Smith, Adam (1723–1790)

Scottish philosopher and social scientist Adam Smith is usually considered as the founder of modern economics. His most famous work, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), has been misrepresented by conservative economic and political thinkers as a critique of any state intervention into the market. His most important economic theory, however, was that the value of commodities is based on the amount of work required for their production (labor theory of value). This was the foundation of Karl Marx's theory of capitalist exploitation (surplus value). The division of labor increases productivity, lowering the prices of commodities, and increases wealth. It requires exchange in the market given that governments do not restrict market operations by undue taxation and protective measures. Smith was one of the founders of the theory of revenue classes each of them appropriated: workers had their share of the value product in the form of wages, stockowners as profits, and landowners as rent. Each class had separate interests and it was the role of government to procure conditions of growth for the wealth of the whole nation. Smith's work also advanced the idea that consumption and lifestyle have symbolic functions that are important in maintaining and justifying social hierarchies, thus anticipating the key theme in sociology of consumption.

Currently Smith's most appreciated contribution to modern social science is The Theory of Moral Sentiments (1759, revised 1789), in which he argues that social life is founded on sympathy: the human capacity to feel what others feel and to see oneself as if with the eyes of others. Moral sentiments are founded on passions that are of three very different kinds. First, the social passions of generosity, humanity, kindness, compassion, mutual friendship, and esteem naturally guide us toward love of the other. Second, the unsocial passions of hatred and anger are evoked when we are insulted or harmed. Third, the selfish passions of happiness and sadness or joy and grief motivate us to seek our own comfort. However, none of the passions is adapted to social life. Only when they are moderated by sympathy, our capacity to judge the adequacy of the passions in each case, can they become foundations of social life. The social passions seldom hurt anyone, even when exaggerated, but expressions of kindness that, from others' point of view are out of measure to the situation, do not evoke admiration and may be interpreted as false. The unsocial passions of hatred and anger are the basis of our sense of justice, but they must be appropriate to the situation from an outsider's point of view. If someone is hurt jokingly or by misunderstanding, a violent reaction of anger might itself be considered unjustified. On the other hand, even strong feelings of anger evoked by violence against an innocent child, and consequent punishment of the perpetrator, are considered just. The appropriateness of our passions is judged by our capacity to assume [Page 1294]the imaginary role of “an impartial observer,” the “little man in the breast,” that represents the sympathy in us. Among the moral sentiments, the sense of justice is most fundamental for social life, whereas altruism based on the social passions is only an embellishment of our interactions and makes them more pleasant. Self-interest is also important, because in commercial society it is the engine of progress through competition.

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