Adam Smith on why we want to be rich

An interpretation of his 'Theory of Moral Sentiments'

In The Theory of Moral Sentiments Adam Smith gives his reasons as to why people seek to become rich. One reading is Smith contends the typical person wishes to be rich because ‘he imagines they [the rich] possess more means to happiness’. This appears to contrast to Jean Jacque Rousseau who takes higher status, ‘amour proper’ to use his term, to be the primary reason for the pursuit of great wealth. Contrary to

Paul S

agar who takes Smith and Rousseau to come to sharply different conclusions on the primary cause of the pursuit of riches, I will maintain Smith and Rousseau’s explanations are actually far closer than previously thought.

Smith takes the central reason for our longing to become rich to spring from a desire for the means to happiness. The Scot writes: ‘He does not even imagine that they [the rich] are really happier than other people: but he imagines that they possess more means of happiness.’ Crucially, though, Smith is explicit in denying the said desire is ‘upon account of the superior ease and pleasure with which they are supposed to enjoy [their lives]’. This would seem to be contradictory. What reasoning could there be for wanting the means to happiness if not to put those means into action to ensure ‘superior ease and pleasure’? According to Smith it is because ‘the fitness [itself]…should often be more valued, than the very end for which it was intended’. He gives the example of a man who spends a lot of money on a watch which only loses a minute a day in place of his previous watch which lost two minutes a day. Since a watch is useful for telling the time and one or two minutes makes no real difference, the value motivating the man to action must be in the fitness of the watch itself independent of its actual usefulness.

The secondary motivator for us to become rich is that everyone sympathises (i.e., emulates emotionally) with the rich and we wish ourselves to take pleasure in such sympathy. ‘The rich man glories in his riches, because he feels that they naturally draw the attention of the world, and that mankind are disposed to go along with him in all those agreeable emotions with which the advantages of his position so readily inspire’. Unlike the previous reason, this is surely one we can all understand and have seen at cocktail parties where the wealthy host will generally have an easier time in telling funny stories than those in a lesser position. But contrary a few people, this is not simply to get on their good side to be in with the chance of getting a favour out of them. Rather, our sympathy genuinely seems greater. Consider the fact that news about a celebrity you have vaguely heard about will generally provoke a greater sense of downness in you than when you hear a local homeless man has died. Smith gives this example: ‘All of the innocent blood that was shed in the civil wars, provoked less indignation than the death of Charles I’.

Rousseau’s explanation for why people want to become rich is simply people wish for the higher status that comes with it. For him the pursuit of wealth is very much as zero-sum game, because, one person becoming relatively richer than you makes you worse off due to the lower status it bestows upon you. According to him the rich only ‘value the things they enjoy to the extent that the others are deprived of them’; after all, each man out of the state of nature has ‘an insatiable ambition, the thirst of raising their respective fortunes…from the desire to surpass others’. This has a ring of truth to it. Many people when presented with the prospect of being in the 90^th percentile of income in one society and very rich will opt for that over being in the 60^th percentile of income in another society but being a little better off overall in absolute terms, but significantly worse off in comparative terms.

In The Opinion of Mankind, Paul Sager maintains Smith and Rousseau’s explanations for people wanting to be rich are sharply different. This is because Rousseau focuses on the zero-sum game of status seeking while Smith focuses on the means to happiness. Importantly, Sagar argues Smith’s explanation does not lead to ‘disruptive social consequences likely to be associated with fierce competition over scare goods that cannot be had simultaneously [e.g., higher status].’. This is because the means of happiness can obviously be multiplied manyfold without necessarily diminishing their worth to each. Nevertheless, I think Sagar’s reading of Smith takes him to place too little weight on status, contrary Rousseau, when, actually, status, as contingently made up by esteem, plays a far larger role in Smith’s explanation for why people seek riches.

