Abstract
This paper presents a theoretical elaboration of the ethical framework of classical capitalism as formulated by Adam Smith in reaction to the dominant mercantilism of his day. It is seen that Smith's project was profoundly ethical and designed to emancipate the consumer from a producer and state dominated economy. Over time, however, the various dysfunctions of a capitalist economy — e.g., concentration of wealth, market power — became manifest and the utilitarian ethical basis of the system eroded. Contemporary capitalism, dominated as it is by large corporations, entrenched political interests and persistent social pathologies, bears little resemblance to the system which Smith envisioned would serve the common man. Most critiques of capitalism are launched from a Marxian-based perspective. We find, however, that by illustrating the wide gap between the reality of contemporary capitalism and the model of amoral political economy developed by Smith, the father of capitalism proves to be the most trenchant critic of the current order.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Bowles, Samuel and Herbert Gintis: 1986,Democracy and Capitalism (Basic Books, New York).
Dolbeare, Kenneth M.: 1986,Democracy at Risk (Chatam House Publishers, Chatam, New Jersey).
Edwards, Richard: 1988, ‘Segmented Labor Markets’, in Frank Hearn (ed.),The Transformation of Industrial Organization (Wadsworth Publishing Company, Belmont, CA).
Firat, A. Fuat and Alladi Venkatesh: 1991, ‘The Making of Postmodern Consumption’, Unpublished manuscript.
Friedman, Milton: 1962,Capitalism and Freedom (University of Chicago Press, Chicago).
Fujiyama, Francis: 1991,The End of History and the Last Man (Harper & Row, New York).
Galbraith, John Kenneth: 1976, ‘The Dependence Effect’, in J. K. Galbraith (ed.),The Affluent Society (Houghton Mifflin, New York).
Ginzberg, Eli: 1979, ‘An Economy Formed by Men’, in G. P. O'Driscoll (ed.),Adam Smith and Modern Political Economy (Iowa State University Press, Ames, Iowa).
Gorz, Andre: 1989,Critique of Economic Reason (Verso, New York).
Heilbroner, Robert L.: 1985,The Nature and Logic of Capitalism (W.W. Norton & Company, New York).
Jameson, Frederic: 1990,Postmodernism (Duke University Press, Durham, NC).
Kellner, Douglas: 1990,Television and the Crisis of Democracy (Westview Press, Boulder, CO).
Lindbloom, Charles: 1977,Politics and Markets (Basic Books, New York).
Lux, Kenneth: 1990,Adam Smith's Mistake (Shambala Press, Boston).
Mattera, Philip: 1990,Prosperity Lost (Addison-Wesley, New York).
Mead, Walter Russell: 1991, ‘The New Old Capitalism’,Rolling Stone May 30.
Novak, Michael: 1982,The Spirit of Democratic Capitalism (Simon & Schuster, New York).
Olsen, Mancur: 1982,The Rise and Decline of Nations (Yale University Press, New Haven, CN).
Phillips, Kevin: 1990,The Politics of Rich and Poor (Random House, New York).
Reich, Robert: 1983,The Next American Frontier (Times Books, New York).
Rosenberg, Nathan: 1979, ‘Adam Smith and Laissez-faire Revisited’, in G. P. O'Driscoll (ed.),Adam Smith and Modern Political Economy (Iowa State University Press, Ames, Iowa).
Schumpeter, Joseph: 1946,Capitalism, Socialism and Democracy (Harper & Row, New York).
Smith, Adam: 1976,An Inquiry into the Nature and Causes of the Wealth of Nations (Clarendon Press, Oxford).
Smith, Adam: 1980,The Wealth of Nations edited by A. Skinner (Penguin Books, New York).
Sowell, Thomas: 1979, ‘Adam Smith in Theory and Practice’, in G. P. O'Driscoll (ed.),Adam Smith and Modern Political Economy (Iowa State University Press, Ames, Iowa).
U.S. Department of Commerce: 1990,Statistical Abstract of the United States (Government Printing Office, Washington, D.C.).
Veblin, Thorstein: 1963,The Theory of the Leisure Class (Harcourt, Brace & World, New York).
Weber, Max: 1958,The Protestant Ethic and the Spirit of Capitalism (Charles Scribner's Sons, New York).
West, E. G.: 1979, ‘Adam Smith's Economics of Politics’, in G. P. O'Driscoll (ed.),Adam Smith and Modern Political Economy (Iowa State University Press, Ames, Iowa).
Wilson, James Q.: 1989, ‘Adam Smith on Business Ethics’,California Management Review 32(1), Fall.
Zeitlin, Maurice: 1989, ‘Who Owns America?’, in M. Zeitlin (ed.),The Large Corporation and Contemporary Classes (Rutgers University Press, New Brunswick, NJ).
Additional information
G. R. Bassiry is currently professor of Management and international business at California State University, San Bernardino, California. Formerly he served as Vice President and Acting President of Farabi University. His most recent articles on business ethics include ‘Ethics, Education, and Corporate Leadership’,Journal of Business Ethics and ‘Business Ethics and the United Nations: A Code of Conduct’,Sam Advanced Management Journal. He has also published numerous journal articles on international business, corporate strategy and corporate leadership, and is the author ofPower vs. Profit by Arno Press of New York Times.
Marc Jones is a management lecturer at the University of Otago, New Zealand. His research interests include multinational corporations and economic development. He has worked as a financial analyst for Electronic Data Systems Corporation and as a management consultant for Peat Marwick Main & Company.
Rights and permissions
About this article
Cite this article
Bassiry, G.R., Jones, M. Adam Smith and the ethics of contemporary capitalism. J Bus Ethics 12, 621–627 (1993). https://doi.org/10.1007/BF01845899
Issue Date:
DOI: https://doi.org/10.1007/BF01845899