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Transaction costs provide the key to understanding Adam Smith's complete philosophical system and how his two great works form an integrated whole. 

• Smith's two essential claims: humans desire to learn proper behavior and have an innate propensity to truck, barter, and exchange
• Sympathy in Smith's view means synchronizing feelings with others—not perfect emotional matching but sufficient "concords" for social harmony
• Three core principles guide proper behavior: justice (respecting others' person, property, and promises), beneficence (proper use of what's ours), and prudence (sacrificing present comfort for future well-being)
• Self-command turns virtuous intentions into actual proper behavior
• Four sources of moral judgment: motive, reaction, convention, and consequence
• As societies scale up, we move from moral community (acting from love) to moral order (following rules from their utility)
• Smith's "Chinese earthquake" example anticipates the modern trolley problem by revealing how moral agency affects our decisions
• The "man of system" tries to impose ideal plans without regard for human nature or gradual change
• Smith's egalitarian views positioned economics against slavery and hierarchical social structures

Also posted, with resources for teaching and learning, at Adam Smith Works, thanks to Amy Willis. 

If you have questions or comments, or want to suggest a future topic, email the show at [email protected] !

You can follow Mike Munger on Twitter at @mungowitz