Adam Smith’s moral philosophy underpins his greatness as an economic thinker

With 2023 marking the tercentenary of one of Glasgow University’s most prestigious alumnus, Colette Lappin explains why Smith’s economics is so important

You may wonder how Smith’s moral philosophy relates to his economic theory. After all, much of his economic theory is discussed in the realm of political philosophy rather than moral philosophy. Many right-wing politicians, such as advocates of neoliberalism, focus on Smith’s discussions on free markets and self-interest to justify their particular political philosophy. Whereas, those on the left often note Smith’s discussion of some of the downsides of capitalist systems. However, neither of these interpretations tell the full story.

One example to illustrate this is the division of labour, which is the separation of persons in a working environment based on individual skill set. In The Wealth of Nations, Adam Smith explains that the division of labour has immense economic benefits, namely, increasing productivity. This increased productivity is as a result of workers having a more specialised skill set. While there are undoubted economic benefits to the division of labour, Smith’s less quoted assessments of the moral implications and human cost of division of labour are equally important. He notes that workers could be made incapable of “conceiving any generous, noble, or tender sentiment” and any “just judgement concerning many even of the ordinary duties of private life . So, what does this mean? Well, it means that the division of labour could be very psychologically demanding for the worker. This could impact on their moral psychology where the basic function of the capacity to engage in mutual sympathy could be difficult not only in their working lives but also in their private lives. In simpler terms, overworking your staff will impact who they are as an individual, and how they form relationships with others.

Smith firstly outlines his concept of sympathy in his 1759 work, The Theory of Moral Sentiments, which is his central work of moral philosophy. Smith defines sympathy as “fellow-feeling with any passion whatsoever”. For example, feeling happy when we see others are happy or sad when we see others are sad. He further argues that humans are able to imagine how another is feeling through observing their behaviour and situation. This is also known as mutual sympathy. 

This is important because there is a correlation between mutual sympathy and good economic development. Smith acknowledges that mutual sympathy is important for overall wellbeing and if this was underdeveloped because of division of labour then this could be detrimental for the wellbeing of workers. Without the capacity to sympathise people cannot form good relationships with others. Sympathy combined with the ability to view situations from an impartial perspective, another of Smith’s central concepts, is useful not only for personal relationships but also for commercial relationships. Firstly, we could not experience good social relations with others or receive approval from others which is a natural instinct according to Smith. Developing good relationships with others can also increase economic development and without the capacity for sympathy this would prove difficult.

Many of his economic concepts could easily be misinterpreted without an understanding of his moral philosophy, such as his concept of sympathy. Smith does not believe that division of labour is always moral. While it could be difficult to reconcile this apparent dichotomy between some of his moral philosophical and economic thinking; the case of division of labour certainly shows that his economic thought is not as clear cut as some politicians may initially think.