The Essential Adam Smith Quotes

“a sympathy or antipathy of sentiments with others,”
― James R. Otteson, The Essential Adam Smith

“The fundamental building block of Smith’s moral anthropology is the desire for mutual sympathy of sentiments,”
― James R. Otteson, The Essential Adam Smith

“Smith’s groundbreaking account of human morality, then, holds it to be an evolutionary account. We are not given moral sentiments; we do not deduce them or apprehend them once and for all. Instead, we develop moral sentiments over time. At the individual level, we train our judgment and our sentiments as a result of the interactions we have with others and the feedback we get from others’ positive and negative judgments. This feedback has purchase on us because of the pleasure we receive from achieving mutual sympathy of sentiments and the displeasure we receive from experiencing an antipathy of sentiments. We are hence encouraged to discover and follow rules of behavior that we come to see as “moral” because of our needs and desires, both of which can be satisfied only in cooperative relations with others (who can, if they like, choose not to associate with us—thus creating scarcity and competition). And our decentralized striving to discover, and follow, these rules gives rise—unintentionally, without any of us planning it—to a shared system of morality.”
― James R. Otteson, The Essential Adam Smith

“But man has almost constant occasion for the help of his brethren” (WN: 26), both because our needs and wants are more complex than those of other animals and because human beings do not have the equipment—fur, claws, wings, and so on—that nature provided other animals to enable them to satisfy their needs. What do human beings have to compensate for their relative physical weaknesses? They have “the faculties of reason and speech” (WN: 25), which enables them to discover and construct plans for cooperating with one another in ways that makes all parties better off. This is why “man has almost constant occasion for the help of his brethren.”
― James R. Otteson, The Essential Adam Smith

“But man has almost constant occasion for the help of his brethren” (WN: 26), both because our needs and wants are more complex than those of other animals and because human beings do not have the equipment—fur, claws, wings, and so on—that nature provided other animals to enable them to satisfy their needs. What do human beings have to compensate for their relative physical weaknesses? They have “the faculties of reason and speech” (WN: 25), which enables them to discover and construct plans for cooperating with one another in ways that makes all parties better off.”
― James R. Otteson, The Essential Adam Smith

“But Smith is adamant that these different geniuses we possess are mainly a result of the differing “habit, custom, and education” each of us engages in, and, even more importantly, do not entail that we are entitled to differing moral status. We are, each of us, full moral agents, alike entitled to protection of our person, property, and promises, and thus entitled to exactly the same scope of liberty and responsibility, of rights and privileges, as anyone else. Smith is here endorsing a profound moral equality among all humans.”
― James R. Otteson, The Essential Adam Smith

“The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education” (WN: 28–29). Smith was himself, of course, a philosopher, so he includes himself in this comparison. So, according to Smith, we have different geniuses, but are not substantially different by nature.”
― James R. Otteson, The Essential Adam Smith

“To summarize Smith’s argument: because I seek to achieve my goals in the most efficient manner possible (as the Economizer Argument holds), I am incentivized to make good decisions about how to achieve my goals using the resources available to me (as the Local Knowledge Argument holds), and hence, as long as we are living in a well-governed society that debars me from acting with injustice, I will be led to cooperate with you in ways that will be beneficial to you as well (as the Invisible Hand Argument holds).”
― James R. Otteson, The Essential Adam Smith

“what Smith means by a “well-governed society” is one that protects the “3 Ps” of justice: person, property, and promise. In other words, it ensures that the only way I can get what I want from you is by appealing to your interests. If your person, property, and promise are protected, I cannot enslave you, I cannot steal from you, and I cannot defraud you. The only recourse I have, then, to get whatever goods or services you might be able to provide is by making you an offer. And since your 3 Ps are protected, you can, if you please, always say “no, thank you” to any offer I might make and simply walk away. This means that I have to ask myself: What can I offer you that you would think is valuable enough to cooperate with me?”
― James R. Otteson, The Essential Adam Smith

