You are on page 1of 11

Adam Smith and Immanuel Kant: On Markets, Duties, and Moral Sentiments

Mark D. White, College of Staten Island/CUNY*
profmdwhite@hotmail.com

As 18th century moral philosophers, Adam Smith and Immanuel Kant are strongly
linked, intellectually and historically.1 Kant was exposed to both of Smith‟s two major
works, The Theory of Moral Sentiments (1759, henceforth TMS) and Wealth of Nations
(1776, henceforth WN), and evidence of their influence (especially of TMS) can be seen
throughout his work. Both scholars strongly emphasize impartiality as a core element of their
moral systems, they were both strongly influenced by Stoic thought, and they shared a
concern for human dignity and freedom from tyranny. However, while their substantive
ethical thought was very similar, they differed in their positions on the basis of morality;
Kant disagreed with Smith‟s sentimentalism (and he did Hume‟s), preferring to ground his
moral system in the respect for dignity and autonomy that issues from reason alone,
regardless of feeling or inclination.
In the 21st century, of course, Smith is much more widely known as the father of
modern economics, while Kant had very little of significance to say regarding markets or
commerce. Nonetheless I argue that a close consideration of Kant‟s ethics can illuminate the
relationship between Smith‟s moral philosophy (as presented in TMS) and his economics (in
WN), or what is commonly referred to as “the Adam Smith problem.” I will explain that
Kant‟s moral philosophy also has dual aspects, which can seen in the two types of duties—
perfect and imperfect—generated by his famous categorical imperative. I maintain that a
world in which agents follow only Kant‟s perfect (or negative) duties, such as duties not to
harm others, would be much like the impersonal marketplace of Smith‟s WN—a minimally
ethical state of the world which would certainly function, albeit not well or to most people‟s
satisfaction. A more complete society, in which people can not only survive but also prosper
*
Prepared for the Association of Social Economics meetings at the 2009 ASSA annual conference. I thank
Sam Fleischacker for encouragement; as is apparent from the citations, my intellectual debt to him is
enormous as well. I also thank Steve Pressman and the attendants at the Association of Social Economics
meetings at the 2009 Allied Social Science Associations conference, many of whom provided valuable
feedback on an early draft of this paper.
1
The similarities between Smith and Kant have been explored most intensively and thoroughly by Sam
Fleischacker (1991, 1996, 1999).

1

Electronic copy available at: http://ssrn.com/abstract=1318605

whether in your own person or in the person of another.com/abstract=1318605 . the result is a duty not to do x. as well as help bring out the oft- neglected social aspects of Kant‟s. the Formula of Respect for the Dignity of Persons: “act in such a way that you treat humanity. a world Smith describes in TMS as one in which persons exercise their capacity for sympathy. 421).and flourish. In general. to explicate my interpretation of the relationship between Smith‟s two strains of thought. Bob‟s maxim would also be rejected by the second version of the categorical imperative. which in Kantian terms would be one in which agents also followed imperfect (positive) duties (such as duties of beneficence). Next. always at the same time as an end and never simply as a means” (1785. the action proposed is merely permissible. it would generate such pervasive lying that trust in reliable communication would break down. This note will begin by explaining the distinction between Kant‟s perfect and imperfect duties. Finally. and therefore his interests would not be furthered—the maxim. resulting in benevolent sentiments. standard in any respectable edition of his work. 2 Electronic copy available at: http://ssrn. and also the apparent conflict between them.) For instance. once universalized. Bob‟s lie would not be believed. I hope to give a new perspective on the apparent duality in Smith‟s thought. contradicts its own end. As a result. Kant’s perfect and imperfect duties In Kant‟s ethics. duties are generated when plans of action. if one proposes a maxim of “I will do x” but this maxim is rejected by the categorical imperative. commonly known as the Formula of Universal Law: “act only according to that maxim whereby you can at the same time will that it should become a universal law” (1785. By explaining these dual aspects of Kant‟s ethical system in relation to Smith. 429). along with his concept of the kingdom of ends.2 When this maxim is universalized. suppose Bob proposes a maxim of “I will lie when it will further my interests. as presented in TMS and WN. not necessarily moral in an affirmative sense. needs more. (If the maxim is not rejected. or fellow-feeling. This is 2 All citations to Kant‟s work use the Academy pagination.” This would be rejected by the first version of the categorical imperative. are rejected by his formalization of the moral law. I use Kant‟s two types of duties. I summarize Smith‟s two viewpoints. the categorical imperative. and how they result from his moral philosophy. or maxims.

