3 BERNARD MANDEVILLE (1670–1733)

The 18th-century Milton Friedman?

It is the best poem in economics. It is also a rhyming one, suggesting, in the words of Alan Partridge, that “the author has put in that little bit of extra work”. It is also deeply controversial. For some people the poem epitomises the acquisitiveness and selfishness that capitalism supposedly encourages. Bernard Mandeville’s The Grumbling Hive, first published in 1705, recounts the story of a hive of bees. Each and every one of the bees living in the hive is morally corrupt. The doctor bees value “Fame and Wealth” above “the drooping Patient’s Health”. The lawyer bees cheat everyone else. The rest of the bee society is composed of “Sharpers, Parasites, Pimps, Players, Pick-Pockets, Coiners, Quacks, Sooth-Sayers”.

But the hive is thriving. “A Spacious Hive well stock’d with Bees/That lived in Luxury and Ease.” The message of the poem is that the bee society is so prosperous precisely because everyone is so moneygrubbing and immoral. So while “every Part was full of Vice/Yet the whole Mass a Paradice”. The poem, however, does not have a happy ending. “Rogues” appear, who pledge to “rid/The bawling Hive of Fraud”. As a consequence the bees become more virtuous and less selfish. The economic impact is devastating. “As Pride and Luxury decrease, So by degrees they leave the Seas. Not Merchants now, but Companies Remove whole Manufactories. All Arts and Crafts neglected lie.”

Mandeville’s most famous literary contribution appears to be an endorsement, even a celebration, of self-interest and immorality. The thinking goes that the consumption of luxuries, no matter how morally compromising–fine silks, wine, visiting prostitutes–is actually a good thing. By this twisted logic, behaving like a libertine is actually deserving of praise because it creates economic activity and employment. It is, in Mandeville’s own words, a “Noble Sin”. As the poem puts it, “Luxury/Employ’d a Million of the Poor/And odious Pride a Million more.”

Private Vices, Publick Benefits

Many have taken Mandeville to be the first uber-capitalist. He appears to be making two related arguments. First, the only legitimate way to judge a society is by how rich it is–rather than, say, how virtuous it is. Second, that to make a society rich you need to let people indulge the vices of greed and pride.

Mandeville, in sum, seems to be advocating an extreme form of laissez-faire economics. The Fable of the Bees, or: Private Vices, Publick Benefits appeared in 1714. It contained The Grumbling Hive, which was originally published in 1705. In the introduction to the definitive 1924 edition of The Fable of the Bees, F. B. Kaye argues that “Mandeville maintains, and maintains explicitly, the theory at present known as the laissez-faire theory, which dominated modern economic thought for a hundred years and is still a potent force.” Another contributor finds “much justification for F. B. Kaye’s assertion that Mandeville’s Fable of the Bees is the first systematic presentation of the laissez-faire philosophy”.

Polite society blanched at the amoral individualism that The Grumbling Hive endorsed. Adam Smith thought it presented an overly simplistic, even cynical, view of human motivation. The book was reportedly held up to be a “public nuisance” before a jury in Middlesex. John Maynard Keynes found only one authority willing to speak up for it–Samuel Johnson, the arch-contrarian, who declared that he did not hate it. Rather, it “opened his eyes into real life very much”.¹

The fables about the Fable

Mandeville was not, of course, a trained economist; the subject hadn’t been invented yet. But neither was he numerically minded, unlike Petty. Mandeville had trained as a doctor in the Netherlands, where he was born in 1670. Within a few years of moving to England he had learned the language so well that few people could tell that he was not a native speaker. It is not clear what first attracted him to economics, but there seems to be an odd affinity between that subject and medicine. Not only was Mandeville a doctor, but so were Petty and François Quesnay. Perhaps these people were intrigued by the movement of money around an economy, just as blood moves around the body.

Hard-line economists often dismiss Mandeville as a lightweight. Friedrich Hayek wrote “what Mandeville has to say on technical economics seems to me to be rather mediocre, or at least unoriginal”. And it is impossible to ignore the fact that Mandeville made some odd logical leaps. Salim Rashid, a historian, goes to town on Mandeville’s theories, pointing out problem after problem. Mandeville argues that the Great Fire of London of 1666, though superficially a “great Calamity”, was actually a really good thing for the city, since it provided lots of employment for people who were to rebuild it: “the Carpenters, Bricklayers, Smiths, and all” were happy to have the opportunity of “full Employ”, as Mandeville puts it. According to Mandeville, were that group “to Vote against those who lost by the Fire; the Rejoicings would equal if not exceed the Complaints”. Mandeville, of course, ignores the fact that burning down London was enormously inconvenient for a great number of people, and that Britain was probably worse off with a rebuilt London than it would have been in the absence of the fire. It hardly seems right to argue that littering is a good idea because it gives employment to street-cleaners, or that people should deliberately get sick because it gives work to doctors.

Mandeville’s theory of luxuries is also interesting. He argues that prohibitions on activities such as boozing or visiting prostitutes are a bad idea. They are a bad idea because the result would be lower overall spending in the economy. That, in turn, would lead to joblessness for the worst-off. Of course, someone who was not allowed to pay for a prostitute might well spend the money now saved on nutritious food. But then again they might not spend it at all, preferring to stuff it under the proverbial mattress instead. And who benefits from that?

