Not Always Impartial

Over the last 20 years, one-fifth of the world’s population has been lifted out of extreme poverty. The catalyst? Capitalism. Why then do so many leaders in the developed world, having benefited from capitalism, now castigate it?

The Economist recently reported that between 1990 and 2010, the rate of people living in extreme poverty ($1.25 a day) fell from 43 percent to 21 percent of the total population in developing countries – a reduction of almost 1 billion people.¹ The magazine attributes this marvelous development to capitalism. In China alone, 680 million people have been lifted out of dire straits. But the remaining billion worldwide, mostly in India and Africa, will likely prove more difficult. They face many internal challenges, including inadequate education and health care. But they’re also facing external resistance from the developed world, where many leaders castigate capitalism.

This bias is brought out in The Economist’s report. While hardly anyone in the developed world comes remotely close to extreme poverty, “many Westerners have reacted to recession by seeking to constrain markets” in the developing world. The magazine’s editors say the developing world “does not need such advice.” Instead, Western leaders would be wise to revisit Adam Smith, recalling his “impartial spectator.”

Adam Smith was a moral philosopher who held the Chair of Moral Philosophy at the University of Glasgow for 13 years. During that time, he wrote two influential books, The Theory of Moral Sentiments (1759) and The Wealth of Nations (1776). In both, Smith was aiming to align free markets with his understanding of human nature.

In Theory, Smith wrote that we operate by sympathy (“to feel much for others and little for ourselves”). In Wealth, he said we operate by self-love (“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”). Smith viewed sentiments and self-interest as complementary experiences. They trigger a search for “successful” behaviors, creating habits. Habits form conscience, what he called the “impartial spectator.” By “impartial,” Smith meant conscience is unbiased distinguishing between good and bad.

Smith was only quarter right. He assumed enlightened people properly define success, producing a properly enlightened conscience. That’s a bad assumption. Scripture says conscience acts less as a spectator and more as a courtroom – attorney, judge, and jury. Conscience accuses us of bad behavior and defends the good (Rom. 2:15). But like the occasional judge or attorney, conscience can be bought. It can be corrupted. That’s why the Bible describes four kinds of conscience – arrogant, defiled, seared, and clear. The first three are corrupted. They are not impartial. Only one of four consciences – clear – is unbiased. It rightly divides between good and bad. Smith was only quarter right.

Scripture notes how success is one of our experiences that can corrupt conscience, making it arrogant. Once conscience is bought, conceited leaders no longer heed devils’ advocates. In the case of capitalists, many become unaware of their bias for The Wealth of Nations – self-interest over sympathy for community. It’s a bias that often turns butcher, brewer, and baker into collusive capitalists. Collectivists recoil.

Collectivists originally came from the poor side of the tracks. Scripture says deprivation can also corrupt conscience, defiling it. Once conscience is bought in this way, defiled leaders look to government to redress grievances. But they too are often unaware of a selective bias – for The Theory of Moral Sentiments and Smith’s notion of “empathy.” The irony, noted by the late William F. Buckley, is that “Back in the thirties we were told we must collectivize the nation because the people were so poor. Now we are told we must collectivize the nation because the people are so rich.”

The way forward is recovering an ancient view of conscience. This will be difficult, as the developed world dispensed with conscience shortly after Smith wrote. Historian Paul Johnson notes how, in the 19th century, with the influence of Freud and his circle, “the personal conscience, which stood at the very heart of the Judeo-Christian ethic” was dismissed.² This divided the discipline of economics into two camps. One operates with a bias for The Theory of Moral Sentiments, the other for The Wealth of Nations.

In his book The Spirit of Democratic Capitalism, Michael Novak writes how Adam Smith, “was the first man in history to conceive of a world from which poverty will be banished, a world of “universal affluence” (his phrase), a world in which every woman, man, and child will be liberated from the prison of poverty.” The world is moving closer to universal affluence. But completing the task will be difficult without a complete understanding of conscience. The faith community could contribute here, but being taken seriously will require being shrewd.

In a 2003 speech, Novak noted how the developed world has moved past Christianity. Given this situation, “it is important to find words to express the common values of the West whose origins may be religious, in terms that are graspable by those who no longer go through the doors of churches or synagogues. It is necessary to express these originally religious concepts in non-religious ways.”³ Can the faith community describe conscience in language graspable to all? How about conscientious capitalism? This would align Adam Smith with an accurate assessment of human nature. And it would help lift the rest of the developing world from extreme poverty while keeping leaders in the developed world – capitalists and collectivists – from a corrupted conscience.

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¹ “Towards the end of poverty,” The Economist, June 1, 2013
² Paul Johnson, Modern Times: The World From the Twenties to the Nineties (New York: HarperCollins, 1991), p. 11.
³ “North Atlantic Community, European Community: Divergent paths and common values in Old Europe and the United States,” a speech delivered by Michael Novak for the F.A. Hayek Foundation in Bratislava, Slovakia on July 3, 2003.