Smith Snark on Bernard Mandeville

Adam Smith, one of the best known economic thinkers of all times, was writing against the economic policies of his times. The interesting ideas we find today in his Theory of Moral Sentiments (TMS) and his Inquiry into the Nature and Causes of the Wealth of Nations (WN) about markets, social organization, communities of values, beliefs, and identity are all rooted in a raging debate Smith took part in about human sociability. War, insecurity, violence, paired with distrust, envy, and selfishness, then as now, made people wonder if humans beings were made to live together. If each person only looked out for herself and social interactions could  become a source of conflict for any reason at any time, how was social order and stability even possible. There was a puzzle and a threat to be solved and reckoned with. Social order meant people lived together peacefully and cooperated, making societies prosperous and providing most of its members with opportunities to thrive and flourish. So, how could individuals moved by their desire to survive and prosper in a world of relative scarcity be part of a stable, peaceful, prosperous yet fragile social organization?  

Thomas Hobbes, in his Leviathan, had already stated the need for laws and government for society to survive. Without them, each human being would be left in a state of nature making their lives “solitary, poor, nasty, brutish, and short” (Hobbes 1909, p. 97). The secret to sociability was the existence of government, the Leviathan, capable of ordering, punishing and keeping selfish human beings from hurting each other. People were made to be sociable.  

In the first paragraph of the TMS Smith takes issue with this pessimistic view. From the very beginning of his first published, and very successful book, Smith states that human beings are also genuinely interested in others. Fellow-feeling, even with no direct interest or connection, is as essential to human beings as looking out for oneself. People are not sociable because of external constraints, they are not sociable because they need to be or because it is in their best interest to seem sociable; it is in their nature. We are sociable.  

Smith´s 1756 letter to the Edinburgh Review on Jean-Jacques Rousseau’s Discourse on the Origin and Basis of Inequality Among Men, published in 1755, makes clear he did not think that Hobbes was the only one to hold this pessimistic view nor that Rousseau was such an original thinker[1]. Rousseau, according to Smith, could also be associated with this selfish hypothesis but the direct connection was not Hobbes but Bernard Mandeville. This medical doctor from the Netherlands who had become a moral philosopher in England had published controversial books attacking public policy based on, what he thought was, a hypocritical and unrealistic view of human nature. Humans, these selfish beings, could never be truly virtuous, if by virtue we were to understand wholly rational, peaceful, other regarding behavior or in Mandeville’s words a “rational ambition of being good” (Mandeville 1988, i.260). Passions and desires, worldly and spiritual, were the driving forces of a rich prosperous, peaceful and strong nation. Human beings are not naturally sociable but, through the “dexterous management of a skillful politician” and “human sagacity” they can be made to live together, just as grapes are not wine but can be turned into wine[2] (Mandeville 1988). 

Mandeville is best known for his succès de scandale. During his lifetime his books were burnt in public places, he was called “Man-devil” and many believed he promoted vice and debauchery. Smith referred to Mandeville’s work as a licentious system, made up of lies but with a sound of truth that made it familiar and attractive. We do not read Mandeville much anymore. Arthur Diamond (1985) wrote there was nothing else to be found in his work; Mandeville was a thing of the past. But, it turns out, Mandeville is one of those authors that, as Levy (1987) argued, is always there, his ideas present as an ominous description of human behavior and market society.  

Joseph Schumpeter (1954, p.184) remarked that Smith “the respectable professor” must have been shocked realizing that “Mandeville’s argument was an argument for Smith’s own pure Natural Liberty couched in a particular form”. Schumpeter was pointing at the shared view that people should be left free to pursue their own interest for the benefit of all. “Private vices, publick benefits” would be a predecessor to what we now identify as Smith’s invisible hand. 

Mandeville is present in Smith’s work not only explicitly, he dedicated a whole section of his TMS to “Dr. Mandeville’s licentious system”, something he did not do with any other author, but also as a constant unnamed presence. If, as Daniel Diatkine (2021) and other scholars have argued, we accept that WN is a response to mercantilism, or to the commercial system as Smith named it, and if Mandeville, as Smith stated, is himself part of this commercial system, then the WN is also directed against Mandeville.

It is not only Dr. Mandeville’s pessimistic and pernicious moral system that Smith has in mind. Smith criticizes the connection this moral system had with the commercial system that explained a large part of the economic policy that hindered the natural progress of opulence (Hurtado, 2006). “Dr. Mandeville’s system that private vices are public benefits” is built upon the mistake that “what is spent at home is all spent among ourselves, none goes out of the country” so people can spend as much money as they like in their own country because no money would leave (Smith 1982, p.513). The more money, precious metals, a nation had, the wealthier it was because, the commercial system took money for wealth.

This would also explain, according to Smith, the importance the commercial system, and Mandeville (1988, i p.248-9; 115-16, 304), mistakenly gave to commercial surplus. Promoting high priced exports and imposing high tariffs on imports would make money flow into the country. Smith, on the contrary, believed that controlling international trade would not regulate the flow of precious metals, and the depreciation of the exchange rate would not increase  commercial deficit (Smith 1982[1776], p.433-4; p.512-13). 

Their disagreement on this point reflects a major one on policy making. Mandeville assumed legislators intended to promote national prosperity thus advancing the interest of the nation. For Smith, this was far from being the case. The interest that Mandeville and the rest of the commercial system advanced was the merchants’ and they imposed on the rest of the population presenting it as the general interest. This is clear in Mandeville’s and Smith’s completely opposite views on wages. 

