The Forgotten Adam Smith
Theory of Moral Sentiments
Introduction
Adam Smith's The Theory of Moral Sentiments (1759) presents a sophisticated understanding of human moral psychology centred on the concept of sympathy. At the heart of Smith's thesis is the idea that our moral judgements and behaviour arise not from pure reason or self-interest, but from our capacity to imagine ourselves in others' situations and share in their emotions. He argues that when we observe others, we naturally place ourselves in their position through what he calls "sympathy" - an imaginative act of perspective-taking that allows us to feel what they feel.
This sympathetic capacity leads to what Smith calls the "impartial spectator" - a psychological mechanism we develop by repeatedly imagining how others view our conduct. It’s like an internalised moral compass that develops through social interaction. When we make moral judgements, we're essentially adopting the perspective of this impartial spectator who can view situations dispassionately.
Smith argues that this process shapes our moral development in several ways. First, it helps us moderate our emotions to levels that others can sympathise with - we learn to control our anger or grief because we understand how others would view excessive displays. Second, it leads us to act in ways that would earn the approval of an impartial observer, forming the basis of virtuous behaviour.
What makes Smith's theory insightful is how it connects individual moral psychology to broader social harmony. Unlike his contemporaries who often saw morality as either purely rational or purely emotional, Smith shows how our moral sentiments emerge from the interplay between emotion and reason, between individual psychology and social interaction. This theory laid important groundwork for his later work The Wealth of Nations (1776). While many read that work as purely about self-interest in economics, understanding The Theory of Moral Sentiments reveals that Smith saw market behaviour as embedded within a broader moral framework shaped by our capacity for sympathy.
Business Class
In The Theory of Moral Sentiments, Smith offers a critical analysis of what he calls "merchants and manufacturers" - the business class. He saw the business class through the lens of his theory of moral sentiments, and his view was not a simple one. He recognised their important economic role but was deeply concerned about their moral character and their influence on society. At the core of his criticism was the observation that merchants and manufacturers often failed to develop the kind of broad sympathy that he saw as important for moral behaviour.
The problem, as Smith explained it, stems from their particular social position and daily activities. Because merchants spend their days focused on profit calculations and competition, they tend to develop a narrowed moral perspective. Instead of cultivating the broad sympathetic understanding that Smith saw as essential for moral development, they often become preoccupied with their own interests and those of their immediate commercial circle.
This narrowing of moral perspective manifests in several ways that Smith found troubling. First, merchants often mistake wealth for virtue, falling into what Smith saw as the common but problematic tendency to admire the rich simply for being rich. Second, their constant focus on profit can lead them to view all human relationships through the lens of commercial advantage, reducing the rich complexity of human moral life to mere calculation. Perhaps most importantly, Smith worried about how merchants tend to band together to advance their interests at the expense of the broader public. He famously wrote that "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." This wasn't just an economic observation, it represented a moral failure, a breakdown in the proper functioning of sympathy that should lead people to consider the welfare of society as a whole.
Smith was particularly concerned about how the business class often sought to influence government policy. He observed that they frequently attempted to secure special privileges, monopolies, and trade restrictions that benefited themselves while harming the general public. This behaviour showed how their narrow focus on self-interest could corrupt not just their own moral sentiments but also the institutions meant to serve the public good.
However, he wasn't entirely negative. He recognised that commerce could also have positive moral effects when properly conducted. Trade requires some degree of trust and fair dealing, and successful merchants need to maintain a reputation for honesty. These commercial virtues, while perhaps narrower than the full range of moral sentiments Smith advocated, still contributed something valuable to society.
What makes Smith's analysis relevant today is how it connects to broader questions about the role of business in society. His insights suggest that while commercial activity is valuable and necessary, we need to be mindful of how it can shape and potentially distort, our moral sensibilities. The challenge he identifies is how to harness the productive power of commerce while preventing it from corrupting our broader moral and social obligations.
Inequality
Smith had quite nuanced views on inequality that were deeply connected to his broader moral philosophy.
In The Theory of Moral Sentiments, Smith recognises that inequality affects our moral sentiments in important ways. He observes that humans tend to admire and sympathise more readily with the wealthy and powerful than with the poor. This natural tendency to admire the rich, Smith argues, serves a social purpose by promoting order and stability, but it also creates moral problems that he was deeply concerned about.
Smith saw this admiration of wealth as morally problematic because it can lead people to pursue riches at the expense of virtue. He writes that this disposition to "admire the rich and despise the poor" is "the great and most universal cause of the corruption of our moral sentiments." This criticism shows how Smith wasn't simply accepting of inequality but rather saw it as potentially corrupting to society's moral fabric.
When we turn to The Wealth of Nations, Smith's treatment of inequality becomes even more interesting. While he defends a market system that inevitably produces some inequality, he argues that extreme inequality harms both economic efficiency and social cohesion. For instance, he supported progressive taxation and public education, partly because he worried that division of labour (while economically efficient) could mentally impoverish workers if they weren't given opportunities for education and cultural engagement.
Smith was very critical of how the wealthy often manipulate political systems to maintain their advantages. He wrote extensively about how merchants and manufacturers often conspire to keep wages low and prices high, arguing that their interests often run contrary to the general good of society. This shows that while Smith defended markets, he was deeply sceptical of concentrated economic power. He suggests that while some inequality might be necessary or even beneficial for economic progress, excessive inequality corrupts both our moral sentiments and our economic institutions. To understand this fully, we need to connect it back to his theory of sympathy. Smith worried that too much inequality could break down our ability to sympathise across social classes, the rich might become unable to imagine themselves in the position of the poor, while the poor might become resentful and alienated from society. This breakdown in mutual sympathy, he feared, could undermine the moral foundations necessary for a well-functioning society.
What Does it all mean for Our Time?
I would argue that Smith's insights into moral psychology, sympathy, and the relationship between commerce and society are relevant to our contemporary challenges for the following reasons. First, consider Smith's central insight about sympathy - that our moral behaviour emerges from our ability to imagine ourselves in others' positions. In our increasingly polarised world, we're seeing exactly what Smith warned about: when people lose the ability to sympathise across social, political, and economic divides, social cohesion breaks down. This is evident in how social media I have Twitter/X in mind) often creates echo chambers that limit our exposure to different perspectives, making it harder to develop the kind of broad sympathetic understanding Smith saw as important for moral development.
Second, his observations about the business class are especially pertinent to understanding modern corporate behaviour. When Smith wrote about merchants becoming preoccupied with profit calculations at the expense of broader moral considerations, he could have been describing many of today's corporate practices. Think about how companies might prioritise quarterly earnings over environmental sustainability, or how social media companies might optimise for engagement metrics while downplaying the social consequences of their platforms. These are modern examples of what Smith identified as the narrowing of moral perspective in commercial life.
Third, the way Smith connected economic inequality to moral corruption also speaks directly to our current moment. As wealth inequality has grown in many societies, we're seeing the effects Smith predicted: the wealthy increasingly living in separate social worlds from everyone else, making it harder for them to sympathise with ordinary people's struggles. This breakdown in mutual understanding affects everything from policy decisions to workplace relations.
Fourth, Smith's warnings about how business interests can capture government policy remain remarkably accurate. When we see powerful corporations (or individuals) lobbying (or buying governments) for favourable regulations or tax policies, we're witnessing exactly the kind of behaviour Smith critiqued. His insight that merchants rarely meet "but the conversation ends in a conspiracy against the public" might make us think differently about industry conferences or corporate lobbying groups.
Fifth, and perhaps most importantly, Smith's framework helps us understand why purely economic solutions aren't enough to address social problems. His work suggests that market economies need to be embedded within a broader moral framework - one that cultivates sympathy and considers the welfare of all members of society. This insight is critical as we engage with challenges like climate change, technological disruption, and economic inequality, all of which require us to think beyond narrow market logic.
Smith's ideas also help us understand why corporate social responsibility programmes often fall short. If he's right that commercial activity tends to narrow our moral perspective, then we need to think carefully about how to design institutions and incentives that encourage broader sympathetic understanding, rather than just hoping businesses will voluntarily act in the public interest.
Overall, Smith's Moral Sentiments suggests that addressing our current challenges requires more than just policy changes, we need to think about how to rebuild the capacity for mutual sympathy across social divides. This might involve everything from reforming education systems to reconsidering how we design social media platforms and urban spaces.
Adam Smith and Big Tech in Our Time
Smith's theory of sympathy suggests that moral behaviour emerges from our ability to imagine ourselves in others' positions. When we apply this to big tech companies, we can see a fundamental problem: their scale and complexity make it difficult for decision-makers to truly sympathise with the millions of users affected by their choices. For instance, when a social media company tweaks its algorithm to increase engagement, the executives making that decision might not fully grasp how it affects teenagers' mental health or democratic discourse in different communities.
This connects to Smith's observation about how commercial activities can narrow moral perspective. In tech companies, this manifests in the tendency to reduce complex human experiences to measurable metrics - "metric sympathy" rather than true moral sympathy. When a platform measures success primarily through engagement statistics or ad revenue, it's exhibiting exactly the kind of narrow commercial thinking that Smith warned could corrupt moral sentiments.
Following Smith's logic, effective tech regulation might need to focus on creating conditions that foster broader sympathy and understanding. This could take several forms. For example, requiring companies to have diverse user representatives on their boards could help inject more varied perspectives into decision-making. Regular mandatory consultations with affected communities could help bridge the gap between tech executives and their users.
Smith's broader point about markets needing to be embedded in moral frameworks suggests that pure market-based solutions won't be sufficient for tech regulation. Instead of just relying on competition to solve problems, we might need regulations that explicitly protect social goods like privacy, mental health, and democratic discourse. This could include requiring companies to conduct regular "sympathy audits" that assess how their decisions affect different user groups.
The way Smith connected economic inequality to moral corruption is relevant to debates about digital divides. As tech services become more essential to daily life, ensuring broad access becomes not just an economic issue but a moral one. This might suggest a need for regulations requiring basic digital services to be treated more like utilities, with universal service obligations.
Summing Up
What I have tried to do in this piece is to show how Smith's understanding of human morality was far more nuanced than the simplified "invisible hand" narrative he's often reduced to. I have attempted to connect Smith’s moral framework to contemporary issues, especially in the business world and technology sector. This is obviously in relation to events in the United States where technology moguls seem to have become the new oligarchs joined with the political system.
I have also tried to provide a fresh perspective on inequality. Smith, as portrayed here, wasn't simply accepting of economic disparities but saw excessive inequality as morally corrupting for both rich and poor. This helps us understand current debates about wealth concentration in the tech sector and beyond.
The big thing from the foregoing is this - If Smith is right that markets need to be embedded within a broader moral framework shaped by sympathy, then purely economic solutions won't be sufficient for addressing issues like digital divides or algorithmic bias.