Suppose Kate proposes a maxim of “I will be indifferent to the suffering of others. known as the Formula of the Law of Nature: “act as if the maxim of your action were to become through your will a universal law of nature” (1785. and in doing so fails to respect himself accordingly. this is not a world that an agent could rationally will. from these two “tests. simply as a means to his prudential end. specifically his good name and the trust he has earned. but contradicts another intrinsically valuable end.) Therefore. namely humanity.” This test is known as the contradiction-in-will test. 4 The contradiction-in-the-will test is derived from a variant of the first formula of the categorical imperative.” According to the first formula of the categorical imperative. indifference to the suffering of others is by definition not treating them as ends to be valued and promoted (as befits ends-in-themselves). Bob also uses himself. because as negative duties they prohibit behavior outright. and it falls to the agent‟s judgment to determine what to do. without also respecting her autonomy by being truthful (or not lying). However. see White (2009).” we derive a duty not to lie. or otherwise avoid the situation in which one is tempted to lie.” as no application of the categorical imperative can rely on preferences or inclinations. change the question. 3 “Will” must not be confused with “want. 3 . for one can simply remain silent. which is an example of a perfect duty. since everyone may—and in all probability will—someday need assistance from others. Perfect duties allow no latitude in their execution. showing in general what we should do (rather than refrain from doing). However. one of Kant‟s “ends-in-themselves.because the act of lying uses the person to whom Bob intends to lie merely as a means to further Bob‟s interests. a variation of the contradiction-in-conception test used earlier to reject a maxim of lying. the maxim does not contradict its own end. perfect duties simply tell you what not to do.3 In other words. but not opportunistic murder. this maxim would not contradict itself upon universalization. Barbara Herman (1989) demonstrates that the contradiction-in-conception test prohibits opportunistic lying. the duty not to lie is not the same as a duty to tell the truth. on this point. it is certainly possible that everyone could be indifferent to everyone else‟s suffering. (We‟ll see that imperfect duties work in much the same way. 421). (To make matters worse. perfect duties do not specify what must be done instead.4 The Formula of Respect for the Dignity of Persons also rejects this maxim.) Other duties resulting from the categorical imperative are positive in nature. In other words. and shows that the contradiction-in-will test is necessary for deriving this basic moral prohibition in Kantian terms. not because it uses other persons as means. but because it does not treat them fully as ends.

6 But while imperfect duties are normally stated in their positive form. since they prohibit certain acts (such as lying). and it does leave the agent with some degree of latitude or “playroom” when executing the duty. or at least an attitude of benevolence to be exercised when possible. which in operation will result in beneficence to some extent. and what remains is the “„new‟ Adam Smith problem concerning the precise nature of their relationship” (Young 1997. In focusing on self-interest in WN. 98). not simply the inclination of the agent. 4 . In this case.5 This is an example of an imperfect duty. and turn to Smith.” or. not benevolence. the resulting duty is “do not be indifferent to the suffering of others. There has been an enormous amount of writing on the (apparent) contrast between Adam Smith‟s emphasis on benevolence (arising from the capacity for sympathy) in TMS and the emphasis on self- interest or self-love in WN. which comprised the original “Adam Smith problem. impersonal market exchanges amongst strangers or mere acquaintances (as opposed to close friends or family relations). the duty of beneficence is really a duty not to be indifferent to others. such as in the famous butcher-brewer-baker passage. there is nonetheless an important difference in emphasis between perfect and imperfect duties: perfect duties are duties of action. or kind acts. to whom we shall turn shortly. What follows is my interpretation of this relationship. since they mandate certain ends that must be respected and pursued. while imperfect duties are duties of ends. which I will argue later is parallel to Kant‟s distinction between perfect and imperfect duties. because it does not specify exactly what must be done. “be kind to others. they are essentially negative duties. 6 Specifically. That aside. Reconciling Smith’s TMS and WN I‟ll set Kant aside for the time being. It seems that the issue of consistency. more simply.” has been resolved in the positive. or kind feelings—the latter is much more important to sentimentalists such as Smith. Smith was outlining the minimal requirements for the operation of markets only— in particular. 25). though not in any specific manner (Gregor 1963.” the duty of beneficence. the demands of an imperfect duty may be relaxed only in recognition of another duty. Rather than recommending that market 5 Note that this duty mandates beneficence. in that both distinctions focus on the same demarcation between market and society.

