Digressions&Impressions

On the Origin of Capitalism; On Ellen Meiksins Wood, and Adam Smith

it was unfixed, variable rents responsive to market imperatives that in England stimulated the development of commodity production, the improvement of productivity, and self-sustaining economic development. In France, precisely because peasants typically enjoyed possession of land at fixed and nominal rents, no such stimulus existed. It was, in other words, not the opportunities afforded by the market but rather its imperatives that drove petty commodity producers to accumulate....The same process created a highly productive agriculture capable of sustaining a large population not engaged in agricultural production, but also an increasing propertyless mass that would constitute both a large wage-labour force and a domestic market for cheap consumer goods - a type of market with no historical precedent. This is the background to the formation of English industrial capitalism.--Ellen Meiksins Wood (1999 [2017] The Origin of Capitalism: A Longer view, 102-103

Meiksins Wood  (whose book I warmly recommend) relies on a distinction between commerce and capitalism. Commerce is historically ubiquitous; whereas capitalism originated once,  relatively recently in human history (in the English countryside). The former is characterized by voluntary exchanges in which people buy low and sell dear and occurs primarily in (what we may call) arbitrage opportunities. While societies in which commerce exists are durable, their growth potential is limited. The latter occurs from necessity, that is survival, in which in order to survive people engage in ever cheaper and more efficient production of their factor. Growth in capitalism is, in principle, open-ended bounded at some limit by Earth's resources (and internal instability). Crucially, in a capitalist system everybody, or all factors, experiences structural domination by the market: "compulsion lies at the heart of the new economic dynamic." (138)

Meiksins Wood explores the question of the origin of capitalism in order to (use her terminology) denaturalize it (cf. p. 74). In particular, she attacks the idea, which she repeatedly associates with Adam Smith and the phrase associated with him, 'truck, barter, and exchange' (11, 21, 28 75, 193), that there is an "economic man" whose shackles (e.g., feudalism, slavery, trade-protection, etc.) simply need to be undone in order for capitalism to emerge naturally. The idea behind this thought can be found in a famous passage in the Wealth of Nations (hereafter WN): "all systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord."

For Meiksins Wood, capitalism emerges, as it happens (but this is less important) under a certain version of feudalism, in which, and this is important, term-limit leases are introduced in agriculture and the price of these leases are determined by an estimation by surveyors of the value of that land after improvement (a key word) in light of prevailing, or at the least the abstract perception of prevailing, market conditions. I quote two representative passages: "As for the tenants, they were increasingly subject not only to direct pressures from landlords but also to market imperatives that compelled them to enhance their productivity." (100) And "We can watch the development of a new mentality by observing the landlord's surveyor as he computes the rental value of land on the basis of some more or less abstract principle of market value, and measures it explicitly against the actual rents being paid by customary tenants."  (101) These new kind of leases create the "rupture" (8) that generates the "laws of motion" associated with capitalism "that uniquely compel people to enter the market, to reinvest surpluses and to produce 'efficiently' by improving labour productivity - the laws of competition, profit maximization, and capital accumulation." (16) 

Some other time, perhaps, I'd like to discuss her fascinating treatment of Thomas More and, especially, Locke. And the role of the state in facilitating the growth of capitalism. For now I want to note that one need not be Marxist to appreciate her effort. Determining the historical origin and naire of capitalism is fascinating  and undoubtedly sheds some light on the possibilities, if any, of articulating alternatives or changes to it. This is so, even if one were to reject the commerce vs capitalism distinction. So, for example, if one has a liberal mindset, the relevant distinction is within capitalism: one between mercantilism and commerce (or liberalism). And the liberal is willing to grant that mercantilism is historically prior (albeit not, perhaps, conceptually). 

Above, I suggested that it is not unfair (to Meiksins Wood and Smith) to see Adam Smith as the proper target of Meiksins Wood's analysis. Even so, while reading her book I had the recurring thought that Smith had anticipated her in a key respect. This is not strange because as many authors have noted that despite the pin factory example, Smith seems almost ignorant of the industrial revolution (if he notices it at all), and focuses quite a bit of attention on land rents. For, in fact, Smith calls attention to the very leases singled out by Meiksins Wood, and he concludes his discussion of them: "Those laws and customs so favourable to the yeomanry, have perhaps contributed more to the present grandeur of England than all their boasted regulations of commerce taken together." (Wealth of Nations, 3.2.14, p. 392)

The three features Smith singles out are [i] "When such farmers have a lease for a term of years, they may sometimes find it for their interest to  lay out part of their capital in the further improvement of the farm; because they may sometimes expect to recover it, with a large profit, before the expiration of the lease." & [ii] since the time of Henry VII, the protection of the tenants'  value in improved land by "the action of ejectment" which allowed legal remedy of recovery against premature. (WN 392; in the next paragraph, Smith  notes that some such law was introduced in Scotland already in 1449) 

Before I get to the third feature, I want to stress this is not a side comment, in Smith's analysis. I offer two kinds of evidence. First, when Smith formally analyzes 'rents of land' in (WN 1.11) he describes variable, fixed-term leases of agricultural capitalism described by Meiksins Woods as the exemplary kind: landlords "In adjusting the terms of the lease, the landlord endeavours to leave him [the tennant] no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighbourhood. This is evidently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more." (WN 1.11.1, 160). Throughout the chapter, Smith makes clear that these leases drive productivity and that they represent a conflictual model (and, but I explore this some other time, in some ways even violate our sense of fairness and justice).

Second, Smith praises the Physiocrats (or "Oecenemists"), when in their plans to eliminate French famine and to have French agriculture catch up with English standards, they emulate British practices:  "it has been in consequence of their representations, accordingly, that the agriculture of France has been delivered from several of the oppressions which it  before laboured under. The term during which such a lease can be granted, as will be valid against every future purchaser or proprietor of the land, has been prolonged from nine to twenty-seven years. The antient provincial restraints upon the transportation of corn from one province of the kingdom to another, have been entirely taken away, and the liberty of exporting it to all foreign countries, has been established as the common law of the kingdom in all ordinary cases. (WN 4.9.38, 678);

So, Smith both knows that the paradigmatic cases of rent, which are crucial to the analytic core of his system, are themselves historically conditioned by institutional factors and not eternal pre-existing forms of exchange.* And it is this paradigmatic case that drives commercial development as he sees it. So, why has this not been emphasized (even missed by friends and critics of Smith). This gets me to the third point.

In explaining the downfall of feudalism and monastic estates, Smith emphasizes [iii] that foreign commerce developed vain, new tastes in landlords, who, in order, to increase revenue from their holdings set in motion the kinds of leases which form the backbone of what Meiksins Wood calls agricultural capitalism.  In fact, scholars love to quote the passage, which emphasizes the political effects, of the rise of agricultural capitalism:

The expensive vanity of the landlord made him willing to accept of this condition; and hence the origin of long leases...The tenants having in this manner become independent, and the retainers being dismissed, the great proprietors were no longer capable of interrupting the regular execution of justice, or of disturbing the peace of the country. Having sold their birth-right, not like Esau for a mess of pottage in time of hunger and necessity, but in the wantonness of plenty, for trinkets and baubles, fitter to be the play-things of children than the serious pursuits of men, they became as insignificant as any substantial burgher or tradesman in a city. A regular government was established in the country as well as in the city, nobody having sufficient power to disturb its operations in the one, any more than in the other. (WN 3.4.13-15, p. 421; elsewhere Smith makes the same claim about the demise of feudal, monastic landholding: "But this increase of rent could be got only by granting leases to their tenants, who thereby became in a great measure independent of them.")

Scholars and critics have loved to focus on the moral psychology and providential morality tale, even theodicy, immanent in [iii], which Smith himself attributes to Hume. But there is no doubt that Smith has the very same explanation [i-iii] of the origin of commerce as a social stage in the four stages of development as Meiksins Wood. (Well not entirely the same because she downplays the significance of the existence of foreign trade.) It is in what she calls the slow development of agricultural capitalism made possible by a certain kind of variable but secure lease that Smith sees the great source of England's wealth. These leases represent  the (improving) reproductive potential of the tenant and the discipline of the market-place. 

So, while I think it is correct to say that Smith also propagated the rhetorical seeds of the naturalized version of the origin of capitalism, he is crystal clear about the origin and significance of agricultural capitalism. None of the above is meant to deny that Meiksins Wood and Smith offer different interpretations of the wider moral significance of agricultural capitalism (Smith thinks it generates a new kind of interdependent independence; Meiksins Wood a new kind of structural domination), but about these matters some other time more.

