Happy 250th birthday: Adam Smith the public figure

Ages ago, I watched a film by Salvador Dali in which an eye is deliberately slashed open with a cutthroat razor. Swooning as the jelly oozed I looked away. It was if my own eyes had been slashed. You might call it vitreous reality. I remembered this, and various other high points of theatrical and cinematic ghastliness, elation and arousal as I wrote this column. Oh and don’t worry. Writing in the space where you usually wake up to read Ross Gittins (Sydney Morning Herald) over your Weeties, this column does have some connection to economics - or at least to its founder.

You see, this month a quarter of a millennium ago, Adam Smith published his great bestseller. No, not The Wealth of Nations, but The Theory of Moral Sentiments which was published 25 years earlier and sold much better during Smith’s lifetime.

Like his compatriots in the Scottish Enlightenment, Smith felt that self-interest was too powerful a force to be demonised in moral philosophy, as he felt Christian teaching had done. As he observed:

The appetites of hunger and thirst, the … sensations of pleasure and pain, of heat and cold, etc. may be considered as lessons delivered by the voice of Nature herself … Their principal object is to teach [us] how to keep out of harm’s way.

Smith’s great theme was that self-interest was healthy if balanced by similarly powerful forces tending towards the public good. In economic life in freely competitive markets, competition and self-seeking behaviour would - miraculously - serve both private and public interests. So long as a bargain was free and informed - for instance free of a merchant’s monopoly power or of fraud - it would improve the lot of all concerned.

And Smith’s Theory of Moral Sentiments argued that people seeking their own interests in a society were united by their sympathy or fellow feeling for others. If that sounds a bit lame to you - a monopolist’s sympathy for his customers rarely stops him exploiting them - Smith wasn’t arguing that people always do the right thing. His point was subtler and more powerful. Smith observed the way we internalise others’ values and live enmeshed in social meanings and expectations.

In thrall to Newton’s explanation of the movement of planets via a single, uniform principle - that of gravity - he looked for a similar foundation for human behaviour in society. In modern parlance Smith argued that we were “hardwired” for sympathy or fellow feeling with others, not in the sense that we always take their side, but in the deeper sense that our understanding and ultimate judgment of them depends on an imaginative sympathy, on the process of being able to place ourselves in their position, to see the world through their eyes.

We feel others’ pain and elation (though not usually as strongly as them) but we do so through some act of imaginative sympathy. Horror, fear, pain and elation are all “infectious” between people in this way, sometimes viscerally so. Smith was lucky enough to avoid seeing any Salvador Dali movies but he would have sympathised with my reaction.

I see a stroke aimed, and just ready to fall upon the leg, or arm, of another person, I naturally shrink and draw back my own leg, or my own arm: and when it does fall, I feel it in some measure, and am hurt by it as well as the sufferer.

The whole of human sociality is built on these foundations. Imaginative sympathy gives us the tools to understand what others are thinking, and we care deeply what they think. (Who didn’t want to be among the “cool kids” at school?) Indeed, armed with his theory, Smith argued that those who strive for riches do it not principally because of the utility it buys, but because they crave the esteem of others. Smith despaired that we were so impressed by the wealthy.

Just as Shakespeare observed that all the world was a stage, Adam Smith introduced a similar idea to social science (or moral philosophy, as he called it). Reflecting on our own observation of others, we realise that others observe us and form opinions about us just as we do about them. This thought makes us all actors and spectators, not just of others’ actions, but ultimately of our own. We keep an eye on our own conduct contemplating what others might think of us.

The more we mature (and Smith knew that some mature more than others!) this internal questioning takes on its own moral force. We crave the approbation of others, but we know it it’s both risky and ultimately unsatisfying to simply act falsely for the sake of social appearances. A mature person ultimately craves not just approbation, but deserved approbation.