How does humanity and morality—spirituality, really—fit into an economic system? To most people, spirituality and economics are completely separate subjects.
I’m an economist, so it surprised me when I learned that the first book written by the 18th Century Scottish economist Adam Smith, widely considered to be the father of modern economics, was The Theory of Moral Sentiments. It was published seven years before his magnum opus The Wealth of Nations, which founded modern economic theory and virtually invented the idea of the free market.It never occurred to me that morality might be part of his philosophy.
Every economist studies The Wealth of Nations, and most will tell you that Adam Smith’s work is all about the science of making wealth. His ideas have formed the guidelines for so many economists, and his words are still the accepted authority on the subject. His influence is still felt and his assumptions are still the foundation of economics.
But Adam Smith certainly recognized the inherent danger of wealth, even as he provided ideas for generating it:
“This disposition to admire, and almost to worship, the rich and powerful, and to despise or, at least, neglect persons of poor and mean conditions, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.”
One of the most prevalent concepts in economy, and one of Smith’s most significant assumptions, was the concept of the “Invisible Hand,” which brooked no interference from government in the economic marketplace—because Smith’s invisible hand would solve the problems, balance supply and demand and also fix prices in an unregulated economy. Smith has thus been called the founder of “laissez-faire capitalism,” and denigrated for his lack of a moral component in his economic theories.
But if you combine this “invisible hand” idea with Smith’s Theory of Moral Sentiments, where he says that human beings have a natural tendency to care about the well-being of others, you get a different picture of this conceptual framework:
Smith’s quotations indicate that he strongly believed in morality. He discussed the welfare of the individual, saying it depends on the welfare of all: “No society can surely be flourishing and happy,” he wrote in Moral Sentiments, “of which the far greater part of the members are poor and miserable.”
The Universal House of Justice, the international governing body of the Bahá’ís, recently reminded us of the same important point:
“The welfare of any segment of humanity is inextricably bound up with the welfare of the whole. Humanity’s collective life suffers when any one group thinks of its own well-being in isolation from that of its neighbours’ or pursues economic gain without regard for how the natural environment, which provides sustenance for all, is affected.”
Smith himself said:
“To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of human nature.”
I am so grateful that I discovered the moral side of economics—and how I wish more economists would explore it too. We can talk about this in our universities, and make it an essential part of economic studies to learn the relationship between morality and economics.
Morality and economics to me have to balance each other rather than competing for organizing and governing economics. They need each other to be complete.
Badi Shams is a Baha'i and a mystic at heart whose field of interest is in economics. He has published a compilation "Economics of the Future", and also more recently the book "Economics of the Future Begins Today". He is retired from the educational system. You can read more of Badi's materials on his website www.badishams.net
You can read more articles on our interfaith blog, Spiritually Speaking, HERE
* This article was published in the print edition of the TImes Colonist on Saturday, June 22nd, 2019