 

On Social Distancing, David Hume, The Plague

There was one Wishart, a gentleman by birth, who employed himself with great zeal in preaching against the ancient superstitions, and began to give alarm to the clergy, who were justly terrified with the danger of some fatal revolution in religion. This man was celebrated for the purity of his morals, and for his extensive learning: But these praises cannot be much depended on; because, we know, that, among the reformers, severity of manners supplied the place of many virtues; and the age was in general so ignorant, that most of the priests in Scotland imagined the New Testament to be a composition of Luther's, and asserted that the Old alone was the word of God. But however the case may have stood with regard to those estimable qualities ascribed to Wishart, he was strongly possessed with the desire of innovation; and he enjoyed those talents, which qualified him for becoming a popular preacher, and for seizing the attention and affections of the multitude. The magistrates of Dundee, where he exercised his mission, were alarmed with his progress; and being unable or unwilling to treat him with rigour, they contented themselves with denying him the liberty of preaching, and with dismissing him the bounds of their jurisdiction. Wishart, moved with indignation, that they had dared to reject him, together with the word of God, menaced them, in imitation of the ancient prophets, with some imminent calamity; and he withdrew to the west country, where he daily encreased the number of his proselytes. Meanwhile, a plague broke out in Dundee; and all men exclaimed, that the town had drawn down the vengeance of Heaven by banishing the pious preacher, and that the pestilence would never cease, till they had made him atonement for their offence against him. No sooner did Wishart hear of this change in their disposition, than he returned to them, and made them a new tender of his doctrine: But lest he should spread the contagion by bringing multitudes together, he erected his pulpit on the top of a gate: The infected stood within; the others without. And the preacher failed not, in such a situation, to take advantage of the immediate terrors of the people, and to enforce his evangelical mission.--David Hume History of England, Vol. 3, ch 34.

After writing about (recall) Hume's use of Thucydides' analysis of the effects of the plague  in his rhetorically complicated essay, The Skeptic, I became curious about Hume's treatment of the plague more generally. The first thing to notice is that plagues recur regularly in the History of England (hereafter: the History). So, for example while commenting on the events of 1604, Hume writes, "The parliament was now ready to assemble, being so long delayed on account of the plague, which had broken out in London, and raged to such a degree, that above 30,000 persons are computed to have died of it in a year; though the city contained at that time little more than 150,000 inhabitants." (I return to this mortality rate below.)

In fact, plagues and the threat of plagues seems to have routinely delayed (see 1625), sometimes opportunistically (later in 1625 ),  or caused prorogation of parliament. In addition, plagues also routinely interfere in warmaking or tipping the balance to one side or another, especially when soldiers are not well fed/supplied (1563). And Hume has no doubt that this, in turn, can cause outbreaks in towns: "the infected army brought the plague with them into England, where it swept off great multitudes, particularly in the city of London. Above twenty thousand persons, there, died of it in one year."

A mortality rate of 20% seems high to us. But it's clear higher mortality rates were known to Hume. For example, the plague of 1665 "with such violence as to cut off, in a year, near 90,000 inhabitants." (And the "king was obliged to summon the parliament at Oxford.")  Hume clearly thought a mortality rate of a third was the average upper bound (this is on the great plague of 1349):

But a sudden damp was thrown over this festivity and triumph of the court of England, by a destructive pestilence, which invaded that kingdom as well as the rest of Europe; and is computed to have swept away near a third of the inhabitants in every country, which it attacked. It was probably more fatal in great cities than in the country; and above fifty thousand souls are said to have perished by it in London alone.e This malady first discovered itself in the north of Asia, was spread over all that country, made its progress from one end of Europe to the other, and sensibly depopulated every state through which it passed. So grievous a calamity, more than the pacific disposition of the princes, served to maintain and prolong the truce between France and England.

It's notable that Hume thinks that in densely packed urban areas, the mortality rates of plagues can be well above a third. Hume wryly implies that depopulation is not all bad because it reduces the warmaking capacity of feudal kings. 

Okay, let's turn to the vignette on George Wishart (burned at the stake in 1546 at St. Andrews) quoted above. Hume makes three very striking points: first, that in order to prevent the spread of infectious disease, social distancing was practiced even at an event that was subject of political and religious turmoil. (Dundee being a port city this should not surprise.) Second, Wishart's cause benefitted from successful prophecy. Third, the people treated the pest as a sign of bad policy and requiring collective atonement and a change of policy. (It's not impossible, of course, that Wishart's prophecy influenced them.)

It is tempting to treat the vignette as an instance of superstitious politics in which religious entrepreneurs exploit fear for innovative religious (and politically salient) ends. And undoubtedly this is one of Hume's (Epicurean) points. But he is also calling attention to another element. The men of Dundee clearly tacitly assume, at least in times of turbulence, a theory of political legitimacy in which both heaven and the citizenry evaluate rulership and, if they find it wanting or incompetent, can withhold consent. And while there are many sources for Hume's thought, this also echoes elements of the theory of the heavenly mandate of the Chinese (recall this post on Mencius and this one on Master Mo). As I noted before (here and here), Hume was almost certainly familiar with Mencius (but not Master Mo).

Okay, I could end here. But some of the tropes discussed in this post are combined in one more vignette. For, the plague was not eradicated by medicine, but by the way social distancing was made structural by architectural social planning:

The fire of London, though at that time a great calamity, has proved in the issue beneficial both to the city and the kingdom. The city was rebuilt in a very little time; and care was taken to make the streets wider and more regular than before. A discretionary power was assumed by the king to regulate the distribution of the buildings, and to forbid the use of lath and timber, the materials, of which the houses were formerly composed. The necessity was so urgent, and the occasion so extraordinary, that no exceptions were taken at an exercise of authority, which otherwise might have been deemed illegal. Had the king been enabled to carry his power still farther, and made the houses be rebuilt with perfect regularity, and entirely upon one plan; he had much contributed to the convenience, as well as embellishment of the city. Great advantages, however, have resulted from the alterations; though not carried to the full length. London became much more healthy after the fire. The plague, which used to break out with great fury twice or thrice every century, and indeed was always lurking in some corner or other of the city, has scarcely ever appeared since that calamity

The passage is notable for a number of reasons in addition to Hume's taste for regular, top-down city-planning (of the sort later associated with Paris and New York city's grid [and maybe he liked in then contemporary Edinburgh]). First, it connects to his theory of the state of exception: urgent necessity allows concentration of authority that is otherwise dangerous and illegal (see this treatment of Johan de Witt in the History and the parallel passage in "An Idea of Perfect Commonwealth").* Second, it shows that it is a mistake to treat Hume as a one-sided (proto Burkean/Hayekian) advocate of spontaneous, bottom up order. Third, he recognizes that centralizing authority has a positive role to play in facilitating not just public safety, but also (anticipating Smith) public health. Fourth, it can do so by what we would call regulating planning and zoning.

One may wonder whether the effect on eliminating the plague was the intention of the changes in city planning. It's not impossible Hume thinks it was an unintended effect. But as we have seen, given the significance Hume puts on widespread familiarity with the effectiveness social distancing, Hume thought it could if not intended, at least have been foreseeable. 

 

Some Elements of De Grouchy's Political Economy: On Physiocrats and Adam Smith

The kind of pressing need which is nearly always stronger than fear of revenge or remorse can also occur in the working classes, either because of a want of wage, or because of a temporary mismatch of their wage with the necessities of life; and even, it is most common among these people. For agriculture is, after all, the most productive of all professions for individuals, while for states, it is the unique source of real and lasting wealth.  

But now we have conclusive evidence that lack of wages or insufficient wages were caused nearly entirely by prohibitive laws hampering commerce and industry. Those laws, at the same time, were harming the well-being of all by collecting, little by little, in the hands of a few, wealth that then became in those hands a means of oppression, and which otherwise, through the free movement of interests would have remained if not equal, at least common to all. The unequal division of taxes at last overwhelmed the inferior class who, with no property and no liberty, was reduced to rely on fraud and would cheat remorselessly, because our conscience cannot survive when it is in chains. The incentive to behave unjustly, when it is based on need, is therefore extremely rare in the absence of bad laws, as even when they are present, this incentive is weak, its effects are the least widely spread, and it is to be feared the least.--Sophie de Grouchy, Letters on Sympathy, Letter 7, translated by Sandrine Berges (with minor modifications by me). 

