Many argue that capitalism, while not perfect, is the system by which people of all walks have an equal chance at living up to their potential and achieving their goals. While concepts on how to build wealth are taught in business schools the world over, what some feel is no longer taught are the moral underpinnings that make capitalism a force for good.
The volume that first truly discussed morality as an essential component to capitalism is Adam Smith’s “The Theory of Moral Sentiments,” which served as the precursor to his better-known work, “The Wealth of Nations.”
As concepts of morality decline in modern-day society, capitalism, some argue, becomes increasingly at risk to be exploited by unscrupulous companies and consumers alike.
While many consider Smith’s “The Wealth of Nations” to be his greatest contribution to capitalism, Smith himself saw the “The Theory of Moral Sentiments” to be his magnum opus. His goal was to explain how man strives to be virtuous through engaging in moral and proper conduct and that, while independent-self interest is in everyone’s nature, humans also innately share the same emotions and instinctual desire to gain approval and understanding of their own.
Smith posited that such understanding can only be created through fostering sympathy and creating even a level of self-doubt — in other words, being introspective and seeing the other person’s point of view.
Dr. Eamonn Butler of the Adam Smith Institute has even pointed out that capitalists “serve their own interests only by serving other people’s.” Using the example of manufacturing a simple cotton t-shirt, Butler says that the production involves the collaboration of “farmers, truckers, designers, machine-makers, weavers, dyers, packagers, exporters, retailers and many others from all over the world.”
“Each contributes their effort willingly, for the reward it bring them; and their efforts are coordinated by the market to produce benefits for us all,” he said.
The idea behind Smith and Butler’s idea of capitalism, is that if ordinary individuals, companies and governments can learn to find common ground in the same way those involved in the manufacturing process for a simple t-shirt do, there is light at the end of the tunnel for the free markets.
Can capitalism still hold true to the moral underpinning Adam Smith once laid out in his philsophical works? To discuss morality as it relates to big government and the free markets, Glenn Beck hosted mogul Steve Forbes and Max Borders, director of content for The Foundation for Economic Education (FEE) and author of Superwealth, on his Tuesday evening broadcast for an engaging discussion.
Beck explains Adam Smith’s Theory of Moral Sentiments:
Below, Steve Forbes talks about the importance of moral sentiments in a capitalist society:
Max Borders chats with Beck about the future of the Libertarian movement: