by Roy Porter
Distancing themselves from pious precepts, privileges and practice, enlightened analysts insisted that, like it or not, economic activity was inexorably governed by fundamental laws of its own. Ideals such as the moral economy, the just price, the proper reward for labour and so forth might all be very admirable, but they were fatally flawed. They did not, for one thing, reflect human nature. Man was, if not nakedly rapacious á la Hobbes, at least an accumulative creature – and therein lay the motivation for economic activity, rooted as it was in the constant human desire for self-improvement. Ignoring or expecting to override such omnipresent motives would end in failure.21
The moral economy was thus self-defeating, whereas the new political economy prided itself upon being grounded on a proper grasp of ends and means, individual and system, self and social – natural science, in particular Newtonian physics, often being invoked to prove how economic forces ‘gravitated’ to an equilibrium. ‘The Circulation of Commerce,’ explained Josiah Tucker, ‘may be conceived to proceed from the Impulse of two distinct Principles of Action in Society, analogous to the Centrifugal and centripetal Powers in the Planetary System.’22 Smith drew on precisely the same model: prices were ‘continually gravitating, if one may say so, towards the natural price’.23
In the nature of things, economic activity, like water, would thus find its own level, and so regulation was futile, indeed utterly counter-productive. It was a view given algebraic expression in the crucial 1690s by Charles Davenant, who explained how the market price of corn would prevail, regardless of legislative interferences, however well-intentioned:
because if B will not give it, the same may be had from C & D or if from neither of them, it will yield such a price in foreigne Countries; and from hence arises what wee commonly call Intrinsick value… Each Commodity will find its Price… The supream power can do many things, but it cannot alter the Laws of Nature, of which the most originall is, That every man should preserve himself.24
‘Trade is in its Nature free, finds its own Channel, and best directeth its own Course,’ Davenant dogmatized in impeccably liberal hydrostatic tones: ‘Wisdom is most commonly in the Wrong, when it pretends to direct Nature.’25 Since profit-seeking was only human nature, it was best to leave trade free and let the economic players get on with it. ‘The main spur to Trade, or rather to Industry and Ingenuity,’ opined his contemporary Dudley North, ‘is the exorbitant Appetites of Men, which they will take pains to gratifie, and so be disposed to work, when nothing else will incline them to it; for did Men content themselves with bare Necessaries, we should have a poor World.’26 Here, as so often, enlightened thinking appealed to Nature against the mildewed wisdom of cloistered scholars and pontificating divines.
Pioneering amongst the liberal theorists of this school was, predictably, Locke. Not only property but exchange and money too were, in his scheme, pre-established in the state of Nature, subject to the laws of Nature and human rationality and industry. Value was created by labour. Hence economic regulation, beyond the legal protection of property, formed no day to day part of the State's remit.27
The new political economy thus repudiated religio-moral or states-manly policing of wealth in favour of a ‘scientific’ endorsement of ‘natural’ economic forces. Christian commandments against greed were sidelined, and the pursuit of gain secularized, privatized and valorized. Dr Johnson – a moral rigorist, yet also a hard-nosed realist – was confident that ‘there are few ways in which a man can be more innocently employed than in getting money’,28 and when Adam Smith's mentor, Francis Hutcheson, proposed his distinction between the violent and the tranquil passions, he too set ‘the calm desire of wealth’ among the latter.29
It was Adam Smith who systematized the new political economy, grounding it in a science of human appetite, specifically in ‘the desire of bettering our condition’.30 Given the ceaseless urge to ‘self-improvement’, ‘every man’, it followed, ‘lives by exchanging… and the society itself grows to be what is properly a commercial society’.31 Selfishness, in short, made the world go round: ‘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.’32 Smith's formula – let the market-place decide – expresses the enlightened inclination to trust in Nature and its resultant play of wants and needs. In so doing, he was forced to confront the old civic humanist prescriptions. Could enrichissez-vous prove compatible with socio-political stability? Would not the pursuit of affluence compromise virtue, and ‘luxury’, as neo-Harringtonians feared, subvert liberty, set class against class and corrupt the commonwealth?
