Adam Smith’s Model of Man and Some of its Consequences

This papers discusses the relationship of the ‘model of man’ presented by Adam Smith in The Theory of Moral Sentiments (1759) and the assumptions about human behaviour which are quintessential for his An Inquiry into the Nature and Causes of the Wealth of Nations (1776/77). It is argued that Smith’s observation of a ‘propensity to truck, barter and exchange one thing for another’ does not in general hold for human behaviour. Moreover, there appears to be an inherent conflict with ‘sympathy’, the key concept proposed in The Theory of Moral Sentiments, if we interpret it as the source of social evaluation, selfevaluation and individual action. Following Karl Polanyi’s critical comments in The Great Transformation (1944), we will discuss some of the consequences of this incongruence for the philosophical foundations of modern economics and economic policy.