Adam Smith’s Emergent Rules of Justice: The Conversation

Vernon Smith, Some Comments Stimulated by the Adam Smith Forum Essays

Caroline Breashears cogently observes that rhetoric is at the foundation of Adam Smith’s larger system: “When we sell bread, defend our characters, or seek the sympathy of our neighbor, we engage in the art of persuasion.” 

Indeed, persuasion is central to Smith’s theory of society. The rules we create and follow are consequences of having reached a consensus that is conveyed in the Smithian concepts of propriety, approbation, impropriety, and disapprobation. Without persuasion, there can be no agreement among neighbors in which “Actions of a beneficent tendency, which proceed from proper motives, seem alone to require reward; because such alone are the approved objects of gratitude felt by the spectator” (TMS, 112). The truth of this beneficence proposition is revealed in the common English expression “debt of gratitude” and in the strong form of saying thank you with “I owe you one.” The proposition is general, predictive, and of the mathematical form beneficial action Z, under conditions X, invokes reward response Y, because it is the approved object of gratitude felt by the (fair-play and impartial) spectator. In any application, one identifies (Z, X) then observes whether or not the predicted response Y occurs. (See V. Smith and B. Wilson, Humanomics, Cambridge University, 2019 for some experimental designs and observed results motivated by a few of the many precise propositions in TMS.) 

Smith criticizes utilitarianism whose modern form has sought to explain everything, including the selling of bread, the defending of characters, and the seeking of our neighbor's sympathy, as utility yielding consequences of the individual’s action choices. In Smith’s theory of society, everyone is strictly self-interested. Moreover, in the above proposition, it must be common knowledge among the principals that more in quantity or quality of a good thing is desirable or preferred. You and I both like avocados, which are good things for us, but many do not like them. Therefore, if you do me a favor (benefit), I might reward you with a dozen avocados picked off my trees. But, unlike modern main-stream accounts, Smith distinguishes between being self-interested and acting in one’s self-interest.  

Thus, explicitly:

 “Though it may be true…that every individual…naturally prefers himself to all mankind, yet he dares not look mankind in the face, and avow that he acts according to this principle. He feels that in this preference they can never go along with him, and that how natural soever it may be to him, it must always appear excessive and extravagant to them. When he views himself in the light in which he is conscious that others will view him, he sees that to them he is but one of the multitude, in no respect better than any other in it. If he would act so as that the impartial spectator may enter into the principles of his conduct, which is what of all things he has the greatest desire to do, he must upon this, as upon all other occasions, humble the arrogance of his self-love, and bring it down to something which other men can go along with.” (TMS, 121) 

By way of persuading his readers, Smith invokes the phrase “go along with” over 40 times in TMS.  

So, in Smith’s model, strictly self-interested individuals are both own- and other-regarding in their actions because of their joint experience of sympathetic fellow-feeling, validated by third party observers who concur. This perspective is fundamentally at odds with independent utility maximization in the absence of just-so extrasensory perception. The “utilitarian” component of Smith’s model is in the little services we do for each other, as predicted in the above proposition: “These affections, that harmony, this commerce, are felt…to be of more importance to happiness than all the little services which could be expected to flow from them” (TMS, 53). 

Smith models relationships which motivate the context-dependent flow of “little services,” each of which have utility value. In utilitarianism, it is the other way around. Every chosen action reveals what must have been highest in utility, a theory without predictive content. One searches databases or performs experiments without theoretical design guidance to see what regularities might be discovered. While such exercises can be of immense value in science, I only want to emphasize that their motivation does not stem from a predictive theory. Remarkably, TMS offers a host of predictive propositions still relevant to contemporary socioeconomics, two hundred sixty-four years after their first publication.    

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In reading the comprehensive essay by Leonidas Montes, I am reminded of a second fundamental methodological distinction in Smith’s articulation of his theory of society and economy. The first, above, is his distinction between being self-interested and acting self-interestedly. The complementary second distinction is between the origins of human action and the consequences of human action (as noted by Samuel Alexander in Beauty and Other Forms of Value, Thomas Y. Crowell Company, 1968, p 249). Modern utilitarian accounts do not make this second distinction because it is the consequences of action that yield utility and therefore motivate the action. In Smith’s proposition on beneficence, the strong sense of obligation felt by the recipient of a favor to reward the action originates in their emotions of gratitude. A “debt of gratitude” is heavy and can only be removed with a rewarding action taken by the one favored. 

