Adam Smith's Marketplace of Life
|Title||Adam Smith’s Marketplace of Life|
|Author||James R. Otteson|
|Review Date||July 2, 2013|
|Publisher||Cambridge University Press|
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While Adam Smith is well-known as the founder of modern economics, rather fewer are especially familiar with his work as a moral philosopher—an activity that preceded and postdated his book The Wealth of Nations (1776). Moreover, just as many modern economists will privately confess that they have never read The Wealth of Nations (after all, it contains no long mathematical equations, so why bother?); among professional philosophers knowledge of Smith’s philosophical writings, most notably Smith’s book The Theory of Moral Sentiments (1759), may well be even sparser. This absence of knowledge may help to explain why Smith’s economic thought is often caricatured as that of a Randian laissez-faire economist, while his philosophical contributions are sometimes portrayed as essentially that of applied Humean ethics with relatively little originality on Smith’s part.
Close study of the corpus of Smith’s work soon shatters these misconceptions, especially once we begin to compare Smith’s economic and philosophical ideas. In recent years, one of the best books to engage in precisely this form of intellectual inquiry is James R. Otteson’s Adam Smith’s Marketplace of Life. Published ten years ago, it marked the beginning of Otteson’s emergence as one of the best of a new generation of Adam Smith scholars.
The key to the persuasive power of Otteson’s book is the way that he explores Smith’s conception of morality and then shows how it relates to Smith’s thinking about the nature of the modern commercial society then emerging in the West. Otteson also underscores the parallels between Smith’s conception of the development of morality and the growth of market-oriented societies.
Consisting of an introduction, seven chapters, and a conclusion, Otteson begins by summarizing the then-existing state of the Smith scholarship, particularly concerning the issue of what is commonly called Das Adam Smith Problem. This is the view, especially as articulated by nineteenth-century German scholars, that there were fundamental tensions between The Theory of Moral Sentiments and The Wealth of Nations: the former with its attention to human sympathy was seen as difficult to reconcile with the self-interested being that apparently inhabited the world of the latter.
Otteson then proceeds to outline what he considers to be the essence of Smith’s moral theory, especially his concepts of sympathy, the impartial spectator procedure, conscience, and human nature (Chapters 1 and 2). This is followed by a discussion of how Smith believed people become moral beings and develop the capacity to identify moral standards and make moral judgments (Chapter 3). At this point, Otteson presents what he calls a “market model” as the “underlying conceptual structure of Smith’s account” (9).
Chapters 4 and 5 are devoted to Das Adam Smith Problem. Otteson makes the argument that many contemporary scholars may have been too quick to say that there is no problem. Otteson suggests that the picture of human motivation that emerges in The Theory of Moral Sentiments—most notably Smith’s attention to the virtues of justice, prudence, benevolence, and self-command and Smith’s pointed criticisms of Bernard Mandeville’s decidedly egocentric vision of the way the moral world “really” works—does seem rather different from the portrait of human motivation outlined in The Wealth of Nations. Reading The Wealth of Nations as a stand-alone book, Otteson notes, would give even attentive readers little-if-any indication that its author had written The Theory of Moral Sentiments. Otteson goes into some detail to explain why he regards many contemporary efforts to resolve the apparent tension as unsatisfactory.
Otteson then provides his own resolution of the two books, based upon his conception of Smith’s moral theory as detailed in chapters 1-4. To this end, Otteson suggests that “a single conceptual model for understanding the growth and maintenance of human institutions underlies both books” (171). The model, put simply, is one of a market in which free exchanges in pursuit of each actor’s own interests (broadly defined) give rise to an unintended system of order. A second factor permitting reconciliation between the two texts is what Otteson calls “the familiarity principle,” which unifies the two pictures of human motivation operative in The Theory of Moral Sentiments and The Wealth of Nations. These sections of Otteson’s book repay close reading. This is especially true of Otteson’s treatment of Smith’s understanding of the origins and nature of government and its particular responsibilities concerning justice (177-181).
