Advertisement

Journal of Business Ethics

, Volume 136, Issue 1, pp 119–132 | Cite as

Will the Real A. Smith Please Stand Up!

  • Matthias P. Hühn
  • Claus Dierksmeier
Article

Abstract

In both the public and the business world, in academe as well as in practice, the ideas of Adam Smith are regarded as the bedrock of modern economics. When present economic conditions and management practices are criticised, Adam Smith is referred to by defenders and detractors of the current status quo alike. Smith, it is believed, defined the essential terms of reference of these debates, such as the rational pursuit of self-interest on part of the individual and the resultant optimal allocation of goods in free markets thanks to the workings of an “invisible hand.” In this article, we question whether this standard view of Smith, the economist, is tenable. We provide an extensive review of the extant secondary literature from economists, business ethicists, and philosophers, comparing their assessments to crucial elements of Smith’s theoretical system. As a result, we show that Smith, far from being an advocate of a value-free or even value-averse conception of economic transactions, stood for a virtue-based and values-oriented model of business. Accordingly, we argue current management education and the pedagogy of business ethics ought to be changed, and certain strategic conclusions drawn for business practice.

Keywords

Economic theory Virtue ethics Business ethics Epistemology Adam Smith 

Notes

Acknowledgments

For instructive criticism and decisive help with the bibliographic apparatus, we wish to thank Katharina Hoegl. We are also indebted to the three anonymous reviewers who made this paper better.

