An Analysis of Adam Smith's Perspective on Wealth and Moral Virtue

This essay provides an analysis of Adam Smith's perspective on the relationship between wealth and virtue, drawing on his seminal works like "The Wealth of Nations" and "The Theory of Moral Sentiments." It explores Smith's ideas on self-interest, morality, and the role of virtues such as justice, prudence, and benevolence in shaping economic outcomes. The essay examines Smith's belief that self-interest, guided by moral sentiments and a system of justice, can lead to societal prosperity. It also discusses the importance of free trade, limited government intervention, and the division of labor in fostering wealth. Furthermore, the essay touches upon Smith's concerns regarding the potential for corruption among businessmen and the need for government to provide essential services like education and infrastructure, especially for the poor. The essay concludes by summarizing Smith's key principles of self-interest, limited government, and a free economy, which he believed would ultimately improve the living standards of people.

What according to
Smith is the relation
between wealth and
virtue?
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Table of Content
Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
What according to Smith is the relation between wealth and virtue?..........................................3
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
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INTRODUCTION
This report is based on Adam Smith who is great philosopher of economics and has great
influence over several aspects of society which provide a better environment and promote better
competition and all theories and concepts are related to universal laws (Adam, 2016). The wealth
and virtues are interlinked and both are essential ingredient in economics as the former related to
money while latter related to moral standards. This provide a systematic approach that perceives
self-interest, sympathy and relation of virtues and wealth. Additionally, this report is based on
several concepts such as theory of moral sentiments and wealth of nation which help in
understanding several terms like distribution of income, virtue and also it provides details
regarding nature and ethics of human behaviour. This report covers several different opinions
and judgement by Smith which provide an idea regarding ethics and moral judgements.
Main Body
What according to Smith is the relation between wealth and virtue?
Adam Smith is a philosopher and writer who wrote several books related to economics as
he as considered as Father of Economics. He provides its own ideas regarding proper division of
workers and presents its view that rivalries and self-interest could lead to prosperity of economy.
His style of writing is greatly influenced by author such as Horace. He wrote several books such
as Wealth of Nations which provide more information regarding the phenomena of nature which
is a combination of several elements such as life, dissolution of flora and fauna and growth.
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Other most popular book such as “The theory of moral sentiments” which he considers to his
most appreciated and excellent work. In a dynamic nature, Smith evaluate the moral and ethics
of his time and encourage social interrelationship through sentiments and emotions as it
emphasises on making judgements of how people tends to perceive their behaviour as it led to
human beings to develop and maintain their habits (Cavallar, 2017). Both the above-mentioned
books depict an incompatible opinions and suggestions which is related to human nature.
Smith believe that self-interest would provide conditions on the basis of justice which in
turn provide good values and culture in a society. The most popular fact about Smith is that it is
well known for development of Gross Domestic Product (GDP) that provide theory on the basis
of wages differentials (Conlin, 2016).
In relation to this theory, unsecured and undesirable job would focus on paying more
wages so that they could find a way to grab the interest of workers in accordance of respective
positions. He is an 18th century philosopher which contribute a valuable thought and judgement
about the nature of individuals and the way they respond and fulfil the criteria in a community.
The ideas and facts presented by Smith in their book is excellent which assist other philosophers
to built its work and aids in formation of classical theory of economics (Hanley, 2016). In
addition to this, He discuss several ideas about the evolution of human society which provide a
fundamental basis to develop proper terms and conditions as well as rules and regulation in
society which create better relationships among them and ensure greater accountability and
transparency.
According to the view point of Adam Smith, an individual who is likely to spent its
wealth in a business entity would earn greater return on investment but at the same time it takes
more risk. The invisible man theory would be depicted in terms of natural phenomenon that
instructs market capitalism in the path of efficiency through rivalries and demand and supply of
particular force or inventory (Hühn, 2019). It also provides a force that proper dividing the work
among the worker in accordance of their specialisation which proves to be more beneficial for a
society. These measures would provide more prosperity of wealth and thus improve the living
standards which in turn generate desirable outcomes. Smith believes that morality could be
minimised with the help of set actions that provide several judgements about society as its
overall opinions emphasise on virtues and wealth. Smith tends to acknowledge that action is
determined on the basis of several intuitions and intentions as culture and norms are more
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important for him. It also guides that social conception would provide significance to respect
each and every individual that generate a good image in a society.
