Adam Smith on moral judgment: Why people tend to make better judgments within liberal institutions

In The Theory of Moral Sentiments Adam Smith explores how sympathy, propriety, and spectators help human beings form moral judgments that promote social harmony. Following Smith's progression through three levels of context exposited in Part IV, Ch. 1 of TMS—trinkets, private life, and political life—I explore how the prevalence of moral corruption depends significantly on the level of context. Moving from clearly defined contexts to more general and abstract contexts worsens our moral judgment. That, in turn, suggests that devolving power, authority, and decision-making to lower levels of context will generally improve moral judgment. Unsurprisingly, Smith's work includes many examples advocating such devolution, from local financing and governance of public works to “the liberal plan” in general which allows people to act “of their own accord.” I conclude that in addition to their economic benefits, Smith advocates liberal institutions as a means of improving our impartiality and our moral judgment.