8. Adam Smith, who wrote The Wealth of Nations and is seen as the father of modern economics, also wrote The T

Question

8. Adam Smith, who wrote The Wealth of Nations and is seen as the father of modern economics, also wrote The Theory of Moral Sentiments, in which he argued that society would be better off if people weren’t so selfish and were more considerate of others. How does this view fit with the discussion of economic reasoning presented in the chapter?

Answer 1

They're not mutually exclusive. If I help you, I get something from that (as do you). What I get may be more intangible than tangible, but it still has value to me. I am acting in my self interest by doing so. Most charity works like that because it is voluntary (I wouldn't do it if I didn't want to). It's a win-win equation. Now if I coerce you into helping me against your will, then it is not very clear that you get much out of it.

Answer 2

Actually, Smith is presenting two arguments on different things: on the one hand, advocating efficiency and on the other equality. In economics usually you have one or the other but not both at the same time. So for Smith, if we are talking about efficiency, then sure, people should be selfish. But if the interest is equality,  as it is in the theory of moral sentiments, then definitely selfishness is not the answer because of the efficency-equality dilemma stated above.