The 1798 Letters on Sympathy (Letters) were attached to De Grouchy's translation of the last, posthumous edition of Smith's The  Theory of Moral Sentiments (TMS) and his Dissertation on the Origin of Languages. Sandrine Berges has argued persuasively that the Letters would have been written in the early 1790s and may well pre-date both De Grouchy's translation of TMS and her decision to publish them jointly. So, the relationship between Smith's TMS and De Grouchy's intentions for the Letter's is not straightforward. In this post I bracket that, and look at De Grouchy's relationship to Smith's political economy in light of the two quoted paragraphs. (The context is De Grouchy's philosophy of law and program for legal reform [recall here, here, and here.]) The larger claim is that a proper legal structure will generate fewer crimes; because good laws deter  individuals properly and do not creative incentives for more crimes and the system of "reasonable laws can both increase the personal desire to be just and strengthen the power of conscience, even towards such objects that are governed and punished by conscience alone." (Letter VIII)

I have discussed the quoted passage before a few weeks ago with an eye toward discussing De Grouchy's political analysis of trade barriers. (I apologize for overlap.) She closes the first quoted paragraph above with an embrace of a two-fold Physiocratic doctrine: "agriculture is, after all, (i) the most productive of all professions for individuals, while (ii) for states, it is the unique source of real and lasting wealth." Physiocracy was a distinctly french political economy, which aimed to redress the economic backwardness of French countryside, which had suffered at the mercantile-imperial policies pursued since Colbert. They promoted free trade, including in agricultural products, in order to enrich the agricultural sector and to reduce the  prevalence of famine. (In addition to Quesnay, Turgot and Rousseau developed importan themes of the school.) While Smith admired many Physiocrats personally and intellectually, and may be open to the idea that (i) is true in some circumstances, he would reject (ii). Smith devotes the whole of chapter IX of book 4 of Wealth of Nations to criticizing it.

In the second paragraph, she is responding to an implied critic, who might suggest that the lack of income of the poor is due to their laziness. In this she echoes (as Sam Fleischacker has argued) Smith. That the poor were deserving poor -- due to some defect in moral character -- was then (and still is, alas) a popular trope, especially among defenders of social hierarchy (be it on meritocratic or conservative grounds). De Grouchy notes that the lack of purchasing power among the poor is due to bad institutions. She believes that political economy has demonstrated this.  And when we look at her argument for this we see that she is only in a very qualified sense a Physiocrat.

For, her first claim --  "lack of wages or insufficient wages were caused nearly entirely by prohibitive laws hampering commerce and industry" -- is, in fact, as my sometime co-author, Spencer Pack, noticed in correspondence a Smithian criticism of physiocracy (which promoted laws that hampered "commerce and industry" and promoted laws that favored agriculture). The underlying idea is that laws that promote one sector of the economy depress effective total demand for labor and, thereby, depress wages. More important, such laws also depress growth (because "commerce and industry" contribute to that), which according to Smith is key to stimulate higher wages, and such laws stimulate inefficiency (because they favor investment in parts of the economy beyond the point of increasing returns). 

But the criticism of physiocratic policies does not exhaust her explanation for the existence of low wages. Her second criticism is an attack mercantile trade policies (which hamper "the free movement of interests"), which have regressive economic and political effects (that was the topic of my earlier post on this passage so won't repeat the argument). This is clearly indebted to Smith's Wealth of Nations, Book 4, chapters i-viii. 

Third, she points out that existing tax policies are regressive and so de facto reduce the effective demand that the wages of the working poor can support. For, a central feature of De Grouchy's analysis of feudalism is that under it the aristocratic rich (and clergy) are exempt from all kinds of taxes (so called 'privileges' and 'exemptions'). Because these rich benefit dis-proportionally from public goods like justice, defense, public works, and from economic policies which favor their interests, the feudal tax code effectively redistributes from the bottom to the top. (This is a point she returns to in Letter VIII.) This means that that the tax code undermines the effective demand of and helps to impoverish the working poor.*

I think a natural way to reconcile the first two paragraphs is as follows: she agreed with Physiocrats that agriculture was the unique source of real and lasting wealth for states. It would be interesting to learn how she evaluated the political economy of relatively small trading or industrializing nations. But she seems to h ave agreed with Smith that policies which favored one sector in the economy over another end up being a tax on the wages of the working poor (over the medium term). Even industrial/agricultural policy which is meant to promote long term wealth of the state may impoverish the working poor (then the vast majority of inhabitants). Such a policy is not just immoral (it hurts the vulnerable), but also undermines public order and public virtue (by encouraging lawlessness and undermining the proper functioning of conscience & reactive attitudes). So, here underlying idea seems to be (and this is the reconcialition I just promised) this: if one wants to achieve physiocratic ends in a humane and just way, one must follow a Smithian political economy.

On The Economist as Physician (again): Adam Smith's Purported Vitalism, and a methodological Caution in doing History of philosophy

The industry of Great Britain, instead of being accommodated to a great number of small markets, has been principally suited to one great market. Her commerce, instead of running in a great number of small channels, has been taught to run principally in one great channel. But the whole system of her industry and commerce has thereby been rendered less secure; the whole state of her body politick less healthful, than it otherwise would have been. In her present condition, Great Britain resembles one of those unwholesome bodies in which some of the vital parts are overgrown, and which, upon that account, are liable to many dangerous disorders scarce incident to those in which all the parts are more properly proportioned. A small stop in that great blood-vessel, which has been artificially swelled beyond its natural dimensions, and through which an unnatural proportion of the industry and commerce of the country has been forced to circulate, is very likely to bring on the most dangerous disorders upon the whole body politick. The expectation of a rupture with the colonies, accordingly, has struck the people of Great Britain with more terror than they ever felt for a Spanish armada, or a French invasion. (WN 4.7.C.43, 604)*

In  recent work, Tamas Demeter has suggested (see here) that Smith's appeal to the ‘body politick’ in Wealth of Nations (WN) is evidence of Smith’s vitalistic commitments.** The idea is that the science of the legislator is akin to a physician who offers policies restoring the body politick. There is no doubt that this image is important and an enduring one (recall) in the history of economics and its self-image. For example, at the height of the controversy over the Chicago Boys's entanglement with Pinochet,  Milton Friedman likened the economist as an expert to a physician (I have discussed that here).

Even so, I do not think Smith’s use of ‘body politick’ is a sign or evidence of his embrace of vitalistic conceptual framework. In fact, I'll suggest that Smith does not even embrace the idea of a body politick as his own position in the passage quoted above. (In fact, the passage offers a nice illustration of my claim that Smith relies on proportional reasoning throughout WN.) Before I get to the context of the passage let me note, that there are really three metaphors/tropes at work in the passage. First, we see Smith using hydrostatic/fluid tropes/metaphors for the size and extent of markets; second, he treats Britain’s whole economy (‘industry and commerce’) as a system; and third, he treats Britain’s political economy in terms of a body politick.

As it happens the first two tropes are indeed echt-Smithian. For, he uses the channel metaphor in a crucial passage in Book 2 of Wealth of Nations, where he is describing that the legislator should neither encourage exports nor domestic trade, but should leave capital free to find its own markets. I have described Smith's use of 'system' in my book, although it is notable that in WN he tends to reserve 'system' for intellectual edifices he opposes (the 'system of commerce' is mercantilism and the 'system of agriculture' is physiocracy), although he calls his own approach the liberal system. But what about "body politick''?

It is, indeed, notable that in the paragraphs WN 4.7.C.43-44, 604-6, Smith is very fond of using ‘body politick.’ (He uses the phrase three times.) But these passages are also exceptional; for Smith does not use the phrase elsewhere in his published writings. So, what needs explaining is why Smith uses these tropes here and not elsewhere.

The immediate textual context for these passages is Smith’s analysis of the potential effects of American independence then (1776) an object of intense policy concern. While Smith prefers a political settlement in which Britain and the Americas are turned into an Atlantic, parliamentary empire, the thrust of Smith’s argument is that colonial independence will not be bad for trade, but rather will help unwind some bad economic policies which are a consequence of Britain's mercantile ideology.

That is to say, when Smith looks at some of the bad political and immoral effects of physiocracy and, in the British context, especially, mercantilism he interprets these in terms of medical metaphors. So, for example, we find Petty using the phrase in his Tracts on Ireland;  Mandeville uses the phrase (mostly, but not always) earnestly in the Fable of the Bees; and Smith's great, unnamed rival, the Jacobite James Steuart, adopts the image in An Inquiry Into the Principles of Political Economy. That’s no surprise because these authors are the ones that embrace such metaphors and, thereby, (a) promote partial economic interests and (b) the idea that experts should offer (b*) tailored/detailed policy advice to politicians that is responsive to economic symptoms. But while Smith is no apostle of laissez faire, throughout his writings Smith rejects (a-b-b*). The science of the  legislator is supposed to prevent the meddling of the crafty politician.

I think a more natural reading of the passage that to Demeter suggests a vitalistic reading presents itself: Smith is critical of competing economic systems and he partially deploys their own leading illustrative metaphors against them in order to show that it is not only bad economics, but also generates bad politics. For, he is claiming that when/if one favors one economic interests over all the others then when that interest is threatened or undermined, the public will (perhaps correctly) be alarmed and so become rather unstable (terrified). That is to say, even on their own terms, mercantile policies create political fragility. Mercantilism systematically generates what modern philosophers call inductive risk and so, in Smith's terms, a wrong system.

