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Adam Smith (1723-1790) was one of the leaders of the Enlightens in eighteenth

century, and is regarded as the person who laid foundation for modern economics

(Robertson, 1984: 135). He is the person who many economists believe as the

father of modern capitalism by his monumental book “The Wealth of Nation”.

However, many economists have misinterpreted Smith’s work because dismissing

his first book “The Theory of Moral Sentiments”. This essay is to analyze people’s

behaviors and reactions in nature, the sympathy and roles of self-interest in

economics that vitally motivate individuals in the society base on nature

characteristics of human beings.

In his work Theory of Moral Sentiments, Smith firstly examines people’s behaviors

and reactions to others’ issues in society. He believes that people naturally tend to

be more compassionate with the needs and misery of others (Andrewes, 2009: 5).

Despite the selfishness, there are apparently some principles in one’s nature, which

engage his concern of others’ prospective, and “make their happiness necessary to

him” although he does not expect anything from it, “except the pleasure of seeing

it” (Smith Moral. Sent. Ex. 1). It can be explained that even this kind of sentiment is

“pity or compassion” (Smith Moral. Sent. Ex. 1), the emotional sense of humanity is

true and it exists inside every individual, affecting their behaviors and reactions. In

the one hand, sympathy is considered as “a selfish principle” because when a man

sympathizes with the others, he really does bring their cases into his own physical

and emotional feelings, and imagine how to behave in specific circumstances. In the

other hand, it can be argued that although imagination helps him to increase his

sympathetic degree, it can not always transform him into their particular cases

(Smith Moral. Sent. Ex. 7). An illustration for this is that when a man shares the

happiness and the pain with his wife giving birth to a child, he can obviously sense
it but “it is impossible that he should imagine himself as suffering her pains in his

own proper person and characteristic” (Smith Moral. Sent. Ex. 7). It may be

reasonable to be explained that because “[a]ll members of human society stand in

need of each other’s assistance” (Smith Moral. Sent. Ex. 3), and hence, naturally

comprehend mutual grief or feelings. This sense is conceived reflectively from

friendship, love, gratitude and also from the development and happiness in society

(Smith Moral. Sent. Ex. 3).

Understanding that individuals are closely and inherently connected to each other in

society, Adam Smith highlights the importance role of self-interest in each person

which has significantly direct effect on social prospect. It has been claimed that self-

interest is the greed and original passion inside of each person that motivate people

to pursue their own aim and advantage without considering the consequences.

However, according to Smith, self-interest has a positive meaning which is “pure

ego” (Fitzgibbons, 1995: 137) and relieve with “a degree of virtue” (Fitzgibbons,

1995: 138). In The Theory of Moral Sentiments, he explains that self-interest exists

in every individual’s mind and people are inclined to care much about whatever

relates to themselves than whatever other men involved in (Smith Moral. Sent. Ex.

11). This idea was once mentioned by Stoic philosopher Zeno that “every animal

was by nature recommended to its own care, and was endowed with the principle of

self-love” (Fitzgibbons, 1995: 138). Thus, the point is that what makes people

“sacrifice their own interests to the greater interests of others?” (Smith Moral. Sent.

Ex. 11). This question leads to the idea of justice in Smith’s moral theory, which is

stated as “ reason, principle, conscience, the heart,… of our behaviors” (Smith

Moral. Sent. Ex. 11). Smith believes that “only by the eye of this impartial

spectator”, people can restrain the greed and selfishness in their self-interests and
better themselves (Smith Moral. Sent. Ex. 11). This ideal impartial spectator is the

one “remind[ing] people that they were one of many, no different and no better

than the others” (Elgar, 1997: 162-163). Everyone is a cell of society and every

individual has to control their selfish, enhance their altruistic influence and

complete the perfection of human nature in order to build a harmonious, happy and

prosperous social life. It is clear that Smith considers neither self-interest nor

benevolence the foundation of society. It is justice that is the grounding of society,

which is expected to minimize self-love and place “a formal role to higher values

without creating an authoritarian state” (Fitzgibbons, 1995: 142).

