Ideas
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A key figure here was Jean-Baptiste Colbert, Louis XIV’s minister of finance between 1663 and 1683, who believed that the state needed accurate knowledge of social and economic conditions if it were to prosper. The French Académiedes Sciences was instructed to study these issues when it was established in 1666.75 In this way, details about credit arrangements, laws of contract, freedom of trade and the circulation of money became matters of interest in their own right. For the first time, it was realised that the quantity of money in circulation could be measured and related to economic performance.
The first British figure of consequence in the development of economics was William Petty (1623–1687), the Fellow of the Royal Society whom we met in Chapter 23 and who coined the phrase ‘Political Arithmetick’, the title of one of his books. He attempted a comprehensive quantification of Britain’s capital assets, public finances and population (harder than it sounds, because Parliament did not sanction a census until 1801, and it wasn’t comprehensive until1851). It was Petty who, following Hobbes, envisaged economic activity as a system of discrete individuals, acting in their own rational self-interest. At the same time, he emptied the market–the system of exchange–of all moral considerations. A second figure was John Graunt (1620–1674), who pioneered the collection of social statistics (what he called ‘Shop-Arithmetique’). This was originally done to counteract public fears about crime, but Graunt extended his approach to assess population levels in different areas. In this way, statistics about variations in mortality began to appear, of great interest to the fledgling life insurance business.76
In mainland Europe, where some of the states were quite small, there was in government little separation of economic, social, medical and legal matters, and these became known as ‘cameralistics’, after the camera, or chamber, of the ruler. In 1727 the first two chairs of ‘cameral’ sciences were established at the Prussian universities of Halle and Frankfurt-on-the-Oder. In fact the first chair at Halle was in Oeconomie, Polizei und Kammer-Sachen (economy, police and cameralistics). In Britain, however, men argued that human nature rather than the state should govern economics. At the time, there was a general acceptance that society had entered a new stage–it had become ‘commercial’. Commercial society, people felt, was the last (or at least the latest) stage in the progress of man. This approach or attitude was summed up by that other great Edinburgh man, Adam Smith. ‘Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.’77 In other words, a person’s place in society is defined by what he or she (can) buy and sell.
Born in Kirkcaldy in 1723, Smith was a sickly child and on one occasion, according to some accounts, he was abducted by gypsies.78 But he grew up to be something of a Renaissance man, familiar with Latin, Greek, French and Italian. He translated works from the French, so as to improve his English. He wrote on astronomy, philology, ‘poetry and eloquence’, and was professor of logic and rhetoric at Glasgow before he was appointed to the more prestigious chair of moral philosophy, in 1752. Though he lived and worked in Glasgow, he participated fully in Edinburgh life: the Glasgow–Edinburgh stage coach arrived each day in time for early-afternoon dinner.79 He published The Theory of the Moral Sentiments in 1759, a work which Alexander Wedderburn, founder of the Edinburgh Review, described as disclosing ‘the deepest principles of philosophy’. But it is for The Wealth of Nations, published in 1776, that Smith is remembered and revered around the world.
