This video makes the case for a return to Smith's original insight: that care, empathy, and collective well-being must be the foundations of political economy, and not the pursuit of personal wealth at any cost. If we want an economy that works for everyone, we need to reclaim Adam Smith from those who misrepresented him.
This is the audio version:
This is the transcript:
Economics today is too often dominated by negative narratives. The economics profession is shaped by the failures of neoliberal thinking, and neoliberalism itself promotes the cult of the individual above all else. Personal wealth is treated as the primary economic objective, and the consequences for society and the planet are routinely ignored.
Economics was not always defined in this way. It was not always defined as selfish individualism. I often reflect on how we reached this diminished position we are now in, and to understand that, I returned to Adam Smith's earlier work.
I revisited his Theory of Moral Sentiments, that was published in 1759. Adam Smith is, of course, considered to be the father of modern economics, and that book I've just referred to, The Theory of Moral Sentiments, predates and informs his 1776 book, The Wealth of Nations, which is considered to be the first ever serious economics book, but we have to read them together.
When you read the opening paragraph in Smith's Theory of Moral Sentiments, you see what he really believes. It sets out the moral foundation of his economic thinking right there, right up front, for everyone to notice. This is not a marginal idea, but his starting point for all his work, and it directly challenges modern interpretations of that work.
Let me quote it in full, as a result. He said:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrow of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous and humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.
Now, this is an astonishing piece of writing. Clear and unambiguous in its intent, I would argue. He is saying that all people possess sympathy for others. What Smith chose to use is the word ‘sympathy'. In modern parlance, we'd probably call it ‘empathy', but it doesn't really matter. What he's saying is our well-being depends on the well-being of those around us, and even distant and remote from us, if we understand their situation. We are, he says, affected by the distress and suffering of others. This, he's saying, is a universal human trait and not a moral quality.
But in the 1970s, the Chicago School of Economics, based unsurprisingly in Chicago, used Smith's work to promote an economics of radical self-interest with which we now think he has identified. It claimed that the individual pursuit of wealth delivers collective benefit for all. The so-called invisible hand, which Smith only referred to once in the Wealth of Nations, is used to justify this claim, but Smith did not rely on that argument at all. He had already set out his stall in the Theory of Moral Sentiments, that this is quite untrue. We are not the individual set out by the Chicago School of economics, and their interpretation of Smith is utterly irreconcilable with his own moral philosophy.
What Smith called sympathy, we now call empathy, and it is present in almost everyone without exception; only those with severe mental health conditions might suppress this human response. We instinctively relate to the experience of others. Our well-being is therefore tied to what we see and imagine of the suffering of others. This is what impacts our everyday lives.
For example, we can imagine the fear of those in conflict zones right now. People in the Middle East are living with real and present danger at present, and there's not one of us who I think cannot imagine the fear that they suffer both for themselves and for their families. The same is true, by the way, of people living in Israel. I also think that they are facing serious risk, and I feel for them as well.
Political leaders may deny this, but people actually feel these sentiments. Fear exists globally, nationally, and within all our communities. This is a matter of fact. That's the point I'm making. We can extrapolate from an extreme situation to our neighbours and understand that very often fear is the one sentiment that undermines the well-being of people, and this is a fact that we all can hold in common.
Economic insecurity is creating widespread anxiety around the world. Social division and prejudice is deepening that fear. If Smith is right, this affects all of us, and I think Smith was right. Ignoring fear does then reduce overall well-being within our economy, and so addressing fear is not just something we do out of being kind or nice. It's actually an economic necessity.
The idea of isolated individuals is, as a matter of fact, fundamentally false. Our well-being is interconnected with that of others. Economics must recognise this shared dependency. That is my argument. Well-being cannot be delivered in isolation. It requires collective conditions that support everyone.
We need, therefore, a politics that is grounded in care for others. We need an economics that creates hope and not fear. We must ensure that there is enough for everyone to live on securely within our economies. That is a basic requirement for well-being. That freedom from fear and a belief that no one should go without should be a core economic goal, and that reflects Smith's original moral insight.
