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And even though he’s the father of capitalism and wrote the most famous and maybe the best book ever on why some nations are rich and others are poor, Adam Smith in The Theory of Moral Sentiments wrote as eloquently as anyone ever has on the futility of pursuing money with the hope of finding happiness. How do you reconcile that with the fact that no one did more than Adam Smith to make capitalism and self-interest respectable?
You might be wondering what an eighteenth-century book on morality and human nature has to do with economics, Smith’s most famous legacy. Behavioral economists today do their work at the border between economics and psychology, which is very Smithian territory. But most economists in the twenty-first century try to predict interest rates, suggest policies to reduce unemployment and soften its sting, or forecast the next quarter’s GDP. Sometimes they try to explain why the stock market went up or down. They’re not particularly good at any of these things, and they often disagree on the best
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Unfortunately, what the media and the public expect from economists is what we are probably worst at—giving precise answers to questions that presume the economy is like some giant clock or machine whose innards can be mastered and then manipulated with some degree of precision. The failure of my profession to anticipate the Great Recession, to agree on how to get out of it, or to predict the path of the recovery should humble all economists.
Economics helps you understand that money isn’t the only thing that matters in life. Economics teaches you that making a choice means giving up something. And economics can help you appreciate complexity and how seemingly unrelated actions and people can become entangled.
The idea that other people care about themselves is generally a good thing to remember if you want them to do something for you in return.
Hillel, the great first-century BCE Jewish sage of the Talmud, asked, “If I am not for myself, who will be for me? If I am only for myself, who am I?” Smith’s answer is that if you are only for yourself, if you would save your finger by killing millions, then who you are is a monster of inhuman proportions.
we imagine being judged not by God, and not by our principles, but by a fellow human being who is looking over our shoulder:
It is from him only that we learn the real littleness of ourselves, and of whatever relates to ourselves, and the natural misrepresentations of self-love can be corrected only by the eye of this impartial spectator. It is he who shows us the propriety of generosity and the deformity of injustice; the propriety of resigning the greatest interests of our own, for the yet greater interests of others, and the deformity of doing the smallest injury to another, in order to obtain the greatest benefit to ourselves.
It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble, of the grandeur, and dignity, and superiority of our own characters.
What spurs us to take care of our neighbor is the desire to act honorably and nobly in order to satisfy what we imagine is the standard that would be set by an impartial spectator.
Smith believes that our desire for approval from those around us is embedded within us, and that our moral sense comes from experiencing approval and disapproval from others. As we experience those responses, we come to imagine an impartial spectator judging us.
If you want to get better at what you do, if you want to get better at this thing called life, you have to pay attention. When you pay attention, you can remember what really matters, what is real and enduring, versus what is false and fleeting.
Man naturally desires, not only to be loved, but to be lovely.
When we earn the admiration of others honestly by being respectable, honorable, blameless, generous, and kind, the end result is true happiness.
Smith realized that people are capable of fooling themselves, rationalizing or ignoring their imperfections and lack of loveliness. In the next chapter we’ll look at self-deception and the challenges of self-awareness. But being loved and actually being lovely, rather than imagining you are, is the ideal.
The man who applauds us either for actions which we did not perform, or for motives which had no sort of influence upon our conduct, applauds not us, but another person. We can derive no sort of satisfaction from his praises.
It is only the weakest and most superficial of mankind who can be much delighted with that praise which they themselves know to be altogether unmerited. A weak man may sometimes be pleased with it, but a wise man rejects it upon all occasions.
Our lives are filled with people who want to influence us in so many different ways. People around us want to be loved, just as we want to be loved. Sometimes they fool us into thinking we’re something we’re not, either for strategic reasons or just through an honest mistake. Smith encourages us not to be fooled. He encourages us to face ourselves honestly. But perhaps the biggest challenge we face isn’t detecting false praise from others. Our biggest challenge comes from ourselves. We so much want to be lovely that we can convince ourselves of our loveliness when the reality is otherwise. The
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When the action is over, indeed, and the passions which prompted it have subsided, we can enter more coolly into the sentiments of the indifferent spectator. What before interested us is now become almost as indifferent to us as it always was to him, and we can now examine our own conduct with his candour and impartiality.
It is so disagreeable to think ill of ourselves, that we often purposely turn away our view from those circumstances which might render that judgment unfavourable.
Nature, however, has not left this weakness, which is of so much importance, altogether without a remedy; nor has she abandoned us entirely to the delusions of self-love. Our continual observations upon the conduct of others, insensibly lead us to form to ourselves certain general rules concerning what is fit and proper either to be done or to be avoided.
The Universe is full of dots. Connect the right ones and you can draw anything. The important question is not whether the dots you picked are really there, but why you chose to ignore all the others.
We don’t have enough data, and we don’t understand how things fit together. We are drunks looking for our lost keys under a lamppost not because that’s where we lost our keys but because that’s where the light is. We should be humbler and more honest. Our empirical studies are very imperfect. We often hold the views we do because of ideology and principle. Then we find some evidence that supports those views. We ignore the rest.
Everyone can explain why the stock market rose or fell yesterday. No one can predict what it will do tomorrow. It’s all just ex post facto storytelling—the narrative fallacy.
What can be added to the happiness of the man who is in health, who is out of debt, and has a clear conscience?
How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it. All their pockets are stuffed with little conveniencies. They contrive new pockets, unknown in the clothes of other people, in order to carry a greater number.
