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Is Adam Smith The Founding Father Of Sustainability


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We examine Adam Smith's seminal works, The Wealth of Nations (1776) and The Theory of Moral Sentiments (1750) and compare the two books.

We uncover the differences between the two books and expose a more complete review of The Wealth of Nations to demonstrate Smith's original theories have been omitted in most financial transactions and economic texts.

We look at the Capitalist view of capital and the Sustainabilist view of capital to note their theoretical and practical differences.

Smith is shown as more than just an "economist" and found of modern economics, but as a complete thinker who views the three forms of capital (natural, human and financial) as inexorably linked to each other.

Published in: Economy & Finance, Technology
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Is Adam Smith The Founding Father Of Sustainability

  1. 1. Is Adam Smith The Founding Father of Sustainability? Nils-Michael Langenborg Founder & Executive Director The Sustainable Adam Smith #GreenAdamSmith April 24, 2012
  2. 2. Rules of Conduct This is not about me This is not about you This is about us
  3. 3. Our Agenda Lecture (Q&A) The Capitalist View of Capital The Sustainabilist View of Capital Assignment – The Necessaries of Life Final Thoughts
  4. 4. Who am I?
  5. 5. Who are you?
  6. 6. Who is Adam Smith? Born June 16, 1723 Died July 17, 1790 (age 67) Scottish social philosopher Collaborated with David Hume Part of the Scottish Enlightenment Professor of Moral Philosophy at University of Glasgow Pioneer of “political economy” (the study of production) Lived with his mother his entire life
  7. 7. What did Adam Smith do? 1776 1759
  8. 8. The Wealth of Nations ➡  An Inquiry into the Nature and Causes of the Wealth of Nations ➡  Four basic principles emerged “consumption” “division of labor” “self-interest” “the invisible hand” ➡  Foundation of free market capitalism
  9. 9. 1. Consumption “Consumption is the sole endand purpose of all production;and the interest of the producer oughtto be attended to only so far as it maybe necessary for promoting that of theconsumer.”
  10. 10. 1. Consumption But in the mercantile system the interestof the consumer is almost constantlysacrificed to that of the producer; and it seems to consider production,and not consumption, as theultimate end and object of allindustry and commerce.”
  11. 11. 2. Division of Labor “The greatest improvementin the productive powers oflabour… seem to have beenthe productive effects of thedivision of labour.” 1 pin = 18 different steps 1 man = 20 pins a day 10 men = 4,800 pins a day/each; 48,000 vs. 200 pins/day
  12. 12. 3. Self Interest “It is not from thebenevolence of the butcher,the brewer or the baker,that we expect our dinner,but from their regard totheir own interest.”
  13. 13. 4. Invisible Hand “…he intends only his owngain, and he is in this, as in manyother cases, led by an invisible hand topromote an end which wasno part of his intention.”
  14. 14. Questions?
  15. 15. The Theory of Moral Sentiments ➡  Published 1759 (17 years before WN) ➡  Four basic principles emerged “self-love” “man within the breast” “approbation” “the invisible hand” ➡  Might TMS be the foundation for “sustainable capitalism” in the future?
  16. 16. 1. Self-Love (The Impartial Spectator) “When the happiness or misery of othersdepends in any respect upon our conduct,we dare not, as self-love mightsuggest to us, prefer the interestof one to that of many. The man within immediately calls to us,that we value ourselves toomuch and other people too little,and that, by doing so, we render ourselvesthe proper object of their contempt.”
  17. 17. 2. Man Within The Breast (self-command) “It is reason, principle, conscience,the inhabitant of the breast, theman within, the great judge andarbiter of our conduct. It is he who, whenever we are about to actso as to affect the happiness of others, callsto us, with a voice capable of astonishingthe most presumptuous of our passions,that we are but one of themultitude, in no respect betterthan any other.”
  18. 18. 3. Approbation (approval) “In the steadiness of his industry and frugality,in his steadily sacrificing the easeand enjoyment of the presentmoment for the probable expectation ofthe still greater ease and enjoyment of amore distant but more lasting period of time, the prudent man is always bothsupported and rewarded by theentire approbation of the impartialspectator, the man within the breast.”
  19. 19. 4. The Invisible Hand “They are led by an invisiblehand to make nearly the samedistribution of the necessaries oflife, which would have beenmade, had the earth beendivided into equal portionsamong all its inhabitants, and thuswithout intending it, without knowing it,advance the interest of society, and affordmeans to the multiplication of the species.“
  20. 20. Questions?
  21. 21. The Capitalist View of Capital Financial Natural Human “Consumption is the sole end and purpose of all production;and the interest of the producer ought to be attended to only so far as itmay be necessary for promoting that of the consumer.”
  22. 22. The Sustainabilist View of Capital Natural Human Financial “The produce of the soil maintains nearly that number ofinhabitants which is it capable of maintaining.“
  23. 23. Questions?
  24. 24. The Necessaries of Life 1.  Family (population) 2.  Food & Shelter (the basics) 3.  Contribution (aka “work”) 4.  Capital (natural and human) 5.  Health (personal and environment) 6.  Exchange (currency) 7.  Technology (as enabler of necessaries) Natural Human Financial
  25. 25. Assignment Food make nearly the same distribution of food had the earth“Tobeen divided into equal portions among all its inhabitants andthus afford means to the multiplication of the species.” Natural Human Financial
  26. 26. Final Thoughts Nils-Michael Langenborg Founder & Executive Director The Sustainable Adam Smith #GreenAdamSmith April 24, 2012