Let me close with a methodological observation. Historians of ideas and literary scholars are much better than philosophers in paying attention to metaphors, similes, tropes, etc. (I assume this is a matter of interest and training.) In so doing, they are able to reveal important themes and resonances in texts we study. But there is always a risk that thinkers and projects are grouped together based on such metaphors/similes where one really ought to emphasize the differences. A familiar example of this is the use of 'Newtonian' in describing various projects/thinkers of the eighteenth century, or 'Rationalist'/'Empiricist' in the whole early modern period. Something similar has happened with 'vitalism,' which until recently was a niche scholarly topic. There is now a tendency to ascribe various vitalist projects to thinkers based on the presence of particular metaphors. But while it is probably not true that Smith  is merely mentioning the metaphor, he using it in a kind of practical reductio. So, I would urge scholars to pay attention to metaphors, similes, tropes, etc. (and, in light of my conflations above, even learn the difference among them!), but these do not settle the categorization of an author's perspective. That needs to be adjudicated on a case by case basis with due attention to their arguments, distinctions, and substantive positions.

On David Graeber Against Adam Smith

[1] Adam Smith…was determined to overturn the conventional wisdom of his day. Above all, [2] he objected to the notion that money was a creation of government. [3] In this, Smith was the intellectual heir of the Liberal tradition of philosophers like John Locke, who had argued that government begins in the need to protect private property and operated best when it tried to limit itself to that function. Smith expanded on the argument, insisting that [4] property, money and markets not only existed before political institutions but [4*] were the very foundation of human society. [5] It followed that insofar as government should play any role in monetary affairs, it should limit itself to guaranteeing the soundness of the currency. [6] It was only by making such an argument that he could insist that economics is itself a field of human inquiry with its own principles and laws-that is, as distinct from, say ethics or politics. Smith's argument is worth laying out in detail because it is, as I say, [7] the great founding myth of the discipline of economics.—David Graeber Debt: The first 5000 Years, 24-25 [numbers added for ease of discussion--ES]

Regular readers know I am an admirer of Graeber's Debt (recall here, here, and here). The book offers a bold vision in which geographically and temporally distant evidence is brought to bear on central issues in political economy. In addition, it alerted me to the significance of the revival of interest among anthropologists in what we may call culturally embedded and shaped human universals, and a willingness to avoid the easy relativism characteristic of much ethnography (and history). Today's post is a bit more nit-picky than my previous ones on Graeber and focuses on a subsidiary issue in the work. It's not an irrelevant issue, however, because Graeber's criticism of Smith frame the work.+ Okay, with that out of the way, let me get started.

The core of Graeber’s argument turns on an extended fictional description, we may call it a thought experiment, of the origin of currency out of the inconveniences of barter. The description of a tribe of “hunters or shepherds” (WN 1.2.3) is introduced at the start of the Wealth of Nations, by Smith to explain the origin and benefits of the division of labor. Graeber has good fun showing that this “faraway fantasy” seems “to be an amalgam of North American Indians and Central Asian pastoral nomads;” (25) the example exhibits “a tendency to slip from imaginary savages to small-town shopkeepers.” (26) As Graeber correctly notes, according the thought experiment, “everyone will inevitably start stockpiling something they figure that everyone else is likely to want. This has a paradoxical effect, because at a certain point, rather than making that commodity less valuable (since everyone already has some) it becomes more valuable (because it becomes, effectively, currency).” (26) After quoting Smith extensively, Graeber helpfully summarizes the upshot of  Smith’s narrative, “Using irregular metal ingots is easier than barter, but wouldn't standardizing the units-say, stamping pieces of metal with uniform designations guaranteeing weight and fineness, in different denominations-make things easier still? Clearly it would, and so was coinage born.” (27) Before we accuse Graeber of being unfair to Smith, he explicitly recognizes that Smith quickly turns to how standardized coinage into an instance of abuses of state power, which with its control over  the mind can defraud other creditors easily. So, there is ample evidence for Graeber’s claims [1-7] in Smith’s text.*

Now, an alert reader may well be suspicious of the fact that I am calling Smith’s treatment of the origin of money a “thought experiment.” My point in doing so is, indeed, to discount Smith’s commitment to the “faraway fantasy” as articulating the (hypothetical) origin of money and property. There are three mutually supporting reasons for this that draw on significant commitments of Smith articulated later in Wealth of Nations.

First, the whole set up of the thought experiment contradicts Smith’s four-stage stadial theory of the development of civilizations. In it, there is a natural progression from (i) a savage stage  of hunter-gathering-fishing; (ii) shepherding by nomadic tribes; (iii) sedentary agriculture; to (iv) commercial society characterized by trading. (WN 5.1.a.3–8) These stages are akin to Weberian ideal types in which the whole order and practices of a society are characterized by its predominant economic organization. To be sure, the four stages do not necessarily follow each other and they can succeed each other out of sequence. Smith also allows that in the territory of a large state the stages coincide. As Graeber notes, it is a very peculiar that Smith seems to mix many different kinds of societies in his example.  And a critic of Smith may see in the contradiction outlined in this paragraph as a problem for Smith; my talk of 'a thought experiment' may seem overly charitable using later passages of Wealth of Nations to interpret earlier ones. But it is worth nothing that Smith had already called attention to his embrace of something like a stadial theory in the Introduction of his work (where he draws a prominent contrast between the misery of "savage nations" of fishers and hunters and the "abundance" of commercial society) and (less prominently) in chapter 1 ("progress of society.")

Now Smith does claim that some medium of exchange is adopted by "every prudent man in every period of society, after the first establishment of the division of labor." (WN. 1.4.2) Of course, not  everybody is prudent, but even so Smith is here committed to the claim that some medium(s) of exchange is likely to exist in every society. This matters because Smith can be read as claiming that government originates in the (second) shepherding stage where the rich cattle/herd owners institute government in order to defend themselves against the poor as a kind of a protection racket. (WN 5.1.a.15) ISo, that Smith would agree with Locke that there is property and money prior to the formation of government. While Smith is not a contractarian, in this sense he is a Lockean (as I have also argued). And Graeber is surely right in thinking that for much of human history government is really an instrument of the rich and powerful to subjugate the poor and powerless.

Second, however, when Smith address the question of the origin of government and property, Smith does not claim that money and property must proceed government. Rather he claims that "Among nations of hunters," [the first stage], "as there is scarce any property, or at least none that exceeds the value of two or three days’ labour, so there is seldom any established magistrate or any regular administration of justice." (WN 5.1.b.2) So, while Smith thinks it is likely that property will precede the existence of government, he does not think property must precede government. Rather, he thinks that most of the time people in the hunting stage are so poor and relatively equal, there is little reason to expect the rise of a regular government in it. (That is, he allows the existence of some authority and hierarchy, but not full blooded government.) He makes the exact same point at the end of the very long paragraph (which articulates his narrative of the origins of government): "The acquisition of valuable and extensive property [in a shepherding stage], therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days labour, civil government is not so necessary."

So, Smith's position is that in the conditions akin to the Lockean state of nature, government is possible. But this means that for Smith it is explicitly and entirely possible that government can precede the existence of property and the development of a medium of exchange. Rather than seeing a contradiction in two strands of Wealth of Nations, it makes a lot more sense to see that by Smith's lights, the thought experiment does not entail anything about the origin of the institution of adopting a medium of exchange and (later) an official government approved currency. Rather the thought experiment is meant to illustrate  why such institutions (medium of exchange/currency, etc.) would be (to speak informally) more welfare enhancing (Graeber uses 'efficient' in his summary of Smith--that's fine, too, if one recognizes it is an informal notion). This is why it shows up in all societies. Of course, Graeber may legitimately claim that Smith's stadial theory is out of date. But that does not touch upon their present debate.

I promised three reasons. For the third, we need to move back to the very first chapter of Wealth of Nations, which precedes the thought example that Graeber criticizes and may, thus, be naively presupposed in its  interpretation. I have in mind this famous passage:

Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow citizens. (WN 1.2.2)

Now, the main point here is that trade presupposes mutual interest. And nothing I'll say will undercut that. In addition, as Sam Fleischacker has emphasized, Smith is emphasizing here the significance  of mutual persuasion in any trade. It is worth asking what happens to Smith's framework when markets become anonymous, but that's for another time.** However, for present purposes the key point is the final claim--that exchange and begging take place among citizens and so within a political framework. The significance of Smith's point may be missed if one forgets that in the eighteenth century there was an extremely limited (male) franchise based on wealth. So, while Smith does not reduce market and begging relations to their political context, he does not ignore these either.

Let me sum up because I have gone on long enough. Where does this leave Graeber's seven theses? Leaving aside [1], which is irrelevant for present purposes, we have undermined [1],[4] and [6]. I think Graeber is right about [2]; it's clear Smith thinks that money need not be the creation of government. But I don't think Graeber can show that Smith thinks money is never the creation of government.

