markets

Abstract

Market skeptics have persuasively argued that the market is a social arena that is not simply amoral but that has negative moral consequences. Market apologists have offered two basic responses to this kind of charge: that the market is amoral, and that it transforms private vice into public virtue. This chapter discusses the moral teachings of the market—that is, the moral sentiments individuals are likely to acquire and develop as they engage in the market. Relying on Adam Smith’s discussions of the “impartial spectator,” that imaginary figure that each of us constructs to offer us moral guidance as we negotiate our lives, it is argued that there are good reasons to believe that our impartial spectators might be changed by our dealings in the market. Rather than celebrating selfishness and greed, the market tends to punish both vices. While the market is unlikely to promote the traditional virtues in the form that they are promoted in other contexts, the market is a moral teacher that rewards and so encourages virtuous behavior.