Analysing The Adam Smith's Problem

Since the Third Plenum of the Eleventh Central Committee of the CPC in 1978, our reform and opening up has been 30 years during which China, the ancient country, has been experiencing world-shaking changes——enormous economic development, great improvement of people's living standard, fast progress of science and technology, enhancement of national power…, all of which make clear to all that the road of reform and opening up is correct! However, along with the establishment of market economic system and the economic development, contradictions between economic interests and moral norms become more and more obvious. Profit seeking, cheating between each other, and competition by hook or crook have become unharmonious voices of social and economic life. Under such situation, it's necessary to review, hackle, and analyze the dispute of so called"the Adam Smith's Problem"that has existed for more than two hundred years. We hope that such work will give us inspiration to deal with conflicts between individual interests and social moral norms during the social and economic development.Adam Smith is a great British moral philosopher in the 17th century, and he is an originator of Classic Political Economy. With his great works---An Inquiry into the Nature and Causes of the Wealth of Nations and the Theory of Moral Sentiments, he established himself a crucial status in human history of development of thoughts. Smith's theoretical system includes therefore both economic and ethical ideas in which the harmonious unification of economic interests and moral norms is his value expectation. In the times before Adam Smith, there had been no one who could expound the theories of political economy so harmoniously and systematically as he did, and no one could depict human nature so multi-dimensionally and profoundly as he did from the combination of ethics and economics, which gives us the conception of human being to be realistic and three-dimensional. However, it's exactly such study on humanity from different dimensions that, after his death, German History School questioned him and said that there is a confliction between his theories, that is, the premise of egoism in An Inquiry into the Nature and Causes of the Wealth of Nations conflicts the premise of altruism in The Theory of Moral Sentiments, which is so called"the Smith's Problem". Nevertheless, most people hold that such problem doesn't exist, and I think so too.In this article, from the backgrounds of Smith and German History School, I will analyze the national interests represented respectively by them and the differences of their theories resulted therefrom.Adam Smith lived in the beginning stage of British industrial revolution. Then Britain had completed primitive accumulation of capital, the industrial capital enlarged quickly, production technology had been improved, and bourgeoisie had had the power to compete in international markets, so Smith advocated abandoning trade protectionism and performing free trade as much as possible. However, the time when German History School was in was the 17th and 18th centuries. Then Germany was in the agricultural stage and ruled by feudal separation. In order to develop national industry and boycott commodities coming from Britain, it's necessary for the state to perform protective trade policies and resist Smith's theories of economic liberalism in the field of ideology. Hence, German History School launched an attack to Smith's theoretical system and claimed that there is a paradox, that is, Smith's premise of the doctrine of good human nature in An Inquiry into the Nature and Causes of the Wealth of Nations and that of the doctrine of bad human nature in the Theory of Moral Sentiments are inconsistent, which constitutes a contradiction for Smith's whole theoretical system which is so called"the Adam Smith's Problem". Since then, disputes about whether such problem exists or not has continued for hundreds of years.In this article, from such aspects as the disciplinary background of Smith's times, the publishing background and process of the two works, the complicated interrelations between them (such as common theoretical foundations——human's self-love and self-benefit), and the unity of opposites, I demonstrate that"the Smith's Problem"is not a contradiction in Smith's theoretical system, that is, the so called"Smith's Problem"is a pseudo problem.Firstly, in Smith's times, economics was not an independent discipline but a part of"Moral Philosophy". The so called contradiction between economics and ethics from the modern perspective doesn't exist in Smith, because then the two were not separated and independent. It's true that Smith based An Inquiry into the Nature and Causes of the Wealth of Nations on egoism to establish his system of political economy while he based the Theory of Moral Sentiments on altruism to construct his system of ethics, but that is not to dissever human nature. On the contrary, it's the same problem——two aspects of human nature, that is, Smith studied and expounded separately different parts of his moral philosophy from the two aspects"sympathy"and"egoism".Secondly, some scholars argue that, in his life, Smith alternately revised and published the two works for several times but didn't change his basic views during such process. As such a serious scholar as Smith, if there were any inherent contradiction between the two works while he couldn't find out, it would be incredible. That can only mean that Smith himself didn't think there is any contradiction between them.Finally, in Smith's theoretical system, individual interests and social interests are a unity of opposites. Smith held that human egoism is not only a natural, inborn, and reasonable ideal, but also a necessary way to achieve social or public interests, because such inborn egoism and self-benefit nature will make people consider them interests first in their economic activities and do their best to seek and maximize their interests, which will make resources allocated unconsciously and reasonably, and which will not only benefit themselves but also boost the increase of social wealth and the development of social benefits.From the above argumentation, this article holds that"the Smith's Problem"is not an inherent contradiction in Smith's theoretical system but is a pseudo problem. Though"the Smith's Problem"is not an inherent contradiction in Smith's theoretical system, the contradiction between individual and social interests really exists in the operation of market economy. It is therefore that"the Smith's Problem"become the pronoun of such contradiction. So, in reality,"the Smith's Problem"becomes a dilemma that we have to face. Therefore, there are the problems that we have to resolve to improve people's ethical quality through education, to promote those excellent moral and ethical ideas in our traditional culture and foster a social environment with strong spirit of morality and ethics, and to establish an institutional environment to reduce altruistic costs. So, in the process of achieving the goal of overall well-off society, it will be of great historical and realistic significance for the construction of socialist harmonious society to properly handle"the Smith's Problem"in reality, which is also a great task for us to realize overall well-off society and construct socialist harmonious society.