Abstract
In the Theory of Moral Sentiments, Smith argued against the account of human nature which
views moral sentiments as deriving from self-love. This paper emphasises that Smith’s understanding
of human nature was not that it was either selfish or benevolent. Human nature consists
of the ability to be either or, and the three powers of themind actualise this ability. The powers of
the mind are will, intellect, and memory, to which correspond respectively the offices of selfcommand,
sympathy, and the impartial spectator. The system of sympathy is an example of
what Mittermaier calls an ex-ante fact and allows for a real distinction between vice and virtue.
Other distinctions important to Smith include production versus predation and market price versus
natural price. This paper develops a model that brings together these real distinctions. It demonstrates
the complementarity of the Theory of Moral Sentiments and the Wealth of Nations.