The Invisible Hand in the ‘Theory of Moral Sentiments’

it was argued in the previous article that in Adam Smith’s Theory of Moral Sentiments the central proof of moral endeavour and development in human life lay in the elaborate exposition of the ‘sympathetic feelings of the impartial and well-informed spectator’. This is the subjective side of moral activity which over the course of history has continually built up the system of personal and social institutions which constitute social life. Interwoven with this argument, however, there lies a running commentary expressing the role of Nature—of God, the Great Architect and all the other titles which Smith ascribes to the power of religion in our lives. To economists the best known term of description is the ‘invisible hand’, because this phrase occurs in the Wealth of Nations, though in a comparatively minor role and fullness, in a passage which describes a man’s administration of his capital. The classic and full statement of the invisible hand’s power occurs in the Moral Sentiments ¹ where it appears as the ultimate governor which controls the self-love of individuals (in all their ‘passions’ not only the economic incentives, as in the Wealth of Nations), and directs them to the ultimate benefit of humanity in general. It is the present writer’s view that if, in the Wealth of Nations, the idea of the ultimate natural harmony of individual interests, following on the belief in natural liberty, had not been accepted as the philosophic justification for free competition and markets, and had not therefore shared the latter’s wide publication, the doctrine of Nature as it appears in the Moral Sentiments would have attracted much less attention in the interpretation of that book. It might have been regarded as little more than a restatement, into a form of words which satisfied the Theism of his own day, of the old Stoic doctrine of Nature, in itself a small part of the very large influence Stoicism had on Smith’s thinking in general. But, just because of what happened in the influential saga of the Wealth of Nations, it becomes more important to understand exactly what kind of position the doctrines of natural harmony have in the earlier book.