Abstract
Both Adam Smith and the 19th century Social Darwinist Herbert Spencer, though in quite different ways, have been enormously influential in what is understood today to be free enterprise or capitalism. In this article Werhane examines the contributions of both, noticing that it is Spencer, not Smith, who advocates a “night watchman” theory of the state. As a social Darwinist, Spencer argues that those who are strongest should succeed and there should be no obstacles for those achievements: those who cannot compete should be allowed to wither away, thus strengthening the species, and thus it is from Spencer that later scholars glean the idea of meritocracy – that those who deserve to lead, to be wealthy or to be in power earned that right. Moreover, and of revelatory interest in Werhane’s commentary, Spencer defended workplace democracy, because it would allow the individual freedom of each individual participant that hierarchical organizations do not.
Original publication: Werhane, Patricia H. “Business Ethics and the Origins of Contemporary Capitalism: Economics and Ethics in the Work of Adam Smith and Herbert Spencer.” Journal of Business Ethics (2000) 24: 185–198. ©2000 Reprinted with permission.
Werhane, Patricia H. “Business Ethics and the Origins of Contemporary Capitalism: Economics and Ethics in the Work of Adam Smith and Herbert Spencer.” Journal of Business Ethics (2000) 24: 185–198. ©2000 Reprinted with permission.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
“Non-tuists” are persons unconcerned with the interests of others except as they relate to, or are the object of, that person’s interests.
- 2.
Mandeville writes,
So Vice is beneficial found,
When it’s by Justice lopt and bound; …
Bare Virtue can’t make Nations live
In Splendor; they, that would revive
A Golden Age, must be as free,
For Acorns, as for Honesty.
(Mandeville, 1732: 1988, ¶ 23–24)
- 3.
“Fair play” is not clearly defined. In the TMS Smith writes,
[If one is just] he would act so as that the impartial spectator may enter into the principles of his conduct.... In the race for wealth, and honours, and preferments, he may run as hard as he can, and strain every nerve and every muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of (1759, 1976, II.ii.2.1).
- 4.
That is almost a direct quotation from the former CEO of Lockheed when, in 1977, he paid $12 million in extortion to Japanese government agents in order to get the Lockheed 1011 contract he wrote, “From a purely ethical and moral standpoint I would have declined such a request. However, in this case I would most certainly have sacrificed commercial success.” (Kotchian, 1977, p. 11.)
References
Bassiry, G. R. and Marc Jones: 1993, ‘Adam Smith and the Ethics of Contemporary Capitalism’, Journal of Business Ethics 12, 621–627.
Bellamy, Richard and Tim Gray: 1990, Herbert Spencer’s Liberalism (Routledge, London).
Bishop, John D.: 1995, ‘Adam Smith’s Invisible Hand Argument’, Journal of Business Ethics 14, 165–180.
Buckle, H. T.: 1861, History of Civilization in England, Volumes I and II (London).
Cropsey, Joseph: 1977, Polity and Economy (Greenwood Press, Westport, Conn).
Doherty, Gary and Tim Gray: 1993, ‘Herbert Spencer and the Relationship between Economic and Political Liberty’, History of Political Thought 14, 475–490.
Donaldson, Thomas and Patricia H. Werhane, eds.: 1977, Ethical Issues In Business, first edition Prentice-Hall, Englewood Cliffs, NJ).
Etzioni, Amitai: 1988, The Moral Dimension (Free Press, New York).
Francis, Mark: 1978, ‘Herbert Spencer and the Myth of Laissez Faire’, Journal of the History of Ideas 21, 294–299.
Frank, Robert: 1988, Passions Within Reason (Norton, New York).
Freeman, R. Edward: 1994, ‘The Politics of Stakeholder Theory: Some Future Directions’, Business Ethics Quarterly 4, 409–422.
Friedman, Milton: 1962, Capitalism and Freedom (University of Chicago Press, Chicago).
Friedman, Milton: 1976, Adam Smith’s Relevance for 1976 (University of Chicago Graduate School of Business Occasional Papers #50, Chicago).
Gray, J. N.: 1982, ‘Spencer on the Ethics of Liberty and the Limits of State Interference’, History of Political Thought 3, 465–482.
Gray, T. S.: 1988, ‘Is Herbert Spencer’s Law of Equal Freedom a Utilitarian or Rights-Based Theory of Justice?’, Journal of the History of Philosophy 26, 259–278.
Hausman, Daniel M. and Michael S. McPherson: 1996, Economic Analysis and Moral Philosophy (Cambridge University Press, Cambridge).
Hildebrand, Bruno: 1848, Die Nationaloekonomie der Gegenwart und Zukunft. Frankfort. (Quoted in the Introduction to the 1976 edition of The Theory of Moral Sentiments.)
Hirschman, A. O.: 1977, The Passions and the Interests (Princeton University Press, Princeton).
Hudson, William Henry: 1895, 1996, An Introduction to the Philosophy of Herbert Spencer (Routledge/Thoemmes Press, London).
Knies, Carl G. A.: 1853, Die Politisch Zoekonomie vom Standpunkte der Geschichtlichen Methode. Braunschweig. (Quoted in the Introduction to the 1976 edition of The Theory of Moral Sentiments.)