With regard to [3], I have shown that Graeber is right that government generally (! begins in the need to protect private property (and in this sense is a Lockean). But it does not follow that Smith thinks government should limit itself to this task. As the one-time Chicago economists, Jacob Viner and George Stigler already showed, Smith's task for government are rather expansive, including  (inter alia) the maintenance of a standing arm and the martial spirit of nation (WN 5.1.f.60) the seting up of roads, tolls, canals (WN 5.1.d.5) primarily to be paid for by progressive taxes on wealthy; the maintenance of public health (WN 5.1.f.60); provide for public education for the poor (WN 5.1.f.55); and even imposition of prudential building codes to prevent spread of fire (WN 2.2.94, while defending his financial regulation).

With regard to [5], it is possible that Graeber is right that for Smith "government should play any role in monetary affairs, it should limit itself to guaranteeing the soundness of the currency." I don't think this is right. If anything, much of Book 2 of Wealth of Nations is a critical treatment of the financial sector--Smith thought it should be regulated carefully including the details of money creation by banks (but about that see my book). It is also possible, of course, that Graeber is right about [7]; that regardless of Smith's own views, Smith is the source of a myth that became constitutive of the way economics ended up understanding itself and its object of study and the nature of its knowledge. I leave  that question for another day.++

 

On the Civilized vs Savages, reconsidered.

Is it possible, without shuddering with horror, to read in history of the barbarous and useless torments that were coolly invented and executed by men who were called sages? Who does not tremble at the thoughts of thousands of wretches, whom their misery, either caused or tolerated by the laws which favoured the few and outraged the many, had forced in despair to return to a state of nature; or accused of impossible crimes, the fabric of ignorance and superstition; or guilty only of having been faithful to their own principles; who, I say, can, without horror, think of their being torn to pieces with slow and studied barbarity, by men endowed with the same passions and the same feelings? A delightful spectacle to a fanatic multitude!...

The punishment of death is pernicious to soci­ety, from the example of barbarity it affords. If the passions, or necessity of war, have taught men to shed the blood of their follow creatures, the laws which are intended to moderate the ferocity of mankind, should not increase it by examples if barbarity, the more horrible, as this punish­ment is usually attended with formal pngeantry. Is it not absurd, that the laws, which detect and punish homicide, should, in order to prevent mur­der, publicly commit murder themselves? Cesare Bonesana di Beccaria [1764] An Essay on Crimes and Punishment (96-97 & 104-105).

I had seen the name Beccaria mentioned in the context of predecessors to Bentham's utilitarianism and legal reform. And I recalled (with the help of Google) that in Discipline and Punishment, Foucault mentioned him as an exemplar of the advocate of a new political economy of punishment (more efficient, but also more unbounded, etc.); in fact, Foucault uses the very same passage I quote above to treat Beccaria as an advocate of the 'principle of moderation.' I had never read his Essay. But because I am preparing (with Sandrine Berges) an edition of Sophie de Grouchy's Letters on Sympathy, which offers a program of legal and penal reform, I decided to read Beccaria. His writing is forceful, with a vigorous sense of outrage and drama; rather than focusing on legal minutiae, he writes in the vernacular of an eighteenth century philosophe, who is clearly familiar with Hobbes, Montesquieu, Helvetius, Diderot, and if not Hume then Condillac or Adam Smith.  So, one is constantly hearing echoes of works already familiar, but applied and given vivacity, if I may, to urgent and existential matters of life and death.

The passages above are parts of his attacks on torture and the death penalty. (Amongst other things, he is also against anonymous accusations, and he favors a clear separation between judge and state prosecutor.) He is uncompromising against torture. And the only exception he grudgingly grants is one during the state of emergency: "it can only be necessary when a nation is on the verge of recovering or losing its liberty; or in times of absolute anarchy, when the disorders themselves hold the place of laws." (It's grudging because he relentlessly focuses on likely abuses of any law.)

As an aside, and to forestall misunderstanding, Beccaria's point is not to promote quiet, capital punishment without spectacle. For such punishment would defeat the purpose of punishment which is almost entirely meant to deter other people's future crimes. And so any punishment needs to be visible to the rest of society. This leads him, in fact, to justify a form of imprisonment that he (quite rightly) calls slavery--the prisoner needs to be seen to work. (His moral psychology justifying this is clearly indebted to Hume or a Humean.) 

Now, as regular readers know I am rather ambivalent (see here), and often opposed to the savage/barbarous vs civilized distinction. Historically, it helps justify colonial projects (from Ireland to the rest of the world) in terms of a paternalistic and violent extension of civilization.The distinction is not merely of historical interest: to this day it is re-activated by moralists to help justify belligerent acts against (let's stipulate for the sake of argument, hostile) 'non-western' forces.* 

For Beccaria, there are two kinds of savage/barbarous conditions. One is the state of nature, which he sometimes calls 'anarchy' or 'state of independence.' For him we escape the state of nature by being under authority of tolerable law or by way of contract. The conditions of this social contract deviate interestingly from Hobbes's account (which clearly inspired it)--about which some other time more. But, and this is the second kind of barbarism, a lot of existing or past states are de facto wholly barbarous or partially barbarous/savage. So, for example, while there are clear, non-trivial republican strains in his thought, he writes about the "Romans" (while praising them for their abhorrence of torturing citizens), that they were "in many respects barbarous, and whose savage virtue has been too much admired." (59)

That is to say, in Beccaria's hands the opposition between barbarism vs (law-governed) civilization is brought home and applied to Europe. And Europe comes out looking very barbarous which incentivizes criminals to become more violent and criminal and, thereby, (note the first passage above) returns to the state of nature. (So, for Beccaria, the state of nature is, as Spinoza suggests, possible within advanced society.) This, in turn, only benefits rulers who can justify further repression and savagery (etc.)

In fact, incentives are crucial to his general approach. I'll offer two examples of this: first, in his treatment of credibility of evidence, he writes: "the credibility of his evidence will be in proportion as he is interested in declar­ing or concealing the truth. Hence it appears,  how frivolous is the reasoning of those, who reject the testimony of women on account of their weakness; how puerile it is, not to admit the evidence of those who are under sentence of death, because they are dead in law; and how irrational, to exclude persons branded with infamy: for in all these cases they ought to be credited, when they have no interest in giving false testimony." (48) Witnesses are crucial to his general penal reform because he attacks oaths, torture, and duels as means toward establishing the truth in law-courts. The inclusion of women as credible witnesses is especially notable, because in general Beccaria is a defender of a modernized patriarchy. By this I mean, that he uses republican and social contract reasoning to attack the paternal tyranny over the household in order to create masculine equality (which excludes women).**

Second, there is a passage, that echoes an extremely familiar Machiavellian trope adopted by a whole variety of eighteenth century writers from Hume to Madison (recall Hirschman [who misses, I think, the significance of Beccaria]), "by opposing one passion to another, and opinion to opinion, a wise legislator puts an end to the admiration of the populace." (84)

Let me wrap up. Beccaria holds up a mirror to his European readers, who think of themselves as progressive, embracing mathematical sciences, and enlightened. What he shows is savage barbarism. But unlike say, Swift or Sade, he does so not to undermine the self-conception of the project of enlightened humanity (in different ways), but to encourage his readers to adopt reforms that may help the mirrored reality live up to its professed ideals.  

 

On the role of Systematicity in an Impure Theory of a (Pluralistic) Liberalism worth Having

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it.--Adam Smith (1790) The Theory of Moral Sentiments

The quoted passage from TMS is one of the epigraphs to Jacob T. Levy's (2015) Rationalism, Pluralism & Freedom (RPF). The other is to a passage from Mill's (1862) Centralization, in which Mill warns against local despotism. Levy's inspiring book, which is both a mitigated defense of the significance of intermediaries to a liberalism worth having as well as a fascinating re-visionary history of liberalism* in which the tradition of reflection on the so-called 'ancient constitution' is an independent stream, is framed by the often competing dangers and aspirations emanating from the so-called 'man of system' and the 'bussybodies.' The man of system represents the rationalistic impulse that in the name of justice and efficiency tends toward homogenization, (Weberian) rationalization, and a controlling, strong central government suspicious of local powers. Levy's discussion is useful to the scholar because he nicely brings out the ways in which Smith is clearly indebted to Montesquieu (and joins him in defending the significance of intermediaries) and especially astute about the ways Smith diagnoses the dangers of both central power(s) and local elites. Levy's book is so good that I regret not reading it before I completed my own, while  recognizing that if I had down so (it appeared when mine was under review) it would have caused lengthy delay.+

Before I get to a critical digression, I want to make two preliminary comments. One personal pleasure in reading Levy's book is that it provides a nice background to Levy's more general views familiar to regular readers of his essays (which often inspire me to figure out what I think); Levy has that rare capacity to speak to the political moment in an intellectual fashion with a distinctive, moral compass without falling victim to partisanship. While reading the book I felt I was visiting a friend in his home environment showing me his study and, thereby, allowing me to connect some dots about him. Second, Levy's book is self-consciously a contribution to impure political philosophy (a term borrowed from Williams). It is, thus, worth reflecting on RPF as an exemplar in that genre (not unlike Sabl's Hume's Politics). Some other time, I'll say more about Levy's contribution to the nature of such impure theory. What follows is a kind of indirect comment on that topic, too.

