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The Theology of Adam Smith

We’ve all heard some form of the quote usually attributed to Frank Outlaw, the founder of

Bi-Lo Stores:

Watch your thoughts, they become words;

watch your words, they become actions;

watch your actions, they become habits;

watch your habits; they become character;

watch your character, for it becomes your destiny.

We agree, but then ask the question, “What’s upstream of our thoughts?” In other words, how should we write and insert what really should be the first line, “Watch your __________, it becomes your thoughts.” We answer with the word ‘theology.’ “Watch your theology, it becomes your thoughts.”

Everyone has a theology – a perspective of humanity in light of the divine – even declaring one doesn’t means to take a theological stance. It should be no surprise that Adam Smith (1723–1790), most famous for his 1776 magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations (“Wealth of Nations”) had a theology that shaped his destiny. In American universities and publications Smith is frequently considered the father of capitalism, and Wealth of Nations is touted as the capitalist’s bible. What is usually a surprise is to learn that Smith’s theology – the perspective through which he wrote Wealth of Nations – is revealed in his previous world-wide bestselling book.

Photo Credit: Paul Knowlton

The Theory of Moral Sentiments (“Moral Sentiments”), first published in 1759, is all but unknown to modern readers. In Moral Sentiments Smith introduced his social science breakthroughs that explained human behavior – including our responsibilities to each other and behavior in the context of free market economics – as springing from our nature as social creatures. In our view Moral Sentiments is a book about behavioral economics that reveals Smith’s theology – the springboard of his thoughts that became his destiny.

On the strong foundation of Moral Sentiments Smith placed and erected the economic breakthroughs he further expounded in Wealth of Nations. John Rae, among Smith’s earliest and best-known biographers, writes that Smith himself considered Moral Sentiments his superior work over Wealth of Nations. Given Smith’s own assessment of his work, one needs an understanding of Moral Sentiments alongside Wealth of Nations to have an accurate understanding of free market capitalism as envisioned by Smith.

Despite Smith’s view of his own work, Moral Sentiments has long been absent from the education of American business students. We should not be surprised then, when our business leaders are unaware that Smith’s theology teaches the turbulent waters of free market economics include favorable currents. These currents are formed from the inherent values of humankind, which Smith derives and supports from a theological perspective of our empathetic behavior as social creatures. These currents, like virtually all currents and trade winds at sea, are invisible to the eye. (As is our theology, but eventually our resulting actions become known.) Neither should we be surprised when those same leaders run aground their organizations, even their entire national economy, because they fail to safely navigate in the currents of a theological perspective of empathy, as Smith explains in Moral Sentiments.

How might an understanding of Moral Sentiments lead to a clearer reading of Wealth of Nations, and in turn, a more profitable and ethical capitalism? There are many examples, from Smith’s perspectives on the pursuit of wealth to the core purpose of government, and in Better Capitalism we’ve done a lot of hard theological work for you. For example, we address the commonly misunderstood phrase ‘invisible hand’ in the section titled ‘Invisible Hand-Wringing’ to explain why the phrase is wholly misunderstood and has nothing to do with laissez-faire government.

For the many of us who haven’t carefully studied Wealth of Nations through the lens of Moral Sentiments, we invite you to pick up a copy of Better Capitalism and take the shortcut to an accurate understanding of what the father of capitalism envisioned for our economic systems. We’re confident you’ll find clarity you weren’t expecting and answers that help you to more ethical and profitable ways of doing business.

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