Lerner, Max: 1937, ‘Preface. Adam Smith’, The Wealth of Nations. Ed. Edwin Cannan (Modern Library, New York).
Mandeville, Bernard: 1731, 1988, The Fable of the Bees. Ed. F. B. Kaye (Clarendon Press, Oxford).
Morrow, Glenn R.: 1926, The Ethical and Economic Theories of Adam Smith (Augustus M. Kelley, New York).
Nozick, Robert: 1974, Anarchy, State, and Utopia (Basic Books, New York).
Paul, Jeffrey: 1982, ‘The Socialism of Herbert Spencer’, History of Political Thought 3, 499–514.
Peel, J. D. Y.: 1972, Herbert Spencer on Social Evolution (University of Chicago Press, Chicago).
Sen, Amartya: 1987, On Ethics and Economics (Basil Blackwell, Oxford).
Simon, Walter M.: 1960, ‘Herbert Spencer and the Social Organism’, Journal of the History of Ideas 21, 294–299.
Smith, Adam: 1759, 1976, The Theory of Moral Sentiments. Ed. A. L. Macfie and D. D. Raphael (Oxford University Press, New York).
Smith, Adam: 1776, 1976, The Wealth of Nations. Ed. R. H. Campbell and A. S. Skinner (Oxford University Press, New York).
Smith, Adam: 1762–1764, 1978, Lectures on Jurisprudence [A] and [B]. Ed. R. L. Meek, D. D. Raphael, and P. G. Stein (Oxford University Press, New York).
Spencer, Herbert: 1851, Social Statics (John Chapman, London).
Spencer, Herbert: 1854, Railway Morals and Railway Policy. Reprinted in Essays, vol. III: 2–112.
Spencer, Herbert: 1857, Progress: its Law and Cause, reprinted in Essays, vol. I: 1–59.
Spencer, Herbert: 1860, The Social Organism, reprinted in the Essays, vol. I: 265–307.
Spencer, Herbert: 1862, First Principles (Williams and Norgate, London).
Spencer, Herbert: 1872, Mr. Martineau on Evolution. Reprinted in Essays. II: 371–388.
Spencer, Herbert: 1873, The Study of Sociology (Williams and Norgate, London).
Spencer, Herbert: 1884, 1982, Man versus the State (Liberty Classics, Indianapolis).
Spencer, Herbert: 1886, The Factors of Organic Evolution. Reprinted in the Essays. I: 389–466.
Spencer, Herbert: 1892a, Essays: Scientific, Political and Speculative. 3 volumes (D. Appleton and Company, New York).
Spencer, Herbert: 1892b, The Principles of Ethics, 3 volumes (Williams and Norgate, London).
Spencer, Herbert: 1896, The Principles of Sociology, 3 volumes (D. Appleton and Company, New York).
Spencer, Herbert: 1904, Herbert Spencer: An Auto- biography, 2 volumes (Williams and Norgate, London).
Stigler, George: 1971, ‘Smith’s Travels on the Ship of State’, History of Political Economy III.
Turner, Jonathan: 1985, Herbert Spencer: a Renewed Appreciation (Sage Publications, Beverly Hills, CA).
Viner, Jacob: 1926, ‘Adam Smith and Laissez Faire’, Adam Smith, 1776–1926. Ed. J. M. Clark, et al. (Augustus M. Kelley, New York).
von Skarzynski, Witold: 1878, Adam Smith als Moralphilosoph und Schoepfer der Nationaloekonomie. Berlin. (Quoted in the Introduction to the 1976 edition of The Theory of Moral Sentiments.)
Weinstein, D.: 1990, ‘Freedom, Rights, and Utility in Spencer’s Moral Philosophy’, History of Political Thought 11, 119–142.
Werhane, Patricia H.: 1989, ‘The Role of Self- Interest in Adam Smith’s Wealth of Nations’, Journal of Philosophy, 669–680.
Werhane, Patricia H.: 1991, Adam Smith and His Legacy for Modern Capitalism (Oxford University Press, New York).
Werhane, Patricia H.: 1997, ‘Adam Smith’s Legacy for Ethics and Economics, Judge Institute for Management Studies Working Paper WP20/97, University of Cambridge.
Williamson, Oliver: 1985, The Economic Institution of Capitalism (Free Press, New York).
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2019 Springer International Publishing AG, part of Springer Nature
About this chapter
Cite this chapter
Werhane, P.H. (2019). Business Ethics and the Origins of Contemporary Capitalism: Economics and Ethics in the Work of Adam Smith and Herbert Spencer. In: Bevan, D.J., Wolfe, R.W., Werhane, P.H. (eds) Systems Thinking and Moral Imagination. Issues in Business Ethics(), vol 48. Springer, Cham. https://doi.org/10.1007/978-3-319-89797-4_17
Download citation
DOI: https://doi.org/10.1007/978-3-319-89797-4_17
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-89796-7
Online ISBN: 978-3-319-89797-4
eBook Packages: Religion and PhilosophyPhilosophy and Religion (R0)