More on Smith and Mandeville

Gavin Kennedy has responded to my previous post here. He feels that I need to provide more textual support for my contention that Smith adapted Mandeville model of how self-interested behaviour by individuals leds to socially desirable outcomes.  My (detailed) defence is below the fold.

Now I won't challenge Kennedy's reading of Smith, which seems to rest on a particular definition of selfishness and self-interest rather I'll defend my point more broadly. My understanding of all of this is that Kennedy is right to stress that Smith was a much more sophisticated moral philosopher than was Mandeville and that Smith distinguished between selfishness and self interest, noting that the latter was completely compatible with perfect negative justice. (And thus he is right to criticise commentators who view Smith as a advocate of selfishness).

But is this really the relevant or the really interesting point? I'm suggesting that Smith and Mandeville were working with the same basic socio-economic 'model' and that this is more important. I think that one reason for this is that Mandeville deliberately set out to shock his readers by adopting a very stringent moral code in which all behaviour that was not self-denying could be called selfish (hence Augustinian).

My reading of Mandeville is partly based upon the work of MM Goldsmith who wrote Private Vices, Public Benefits: Bernard Mandeville's Social and Political Thought .  In this article, Goldsmith argues that:

'Smith, like Hume, denounced Mandeville while accepting much of the substance of his argument' (604)

Thus they were both defenders of 'luxury,' and commercial society and of the division of labour. Smith (and Hume) accepted Mandeville analysis of commercial society. Previous thinkers like Machiavelli,* inspired by antiquity, were interested in civic virtue. From this perspective, commerce might be useful if it made the sovereign rich and therefore powerful, but the danger of commerce was felt to be that it was corrupting and that it undermined virtue. In Early Christian and in classical thought commercial values were denigrated**.  Trade was often percieved to be zero-sum. Mandeville was one of the first thinkers to systematically focus attention on the fact that self-interested or indeed selfish behaviour in the market place had positive and unintended consequences.  I think this is why Mandeville is an important thinker and why he was a big influence on Smith (notwithstanding their different moral theories and different styles of arguing). To quote Goldsmith again:

'Francis Hutcheson, David Hume, and Adam Smith all explicitly rejected what they identified as Mandeville's view. Yet all adopted or absorbed some of the most important aspects of Mandeville account of society and morality. All rejected the suggestion that selfish and self-interested behavior was itself wrong . . . They could do this because they accepted Mandeville's demonstration that this behavior was beneficial but discarded the rigid, impossible standard of virtue that he undermined by insisting upon. Thus they rehabilitated human nature from Mandeville's strictures by adopting moral theories according to which luxury, selfishness, pride, emulation, and appobativeness were not necessarily vices to be condemned. And so they were able to moralize the practices of a commercial society which led to prosperity and happiness - not to the virtue demanded by civic humanism or the performance of duty demanded by nature law' (604-605)

* My comparison between Mandeville and Machiavelli was not intended to suggest a similarity between the content of the thought of either thinker. Rather my point was that both thinkers were viewed as evil and hence subsequent writers were disinclined to quote them approvingly and were more likely in fact to do the exact opposite!

** The later scholastics did not denigrate commerce and their writings contain much valid economic analysis but their work was little read in Britain after the Reformation.

Comments

[Gavin Kennedy]

Mark
I have responded on Lost Legacy to your most recent post that insists Adam Smith held similar views. This is not supported by what either of them wrote, though anything can be asserted by subsequent authors.

While Adam Smith did not seek to upset others, especially the Church, which had some fairly unpleasant zealots seeking signs of apostacy, he did not write to hide his moral philosophy with the cynicism you imply.

I also took the opportunity to read your impressive paper on Adam Smith and the division of labour, and Allyn Young's 1928 important contribution. I think Smith's account of the supply chains supporting the production of the labourer's woolen coat is closer to what Young was getting at (and what a gem of an insight that was!) than the pin factory example, upon which most attention has been focussed.

Integrating this insight into a neoclassical setting is not convincing in my mind. Smith's disequilibrium commercial society is not the same as is modelled in a perectly competitive general equilibtrium.

However, that's maybe for another day.

Gavin

[Mark Koyama]

Hi Gavin, I'm having trouble posting comments on your blog for some reason so I will reply here.

You are right of course that Smith is far too often described as a defender of selfishness. Perhaps where we differ in this debate in not in interpreting Smith so much as in our view of Mandeville?

I think Mandeville is serious thinker but that he deliberated couched his insights in language designed to shock rather than to enlighten.

Thanks for reading my paper, mainstream economics is still struggling to integrate Smith's insights concerning the disequilibrium nature of growth. I'm not sure to what extent it is possible to do this but it seems like a worthwhile endeavour.