Adam Smith, The Theory of Moral Sentiments, and the Gift the Market Cannot Replace

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Adam Smith wrote two books, not one

In 1759, a thirty-five-year-old Scottish philosopher who had been teaching moral philosophy at the University of Glasgow for eight years published his first major book. It was called The Theory of Moral Sentiments. It argued that the foundation of all human ethical life is something he called sympathy, or fellow-feeling. Human beings, he wrote, are so constituted that they cannot watch another person suffer without something moving in themselves in response, and cannot watch another person flourish without something answering. The whole structure of morality grows from this capacity. Without it, no human society would hold together for a week.

Seventeen years later, in 1776, the same philosopher published a second book. It was called An Inquiry into the Nature and Causes of the Wealth of Nations. It described how human beings, pursuing their own interests in a context of peaceful exchange, produce between them, without anyone intending it, an increasingly refined division of labour that raises the productive capacity of the whole community. It is in this book that the famous sentence appears, the one about the butcher and the brewer and the baker. It is also in this book that the phrase "the invisible hand" appears, once, in passing.

The philosopher was Adam Smith, and he saw himself, until the end of his life, as first and foremost a moral philosopher. He revised The Theory of Moral Sentiments repeatedly, the last revisions coming only months before his death in 1790. He was building, over thirty years, a single picture of human social life in two books. The first book described the moral substrate. The second book described how the market rose above it.

The amputation: how economics inherited only half of Smith

In the nineteenth century, and ever more strongly through the twentieth, the tradition that called itself economics picked up The Wealth of Nations and set The Theory of Moral Sentiments carefully on a shelf where it could be ignored. Economics became the science of the invisible hand without the moral sentiments under it. The rest of Smith, the bigger half of Smith, was preserved in glass cases in philosophy departments and allowed to gather dust.

What modern economics became, from that point, was half a Smith. It took the part about how markets produce emergent order through self-interest, and it lost the part about how markets only work when they sit on a substrate of sympathy, fellow-feeling, fair dealing, trust, mutual recognition, and all the other moral sentiments without which no exchange can take place.

The stream continued past Smith, but it carried only half of him. Ricardo built a theory of comparative advantage on the half. Mill built a theory of utility on the half. Marx built a critique of capital on the half and inherited, unknowingly, the same amputation. Marshall built modern economic method on the half. Keynes built macroeconomic management on the half. Hayek built the knowledge-problem defence of markets on the half. Friedman built the whole of Chicago economics on the half. Each of them saw one more detail of what the amputated half could do. None of them recovered the other half.

The contemporary economic frame you are standing inside, with all its sophistications, is still standing on the half.

Back to the tired friend: the gift you cannot price

Go back to the tired friend in the prologue. Go back to the child you explained something to, the door you held, the dish you passed, the thank-you you said to a person who was paid to serve you but whom you thanked anyway.

What moved between you and them was real. Something was given. Something was received. Something flowed.

Now try to price it.

You cannot. Not because you are being sentimental. Because the thing itself is not the kind of thing that has a price. If you set a price for holding a door, the door-holding stops being what it was. If you paid someone to listen to you, the listening stops being what it was. The moment a price appears, the thing the price is trying to measure has already left the scene. A different thing has taken its place. That different thing is a transaction. It is not worthless. It does its own work. But it is not what you did for the tired friend.

What you did for the tired friend is called a gift. Not the special kind wrapped in paper at Christmas. The everyday kind, the hundred-times-a-day kind, the one moving invisibly through every working human relationship. Something is offered. Something is received. Nothing is counted. No receipt is issued. No debt is recorded. And yet something real has happened that sustains both parties in a way no transaction can.

The flow of gifts your day already runs on

Watch what happens in a day, in this mode. You begin the day eating food someone else made. Even if you paid for it, the paying covered only a fraction of what went into getting it to you. Soil the farmer did not make built the food. Rain the farmer did not make watered it. Seeds that carry genetic memory of ten thousand years of unpaid human care built it. A supply chain of thousands of small gifts of attention got it to your kitchen. You did not pay for any of that. You cannot pay for any of that. If the cost of all the unpriced gifts in your breakfast were added up, no one in the world could afford breakfast. And yet you ate.

