Where does virtue consist?

ln search of absolute measure of value one finds that the real value is Esteem Value rather than Exchange Value.





........Adam Smith rejected the argument that we distinguish between objects of approval and disapproval by virtue of our possession of a moral sense, where the latter is defined as a reflex sense; akin to our sense of beauty, shame or ridicule. Smith criticized this type of argument, largely on the ground that it is odd that anything akin to a moral sene - should hiterto have been so little taken notice of, as not to have got a name in any language.

A similar critical spirit is to be found in Smith's handling of what he took to be the second major question of moral philosophy; that concerning the problem of - where does virtue consist? The was an argument that virtue consists in benevolence; a position which Smith rejected on the ground that it gave prominence to the -milder- virtues, at the expense of the more demanding virtue of - self command.

Smith criticized the argument because of the denial that actions based on self love could ever be regarded as virtuous. Smith also rejected Hume's solution which grounded approval of an action on perception of its utility......- and that the sentiment of approbation always involves in it a sense of propriety quite distinct from the perception of utility.

Adam Smith, Wealth of Nation

The importance of the analysis of the -circular flow- marks an enormous advance in economic theory (1), the first study of the whole organism.

(1) Cannan

Where the division of labour is thoroughly established, it is to be expected that each individual is in a sense dependent on his fellows, and that 'every man thus lives by exchanging, or becomes in some measure a merchant.' Smith in fact regarded the division of labour as both the cause and consequences of exchange. He remarked that the institution is not the effect of 'human wisdom', but rather the consequence of man's proensity to truck, barter, and exchange one thing for another.


The things which have the greatest value in use have frequently little or no value in exchange; and on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water, but it will scarce purchase anything. A diamond, on the contrary, has scarce any value in use, but a very great quantity of other goods may frequently be had in exchange for it (Wealth of Nation, l iv 13; 131).


'lt is the responsibility of the government to ensure that the impediments to the 'obvious and simple' state of natural liberty were removed; a state which once attained would, inter alia, optimize the efficiency with which resources were allocated.'

Adam Smith, Wealth of Nation















http://www.economist.com/blogs/freeexchange/2007/
10/this_week_in_comparative_advan.cfm