Wednesday, July 15, 2026

Adam Smith on the value of self interest and the injustice of goverment trying to thwart it

See Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Cannan ed.), in 2 vols. [1776] from Online Library of Liberty. I wanted to post this because of my post on the decline in ESG from a few days ago. The idea was to emphasize that businesses don't have to try to improve society to make it better off and this invisible had philosophy does not apply only to international trade. What Smith says here sure sounds like the invisible hand.

From Volume 1.

"Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily leads him to prefer that employment which is most advantageous to the society."
From Volume 2.
"It is thus that the private interests and passions of individuals naturally dispose them to turn their stock towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society, among all the different employments carried on in it, as nearly as possible in the proportion which is most agreeable to the interest of the whole society."

"To prohibit a great people, however, from making all that they can  of every part of their own produce, or from employing their stock and industry in the way that they judge most advantageous to themselves, is a manifest violation of the most sacred rights of mankind."

 See The State of ESG Investing: How Dire Is It?

"Investing based on environmental, social and corporate-governance factors has taken a hit over the past several years amid a backlash against so-called woke policies and weakness in ESG funds’ performance." 

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