R. H. Coase Graduate School

R. H. Coase

1 3

passion against any person in whose

breast we suspected or believed such

designs or affections were harboured,

though they had never broken out into

any actions. Sentiments, thoughts, in-

tentions, would become the objects of

punishment; and if the indignation of

mankind run as high against them as

against actions; if the baseness of the

thought which had given birth to no

action, seemed in the eyes of the world

as much to call aloud for vengeance

as the baseness of the action, every

court of judicature would become a

real inquisition. There would be no

safety for the most innocent and cir-

cumspect conduct. . . . Actions, there-

fore, which either produce actual evil,

or attempt to produce it, and thereby

put us in the immediate fear of it, are

by the Author of nature rendered the

only proper and approved objects of

human punishment and resentment.

Sentiments, designs, affections, though

it is from these that according to cool

r e a s o n   h u m a n   a c t i o n s   d e r i v e   t h e i r

whole merit or demerit, are placed by

the great Judge of hearts beyond the

limits of every human jurisdiction, and

are reserved for the cognizance of his

own unerring tribunal. That necessary

rule of justice, therefore, that men in

this life are liable to punishment for

their actions only, not for their designs

and intentions, is founded upon this

salutary and useful irregularity in

human sentiments concerning merit or

demerit, which at first sight appears so

absurd and unaccountable. But every

part of nature, when attentively sur-

veyed, equally demonstrates the  provi-

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Selected Papers No. 50

dential care of its Author; and we may

admire the wisdom and goodness of

God even in the weakness and folly

of  men.19

Adam Smith also explains that this “irreg-

ularity of sentiment” is not without its

positive utility :

M a n   w a s   m a d e   f o r   a c t i o n ,   a n d   t o

promote by the exertion of his faculties

such changes in the external circum-

stances both of himself and others, as

may seem most favourable to the

h a p p i n e s s   o f   a l l .   H e   m u s t   n o t   b e

satisfied with indolent benevolence, nor

fancy himself the friend of mankind,

because in his heart he wishes well to

the prosperity of the world. That he

may call forth the whole vigour of his

soul, and strain every nerve, in order

to produce those ends which it is the

purpose of his being to advance, Nature

has taught him, that neither himself

nor mankind can be fully satisfied with

his conduct, nor bestow upon it the full

measure of applause, unless he has

actually produced them. He is made

to know, that the praise of good inten-

tions, without the merit of good offices,

will be but of little avail to excite either

the loudest acclamations of the world,

or even the highest degree of  self-

applause.20

Adam Smith on many occasions observes

that aspects of human nature which seem

reprehensible to us, in fact serve a useful

social purpose. “Nature. . . even in the present

depraved state of mankind, does not seem

to have dealt so unkindly with us, as to

have endowed us with any principle which

is wholly and in every respect evil, or which,

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R. H. Coase

1 5

in no degree and in no direction, can be the

proper object of praise and approbation.“*’

Consider his discussion of pride and vanity:

Our dislike to pride and vanity gen-

erally disposes us to rank the persons

whom we accuse of those vices rather

below than above the common level.

In this judgment, however, I think we

are most frequently in the wrong, and

that both the proud and the vain man

are often (perhaps for the most part)

a good deal above it; though not near

so much as either the one really thinks

himself, or as the other wishes you to

think him. If we compare them with

their own pretensions, they may appear

the just objects of contempt. But when

we compare them with what the

greater part of their rivals and com-

petitors really are, they may appear

quite otherwise, and very much above

the common level. Where there is this

real superiority, pride is frequently

attended with many respectable virtues

-with truth, with integrity, with a

high sense of honour, with cordial and

steady friendship, with the most in-

flexible firmness and resolution; vanity

with many amiable ones-with human-

ity, with politeness, with a desire to

oblige in all little matters, and some-

times with a real generosity in great

ones-a generosity, however, which it

often wishes to display in the most

splendid  colours  that it  can.22

Of more interest to those of us concerned

with the working of the economic system

is Adam Smith’s discussion of the view, to

which his teacher Dr. Hutcheson subscribed,

that virtue consists wholly of benevolence

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Selected Papers No. 50

or love and that any admixture of a selfish

motive detracts from that virtue. Hutcheson,

according to Smith, argued that if “an

action, supposed to proceed from gratitude,

should be discovered to have arisen from an

expectation of some new favour, or if what

was apprehended to proceed from public

spirit should be found out to have taken its

origin from the hope of a pecuniary reward,

such a discovery would entirely destroy all

notion of merit or praiseworthiness in either

of these actions. . . . The most virtuous of

all affections. . . was that which embraced

as its objects the happiness of all intelligent

beings. The least virtuous . . . was that

which aimed no further than at the happiness

of an individual, such as a son, a brother,

a  friend."23

Adam Smith, as we have seen,

did not deny the existence of benevolence

nor that it contributed to human welfare.

But he regarded this doctrine of Hutcheson’s

as being too extreme: “Regard to our own

private happiness and interest . . . appear

upon many occasions very laudable prin-

ciples of action. The habits of economy,

industry, discretion, attention and application

of thought, are generally supposed to be

cultivated from self-interested motives, and

at the same time are apprehended to be very

praiseworthy qualities, which deserve the

esteem and approbation of every  body."24

Adam Smith adds:

Benevolence may, perhaps be the sole

principle of action in the Deity, and

there are several not improbable argu-

ments which tend to persuade us that

it is so. . . . But whatever may be the

case with the Deity, so imperfect a

creature as man, the support of whose

existence requires so many things ex-

ternal to him, must often act from

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