References

  1. Alvey, J. E. (1999). A short history of economics as a moral science. Journal of Markets & Morality, 2(1), 52–73.Google Scholar
  2. Andrew, E. G. (2001). Conscience and its critics: Protestant conscience, enlightenment reason, and modern subjectivity. Toronto: University of Toronto Press.Google Scholar
  3. Berle, A. A., & Means, G. G. C. (1932). The modern corporation and private property. New York: Macmillan.Google Scholar
  4. Blaug, M. (1992). The methodology of economics: How economists explain. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  5. Blosser, J. (2011). Christian freedom in political economy: The legacy of John Calvin in the thought of Adam Smith. In P. Oslington (Ed.), Adam Smith as theologian (pp. 46–60). London: Routledge.Google Scholar
  6. Bofinger, P. (2013). Adam Smith: Der Segen des Egoismus. Frankfurter Allgemeine Sonntagszeitung. http://www.faz.net/aktuell/wirtschaft/wirtschaftswissen/die-weltverbesserer/adam-smith-der-segen-des-egoismus-12536505.html.
  7. Bonar, J. (1922). Philosophy and political economy (3rd ed.). London: Allen & Unwin.Google Scholar
  8. Bragues, G. (2008). The ancients against the moderns: Focusing on the character of corporate leaders. Journal of Business Ethics, 78(3), 373–387.CrossRefGoogle Scholar
  9. Bragues, G. (2009). Adam Smith’s vision of the ethical manager. Journal of Business Ethics, 90(4), 447–460.CrossRefGoogle Scholar
  10. Brat, D. A. (2005). ‘Adam Smith’s god and the end of economics’, in Virginia Economic Journal. Presented at Virginia Association of Economists Meetings in Richmond, VA, March 2005.Google Scholar
  11. Broadie, A. (2006). Sympathy and the impartial spectator. In K. Haakonssen (Ed.), The Cambridge companion to Adam Smith (pp. 158–188). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  12. Brodbeck, K.-H. (1998). Die Fragwürdigen Grundlagen Der Ökonomie: Eine Philosophische Kritik Der Modernen Wirtschaftswissenschaften. Darmstadt: Wiss. Buchges.Google Scholar
  13. Brown, V. (1994). Adam’s Smith discourse: Canonicity, commerce and conscience. London: Routledge.Google Scholar
  14. Calkins, M. J., & Werhane, P. H. (1998). Adam Smith, Aristotle, and the virtues of commerce. The Journal of Value Inquiry, 32, 42–60.CrossRefGoogle Scholar
  15. Carrasco, A. M. (2004). Adam Smith’s reconstruction of practical reason. Review of Metaphysics, 58(1), 81–116.Google Scholar
  16. Chapman, B. (2014, June 10). The invisible hand of Ronald Reagan. Memorial service remarks. Accessed November, 2014, from http://www.discovery.org/p/7.
  17. Clarke, P. H. (2000). Adam Smith, Stoicism and religion in the 18th century. History of the Human Sciences, 13(4), 49–72.CrossRefGoogle Scholar
  18. Coase, R. H. (1976). Adam Smith’s view of man. Journal of Law and Economics, 19(3), 529–546.CrossRefGoogle Scholar
  19. Darwall, S. (1999). Sympathetic liberalism: Recent work on Adam Smith. Philosophy & Public Affairs, 28(2), 139–164.CrossRefGoogle Scholar
  20. Den Uyl, D. J., & Griswold, C. L. (1996). Adam Smith on friendship and love. Review of Metaphysics, 49(3), 609–637.Google Scholar
  21. Dierksmeier, C. (2011). The freedom-responsibility Nexus in Management Philosophy and Business Ethics. Journal of Business Ethics, 101(4), 263–283.CrossRefGoogle Scholar
  22. Elegido, J. (2009). Business education and erosion of character. African Journal of Business Ethics, 9(1), 16–24.Google Scholar
  23. Evensky, J. (1993). Adam Smith on the human foundation of a successful liberal society. History of Political Economy, 25(3), 395–412.CrossRefGoogle Scholar
  24. Evensky, J. (2003). Adam Smith on the human foundation of a successful liberal society. History of Political Economy, 25(3), 395–412.CrossRefGoogle Scholar
  25. Evensky, J. (2005). Adam Smith’s moral philosophy. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  26. Faccarello, G. (2005). A tale of two traditions: Pierre Force’s self-interest before Adam Smith. European Journal of the History of Economic Thought, 12(4), 701–712.CrossRefGoogle Scholar
  27. Fitzgibbons, A. (1995). Adam Smith’s system of liberty, wealth and virtue. Oxford: Oxford University Press.Google Scholar
  28. Fleischacker, S. (2012). Sympathy in Hume and Smith: A contrast, critique, and reconstruction. In C. Fricke & D. Føllesdal (Eds.), Intersubjectivity and Objectivity in Adam Smith and Edmund Husserl (pp. 273–311). Frankfurt: Ontos Verlag.Google Scholar