Even if Mandeville considered money was essential to the existence of society (Mandeville 1988, i p.349), he also realized “too much Money can undo a Nation” (Mandeville 1988, i.194), and, contrary to what Smith wrote, he did not take it for wealth. A nation’s surest wealth consisted “in a multitude of laborious poor” (Mandeville 1988, i p.287). Mandeville was advocating for keeping workers poor. Poverty was useful because it made workers work (Mandeville 1988, i p. 92-3, 192, 194, 287, 302). Following the doctrine of the utility of poverty, poor laborers should and would not save; they would spend everything and stop working while they did (Mandeville 1988, i p.193, 287). Smith could not disagree more. Increasing wages, or the “liberal reward of labour”, were a sign of prosperity. Increasing wealth led to increasing wages, and this “progressive state” was when “the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable. The progressive state is in reality the chearful and the hearty state to all the different orders of society” (Smith 1982[1776], p.99). 

Smith was right to take Mandeville’s arguments head-on. Commercial society was desirable but not for the reasons Mandeville gave. Agreed commerce made nations prosperous but commercial society did not rely on an unlimited and selfish individual desire for well-being, nor did it require a mass of laboring poor for some to live in leisure and benefit from this prosperity. People should be wary of “the dextrous Management of a skilful Politician” (Mandeville 1988, i p.369) should this politician become a “man of system […] 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” (Smith 1982 [1759], p.233-4) and become a despotic Leviathan. 

 

Diamond, A. (1985). “Does Mandeville Matter Today?” History of Economics Society Bulletin, 6(2), 30-36. 

Diatkine, D. (2021). Adam Smith and the Wealth of Nations. The Discovery of Capitalism and its Limits. Palgrave Studies in the History of Economics Series, London: Palgrave Macmillan Cham. 

Hobbes, Thomas (1909). Hobbes’s Leviathan. Reprinted from the edition of 1651 with an Essay by the late W.G. Pogson Smith. Oxford: Oxford University Press. Available at: https://files.libertyfund.org/files/869/0161_Bk.pdf

Hurtado, J. (2006). “The mercantilist foundations of ‘Dr. Mandeville’s licentious system’. Adam Smith on Bernard Mandeville” in. L. Montes & E. Schliesser (eds.) New Voices on Adam Smith, London: Routledge, pp. 221-246.

Levy, D. (1987). “Is Mandeville Useful Today? A Comment”. History of Economics Society Bulletin, 8(2), 51-53. 

Mandeville, B., (1988). The Fable of the Bees or Private Vices, Publick Benefits, 2 vols. with a Commentary Critical, Historical, and Explanatory by F.B. Kaye, Indianapolis: Liberty Fund. Available at http://oll.libertyfund.org/titles/1863

Sagar, Paul (2018). “Smith and Rousseau. After Hume and Mandeville.” Political Theory, 46(1), 29-58. 

Schumpeter, J.A. (1954). History of Economic Analysis. London: Allen & Unwin. 

Smith, A. (1982 [1759]). Theory of Moral Sentiments. ed. D. D. Raphael and A. L. Macfie. Indianapolis: Liberty Fund. 

Smith, A. (1982 [1776]. Inquiry into the Nature and Causes of the Wealth of Nations. R.H. Campbell and A.S. Skinner (eds). Indianapolis: Liberty Fund. 

Smith, A. (1980 [1756]). “Letter to the Edinburgh Review,” in Essays on Philosophical Subjects, ed. W. L. D. Wightman. Indianapolis: Liberty Fund.

Smith, A. (1982). Lectures on Jurisprudence. R.L. Meek, D.D. Raphael & P.G. Stein (eds)., Indianapolis: Liberty Fund. 

[1] See Paul Sagar (2018) for a compelling argument on Smith’s rather mitigated interest in Rousseau. Sagar distances himself from a trend in Smith scholarship comparing both thinkers by reading Smith as a response to Rousseau.
[2] I expand on this argument in “Mandeville, Grapes, Wine, and Government” part of the October 2020 edition of Liberty Matters on Mandeville. https://oll.libertyfund.org/page/liberty-matters-mikko-tolonen-mandeville-hayek-politics-of-selfesteem#Hurtado Response 

Want more SmithSnark?  
Doug Den Uyl's Smith Snark on Shaftesbury
Shannon Chamberlain's Smith Snark on Epictetus
John Alcorn's Smith Snark on François de La Rochefoucauld

Even more to check out:
Liberty Matters: Mikko Tolonen, Mandeville, Hayek, and the Politics of Self-Esteem (October 2020)
Sarah Skwire’s Why does Mandeville make Smith so mad?
Garret Edwards' If Bernard Mandeville is Larry David, who's Jerry Seinfeld? Adam Smith, of course.
Garth Bond's Mandeville’s Social Toyman and Social Media
Wally Thurman on Bees, Beekeeping, and Coase on EconTalk. (This 2013 podcast is about Bees and has nothing to do with this article, but we're including it for completeness.)

And if you want to read more about Mandeville:
Mandeville: His Life and Work at the Online Library of Liberty
F.A. Hayek's "Dr. Bernard Mandeville." Master-Mind Lectures, The British Academy (1966).