Like Hume, Smith was no narrow ‘economist’, he was engaged with the study of man at large, notably the philosophy of scientific inquiry, aesthetics, language, ethics and social laws. Drawing attention to the ‘great scramble’ of commercial society,33 he had no illusions about ‘the bad effects of a political economy, in some degree both partial and oppressive’, not least in creating alienation amongst the workforce.34An Inquiry into the Nature and Causes of the Wealth of Nations must thus be assessed in terms of its wider contribution to enlightened discussions about freedom, justice, subject–state relations and the quality of life in commercial society.
In his early student lectures at Glasgow, Smith proposed ‘opulence and freedom’ as ‘the two greatest blessings men can possess’.35 That was a coupling perhaps designed to shock. Two contrasting concepts of liberty had been in circulation in Antiquity.36 In the Stoic view, for instance, by Seneca and Epictetus, freedom was a state of tranquillity in which the cravings of the flesh were curbed by the rational will. There was also the ‘civic’ view, proposed by Cicero and Livy, for whom liberty lay in political activity aimed at realizing the common good. Rejecting both the political passivity of the former and the ‘direct action’ of the latter, Smith held that the key to enlightened desiderata was commerce, where every man ‘becomes in some measure a merchant’.37 Classical thinkers would have condemned such a society as rather inglorious, but for Smith it chimed with that ‘general disposition to truck, barter and exchange’38 which achieved its full expression only in commercial society, indeed in a nation of shopkeepers.
Restlessness, stated Smith, was the spur to opulence, ‘an augmentation of fortune’ being the means by which ‘the greater part of men propose and wish to better their condition’.39 Commercial society thus squared with human nature. What was truly ‘unnatural’, it followed, was the Stoic ideal of ‘tranquillity’, teaching as it did a perfection ‘beyond the reach of human nature’.40 Whereas Stoicism disparaged economic life, Smith construed ‘selfishness’ as everyone's laudable desire to get on.41 Downplaying the commonwealth tradition, moreover, he held, like Hume, that the proper stage for human energies was not the public or political arena, neither honour nor glory, but private, self-regarding pursuits. For Graeco-Roman thinkers, time spent meeting household needs was beneath the dignity of the true male citizen – indeed, fit only for inferiors, peasants, artisans, women and slaves; for Smith, by contrast, it was the natural business of humanity at large. Indeed, it was a public benefit, for economic exchange forged supportive social networks: in a ‘civilized and thriving country’, even the ‘very meanest person’ could not be provided with even the shirt on his back without the ‘joint labour of a great multitude of workmen’.42 From such interdependency commercial society's unique strength was derived.
For Smith, dependency was of course corrupting – a view impeccably classical and central to the civic humanist equation of freedom with independence.43 According to the neo-Harringtonians, however, the chief source of corruption and threat to independence lay in the growth of commerce, paper money, the credit nexus and the public debt (see chapter 8). Smith rejected this thinking. While never denying that dependency spelt corruption, he counter-insisted that ‘commerce is one great preventive’ of its occurrence. Economic activity was thus not pathological but prophylactic, protecting a sound constitution. For t
he civic humanists, history had been a descent into decadence; for Smith, on the contrary, it was more a pageant of progress.
In Smith's variant on the ‘four stages’ theory, the ‘lowest and rudest state of society’ was the age of hunters.44 In that mode of production, ‘there is scarce any property’, but that absence also ruled out dependency.45 By contrast, the second age – that of shepherds – brought growing inequality and with it subordination.46 Thanks to ‘the superiority of his fortune’, the Tartar chieftain supported a thousand retainers for whom he was ‘necessarily both their general and their judge’.47 Much the same still held for the third age, that of farmers. Just as the nomad warlord was the head shepherd, so in the third age power lay with the greatest landowners.48
The fourth, or commercial, age marked a watershed: at long last the natural propensity to ‘truck, barter and exchange’ was given free rein to establish its beneficial networks of interdependency. Countering Rousseau, who portrayed trade as breeding corruption, Smith thought commercial society brought a wholly new and superior form of freedom, that of liberty under the law, the true hallmark of civilization. Probing the secret of this conjunction of opulence and freedom, luxury and civilization – one, he noted, highlighted earlier by Hume49 – Smith directed his gaze on the collapse of the feudal lords.
