(1723—1790) moral philosopher and political economist
Scottish philosopher and economist. Although best remembered as an economist, Smith was a polymath, and an eminent social theorist and moral philosopher. Born in Kirkcaldy, he was educated at Glasgow university and Balliol College, Oxford. He resided in Edinburgh, and became friends with Hume and his circle, from 1748 until 1751, in which year he was appointed professor of logic at the university of Glasgow. In the following year he changed to the chair of moral philosophy. On publication of The Theory of Moral Sentiments (1759), he received patronage from the Duke of Buccleuch, enabling him to resign his chair, and subsequently devote himself to scholarship. An Inquiry into the Nature and Causes of the Wealth of Nations was published in 1776. Smith's moral philosophy differs from that of Hutcheson and Hume in its emphasis on Stoic virtues, and in particular that of self-command. Smith's man of perfect virtue ‘joins, to the most perfect command of his own original and selfish feelings, the most exquisite sensibility both to the original and sympathetic feelings of others’ (The Theory of Moral Sentiments, ii. 3. 34). His system hinges on the operation of sympathy, arising from an intellectual or moral appreciation of the situation of one who is aroused, and provoking a fellow-feeling or analogous sensation in the attentive spectator. The ‘impartial spectator’ is introduced as an explanation of the working of conscience: it is an internalization of the gaze of others, whereby I imagine what I should feel were I to have an unprejudiced and undistorted view of my own actions. The impartial spectator functions as a ‘tribunal within the breast’ whose authority derives from the censure of the world, but which nevertheless has the power to overturn the judgements of others (iii. 2. 31).
The ‘invisible hand’ for which Smith is famous first appears as a phrase in an essay he wrote on the history of astronomy. It recurs in The Theory of Moral Sentiments at iv. 1. 11. In spite of their insatiable greed and rapacity, the rich are unable actually to consume much more than anyone else, and so are led by the invisible hand to make ‘nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants’. In The Wealth of Nations the emphasis is less on equal distribution and more on the promotion of the common good that arises from the pursuit of self-interest (see also Mandeville). In economics, Smith gives the pioneering analysis of the structure of a functioning economy, and the first discussion of the benefits of the ‘division of labour’. His general optimism about the economic results of free markets has given his name a lustre in libertarian political circles that he might not have entirely welcomed, given his low opinion of the motives that lead to economic activity (see vanity). In fact, in Pt. v of the book he allows for the provision of public services out of general taxation where market mechanisms fail, and argues that the state has a vital role in providing educational services for the poor, both to ward off the ‘mental mutilation’ consequent upon industrial working conditions, and to enable them to become better workers and citizens.