In the treasured Chapter II of WN’s Book I, the division of labor is deemed an unintended consequence of trade. But from whence comes the propensity to trade? As is his wont, Smith presses more deeply into the search for origins. Failing to find any, he notes that trade is a unique characteristic of humans. But that failure does not diminish his finding that the wealth of nations is a consequence of the division of labor, itself a consequence of trade, which is a consequence of gains from exchanges unaccompanied by any intention beyond achieving those narrow self-interested gains. Hence, people everywhere engage through markets, causing all to prosper but having no clue as to why. All the while, the vast majority of them imagine, as J. S. Mill did, that, having solved the problem of production, we need to focus on how to better distribute its output, as if we can achieve whatever we may collectively think we want by top-down design—a belief, as Smith might say, that is the source of half the world’s troubles.     

It was Smith’s clear-headed distinction between origins and consequences that framed his insight that wealth creation was an entirely unintended consequence of the entirely natural socially driven propensity to trade. The creation of wealth via the division of labor was not a new idea, but Smith gave it a grand comprehensive meaning that accelerated the classical liberal trend.       

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Peter Onuf elegantly and accurately summarizes Adam Smith’s intellectual and practical contributions to the understanding of human action. I am grateful to have learned from him.

Smith’s “stages of historical development” serve as a metaphor for adapting property, from rights of hot pursuit in a world of abundant game and gathering products, to domesticated animals, to domesticated plants, to appropriated land, to capital accumulation above subsistence needs in the new commercial classes. Smith’s clarity assured avoidance of the errors in Ricardo’s labor theory of value.  

I believe that Adam Smith saw North America as a testing laboratory for his simple system of natural liberty. He could sympathize with the growing aspirations of the colonists, yet remained a loyal British citizen in dissent because he believed that Britain could only be free if dissent was part of national learning. Liberty was a natural product of Hume-Smith’s “experimental reasoning.” Ben Franklin symbolized their counterpart in America. He was the grand old man of the slave-owning founders, who shared Adam Smith’s view that slavery was a moral abomination but also entertained no racial exceptions to the principle “that all men are created equal” in the Declaration of Independence and the Constitution, clearing the way for the eventual expansion of freedom to all men, and even to women and children. 

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I turn finally to the informative essay by Brianne Wolf. I call it informative because I am a consumer of Smith’s works, not a scholar of literature about his thoughts and those of his followers. It was only late in my career that I could appreciate my work as part of the Hume-Smith method of experimental reasoning. Her essay, like those of the other responders to my original piece, represents a learning opportunity for me. 

Brianne Wolf raises important questions about my discussion of Smith’s concept of justice as negative. As she notes, and I agree, justice as negative is what Adam Smith refers to as “mere justice.” But she further states: 

“V. Smith argues that justice for Smith is primarily negative. ‘It [Justice] is negative because the way we get more justice is by reducing injustice, that is, hurtful actions. Smith certainly describes mere justice in this way. But he also suggests that one would not likely be approved of, or well-liked by one’s fellows if they exercised only this sort of justice. He [Adam Smith] writes, ‘The man who is barely innocent, who only observes the laws of justice with regard to others, and merely abstains from hurting his neighbors, can merit only that his neighbors in their turn should respect his innocence, and that the same laws should be religiously observed with regard to him.’” (Wolf, 5) 

My reading of this quotation from TMS differs in that the man who observes the laws of justice cannot expect to be rewarded for doing this. Rather he “can merit only that his neighbors in their turn should respect his innocence, and that the same laws should be religiously observed with regard to him” (TMS, 76).

I interpret TMS this way because the quotation is an elaboration of what he says in the previous paragraph: 

“Though the mere want of beneficence seems to merit no punishment from equals, the greater exertions of that virtue appear to deserve the highest reward. By being productive of the greatest good, they are the natural and approved objects of the liveliest gratitude. Though the breach of justice, on the contrary, exposes to punishment, the observance of the rules of that virtue seems scarce to deserve any reward. There is, no doubt, a propriety in the practice of justice, and it merits, upon that account, all the approbation which is due to propriety. But as it does no real positive good, it is entitled to very little gratitude. Mere justice is, upon most occasions, but a negative virtue, and only hinders us from hurting our neighbour. The man who barely abstains from violating either the person or the estate, or the reputation, of his neighbours, has surely very little positive merit.” (TMS, 117, Stewart edition, italics added)

The claim that “the mere want of beneficence seems to merit no punishment” refers back to Smith’s second beneficence proposition: “Beneficence is always free, it cannot be extorted by force, the mere want of it exposes to no punishment; because the mere want of beneficence tends to do no real positive evil” (TMS, 112).