You dressed in clothes. You walked on a floor someone else built. You turned on a light the whole of modern physics had to be worked out to allow you to have. You sent a message with an alphabet you did not invent. You spoke a language whose every word carries invisible accumulated generations of shared labour. The day has not begun and you are already the recipient of incomprehensibly large gifts from the living and the dead.

Care as the principle of the economic sphere

The principle of the sphere of labour and exchange is care.

The French Revolution named this sphere with a brother-word, though the sphere had to include everyone, and so we will name it here by what it has always done, which is care. You can say kinship. You can say the gift. You can say the common life. You can say mutual service. The words name different facets of the same underlying principle. Each is true. None is sufficient on its own.

Care is not charity. Charity is care delivered by those who have surplus to those who do not, and it is often beautiful, but it is one narrow form of care rather than its whole nature. Care is the movement of attention, work, resource, and recognition from whoever has them toward whoever needs them, in a way that sustains the whole web on which everyone depends. The ordinary case is a mother to a child, a neighbour to a neighbour, a worker to the colleague at the next desk, a nurse to a patient, a cook to whoever will eat the meal, a writer to whoever will read the sentence. Care is what people do for each other, constantly, in ways both paid and unpaid, when the relationship is actually working.

Care is the principle of this sphere because the sphere is the sphere of providing. Human beings need things. Food, shelter, clothing, tools, transport, healing, teaching, comfort, company. No one person can produce all these for themselves. Even the most self-sufficient homesteader is sustained by an immense web of unseen others stretching back in time and outward in space.

Why this sphere corresponds to the limbs and metabolism

This is the reason this sphere corresponds to the human being's limbs and metabolism rather than to the head or the heart. The limbs and the metabolism are where the human being meets the material world and transforms it. Food comes in. Work goes out. The hands take hold of matter and shape it. The digestion takes in what the world provides and turns it into the body's own substance. Warmth is generated. Will is exercised. Matter is moved. This is the willing pole of the human being, opposite to the thinking pole in the head, mediated by the feeling pole in the heart. The three social spheres mirror the three systems of the human being exactly.

What associative economics actually looks like

What does an economic sphere actually organised around care look like in practice? It is not obvious from the surface of modern economic life, because the surface has been colonised by a logic that is not care. We have to look harder to see the alternative that is already there, in fragments.

The first thing to notice is that a care-organised economy does not abolish price. Price is how the web communicates with itself at scale. What it does is ask a different question about price. The current question is: what price will maximise the return to the producer or to the capital that funded the production? A care-organised economy asks: what price actually serves the situation? What price covers the needs of the people whose work produced the good, so that they can continue to live and continue to produce? What price lets the people who need the good actually receive it?

An older vocabulary called this the true price. A true price is one at which one person, doing one kind of work, produces enough to meet their needs until they can do the same quantity of work again, while also providing the product in a way that genuinely meets the needs of whoever receives it.

The form of this communication is what the older tradition called an association. An association in the broader sense of a body in which the three economic roles, production, distribution, and consumption, meet and deliberate. Producers report what they can make and at what material cost. Distributors report what is flowing and where, what is needed and where, what is surplus and where. Consumers report what they actually need, what they would pay willingly, what would serve them and what would not. The three-way conversation, sustained over time, produces prices that are neither arbitrary impositions nor winner-take-all extractions.

This sounds utopian until you realise that fragments of it already exist, have existed for over a century, and continue to function. Consumer cooperatives. Producer cooperatives. Credit unions. Community-supported agriculture. Member-owned insurance mutuals. Worker-owned firms. Fair-trade certifications with active producer participation. Biodynamic agricultural networks. Mutual-aid societies. Each of these is an associative fragment, embedded in a surrounding arrangement that runs on different principles, but functioning, within its own scope, on something close to the associative logic.

Money and its three functions

A healthy economic sphere would also handle money differently from the current arrangement. The tradition we are drawing from noticed that money has three different functions in the social organism, and that modern money confuses them at cost.

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