In his famous book Wealth of Nations, Smith further interprets the influence of self-

interest in economics, which is believed to be hugely influential to standard of one

nation. According to Smith, as said above, human beings are innately self-interested

and it is not selfish that ignoring the needs or taking advantages of others without

reckoning the consequence. In economics, it can be understood that self-interest in

Smith’s system just to guarantees both sellers and consumers are beneficial in a

voluntary acceptance.(Sharpe: 27). Smith has demonstrated that there are more

chances for a man to get help if he can show them he is in favor with their self-

interest and it is their benefits to do so not his. As it is said that “give me that which

I want, and you shall have this which you want” is purely based on the

characteristics of self-interest existing inside everyone (Smith W. Nat. Ex. 3). There

is a famous quote of this idea in Smith’s work: “It is not from the benevolence of the

butcher, the brewer, or the baker, that we expect our dinner, but from their concern

for their own interest. We address ourselves, not to their humanity, but to their self-

love, and never talk to them of our own necessities but for their advantages” (Smith

W. Nat. Ex. 3). What Smith trying to address here is that helping people is the only
and the best way to help yourself. This makes no differences to one’s business that

the most profits can be earned when it meets the demands of the consumers. And

thus, self-interest is now defined as cooperation between each individual, it can not

be isolated as the transactions incurred in term of your demanding fulfilling my

needs. It does a key part in society since it contributes every single person to one

unit, enhancing social life with satisfaction, harmony and happiness.

The ideas of “invisible hand” and “natural liberty” in Smith’s works have a great

contribution to economics growth and nation development. Smith believes that due

to his self-interest, every individual firstly will follow “the whole basis of his

subsistence” (Smith W. Nat. Ex. 3), which can assure him to be alive and able to

work efficiently; then he continues to put a special effort to search for the most

beneficial use of whatever wealthiness he can manipulate. (Smith W. Nat. Ex. 4). It

is merely his own advantages that he considers not that of social profits. However,

as Smith explains, whenever they follow their self-interest and invest their wealth

into a specific industry, they will probably want to earn profit for themselves, which

indirectly gain the wealth of that country. (Smith W. Nat. Ex. 6). This is how

“invisible hand” works. Smith conceives that only the people who are in their

specific local situations are the best judgers in economics investment since they are

investing their wealth and they are the people who clearly acknowledge how safe

and potential their businesses are in the future (Smith W. Nat. Ex. 7). Accordingly,

Smith emphasizes on the “natural liberty” in economics or it is “free market” in

other words. This concept, to Smith, does not mean to “relieve the individual of

moral responsibility in his daily pursuit of material wealth” (Young, 1997: 173) as

the result of self-interest said above, “liberty” can not be considered as completely

“freedom” from everything, but freedom to restrain one’s passion and from explore
one’s idea of his ideal business (Muller, 1995: 2). Based on Smith’s doctrine, Sharpe

(2007: 29) states that “Smith accepted these [selfishness and greed] as human

frailties, and he contended that these base motives cannot be outlawed… they

might be discouraged and moderated in a commercial society with the right

incentives”. This argument shows that it is not that Smith denies all the role of

Government in the economics of society, but it is the responsibility of Government

to remain the justice, public good to society and defend the country from invasion.

The idea of self-interest in economics has remarkably motivated every individual in

the society. Smith believes that self-interest creates the incentives of people in

better themselves whatever “imperfect, but attainable virtue”, enhance people’s

“self-control”, the ability to prevent satisfaction and the inclination to realize others’

needs through their actions. Moreover, while trading, it is believed that self-interest

will create competitions and inequality in society which seem to be contradictory to

Smith’s moral theory. However, Smith argues that “competition was absolutely

essential to turning self-interest into benevolence in a self-regulating society”

(Sharpe, 2007: 30).

In conclusion, Adam Smith makes a valuable contribution to modern economics of

eighteenth century. He points out the importance of self-interest in society and

therefore, motivating each individual in social life to enhance not only their wealth

but also their morality.