Adam Smith is saying that society treats beneficence and justice symmetrically. Just as we do not punish “want of beneficence,” we do not reward “want of breaking the law.” There is no reward for driving through a green light, only a punishment for failing to stop at a red light. His impeccable precision in articulating the theory is matched only by the rigor of his applications to life.  

Near the close of TMS, Smith records his critical assessment of positive law:   

“Every system of positive law may be regarded as a more or less imperfect attempt towards a system of natural jurisprudence, or towards an enumeration of the particular rules of justice….To prevent the confusion which would attend upon every man’s doing justice to himself, the magistrate, in all governments that have acquired any considerable authority, undertakes to do justice to all, and promises to hear and to redress every complaint of injury. In all well-governed states too, not only judges are appointed for determining the controversies of individuals, but rules are prescribed for regulating the decisions of those judges; and these rules are, in general, intended to coincide with those of natural justice. It does not, indeed, always happen that they do so…Sometimes…the interest of the government; sometimes the interest of particular orders of men who tyrannize the government, warp the positive laws of the country from what natural justice would prescribe….In no country do the decisions of positive law coincide exactly…with the rules which the natural sense of justice would dictate. Systems of positive law, therefore, though they deserve the greatest authority, as the records of the sentiments of mankind in different ages and nations, yet can never be regarded as accurate systems of the rules of natural justice….It might have been expected that the reasonings of lawyers, upon the different imperfections and improvements of the laws of different countries, should have given occasion to an inquiry into what were the natural rules of justice, independent of all positive institution….But though the reasonings of lawyers did produce something of this kind…it was very late in the world before any such general system was thought of…In the laws of Cicero and Plato, where we might naturally have expected some attempts towards an enumeration of those rules of natural equity which ought to be enforced by the positive laws of every country, there is, however, nothing of this kind. Their laws are laws of police, not of justice…” (TMS, pp 501-5) 

I want to close by thanking the four distinguished Smith scholars for their responses to one who is a deeply respectful consumer and beneficiary of Smith’s work. We are fortunate to live in a free country; a country that survives factionalism; a country where it is possible for dissent to overcome oppressive narrow-minded forms of populism; a country still predominantly influenced by bottom-up principles of government despite scary recurring threats to those principles. The widespread celebration of the 300th year anniversary of the birth of Adam Smith gives evidence that these principles continue to matter. May our descendants never fail to honor this path-finding tradition.      

Brianne Wolf, Another Propensity of Human Nature in Law and Government?

All the other excellent essays in this forum focus on Vernon’s discussion of the emphasis Adam Smith places on the propensity to truck, barter, and exchange in The Wealth of Nations. As is rightly pointed out, this propensity of human nature is also accompanied by the propensity to sympathize with others. In his essay, Onuf focuses on Smith’s reliance on historical fact rather than proclamations about human nature. Breashears and Montes, however, focus on the important propensities of human nature necessary for trade in Smith’s system. For her part, Breashears focuses on the importance of the faculty of persuasion. Montes’s essay focuses on the role of fairness in a market system as representative of the role of society, encompassing persuasion and morality in trade. Much speculation is made both in this forum and across Smith scholarship about additional works Smith was considering. As Smith writes,

"I have likewise two other great works upon the anvil; the one is a sort of Philosophical History of all the different branches of Literature, of Philosophy, Poetry and Eloquence; the other is a sort of theory and History of Law and Government” (CAS, 286-7). 

Smith’s references make one wonder if an additional human propensity would have been posited by these works. Although Breashears has persuaded me that a work about literature and eloquence would likely have focused on the faculty of persuasion and perhaps the faculty of taste (TMS I.i.4), I intend for this essay to explore what propensity would have accompanied Smith’s proposed work on jurisprudence. He defines jurisprudence in TMS: 

“The wisdom of every state or commonwealth endeavors, as well as it can, to employ the force of the society to restrain those who are subject to its authority, from hurting or disturbing the happiness of one another. The rules which it establishes for this purpose, constitute the civil and criminal law of each particular state or country. The principles upon which those rules are, or ought to be founded, are the subject of a particular science, or all sciences by far the most important, but hitherto, perhaps, the least cultivated, that of natural jurisprudence.” (TMS VI.ii.1.1)

