Beyond the Efficiency of the Market

In the Wealth of Nations, Adam Smith provides a brief discussion of the English poor law as part of a larger discussion about labor markets. As we might expect from the caricature of Smith as a laissez-faire economist, he argues that the law distorts the labor market in two ways: (1) by restricting the free circulation of labor (2) by causing differences in price across labor markets. However, Smith spends a good deal more time talking about the moral consequences of the law. Why does Smith discuss the moral effects of the law rather than simply dismissing it on economic grounds? This chapter addresses this question by reading Smith’s argument about the poor law in Wealth of Nations together with his arguments about the extent of sympathy in Theory of Moral Sentiments. I argue that attention to the moral consequences of this policy shows how economic liberty is also tied to the development of healthy moral judgment and sympathetic relationships. Smith highlights two key aspects of the law that harm the moral situation of the poor by exacerbating the problem of distance in sympathetic relationships. First, the poor law establishes a position of arbitrary power for its overseers relative to the rest of society. Second, the law positions the poor as objects to be administered rather than individuals with moral worth.  With this example, Smith shows how interfering with the market makes it more likely that we enhance its negative potential for fostering selfishness to the detriment of sympathy.