The Adam Smith Problem

Scientific Essay from the year 2012 in the subject Economics - History grade: First London Metropolitan University language: English abstract: In Wealth of Nations Smith vehemently cited that economic practices were motivated by the principle of self-interest. On the other hand Smith argued that economic behaviour was mainly determined by sympathy a sentimental phenomenon that is prominent in the Theory of Moral Sentiments. As such these two works present a moral dilemma as to whether the human behaviour in economy is motivated by self-interests or sympathy. In effect the Adam Smith Problem revolves around the presumption that economic behaviour is driven by both social interest of benevolence and private interest of self-love. This paper presents a critical analysis of this problem. In details the paper seeks to determine the extent to which the problem is based on a misunderstanding of human behaviour.