Smith also provides an indirect definition in WN while discussing the duties of the sovereign:

“The second duty of the sovereign, that of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administrating of justice, requires too very different degrees of expense in the different periods of society.” (WN V.i.b.1)

Onuf makes a compelling point that Adam Smith’s conception of politics focuses on the opinion of the people as a kind of political market force. Indeed, throughout Book V of The Wealth of Nations, Smith emphasizes “the great body of the people.” He worries about the people’s ability to make political judgments.[1] He also discusses the oft emphasized judgment of the sovereign or legislator (e.g. WN IV.ii.39). But what propensity would animate this participation in a political regime? 

In his original essay, Vernon focuses on the pre-civil role of property rights. But what promotes adherence to the law or the conception of government at all? Another possible interpretation of Vernon’s essay is that our Smithsonian political propensity would be to seek justice.

Yet we often see the negative origins of government and politics presented in Smith’s writings. As Vernon suggests, the desire to protect property is foundational to government, especially the wealthy. Smith snidely comments, 

“Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all” (WN V.i.b.12). 

When Smith comments on the benefits of government for the rich, he sounds like Rousseau. After all, Smith’s first publication is a  review of the Frenchman’s “Second Discourse” where Rousseau says something similar: 

“The rich above all must have soon sense how disadvantageous to them was a perpetual war in which they alone paid all the costs and in which the risk to life was common to all, while the risk to goods was theirs alone…such was, or must have been, the origin of society and of laws, which gave new fetters to the weak man and new forces to the rich man, irreversibly destroyed natural freedom, forever established the law of property and of inequality, made an irrevocable right out of a clever usurpation, and henceforth subjected the entire human race to labor, servitude, and misery for the profit of a few ambitious people.” 

Onuf’s and Vernon’s essays propose that the government uses the people as a tax base. Indeed, in Book V of WN, Smith emphasizes the propensity of the sovereign to accumulate debt at the expense of the people. But Smith throughout WN disapproves of the use of government as a benefit to the rich. In particular, he railed against mercantilism or, what we might call today, crony capitalism. In a letter to Andreas Holt, Commissioner of the Danish Board of Trade and Economy, Smith wrote that the Wealth of Nations was a “very violent attack…upon the whole commercial system of Great Britain” (CAS, 250). 

The impulse for political participation for Smith is a natural love of those closest to us and a preference for their well-being. In Lectures on Jurisprudence, he calls this a propensity toward what is familiar: 

“We see that there is in man a great propensity to continue his regard towards those which are nearly connected with him whom we have formerly respected. The sons and particularly the eldest son commonly attract this regard, as they seem most naturally to come in the place of the father; and accordingly in most nations have been continu'd in their fathers’ dignity.” (LJA Iv.46)

In The Wealth of Nations, he writes: 

“Civil government requires a certain subordination. But as the necessity of civil government gradually grows up with the acquisition of valuable property, so the principal causes which naturally introduce subordination gradually grow up with the growth of that valuable property.” (WN V.i.b.3) 

Smith also identifies four parts of human nature that render us susceptible to rule by others: 1) “superiority of personal qualifications,” 2) “superiority of age,” 3) “superiority of fortune,” and finally, 4) “superiority of birth” (WN V.i.b.5-8). At the same time, because Smith recognizes that “The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scare admit of a remedy” (WN IV.iii.c.9), I argue that he wants to replace this propensity of subordination with individual judgment wherever possible because “the law ought always to trust people with the care of their own interest, as in their local situations they must generally be able to judge better of it than the legislator can do” (WN IV.v.b.16).

But this judgment must be educated. In a much-analyzed section of Book V of The Wealth of Nations, Smith details the downfall of the division of labor—the intellectual development of the worker. These insights are best grouped with those of TMS. For Smith, moral judgment develops throughout one’s life by experiencing many situations and engaging in the sympathizing process—both reacting to individuals’ behavior and seeing others react to their own. The ideal endpoint of this process is an individual who no longer requires actual spectators but can judge their own behavior as an impartial spectator would. The division of labor limits what workers will experience in the world, depriving them of adjusting and contextualizing to many different circumstances. They are confined to “performing a few simple operations” and therefore have “no occasion to exert…understanding, or…invention” (WN V.i.f.50). I think the desire to remedy this lack of exposure is one of the reasons Smith emphasizes military training and service. Additionally, Smith wants to be sure that workers can contribute to society not only morally, but also politically. He writes, “Of the great and extensive interests of his country, he is altogether incapable of judging” (WN V.i.f.50). However, in other stages of economic development, lack of invention is not a problem and “every man too is in some measure a statesman, and can form a tolerable judgment concerning the interest of the society, and the conduct of those who govern it” (WN V.i.f.51). 