which Smith deems necessary for a truly flourishing society.8 In TMS. but also 7 See Fleischacker (2004. The emphasis is on the „even‟ in each case” (Fleischacker 2004. 137-8) and references to WN therein. on this see Wight (2005) and McCloskey (2008). 9 See TMS (VI.1) for Smith‟s description on the diminution of sympathy and benevolence as social distance increases. he did. that even society without benevolence need not be a hostile society. on the other hand. for a similar take on the duty of beneficence and social or emotional proximity. Also. not that it should operate on such a basis. to whom general benevolence becomes more specific. This is not to deny the obvious importance of some degree of self- love. that each person knows his or her own interest better than anyone else does. especially those close to us. or endorsing such attitudes. Furthermore. for whom each need have no special concern.ii. what Young (1997. say that often benevolent actions will interfere with the proper operation of markets. but rather tempers it with the sentiments arising from persons‟ sympathy for others‟ circumstances. The capacity for sympathy or fellow-feeling becomes essential to generate benevolence (and beneficence) towards others. social interaction in general. that economic exchange.) 5 .9 In market circumstances. markets can operate smoothly: “human beings can pursue even their individual interests together. Smith was arguing that even if they are so motivated. even among entirely self-interested people. 71) calls “a kind of inverse square law. emphasis in original). sympathy does not play as significant a role. Smith was not making a moral or prudential argument for self-love or egoism. nor was he arguing that self-interest was sufficient for a flourishing society outside of the market realm.7 But at the same time he did recognize that the majority of economic transactions in a developed commercial society will be between persons with little personal connection.” (See Kant 1797. the opposite of pure self-interest. as opposed to the more distant— and therefore less informed—actions of policymakers. outside the narrow confines of anonymous market exchange.participants be motivated solely by self-interest. is not a zero-sum game. of course. and is therefore better placed to pursue that interest. of course. 451-2. not just because of the relative lack of personal connection between buyer and seller. 91. He was also making what we think of now as a Hayekian efficiency-of- information argument. Smith was describing (and prescribing) appropriate conduct in a broader context. 55-57) on Smith‟s moral/political assessment of capitalism. but this is one extreme. He was merely making a case that a market can operate based on the participants‟ pursuit of their own self-interest. Smith‟s conception of self-interest (or self-love) is very different from that of the modern economist. 8 See Fleischacker (1999. and does not argue against motivations marginally deviating from self-interest.

11 However. seeing someone in need naturally generates. to avoid punishment. and to spare him humiliation and maintain his respect for himself” (1797. and this humbles him. 11 Of course. corresponding to Oliver Wendell Holmes‟ “bad man”.” the final goal of moral endeavor.10 But in more general social contexts. 448-9). To help bridge between the two scholars‟ concepts. as imperfect duties cannot be 10 This recalls Kant‟s passage on respectful beneficence: “since the favor we do [someone] implies that his well-being depends on our generosity.e. inasmuch as these laws have in view the very relation of such beings to one another as ends and means.. Hereby arises a systematic union of rational beings through common objective laws. Kant and Smith: Parallels Having presented the relevant aspects of Kant and Smith this way. (1785. In Kant‟s terms. and doing so for the sake of duty. sentiments of benevolence. I introduce Kant‟s concept of the “kingdom of ends. a kingdom that may be called a kingdom of ends (certainly only an ideal). see Cooter (1998). an ethical society is characterized by citizens following both their perfect and imperfect duties. this is the standard assumption made in neoclassical law and economics. 6 . 433) There are two stages toward achieving the kingdom of ends. such as the duties (codified in laws) prohibiting murder. and do not need assistance or aid unless they ask for it. At this stage. but rather follow them merely out of self-interest.e. 214-6). assault. an ideal civil community is achieved when people follow their perfect duties. through our capacity for sympathy. which manifest themselves in good deeds. i. persons do not follow these duties for the sake of duty. involving a moral civil community and ethical community (Sullivan 1989. similarities and parallels begin to appear. as is the Kantian ideal. i. it is our duty to behave as if our help is either merely what is due him or but a slight service of love.because participants can rest assured that all involved are tending to their own affairs to the best of their abilities. and theft (also known as juridical duties). chiefly those enforceable by the state. a utopian state of the world in which all persons can pursue their own ends in cooperation with each other: For all rational beings stand under the law that each of them should treat himself and all others never merely as a means but always at the same time as an end in himself.

