In Chapter 2, I discuss the moral foundation for capitalism provided by Adam Smith. The great philosopher of the Scottish Enlightenment is frequently invoked by economists as the father of their discipline, yet Smith’s life and writings have been widely distorted. In contrast to his popular caricature today, Smith was a moral philosopher of the highest caliber who incorporated important moral perspectives throughout his writings. Smith presented his moral theory based on social norms and culture in The Theory of Moral Sentiments and maintained it as the moral foundation for his economic theory in The Wealth of Nations. Smith’s moral theory is based on the principle of sympathy and the behavioral norms that arise due to past social experiences that reveal standards of right and wrong behavior. Similar to the other philosophers of the Scottish Enlightenment, he attributes moral judgment and the moral conscience to the impartial spectator, but he also reserves important roles for religion and moral codes such as the Stoic virtues. When nineteenth-century classical economists adopted narrow self-interest as the first principle of their discipline, therefore, they adopted a principle that Smith and the other Scottish Enlightenment philosophers had adamantly rejected.