American Economic Review: Papers & Proceedings 2011, 101:3, 166–170 http://www.aeaweb.org/articles.php?doi 10.1257/aer.101.3.166 = Economics: A Moral Inquiry with Religious Origins By Benjamin M. Friedman* Its secure foundation as an empirically based The commonplace view today is that the discipline notwithstanding, economics from its emergence of “economics” out of the European inception has also been a moral science. Adam Enlightenment of the eighteenth century was an Smith’s academic appointment was as profes- aspect of the more general movement toward sor of moral philosophy, and not only his earlier secular modernism in the sense of a historic turn Theory of Moral Sentiments but the Wealth of in thinking away from a God-centered universe, Nations, too, reflects it. Both books are replete toward what we broadly call humanism. To the with analyses of individuals’ motivations and contrary, I suggest that the all-important tran- psychological states, and the ways in which sition in thinking that we rightly identify with what we now call “economic” activity, carried Adam Smith and his contemporaries and follow- out in inherently social settings, enables them ers—the key transition that gave us economics as to lead satisfying lives or not. Even the divi- we now know it—was powerfully influenced by sion of labor, which Smith hailed from the then-controversial changes in religious belief in very first sentence of the Wealth of Nations( as the English-speaking Protestant world in which the key to enhanced productivity, is subject) to they lived. Further, those at-the-outset influences explicitly moral reservations—because it erodes of religious thinking not only fostered the subse- individuals’ capacities for “conceiving any gen- quent spread of Smithian thinking, especially in erous, noble or tender sentiment” and for judg- America, but shaped the course of its reception. ing either “the ordinary duties of private life”or The ultimate result was a variety of fundamen- “the great and extensive interests” of the nation. tal resonances between economic thinking and The greatest concern throughout is to foster the religious thinking that continue to influence our well being of what Smith calls “the great body public discussion of economic issues, and our of the people.” Material living standards mat- public debate over economic policy, today. ter for themselves, but, more importantly, they The idea of a religious influence on Adam are essential for both individual happiness and Smith’s thinking, or on that of his contempo- public advancement: “No society can surely be raries and followers, will probably strike many flourishing and happy of which the far greater readers of the American Economic Review as part of the members are poor and miserable.”1 implausible. As far as one can tell from the As if in validation of Smith’s concerns about available biographical sources, Smith, like the division of labor, the moral aspect of our many Enlightenment figures, was at most what discipline is often ignored, and sometimes even American students of that time think of as a deliberately set aside, in today’s ever narrower Jeffersonian deist. There is little evidence of and more specialized forms of economic anal- Smith’s active religious participation, much less ysis; but it was there from the outset, and it is religious enthusiasm.2 widely recognized nonetheless. By contrast, But Smith and his contemporaries lived in what is not generally understood—indeed, what a time when religion was both more pervasive contradicts most current-day interpretations and more central than anything we know in of the origins of economics as an independent today’s Western world. In the Britain of Smith’s intellectual discipline—is the influence on the day, religion was coterminous with politics. work of Smith and other early “economists” The Moderates and the Evangelicals within the stemming from thinking about matters not just Church of Scotland were of course debating moral but religious in the traditional sense. matters of theology. But their debates were also about political matters: issues of liberty such * Harvard University, Department of Economics, Littauer Center 127, Cambridge, MA 02138 e-mail: bfriedman@ harvard.edu . ( 2 A few scholars have taken different views; see, for 1 Quotations) are from Adam Smith 1776 . example, Jerry Evensky 1998 ( ) ( ). 