A commentary on Adam Smith and international business

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Abstract

A close reading of Adam Smith’s works, “An Inquiry into the Nature and Causes of Wealth of Nations” and “The Theory of Moral Sentiments,” indicates that he would not support the advocacy of free markets wholeheartedly. His view on market systems, although “free,” implies strong institutions and regulations. Adam Smith would have been particularly concerned with the fact that the large multinationals are as much political actors as they are economic actors. He would have argued that there may be ‘moral‘ limits to globalization. In his view, the general rules of morality are (in modern parlance) ‘socially embedded.’ Thus, sympathy and fellow-feeling mostly operate at ‘close quarters’ and, in particular, they may not be effective at a transnational level.

Keyword(s)

Adam Smith (1723-90); Free markets; Globalization; International business; Morality; Multinational corporations

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