As we learned from Vernon’s original essay, our emotional attachment to one another is important for justice. But as the scope of government increases, the mechanism of justice becomes increasingly out of view and the leaders in government less familiar and proximate. As Smith tells us in his “circles of intimacy,”[2] it is hard to sympathize with those who are far away from us. Just as Smith thought that extending sympathy beyond immediate circles was possible in a commercial society where “colleagues in office, partners in trade, call one another brothers.” Smith also thought it was possible to judge sovereignty beyond simple familiarity or habits of obedience (TMS VI.ii.1.15). Therefore, the concern with the government's administration of  justice is the difficulty of being spectators and commentators of an entity far removed “from the great body of the people,” leaving neighboring government officials to work together. Indeed, Smith warns us to guard against corrupt judges who can be bought off and to ensure “that justice should not frequently be sacrificed to, what is vulgarly called, politics” (WN V.i.b.13, 24).

Sentiment was always part of the motivation toward government and rules of justice, but it seems that, as the government increases in size, citizen judgment is also required to check political power.

Works Cited

Frame, Edward. and Michelle. Schwarze (forthcoming) "Adam Smith on Education as a Means to Political Judgment." Political Research Quarterly.

Nieli, Russel"Spheres of Intimacy and the Adam Smith Problem," Journal of the History of Ideas 47, no. 4 (1986). 

Oprea, Alexandra. (2022). "Adam Smith on Political Judgment: Revisiting the Political Theory of the Wealth of Nations." Journal of Politics 84(1): 18-32.

Smith, Adam. (1981 [1776]). An Inquiry into the Nature and Causes of the Wealth of Nations. Indianapolis, Liberty Fund.

Smith, Adam. (1987). Correspondence of Adam Smith. Indianapolis, Liberty Fund.

Smith, Adam. (1982 [1762-3]). LJ(A). Lectures on Jurisprudence. Indianapolis, Liberty Fund.

Smith, Adam. (1982 [1759]). The Theory of Moral Sentiments. Indianapolis, Liberty Fund.

Endnotes

[1] For more on the political judgment of the people in Smith’s work see Oprea, A. (2022). "Adam Smith on Political Judgment: Revisiting the Political Theory of the Wealth of Nations." Journal of Politics 84(1): 18-32.; Frame, E. and M. Schwarze (forthcoming) "Adam Smith on Education as a Means to Political Judgment." Political Research Quarterly. 

[2] Russell Nieli, "Spheres of Intimacy and the Adam Smith Problem," Journal of the History of Ideas 47, no. 4 (1986).

Leonidas Montes, Civilization, Persuasion and Propriety

The four exchanges triggered by Vernon Smith´s essay are different but interrelated responses. I will simply focus on some spontaneous reactions to the essays that celebrate Smith´s tercentenary.

Peter Onuf rightly refers to Adam Smith as a “history-minded comparativist whose understanding of contemporary market society was grounded in his empirical understanding of the contingent and ongoing development of state capacity, focused specifically on the problem of justice in Britain.” The rule of law combined with the British tradition of common law allows Smith to take experience as an evolutionary process. A great insight, underlines Peter, is that individuals are risk averse. And, as John Locke wrote in his Second Treatise, we value and defend “life, liberty and property”. Classical liberalism relies on this simple and very human assumption. It is also the basic foundation of self-interest. And regarding life - the most precious and first reason for self-interest - Vernon Smith delves into the way society has dealt with murder. The defense of life is Leviathan´s first civil responsibility. Yet the social and political importance of the development of murder leads Vernon Smith to argue that “victim compensation evolved into a tax as government became stronger”. This is a mark of civilization and as a final and suggestive connection Peter Onuf reminds us about the role of the United States. As a final reflection, how we have dealt with life and murder has shaped modernity.

