The Adam Smith Problem Revisited: A Methodological Resolution

The Adam Smith problem refers to a claimed inconsistency between the Theory of Moral Sentiments and the Wealth of Nations, regarding the portrayal of human nature in these two books. Previous research predominantly resolved the claimed inconsistency by uncovering virtuous, less selfish character traits in the Wealth of Nations. The present paper voices caution. I acknowledge – on methodological grounds – fundamental differences regarding the portrayal of human nature in Smith’s behavioural ethics, i.e. the Theory of Moral Sentiments, as compared with Smith’s economic research. The key argument is that Smith’s two books address different research problems and hence do not, need not and cannot adopt the same view of human nature – for methodological reasons, so my argument. Adam Smith scholarship overlooked that Smith himself in considerable degrees understood ‘economic man’ as a heuristic abstraction. I connect to the philosophies of science of Imre Lakatos and Karl Popper. Key words: Adam Smith problem; economic methodology; problem dependence; research heuristics; Popper; Lakatos. JEL classification Codes: B10 (History of Economic Thought through 1925 – General), B20 (History of Economic Thought since 1925 – General), B40 (Economic Methodology – General).