We know what capitalism is today, but we don’t know what it was supposed to be, because we never got the whole story. It’s time to dig up Adam Smith’s second book
Capitalism doesn’t work. We all know it doesn’t work. Or rather, it works, but it destroys everything in its path. A killing machine that has spun out of control “works,” but not for us — only for the machine, and perhaps for those who ride upon it. But if we were to truly get to the depth and essence of it, it doesn’t work even for them. Setting aside the existential envy of the subordinated, the rich are the first to be stripped of their humanity, and there is no salvation even for them. But how did we get here? To the point where, as a species, we created a system that is tragically eliminationist toward all of us — and one day toward the system itself?
There is one aspect of capitalism that gets skipped over. The story of its “father,” Adam Smith, is not complete. Ironically, his “child,” which has spun out of control, deliberately conceals the story. You’ve all heard of The Wealth of Nations, the book treated as the bible of capitalism. But there is also a second book of his — a book without which the first should never be read, because without it the story is not only incomplete but planetarily catastrophic.
That second book of Adam Smith’s is called The Theory of Moral Sentiments. And right there lies the first irony. That “second” book actually comes first. Smith published it in 1759, fully 17 years before The Wealth of Nations. Before the market, before the famous invisible hand, and before all the later economic mythologies, we have the same Smith — but here he speaks of a human being who feels, judges, feels shame, seeks approval, and tries to live before the imagined gaze of other people. In other words, before economics comes moral psychology, and before the market comes the question of what kind of being even enters the market in the first place. The human being Adam Smith imagines is not that cold caricature later drawn by market fundamentalists — that creature woven out of self-interest, running after its own advantage and somehow, at the same time, “producing the general good.” Smith’s human being is a deeply social being. He wants to earn, yes, he wants to advance, to be recognized — but he also wants to be worthy of recognition. Within him there is an inner judge, what Smith calls the “impartial spectator.” This is the imagined gaze of a reasonable other person, before whom we test our own actions. The quiet voice that asks whether we have gone too far, whether we have been cruel, whether we have turned another person into a means, and whether, in our own ambition, we have become ugly in our own eyes.
In The Theory of Moral Sentiments, the key word is sympathy. It sounds like something belonging to private life, to good upbringing, or to the occasional humanitarian gesture. But for Smith it is a far more serious matter. Sympathy is the capacity to imagine another’s condition. To step outside ourselves, at least a little, and to feel what it would be like to be that other person — in misfortune, or in dependence on someone else’s decision. Without it, there is no society. Without it, all that remains are appetites colliding in space, and a law that afterward tries to clean the blood off the floor.
This is where the buried mechanism of Smith’s capitalism lies. The market, in his deeper picture, can exist only among people who still possess a moral reflex. Among people who are capable of feeling ashamed, and who care about how they appear before others and before themselves.
“To those who have been accustomed to the possession, or even to the hope of public admiration, all other pleasures sicken and decay. Of all the discarded statesmen who, for their own ease, have studied to get the better of ambition, and to despise those honours which they could no longer arrive at, how few have been able to succeed?” — Adam Smith, The Theory of Moral Sentiments, 1759
These, Smith argues, would have to be people who know that the price of a thing is never the “whole truth” about that thing. Someone produced that thing. Spent time…
What do we actually have here? Smith’s economics, as he naively saw it, is still immersed in a moral community. It counts on inner restraints and assumes that a person who does business nevertheless remains a human being!
And here we come to yet another suppressed Smith — perhaps the most dangerous one for today’s preachers of the market. Smith did not imagine the state as mere scenery standing off to the side while the economic machine produces “order, meaning, and justice” all by itself. For him, the state had the role of guardian of the conditions under which society can remain a society at all. It must defend the community, maintain justice, build public institutions, finance what is not attractive enough to private interest but without which communal life collapses. And, especially important, it must educate people.
For Smith, that education is not merely preparation for the labor market — which today is almost the exclusive function of schooling. It is the defense of the human being against being turned into a machine by labor. Smith understood very well the dark side of the division of labor. A person who spends his whole life performing a few small, repetitive tasks may become more efficient, but at the same time ever poorer as a human being. His imagination narrows. His capacity for judgment weakens, and his relationship to the world becomes mechanical. That is why the state, in Smith’s picture, had to intervene precisely where economic success produces human mutilation. It had to protect the citizen from the fate of becoming “merely a worker.”