Caroline Breashers engages with Smith's rhetoric, particularly with “the art of persuasion”. Persuasion is a key aspect that permeates all Smith’s legacy, through his Lectures on Rhetoric and Belles Lettres, Lectures on Jurisprudence, Theory of Moral Sentiments and finally Wealth of Nations. Its importance is pervasive and comprehensive, and I believe we can even talk about “sympathetic persuasion” (see Montes 2019). I do not need to persuade Caroline of the importance of persuasion. I fully agree with her. She concludes, the “desire of persuasion was a powerful human motivation for Smith”. But persuasion also involves risks: it can also become a strong and dangerous political impulse. Adam Smith and Vernon Smith are aware and alert towards the man of system who believes he knows what is best for all of us. Many enlightened politicians might attempt to move us over the chessboard of society forgetting that we can move on our own. Persuasion is a foundational concept behind exchange, division of labor and progress. But we need justice and the rule of law.

Brianne Wolf recovers Locke´s idea that property is “an extension of our right to our own person”. It is interesting to note that during the seventeenth century “property” and “propriety” were used interchangeably. They had the same meaning. Today property has a material sense, but “propriety” is still morally loaded. For example, the first part of TMS is precisely entitled “Of the Propriety of Action”. And we keep this linguistic tradition: when we talk about “proper behavior” or “to act with propriety” we refer to a moral conduct approved by society. In other words, the meaning and understanding of property has an ethical underpinning. It is even related to sympathy through the Greek concept of oikeiosis, something that Smith knew well.

David Hume - and a fortiori Smith - knew that “there is no conception of justice until there is property”. Justice is a social phenomenon, an artificial virtue that evolves. This evolution is social. And justice evolves as we socialize. In this sense, as Brianne reminds us, the role of sympathy is evident. Sympathy is the human principle that defines ethics. Yet the sympathetic process requires sentiments and deliberation. For that very same reason, in her brief but consistent “Affective Foundations of Property, Justice and Political Judgment” we feel and understand the value of ideas. If civil society rests upon justice and property, without sympathy there would be no society. But without justice and property there would be no society.

Inspired by Vernon Smith´s first essay, Peter Onuf takes us into progress and civilization. Caroline Breashers, into persuasion, and Brianne Wolf to the world of classical liberal ideas through John Locke´s concept of property. In a way, society and human nature emerge through the lens of Adam Smith´s sympathy and self-interest. What a great and consistent way to celebrate his 300th birthday. 

References

Montes, L. (2019) “Adam Smith’s foundational idea of sympathetic persuasion”, Cambridge Journal of Economics, Vol. 43(1).

Caroline Breashears, Doing Justice to Adam Smith

Adam Smith would have loved how this forum modernizes the virtual public sphere of the Enlightenment. His personal library—with its copies of Joseph Addison and Richard Steele's Spectator papers—attests to his interest in how we improve society through civil debates. Smith engaged in such conversations in his clubs, his letters, and of course his books, where he responded to numerous philosophers from Frances Hutcheson to David Hume. Our forum does justice to that tradition and the enduring value of Smith's ideas. 

Professor Montes expands on an earlier discussion with our own Professor Vernon Smith about the complex meaning of "fair" in The Wealth of Nations. He connects this point with "a kind of marketplace of persuasion," arguing, "if the word 'sympathy' does not appear in WN, the sympathetic process is present as moral exchange." Professor Montes demonstrates how rational trade and the moral basis of exchange rest on "fairness and persuasion," drawing our attention to the uniquely human process:

Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that. (WN I.ii.2) 

As Professor Montes observes, Adam Smith taught us that "fair and deliberate exchange" is the basis of a liberal order. Ultimately, "reason and sentiment interact, even when we think about justice and the market." Yet, he observes, linguists have shown that the term "fair" is complex and perhaps untranslatable.

It is possible that Adam Smith used "fair" in the passage quoted above precisely because of the richness of its eighteenth-century English connotations. Smith was fascinated by language, as evident in his "Essay on Languages," and his systematic approach informs his review of Samuel Johnson's Dictionary for the Edinburgh Review (1755-56). While Smith admired Johnson's accomplishment, he regretted that the dictionary was insufficiently "grammatical."  

While Smith's review does not analyze Johnson's definitions of "fair," he kept the two folio volumes of the Dictionary, where Johnson identifies a range of meanings, including "pleasing to the eye"; "clear; pure"; "favourable; prosperous"; "likely to succeed"; "equal; just"; "not effected by any insidious or unlawful methods; not foul"; "not practicing any fraudulent or insidious arts"; "open; direct"; "gentle; mild; not compulsory"; "pleasing; civil"; "equitable; not injurious"; "gently, decently; without violence"; "civilly; complaisantly"; "happily; successfully"; "on good terms"; "honesty; just dealing"; and "an annual or stated meeting of buyers and sellers."  

