The great war and the British people

The “Adam Smith Problem” is the name given to an argument that arose among German scholars during the second half of the nineteenth century concerning the compatibility of the conceptions of human nature advanced in, respectively, Adam Smith's Theory of Moral Sentiments (1759) and his Wealth of Nations (1776). During the twentieth century these arguments were forgotten but the problem lived on, the consensus now being that there is no such incompatibility, and therefore no problem. Rather than rehearse the arguments for and against compatibility and incompatibility, this paper returns to the German writers of the 1850s–1890s and demonstrates that their engagement in this argument represents the foundation of modern Smith scholarship. It is shown that the “problem” was not simply a mistake best forgotten, but the first sustained scholarly effort to understand the importance of Smith's work, an effort that lacked any parallel in English commentary of the time. By the 1890s British writers, overwhelmingly ignorant of German commentary, assumed that there was little more to be said about Smith's work. Belated international familiarity with this German “Problem” played a major role in transforming Smith from a simple partisan of free trade into a theorist of commercial society and human action.