will allow all persons to pursue their ends in cooperation with each other. treating each other (positively) as ends to be furthered and not simply avoiding (negatively) using others as means. In such a world. from market participants. but it would hardly be a world in which persons flourished and maximally furthered their ends. but not merely so. for they also treat others as end-in-themselves by following basic rules or duties of respect. How Gauthier breaks from both is by claiming that the market is the ideal model for an ethical society. all out of respect for the moral law. While the moral civil community is a crucial step towards the kingdom of ends. VIII). a world in which no persons observed their imperfect duties (such as the duty of beneficence) could exist without internal contradiction. in which they obey laws out of fear of punishment. but it could not be willed rationally. persons do use each other as means to their own ends.51). as long as he does not violate the laws of justice. as they pursue their own self-interest within the broad constraints of justice: “every man. and so on. would not harm each other. is left perfectly free to pursue his own interest his own way” (WN. IV. it is merely an intermediary step. would not steal.12 In the terms of the Formula of Respect for the Dignity of Persons. antecedent morality. Indeed Kant referred to persons inhabiting such a society. not out of respect for the law (or the duties underlying it). is what we expect. I do use the baker to get my bread and feed my family. according to Kant‟s universalization test. however orderly it appears to be.enforced at all (and many perfect duties are impractical for the state to enforce. they would not cheat. such as the duty not to lie. as existing in an “ethical state of nature” (1793.9. Only in a truly ethical community. at the minimum.” that is. a world in which people observed both perfect and imperfect duties. 84-5) means when he refers to the market as a “morally free zone”: “in understanding the perfect market as a morally free zone we shall be led back to its underlying. persons would respect each other merely in a negative fashion. I maintain that Smith‟s description of self-interest as the minimal precondition for the operation of the market fits Kant‟s limited endorsement of a civil society based on state enforcement of perfect duty alone. but I do not 12 This is also what David Gauthier (1986. a world in which persons only fulfilled their perfect duties towards each other may operate on some minimal level. and morality is necessary only where markets are not possible (see Gauthier 1986. of course. 95). Ch. especially in noncommercial contexts). in such situations. mutually agreed-upon constraints on behavior corresponding to what Smith called the “laws of justice” that thereby define the boundaries of the market. This behavior. 7 . Recall that. because it would not be consistent with the recognition of persons as ends-in-themselves.

satisfy the negative standard of treating people as ends while also as means. but to Smith it arises out of sympathy. the capacity to imagine oneself in the circumstances of another. benevolence would then be missing from the world. we will be sensitive to their pains. required by itself. absent coercion or deceit. and justice” (WN. beneficence of this sort must come from respect for duty to be truly moral. as Jonathan Wight notes. and can alone produce the harmony of sentiments and passions in which consists their whole grace and propriety” (TMS. 156). To Kant. even if no account is taken of advantages (of happiness). Both thinkers envisioned a society where love for oneself and for one‟s neighbors coexist. liberty. not just negatively. a world of markets unsupported by a social undergarment of moral fabric” (2006. and to indulge our benevolent affections. helped by positive laws but primarily encouraged by morality. Likewise. that to restrain our selfish. as opposed to the least we can live with. Of course.steal the bread from him. corresponding (politically) to “the liberal plan of equality. If we treat others fully as ends-in-themselves. Voluntary transactions. 8 .3). in order to present the world as a beautiful moral whole in its full perfection. accordingly. nor do I cheat him out of it. But at least a great moral adornment. But this neglects the positive side of this version of the categorical imperative. (1797. 13 See Evensky (2005. Kant and Smith did disagree on the source and nature of benevolence and beneficence. both Smith and Kant recognized the need for other-regarding motivations and actions to create a complete social order. “Smith would be appalled by a world that holds wealth above human connections. constitutes the perfection of human nature. 458). fulfilled with the utmost conscientiousness. Kant reveals his teleological side when he poses the following question: Would it not be better for the well-being of the world generally if human morality were limited to duties of right. IV.5. and will help them when we can. that to feel much for others and little for ourselves.5). which generates imperfect duties through the requirement to treat others as ends positively. I. 12-16) for more on Smith‟s vision of the ideal progress of humankind. and benevolence were considered morally indifferent? It is not so easy to call what effect this would have on human happiness. representing the best we can do.13 Setting aside fine details of moral psychology. which generates sentiments of benevolence: “it is. This is.i.9.

