In every part of the universe we observe means adjusted with the nicest artifice to the ends which they are intended to produce; and in the mechanism of a plant, or animal body, admire how every thing is contrived for advancing the two great purposes of nature, the support of the individual, and the propagation of the species. But in these, and in all such objects, we still distinguish the efficient from the final cause of their several motions and organizations. The digestion of the food, the circulation of the blood, and the secretion of the several juices which are drawn from it, are operations all of them necessary for the great purposes of animal life. Yet we never endeavour to account for them from those purposes as from their efficient causes, nor imagine that the blood circulates, or that the food digests of its own accord, and with a view or intention to the purposes of circulation or digestion. The wheels of the watch are all admirably adjusted to the end for which it was made, the pointing of the hour. All their various motions conspire in the nicest manner to produce this effect. If they were endowed with a desire and intention to produce it, they could not do it better. Yet we never ascribe any such desire or intention to them, but to the watch-maker, and we know that they are put into motion by a spring, which intends the effect it produces as little as they do. But though, in accounting for the operations of bodies, we never fail to distinguish in this manner the efficient from the final cause, in accounting for those of the mind we are very apt to confound these two different things with one another. When by natural principles we are led to advance those ends, which a refined and enlightened reason would recommend to us, we are very apt to impute to that reason, as to their efficient cause, the sentiments and actions by which we advance those ends, and to imagine that to be the wisdom of man, which in reality is the wisdom of God. Upon a superficial view, this cause seems sufficient to produce the effects which are ascribed to it; and the system of human nature seems to be more simple and agreeable when all its different operations are in this manner deduced from a single principle.--Adam Smith, The Theory of Moral Sentiments (TMS) 188.8.131.52
Unlike Hume, who explicitly informs his readers of the “elements” of his system (184.108.40.206; see Hazony), Smith is silent on the elements of his system. But Smith's interest in discerning principles, which are the explanatory grounds (that is, axioms, fundamental causes, common notions, etc.) of a system (see here), is (further) evidence that he is interested in systematic knowledge (recall). And while he makes no mention of elements, Smith is less silent on the “principles of human nature.”
For example, at the start of TMS, Smith writes, in one of the most Hobbesian passages of his oeuvre, “And from thence arises one of the most important principles in human nature, the dread of death, the great poison to the happiness, but the great restraint upon the injustice of mankind, which, while it afflicts and mortifies the individual, guards and protects the society.” (TMS 220.127.116.11, 13) Later Smith notes that it is universally accepted that “compassion” is a “principle of human nature.” (TMS 18.104.22.168, 43) So, Smith seems to be committed to the idea that there is a heterogeneous mixture of principles in human nature. With that in mind, let's turn to TMS 22.214.171.124.
I have long found TMS 126.96.36.199 (quoted above) extremely difficult to parse (especially this part: "When by natural principles we are led to advance those ends, which a refined and enlightened reason would recommend to us, we are very apt to impute to that reason, as to their efficient cause, the sentiments and actions by which we advance those ends.") One important claim is that according to Smith it is relatively easy to distinguish between efficient and final causes when it comes to bodies; but when it comes to mental activity, it is very difficult to distinguish between final and efficient causes ("accounting for the operations of bodies, we never fail to distinguish in this manner the efficient from the final cause, in accounting for those of the mind we are very apt to confound these two different things with one another"). Another important claim is that some scientific systems of human affairs have a tendency to explain by mono-causes (or single, fundamental explanatory principles).
In the passage quoted at the top of this post, Smith is critical of the tendency to reduce human affairs to single, explanatory principles. This is a recurring theme in TMS. For example, earlier in TMS, he had written critically of “Those who are fond of deducing all our sentiments from certain refinements of self-love [Hobbes and Mandeville--ES], think themselves at no loss to account, according to their own principles, both for this pleasure and this pain.” (TMS 188.8.131.52) He is also critical of Hume: “The same ingenious and agreeable author who first explained why utility pleases, has been so struck with this view of things, as to resolve our whole approbation of virtue into a perception of this species of beauty which results from the appearance of utility." (TMS 4.2.3) Echoing Toland's criticism of Spinoza (recall), Smith insists that Hume's mistake is one common to “men of reflection and speculation.” (TMS 4. 2.11) In fact, in context, Smith accuses Hume of adopting a stance of "refined and enlightened reason" in his explanation of the origin of justice (in order to "impute to that reason" what is really caused by resentment; see here for a defense of that claim). In particular, he claims that Hume's mistake is a natural one ("we are very apt to impute") for a thinker to make. That is, Smith treats Hume as an exemplar to diagnose the existence of a kind of (what Kant will call) transcendental illusion.
Much of TMS 184.108.40.206 recycles a standard seventeenth and eighteenth century design argument (the "circulation of the blood" may be thought a modern touch) that could have been penned by a lesser follower of, say, Samuel Clarke. Smith, who was a close student of Cicero, signals his familiarity with Boyle's version of the Posidonian argument (recall).
Yet, Smith is undoubtedly also familiar with Hume's argument against final causes, and he leaves it unclear why he does not accept Hume's argument. (I have argued that Smith's considered views only are made clear in his posthumous work.) Oddly, when Hume wrote Smith with his objections and suggestions for improvement, he (Hume) did not comment on this point of disagreement. Perhaps, that is because he discerned that in Smith's treatment, the Designer's ends that can be inferred from his works, turn out to be oddly Epicurean: "[I] the support of the individual, and [II'] the propagation of the species." Smith here, anticipates, the argument of Philo:
You ascribe, Cleanthes, (and I believe justly) a purpose and intention to Nature. But what, I beseech you, is the object of that curious artifice and machinery, which she has displayed in all animals? The preservation alone of individuals and propagation of the species. It seems enough for her purpose, if such a rank be barely upheld in the universe, without any care or concern for the happiness of the members, that compose it. Dialogues Concerning Natural Religion (D.26)