It was for this reason that Mandeville had an eye to the economic impact of well-meaning moralisers. If something had to be done about sordid activities, better to regulate than to ban. Alfred Chalk, a historian, points out that as far as Mandeville was concerned, only “certain restrictions concerning time and place” were necessary to regulate both prostitution and polygamy. In an anonymous pamphlet published in 1724, Mandeville supported the idea of regulated brothels, according to research by Bruce Elmslie, an economist.

Free to choose

But Mandeville’s contribution to economic thought does not end there. Mandeville did not really see himself as an economic theorist. Rather he is best viewed as a philosopher of capitalism. Here a comparison with Milton Friedman, perhaps the most famous economist of the 20th century, is instructive. Friedman was also interested in the ethics of capitalism. When it came to the question of how businesses should behave, he took a fairly hard line. “There is one and only one social responsibility of business,” he writes, “to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

You are probably thinking that Friedman sounds a lot like Mandeville. Actually the opposite is true. Mandeville did think that letting people spend their money however they liked would be good for capitalism. But then he pushes the question one step back. Do we want capitalism to thrive if it leads to us to sacrifice our principles? Greed might well lead to higher overall wealth, Mandeville says. But at what ethical cost?

To understand this philosophy of capitalism, you need to understand the notion of “self-denial”. Humans, Mandeville argued, are constantly torn between self-denial and self-indulgence–between, say, cooking for your partner after they have had a long day at work, and going out with your mates. For Mandeville, self-denial is a virtuous act, while self-interest is not. (This is also a notion central to many schools of religious thought.) People struggle against their “various Passions” to do the right thing.

One can question the philosophical basis of the self-interest/self-denial opposition. Mandeville is never particularly clear at which point self-denial turns into self-interest. If people take pleasure and pride in denying themselves things, is that just as bad as not self-denying? Francis Hutcheson (1694–1746), one of Adam Smith’s teachers, quipped that Mandeville “has probably been struck with some old Fanatick sermon upon Self-Denial in his Youth, and can never get it out of his head since”.

At any rate, Mandeville liked the concept a lot, and used it to construct his ethical critique of capitalism. The argument boils down to this. Mandeville argues that in pre-capitalist days, society gave self-denial pride of place. But then capitalism came along. Suddenly self-interest became a whole lot more respectable. As George Bragues, a business theorist, argues, “by raising the standing of those who skilfully gratify their avarice, and providing them with power, privilege, and fame, commercial societies undermine the low ranking which the traditional moral consensus had assigned to the selfish”. Thomas Horne, an economist, refers to this as “the moral problem of commercial society”; the notion that capitalism “does not just recognise and use the self-interest that seems to be a part of human nature, but also enhances it in the name of economic efficiency”.

On these grounds Mandeville appears to find it difficult to support the idea that market exchange is good. Capitalism’s celebration of self-interest, he says, promotes “the degeneracy of Mankind”. Bragues finds that Mandeville “takes particularly aim at sellers for being willing to embellish the quality of their goods, fake an interest in the buyer’s well-being, and exploit the psychological vulnerabilities of customers”. Think about when an estate agent tries to let or sell you a house. They pretend to be interested in your wellbeing; but once the money has changed hands they never again ask how you are doing. Mandeville talks of the “innumerable Artifices, by which Buyers and Sellers out-wit one another, that are daily allowed of and practised among the fairest of Dealers”. In a word, under capitalism people stop caring for one another, and see other people purely as a means to an end: self-enrichment. Mandeville’s argument has a faint ring of the notion of “commodity fetishism”, which Karl Marx was to develop over a century later (see Chapter 15). Marx and Friedrich Engels describe a society that “left remaining no other nexus between man and man than naked self-interest, than callous cash payment”. Marx, indeed, professed himself a fan of Mandeville.

Historians argue how much Mandeville personally cared about the supposed rise of self-interest. Did it bother him that self-interest supplanted self-denial, or was he merely pointing it out? One theory is that he did not much care. He just liked to poke fun at the hypocrisy of the elites. Mandeville found it funny, in Russell Nieli’s words, that people “still on occasion paid lip-service to traditional Christian and Stoic moral virtues, while practicing in their daily lives an ever more conspicuous worldliness”. Mandeville put it well: “The practice of nominal Christians is perpetually clashing with the theory they profess.”

And what if you were to turn to Mandeville and say: “Yes, capitalism is morally corrosive, but look at the prosperity it has created”? Mandeville would accept that entirely. “If the ancient Britons and Gauls should come out of their Graves,” he said, “with what Amazement would they gaze on the mighty structures everywhere rais’d for the poor!” And as The Fable of the Bees clearly demonstrates, he believed that curtailing vices would lead to a sharp drop in economic activity. Unfortunately, therefore, Mandeville could do little more than huff and puff about the state of the world. How could he possibly decide which was better: moral virtue or material comforts? “For Mandeville,” say Phyllis Vandenberg and Abigail DeHart, two scholars, “society could be prosperous and based on private vices, or poor and based on private virtues–but not both.”

All of this makes Mandeville an incomplete but still interesting thinker. One has to think of him in two parts. First, he did believe that luxuries were good for capitalism. Allowing people to behave in a greedy, self-interested way had a solid economic justification. In that sense you can see him as an intellectual inspiration for laissez-faire economists. But it is important to acknowledge the second part of Mandeville’s thought. He did not much care whether or not capitalism was healthy. Instead he worried about the sort of society that capitalism might end up creating. He asked a question that no one in capitalist society can ever ignore: when does my desire to enrich myself conflict with my morals?