Adam Smith and the Feedback Loop of Reactions

Adam Smith and the Feedback Loop of Reactions

You probably know Adam Smith as one of the most influential economists of all time, notable for his notion of the “invisible hand” of the market. But Smith’s first book, The Theory of Moral Sentiments, is a work of philosophy. In it, he describes a different sort of invisible force that guides us: how the approval and disapproval of others, real or imagined, influences our behavior.

We are, by nature, selfish. We value ourselves above all other humans. Smith illustrates his point by suggesting that the news that your little finger must be amputated would likely be more stressing than the news of the deaths of a huge number of strangers overseas. Yet despite our inherent selfishness, the majority of people the majority of the time are cooperative and kind to one another. Smith believed our interactions with others are responsible for our well-established reciprocity. He saw others’ responses to our behavior as feedback guiding how we act in the future. To do something selfish usually warrants a disapproving reaction. To do something selfless usually merits an approving one.

The feedback loop of others’ reactions to our actions is the basis of civilization. Russ Roberts writes in How Adam Smith Can Change Your Life, “Smith’s vision of what sustains civilization is the stream of approval and disapproval we all provide when we respond to the conduct of those around us. That stream of approval and disapproval creates feedback loops to encourage good behavior and discourage bad behavior.”

This type of feedback doesn’t just cover formal punishments and prohibitions according to the law where we live. It also covers the ways people respond to behavior that is just considered the norm. If a friend says hello to you on the street and you fail to acknowledge them, you haven’t broken any laws, but they’re likely to respond in a negative fashion. So you adhere to the norm. Smith writes: “When Nature formed man for society, she endowed him with a basic desire to please his brethren and a basic aversion to offending them. She taught him to feel pleasure in their favorable regard and pain in their unfavorable regard. She made their approval most flattering and most agreeable to him for its own sake, and their disapproval most humiliating and most offensive.”

Smith asked readers to imagine a person who grows to adulthood without any interactions with other people. He believed such a person would have no awareness of their character and no notion of the right or wrong way to act. Our desire to be loved and accepted prompts moral behavior relative to the standards of our society. We in turn respond with approval of the same behavior on the part of others.