  29. Foley, V. (1974). The division of labor in Plato and Smith. History of Political Economy, 6(2), 220–242.CrossRefGoogle Scholar
  30. Force, P. (2003). Self-interest before Adam Smith: A genealogy of economic science. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  31. Forman-Barzilai, F. (2010). Adam Smith and the circles of sympathy: Cosmopolitanism and moral theory. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  32. Friedman, M. (1953). Essays in Positive Economics. Chicago: University of Chicago Press.Google Scholar
  33. Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. New York Times Magazine.Google Scholar
  34. Galbraith, J. K. (1973). Economics and the public purpose. Boston: Houghton Mifflin.Google Scholar
  35. Ghoshal, S. (2005). Bad management theories are destroying good management practices. Academy of Management Learning & Education, 4(1), 75–91.CrossRefGoogle Scholar
  36. Giacalone, R. A. (2004). A transcendent business education for the 21st century. Academy of Management Learning & Education, 3(4), 415–420.CrossRefGoogle Scholar
  37. Gray, D., & Clarke, P. (2005). Meeting Goodpaster’s challenge: A Smithian approach to Goodpaster’s paradox. Business Ethics: A European Review, 14(2), 119–126.CrossRefGoogle Scholar
  38. Griswold, C. L. (1999). Adam Smith and the virtues of enlightenment. Cambridge: Cambridge University Press.Google Scholar
  39. Griswold, C. L. (2010). Smith and Rousseau in dialogue. In V. Brown & S. Fleischacker (Eds.), Adam Smith Review (Vol. 5, pp. 59–84). London: Routledge.Google Scholar
  40. Haakonssen, K. (2006). Introduction—The coherence of Adam Smith’s thought. In K. Haakonssen (Ed.), The Cambridge companion to Adam Smith. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  41. Haakonssen, K., & Winch, D. (2006). The legacy of Adam Smith. In K. Haakonssen (Ed.), The Cambridge companion to Adam Smith (pp. 366–394). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  42. Haase, M., & Neuhäuser, C. (2013). Ethics, sustainability, and the homo economicus model: On the role of meta- and metametatheories. Unpublished presentation at the 8th Zittauer Gespräche zur Unternehmens- und Wirtschaftsethik, October 2013, Zittau, Germany.Google Scholar
  43. Hanley, R. P. (2009). Adam Smith and the character of virtue. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  44. Heilbroner, R. (1979). Modern economics and a chapter in the history of economic thought. History of Political Economy, 11(2), 192–198.CrossRefGoogle Scholar
  45. Heise, P. (1995). Stoicism in the EPS: The foundation of Adam Smith’s moral philosophy (pp. 17–30). XI: Perspectives in History of Economic Thought.Google Scholar
  46. Hill, L. (2011). The hidden theology of Adam Smith. European Journal of the History of Economic Thought, 8(1), 1–29.CrossRefGoogle Scholar
  47. Hollander, S. (1977). Adam Smith and the self-interest axiom. Journal of Law and Economics, 20(1), 133–152.CrossRefGoogle Scholar
  48. Hont, I., & Ignatieff, M. (1983). Needs and justice in the wealth of nations: An introductory essay. In I. Hont & M. Ignatieff (Eds.), Wealth and virtue: The shaping of political economy in the Scottish enlightenment (pp. 1–44). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  49. Hope, V. (1984). Smith’s Demigod. In V. Hope (Ed.), Philosophers of the Scottish Enlightenment (pp. 157–167). Edinburgh: Edinburgh University Press.Google Scholar
  50. Hühn, M. P. (2014). You reap what you sow: How MBA programs undermine ethics. Journal of Business Ethics, 121(4), 527–541.CrossRefGoogle Scholar
  51. Hühn, M. P., & Kuhlmann, C. (2013). Der mißverstandene Mr. Smith. GWP—Gesellschaft Wirtschaft Politik, 62(4), 503–510.Google Scholar
  52. James, H. S., Jr, & Rassekh, F. (2000). Smith, Friedman, and self-interest in ethical society. Business Ethics Quarterly, 10(3), 659–674.CrossRefGoogle Scholar
  53. Jensen, M., & Murphy, K. J. (1990). Performance pay and top-management incentives. Journal of Political Economy, 98, 225–264.CrossRefGoogle Scholar
  54. Kapp, K. W. (1950). The social costs of private enterprise. Cambridge: Harvard University Press.Google Scholar
  55. Kennedy, G. (2008). Adam Smith: A moral philosopher and his political economy. Palgrave Macmillan: Basingstoke.CrossRefGoogle Scholar
  56. MacIntyre, A. (1981). After virtue: A study in moral theory. Notre Dame: University of Notre Dame Press.Google Scholar