When he died, ‘after a life of intellectual adventure and social prudence’, a local newspaper complained in its obituary (4 August 1790) that he had ‘converted his chair of moral philosophy at Glasgow University into one of trade and finance’.80 There is more than an iota of truth in this but, because of the way Smith has been understood, and misunderstood, in the years since he lived, it is important to reiterate that he was an academic, a moral philosopher, who took a very moral view of his own work. ‘Capitalism’ is a term invented only at the turn of the twentieth century (as Kapitalismus, by Werner Sombart, the German economist and sociologist), and Smith would not have recognised either the word or the sentiment. His grasp of finance and banking was never especially strong and towards the end of his life he expressed profound misgivings ‘about the moral complexion of commercial society’.81 There is an irony here because Smith created an approach and a language that, ultimately, divorced economics from what most people mean by morals. But he himself felt that allowing absolute freedom of economic activity was itself a form of morality. Among other things, his book was a morally-outraged attack on the monopolistic practices of the grain trade.82 He championed the interests of the consumer against the monopolists, identifying consumer demand as the engine for the creation of wealth.83 We should not forget that state intervention in the eighteenth century was very important to economic development and Smith never disagreed with this.84
The formation of commercial society is, as both Roger Smith and Paul Langford highlight, a new stage in the evolution of a modern view of human nature. ‘The term “economic man” is a code-word for the opinion that what is called society is only an association of individuals who act in the light of rational self-interest to maximise their material profit and well-being.’85 As well as everything else, this clearly has implications for man’s psychology, and it is important to be aware of the new world of the consumer into which Smith introduced his book. ‘The architect John Wood, writing in 1749, listed the novelties introduced since the accession of George II. Cheap and dirty floorboards gave way to superior deal covered with carpets. Primitive plaster was concealed with smart wainscoting. Stone hearths and chimney-pieces, customarily cleaned with a whitewash which left a chalk debris on the floor, were replaced with marble. Flimsy doors with iron fittings were abandoned for hardwood embellished with brass locks. Mirrors had become both numerous and elegant. Walnut and mahogany, in fashionable designs, superseded primitive oak furniture. Leather, damask, and embroidery gave seating a comfort unobtainable with cane or rush…The carpets, wall-hangings, furnishings, kitchen and parlour ware in the homes of many shopkeepers and tradesmen in the 1760s and 1770s, would have surprised their parents and astonished their grandparents.’86
Smith’s theories were especially poignant because at the time, in France, the only country where there was what we might call rival thinking, the theories of the so-called physiocrats were very different and, as it soon turned out, nowhere near as fruitful or accurate. The physiocrats were significant because they too encouraged the idea that, in the eighteenth century, there was a shift to commercial society and with this went an acceptance of commerce and exchange as important to the understanding of the laws of human nature. However, France, much more than England, was overwhelmingly rural and agricultural and this determined the theories of the physiocrats, the main figures here being François Quesnay (1694–1774) and the marquis de Mirabeau (1719–1789). Their view, argued in a series of books, was that all wealth derived from land, from agricultural productivity. Civilisation was essentially driven by the surplus of agricultural goods over the consumption of food required to produce it.87 Expansion of this surplus, and the consumption it fuelled, produced the growth in population that worked yet more land, in a virtuous cycle. Quesnay’s approach led him to view society in a particular way. There was a ‘productive class’, engaged in agriculture, there was a class of proprietors, landowners who included both the king and the church, who received the yield of agriculture in the form of tithes, taxes and rents, and there was what he called in a revealing phrase a ‘sterile class’, which included manufacturers, dependent on agriculture and, according to him, incapable of producing a surplus.88
Adam Smith in effect took the opposite view, that man had advanced beyond agricultural society, to a new stage in civilisation, commercial society. The basis of economic value, the origin of wealth, Smith said, lay in labour, work done. This was a marked change in that Smith did not identify any one o
