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As Hirschman points out, even Keynes noted that it was “better that a man should tyrannize over his bank balance than over his fellow-citizens,” expressing the hope that the former might serve as “an alternative” to the latter.
Mainstream economic theory makes powerful use of the assumption of full-blooded pursuit of self-interest. Some specific results, including the central Arrow-Debreu theorems on the efficiency and Pareto optimality of competitive equilibria, are based on ruling out “externalities” (including altruism) altogether, except in some very restricted form.
Even when altruism is allowed (as, for example, in Gary Becker’s model of rational allocation), it is assumed that the altruistic actions are undertaken because they promote each person’s own interests; there are personal gains to the altruist’s own welfare, thanks to sympathy for others.
The ideas recalled here had quite an impact in justifying the newly developing system of capitalism (invoking the power of benign self-interest), and even if things did not exactly work out as foreseen, the ideas did influence what happened. This is the pivotal reality of an imagined world that helped to create the real world in which we now live.
THIS essay has its origin in the incapacity of contemporary social science to shed light on the political consequences of economic growth and, perhaps even more, in the so frequently calamitous political correlates of economic growth no matter whether such growth takes place under capitalist, socialist, or mixed auspices.
As a result, philosophers and political economists could range freely and speculate without inhibitions about the likely consequences of, say, commercial expansion for peace, or of industrial growth for liberty.
How did commercial, banking, and similar money-making pursuits become honorable at some point in the modern age after having stood condemned or despised as greed, love of lucre, and avarice for centuries past?
No matter how much approval was bestowed on commerce and other forms of money-making, they certainly stood lower in the scale of medieval values than a number of other activities, in particular the striving for glory.
At the beginning of the Christian era St. Augustine had supplied basic guidelines to medieval thinking by denouncing lust for money and possessions as one of the three principal sins of fallen man, lust for power (libido dominandi) and sexual lust being the other two.
Thus Augustine speaks of the “civil virtue” characterizing the early Romans “who have shown a Babylonian love for their earthly fatherland,” and who were “suppressing the desire of wealth and many other vices for their one vice, namely, the love of praise.”
For the later argument of this essay it is of considerable interest that St. Augustine conceives here of the possibility that one vice may check another.
Then, during the Renaissance, the striving for honor achieved the status of a dominant ideology as the influence of the Church receded and the advocates of the aristocratic ideal were able to draw on the plentiful Greek and Roman texts celebrating the pursuit of glory.
This powerful intellectual current carried over into the seventeenth century: perhaps the purest conception of glory-seeking as the only justification of life is to be found in the tragedies of Corneille. At the same time, Corneille’s formulations were so extreme that they may have contributed to the spectacular downfall of the aristocratic ideal that was to be staged by some of his contemporaries.
This astounding transformation of the moral and ideological scene erupts quite suddenly, and the historical and psychological reasons for it are still not wholly understood.
Denunciation of the heroic ideal was nowhere associated with the advocacy of a new bourgeois ethos.
The fact is of course that, less than a century later, the acquisitive drive and the activities connected with it, such as commerce, banking, and eventually industry, came to be widely hailed, for a variety of reasons.
The implication was that moral and political philosophers had hitherto talked exclusively about the latter and had failed to provide guidance to the real world in which the prince must operate. This demand for a scientific, positive approach was extended only later from the prince to the individual, from the nature of the state to human nature.
THE overwhelming insistence on looking at man “as he really is” has a simple explanation. A feeling arose in the Renaissance and became firm conviction during the seventeenth century that moralizing philosophy and religious precept could no longer be trusted with restraining the destructive passions of men.
The most obvious alternative, which actually antedates the movement of ideas here surveyed, is the appeal to coercion and repression. The task of holding back, by force if necessary, the worst manifestations and the most dangerous consequences of the passions is entrusted to the state.
Out of ferocity, avarice, and ambition, the three vices which lead all mankind astray, [society] makes national defense, commerce, and politics, and thereby causes the strength, the wealth, and the wisdom of the republics; out of these three great vices which would certainly destroy man on earth, society thus causes the civil happiness to emerge.
It may therefore be said that Mandeville restricted the area in which he effectively claimed validity for his paradox to one particular “vice” or passion. In this retreat from generality he was to be followed, with the well-known resounding success, by the Adam Smith of The Wealth of Nations, a work that was wholly focused on the passion traditionally known as cupidity or avarice.
In this limited and domesticated form the harnessing idea was able to survive and to prosper both as a major tenet of nineteenth-century liberalism and as a central construct of economic theory.
The major passions had long been solidly linked to one another in literature and thought, often in some unholy trinity, from Dante’s “Superbia, invidia e avarizia sono / le tre faville ch’anno i cuori accesi”e to “Ehrsucht, Herrschsucht und Habsucht”f in Kant’s Idea for a General History.
