What I Didn’t Know About Adam Smith

Last year, when I was in the horrible, awful process of moving, I had an assortment of unwanted textbooks, clothes, and furniture that combined was worth over $1,000.  I faced two options. I could take pictures of all my items and upload them to eBay or Craiglist or even Facebook Marketplace to sell them for what they were worth. Or I could sell my textbooks to my friend who was taking the same class in the fall at a heavily discounted rate. My pockets would not be as full, but I would be helping out a fellow classmate. Faced with these two options, I texted my friend and sold my textbooks to her.  Combined with a couple other sales, I walked away from my unwanted things for a grand total of little more than $200.

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Why did I sell these possessions for so little? The work of Adam Smith helps explain why I acted, not out of self-interest, but out of sympathy.

Adam Smith was a Scottish, moral philosopher who is considered the father of economics after his book, An Inquiry into the Nature and Causes of the Wealth of Nations. This revolutionary work was published in the same year the founding fathers published their own revolutionary document (aka, the Declaration of Independence). While The Wealth of Nations is over 900 pages long, the SparkNotes version is that the power of self-interest can coordinate an entire economy as if by an invisible hand (catchy, right?).  

However, Adam Smith thought the study of national economic growth was actually secondary to the topic of his first work, The Theory of Moral Sentiments. While his second book started a new field of study, he considered it  less important . (An economist who thought sentiments were more important than money?!?! Blasphemy!)

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Adam Smith cared deeply about virtue. He was more concerned about virtue than he was about lauding self-interest . He spent his life observing men and women in Glasgow, watching their behavior in the marketplace and in their community circles. He noticed how their interactions led to both good and bad outcomes. He saw how sympathy and prudence enable persons to cooperate with one another both in the buying and selling of goods and in fostering relationships.

I undersold my textbooks to a friend who was going to take the same classes in the fall. I even threw in my old tests at no extra charge. Why didn’t my ‘self-interest’ prompt me to make a huge profit? Because I sympathized with her. I knew her. She knew me. And I knew what she was in for, since I’d taken the same classes prior. We became closer friends because she knew I was giving her a great deal and that I cared more about her success in the class than making a profit.

People  act with sympathy towards others all the time. We put ourselves in their shoes, thinking about how we would want others to treat us. We look out for those closest to us because of the relationships we have.

Adam Smith observed that these virtues prospered under economic freedom. When people were not oppressed and had the ability to produce and innovate to provide for themselves and their families, he observed more virtue than vice. For example, when many stores have family and friends discounts for their employees, because they know the importance of building relationships with their workers.  To this day, economic freedom still provides the space and opportunity to learn from one another. Economic freedom increases trust and promotes social capabilities; both of which make us more sympathetic. Getting to know your hairdresser is beneficial in more ways than one; you are more likely to get a haircut you love, but you’ll also enjoy your time in the chair. Observing these types of relationships, Adam Smith built his theory on how economic freedom makes the world a better place.  

While you may not be moving anytime soon, let Adam Smith’s insights guide your actions when you talk to your hairdresser, sell your used textbooks, or befriend your local barista. Think about opportunities you face for cultivating virtue by participating in the economy. I guarantee you’ll find Adam Smith more relevant to your life than you give him credit for.
Still curious about Adam Smith’s work on virtue? Check out Russ Robert’s book, How Adam Smith Can Change Your Life for an quick, accessible application of Theory of Moral Sentiments.

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