A Structured Approach to the Adam Smith Problem

The often discussed but never defined “Adam Smith Problem” is in fact several issues surrounding our understanding of the philosophical framework which underlies the two published works of Adam Smith: The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. In this thesis, I examine the secondary literature and argue that this is not in fact one problem, but a set of three inter-related issues which require clarification:
(1) What principles of human nature are the works committed to and do they contradict one another?
(2) What role does the invisible hand play, and according to Smith, to what extent can we rely on it to produce the greater good?
(3) Can the economic man of Wealth of Nations be a virtuous man, and if so, how?
Having defined this more precise Adam Smith Problem, I examine Smith’s work to understand how he would answer these three questions. To explain (1), I explain how both works are committed to the understanding of human beings as cogs in a machine, unintentionally producing an order which is designed by God. With regards to (2) I argue that the invisible hand is a metaphor for these unintended but providentially designed outcomes, and contrary to some economists, does not express equilibrium in the market or sanction morality-free economics. In order to answer (3), I adapt Russell Nieli’s “spheres of intimacy” account of Smith to show that the same mechanisms are said to underlie human behaviour in both our intimate and economic lives of individuals, and thus the economic man is in fact also the virtuous man.