Princeton.” Boston University Law Review 78. 9 . Fleischacker.(2004) On Adam Smith’s Wealth of Nations. Law. for whom a central question is the proper relation of the market to society.” History of Political Thought 17. and to promote a socially rich reading of Kantian ethics. Jerry (2005) Adam Smith’s Moral Philosophy: A Historical and Contemporary Perspective on Markets.(1996) “Values Behind the Market: Kant‟s Response to the Wealth of Nations. Samuel (1991) “Philosophy in Moral Practice: Kant and Adam Smith. Ethics. 249-269. Cambridge: Cambridge University Press. ----.(1999) A Third Concept of Liberty: Judgment and Freedom in Kant and Adam Smith. It is rather the connection between Smith‟s TMS and WN that welcomes new approaches. The readings and interpretation of Kant are neither new nor novel. 379-407. and I hope mine is of some value. in particular to social economists. amenable to social economics.” Kant- Studien 82. NJ: Princeton University Press. the description of Smith is not particularly deep or innovative. References Cooter. ----. ----. NJ: Princeton University Press. and Culture. Evensky. Robert (1998) “Models of Morality in Law and Economics: Self-Control and Self- Improvement for the „Bad Man‟ of Holmes.Conclusion My ambition for this note is modest: to provide a new perspective on the relationship between Adam Smith‟s two major works through Kant‟s distinction between perfect and imperfect duties as seen through his kingdom of ends. Princeton. 903-930. and the ethical demands placed on persons in each.

Mark D. ----.(1797) The Metaphysics of Morals. Gregor. R. Cambridge. Herman. 1993. Barbara (1989) “Murder and Mayhem. 113-131. ed. (2009) “Kantian Ethics and the Prisoners‟ Dilemma.Gauthier. Mary J. (1963) Laws of Freedom.” Eastern Economic Journal. Allen Wood and George diGiovanni. ----. 10 . Cambridge: Cambridge University Press (1998). Adam (1759) The Theory of Moral Sentiments. Macfie.” reprinted in The Practice of Moral Judgment. the Last of the Virtue Ethicists. Campbell and A. ed.H. Indianapolis: Liberty Fund (1982). James W.D. Roger J. Oxford: Oxford University Press. Sullivan. David (1986) Morals by Agreement. D. Indianapolis: Hackett Publishing Co. Deirdre (2008) “Adam Smith. trans.S.(1776) An Inquiry into the Nature and Causes of the Wealth of Nations.L. ed. Cambridge: Cambridge University Press (1996).(1793) Religion within the Boundaries of Mere Reason. Skinner. Immanuel (1785) Grounding for the Metaphysics of Morals. Smith. ed. in press.” History of Political Economy 40. Ellington. McCloskey. (1989) Immanuel Kant’s Moral Theory. Kant. (1993). Oxford: Basil Blackwell. MA: Harvard University Press. Raphael and A. Mary Gregor. White. 43-71. Cambridge: Cambridge University Press. ----. Indianapolis: Liberty Fund (1982).

(1997) Economics as a Moral Science: The Political Economy of Adam Smith.(2006) “Adam Smith‟s Ethics and the „Noble Arts. (2005) “Adam Smith and Greed. ----.‟” Review of Social Economy 64. Jeffrey T. 155-180.” Journal of Private Enterprise 21. 11 . Jonathan B.Wight. 46- 58. UK: Edward Elgar. Young. Cheltenham.