Comment by _delirium

Smith's overall conclusion on the relation between morality and free markets is a bit more mixed than that of someone like Hayek, though. He does say things like the excerpt you quote quite frequently, but he also has a number of comments lamenting the immoral behavior that profit motives cause, like an encouragement to fraud and collusion. He does worry that some attempts to solve the problem would be worse cures than the disease, but he doesn't think that no problem exists, or that self-interest always produces moral outcomes, or that government regulation to mitigate the immoral effects of self-interest is always wrong.

His policy proposals on that latter point are pretty pragmatic, and he endorses regulation when he thinks it has relatively large gains for relatively small downsides. For example, he proposes that the government ought to require employers to pay their employees in hard money, and not permit them to pay in promissory notes or in goods. His reasoning is that this prevents unscrupulous employers from tricking employees, either by paying them in goods whose value has been misrepresented, or by convincing them to work for promises of payment that the employer doesn't really intend to keep.