ccupational sector as the fundamental basis of wealth–what mattered instead, he said, was exchange and productivity, the value added in any transaction. This approach later became what was called ‘classical economics’, so it is important to reiterate here that Smith had no conception of a discipline of economics isolated from the study of moral relations, from the history of civilisation or from political questions about how Britain should be governed. ‘He defined political economy “as a branch of the science of a statesman”.’89 Smith’s view was essentially the modern one that we have today: a man was to be judged by his rational and moral qualities, and the extent to which they helped the welfare of his fellow men. This led Smith to change attitudes–towards entrepreneurs, for example: they were not shady moral types, he said, but important figures who accumulated capital and in that way facilitated productive work by others. Although he came to be regarded as the father of free-market economics, in fact Smith believed that legislation was essential in certain areas of life, to maintain fairness and openness, and he himself lectured on jurisprudence.90 J. A. Schumpeter, the great Austro-American economist of the twentieth century, said that Smith’s seminal work, The Wealth of Nations (1776), was the most influential of all books on economics but that it was also, after Darwin’s On the Origin of Species, the best of all scientific books. In the nineteenth century, H. T. Buckle thought The Wealth ‘perhaps the most important book that has ever been written’.91 Smith’s approach, his rationalism, allowed mathematics to be applied to trade and exchange. This was not always successful but it did show that economic activity obeys certain laws or order and we have Smith to thank for this. He is often identified with the phrase ‘laissez-faire economics’, but this is a French term, and reflects an eighteenth-century French view that did not become popular in Britain until the nineteenth century. In fact, Smith himself was always equally concerned with justice in civil society and with wealth creation. He justified this view by a comparison between Britain and elsewhere. By attaching value to labour, gross inequalities were not ironed out but, he argued, abject poverty was reduced, as he had predicted, much more so in Britain than elsewhere in Europe or, for example, India. People, he felt, would always naturally pursue their own self-interest and, other things permitting, this would lead to a high-wage economy which encouraged consumption, productivity and a general and continual upward cycle. Notably, Smith believed that God has so designed human nature that the average person, besides looking out for him- or herself, also shares sympathy for others. He believed that a civic humanism could go hand-in-hand with a commercial society.
The discipline of political economy was well launched by Adam Smith. One of Smith’s most influential followers was the Reverend Thomas Robert Malthus (1766–1834), who became known as ‘Population Malthus’ on account of his theory of population and its effect on economics. The advent of the French Revolution and its bitter after-taste had concentrated minds on the political instability that seemed to be just below the surface everywhere and Malthus thought that, at the least, he had one answer if not the answer. Like so many others of his time he thought that there were discoverable laws of human nature but in his case he believed that there were limits to progress and he argued that he had hit upon one of the most intractable. He first published An Essay on the Principle of Population, As It Affects the Future Improvement of Society in 1798 but there was a second edition, almost a new version, in 1803, in which he expanded his argument. In these works Malthus produced a very pessimistic view of the future. His view was that there are laws of human nature and that one basic law is that the rate of population growth increases geometrically whereas the production of food increases only arithmetically. It follows from this that conditions of scarcity are a permanent feature of the human condition.92 However, we should not overlook the fact that Malthus was a reverend and he viewed his discovery in a moral way, concluding not that starvation is an inevitability but that people should show restraint–prudence–and avoid contributing to a population that outstrips its ability to feed itself. The law he had uncovered, he said, was God’s way of showing man that he had to show restraint on the procreation front, and work hard at wealth creation to ensure there was always enough food to go round.93
Malthus was, with Bentham, encountered earlier, a utilitarian. We may conclude this section by considering the ideas of a colleague of Malthus, when he went to work as a curate at the new East India College, a teaching outfit where future employees of the East India Company were trained (the East India Company was the chief organ of British power in India during the high days of empire). At the college Malthus came across James Mill, father of John Stuart Mill (1806–1873), who was one of the most uncompromising–and scientifically-minded–utilitarians. In his Analysis of the Phenomena of the Human Mind (1829), James Mill said that his aim was to make ‘the human mind as plain as the road from Charing Cross to St Paul’s in London’. (In other words, for those who knew London, it was not a long journey and was, essentially, a straight line.) Mill tells us that he used the word ‘analysis’ in the title of his book to show that his methods at least aimed to be like those in chemistry. As one reviewer put it, ‘sensation, association, and naming, are the three elements which are to the constitution of the human mind what the four elements, carbon, hydrogen, oxygen, and azote [nitrogen] are to the composition of the human body’.94 Association was an important concept in early psychology and referred to the way in which sensations–pains and pleasures, and ideas and actions–come together to form regular patterns. This is another of those ideas which may seem self-evident to us but it was new at the time because it linked what goes on inside the head with behaviour and experience, and gave rise to much of modern psychology, such as learning theory, perception and motivation.95
