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Adam Smith is often associated with the idea that the desire to better one's condition makes an individual better off and also, unintentionally, makes society better off. This paper asks whether for Smith there are circumstances under which the same desire to better one's condition ultimately betters neither one's condition nor society's condition. The answer proposed here is that in Smith's works, the presence of significant wealth may generate perverse incentives misaligning the betterment of the individual and of society, either because the individual may be worse off while society is better off, or because the individual is better off while society is worst off. This result is achieved by analyzing the role of approbation. For Smith, approbation is gained through proper moral conduct as well as through bettering one's material condition. But wealth can trump moral conduct as a means to achieve approbation. In a world with "police, revenue, and arms" the more prosperous society is, the more powerful the incentives to rely upon wealth to gain approbation, rather than upon virtuous conduct. In the presence of wealth generated by commerce and the government power of granting monopolies, the desire to better one's condition can curb moral behaviors and bring ruin to either individuals or society.




Cambridge University Press

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Journal of the History of Economic Thought

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Economics Commons