  57. MacIntyre, A. (2007). After virtue: A study in moral theory (3rd ed.). Notre Dame: University of Notre Dame Press.Google Scholar
  58. McCloskey, D. (2006). The Bourgeois virtues: Ethics for an age of commerce. Chicago: University of Chicago Press.CrossRefGoogle Scholar
  59. McCloskey, D. (2008). Adam Smith, the Last of the former virtue ethicists. History of Political Economy, 40(1), 43–71.CrossRefGoogle Scholar
  60. Mehta, P. B. (2006). Self-interest and other interests. In K. Haakonssen (Ed.), The Cambridge companion to Adam Smith (pp. 246–269). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  61. Mirowski, P. (1989). More heat than light—Economics as social physics: Physics as nature’s economics. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  62. Montes, L. (2008). Adam Smith as an eclectic Stoic. In V. Brown (Ed.), The Adam Smith review (Vol. IV, pp. 30–56). London: New York.Google Scholar
  63. Montes, L., & Schliesser, E. (Eds.). (2006). New voices on Adam Smith. Abingdon: Routledge.Google Scholar
  64. Muller, J. Z. (1995). Adam Smith in his time and ours: Designing a decent society. Princeton: Princeton University Press.Google Scholar
  65. Newbert, S. L. (2003). Realizing the spirit and impact of Adam Smith’s capitalism through entrepreneurship. Journal of Business Ethics, 46(3), 251–258.CrossRefGoogle Scholar
  66. Nussbaum, M.C. (2002). Mutilated and Deformed: Adam Smith on the Material Basis of Human Dignity. The cosmopolitian tradition Google Scholar
  67. Oslington, P. (2011). The future hope in Adam Smith’s system. Studies in Christian Ethics, 24(3), 329–349.CrossRefGoogle Scholar
  68. Otteson, J. R. (2002). Adam Smith’s marketplace of life. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  69. Pack, S. J. (2010). Aristotle, Adam Smith and Karl Marx: On some fundamental issues in 21st century political economy. Cheltenham: Edward Elgar Publishing.CrossRefGoogle Scholar
  70. Pack, S. J., & Schliesser, E. (2006). Smith’s Humean criticism of Hume’s account of the origin of justice. Journal of the History of Philosophy, 44(1), 47–63.CrossRefGoogle Scholar
  71. Paganelli, M. P. (2009). Smithian answers to some puzzling results in the experimental literature. In J. T. Young (Ed.), The Elgar companion to Adam Smith (pp. 181–192). Cheltenham: Edward Elgar.Google Scholar
  72. Raphael, D. D. (1978). Adam Smith: Philosophy, Science, and Social Science. Royal Institute of Philosophy Lectures, 12, 77–93. doi: 10.1017/S0080443600002594.Google Scholar
  73. Raphael, D. D. (1992). Adam Smith 1790: The man recalled, the philosopher revived. In P. Jones & A. Skinner (Eds.), Adam Smith reviewed (pp. 93–118). Edinburgh: Edinburgh University Press.Google Scholar
  74. Raphael, D. D. (2007). The impartial spectator: Adam Smith’s moral philosophy. Oxford: Clarendon Press.CrossRefGoogle Scholar
  75. Raphael, D. D., & Macfie, A. L. (1976). Introduction. In A. Smith (Ed.), The theory of moral sentiments. Oxford: Clarendon Press.Google Scholar
  76. Rasmussen, D. C. (2008). The problems and promise of commercial society: Adam Smith’s response to Rousseau. Philadelphia: Penn State Press.Google Scholar
  77. Redman, D. A. (1993). Adam Smith and Isaac Newton. Scottish Journal of Political Economy, 40(2), 210–230.CrossRefGoogle Scholar
  78. Rick, J. (2007). Hume’s and Smith’s partial sympathies and impartial stances. Journal of Scottish Philosophy, 5(2), 135–158.CrossRefGoogle Scholar
  79. Ross, I. S. (2004). Great works upon the anvil in 1785. Adam Smith’s projected corpus of philosophy. In V. Brown (Ed.), The Adam Smith review (Vol. I, pp. 40–59). London: New York.Google Scholar
  80. Ross, I. S. (2010). The life of Adam Smith. Oxford: Oxford University Press.Google Scholar
  81. Rothschild, E. (1994). Adam Smith and the invisible hand. The American Economic Review, 84(2), 319–322.Google Scholar
  82. Rothschild, E. (2001). Economic sentiments—Adam Smith, condorcet, and the enlightenment. Cambridge: Harvard University Press.Google Scholar
  83. Rothschild, E., & Sen, A. (2006). Adam Smith’s economics. In K. Haakonssen (Ed.), The Cambridge companion to Adam Smith. Cambridge: Cambridge University Press.Google Scholar
  84. Schumpeter, J. A. (1954). History of economic analysis. Oxford: Oxford University Press.Google Scholar
  85. Seele, P., & Seele, K. (2012). Standalone, curricular infusion or generic skills in business ethics education? An overview of extracurricular ‘studium generale’ programs in Austria, Germany, and Switzerland. Journal of Business Ethics Education, 9, 145–164.CrossRefGoogle Scholar
