Market Dummy and Social Animal: Adam Smith’s Models of Man

This paper discusses the relationship of the two models of man presented by Adam Smith in The Theory of Moral Sentiments and the Wealth of Nations—and the working of the invisible hand. There appears to be an inherent conflict of the market solution and the working of the price mechanism with “sympathy,” the key concept proposed in The Theory of Moral Sentiments, the source of social evaluation, self-evaluation and individual action—and the impartial spectator controlling individual action. We will give an extended explanation for this incongruence and, given this background, elaborate on Smith’s social program of educating the common people. References to John Rawls’ Theory of Justice, Ken Binmore’s evolutionary theory of fairness, and Karl Polanyi’s critical comments in The Great Transformation on the emergence of the market society demonstrate that Smith does not give us a moral theory but a tool kit for moral behavior, on the one hand, and conditions and implications of a market economy, on the other—exemplified by the two models of man which he applies.