Question

Much has been written about the so-called “Adam Smith Problem;” the apparent dichotomy between his Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. Discuss whether these two works are reconcilable with one another. Do they reflect two very different imaginations of humans? Do they suggest that the author changed his mind after writing the first book? Might they represent a more complex and unifiable imagination of who we are or can be?

Answer 1

“Adam Smith Problem”, a term that has haunted the imaginations of numerous economists and have been a hot debate among the economists as to whether Smith himself differed in his approach in his two famous books, ‘An inquiry in to the Nature and Causes of the Wealth of Nations’ and ‘Theory of Moral Sentiments’. It has been highly debated that Smith has been very illicit in properly pointing out his dichotomy in this difference of opinion.

                                   However, we must understand that in the ‘An inquiry in to the Nature and Causes of the Wealth of Nations’ and ‘Theory of Moral Sentiments’, Smith has instigated or focused on the minimum and bare conditions that must prevail so that we can indulge in to any type of beneficial economic exchange in the market, whereas in ‘Theory of Moral Sentiments’, Smith has put more importance or stress on the insights or in the core development of our social connection or interaction with other social beings in order to lead a sustainable life. Both the statements by Smith are different and diverse from each other and do not cross each other’s preview. Just like, we as a social being inhibit two different worlds, where we inhibit one world in our family, where we have a different set of communication and dialog and a different way of living, in sharp contrast to the world which we live outside out homes. Here we need to interact with different people at different levels of life, which demands a specific interaction quality and the mode of exchange in terms of ideas and financial exchanges must be done in a specified and arranged manner so that all the sections of the society are in sync and we gain from this exchange. Smith’s idea in the ‘An inquiry in to the Nature and Causes of the Wealth of Nations’ and ‘Theory of Moral Sentiments’, gives us details as to how we extra virtuous when we deal with the people who are not near to each other, which implies that we can be benevolent and justifiable in our approach and communication with these people. He however, stressed that it is competition that spur’s the feeling of betterment among us and when we enter in to competition, it brings out the best in us and our knowledge level increases. Therefore, both the books of Adam Smith are in complete sync, if we look at the two books from the perspective that they were written from.