The Advancement of Learning
The idea of controlling the passions by playing one off against the other is, moreover, highly congruent with the irreverent and experimental bent of his thought.
Unlike Spinoza, Hume was eager to apply his insight. He did so immediately in Book III of the Treatise when discussing the “origin of society.” Speaking of the “avidity … of acquiring goods and possessions,” he finds this so potentially destructive and also so uniquely powerful a passion that the only way of checking it is to have it countervail itself. This does not seem an easy operation to perform, but here is how Hume solves the problem:
Let us, therefore, rest contented with asserting that two opposite vices in a state may be more advantageous than either of them alone; but let us never pronounce vice in itself advantageous.
Whatever may be the consequence of such a miraculous transformation of mankind as would endow them with every species of virtue, and free them from every species of vice; this concerns not the magistrate who aims only at possibilities. Very often he can only cure one vice by another; and in that case, he ought to prefer what is least pernicious to society.
This polemic suggests that the idea of engineering social progress by cleverly setting up one passion to fight another became a fairly common intellectual pastime in the course of the eighteenth century.
The principle of the countervailing passion had arisen in the seventeenth century on the basis of its somber view of human nature and of a general belief that the passions are dangerous and destructive.
“One becomes stupid as soon as one ceases to be passionate.”
For the next step in our argument, it is particularly significant that the word “interest” was here used as a generic term for those passions that are assigned the countervailing function.
“ambition must be made to counteract ambition.”
But it may be significant that the principle of the division of powers was given the attire of another: the comparatively novel thought of checks and balances gained in persuasiveness by being presented as an application of the widely accepted and thoroughly familiar principle of countervailing passion.
A specific role assignment of this sort underlies the Hobbesian Covenant, which is concluded only because the “Desires, and other Passions of men,” such as the aggressive pursuit of riches, glory, and dominion, are overcome by those other “passions that incline men to Peace,” which are “Feare of Death; Desire of such things as are necessary to commodious living; and a Hope by their Industry to obtain them.”
But many contemporaries of Hobbes, while sharing his concern about the predicament of man and society, did not embrace his radical solution and felt, moreover, that the countervailing strategy was needed on a continuing, day-to-day basis.
Such a formulation emerged in fact and took the form of opposing the interests of men to their passions and of contrasting the favorable effects that follow when men are guided by their interests to the calamitous state of affairs that prevails when men give free rein to their passions.
Once again Machiavelli stands at the source of the flow of ideas to be examined, just as he had initiated the train of thought that developed into the notion of pitting passions against passions. As we shall see, these two flows ran separately for a long time, but in the end they merged—with some remarkable results.
Les princes commandent aux peuples, et l’intérêt commande aux princes.k
interest the “tyrant of tyrants”
in matters of state one must not let oneself be guided by disorderly appetites, which make us often undertake tasks beyond our strength; nor by violent passions, which agitate us in various ways as soon as they possess us; … but by our own interest guided by reason alone, which must be the rule of our actions.l
It is richly ironical that the new doctrine of princely interest should have come to warn and inveigh against indulging the passions so soon after the moralizing and religious precepts of old had been ridiculed as unrealistic and useless.
“reasonable self-love”—that is interest—
The transition from the interest of the ruler to the interests of various groups among the ruled proceeded in somewhat different ways in England and France. In England the concept of interest in the singular that was to guide princes and statesmen and later turned into the “national interest” was apparently imported from France and Italy early in the seventeenth century.m Rohan’s On the Interest of Princes and States of Christendom was particularly influential. It was rapidly translated and provoked much comment. One of Rohan’s pithy phrases in his opening paragraph—l’intérêt seul ne peut
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By the word interest I understand not always an interest concerned with wealth (un intérêt de bien), but most frequently one that is concerned with honor or glory.43
This warning against misunderstanding was the only point of real substance in a very short preface; clearly, for the average reader of the Maximes, the term “interest” had started to take on the more restricted sense of economic advantage.
Actually Adam Smith stated the last point as a general proposition when discussing what he considered the overriding motive of man, namely, the “desire of bettering our condition”:
But because of the just noted semantic drift of the term “interests,” the opposition between interests and passions could also mean or convey a different thought, much more startling in view of traditional values: namely, that one set of passions, hitherto known variously as greed, avarice, or love of lucre, could be usefully employed to oppose and bridle such other passions as ambition, lust for power, or sexual lust.
no change whatever can be found in the assessment of avarice as the “foulest of them all” or in its position as the deadliest Deadly Sin that it had come to occupy toward the end of the Middle Ages.
But once money-making wore the label of “interests” and reentered in this disguise the competition with the other passions, it was suddenly acclaimed and even given the task of holding back those passions that had long been thought to be much less reprehensible.