A great feudal landholder would use his wealth rather like the nomad chief, maintaining hordes of retainers and dependants: what other outlet was there to lavish his surplus upon?50 As opportunities for consumption arose, however, they were naturally seized – ‘consumption’ was, after all, for Smith ‘the sole end and purpose of all production’.51 What had permitted this break-through into commodity consumption was ‘the silent and insensible operation of foreign commerce’, whose effects were to prove dramatic indeed: ‘for a pair of diamond buckles perhaps, or for something as frivolous and useless,’ he explained,
the feudal lords exchanged the maintenance, or what is the same thing, the price of the maintenance of a thousand men for a year, and with it the whole weight and authority which it could give them… and thus for the gratification of the most childish, the meanest and the most sordid of all vanities, they gradually bartered their whole power and authority.52
The intrusion of such ‘trinkets or baubles’53 – in other words, ‘domestic luxury’54 – into the feudal sphere in the long run emancipated moneyed, commercial society from the thrall of personal dependency. Once tenants attained independence, proprietors were ‘no longer capable of interrupting the regular execution of justice’. The law and order typical of a post-feudal society in which every man was an autonomous economic agent became the guarantor of modern liberty.55
Freed from dependence on a particular lord and master, individuals in a commercial society came to enjoy an independence unique to the impersonal market and to its contractual social system. This social ‘revolution of the greatest importance to the publick happiness’ could not be put down to deliberate action, for neither landholders nor merchants had any ‘knowledge or foresight of that great revolution’ and neither had ‘the least intention to serve the publick’.56 Civic humanist faith in the primacy of political and personal virtú notwithstanding, the general good was not brought about by conscious design, by the will of some great man or senate.
The liberty characteristic of commercial society rested in part on the wealth which cost-efficiencies brought. Success came from scale: bigger markets permitted specialization, which in turn spelt productivity. Hence, in Smith's immortal pin manufacture example, ten workers could make 48,000 pins a day thanks to the division of labour, whereas each on his own could not have turned out a score. Market society thereby bred a ‘universal opulence which extends itself to the lowest ranks of the people’.57 By contrast, independence Rousseau-style condemned the multitude to being ‘miserably poor’, with, in Smith's view, no compensations at all. Impoverished societies were callous: frequently, he noted, they resorted to ‘destroying, and sometimes abandoning their infants, their old people, and those afflicted with lingering diseases’. Opulence, by contrast, was a ‘blessing’; only in a developed market society was material plenty enjoyed: the ‘common day labourer in Britain has more luxury in his way of living than an Indian sovereign’, while his abode ‘exceeds that of many an African king, the absolute master of the lives and liberties of 10,000 naked savages’. A peasant in a ‘civilized and thriving’ nation was thus better off than a savage prince.58
For all its gross inequalities,59 commercial society also enshrined the second great human blessing: liberty. Free of feudal ties, individuals were, for example, entitled to change jobs at will – Smith denounced the ‘violent’ Asian practice of forcing a son to follow in his father's trade.60 Together with secure inheritance rights, occupational choice made individuals free ‘in our present sense of the word’61 in the system of natural liberty where every man ‘is left perfectly free to pursue his own interest his own way’.62
Personal liberty carried political implications. It was the ‘highest impertinence and presumption’ of governments ‘to watch over the economy of private people’ by such measures as sumptuary laws;63 economic well-being derived not from royal decree but from the confidence conferred by an impersonal law-governed system of public liberty. The superiority of modern constitutional liberty over Classical republicanism lay in the fact that liberty under the law was liberty for all, whereas compare Hume's judgement on Sparta – political liberty in Antiquity had been enjoyed only by a few and sustained by a slave system as unproductive as it was unpalatable.64 Unlike Mandeville, Smith thought wealth was actually increased by the ‘liberal reward of labour’, for that was an incentive to industriousness.65 Where wages were high, workmen were more ‘active, diligent and expeditious’ – in England more than Scotland, in urban rather than rural areas.66 Since workmen constituted the bulk of the populace, whatever improved their lot made for a flourishing society.67
For Smith, modern liberty was tempered by justice.68 While critical of Hume for reducing justice to questions of utility, he closely followed his old crony. In The Theory of Moral Sentiments (1759) Smith maintained what made society work was not generosity (merchants got by without it) 69 but justice – ‘the main pillar that upholds the whole edifice’.70 That virtue was negative in the sense that its prime requirement lay in not injuring others: ‘we may often fulfil all the rules of justice by sitting still and doing nothing’.71 In this respect, Smith's thinking contradicted both Aristotle and Rousseau, since he believed it possible to fulfil public duties passively, simply by obeying the law. In an orderly commercial society, support for the status quo was the ‘best expedient’ of a ‘good citizen’.72 Freedom and the just life were not exclusive to those well born and wealthy enough to pursue an active ‘republican’ political existence.