As noted above, Levy draws generous inspiration from Smith's critique of systematicity. He returns (66) to the passage from TMS quoted at the top of this post, and quotes it (alongside Montesquieu) more fully:

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. 

Levy rightly resists the hungry temptation (familiar from those inspired by Hayek) to turn Smith into a mere critic of social planning. Smith here is defending not just gradualism, but also the political dangers in trying to eliminate intermediaries, that is, "the great interests." In the paragraphs just before the one that Levy quotes, Smith discusses these in terms of "the great orders;" the core upshot of that discussion can be summarized as follows, "The man whose public spirit is prompted altogether by humanity and benevolence, will respect the established powers and privileges even of individuals, and still more those of the great orders and societies, into which the state is divided" (emphasis added). As Levy correctly notes Smith's political theory is both a great critique of the moral abuses of intermediaries (including guilds, imperialistic monopolies, state religions, etc.) and aims at defending the rights of these. Social intermediaries are worth preserving and are, in fact, not simply reducible to the the desires and interests of those that compose them (recall)--they have a principle of motion of their their own (that is also resistant to outside imposition).** While I would emphasize more (than Levy does) the significance of aesthetics (apparent "beauty") to the "madness" of fanaticism that is a danger in Smith's "man of system," so far so good.

But Levy's analysis of Smith and the nature of systems is also partial. I say this not to deny that for Smith "love of system" tends to generate not just fanaticism or expert-overconfidence. But that Levy omits something important starts to become clear if we also quote the closing sentence of the paragraph, which Levy fails omits:

If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

Here we see that what Smith is after, and this is something that Levy explicitly recognizes  (when discussing Montesquieu): that social reformers are more likely to succeed, and less likely to generate dangerous, political "disorder," if their reforms work with the "grain" of society, that is, the interests and commitments of intermediaries (and individuals). Social reform is not left to the market or only to bottom up processes; it can be influenced and guided by the center if it (the center) is capable of understanding its own limitations and taking into account the interests and aims of social actors.

In addition, the center must be guided by a system. For Smith claims, in the first sentence of the next paragraph, that “some general, and even systematical, idea of the perfection of policy and law, may no doubt be necessary for directing the views of the statesman.” Such a system allows it to avoid acting in ad hoc fashion and also be able to grasp which compromises are worth accepting and which undermine its moral and political aims. That is, a system is required to guide (not control) long-term planning and to allow trade-offs to be modeled and foreseen. For, while “the judgments of mankind [can be] perverted by wrong systems,” Smith actually explicitly defends systematicity--this should come as no surprise because throughout his life, Smith called attention to (a) the systematicity of his own works (say, here and here) and (b) he refers to his own project as a "system of natural liberty." More important, Smith thought that (c) a proper, (aestheticized) “love of system” can activate the most “noble and magnificent” political and philanthropic projects and the right sort of “public spirit.” In particular, a system-inspired public spirit can even compensate for an absence of the love of humanity or “pure sympathy” in a political agent.++ (Smith is often treated as a sentimentalist, but throughout his writings rules and the reflections of reason can compensate for lack of feeling.) For the a system that can or does generate such “public welfare” is a system worth having. (An important element in a right sort of system is Smith's concern to address inductive risk, but about that another time more.)

Let me wrap up. Levy's book attunes the reader to the the frequent dissonances between the "freedom to associate"" and the "freedom within (or from) group life."  (I write "frequent" because Levy is is equally astute about the ways such freedoms can reinforce each other.) Levy is, however, a skeptic about the ability of a normative and impure system that can do full justice to such dissonances. I think this is due to the fact that the most influential systems we have either rationalize these away (toward one side, often favoring the state or justice at the expense of other important liberal commitments) or contain non-trivial (Rawlsian) "wobbles" from  the point of view of coherence and reason. But what makes Smith especially notable today, or so I argue in my book, is that he is an exemplar in offering such a system without the (one-sided) rationalization or the wobble. That's not because Smith squares a theoretical circle (overlooked by Levy and the tradition), but because he embraces deviations from reason and coherence as an endemic feature of social life and internalizes it in his system (or so I argue). This generates its own tensions, of course, but about these another time.

A note on Hume, Kant and Spinoza on Socratic Political Theory (or on the roots of Public Choice Theory)

All absolute governments must very much depend on the administration; and this is one of the great inconveniences attending that form of government. But a republican and free government would be an obvious absurdity, if the particular checks and controuls, provided by the constitution, had really no influence, and made it not the interest, even of bad men, to act for the public good. Such is the intention of these forms of government, and such is their real effect, where they are wisely constituted: As on the other hand, they are the source of all disorder, and of the blackest crimes, where either skill or honesty has been wanting in their original frame and institution.

I.III.4

So great is the force of laws, and of particular forms of government, and so little dependence have they on the humours° and tempers of men, that consequences almost as general and certain may sometimes be deduced from them, as any which the mathematical sciences afford us.--David Hume "That Politics May be Reduced to a Science."

At first glance, Hume is defending here a species of republicanism. But Hume's lines here were also taken to be the founding text of a normative, research program of institutional design ('wise constitution'), which takes itself to create institutions in which the incentives are such that it is in the self-interest of even bad people to promote the "public good" including ones distinct from Hume's republican commitments. This project is historically associated with a careful reader of Hume, Madison, who wrote that "if men were angels, no government would be necessary" (which echoes Spinoza's Political Treatise 6.3: "if human nature were so constituted, that men most desired what is most useful, no art would be needed to produce concord")+ and philosophically with a range of thinkers from Kant's race of "devils" all the way to Buchanan and Tullock's public choice theory. As Kant puts it in Perpetual Peace:

The problem of organizing a state, however hard it may seem, can be solved even for a race of devils, if only they are intelligent. The problem is: "Given a multitude of rational beings requiring universal laws for their preservation, but each of whom is secretly inclined to exempt himself from them, to establish a constitution in such a way that, although their private intentions conflict, they check each other, with the result that their public conduct is the same as if they had no such intentions."

A problem like this must be capable of solution; it does not require that we know how to attain the moral improvement of men but only that we should know the mechanism of nature in order to use it on men, organizing the conflict of the hostile intentions present in a people in such a way that they must compel themselves to submit to coercive laws. Thus a state of peace is established in which laws have force.

In fact, Hume need not be taken to be defending republicanism. All he is saying that republicanism would be an absurdity, in the sense of an internal practical contradiction, if one assumed that "the particular checks and controuls, provided by the constitution, had really no influence." That is, Hume is saying that even republicanism -- a normative program -- presupposes that it is empirically true that humans are responsive to systematic incentives and interests. (I leave aside here, to what degree and in what way Hume actually embraced a normative/empirical distinction.)

In the right contexts this empirical fact, that humans are responsive to systematic incentives and interests, allows one to deduce "consequences almost as general and certain" as "any which the mathematical sciences afford us." Here Hume connects his program for political science to his great program for the "science of Man" in the Introduction of the Treatise:

We must therefore glean up our experiments in this science from a cautious observation of human life, and take them as they appear in the common course of the world, by men’s behaviour in company, in affairs, and in their pleasures. Where experiments of this kind are judiciously collected and compared, we may hope to establish on them a science, which will not be inferior in certainty, and will be much superior in utility to any other of human comprehension.

Throughout Hume's philosophy he argues that his science is foundational to and more useful than the other (mathematical-empirical) sciences and just as (epistemically) secure.* So, given the tight fit between Hume's "That Politics May be Reduced to a Science" and Hume's Treatise, it stands to reason that this essay gives us a glimpse of "the examination of...politics...which will compleat" his Treatise (as the Advertisement to the Treatise promised.).

So far so good. Now consider the opening passage from Spinoza's (posthumous) Political Treatise (in the old Gosset translation with minor corrections):

3. And, certainly, I am fully persuaded that experience has revealed all conceivable sorts of commonwealth, which are consistent with men's living in concord [homines concorditer vivant], and likewise the means by which the multitude may be directed [multitudo dirigi] or kept within fixed bounds. So that I do not believe that we can by meditation discover in this matter anything not yet tried and ascertained, which shall be consistent with experience or practice. For men are so situated, that they cannot live without some general law. But general laws and public affairs are ordained and managed by men of the utmost acuteness, or, if you like, of great cunning or craft. And so it is hardly credible, that we should be able to conceive of anything serviceable to a general society, that occasion or chance has not offered, or that men, intent upon their common affairs, and seeking their own safety, have not seen for themselves.