Neoliberalism is based on indifference to others. It promotes division and at times a culture of hate. This is what has led us to today's economic and social crisis. The system undermines the well-being it claims to create. It fails on its own terms as well as morally. We must, then, rethink the foundations of political economy. Care must replace indifference as our guiding principle. Empathy must be central to economic thinking. This is essential for our future well-being. This is what this channel is seeking to explore. This is what I believe in.
What do you believe in? Do you believe that being selfish is a better sentiment than caring? Do you believe that the well-being of others has an impact on your well-being? Do you believe that you act on that sentiment of care? Let us know. There's a poll down below. Leave us your comments, and if you like this video, please indicate that fact by ticking the box below and share the video with whoever you want. And if you want to, please make a donation, because it costs money to create these videos, and that would help no end.
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I voted for collective well-being and I’ll be surprised if many here don’t. Maximising individual wealth does bring material prosperity (eg USA) bur does deliver brutal outcomes. The Rawlsian option (the difference principle), judging by who’s worst off is noble but probably results in stifling incentives and sub optimal outcomes. I don’t think you can improve on the old-school European Social Democratic model. A market economy with a strong government at around 50% of GDP. In other words “as much competition as possible, as much regulation as necessary.”
[…] the ethical core of the Enlightenment. The idea of equal moral worth, nd rspetc for the "other", as seen in the work of Adam Smith, was subordinated to the idea of market value. Those without economic power were, in effect, […]
It’s quite perverse that the same tech company bosses that maintain this individualistic stance get richer and richer from the very thing that drives the massive expansion of their tech: Social forces.
We are not and never will be a collection of individuals. We are and always will be a social animal.
Neoliberalism is and always has been based on a big fat LIE.
[…] of a failed idea. That idea, of course, is the neoliberal agenda, which puts at its centre, contrary to the teaching of Adam Smith, the belief that the individual pursuit of personal well-being will always deliver the greatest […]
In “The wealth of nations”, Smith calls for government regulation of economic activity, he argues for workers’ right to organize, and he warns against letting rich merchants and their lawyers write proposals for new legislation – just to mention a couple of topics the neoliberals would probably prefer weren’t included…
Good articles recently published here:
https://oll.libertyfund.org/publications/liberty-matters/2026-03-09-compounding-interest-revisiting-the-wealth-of-nations-at-250
Note the fourth one, by Brianne Wolf, as particularly relevant to your blog entry.
“a universal human trait and not a moral quality”
My theology of creation agrees – as it also compels me to agree with the idea of everyone being of equal worth. I don’t quibble with a word you have written.
Yet this is not how things work out. And whatever ideology or dogmas we wrap ourselves in, they don’t prevent us denying the “universal truths” that are supposed to be “self-evident” – whether the range of world religions (including mine), theism, deism, atheism, humanism, secularism, scientific materialism, Marxism, capitalism, within them all we can find horrible examples of brutality, selfishness, cruelty, hypocrisy, & blinkered self-interest. As you point out several times, the fathers of the enlightenment, as well as the founding fathers of the New World experiment, had their blinkers on with regard to gender and race. Why?
I wish I knew what led the Chicago economists to make the moral change of direction that they did in 1970 and to go against something that Adam Smith said was part of human nature. Then we might have more success in persuading economists, politicians, journalists, and voters today, 50 years later, to change direction, and pay attention to how we are constructed, for interdependence and mutual care.
“Reason” can, must, and has, constructed a sound case to the jury. But reason and skilled advocacy are not enough – although they are essential. Something else is needed, in the nature of either a moral revolution or a miracle, to change hearts and minds and produce action.
Thank God, miracles and moral revolutions can and do happen. If only I knew the formula (although that would probably turn me into a tyrant).
The formula is faith, including in humanity itself
Neo-liberalism simply behaves like some of the sub-divisions of Christianity or even Islam to my mind – it quotes selectively from texts and claims to have found something ‘different’ or unique or more ‘true’ and elevates it.
This reduces Neo-liberalism to nothing more that a belief system; a theory based on observable facts it is not, and it should not be used to guide any policy whatsoever.
Correct
You ask “What should the core goal of Economics be?”. Well, it should be to explain the real world as it is.
