Society means markets but also morals: what is left unsaid of Adam Smith

It has been 250 years since Adam Smith published The Wealth of Nations in 1776, a book commonly regarded as the founding text of modern economic thought. “Modern” in the sense that it is supposed to mark a break with the moralizing reflections of earlier authors and inaugurate the supposedly neutral analysis of economic behavior as such. 

Smith and the Founding Myth

Two and a half centuries later, Smith continues to be invoked as the founding father of economic liberalism. Or, as one of the most influential representatives of that tradition, George Stigler, once put it: The Wealth of Nations is “a stupendous palace erected upon the granite of self-interest.”

Yet this very success conceals a problem. What remains of Smith today is largely a simplified figure, an icon enlisted in the service of an ideology.

In this reading, Smith is portrayed as the author who taught that individual interest, if left free to operate, spontaneously produces order and prosperity. The famous image is familiar even to those who know little else about Smith: it is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their interest.

From this passage, 19th- and 20th-century economic thought constructed the image of Smith as the precursor of methodological individualism and homo oeconomicus: an individual who maximizes their utility, and for whom — paraphrasing Margaret Thatcher — “society does not exist.”

An Oversimplified Reading

But what if this common reading were fundamentally flawed?

17 years before The Wealth of Nations, Smith published another major work, The Theory of Moral Sentiments, a book devoted not to egoism but to sympathy, moral judgment and the conditions of social coexistence. And if we wish to be precise, the famous passage about the butcher continues by invoking not self-interest but self-love: a disposition that presupposes the desire to be recognized by others for the good offices one renders them.

It is therefore no accident that in The Wealth of Nations Smith connects the human propensity to exchange with the faculty of speech, hence with sociability itself. Markets do not arise from the interaction of isolated egoists. They arise from our ability to address one another, to persuade and to reach agreement. Far from grounding a theory of radical individualism, Smith understands exchange as the expression of a form of natural sociability: the way in which human beings organize cooperation.

Society and Exchange

As one can see, it suffices to remove a single “s” from Margaret Thatcher’s famous formula — “society does not exist.” For Smith, in fact, society does not exit: it never leaves the framework of exchange.

In this perspective, competition is not the glorification of force, nor equilibrium the mere outcome of a tug-of-war among competing powers. Exchange, for Smith, ultimately rests on the capacity to understand one another.

Here we begin to see how Smith has become a truncated figure, and contemporary liberalism a curious caricature of his thought: a world full of butchers and egoists, but with fewer and fewer traces of Smith himself.

A Thought Still to Be Understood

There is also another Smith who rarely enters the canonical celebrations: the Smith sharply critical of the British Empire and of colonial commercial practices, hostile to any system of economic domination sustained by mere force. As he once wrote to a friend, he thought The Wealth of Nations was “a very violent attack … upon the whole commercial system of Great Britain.”

Now, 250 years after his most famous book, the real question may therefore not simply be what remains of Adam Smith, but what in Smith still remains to be thought. Perhaps quite a lot — especially if we read him as an open thinker trying to understand the fragile bonds upon which a society can hold together, rather than as the closed founder of a granitic doctrine. Society lives by exchange, certainly — but by an exchange in which moral sentiments are not a decorative afterthought.

And perhaps precisely today — at a moment when the West’s soft power appears to be fading, and when the language of markets once again blends with the hard grammar of power and force — returning to Smith with greater attention may prove less an exercise in commemoration than an urgent intellectual task.