Business ethics and the origins of contemporary capitalism

economics and ethics in the work of Adam Smith and Herbert Spencer

Patricia Werhane

pp. 297-314

in: David Bevan, Regina W. Wolfe (eds), Systems thinking and moral imagination, Berlin, Springer, 2019

Abstract

Both Adam Smith and the 19th century Social Darwinist Herbert Spencer, though in quite different ways, have been enormously influential in what is understood today to be free enterprise or capitalism. In this article Werhane examines the contributions of both, noticing that it is Spencer, not Smith, who advocates a "night watchman" theory of the state. As a social Darwinist, Spencer argues that those who are strongest should succeed and there should be no obstacles for those achievements: those who cannot compete should be allowed to wither away, thus strengthening the species, and thus it is from Spencer that later scholars glean the idea of meritocracy – that those who deserve to lead, to be wealthy or to be in power earned that right. Moreover, and of revelatory interest in Werhane's commentary, Spencer defended workplace democracy, because it would allow the individual freedom of each individual participant that hierarchical organizations do not.Original publication: Werhane, Patricia H. "Business Ethics and the Origins of Contemporary Capitalism: Economics and Ethics in the Work of Adam Smith and Herbert Spencer." Journal of Business Ethics (2000) 24: 185–198. ©2000 Reprinted with permission.

Cited authors

Darwin Charles

Spencer Herbert

Smith Adam