“Smith continues that each individual “generally, indeed, neither intends to promote the publick interest, nor knows how much he is promoting it”; “by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention” (WN: 456).”
― James R. Otteson, The Essential Adam Smith

“Now we come to Smith’s third argument, which is based on the most famous passage in all of Smith’s Wealth of Nations, indeed arguably in all of economics. Smith writes: “It is his own advantage, indeed, and not that of the society, which [each person] has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society” (WN: 454).”
― James R. Otteson, The Essential Adam Smith

“The second argument is the Local Knowledge Argument, which has a couple of steps. First is the claim that people tend to know their own goals and purposes, as well as opportunities and available resources, better than others.”
― James R. Otteson, The Essential Adam Smith

“Adam Smith’s political economy is based on a chain of three arguments. The first we called the Economizer Argument, or the claim that each person naturally seeks out the most economical use of the resources available to him to achieve his goals, whatever they are. Whatever one’s goals, one wants to achieve them as efficiently as possible. Smith’s claim is that no one needs to tell us to do this: we are psychologically constructed, as it were, to do so already.”
― James R. Otteson, The Essential Adam Smith

“a country that wants to increase its wealth and enable its citizens to prosper must enact policies that enable the division of labor, the increase of production, the decrease of prices, and the resulting increase in standards of living. His larger political-economic argument then proceeds on the basis of three linked arguments, which we might call the Economizer Argument, the Local Knowledge Argument, and the Invisible Hand Argument.”
― James R. Otteson, The Essential Adam Smith

“Now, of course, the pin-makers do not need 4,800 pins per day themselves, so what do they do with the surplus? They sell it. As the number of pins available in the market thus increases, the prices will decrease, which means that more and more people will be able to afford them. As division of labor spreads to other industries, the result will be the same: more and more goods (and services) available in the market, with ever-decreasing prices. This means more and more people will be able to afford more and more means to satisfy their ends, which means the overall wealth of the society will increase.”
― James R. Otteson, The Essential Adam Smith

“Smith argued, by contrast, that wealth does not consist in pieces of metal; it consists rather in the relative ability to satisfy one’s needs and desires. “Every man,” Smith wrote, “is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life” (WN: 47).”
― James R. Otteson, The Essential Adam Smith

“After surveying the evidence that he could gather, Smith came to the conclusion that the primary factor in explaining why some places were increasing in wealth was the division of labor.”
― James R. Otteson, The Essential Adam Smith

“The main questions Smith set himself to explain were captured in the full title of the book. He wanted to know, first, wherein genuine or true wealth consisted, and, second, what had enabled some countries to grow in wealth where others had not. WN”
― James R. Otteson, The Essential Adam Smith

“Motivating desire: The “desire for mutual sympathy of sentiments,” which Smith believes all human beings have by nature. Market: What gets exchanged is our personal sentiments and moral judgments. Competition: Because we all want mutual sympathy of sentiments but we cannot all sympathize with everyone’s sentiments, mutual sympathy becomes a sought-after scarce resource. Rules developed: standards of moral judgment and rules determining what Smith calls “propriety” and “merit”—or what we might call virtue and vice, good behavior and bad behavior, and so on. Some of these rules are relatively fixed, like the rules of justice, whereas others, like beneficence, are more variable. Resulting “spontaneous” order: commonly shared standards of morality, moral judgment, manners, and etiquette. Objectivity: the judgment of the impartial spectator, which is constructed inductively on the basis of people’s lived experience with others.”
― James R. Otteson, The Essential Adam Smith

“We can now specify the particular elements of Smith’s model for understanding the human social institution of morality according to what I call Smith’s “marketplace of morality.” It has six elements: motivating desire, market, competition, rules developed, resulting “spontaneous order,” and objectivity.”
― James R. Otteson, The Essential Adam Smith

“Economists came to see their work as like physics, or perhaps engineering: if you tell me what your goals are, I can tell you how best to achieve them; or, I can tell you what the likely consequences are of policies you are contemplating, but I leave it to you or others to decide whether those consequences are good or bad.”
― James R. Otteson, The Essential Adam Smith