In this chapter, we focus on the founding father of economics, Adam Smith. It seems that Adam Smith would largely side with the view that free market institutions encourage civic virtues and that civic virtues increase human happiness. In his Lectures on Jurisprudence (? 17) (Smith, 1896 [1763]) he states: “whenever commerce is introduced into any country, probity and punctuality always accompany it …. Of all the nations of Europe, the Dutch, the most commercial, are the most faithful to their word”. This citation indicates that Smith supported the doux commerce thesis. However, closer inspection shows that Smith was also aware that market institutions can have destructive effects on virtues. In what follows, we will first describe Hirschman’s seminal paper on four theses in the debate on the effects of commerce on virtues. Then we describe Smith’s position in this debate. In the third section, we reflect on the second question and present Mandeville’s view and confront it with Smith’s ideas. In the conclusion, we construct an overall picture of Smith’s views on the relationship between free market economy, virtues and societal flourishing.