  86. Skinner, A. S. (1974). Adam Smith and the role of imagination. In W. B. Todd (Ed.), Hume and the enlightenment: Essays presented to Ernest Campbell Mossner. Edinburgh: Edinburgh University Press.Google Scholar
  87. Skinner, A. S. (1996). A system of social sciences: Papers relating to Adam Smith. Oxford: Oxford University Press.CrossRefGoogle Scholar
  88. Smith, A. (1776/1976). An enquiry into the nature and causes of the wealth of nations. In D. Raphael (Ed.), Glasgow edition of the works and correspondence of Adam Smith (2 Vols.). Glasgow: Glasgow Publishers.Google Scholar
  89. Smith, A. (1790/1976). The theory of moral sentiments. In D. Raphael (Ed.), The Glasgow edition of the works and correspondence of Adam Smith (Vol. 1). Glasgow: Glasgow Publishers.Google Scholar
  90. Smith, A. (1982). Essays on philosophical subjects. In W. P. D. Wightman & J. C. Bryce (Eds.), Glasgow edition of the works and correspondence of Adam Smith (Vol. 3). Indianapolis: Liberty Fund.Google Scholar
  91. Solomon, R. C. (1993). Review: beyond selfishness: Adam Smith and the limits of the market. Business Ethics Quarterly, 3(4), 453–460.CrossRefGoogle Scholar
  92. Solomon, R. C. (2008). Free enterprise, sympathy, and virtue. In P. J. Zak (Ed.), The critical role of values in the economy (pp. 16–41). Princeton: Princeton University Press.Google Scholar
  93. Stewart, D. (1794/1980). Account of the life and writings of Adam Smith, LL.D. In A. Smith (Ed.), Essays on philosophical subjects. Oxford: Oxford University Press.Google Scholar
  94. Stigler, G. (1971). Smith’s travels on the ship of state. History of Political Economy, 3, 237–246.CrossRefGoogle Scholar
  95. Valihora, K. (2001). The judgement of judgement: Adam Smith’s theory of moral sentiments. British Journal of Aesthetics, 41(2), 138–161.CrossRefGoogle Scholar
  96. Viner, J. (1927). Adam Smith and laissez-faire. Journal of Political Economy, 35(2), 198–232.CrossRefGoogle Scholar
  97. Viner, J. (1960). The intellectual history of Laissez Faire. Journal of Law and Economics, 3(October), 45–69.CrossRefGoogle Scholar
  98. Viner, J. (1972). The role of providence in the social order. Philadelphia: American Philosophical Society.Google Scholar
  99. Vivenza, G. (1984). Adam Smith e la cultura classica. IPEM: Pisa.Google Scholar
  100. Vivenza, G. (2001). Adam Smith and the classic: The classical heritage in Adam Smith’s thought. Oxford: Oxford University Press.CrossRefGoogle Scholar
  101. von Hayek, F. A. (1975). The pretence of knowledge. Nobel memorial lecture. The Swedish Journal of Economics, 77(4), 433–442. CrossRefGoogle Scholar
  102. Waszek, N. (1984). Two concepts of morality: A distinction of Adam Smith's ethics and its stoic origin. Journal of the History of Ideas, 45(4) 591–606. Google Scholar
  103. Waterman, A. M. C. (2002). Economics as theology: Adam Smith’s wealth of nations. Southern Economic Journal, 6, 907–921.CrossRefGoogle Scholar
  104. Wells, T., & Graafland, L. (2012). Adam Smith’s Bourgeois virtues in competition. Business Ethics Quarterly, 22(2), 319–350.CrossRefGoogle Scholar
  105. Werhane, P. H. (2000). Business ethics and the origins of contemporary capitalism: Economics and ethics in the work of Adam Smith and Herbert Spencer. Journal of Business Ethics, 24(3), 185–198.CrossRefGoogle Scholar
  106. Werhane, P. H. (2004). …laissez-faire when it was new… In V. Brown (Ed.), The Adam Smith review (Vol. I, pp. 135–140). London: New York.Google Scholar
  107. Williams, B. (2006). Ethics and the limits of philosophy. London: Routledge.Google Scholar
  108. Winch, D. (1978). Adam Smith’s politics. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  109. Young, J. T. (1986). The impartial spectator and natural jurisprudence: An interpretation of Adam Smith’s theory of the natural price. History of Political Economy, 18(3), 365–382.CrossRefGoogle Scholar
  110. Young, J. T. (1997). Economics as a moral science. Cheltenham: Edward Elgar Publishing.Google Scholar
  111. Zúñiga, G. L. (1997). Scholastic economics: Thomistic value theory. Religion & Liberty, 7(4), 5–7.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.CEIBSShanghaiPeople′s Republic of China
  2. 2.Humanistic Management Network, Global Ethic InstituteUniversity of TübingenTübingenGermany

Personalised recommendations