Adam Smith and Benevolence
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In a famous passage of The Wealth of Nations. Adam Smith says:
In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
Critics of the free market often cite this passage. Isn’t Adam Smith, the main theorist of capitalism, admitting that the market rests on greed? People in a capitalist system look at their fellow human beings in a narrowly selfish way. A truly humane economy would be different. For example, the Marxist philosopher G.A. Cohen compares how people act under capitalism with the warm and friendly relations they share on a camping trip:
I do not think that the cooperation and unselfishness that the trip displays are appropriate only among friends, or within a small community. In the mutual provisioning of a market society, I am essentially indifferent to the fate of the farmer whose food I eat: there is little or no community between us….But it does seem to me that all people of goodwill would welcome the news that it had become possible to proceed otherwise, perhaps, for example, because some economists had invented clever ways of harnessing and organizing our capacity for generosity to others.
Before I comment on the critics, I’d like to set aside one observation that is correct but not on point. Hasn’t Murray Rothbard taught us that Adam Smith was not the main theorist of the free market but to the contrary abandoned the explanation of value developed by the Spanish scholastics? If so, why should we bother about his view of benevolence?
The answer to that is straightforward. Rothbard is correct about Smith’s role in economic theory, but in this case Smith got things right. Buyers and sellers in the free market do indeed act from self-interest, which by no means excludes friendly feelings for those they do business with.
If the philosopher Martha Nussbaum is right, the critics of the market have misunderstood what Smith is saying in the passage about benevolence. He is not saying that in order for the free market to work we have to rely on the low but powerful motive of self-interest, because the higher motive of benevolence is too weak to do the job. Rather, Smith is saying that it’s better to rely on self-interest than on benevolence. Smith is more like Ayn Rand than we thought.
Nussbaum’s analysis of the passage is conveniently available in her recent book The Cosmopolitan Tradition (Harvard, 2019). She says,
The famous passage…is usually read out of context…he is not claiming that all human behavior is motivated by self-interest, something TMS [The Theory of Moral Sentiments] spends seven hundred pages denying and something WN [The Wealth of Nations] has just denied. Smith is saying, instead, that there is something particularly dignified and human about these forms of exchange and deal-making, something that makes them expressive of our humanity. “Nobody but a beggar,” he continues, “chuses [sic] to depend upon the benevolence of his fellow-citizens.”
In other words, people shouldn’t be parasites. They should instead trade with others. Again the resemblance to Rand is striking. Nussbaum elaborates that for Smith, a
good society would be one in which people learn to be self-commanding, and their individual powers of agency and self-command are respected by the institutions within which they live….In a way that closely follows Cicero and other Stoic texts, and using the dog, their ubiquitous example of animal behavior, to make his point, Smith suggests that non-human animals, lacking reason and language, have available to them only a very reduced form of connection, both with one another and with humans. All they can do is to fawn in a “servile” way on the person or animal they want to please, in the hope that they will get what they want….Human beings, having language and reason, can use persuasion to get what they want and one characteristic expression of that capacity is the making of contracts and the establishment of exchange relations.
Unfortunately, Smith is by no means always this good and neither, for that matter, is Nussbaum. Smith, as Rothbard makes evident, is not a full and consistent defender of the free market, and Nussbaum is very much a supporter of the welfare state. In this instance, though, she has explained one of Smith’s arguments in a clear and convincing way. It is an argument that friends of the market will welcome.