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The ubiquitous topic of Happiness has nowhere to my knowledge been so thoroughly treated, and in only five packed chapters in this book. Along with dozens of others, the authors do a fine job of including what my favorite scholar had to say: Adam Smith, in The Theory of Moral Sentiments (1759). My favored Dugald Stewart edition is magnificently subtitled: An Essay towards an Analysis of the Principles by which Men naturally judge concerning the Conduct and Character, first of their Neighbours, and afterwards of themselves. To which is (modestly, I assure you) added, A Dissertation on the Origins of Languages. New Edition. With a biographical and critical Memoir of the Author, by Dugald Stewart (London: Henry G. Bohn, 1853). This Foreword gives me an excuse for embellishing their discussion just a bit.

The word ‘happiness’ appears 156 times in the Stewart edition, including Stewart’s memoir of Adam Smith. Of what does happiness consist? Very simply, I believe, it is to be loved and to be loveable. But if we have not genuineness, there can be no love, no joy, no purpose.

In Smith, human happiness arises from the consciousness of being beloved. But its sources are not due to sudden changes of fortune. ‘He is happiest who advances gradually to greatness’, with the public (our friends, neighbors) aware of every step in the achieving process, and ‘in whom, upon that account, when it comes, it can excite no extravagant joy, and with regard to whom it cannot reasonably create either any jealousy in those he overtakes, or any envy in those he leaves behind’ (p.56).

Smith’s insightful recognition of the fundamental asymmetry between our joy and our sorrow, between gain and loss, is in the context of happiness: ‘What can be added to the happiness of the man who is in health, who is out of debt, and has a clear conscience?’ Any accessions of success are properly superfluous, for ‘if he is much elevated upon account of them, it must be the effect of the most frivolous levity’ (p.62).

To this tranquil state little can be added, but much might be taken from it. Measured from this state to the ‘highest pitch of human prosperity, the interval is but a trifle; between it and the lowest depth of misery, the distance is immense and prodigious. Adversity, on this account, necessarily depresses the mind of the sufferer much more below its natural state, than prosperity can elevate him above it’. Others find it difficult to sympathize with a person’s deep sorrow, but can thoroughly ‘enter into his joy’, and ‘it is on this account, that though our sympathy with sorrow is often a more pungent sensation than our sympathy with joy, it always falls much short of the violence of what is naturally felt by the person principally concerned’ (p.63).

As in the proverb, every man may indeed be the whole world to himself, but to all others he is a tiny and insignificant part of it. His happiness may be of far greater importance to himself, than that of the whole world beyond, but to all others he is of no greater consequence than any other single person:

yet he dares not look mankind in the face, and avow that he acts according to this principle … When he views himself in the light in which he is conscious that others will view him he sees that to them he is but one of the multitude, in no respect better than any other in it. If he would act so as that the impartial spectator may enter into the principles of his conduct, which is what of all things he has the greatest desire to do, he must upon this, as upon all other occasions, humble the arrogance of his self-love, and bring it down to something which other men can go along with … 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 jostle, 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. This man is to them, in every respect, as good as he: they do not enter into that self-love, by which he prefers himself so much to this other, and cannot go along with the motive from which he hurt him. They readily, therefore, sympathize with the natural resentment of the injured, and the offender becomes the object of their hatred and indignation. (pp. 119–120)

In the above passages and in propositions elsewhere in his first published book,1 Smith accounts for human sociability; its origins, rule structure, and species success. What of this wisdom carries over into his far better known, magnum opus? Adam Smith (1776), An Inquiry into the Nature and Causes of the Wealth of Nations, edited with an Introduction, Notes, Marginal Summary and an Enlarged Index by Edwin Cannan, 2 vols (London: Methuen, 1904).

Nothing carries over explicitly. Nowhere between the covers of his second book does Smith cite, connect, or build upon, the social structure of the rules we follow, that he so elegantly derives in his first book. Unlike today, when we freely and generously cite ourselves, for Smith this was just vain, bad form.

However, behind all the most famous passages in his second book lurks the specter of his wisdom in the first. For example: ‘Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way’ (Vol. 2, p.184). Significantly, in the secondary literature, such passages are routinely interpreted to mean that Smith was committed to individualism in the unbridled pursuit of self-interest.2 But it is from his first book that we glean why the conditional clause ‘so long as he does not violate the laws of justice’ conveyed the substance of its message, and similarly, the strange, unexamined phrase ‘pursue his own interest his own way’. Little wonder that when people rediscovered his second book, it launched the great diversion known as ‘Das Adam Smith problem’, in which leading historians of economic thought revealed their utter incapability of reading and understanding his first book.

And finally, on America, I believe we find him at his best:

The rulers of Great Britain have, for more than a century past, amused the people with the imagination that they possessed a great empire on the west side of the Atlantic. This empire, however, has hitherto existed in imagination only. It has hitherto been, not an empire, but the project of an empire; not a gold mine, but the project of a gold mine; a project which has cost, which continues to cost, and which, if pursued in the same way as it has been hitherto, is likely to cost, immense expense, without being likely to bring any profit; for the effects of the monopoly of the colony trade, it has been shown [see Vol. 2, pp.91–136], are, to the great body of the people, mere loss instead of profit. It is surely now time that our rulers should either realize this golden dream, in which they have been indulging themselves, perhaps, as well as the people; or, that they should awake from it themselves, and endeavor to awaken the people. If the project cannot be completed, it ought to be given up. (Vol 2, pp.432–433)

Our brethren in the United Kingdom eventually followed this advice from one of their most loyal, greatest, and dissenting citizens.

Vernon L. Smith

Professor of Economics and Law

George L. Argyros Endowed Chair

in Finance and Economics

Economic Science Institute

Chapman University

2002 Nobel Laureate in Economics


1. Smith’s first book, The History of Astronomy, was published posthumously in 1795 along with other essays, but was written in the early 1750s.
2. ‘The core of Smith’s thesis was that humans’ natural tendency toward self-interest (or in modern terms, looking out for yourself) results in prosperity. Smith argued that by giving everyone freedom to produce and exchange goods as they pleased (free trade) and opening the markets up to domestic and foreign competition, people’s natural self-interest would promote greater prosperity than with stringent government regulations’ (https://www.investopedia.com/updates/adam-smith-wealth-of-nations).