It was here that Smith's break with civic humanism most clearly surfaced, for he did not share Adam Ferguson's qualms that legalism would sap society's lifeblood. In his An Essay on the History of Civil Society (1767), Ferguson had argued that liberty was at risk when national felicity was measured by the ‘mere tranquillity which may attend an equitable administration’73 – that was ‘more akin to despotism than we are apt to imagine’.74 A government system requiring no personal involvement, he feared, would ‘lay the political spirit to rest’. Hence, while modern society doubtless embodied important liberties, he was uneasy that its members would grow ‘unworthy of the freedom they possess’.75 To endure, civil liberty required the ‘individual to act in his station for himself and the public’.76 While conceding that the Spartan model was anachronistic, true ‘rights’ were sustainable only by individual political action.77
Smith pooh-poohed such rhetorical appeals to the civic spirit. The public good did not depend upon a ‘general will’, it would best be promoted through the interplay of particular wills. This, of course, was the message of the ‘Invisible Hand’ – each ‘intends only his own gain’ but in so doing ‘frequently promotes that of
the society more effectually than when he really intends to promote it’.78 Indeed, he tartly asided, ‘I have never known much good done by those who affected to trade for the publick good.’79 Politicians were, in fact, positive menaces to the liberty enshrined in the rule of law, for all too often they pursued agendas affecting citizens in ways ‘evidently contrary to the justice and equality of treatment which the sovereign owes to the different orders of his subjects’.80 Government should limit itself to defence, the maintenance of justice through ‘exact administration’, and ‘certain publick works’ like education.81 The complexity and interdependence of commercial society rendered civic humanist heroics obsolete.
To view Smith's ‘Invisible Hand’ in purely economic terms would thus be myopic and shallow. What is significant in both Hume and Smith is the de-politicization of the hallowed ideal of the ‘public good’. For them individual happiness and material well-being had moved centre stage, and identification of the ‘good’ as some towering political or moral virtue lost its purchase. Social interdependence upstaged any conception of society predicated on acts of individual virtue.
In the light of this dissonance between individual will and social outcomes, Smith held that the consequences of luxury were beneficial, even if the cause was footling – all those ‘sordid and childish’ diamond buckles!82 Though he might occasionally moralize as to how the ‘real happiness of human life’ was to be found in the beggar's ‘peace of mind’, by contrast to the specious ‘pleasures of wealth and greatness’ conjured up by the imagination, such Stoicism hardly dominated his thinking.83 He never belittled, however, the role of the imagination in firing economic activity.84 Imagination, as cast from Hobbes onwards, might be ‘but a Fiction of the mind’85 but it was that which made it such a powerful stimulus. It was precisely because ‘the pleasures of wealth and greatness… strike the imagination as something grand and beautiful and noble’ that men would commit themselves to the toil responsible for all ‘the sciences and arts which ennoble and embellish human life’.86 How could this be a matter for regret? Imagination had transformed ‘rude forests’ into ‘agreeable and fertile plains’;87 goods were produced and consumed because they met not fixed needs but rather ‘desires’.88 ‘The whole industry of human life,’ Smith concluded, ‘is employed not in procuring the supply of our three humble necessities, food, cloaths, and lodging, but in procuring the conveniences of it according to the nicety and delicacy of our taste.’89 Stoics and others bent upon ‘real’ satisfactions alone were in truth condemning mankind to misery.90