Abstract

Most current discussions of business ethics confuse truly ethical issues with ones of policy, liability, or deterrence. The fundamental ethical question about capitalism is whether its capacity to create wealth and reduce poverty is offset by a reduction in the moral quality of its participants. Though the Wealth of Nations is often read as a book wholly devoted to exchange, in it Adam Smith identifies (and in some cases proposes remedies for) five moral problems created by capitalism: impoverishing the spirit of the workers, creating cities in which anonymity will facilitate price-fixing, expanding the ranks of the rich who lack virtue, inducing government to create monopolies and privileges, and separating ownership and management in ways that lead to what we now call agency problems.