Russ Roberts (@EconTalker) talks about how economics can help us understand the world around us and lead better lives. He’s the author of How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness and host of the EconTalk podcast.
“We often couch our self-interest in altruistic terms.” -Russ Roberts
The Cheat Sheet:
- Adam Smith’s deepest insight into human nature — what really makes us tick — is being loved and lovely.
- Learn about the impartial spectator — Smith’s basis for our conscience.
- What are the dangers of self-deception at work and at home?
- The father of capitalism thought that seeking wealth for its own sake is a fool’s game and corrupts us.
- Even in 1759, Adam Smith understood the seductive power of gadgets, celebrities, and powerful politicians.
- And so much more…
[aoc-subscribe]
Most people have heard of Adam Smith and know he has something to do with capitalism and free trade. But his first book, The Theory of Moral Sentiments, is full of wonderful wisdom that can help anyone become a better colleague, spouse, or friend.
Russ Roberts, author of How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness and host of the EconTalk podcast takes Smith’s insights, explains them, and tells us how we can apply them to modern life on episode 489 of The Art of Charm.
More About This Show
Almost anyone with a high school level grasp of economics has at least heard the name Adam Smith in passing. He was a Scottish philosopher and political economist most famous for writing An Inquiry into the Nature and Causes of the Wealth of Nations in 1776, a document that free market capitalists still reference reverently today.
But it’s his prior book, The Theory of Moral Sentiments (1759), that inspired economist and EconTalk podcaster Russ Roberts to write his own: How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness.
“[Smith] wrote it as a scholarly study of how people behave and the philosophy of morality and how we treat each other,” says Russ, “and how we respect or don’t respect each other. He was in competition, essentially, with other philosophers trying to explain those questions. So he wrote what’s a pretty dry book — or the kind of book you’d expect in 1759 — but he’s a great writer, so it’s entertaining.”
What Russ has tried to do is pull Smith’s life lessons and brilliant ideas about human nature from this book and present them to a modern audience that might not be academically inclined to peruse them in their native copy.
Self-Interest Is Not Selfish
One of Adam Smith’s ideas is that self-interest is not selfish. While we tend to be compelled toward benevolent acts when we see others in distress, we’re still motivated chiefly by the immediate world around us and how it affects our own day-to-day activities and general survival. “You can see a terrible tragedy on television,” says Russ. “You can watch about it for days. But you kind of forget about it because you’re mainly worried about your life and your own problems. It’s not that you don’t care about other people. It’s not that you don’t feel bad for people who are killed in tragedy, but it doesn’t weigh on you as your own tragedies do.”
Consider this: If you were told about an earthquake on the other side of the world that killed millions of people, but you also knew you had to have surgery tomorrow to remove your pinky finger, which of these two would keep you tossing and turning through the night with worry?
It sounds heartless so far, right? But also consider this: if you were given the choice to save your pinky finger on the condition that millions of people had to die, you’d probably give up the finger without a second thought, right? (And if not, you might actually be heartless.)
But why is this? Why are we motivated to put others before ourselves in some circumstances even when it goes against our own interests? “Smith suggests the reason is that we care about how we are perceived by other people,” says Russ. “Because we realize deep down that even though we are self-interested, we want to be around others. We want their approval. We want their respect. We want their love and affection. That is the essence of being human. So we want and need to be around other people. We’re not self-sufficient. We don’t want to just be with ourselves — either economically or socially. We need to interact with other people, and if we want to interact with other people, we’d better treat them decently or they’re not going to respect us. They’re not going to want to be around us.”
The Impartial Spectator’s Invisible Hand
Smith realized that we act as if we have an impartial spectator watching us who’s judging us and keeping us from acting purely selfishly — and that’s basically what a conscience is. In Adams’ own vernacular, it’s the personal version of the “invisible hand” that naturally drives an economy unfettered by artificial restraints.
Smith summed up this tendency by saying:
Man naturally desires, not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love. He naturally dreads, not only to be hated, but to be hateful; or to be that thing which is the natural and proper object of hatred. He desires, not only praise, but praiseworthiness; or to be that thing which, though it should be praised by nobody, is, however, the natural and proper object of praise. He dreads, not only blame, but blame-worthiness; or to be that thing which, though it should be blamed by nobody, is, however, the natural and proper object of blame.
“Instead of thinking about it as selfish vs. altruistic or kind vs. cruel,” says Russ, “what Smith’s saying is we’re complicated. We want the affection and respect and honor and praise of other people, but we want to earn it honestly. And to do that we sometimes have to do stuff that goes against what is in our natural self-interest to do.”
Listen to this episode of The Art of Charm in its entirety to learn more about why “The Father of Capitalism” felt the economic comforts we chase (and sometimes allow to degrade us) are worth far less than human satisfaction, how the cult of celebrity was strong even in Smith’s day, why the pursuit of wealth for its own sake tends to corrupt us, how Smith’s works in their original format compare to the works of his contemporaries, why learning to accept criticism from others instead of depending purely on self-observation is imperative for personal growth, and tons more.
THANKS, RUSS ROBERTS!
Resources from this episode:
- How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness by Russ Roberts
- EconTalk podcast
- The Theory of Moral Sentiments by Adam Smith
- Adam Smith via Encycloaedia Britannica
- The Price of Everything: A Parable of Possibility and Prosperity by Russ Roberts
- The Invisible Heart: An Economic Romance by Russ Roberts
- The Choice: A Fable of Free Trade and Protection by Russ Roberts
- Keynes vs. Hayek: A Rap Battle Renewed (via The New York Times)
You’ll also like:
On your phone? Click here to write us a well-deserved iTunes review and help us outrank the riffraff!