166 VOL. 101 NO. 3 ECONOMICS: A MORAL INQUIRY WITH RELIGIOUS ORIGINS 167 as the allowable degree of toleration, issues of of religious thinking. To be clear, the suggestion church authority and therefore of political influ- here is most certainly not that Smith, or any of ence, and issues of patronage in the awarding the other “economic” thinkers of his day, self- of church livings, honors and other offices. In consciously sought to bring religious principles a far more dramatic way, in the prior century to bear on what they thought and wrote. Rather, the issues at stake in the English civil war, the the theological controversies to which they were Puritan Commonwealth under Cromwell, the exposed were an influence on the basic view of Stuart restoration, and the Glorious Revolution man and the world—their “pre-analytic vision,” of 1688 had all turned crucially on religious con- to use Joseph A. Schumpeter’s 1954 name for tention. But Smith witnessed the phenomenon it—that they brought to their new( thinking.) as well; he was 22 years old when the Highland And it was that new thinking that gave us rebellion of 1745 brought the same deadly mix economics as the intellectual discipline that we of religion and politics to Scotland. know today. The central theorem underlying Perhaps more important for purposes here, modern Western economics—the idea that we intellectual life was also far less segmented then. know as Adam Smith’s “invisible hand” even Not only were the sciences and the humanities though Smith’s use of the phrase, only once( in to use today’s language normally discussed the Theory of Moral Sentiments and once again in( the same circles and often) by the same indi- in the Wealth of Nations, was neither original viduals, but theology too was part of the ongo- nor so specific4 —is that behavior motivated ing discussion. Part of what Smith taught, as merely by individuals’) self-interest can, and Professor of Moral Philosophy at Glasgow, was under the right conditions will, lead to benefi- “natural theology.” In turn, one of the principal cial outcomes not merely for the individual s texts used for natural theology instruction in concerned but for others as well. Although there( ) Scotland in the eighteenth century was Newton’s were antecedents most obviously in the writ- Principia Mathematica. Likewise, when the ings of Pierre Nicole( 1696 , whose ideas also “literati” of the Scottish Enlightenment dined had a clearly identifiable( origin) in theological out, their regular interlocutors included profes- thinking, in his case Jansenist Augustinian ,5 sional divines. Of the 100 members of the the idea, especially in the form /in which Smith) Select Society, Edinburgh’s+ elite dining and advanced it, was new, and it proved powerful. debate club to which Smith, David Hume, Adam At the beginning of the eighteenth century, Ferguson and most of the distinguished Scottish people who thought about such matters some- figures of that day belonged, 14 were ministers times did and sometimes didn’t ascribe to indi- including Ferguson, who also held the chair viduals the ability to perceive what actions and of( moral philosophy in Edinburgh, as well as pursuits were in their own self-interest. But William Robertson, the leader of the Moderate there was no sense that their pursuing that self- party in the Scottish church and also principal of interest, even if they perceived it correctly, had Edinburgh University .3 any broader beneficial consequences. Indeed, Hence Smith and his) contemporaries would the standard adjective used to characterize indi- continually have been exposed to what were then vidual behavior motivated by self-interest was current debates, tensions and new ideas in theol- “vicious.” ogy, in the same way that economists in univer- The transition began in earnest with Bernard sity life today might be exposed to new thinking Mandeville’s publication of the Fable of the in physics, or biology, or demography. And in Bees, first in 1714 and then, in revised form, the same way that economists today often draw in 1723. As is well known, Mandeville had on ideas from those other lines of inquiry—think the basic insight that pursuit of individual self- of “gravity” models of trade, or “contagion” interest might lead to more generally favorable models of financial crises—these eighteenth outcomes. But he did not fully work out this century thinkers who created what became the idea, nor the conditions under which it would field of economics could easily have been influ- enced by what they heard, and read, and saw, 4 See Emma Rothschild 2001, ch. 5 for a discussion of Smith’s use of the phrase, and( references) to earlier analyses. 5 See Albert O. Hirschman 1977 for a concise summary 3 See Roger L. Emerson 1973 of some of the more important( antecedents.) ( ). 168 AEA PAPERS AND PROCEEDINGS MAY 2011 play out. As his subtitle emphasized—“Private Calvinists believed in predestination, with no Vices, Publick Benefits”—he therefore contin- role for human choice or action to affect who is ued to regard such behavior as “vicious.” But saved and who is not; their opponents believed Mandeville’s Fable led to widespread debate, not only that anyone can potentially be saved but and much of what Hume, Francis Hutcheson that individuals’ choices and actions—human and others wrote about such matters during the agency—play a role in this determination.