Smith also describes about imagination in which he thought that if a person place itself in
other opinions then it would help in generating a great idea and thus provide sympathy to others.
But at the same time, there is not a clear and systematic procedure so that proper course of action
could be decided and there is no formation of guidelines which create discrepancies. Plus, there
is so much biasness in society which create lot of difficulties for human beings (Kennedy, 2016).
The judgements are also not clear which misunderstandings and problems in a community. He
also places strong argument on Hobbes and Rousseau who said that self-interest is significant
instinct as it leads to cruelty. Smith declared that people could imagine the feelings of others
which reflect a good understanding of others. He said that individuals would pursue their self
interest and become generous towards others that provide a better judgement of what is right and
what is wrong. On this basis, it helps in developing moral standards and help in taking proper
and immediate actions which facilitate best decisions that depicts good behaviour and ensure
prosperity of success.
In an era of globalisation, Smith provide a view that level of technical awareness would
assist in maximising the productivity of labour as these are internal to each firm which provide
inconsistency and vast growth opportunities in an economy. For achieving a competitive
advantage, the firm would greatly emphasise on proper allocation of resources that has an effect
on a production cost for a long run (Marx, 2018). He was very suspicious regarding businessmen
as they could do anything in order to minimise the possibility of competition which create a
positive approach towards decision making in a modern era. Also, Smith is totally in favour of
aspects of a government as it should maintain all laws and regulations in a true and efficient
manner which provide subsidies and education to those who are not willing to afford it. This
create satisfaction and help in improving the conditions of a society which generate a positive
reputation across the globe. This show a concern of Adam Smith towards the poor people and
tends to reduce inequalities which depict a sound picture of the company. Smith provide the
overview of four different principle virtues that is justice, self-command, prudence as well as
benevolence. He provides judgements over phenomenon such as moral sentiments and actions
taken by individual to please others and seeking their approval as they use moral principles so
that they could analyse the action conducted by others. Smith tends to define two different kinds
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of virtues, firstly, lower virtues which cover elements such as frugality, justice, prudence and so
on while other includes primary virtues such as gratitude, sense of belongingness, love and
affection, friendship along with compassion (Mizuta, 2016).
The main idea regarding the book Wealth of Nation is based on three principles such as
thinking analytically and plentiful examples and proving them as the progress is towards
freedom of trade, distribution of work and inhabitation of self-interest. On the other hand, theory
of moral sentiments would emphasise on dividing the philosophy on the basis of several aspects
such as politician, ethics and virtues.
As there should be optimum balance between such virtues which create a harmonious
environment in an economy. As it has been comprehended by Smith that an individual need not
to be virtuous for the economic system and values in order to generate more wealth as it explains
that people would tends to make entry in civilisation that create huge prospects of growth and
brings prosperity of success in a nation. Sympathy promoted among the people would create a
great feeling as they could judge the intuitions and action of other by standing themselves in their
position and try to recognise it which help in ensuring a proper command and approval of it as
create certain emotions of an individual’s towards one another (Mizuta, 2016). After analysing
the overall perspectives, Smith found an impartial spectator and lack of proper information
would lead to confusions and misunderstandings among them and create a gap. Such idea is not
clear and this minimise the overall creativity and creates a feeling of selfish and would affect the
behaviour of individual.
As per the viewpoint of Smith, several attributes such as manpower or system is
developed by God as it accelerates more happiness among them and create favourable
consequences of human beings. This help in maintaining proper moral standards and creates
trustworthy among individuals and establish certain norms, ethics and principles which creates a
mutual network among them. Adam Smith determine the behaviour of people by dividing them
on the basis of strength and weaknesses which help them to grab every opportunity by
minimising the possibility of threats (Norman, 2018).
