Three Essays on Adam Smith's Moral Philosophy and Political Economy

Hairuo Tan

Advisor: Daniel B Klein, PhD, Department of Economics

Committee Members: Donald Boudreaux, Peter Boettke, Erik Matson

Buchanan Hall, #D180
April 09, 2024, 11:00 AM to 01:00 PM

Abstract:

The first chapter examines Adam Smith and Confucius’s view on morality through a comparative analysis of The Theory of Moral Sentiments and The Analects of Confucius. Smith and Confucius both base their theory of morality upon their theory of sympathy. Whereas Smith introduces the role of an impartial spectator in the process of sympathy, Confucius’s theory of sympathy is through shu, which means reciprocity or the exchange of heart. Both Smith and Confucius realize that in addition to the judgment made through the sympathetic sentiment, there is a higher judgment from above. The most important theme of The Analects is Confucius’ teaching of virtues required for making a junzi, an ideal man whose behavior is strictly guided by the perfections of his morality. The core value of junzi is ren, a comprehensive idea encompassing all virtues. One of the virtues in ren is li, known as ritual propriety. Confucius’s teaching of li shares the “loose, vague, and indeterminate” property as Smith’s view on propriety. Both li and propriety are evolving to an unattainable perfection. Other virtues subsumed in ren resemble Smith’s rendition of prudence and self-command.

The second chapter explores whether Smith allows for paternalistic intervention as an exception to his system of natural liberty, in the sense of endorsing government intervention on a justification of protecting the individual from herself. Smith does not deny the possibility of expanding the role of the government beyond the Nightwatchman-state and the provision of certain public goods. I examine the text to interpret Smith’s reasoning on three occasions where he seems to have favored an exception: (1) the ban on small-denomination banknotes; (2) the cap on interest rates; (3) the schooling of youth. My analysis argues that on these issues Smith’s justifications are primarily not paternalistic. Smith’s attitude toward paternalism is at most non-rejection or tolerance with grudges, and more likely resistance and rejection. The room for paternalism is limited because of Smith’s vision for self-development. Self-development is largely a voluntary process, which is guided by sympathetic sentiment. This process is not perfect and can be accompanied by moral corruption or self-destruction. But Smith does not suggest that those imperfections can be remedied by a government. 

The third chapter complements the second, by delving into Adam Smith's moral philosophy, to unveil the obstacle to accommodate paternalistic intervention in the Smithian political economy. Smith’s theory on moral development is a process involving self-motivation and self-adjustment. One’s moral improvement is a learning process through the practice of self-command and sympathy when interacting with another in society and observing how her conduct is perceived by others. Self-inspection is done through consulting a supposed impartial spectator so that one can serve as her own judge and become a part of a harmonious society. Smith laments cases in which individuals’ corrupted moral state, but Smith leaned against intervention by a third party, a jural equal or a jural superior, to correct someone’s moral corruption, as long as such a corruption does not result in violations of commutative justice. The bottom line is Smith’s belief that everyone is “fitter and abler to take care of himself than of any other person” (TMS, VI.ii.I.1). Justifications for paternalism, such as the prevention of one’s self-harming behavior, can find little support in Smith’s theory.