Posted on Nov 16, 2023Read on

Adam Smith on Building Equitable Economies: A Reflection | Gratitude Series 14/60

Reflecting on Adam Smith's profound insights, we find a rich tapestry of thoughts that beautifully intertwine the concepts of labor, value, and moral sentiments, all crucial in understanding an equitable economy and community well-being.

From "The Wealth of Nations," Smith observed that "Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all wealth of the world was originally purchased" [7]. This idea emphasizes labor's intrinsic value as the bedrock of economic value. Furthermore, Smith highlights the significance of labor division in enriching society: "It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people" [8].

Delving into the essence of value, Smith distinguishes between a good's "real" value, determined by labor, and its "nominal" price [9]. He articulates, "The value of any commodity, therefore, to the person who possesses it... is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities" [10].

In "The Theory of Moral Sentiments," Smith's reflections extend beyond economics into the realm of ethics and human behavior. He notes, "The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another" [18]. This observation resonates deeply in today's society, where excessive value is often placed on material wealth and status.

Smith also wisely advises, "Never complain of that of which it is at all times in your power to rid yourself" [19]. Moreover, Smith's insight into empathy – "Though our brother is upon the rack, as long as we ourselves are at ease, our senses will never inform us of what he suffers" [20] – is a powerful reminder of the importance of imagination and empathy in understanding and alleviating the suffering of others.

In a world increasingly driven by consumerism, Smith's critique of materialism is more relevant than ever: "How many people ruin themselves by laying out money on trinkets of frivolous utility?" [21]. This calls for a shift towards a value system that prioritizes human well-being and sustainable living over mere acquisition and consumption.

Finally, Smith's ethos of benevolence and self-love harmoniously coexisting – "To feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature" [24] – encapsulates the essence of building a more compassionate and equitable society.

The 16-year gap between "The Wealth of Nations" and "The Theory of Moral Sentiments" reminds us that profound insights and impactful works often require time to mature. This reflection offers solace and encouragement in the journey of creating 'The Internet of Value,' emphasizing patience and perseverance in the pursuit of meaningful contributions.

While acknowledging Smith's perspectives as a product of his time, it's essential to discern his core philosophies, learning and adapting them to modern contexts. His foundational ideas continue to inspire and guide us in building a more equitable and empathetic world.


  1. Adam Smith, “An Inquiry Into the Nature and Causes of the Wealth of Nations”, p.33 (1827) [7]

  2. Adam Smith Institute [8]

  3. Adam Smith on the Labor Theory of Value, [9]

  4. Adam Smith Quotes, Goodreads [10]

  5. Adam Smith Quotes from The Theory of Moral Sentiments, [18, 19, 20, 21, 22, 24]