According to his point of view, he determined the truth which lead to industrial
revolution and provide a way in advancement in technology and other materials which simplify
the overall working process and maximise life expectancy that help in achieving their long term
goals. Resentment is another term that is introduced by Smith as it is provided on the basis of
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actions such as improper behaviour and attitude which prove to be a hurdle and challenges as it
led to punishment and violent justice among the group of individuals. Smith believes in
experiments and observation which is related to science as it provides a natural phenomenon and
bring smooth flow of activities in a coordinated and efficient manner. Prudence is related to
virtue which could be understood as superior virtue as these focus on creating wise and judicious
conduct of a corporation as it determines the overall effectiveness of a corporate world. The
capable of taking proper decision and preparing for immediate action would help in ensuring
proper coordination and cooperation which create transparency and allows to gain maximum
exposure and generosity as it helps in enjoying greater economy of scale. Furthermore, Smith
analysed that human beings could generate the interest of public on the basis of several economic
choices and emphasise on promoting the facility of free trade that means exchange of
merchandise or services among the boundaries of nation which create more prosperity of nation
and thus create self-interest along with necessity of government regulations. In his book, namely,
An Inquiry into Nature and Causes of the Wealth of Nations, Adam Smith would produce and
create its own goods that promote a mutual independency and provide a conceptual framework
of nature, attitude of individuals and their perceptions.
Smith has described three aspects of prosperity which is self-interest, limited government
and free economy. Firstly, people must cultivate hard work and practice more and more which
inculcate self-interest among them as it is natural for individuals (O'donnell, 2016). For example:
if butcher tends to sell meat by not focussing on quality and price then it would minimise lose
customer but if it sells meat of better quality at a reasonable price which help in generating more
buyers. Through this, Smith could get a better idea as saving ere more precious as virtues which
encourage advanced innovations and modern technology that raises the standard of living of
people. Secondly, he also observed that the obligation performed by the government is very
limited due to the defence of nation, building of roads and railways, and reprimand to criminals
and many more. They take immediate actions against any illegal activity such as robbery or fraud
as it affects the overall operations and create a negative impact on division of labour in case of
industrialisation. The third element which is provided by Smith is principles of free economy by
hoping the government to depreciate the value of currency and to minimise the taxation policies
and should encourage removal of tariff as it reduces the overall expensive on the part of people
and create less burden for them. Smith was so much particular about poor people as he thinks
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that God meant them to be. His perspective was different as it does not have religious attitude
and think that more distribution of income and wealth among common man is beneficial for the
economy as a whole and provides greater prosperity of a nation (Schliesser, 2017). In addition to
this, Smith provides greater explanation about self-regulation of market which provide necessary
details regarding the wants and needs of people and their buying behaviour as it reflects a
freedom to trade themselves whatever they want. Smith is totally in favour of competition as it
helps in maximising the efficiency and prevent dishonest practices which provide a betterment
towards a society which generate more productivity and incentives for efficiency.
Therefore, Adam Smith analyse an efficient distribution of task among the personnel
would make them capable to work with zeal and enthusiasm which inculcate confidence and
determination among them as it enables them to improve the overall performance and maximise
the level of output. This ensure increasing the satisfaction level of clients which provide growth
aspects in all over nation. Adam Smith create an optimum balance by providing an utmost
sympathy towards poverty as it creates a natural stress which cause sacrifice and dissatisfaction
among them. Also, he considers the several aspects of growth which create wealth such as
prosperity of material, advancement of technology and political stability which help in
generating more income and make the happy. Sense of duties and sentiments would help in
deciding best alternative and also focus on optimum utilisation of resources such as manpower,
method, machine, material and money as it has great valuable in future.
According to an invisible man that is developed by Smith has observed that there is equal
distribution of inhabitants in Earth and also there is multiplication of species that is diverse in
nature as it provides proper ecological balance in a society. The message that are presented by
Smith has a great meaning which needs proper judgements and evaluation of day to day
activities as it helps in understanding core aspects of a business entity. It also provides a unique
perspective regarding human nature as the needs of individual are infinite in nature and he tends
to earn more and more which provide them to maintain a reasonable standard of accuracy which
depict a best picture and ensure a greater success of heights in their career (Sorensen, Miller and
Cabe, 2017). He tries to discover the information regarding good outcomes and good intentions
as well as bad intentions plus bad outcomes. From the historical point of view, Smith emphasise
that it is not well clear as human beings perceived into deception which assist in bringing several
elements such as laws and legislations, economic and other moral judgements. By looking
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awareness, Smith declared that there should be abide of all rules and regulations that provide
justice and depict a fair picture of an economy and bring honest and integral part of behaviour of
humans. He perceives that extension of market would help in creating contact and boost the
growth of economy which could be only possible through formation of an appropriate strategy.