4. Therefore, on applying my mind to politics, I used certain and undoubted reason to offer demonstratios [certa et indubitata ratione demonstrare,], or to deduce from the very condition of human nature, not what is new and unheard of, but only such things as agree best with practice. And that I might investigate the subject-matter of this science with the same free spirit [animi libertate] as we generally use in mathematics, I have laboured carefully, not to mock, lament, or execrate, but to understand human actions; and to this end I have looked upon passions, such as love, hatred, anger, envy, ambition, pity, and the other perturbations of the mind, not in the light of vices of human nature, but as properties, just as pertinent to it, as are heat, cold, storm, thunder, and the like to the nature of the atmosphere, which phenomena, though inconvenient, are yet necessary, and have fixed causes, by means of which we endeavour to understand their nature, and the mind has just as much pleasure in viewing them aright, as in knowing such things as flatter the senses.

(Reversing Spinoza order of presentation we may say that) Spinoza self-consciously sets out to offer a pleasing science of man. In this causal science there is no room for moralizing about original sin and other purported defects of human nature. Rather, Spinoza treats the passions as (hidden causal) properties of human nature from which effects can be deduced. Spinoza denies that his conclusions are original; rather they conform to existing practice. While Spinoza does not explicitly say his conclusions are as secure as other natural sciences, his choice of contrast class (meteorology) suggests he is not setting the bar beyond reach.

In fact, (moving to the third paragraph) Spinoza is explicit that he is merely conforming to, and perhaps systematizing, practical know-how [praxi -- a term that he repeats through the passage] available to (use Mandeville's term) the crafty politician,  who according to Spinoza knows how to direct the multitude. (Unlike Adam Smith, who distrusted such craftsmanship, Hume praises it--recall his high praise of De Witt's ability to "manage" the Dutch and maintain a "spirit of union" or concord.] Spinoza explicitly draws on comparative institutional practices found in [historical] experience [experientiam omnia civitatum genera]. I have labeled such comparative  institutional analysis, Socratic Political Theory (recall; but see, especially, this post on Ursula Le Guin and this one on Thomas More.) Such analysis is rooted in empirical experience, but itself normative (because focused on the "public good" -- Spinoza puts it in terms of "living in concord" -- and developed around, what Weber later called, ideal types of particular institution frameworks).

As an aside, I have intimated here (and elsewhere) that Hume that Spinoza would have read Spinoza's Political Treatise. This does not preclude the reality that  Hume and Spinoza read the same sources (Machiavelli, especially, but also More and Bacon).

Let me wrap up. In the title of this post, and above I noted that Buchanan (a student of Knight) and Tullock's public choice theory is one of the modern heirs of this (Spinoza-Humean) Socratic political theory.** This fact is less surprising if we remember that as late as 1964 the reality of Socratic political theory kind was explicitly presupposed -- in the context of cold war rivalry -- by the Chicago economist (and also a student of Knight), George Stigler, and made conceptually possible the proper competence of the economist as such; "consists in understanding how an economic system works under alternative institutional frameworks." (Presidential Address to the American Economics Association; recall this post.) Needless to say, the contemporary mainstream economist lacks such competence nor wishes for it. If Stigler is correct, then in our life-time, a Kuhn-loss has taken place in front of our eyes. That is to say, public choice represents a vision for political economy that is rooted in older intellectual traditions. How to sort the traditional elements from the modern innovations is the topic for a series of future posts.

 

 

 

Hume's Partial Critique of Rational Choice Theory (and Expert Overconfidence)

Though de Wit’s intelligence in foreign courts was not equal to the vigilance of his domestic administration, he had, long before, received many surmises of this fatal confederacy; but he prepared not for defence, so early or with such industry, as the danger required. A union of England with France was evidently, he saw, destructive to the interests of the former kingdom; and therefore, overlooking or ignorant of the humours and secret views of Charles, he concluded it impossible, that such pernicious projects could ever really be carried into execution. Secure in this fallacious reasoning, he allowed the republic to remain too long in that defenceless situation, into which many concurring accidents had conspired to throw her.--David Hume The History of England, Vol. 6, 257-8; [Emphasis added.]

I have discussed the passage before (recall here; below I explain why I return to it). In particular, De Witt’s response to the threat posed by England and France is treated as an instance of rational over-confidence. De Witt, who elsewhere in the History is treated as a magnanimous, philosopher-king by Hume, treats his country's (likely) enemies as rational, calculating agents--ones that understand their national self-interests properly and that will act accordingly (in the context of a balance of power). In the grip of a model of reality, De Witt treats something as impossible that he ought to prepare for. De Witt is, thus, an exemplar of an intellectual that mistakes his own view of the world for reality.

I use the language of ‘model’ here for two reasons: first, because Hume attributes De Witt’s mistake in his evaluation of Charles not to a lack of access to relevant data (he “received many surmises”), but to a systematic way of seeing the world based on agents’ objective interests from which actions can be inferred (“reasoning”). Second, the (implicit) causal model governs what is taken to be possible or not.

Of course, the reasoning is not fallacious within the model-universe, but it is objectively fallacious. In earlier work, I treated Hume's critical representation of De Witt as a reductio, and instance, of the limitations of mathematical, Cartesian political philosophy. For, first, we know that Hume was rather critical of applications of mathematics (see, especially, Treatise 1.4.1-2; and this piece for scholarship or this video for larger context.) Second, De Witt was one of the leading mathematicians of his day, trained in the Cartesian milieu of Van Schooten in Leiden (which included Huygens and Hudde). And Hume explicitly calls attention to De Witt's practical skill in applied or mixed mathematics: "even made improvements in some parts of pilotage [sic] and sailing, beyond what men expert in those arts had ever been able to attain." (Piloting is traditionally a mathematical topic.)

By contrast, Hume explains that De Witt falls short in his knowledge "of the humours and secret views of" Charles II. That is, De Witt failed to understand the character or physico-psychological make up the British King; De Witt lacks (Humean) knowledge of human nature. For, it is a core tenet of Hume's theory of political science, that in domestic affairs, in the aggregate, people become predictable (in the manner of, say, public choice theory) due to the (primarily) institutional incentives and constraints they face: "soo great is the force of laws, and of particular forms of government, and so little dependence have they on the humours° and tempers of men, that consequences almost as general and certain may sometimes be deduced from them as any which the mathematical sciences afford ." (That Politics May be Reduced to a Science.) [The last point is an echo of Spinoza's Political Treatise.] By contrast, international relations are less predictable because they are influenced by the individual whims and characters ("humours and tempers") of rulers.

Before I explain why I started to change my mind about the nature of Hume's target here, first an aside: when I first started blogging and presenting on Hume's (and Spinoza's) treatment of the fall of the De Witt brothers, the great Dutch scholar, Wiep van Bunge , asked me if I had any idea who the source of Hume's treatment of De Witt might be. For, while it's clear that Hume carefully read Temple, his analysis of De Witt clearly draws on material not in Temple. I had not done my home-work; so finding this source was put on my (rather long) scholarly-to-do-list.

Now a while ago a sagacious, anonymous referee had questioned my treatment of this passage. In particular, the referee found the connection with Cartesianism far-fetched. (Admittedly, in the earlier version of the paper, I had not linked the passage to Hume's anti-mathematicism and I had not made explicit that piloting is mathematical.)* But in looking at Hume's treatment again, it's clear that what he is attacking is one-sided and overzealous application of what we would rational choice theory [RTC] by an agent in conditions of uncertainty. For, in Hume's hands De Witt treats others as rationally and correctly following their national self-interests. But this is, of course, not a doctrine especially associated with Descartes (if anything contemporary rational choice theorists tend to treat Hobbes and Hume as the great early modern RCT heroes).**

Rather, the idea that agents, including international agents, follow their own interest is associated with De La Court brothers themselves often coupled with De Witt. (For a nice accessible treatment of De La Courts, see this book by Arthur Weststeijn.) So, yesterday I started to look for English (and French) translations of De La Court's Interest of Holland that may be known to Hume. In the age of Google this is easy, and I learned that there is a 1746 translation which has -- you can  imagine my joy -- a biographical sketch of the De Witt brothers attached to it in the prefatory material. There we find the famous anecdote about De Witt's pilotage (and mathematical) skills:

It was the received doctrine of the seamen, that there were but ten points of the compass from which, if the wind blew, ships could go out, and that twenty-two were against them; but the pensionary de Witt, as he was a great mathematician, soon discovered the falsity of this notion, and that there were in reality no less than twenty eight points in their favour, and but four that could hinder them from going out, viz. W. NW. by W. NW. NW. by N. The pilots however perceiving that he reckoned upon all the passages, declared positively that in the Spaniards-gat there was not above ten or twelve feet water, and that therefore it was...impossible to carry out large ships by that passage. Their assertion did not satisfy the pensionary, he went through it in a long-boat in person at low water, and without trusting the lead out of his hand, found it at least twenty foot deep every where, and free from those incumbrances which the pilots had hitherto talked of. The pensionary therefore engaged that himself and M. van Haaren would carry out the two greatest ships in the fleet through the Spaniards-gat with the wind at SSW, which he performed on the 16th of August 1665, and the greatest part of the fleet followed him without the least accident, since which that passage has been called, and very deservedly, Witts-diepc. "MEMOIRS OF Cornelius de Witt and John de Witt," prefaced to Pieter de la Court, The True Interest and Political Maxims, of the Republic of Holland [1662] translated (London: John Campbell, Esq, 1746).