Whether you are a “Chicago Boy” or a “MMTer” your theories must chime with the real world… and often, they don’t. Never let reality get in the way of a good theory.
Adam Smith does that by placing of “Moral Sentiments” front and centre of his work. The “Mile End Economists” are his descendants.
🙂
Having just read J. Doyle Farmer’s “Making Sense of Chaos”, one gets the impression that your condition that ‘it should be to explain the real world as it is’ is not treated as a priority if your methods are out of line with received wisdom. It seems that those who are looking for different approaches tend to have to come from a non-economics background and struggle to get necessary support and funding
Economics as taught misses out alot of historical detail, for example predating ‘Wealth of Nations’, Antonio Serra’s 1613 work ‘A Short Treatise On The Causes That Make Kingdoms Abound In Gold And Silver Even In The Absence Of Mines, With Particular Reference To The Kingdom Of Naples’ was called by Schumpeter in ‘History of Economic Analysis’ “the first to compose a scientific treatise … on economic principles and policy.” (Harvard University Press 1954, p. 195)
But that was not political economy. For the same reason you cannot claim Luca Pacioli’s 1494 text, Summa de Arithmetica, which is accredited with starting double entry book-keeping is not economics although elements of it clearly are.
Another banger
Might be good to have more like this, and for the greens to get well versed. Smith again argued against organisations getting too large (I think) and in favour of govt intervention? Might be good to show that ‘true capitalism’ might be very different to the current incarnation?
Against large corporations, agreed. As an enlightenment thinker he realised government had a role
Very good to see an alternative portrayal of Adam Smith. (he probably set out his stall rather than his stool – speaking as a gastroenterologist).
My fault for dicatating that and not noticing the error.
Yet another very informative post. But I’m having trouble keeping up!
Human biological evolution has brought us to the unique position of being able to set off on the path of what I call intellectual evolution. Greater empathy with those human living on the other side of the world, and even for the animals we eat, is a result of this continued improvement in our moral development, but it is still a thin veneer over our more basic instincts. Thinner for some than for others.
With regard to the poll: voting for collective well being does not rule out ‘free market’ activity, it just recognises the importance of government in setting and enforcing the constraints within which individual, entrepreneurial spirit may freely express itself.
A point of information: The Theory of Moral Sentiments was Adam Smith’s last book as well as his first, because he published his 6th and final revised edition in 1790, a year after his 5th and last revision of The Wealth of Nations in 1789. So he clearly did not disavow the former. There was only one Adam Smith.
“The wise and virtuous man is at all times willing that his own private interest should be sacrificed to the public interest of his own particular order or society.” TMS, p.235.
Agreed
“The Theory of Moral Sentiments” is a timely reminder of the ideological holes in neoliberal economics,
but:
“the public interest of his own particular order or society” …
leaves wiggle room for exclusionary self-interest.
“Who IS my neighbour?” gets a more radical answer in the parable of the Good Samaritan, + the painfully challenging exhortation to love your enemy , offer the other cheek, walk the second mile, and pray for those who despitefully use you.
I concede that even with those teachings at the heart of our message, Christians have, time and time again, sidelined them, in favour of racism, self-interest and misogyny, and still do.
But Messrs Trump and Fa***e have done us a favour – they have exposed and discredited the weaponisation of the cross, and showed us what 21st century Christo-fascism really is – hatred, division, violence, selfishness, cruelty, thuggery, war crimes, genocide, destruction – these wolves look like wolves, we can see the blood on their jowls and the shreds of raw meat hanging from their fangs, however many crosses they wave at us.
When the MAGA/Reform/Restore perversions of Christianity depress me (which is pretty much all the time), I look to the church of the Middle East and North Africa, people with neither money nor worldly power, persecuted, restricted minorities, committed to loving and serving their neighbours, and actively promoting peace and increasingly joining their Muslim neighbours, who are also looking for a politics of care and an economy of hope. Never covered on the MSM (except to hijack for Islamophobic purposes), but I get regular first hand news from MENA, and it gives me hope.
Trump claims he can deliver hell tonight. He can’t. He’s trapped inside it himself, and it will destroy him.
Much to agree with, not least your last sentiment.