Adam Smith’s Legacy for Ethics and Economics
ABSTRACT – This article challenges a popular understanding of the Wealth of Nations. According to this reading of Smith, self-interested, economic actors in free competition with each other unintentionally create a self-constraining system. This system, the“invisible hand” which governs market transactions, functions both to regulate these self-interests and to produce economic growth and well-being such that no one actor or group of actors can take advantage of other actors or take advantage for very long. We suggest that this is a misreading of Smith.
Smith is not a laissez-faire economist. Economic exchanges occur and markets are efficient, according to Smith, precisely because we are not merely non-tuistic, and economic growth depends on what today we call the rule of law. Smith was the Professor of Moral Philosophy at Glasgow, and argues precisely against, and may not have even imagined, a separation of ethics from economics, ethics from commerce; or ethics from his idea of a viable political economy.
by Patricia H. WERHANE
Darden Graduate School of Business Administration, University of Virginia and DePaul University