The great 18th century economist and moral philosopher Adam Smith published two major treatises during his lifetime. The better-known Wealth of Nations (WN), published in 1776, is one of the first landmark economics books and some claim that it was the start of political economy. In it, Smith argues that for the well-being of the vast majority of people to improve steadily, the government must play a limited role: providing defense and protection, building some infrastructure, and not much else. He also argues that economic freedom harnesses self-interest, so that by doing well for ourselves, within the bounds of justice, we do good for our fellow man.

His earlier book, The Theory of Moral Sentiments (TMS), published in 1759, is different. In it, he discusses how we should behave toward each other. He puts much less weight on self-interest and highlights beneficence toward our fellow humans.

Did the 17 years between the books cause him to become less optimistic about the fundamental nature of human beings? One might think so. But in How Adam Smith Can Change Your Life, economist Russ Roberts makes a persuasive case that Smith did not change at all, but was merely addressing two different questions. In WN, Smith explains that an increasingly extensive division of labor, which causes us to depend more and more on the actions of strangers who are more and more distant from us, makes us better off. The self-interest of these strangers causes them to work for us even if they never hear of us. According to Roberts, TMS by contrast “is overwhelmingly a book about the people closest to us, the ones we can actively sympathize with—our family, our friends, and our immediate neighbors.” George Mason University economist Daniel Klein, whom Roberts references, believes TMS is about political ethics as well as private morals. Nevertheless, they both agree, as did the late Ronald Coase, there is no contradiction between WN and TMS.

Roberts’ goal, at which he succeeds admirably, is to elaborate on Smith’s insights in TMS, explaining many passages from the 1759 book and making the insights vivid through contemporary examples from his own life and the modern world. Toward the end, Roberts shows that even in TMS, Smith had some things to say about how intrusive governments can cause problems.

Being lovely / Roberts does a marvelous job of explaining Smith’s insights about humans. Nine of the 10 chapters are on particular themes in Smith’s book, including how to know yourself, how to be happy, how not to fool yourself, how to be loved, and how to be lovely.

In one chapter, Roberts introduces his own law, “The Iron Law of You.” It states that you care more about yourself than you do about others and that others care more about themselves than they do about you. We can offset this, Roberts writes, by paying attention to the person whom Smith called “the impartial spectator.” Who is this spectator? God? No. Roberts writes that it’s a kind of human being looking over our shoulder, one who thinks beyond us and our narrow concerns.

How do we become happy? Smith wrote, “Man naturally desires, not only to be loved, but to be lovely.” If we figure those two things out, we will be happy. And by being lovely, Smith meant being worthy of being loved. If we strive to be lovely, Roberts writes, then we will be loved.

That raises the question, how do we become lovely? There are two important elements. The first is to observe propriety. This means, according to Roberts, meeting the expectations of those around us: acting in the way they expect, which makes it easier for them to interact with us. Roberts gives many examples, ranging from saying “please” and “thank you” to sympathizing with people in their moments of grief.

But what if people’s expectations of us are improper? Roberts doesn’t raise this question explicitly, but he addresses it using Smith’s conception of virtue. Virtue, for Smith, involves prudence, justice, and beneficence. In modern terms, writes Roberts, prudence means “taking care of yourself”; justice means “not hurting others”; and beneficence means “being good to others.”

The prudent man, claims Roberts, does not smoke, is “physically active and keeps his weight under control,” and “works hard and avoids debt.” On debt, I must part company. It was by taking on what seemed like a massive debt at the time—1986—that my wife and I managed to buy a house in coastal California. I doubt that Roberts would have criticized our decision even prospectively. So I think he must mean something like “avoids too much debt” or “consistently spends beyond his means.”

Being just is relatively easy to understand: don’t cheat. It’s important, note both Roberts and Smith, not to cheat in even little ways. If we do, there will be, writes Smith, “no enormity so gross of which we may not be capable.”

Beneficence is harder to define. According to Smith, the rules of beneficence are “loose, vague, and indeterminate.” Roberts writes that some of its aspects are “friendship, humanity, hospitality [and] generosity.”

He discusses his challenges in following these rules while raising four children. One beneficent rule he created was always to take his daughter’s or son’s hand when offered. A rule I created for myself before my daughter was a year old was, when she asked me to play with her or do anything with her, to say yes at least 90 percent of the time.

Good and bad systems / The two chapters most directly relevant to readers of this magazine are “How to Make the World a Better Place” and “How Not to Make the World a Better Place.” In the former chapter, Roberts discusses a range of phenomena, from the evolution of language, to men wearing hats, to traffic patterns—all of which Adam Ferguson, a Scottish contemporary of Smith, called “the result of human action, but not of human design.”

In Roberts’ view, thinking “clearly about the complex interaction of individual actions that lead to unintended patterns of predictable and orderly outcomes” is “the single deepest contribution of economics to understanding how the world works.” Roberts notes the irony that Smith’s most profound thoughts on the ways in which we benefit others without particularly intending to do so are found more in TMS than in WN. The bottom line here is that to make the world a better place, we need to be good people. We are not likely, on our own, to make the bigger world much better, but we should do our share.

To take an example from my own life, I don’t believe that the few hundred dollars I give to each of four or five charities every year will have a noticeable effect on the world. And yet I do give because I feel an obligation to give to charities that do good. As Roberts writes, “When you behave with virtue, you are helping to sustain” a system of norms and informal rules.

In “How Not to Make the World a Better Place,” Roberts highlights Smith’s criticism of what he called “the man of system” and what I call “the life arranger.” Smith writes that the man of system

seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

Roberts gives examples of “men of system,” ranging from extreme mass murderers—Pol Pot, Stalin, and Mao (I would have added Hitler)—to the less extreme examples we see in the United States: those who decided to invade and try to remake Iraq and those who think the government can achieve good results with the drug war.

Roberts writes that people often “have trouble remembering that there are other ways of changing the world than using legislation.” He takes the example of smoking. Per-capita consumption of tobacco in the United States “fell by 50 percent in the last half of the twentieth century.” Admittedly, some of this was due to higher taxes on cigarettes and restrictions on where one can smoke. But most of those restrictions came along within the past 20 years, by which time much of the decline had already occurred. Roberts writes, “Smoking is no longer cool or hip.” Great change happened because individual people decided to change.

Men of system, take note. And get lost.