Part I- A Bit of History
On 28 May 2014 I posted a Blog: Imaging a Better World: Moving forward with the real Adam Smith where I noted the following, amongst others:
‘There is no doubt that today capitalism is under fire. It is besieged and under attack. To my mind this is the best time to revisit Adam Smith and to try to see if we can locate the true and real Smith. As what has been mainly known about Adam Smith and ascribed to him, are far from the truth. The right-wingers and the market-fundamentalists for too long have abused Smith in order to promote their obnoxious agenda and to legitimise exploitation of people and resources for the benefit of the 1%.
‘In the interest of accountability to truth and to Smith himself, this must be challenged and attempts must be made to discover the real Adam Smith and his true values.’
Then, I noted that:
‘We should recall the wisdom of Adam Smith, “father of modern economics”, who was a great moral philosopher first and foremost. In 1759, sixteen years before his famous Wealth of Nations, he published The Theory of Moral Sentiments, which explored the self-interested nature of man and his ability nevertheless to make moral decisions based on factors other than selfishness. In The Wealth of Nations, Smith laid the early groundwork for economic analysis, but he embedded it in a broader discussion of social justice and the role of government. Today we mainly know only of his analogy of the ‘invisible hand’ and refer to him as defending free markets; whilst ignoring his insight that the pursuit of wealth should not take precedence over social and moral obligations.
‘We are taught that the free market as a ‘way of life’ appealed to Adam Smith but not that he thought the morality of the market could not be a substitute for the morality for society at large. He neither envisioned nor prescribed a capitalist society, but rather a ‘capitalist economy within society, a society held together by communities of non-capitalist and non-market morality’. As it has been noted, morality for Smith included neighbourly love, an obligation to practice justice, a norm of financial support for the government ‘in proportion to [one’s] revenue’, and a tendency in human nature to derive pleasure from the good fortune and happiness of other people.
‘In his "Theory of Moral Sentiments" he observed that "How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it."
Part II- Adam Smith and the Pursuit of Happiness
(N.B. In the spring of 2008, Michael Busch, a senior economics major at the University of Northern Iowa, wrote a fascinating article on Adam Smith and Happiness at the University’s business and economic journal, Major Themes in Economics.
I take my hat off to him. It is an excellent article, very informative, clear and easy-to-read. I am thus, very happy to share it with you.)
Adam Smith and Consumerism’s Role in Happiness: Modern Society Re-examined
‘In modern America, consumerism has encouraged people to seek happiness through constant expansion of their material standard of living. Consumerism has led to a growth of status consumption and want-creation, both of which increase consumption without contributing to happiness. Adam Smith observed that lasting happiness is found in tranquillity as opposed to consumption. In their quest for more consumption, people have forgotten about the three virtues Smith observed that best provide for a tranquil lifestyle and overall social well-being: justice, beneficence and prudence. Applying the virtues to modern society may decrease overall consumption but will lead to a more satisfied life.’
More reading on Adam smith and the Pursuit of Happiness
It is important to remember that: ‘Though Smith was principally in favour of free markets and advocated a policy of restraint in regard to state intervention, a close reading of his work reveals that he believed it takes great leadership to ensure capitalism works.
Smith believed it was necessary for great leadership at all levels – to enforce contracts, protect patents, prevent unfair practices, prevent cartels, encourage innovation, and provide for public goods such as transportation, bridges, lighthouses, public safety, security and global mobility. This requires honest, upright and high integrity leadership.
At the core of his work, Smith was driven by a desire to discover the best ways to make individuals and nations happier. His Wealth of Nations was really an extension of The Theory of Moral Sentiments, and is still recognised today as the first and most important book written on political economy.
Ultimately, Smith sought to guide himself and others in the pursuit of true satisfaction. While we might think that material gain and status is what leads to a fulfilled life, he disagreed.
Fulfilment comes when we are able to perform good work in the world and know that we are admired and respected because of our actions. In Smith’s own words: “Man naturally desires not only to be loved, but to be lovely [worthy of being loved].”
Being good is not some empty ideal that holds us back from doing well and succeeding in life.
On the contrary, qualities such as giving, and other wholesome behaviours, are the very things that increase our chances of success, happiness and contentment.
Conversely, greedy pursuits for status, money and fame leave us in danger of feeling isolated and inadequate, feeling neither lovely nor loved.
Some of Smith’s advice to us on being happier includes the following:
- Most of us are inherently self-motivated and think about ourselves, but surprisingly, “we also care about other people’s happiness.” This means that deep down, we become happier when we care about others.
- We desire to be loved and to be worthy of love. This requires us to give and help others, which bring joy and happiness.
- Pursuing money for its own sake is much more likely to bring about sadness than happiness.
- “Self-delusion is the source of half the disorders of human life.” We need to guard against this at all times.
- Emotional intelligence is key to our happiness. When we successfully interact emotionally with others, we increase our levels of happiness. So, we need to enhance our emotional intelligence at all times.
Some Final Thoughts: It is very much worth realising that Adam Smith didn’t just work to understand how economics and its systems functioned, but how they could play a role in serving human values best.
To help achieve this and to cultivate civilised societies, there is one quality that acts as the foundation upon which all others are built: trust.
In his book, How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness, Russ Roberts highlights the importance of trust in society, writing: “When you can trust the people you deal with – when you don’t have to fear that your trust will be exploited for someone else’s gain – life is lovelier and economic life is much easier.
How does trust get created? By the myriad of small interactions we have with each other when we honour our word and pass up the chance for opportunism.”
I believe trust is also one of the key deficits we have in many organisations, and possibly, in nations. In fact, on a daily basis, we have more than 20,000 interactions (words we speak, our body language, our facial expressions etc.) with people around us.
These 20,000 moments define our leadership, influence and levels of trust in us. Smith seems to have figured this out almost 250 years ago.-ROSHAN THIRAN What Adam Smith Teaches Us About Becoming Happier