Johnson thus associates "fair" with not only a place of exchange but justice, openness, civility, prosperity, and even beauty. These are all qualities Smith promotes throughout The Wealth of Nations, The Theory of Moral Sentiments, and his Lectures on Jurisprudence and on Rhetoric and Belles Lettres. 

The absence of those qualities, as Professor Onuf's essay suggests, raised Smith's ire, particularly in Part IV of The Wealth of Nations. Smith there becomes more explicit in his assault on mercantilism, or what Professor Onuf describes as "state-sanctioned capitalists." Smith's readers would have recognized in his descriptions of mercantilism the opposite of "fair" dealings—indirection, inequity, compulsion—with other countries and of course America.  

Adam Smith's emphasis on justice does not stop there. In The Theory of Moral Sentiments, as Professor Smith observes, he associates justice with protection from murder, theft, and violation of contracts. As scholars such as Daniel Klein have shown, Adam Smith also attends to distributive and estimative justice. 

I am most struck by Smith's final observations on justice in the sixth edition of TMS (1790), which was published shortly before his death. He notes the challenge of achieving justice in all its manifestations, including in the sense Dr. Johnson defines first: "the virtue by which we give to every man that what is his due." What happens when society misjudges us? What happens when our own impartial spectator, the man within the breast, is at odds with the judgment of others? 

These were not abstract problems for Smith. He resented misjudgments about his friend David Hume, a religious skeptic, and collected pamphlets on the infamous case of Jean Calas, who was unjustly executed for the murder of his own son (a case Smith addresses in TMS III.2.11). Smith's library contained additional books that addressed the search for tranquility and justice. In his copy of George Anne Bellamy's Apology (1785), one heavily dogeared page concludes a passage in which the author bemoans the cruelty of others. She addresses "goodness" as that "sweet dictator of the human breast," which leads to "happiness here as well as hereafter," and is a "divine influencer of tranquillity [sic]." The hope for justice sustains her.

Justice and tranquility appear with new urgency in Smith's final revisions to TMS Part III. He discusses how society might misjudge a person who then begins to doubt the judgment of his own impartial spectator:

In such cases, the only effectual consolation of humbled and afflicted man lies in an appeal to a still higher tribunal, to that of the all-seeing Judge of the world. . . . A firm confidence in the unerring rectitude of this great tribunal, before which his innocence is in due time to be declared, and his virtue to be finally rewarded, can alone support him under the weakness and despondency of his own mind, under the perturbation and astonishment of the man within the breast, whom nature has set up as, in this life, the great guardian, not only of his innocence, but of his tranquillity [sic]. . . . That there is a world to come, where exact justice will be done to every man . . . is a doctrine, in every respect so venerable, so comfortable to the weakness, so flattering to the grandeur of human nature, that the virtuous man who has the misfortune to doubt it, cannot possibly avoid wishing more earnestly and anxiously to believe it. (TMS III.2.33)  

However unjust a society, Smith raises this possibility of a final "exact justice" for each individual. The expectation of this justice is a guardian of our tranquility. He depicts this hope  with beauty and sympathy. 

Sympathy is also essential in dealing with hard problems in the present. In WN, Professor Wolf observes, "Smith was very interested in the American case and especially the possibilities for sympathy and consequently moral and political judgment that were lost between the Americans and Britain because of the structure of empire." Rights matter, she observes, but a society must recognize and defend them through the sympathetic process.  

The sympathetic process informs all of Smith's teachings, helping us to understand, judge, communicate, and act. It also runs throughout this forum, which extends the eighteenth-century virtual public sphere to the present. Whether we would meet Smith's criteria for good writing—"perspicuity of style," conveying our sentiments "by sympathy," regulating our exuberance and bringing it "to that pitch which will be most agreeable"—might be debatable, but I like to think that Smith would be pleased.  

Peter S. Onuf, Law, Market, and Nation-State

My co-respondents evoke a sympathetic and engaging image of Adam Smith (AS), the enlightened moral philosopher, in their responses to Vernon Smith’s (VS’s) provocative short essay. I am “persuaded” by Caroline Breshears’s account of “Smith’s rhetorical ideals,” Brianne Wolf on his “sympathetic system” and Leonidas Montes on “fairness” and the “moral foundations” of his “account of human nature.” The collective portrait rings true to my understanding of AS and the ethos and aspirations of an enlightened, improving age. But the historian wants to know where this “system” (in an era of proliferating systems) came from? VS convinces me that AS asked the same question. AS’s brief comments on murder and capital punishment suggest the answer I develop at much greater length than either he or, I’m guessing, VS, would have thought useful. 

AS the system-builder was focused on the present state of the British nation and its future prosperity. I’m not sure his “main concern…was improving the condition of the poor” (Montes, my emphasis), but I do agree with Wolf about his strong and inclusive conception of the “nation” or “people,” their “emotional attachment to the law via their sympathy with each other” and their “thick emotional ties.” This was AS’s version of Benedict Anderson’s “imagined community. Getting the history right would be of no great concern to the philosopher—or to the political economist who imagined the “nation” that had emerged with an expanding and increasingly integrated “market” and the “propensities” it mobilized and unleashed. For most purposes, AS could fall back on the stadial theory of historical development, dismissing fanciful notions of an original social contract. AS instead leaned into the future, seeking to enlighten policy-makers about impediments to market freedom and social and economic progress. Yet as his stray comments on crime and punishment in early Britain reveal, AS was a capacious thinker who also recognized the distinctive historical circumstances of contemporary Britain.

How did Britain become a modern, market-based commercial society? My fellow respondents rightly emphasize the importance of culture in sustaining and expanding the ambit of reciprocal recognition and trust in “the social field of communication,” or what Montes calls “a kind of marketplace of persuasion.” Emphasizing speech, they acknowledge the distance between past and present, between “very early times,” when the meaning of words was “ambiguous” and misunderstanding fostered endemic conflict and the modern era, when (quoting AS), “the Introduction of Commerce…brings on the improvement of Prose” (Breshears). Responding to VS’s emphasis on “resentment and punishment,” Montes invokes AS’s “evolutionary perspective,” discovering in his famous formulation of “our [putatively universal] propensity to ‘truck, barter and exchange,’” a teleology or “final cause” in its endpoint, “exchange.” The “moral foundations” of human nature that animate AS’s moral philosophy and VS’s experimental economics are thus realized in modern commercial society. For historians, “foundations” (or “pathways”) come first. For AS’s sympathetic interlocutors, they are immanent in human nature and revealed through history. “Since the eighteenth century,” Montes hopefully concludes, “we have improved towards a much better living together.”

Wolf draws on David Hume as well as AS in developing her “spectatorial theory of property rights.” Emphasizing the “conversational” rather than “contractual” origins of modern society, she questions VS’s thesis that “our natural impulse for revenge” is foundational, suggesting instead that AS used “these passages to check this same impulse in his readers.” Sociable modern people define themselves against their “barbarous” ancestors, becoming civil and enlightened by “interacting with people over time” and arriving “at the best rules for protecting property.” Sympathetically engaging with her enlightened subjects, she joins them in discovering the “necessary foundations of civil society” and a “robust system of property rights” in the domain of “affective ties” and a common culture “beyond the legal enforcement of injury or infringement” (my emphasis). Until they are made “tangible for the average person,” property and exchange are both “ephemeral economic concept[s].” To the skeptical historian these concepts might “seem arbitrary and relativist,” self-evidently historically contingent, impossibly “foundational.” But Wolf and her colleagues give us a valuable, ahistorical perspective on how Smith and his colleagues made sense of their emerging and supposedly improving world. Thinking (and feeling) with their subject, they give us “a different (and inspiring) understanding of liberalism” in its formative moment.

Yet there is also value in thinking historically and following AS’s and VS’s provocative, disquieting commentary on crime, punishment and the formation of modern, sovereign nation-states. For students of AS it is particularly important to keep in mind that the recently United Kingdom was becoming the dominant fiscal-military state of its time, demonstrating an extraordinary capacity to threaten and make war across the frontiers of its far-flung empire, on land and at sea. The efficacy of government at home, in the great British metropolis, may have depended on accommodating the power of public opinion and adhering to the principle of fair play (though we should never underestimate the important of coercive sanctions in preserving the King’s peace), but the very visible hand of state power played a critical role in extending and sustaining empire. The wealth of the nation might promote the prosperity and welfare of the British people, but its primary role was to finance the insatiable demands of making war and keeping the King’s peace—as AS very well knew.