In this regard, a key phrase employed by Otteson to describe Smith’s view of morality and markets is that of “unintended order.” This is important, not least because it seems to ascribe a larger role for human choice and action in the development of social, political, and economic arrangements than is suggested by, for example, the phrase “spontaneous order” much popularized by Friedrich Hayek. To this extent, “unintended order” lends itself to two things. First, it allows greater recognition of the power of human agency in consciously shaping our immediate world, something often difficult to detect in the neo-evolutionist tendencies that seem to serve as a reductionist explanatory tool for everything in the minds of many contemporary classical liberals and free-marketers. Second, it does not make the mistake of denying that the unintended side-effects of human choice and action can contribute to shaping society in beneficial ways that seem beyond the comprehension of many modern liberals and those with a penchant for extensive government economic planning.
In chapter 6, Otteson’s attention shifts somewhat to the issue of whether Smith’s approach to morality is essentially descriptive or whether it also has strong normative elements. Different parts of The Theory of Moral Sentiments and The Wealth of Nations can lead readers to believe that Smith thinks that what matters are the “facts” rather than what might be called “non-empirical realities.” Again, the tendency is often to view Smith as seeing morality as a question of contingency in the sense of relative efficiency (the implication being that those aspects of morality that are no longer “efficient” can be dispensed with). Otteson’s analysis articulates a careful challenge of that view. Without denying the strongly descriptive element of Smith’s thought, Otteson sides with those scholars who maintain that Smith’s ethical framework also had a strong normative dimension.
When discussing this issue, Otteson does not skirt or dismiss the “God-issue.” He maintains that Smith believes that “the oughts” of morality arise, ultimately, from God’s benevolent design. Heuristic devices such as the impartial spectator operate in the marketplace of morality to produce a state of affairs that Smith regards as the true human happiness that God intends for everyone. “The core virtues of morality are not only common to all ages and cultures, but Smith,” Otteson states, “wants to argue that it is no accident that they are such: God planned it that way” (255). To understand this position, Otteson maintains, we need to understand the ultimate meaning of the impartial spectator device. For Smith, Otteson holds, it “represents the fruition of the system of morality that God wants us to develop; the impartial spectator is thus the manifestation of God’s will in us, the partial manifestation, even of God himself in us” (256).
Herein we find, Otteson goes on, perhaps the biggest difference between Smith and Hume’s respective conceptions of unintended order. Hume’s would appear to not include, entail, “or perhaps even allow a grand design by God” (256). Though there is certainly an element of rule-utilitarianism in Smith, Otteson maintains that, for Smith, learning and following the system of morality is also a matter of obedience to God’s will.
Otteson turns in chapter 7 to providing further evidence that the market model does permeate Smith’s corpus of writings. In his conclusion, Otteson illustrates how Smith’s moral theory which, at least in The Wealth of Nations, permits people to follow their self-interest (within the bounds of Smith’s conception of justice) in the market, can facilitate the development of affection for and benevolence towards others in ways not so obvious in non-market economic settings. He also, however, advances the claim that Smith’s theory fails to adequately address the issue of moral deviancy, and then tries to build an explanation for such choices and actions that conforms to Smith’s view of the nature and ends of morality.
But perhaps one of the most interesting side-effects of Otteson’s book is what his study of Smith tells us about the Scottish Enlightenment. While the Scottish Enlightenment is invariably and correctly presented as helping to usher in the dawn of the modern social sciences, Adam Smith’s Marketplace of Life demonstrates that one of its most important figures—like many others of the Scottish School—did not think that being descriptive and analytical meant believing that the normative dimension of human life was somehow “not real,” or that morality had to be dismissed as hopelessly subjective.
Integrating the positive and normative aspects of human reality is not of course an easy exercise—especially when we are ceaselessly told by many contemporary social scientists and philosophers that the two have little to do with each other. Nor are attempts at integration always achieved in the most coherent manner. Adam Smith and much of the Scottish Enlightenment, however, do provide us with some ways to undertake such an enterprise, of which James Otteson’s book is a very readable and intellectually coherent example.
Samuel Gregg is Director of Research at the Acton Institute and author, most recently, of Becoming Europe: Economic Decline, Culture, and How America Can Avoid a European Future (2013).