They tend to make a related point by providing the food and emphasise on perfection of
work which create a free flow of activities and it provide judgement that rich people provide
more employment opportunities and delivery of merchandise among their clients in an efficient
manner. Hence, selfishness of rich people has more demand which in turn leads to political
stability plus population growth and provide more security among the group of people. To
develop happiness, Smith put it emphasise on three principles such as welfare of materials as it
consists of health and preservation, maintaining good relationship and creating strong
distribution of network and last is tranquillity which is on the approval of conscience as it could
be earned through virtue. The most essential component of happiness in according to Smith is
developing friendships as it removes the loneliness, stress and anxiety and fear from individuals
and help in finding someone to whom it could share its feeling. In accordance of theory of wealth
and nations (Werhane, 2019). Various terms such as economic growth which could be possible
through free movement of goods or services and capital and greater political stability could win
the heart of Smith as it would provide a better idea so that it could ensure a maximum value and
create a sense of pleasure among them. Developing an efficient relationship with others,
exchange of goods or services and practice of virtue in case of Smith are articulated in a
particular frame of self-possession and thus provide a proper judgement in decision making
ability in a calm and effective manner. According to his perspective, if an individual who tends
to invest his wealth in a corporation would likely to earn more returns and increase the
profitability ratio of an enterprise.
CONCLUSION
From the above information, it can be summarised that human nature is different towards
one another and wealth and virtues are complementary towards each other in economics which is
described by Adam Smith. It has been comprehended that it is necessary to maintain moral
standards that provide good judgements towards the society and contribute towards the growth of
a nation. Adam Smith has brought greater revolutionise in economics as he renders great ideas
and advocate several philosophies which tends to accelerate the wealth and progress of society.
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He also promotes free trade and partition of workers on the basis of their skills as it improves the
overall productivity and help in bringing prosperity of success in a worldwide. It has mainly
emphasised on several theories which has three important pillars such as making proper
investment and accumulating capital and expansion of market which provide an ability to ensure
greater success in future.
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REFERENCES
Books and Journals
Adam, S., 2016. The wealth of nations. Aegitas.
Cavallar, G., 2017. The Rights of Strangers: Theories of International Hospitality, the Global
Community and Political Justice since Vitoria. Routledge.
Conlin, J., 2016. Adam Smith. Reaktion Books.
Hanley, R.P. ed., 2016. Adam Smith: His life, thought, and legacy. Princeton University Press.
Herzog, D., 2018. Without foundations: Justification in political theory. Cornell University
Press.
Hühn, M.P., 2019. Adam Smith’s philosophy of science: Economics as moral
imagination. Journal of Business Ethics. 155(1). pp.1-15.
Kennedy, G., 2016. Adam Smith: A moral philosopher and his political economy. Springer.
Marx, K., 2018. A history of economic theories: From the Physiocrats to Adam Smith. Pickle
Partners Publishing.
Mizuta, H., 2016. A critical bibliography of Adam Smith. Routledge.
Norman, J., 2018. Adam Smith: What He Thought, and why it Matters. Penguin UK.
O'donnell, R., 2016. Adam Smith’s theory of value and distribution: A reappraisal. Springer.
Schliesser, E., 2017. Adam Smith: Systematic philosopher and public thinker. Oxford University
Press.
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Sorensen, D.P., Miller, S.E. and Cabe, K.L., 2017. Developing and measuring the impact of an
accounting ethics course that is based on the moral philosophy of Adam Smith. Journal
of business ethics 140(1). pp.175-191.
Werhane, P.H., 2019. The role of self-interest in Adam Smith’s Wealth of Nations. In Systems
Thinking and Moral Imagination (pp. 271-280). Springer, Cham.
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