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  • Print publication year: 2002
  • Online publication date: June 2012

5 - The Market Model and the Familiarity Principle: Solving the “Adam Smith Problem”


The Adam Smith Problem is not of merely historical significance. It is a problem also for us today because it highlights the tension between moral injunctions to beneficence and other virtues, on the one hand, and the seeming amorality of economic markets on the other. If a large portion of the relations people have with other people take place within the context of the market's extended economic order, and if the Smith of WN is right that people's actions in such contexts are informed by their self-interested pursuits, then it is no small matter of concern how moral virtues that are approved in other contexts apply here. If the Smith of TMS is right, one does not—or should not—check one's morality at the marketplace door. Thus the matter of how morality mixes with markets must still be addressed.

Before one can consider that larger problem, however, we must first contend with Adam Smith's version. The core of this problem, as I argued in Chapter 4, is not just the fact that the two books seem to have little obvious connection between them, but also the apparently conflicting pictures of proper human motivation Smith gives in TMS, on the one hand, and in WN, on the other. In TMS, Smith argues that a person should properly be motivated by a balance of self-interest and benevolence, as determined by the judgment of the impartial spectator.