Eighteenth-century Scotland had a question it could not argue its way past. If people act mainly from self-love, where does morality come from? Bernard Mandeville had said the awkward part out loud — private vices produce public benefits — and Glasgow's answer was that God had fitted humans with a moral sense, a sixth faculty registering virtue the way the eye registers colour. Francis Hutcheson taught it from the chair of moral philosophy. The former student who took that chair in 1752 dispensed with the faculty entirely.
He did it by showing that nothing extra was needed. A person judges others by imagining himself into their situation and testing whether he can go along with what they feel; he then learns to judge himself the same way, by asking how his conduct would look to a disinterested onlooker who knows the facts and has nothing riding on the outcome. Smith called that onlooker the impartial spectator, and the argument of The Theory of Moral Sentiments in 1759 was that conscience is not implanted but assembled — built by a social animal out of a lifetime of being watched, and of watching. Morality is what the wish for the approval of others turns into once one begins wanting to deserve it.
The classroom that produced this had already produced the other book. Smith lectured on ethics, on jurisprudence, and then on what he called police, revenue and arms; student notes of those last lectures, one set recovered in 1895 and another in the twentieth century, show him teaching the substance of his economics more than a decade before he wrote it. He knew from the inside what a bad institution felt like. Six years at Balliol on a Snell exhibition had shown him professors paid by endowment who had, as he put it later, given up even the pretence of teaching — a complaint that is already an economic argument. In 1764 he resigned the Glasgow chair to tutor the young Duke of Buccleuch abroad, and returned to his students the portion of their fees he judged he had not earned.
France gave him the acquaintance of François Quesnay and the physiocrats, whose system he admired and whose central claim — that only agriculture produces new wealth — he rejected. Twelve years of writing followed. An Inquiry into the Nature and Causes of the Wealth of Nations appeared in 1776 arguing that a nation's wealth is not the metal in its treasury but what its labour produces each year, and that the engine of that output is the division of labour. Ten workers splitting pin-making into eighteen operations could turn out upwards of forty-eight thousand pins a day; one man working alone could scarcely make twenty. Dinner arrives, he observed, because the butcher and the baker are attending to their own interest.
Most of the book prosecutes the people who game that arrangement. Smith spent hundreds of pages on the mercantile system, on monopolies granted to trading companies, on tariffs written by the interests they enriched, and he noted that men of the same trade rarely gather without the conversation drifting toward conspiracy against the public. The invisible hand — the phrase that carries his name into arguments he never had — occurs exactly once in the whole work. In 1778 he became a commissioner of customs in Edinburgh and spent his last twelve years administering duties he had argued against.
German scholars in the later nineteenth century decided the two books could not belong to one mind, and named the difficulty Das Adam Smith Problem. Almost nobody defends that reading now, and Smith's own last year is why: he spent it not on revising the economics but on a sixth part to The Theory of Moral Sentiments, with a new chapter on how the habit of admiring the rich and neglecting the poor corrupts moral judgement at its root. Days before his death in 1790 he had his executors burn sixteen volumes of manuscript; the book about conscience was the one he was still correcting.