Because he believed that we were hard-wired for such exchanges, Smith concluded that economic development was best ensured not by the visible hand of government organizing commerce toward some enlightened end or forcing its citizens to assume the instinct of angels. Instead, individuals should be liberated to pursue their economic interests, the benefits of which would be greatest for those who had the least.

Fair enough, but this sounds an awful lot like Bernard Mandeville. In Smith’s mouth, the moral mandate of self-interest may be blunted of its cynicism, but that only increases its power. Smith knew this, which is why he took aim at Mandeville in his other great work, The Theory of Moral Sentiments. He did not accuse Mandeville of promoting vice at the expense of virtue (the familiar line of attack) but of failing to adequately distinguish between the two. “Every thing, according to him, is luxury which exceeds what is absolutely necessary for the support of human nature,” he said of Mandeville, “so that there is vice even in the use of a clean shirt, or of a convenient habitation.”

For Smith, this was nonsense. To the degree that having a clean shirt or a convenient home lies in our self-interest, the pursuit of them is not only legitimate, it’s fairly laudable. As Smith described it, Mandeville’s famous equation—private vices yield public benefits—was a piece of “ingenious sophistry” that ultimately relied on an “ambiguity of language.” Only by maintaining there is no distinction between self-interest and selfishness—indeed, that all self-interest is selfishness—could the equation hold.

Yet such sophistry can also work in reverse. If the brilliance of Smith’s reply was to distinguish activities that are self-interested from those that are merely selfish, thus providing a space for commendable commercial pursuits, the distinction is lost if we regard all self-serving pursuits as praiseworthy and just.

This is the danger I see in the way my students sometimes talk about the pursuit of self-interest. They are so convinced of the power of that pursuit that they have lost the ability to make moral distinctions among the types of interests they might pursue or, for that matter, how exactly they might go about pursuing them. A few even resist the idea that such distinctions should be made. The pursuit of self-interest is taken to be so obviously valuable that the notion it could be otherwise seems incredible and, in respect to the free markets, subversive to say the least.

It is neither. A philosophy that cannot distinguish between a pickpocket and Larry Page isn’t worthy of serious consideration, nor is one that says the only difference between the two is a matter of legality. True, those most apt to defend the efficacy of self-interest are quick to reply that the pursuits of the pickpocket don’t qualify, but either they are confused about the term they are using or they are merely making my point. Once you say that some pursuits are indecent or even impermissible, you have acknowledged there is a line between self-interest and selfishness. The rest is a matter for debate.