Word: smith
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Hardly anything else in Smith's work is nearly that simple or consistent. Consider The Theory of Moral Sentiments, his long-neglected other masterpiece, published 17 years before The Wealth of Nations, in 1759. I recently cracked open a new 250th-anniversary edition, complete with a lucid introduction by economist Amartya Sen, in hopes that it would make clearer how we ought to organize our economy. (See a special report on important economists...
...chance. Most of the book is an account of how we decide whether behavior is good or not. In Smith's telling, the most important factor is our sympathy for one another. "To restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature," he writes. But he goes on to say that "the commands and laws of the Deity" (he seems to be referring to the Ten Commandments) are crucial guides to conduct too. Then, in what seems to be a strange detour from those earthly and divine parameters, he argues that the invisible hand...
There are similar whiplash moments in The Wealth of Nations. The dominant theme running through the book is that self-interest and free, competitive markets can be powerful forces for prosperity and for good. But Smith also calls for regulation of interest rates and laws to protect workers from their employers. He argues that the corporation, the dominant form of economic organization in today's world, is an abomination...
...point here isn't that Smith was right in every last one of his prescriptions and proscriptions. He was an 18th century Scottish scholar, not an all-knowing being. Many of his apparent self-contradictions are just that - contradictions that don't make a lot of sense. (See the best business deals...
...Smith was also onto something that many free-market fans who pledge allegiance to him miss. The world is a complicated place. Markets don't exist free of societies and governments and regulators and customs and moral sentiments; they are entwined. Also, while markets often deliver wondrous results, an outcome is not by definition good simply because the market delivers it. Some other standards have to be engaged...