David Warsh, in his zeal to contribute to the commemoration of Adam Smith's death {"200 Years Later, Adam Smith's Free Market Vision Prevails," Business, July 18}, has overlooked some shortcomings in the theory of competition that forms the base of our economic system.

Perhaps politicians and philosophers are rushing to stand alongside Adam Smith, but environmentalists are not, at least not this one. It seems to me that Mr. Smith's notion of the "invisible hand" is exactly why the world finds itself in an overall ecological crisis of catastrophic proportions. Mr. Warsh even provides the reason why competition does not necessarily contribute positively to the common good. People pursuing the greatest advantage causes "both capital and labor to forever move from less profitable to more profitable employment." It all boils down to the maximization of profit.

Thus, while capitalist societies find themselves better off within a materialistic definition of well-being (embodied in our ever-increasing gross national product), they are now realizing that such massive wealth has been accrued at the cost of our life-support system, the Earth.

Socialism, however, has empirically shown itself to be just as inept as capitalism as far as the environment is concerned. I propose that Mr. Warsh and all economists, politicians, philosophers and environmentalists stop wasting time idolizing Adam Smith and begin working together to formulate a new economic theory that gives ecological concerns their rightful place. G. SHERMAN MORRISON Washington