[Adam] Smith also talks about a selfish passion [in Theory of Moral Sentiments], which is a desire for praise. He argues that people instinctively desire praise, but that, as they mature, this feeling develops into a desire for praiseworthiness. This is a little bit different, and I haven’t seen it written about anywhere else. He points out that, suppose you were praised for something that you knew you didn’t do: It was a mistake, people thought you did something, so they’re praising you, but in fact you didn’t do it. It wouldn’t be such a good feeling – even if you could keep the lie going, and continue to receive the praise. He uses that to show that what people really want is to be deservedly praised. And that turn of mind, which develops as people mature, is what makes us into people with integrity.
I think this underlies how the economy works. We start out with selfish
feelings, which are intermixed with feelings of empathy for others, and
then we develop this mature desire to be praiseworthy. I think it is
central to our civilisation that people do that. Adam Smith uses the
example of mathematicians. Mathematicians seem to be, in his
observation, totally unconcerned with popular praise. That’s because
they know they’re doing good work in their mathematics, but also that
the public will never appreciate them for what they do. They live in
relative poverty, and they don’t seem to care about praise, except from
their fellow mathematicians. And yet they’re doing all of this work
which benefits humanity. This is something that happens in our society,
and it makes the system work. He doesn’t go on, in this book, to explain
how this develops into something that works. But this does mark the
beginning of the thought process leading to his later book, The Wealth of Nations, in 1776.
--Robert Shiller, The Browser, on praiseworthiness as a building block of civilization