“If there is any society among robbers and murderers, they must at least… abstain from robbing and murdering one another. Beneficence, therefore, is less essential to the existence of society than justice; the want of beneficence will make a society uncomfortable, but the prevalence of injustice will utterly destroy it.” — Adam Smith, The Theory of Moral Sentiments, 1759
This is an extremely important point, because in the “popular version” of Smith the state is often portrayed as an obstacle to the “natural genius of the market”! But Smith saw that private interest has a tendency to occupy the rules of the game. He knew that merchants and manufacturers, whenever they can, try to reduce competition, raise prices, and shift the cost onto others. He knew that economic power does not sit quietly in the factory, the shop, or the bank, but slowly seeps into law, politics, public discourse, and the moral vocabulary of society. In other words, he knew that the market very quickly begins writing the rules to suit itself if it is not kept under supervision. And this is precisely where the great betrayal of Adam Smith begins. Today’s capitalism took from him the freedom of exchange, but discarded the moral and institutional framework that gives that exchange its human meaning. It took his interest in productivity, but ignored his fear of what productivity can do to a human being. It took his faith in market dynamics, but buried his suspicion of concentrated business power. Put simply — it took The Wealth of Nations and behaved as if The Theory of Moral Sentiments had never been written.
The result is a world in which almost everything has begun to behave like a market. The worker became a resource, the consumer a target, attention a commodity, loneliness a business model, anxiety a marketing opportunity, and human weakness a space for monetization. Today it is not only things that are sold. What is sold are identities, moods, illusions of closeness, simulations of status, promises of health, promises of youth, promises of meaning… The system first produces a lack, and then sells us its small, short-lived substitutes. It tells a person he is not successful, beautiful, interesting, or visible enough — and then offers him a market path toward the peace it itself took from him.
This is capitalism without Smith’s second book. Capitalism without sympathy as a social capacity. Without the inner spectator, without shame, but also without that crucial thing — a state that protects the human being from being turned into a tool by economic necessity. Such a system can grow, innovate, and produce billions of transactions, lift stock markets and build towers of glass, but it increasingly resembles a machine that has forgotten why it was ever started.
No one at all offers meaning. Let us listen to what the leaders of the largest countries have to say when they speak about the economy. Let us listen to Trump, Xi, Putin, the European bureaucrats — they all recycle one and the same story about market growth, but toward what goal? There is no goal — only eternally more, without any thought that there is probably no room for “more” even now. We’ll make room, they say, we’ll go into space, into orbit, to Mars — but again, toward what goal? Profit, and profit alone.
Today’s capitalism has, in the deepest sense, betrayed its own father. It betrayed him by turning him into a mascot for a world that Smith would probably have been horrified by. The father of capitalism, as he is simplistically called, did not leave behind only a book about wealth. He also left a warning that wealth without moral feeling becomes a force that devours its own foundations. When the question of what kind of human being it produces is thrown out of economics, all that remains is a vast apparatus for turning life into output, relationships into advantage, the planet into raw material, and the soul into consumer space.
And does this realization change anything? Not particularly — but at least we know that what is being offered to us is not what was originally intended. The so-called “capitalism with a human face” is an illusion today just as it evidently was in 1759, when Smith wrote about such a construct. Karl Marx, too, paid his tribute to the capitalist mode of production, in the sense that he described it as a system that is certainly capable of lunging toward new technological revolutions at extraordinary speed — but, a hundred or so years after Smith, he clearly saw that the machine is so destructive that it can be stopped only by those who suffer beneath it.
“The bourgeoisie, during its rule of scarcely one hundred years, has created more massive and more colossal productive forces than have all preceding generations together.” — Karl Marx, The Communist Manifesto, 1848
We know how that story ended, too. Capitalism could not be stopped. We can say that resistance existed, and that it defied all forces, but in the end it gave way. The machine survived and pressed on even more powerfully, crushing every brake before it. How so? Smith was on the trail, but perhaps he didn’t want to admit even to himself just how far it went. Capitalism simply “merged” with the worst characteristics of Homo sapiens, and those always prevailed. Even at the very epicenter of “resistance,” the greed for owning and accumulating could not be stopped.
Does this mean the struggle is over? Without offering or inventing false hope, the answer is — no. Indeed, history has confirmed that mechanical resistance to capitalism simply does not succeed, but that is not the end of resistance. Perhaps we are living on the very edge of the creation of a new resistance, a new renaissance that could spring precisely from this broad apathy felt globally. And we will speak about it — but not now and not here, because it requires far more space.
As for Adam Smith, the saying that the road to hell is paved with good intentions definitely applies to him. Yet, for the sake of historical justice, our opinion of him must be revised, saved from deliberate selective forgetting. Because his “buried book” today sounds like a message from the ruins of the future. It tells us that the catastrophe did not begin only when multinational corporations, hedge funds, algorithms, and platforms appeared. It began the moment we accepted the idea that the market can be separated from character and morality, that profit can be separated from consequences, and that a human being can live endlessly as a function without anything inside him ever breaking.
About the Author
Mario Hoffmann is an independent analyst and writer covering global economics, geopolitics, and international affairs. With a background in history and politics, he writes for EconoPuls to provide in-depth context on the stories shaping our world.