It's not impossible that this biography of the De Witt brothers was Hume's source. Because it, too (recall), emphasizes Johan De Witt's magnanimity (and his modesty about his great skill in mathematics):

But amongst all the great and truly amiable qualities with which the mind of this extraordinary person was adorned, his modesty and his magnanimity deserve particular notice. The first was so settled and so unfeigned, that he took more pains to conceal his abilities, than a vain man would have done to have displayed them; of which we have a remarkable instance, in his engaging Francis Schooten to publish his Elementa curvarum linearum, one of the deepest books in mathematics that had in those days appeared, and which was written by our author at twenty-three. As to his greatness of mind, I will not pretend to give any single instance of it, since every fact that will be taken notice of in these memoirs may be consider’d as a proof of it.

Even so, Hume did not follow this biography slavishly. Because the English biography does not treat de Witt as in the grip of RTC. Rather according to the English biography, De Witt was simply mistaken about because misled by his enemies: "though he was not entirely blinded by the delusive representations of France and England, yet it is certain that it was a long time before he perceived in how great danger the republic stood." So, on  this biography's account the source of De Witt's delusion is not RTC, but his mistaken reliance on his friendship with Temple: "The regard he had for Sir William Temple; and his confidence in the declarations made by him, kept this statesman long in suspence, and the great consideration he had for the French embassador contributed not a little to the keeping him fixed in these sentiments, notwithstanding the strong appearance there was of foul dealing." [Of course, it would be peculiar if the preface to De La Court's Interest would undermine reliance on interest.]

Okay, so much for history of (political) philosophy and political economy. What about my study question? The biography of brothers De Witt attached to De la Court's Interest is unsigned. However, we know De la Court's Interest was translated by John Campbell {HT Mikko Tolonen (see also Weststeijn, p. 361)}. So, it would be likely that Campbell is also the translator of the sketch De Witt's life.

Now the standard treatment of De Witt's life is (as Aaron Garrett suggested to me) Emanuel Van der Hoeven's (1705) Leeven en dood der doorlugtige heeren gebroeders Cornelis de Witt en Johannes de Witt, which was also translated in French (a language Hume read).*** So, one may expect Campbell translated it into English and added it as a preface to his translation.

There are two problems with this hypothesis: first, the English biographical sketch is much shorter than Van der Hoeven's Leeven. And so, at best we're dealing with an excerpted text. However, when I checked the passages I quoted above in the  original Dutch, it is clear that the English is by no means a straight translation. Rather, if it is based on Van der Hoeven's Life at all, it is a serious re-interpretation. However, Van der Hoeven's Life provides a clue for the more likely source. When Van der Hoeven recounts  the story about De Witt's piloting skills in Texel he quotes and cites a French historian  at length, De la Neuville. Neuville wrote a History of Holland.

Yet, when I looked at a different edition of Campbell's translation of De la Court's Interest on Google, I noticed that some scribe had decided the biography of De Witt was written by Campbell. As noted above, there is internal evidence for this suggestion (which Tolonen also suggested). The account of De Witt has an English perspective. In addition, there is an illuminating note (which is not in the other edition reproduced in the liberty fund website): "the reader will perceive, that not only the general histories of Holland, have been consulted for this work, but also all the private memoirs and other pieces which contain contain any authentic account of the transactions mentioned therein." Among the sources he cites is not just De la Neuville, but also Van der Hoeven (in French translation). So, we can infer that John Campbell not merely translated but created an English life of De Witt (and his brother).  And for now I think it is this Life that helped shape non-trivial details of Hume's political philosophy (for whom the Dutch republic is very important model in his Idea of a Perfect Commonwealth).

Now, the question is, who was this John Campbell? But that's for another day.

 

 

 

 

Sophie de Grouchy as Decision-theorist and her Public Choice Philosophy of Law

However we have not paid sufficient attention to what a small number of philosophers have been saying over the last few years. We will not hesitate to repeat it here, for truths must be told not only until they are adopted by every enlightened person, but until all those who defend the abuses they proscribe are silenced. The prevention of crime is less the effect of the intensity of a sentence than of its certainty; and extreme severity almost always results in impunity. Indeed, a humane man will not denounce a servant who stole from him if the sentence awaiting him is death. The same quality almost always prevents one from denouncing small thefts which, although less severely punished, are still disproportionately so. If, on the contrary, minor crimes were punished only by corrective sentences informed by and essentially punished through public opinion; if for all ordinary offences, and the least wrongdoings, we did not break in an instant all the ties that attached the offender to society (by taking his life, or covering him with permanent disgrace), that is, the last safeguard between him and a life of crime, then all would make it a duty, for the sake of common interest, to denounce criminals. We would be less indulgent, even, were it not for the fact that need reduces people to a dulled state which excuses their crime. Criminal laws, through their severity, and civil laws, because they favor inequality are therefore the cause of impunity for lesser crimes. And they can also be considered the cause of greater crimes since it is the impunity of the former which inspires the confidence needed to commit the latter.

In order for the fear of a sentence to be effective and beneficial the sentence must not outrage. Its justice must be perceptible to average reason, and it must especially awaken the conscience, at the same time as it punishes its silence and slumber. But this will not be so if sentences are too strong and instead of inspiring horror against crime, appear barbarous and unjust themselves; if they do not punish the injustices committed by the rich against the poor; if, when these injustices are not subject to sentences, the laws do not prevent them in other ways; if a judge can arbitrarily harden or soften a sentence; if there are privileges, hereditary, personal or local which offer a legal loophole, direct or indirect. Then the people are tempted to see criminal laws as made against them and in favor of the rich, as the result of an association designed to oppress them. Then they hate more they fear these laws that no longer inform their conscience because they outrage their reason, and this hatred is enough to overcome fear in strong souls and in all those made bitter by the joint feeling of injustice and need. Sophie de Grouchy (1798) Letters on Sympathy, Letter 8, translated by Sandrine Berges.

The "small number of philosophers" De Grouchy mentions in the first sentence above is almost certainly an allusion to Cesare Beccaria (1764) An Essay on Crimes and Punishments and Voltaire's championing it.* Some other time I return to Beccaria and the impact of his thought. But here I call attention to four features of De Grouchy's argument. For she is treating institutional design as a system of incentives on agents that can, if properly aligned, can cultivate virtue and minimize badness.

First, in particular, in thinking about the preventive role of criminal law, she treats would be criminal agents as evaluating (i) the risk of punishment and (ii) length/severity of punishment as distinct factors/variables (in some decision calculus).**

Second, the (i) risk of punishment is not just the chances of being caught in light (iii) of people's willingness to snitch on the would be criminal, but is also (iv) a judge's/jury's willingness to convict. Both (iii-iv) are informed by (v) a sense of proportionality between (ii) the length/severity of punishment and (iv) the severity of the crime. If (ii) and (iv) are felt to be proportionate then the risk of punishment is, thus, taken to be high ceteribus paribus. Because nullification is more likely when (ii) and (iv) are out of proportion, she advocates for less severe punishment for lots of crimes.  (At the time one could be hanged or lose whole body parts for relatively minor offenses.) [UPDATED: as Liam Kofi Bright pointed out to me on facebook, this is a nice change from More's argument [recall here] that harsh laws for minor crimes ought be reduced because it incentivises committing worse crimes.]

Third, felt proportionality is a consequence of (vi) a kind of fairness constraint in light of perceptions of the larger institutional status quo ("if there are privileges, hereditary, personal or local which offer a legal loophole, direct or indirect. Then the people are tempted to see criminal laws as made against them and in favor of the rich, as the result of an association designed to oppress them.") So, she thinks that crimes are, in part, understood as consequences of larger social situation (for example, the needy are needy in virtue of the fact that society is badly structured; the feudal rich are protected by "civil law" such as tax and property laws that favor them, etc.) and also interpreted by ordinary people ("average reason") in light of these larger social situation by citizens.

As an aside, elsewhere in the book, De Grouchy also has a rich analysis of how our sense of fairness gets corrupted in unjust societies (about which another time more). But this helps explain how in some political circumstances people are willing to punish petty crimes rather severely.

Finally, criminal reform should, thus, not be decoupled from a larger institutional reform (which make both society and the laws in it fairer). Rather, because people's perceptions about society matter (vi) within the adjudication of criminal cases, would-be-social-reformers can influence criminal outcomes both via social/political reform and criminal reform.