ADAM SMITH AND ABE MASLOW: CONSCIOUS CAPITALISTS

August 12th, 2007

If you’ve been following my musings, you know I’ve got a healthy appetite for readin’ and writin’ (not as big of a fan of ‘rithmetic). I particularly appreciate off-beat books that look at business or the world from a unique perspective. That would be a good way to describe Saving Adam Smith: A Tale of Wealth, Transformation, and Virtue, written by doctoral student Jonathan Wight a few years ago. Quite often, the Gordon Geccos (remember Michael Douglas in the movie WALL STREET) of the world use Adam Smith’s “invisible hand” of capitalism to describe the benefits of laissez-faire capitalism. There’s an underlying message that is somehow attributed to Smith – who many see as the father of capitalism: “greed is good” and selfishness helps everyone live up to their true potential and get what they need.

Well, Jonathan Wight did his doctoral studies on Adam Smith and found him to be much more Maslovian in his world view. Consider this passage: “Smith’s model is based upon notions that are intuitive to any parent – that children are driven first by the basic instinct for survival, and beyond that, the basic instinct for approval. Smith takes this one step further, arguing that adults as well as children desire not only pats of encouragement and approval, they desire to be worthy of that approval. People want to be virtuous.” In other words, Wight suggests that Smith believed markets and morals go hand-in-hand and he uses a first person narrator – a fictional economics grad student – who travels across the country with Adam Smith to get his points across.

Here’s an example of a verbal exchange from the book as these two characters meet a third person who describes life in Silicon Valley (while overlooking Big Sur cliffs):

1. “No question, people work hard when their contributions are recognized and rewarded. Stock options are important. But you’ll miss something momentous if you stop there…The secret is this: People work harder when they appreciate themselves for what they have done. When the goal of the enterprise is worthy of their highest aspirations…when you touch someplace deep inside, by having them buy into a dream bigger than themselves. That unleashes the creative spirit, and the mind and heart are integrated. So the company becomes, in a sense, the vehicle for the aspirations of the workers as integrated human beings.”

2. “I thought the company was a vehicle for making profit,” I said remembering Milton Friedman’s and Adam Smith’s injunctions against “do-goodism.”

3. “It has potential for much more than that…when people accept a bigger dream, there’s a remarkable transformation. The workplace becomes alive, dynamic, charged with energy. Profit is the by-product of achieving that higher aspiration.”

So, according to Jonathan Wight, Adam Smith was a “conscious capitalist” just like Abe Maslow. Having written a book about applying Maslow’s “hierarchy of needs” to the workplace and distilling down his five levels of the pyramid to three (survival, success, and transformation), I find it fascinating to read these because #1 basically suggests that employees have base compensation needs (survival) which then move on to their social/esteem needs of recognition (success). But, it’s the meaning/aspirational needs at the top of the pyramid (transformation) that create what Adam Smith might have called an “integrated human being” and what Maslow called a “self-actualized person.”

The next time someone cites Adam Smith as their foundation for why they believe capitalism is based upon the positive virtues of selfishness, please direct them to Saving Adam Smith as Wight passionately pleads for a more compassionate and aspirational perspective on human nature, one that corresponds well with the theories I’ve espoused in PEAK.

Entry Filed under: Miscellaneous, Books