R. H. Coase Graduate School

R. H. Coase

a harmony in man’s nature no longer

requires us to postulate a divine creator

and Adam Smith’s use of the word Nature

is singularly appropriate. The harmony in

human psychological propensities should,

however, be regarded as the existence of that

combination of traits which makes for

survival rather than as leading to the “per-

fection and happiness” of mankind. Such

a position, which assigns a genetic basis

for human psychology, is one for which

there is, today, some  support.38

I can find no essential difference between

the views on human nature in  The Theory

of 

Moral Sentiments 

and those expressed in

The Wealth 

of 

Nations. 

Of course, the

subject is not treated systematically in  The

Wealth  

of 

Nations 

and Adam Smith’s views

have to be inferred from incidental remarks.

But self-love is everywhere evident. We are

more familiar with the effect of self-love on

the actions of merchants and manufacturers

but in fact all men, whatever their occu-

pations, are much the same. When speaking

of teachers, he says: “In every profession,

the exertion of the greater part of those

who exercise it, is always in proportion to

the necessity they are under of making that

exertion.“39 Of those engaged in the “ad-

ministration of government,” he says that

they are “generally disposed to reward both

themselves and their immediate dependents

rather more than  enough.“40

Self-love also shows itself in the “over-

weening conceit which the greater part of

men have of their own abilities” and their

“absurd presumption in their own good

fortune,"41

which is used by Adam Smith

to explain why, among other things, people

buy lottery tickets, invest in gold mines,

become lawyers, engage in smuggling, join

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24

Selected Papers No. 50

the army or go to sea. It may seem strange

that self-love sometimes results in self-harm

but the reason is that self-love leads to

self-deceit and self-deceit  colours  our per-

ception of the outcomes of alternative courses

of action. This is all of a piece with Adam

Smith’s view that man overestimates the

difference between one permanent situation

and another. “Avarice overrates the difference

between poverty and riches: ambition, that

between a private and public station: vain-

glory, that between obscurity and extensive

reputation. "42 This theme is illustrated by

the discussion of ambition and in particular

the case of the poor man’s son “whom

h e a v e n   i n   i t s   a n g e r   h a s   v i s i t e d   w i t h

ambition”:

. . . He studies to distinguish himself

in some laborious profession. With the

most unrelenting industry he  labours

night and day to acquire talents superior

to all his competitors. He endeavours

next to bring those talents into public

view, and with equal assiduity solicits

every opportunity of employment. For

this purpose he makes his court to all

mankind; he serves those whom he

hates, and is obsequious to those whom

he despises. Through the whole of his life

he pursues the idea of a certain artificial

a n d   e l e g a n t   r e p o s e   w h i c h   h e   m a y

never arrive at, for which he sacrifices

a real tranquillity that is at all times in

his powers, and which, if in the extrem-

ity of old age he should at least attain

to it, he will find to be in no respect

preferable to that humble security and

contentment which he had abandoned

for  it.43

However, if the ambitious man is not made

happy by the inner forces which drive him,

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R. H. Coase

t h e   r e s t   o f   u s   g a i n .   S a y s   A d a m   S m i t h :

“

. . . it is well that nature imposes upon us

in this manner. It is this deception which

rouses and keeps in continual motion the

industry of mankind. It is this which first

prompted them to cultivate the ground, to

build houses, to found cities and common-

wealths, and to invent and improve all the

sciences and arts, which ennoble and em-

bellish human life. . . .  "44

Benevolence is not absent from The Wealth

of 

Nations 

but, as in 

The Theory 

of 

Moral

Sentiments, 

it is put in its place. Consider

Adam Smith’s view that slavery could “afford

t h e   expence of slave cultivation” in the

production of sugar and tobacco, but that

this was not true for corn. He supports this

conclusion by observing that the “late reso-

lution of the Quakers in Pennsylvania to set

at liberty all their negro slaves, may satisfy

us that their number cannot be very great.

Had they made any considerable part of

their property, such a resolution could never

h a v e   b e e n   a g r e e d   to."45

This quotation

reveals the weight which Adam Smith

assigns to benevolence. Freeing the slaves

was certainly a benevolent action but hardly

one likely to be undertaken if the price

was personal ruin.

Dr. Arthur H. Cole after referring to

passages such as these concludes that Adam

Smith had a “pretty low opinion of mankind

in general.” This he finds difficult to reconcile

with the picture drawn by Adam Smith’s

biographers of a man who was “friendly and

generous.“46 

I do not regard this as a

problem. Adam Smith saw the less agreeable

qualities of human beings as being productive

of good. Self-interest promotes industry;

resentment discourages aggressive actions by

others; vanity leads to acts of kindness; and

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