The crucial point is the term ‘rich’ is not defined by Smith in absolute terms, rather, it is a relative term. Smith refers to the rich in phrases such as ‘when we consider the condition of the great’ and their lifestyle as ‘the one more gaudy and glittering in its colouring’. Also, he talks about how ‘the rich…lead what is called fashion. All of these quotes make better sense when ‘rich’ is understood as a relative term; certainly, to lead fashion some must follow, meaning, not everyone can be rich at once. This means that in aiming for the means of happiness of the rich, people seem to have to be aiming for something which is by definition scare. The text bears out this reading. Smith frequently talks about being rich as being in that ‘envied situation’ and even explicitly says it is ‘the attention of the world [and mankind sympathising with it] … agreeable emotions…which…renders greatness the object of envy’. A state of envy doesn’t make sense unless it is the relative position in wealth which people really desire – otherwise nothing at all is gained by wanting them worse off. (Though I reckon Smith still takes absolute wealth to be not too small a motivator of seeking riches).

This brings Smith much closer to Rousseau because both seem to be pointing towards higher status as the significant reason for people wanting to be rich. Sagar acknowledges there are places in Part 1 of The Theory of Moral Sentiments where this interpretation is plausible, however, he maintains the pleasure the rich get from the sympathy of people ‘augments the pleasure the rich themselves expect to experience from their material affluence’ and this is the reason why people want to be rich. He continues that wealth seeking is ‘not a zero-sum game…but a complex effect of the capacity to share each other’s sentiments’. This interpretation sits well with Smith’s observation that: ‘To those that have been accustomed to its possession, or even to the hope of public admiration, all other pleasures sicken and decay’ Why? Because public admiration or esteem is distinct from status and not zero-sum. In a town which has one trumpeter the esteem granted to a new violinist probably increases the total amount of it while only shaving off the tiniest sliver of esteem from everyone else, if at all.

Nevertheless, although Sagar is right to contend the seeking of riches ‘is not necessarily a zero-sum competitive game’, contrary Rousseau, and ‘we can (and often do) find ways of securing the esteem of our peers for us’, which is a large part of our desire to be rich, the supply of esteem is not infinite. By this I mean that after so many people have acquired esteem from people then at some point an additional person coming to a position of esteem has to come not from new attention being generated but attention being redirected. We can’t all be continually clapped. At this point people begin to envy the newcomers. We can now take the first motivator to simply be the desire for the esteem of others – which very often comes with status but does not necessarily. This new reading explains why our admiration for the rich will be larger the further away they are because our desire for esteem is not affected by them, contrasting to those who are rich near to us who do take way esteem from us, but our sympathy for their situation remains the same (the second motivator).

This reading is also backed up by considering Smith’s ‘upstart’ who comes to great fortune very quickly, who, ‘though of the greatest merit, is generally disagreeable, and a sentiment of envy commonly prevents us from heartily sympathizing with his joy’. The result is ‘he generally leaves his old friends’ after they suspect and gesture to his new found humility being insincere. If it were simply the means of happiness which we wish for from being rich, contrasting to the admiration derived from being rich, then, there would be little reason for the old friends to go off the upstart, but they do for the obvious reason it makes them feel inferior and they actually become inferior in the small social circle of an 18^th Century Scottish town too and get less esteem from people too (note again: these are different). Smith recognised this implicitly by saying the best way to rise to the top is gradually because this doesn’t create ‘any envy in those he leaves behind’ due to the fact that when it comes there is ‘no extravagant joy’ which can abruptly divert attention from the old friends.

In sum, while Smith’s explanation of why people want to become rich is not as dower as Rousseau’s, not being entirely zero-sum in its focus on status seeking, it still contains the idea that in small groups we are primarily motivated to pursue riches due to the greater esteem they grant us, often going together with status, and, which can become close to zero-sum nonetheless. Contrastingly, we welcome the riches of those who are far away from us and very famous because our sympathy with their great means to happiness is pleasurable while having little to no effect on the esteem we receive ourselves.

[Smith defines envy as: ‘that passion which views with malignant dislike the superiority of those who are really entitled to all the superiority they possess’]