Adam Smith, answered from the texts and cited to the page.
There is no contradiction, and the appearance of one rests on a misreading of both books. The Wealth of Nations does not teach that man is governed by self-interest; it analyzes how a particular institution — the market — channels the self-interested motive that is one motive among several, for the specific purpose of explaining the production and distribution of wealth.
To abstract one motive for an analytical purpose is not to deny the others. The Theory of Moral Sentiments opens with the flat denial that man is merely selfish — however selfish man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others — and it never wavers. The two books share one architecture: order arising among partial and passionate creatures without a designer, through sympathy in the moral case and through exchange in the economic.
And the self-interest of the Wealth of Nations operates only within the justice and propriety that the Moral Sentiments establishes; a market presupposes the settled expectations, the honesty, the restraint from injury that are the work of the impartial spectator and the laws of justice. I was revising the Moral Sentiments in the last year of my life, after the Wealth of Nations was long in print; if I had felt the contradiction, I had every opportunity and no inclination to resolve it by retreat.1234
But we rarely view it in this abstract and philosophical light. We naturally confound it in our imagination with the order, the regular and harmonious movement of the system, the machine or oeconomy by means of which it is produced.The Theory of Moral Sentiments
But what makes this difference? When our passive feelings are almost always so sordid and so selfish, how comes it that our active principles should often be so generous and so noble?The Theory of Moral Sentiments
The man who is barely innocent, who only observes the law of justice with regard to others, and merely abstains from hurting his neighbours, can merit only that his neighbours in their turn should respect his innocence, and that the same laws should be religiously observed with regard to him. CHAP. II.The Theory of Moral Sentiments
But this can never be done so effectually as by viewing whatever befalls themselves in the light in which their neighbours are apt to view it. The stoical philosophy, in this respect, does little more than unfold our natural ideas of perfection. There is nothing absurd or improper, therefore, in aiming at this perfect self-command.The Theory of Moral Sentiments
The most famous interpretive problem in Smith scholarship, coined in nineteenth-century Germany and now generally regarded as dissolved. The recovery of the Lectures on Jurisprudence (from student notes discovered in 1896 and 1958) revealed the connecting jurisprudential middle term and showed the two published books as parts of a single planned system. The Glasgow Edition scholarship (D.D. Raphael and A.L. Macfie's introduction to TMS especially) treats the problem as a misunderstanding: the sixth edition of TMS (1790), Smith's last work, deepens rather than retracts the social and other-regarding dimension. Amartya Sen and Samuel Fleischacker have made the complementarity central to the recovery of Smith as a moral philosopher of the market. A minority still presses that the analytical self-interest of WoN sits in real tension with the spectator theory; the dominant reading is integration.