Just as psychology had an uncertain and drawn-out birth during the eighteenth century, not really coalescing until the nineteenth, so too with what we now call sociology. During the Enlightenment there were conflicting views about man and his relation to his fellows. Some shared Hobbes’ view that man was not naturally social whereas others considered sociability perfectly normal. It did not take a genius to see that man everywhere lived in civilisation, in cities, had formulated politics, so it seemed to many that the laws of ‘society’ (a late eighteenth-century term in this context) should be identifiable.96
One concern was the difference(s) between savage and civilised, which recalled the ancient barbarian/Greek and Roman divide. Carolus Linnaeus (1707–1778), for example, listed several categories of Homo under his famous classificatory system. These included Homo ferus (feral or wild man), Homo sylvestris (tree man, including the chimpanzee) and Homo caudatus (tailed man, partly mythical, partly designed to include imperfectly understood birth disorders). The first primates were imported into Europe at this time–orang-utans and chimpanzees–giving rise to the creation of comparative anatomy. People like Linnaeus and Edward Tyson could see the close relation in form to humans but at that stage lacked the conceptual framework to make more of the similarities. Erasmus Darwin (1731–1802), Charles Darwin’s grandfather, wrote Zoonomia: Or the Laws of Organic Life, in the 1790s, in which he showed animals as changing over time in a progression. This was an early theory of evolution, but showed no understanding of natural selection. When people travelled in the eighteenth century, and met ‘savage’ or ‘primitive’ peoples, they had no idea whether such peoples were at an earlier stage of development, or a later one, and were in a state of decay from a higher civilisation. What distinguished man from the animals was his possession of a soul, and language. Skulls began to be collected, as evidence of different ‘racial’ types.
Roger Smith also says that the idea of Europe, as an entity by itself, as somewhere different from Christendom, as a civilisation of its own–the West, different from the East–also emerged in the eighteenth century. This is discussed in more detail in Chapter 29 (on the Oriental renaissance) but this idea, that Europe was artificial in comparison with more ‘primitive
’ and ‘natural’ peoples, received a boost from Jean-Jacques Rousseau (1712–1778) in his idea of the ‘noble savage’. Rousseau was, psychologically speaking, far from straightforward (his mother died in childbirth, his father disappeared when he was ten), and several modern historians have argued that he was psychologically disturbed.97 He came to public attention in 1755 when he submitted an essay for his local Dijon Academy, addressing the question ‘What is the origin of inequality among men, and is it authorised by natural law?’ He began his answer by trying to describe and understand man’s original, natural state, though he conceded that this was a difficult, even impossible task, as there were by then so many layers of artificiality. Nevertheless, he concluded that the moral life is a consequence of civilisation, not the natural state and that in achieving morality and civilisation men and woman have lost their innocence. In gaining something, something has also been lost. He advanced this view because he felt that man possesses a spirit, a consciousness of freedom, and that the soul revealed itself through the passions. ‘Nature commands every animal, and the beast obeys. Man feels the same impetus, but he realises he is free to acquiesce or resist; and it is above all in the consciousness of this freedom that the spirituality of his soul is shown.’98 Rousseau’s natural man is ‘individual, innocently at one with his feelings, feelings that are firmly feelings of self but include a desire for self-improvement and sentiment about others.’99 This is one of the origins of the romantic movement, considered in Chapter 30. And it was this which separated man from the animals. ‘Some actual savage societies, like the Carib, preserve a happy balance between “the indolence of the primitive state and the petulant activity of our vanity”. Other societies developed iron and corn, “which have civilised men, and ruined the human race”. Manufacturing and agriculture created a division of labour and, through labour, property and inequality…men became what they once were not–deceivers, exploiters, legislators of inequality, defenders of oppression, tyrants.’100 His Social Contract, which introduced the idea of the ‘general will’, became for some people a sacred text of the French Revolution.