PhD_04

 

Chapter 4: The Invisible Hand of God in Adam Smith

 

Links to the other chapters:

 

Title page, dedication, contents, key words, abstract and acknowledgements

Chapter 1: Introduction: Holism versus reductionism in economic thought

Chapter 2: the Prisoners' Dilemma

Chapter 3: Arrow's Impossibility Theorem

Chapter 4: The Invisible Hand of God in Adam Smith

Chapter 5: Friedrich Hayek: a Panglossian evolutionary theorist

Chapter 6: Keynes’s methodological standpoint and policy prescription

Chapter 7: Conclusion; glossary; and bibliography

 

 

 

 

Chapter 4        The Invisible Hand of God in Adam Smith[1]

 

 

4.1       Introduction

 

The two previous chapters have looked at the mid- and late-twentieth century response of political economy to two perceived anomalies which have been seen as challenges to the invisible hand hypothesis: the prisoners’ dilemma and Arrow’s impossibility theorem.  In the present chapter attention returns to the roots of this tradition in the writings of the eighteenth century father of nineteenth and twentieth century economics: Adam Smith.

 

Adam Smith has been lauded by the economists – both orthodox and heterodox – of the last two centuries as the founder of their discipline.  As Heilbroner says ‘An aura surrounds Smith, endowing his name with an authority not enjoyed by any other worldly philosopher except Marx’ (Heilbroner, 1986: 1).  On the orthodox side, for just two examples of Smith’s continuing influence at all levels of the discipline, see the references to the ‘invisible hand’ in the ‘industry standard’ introductory economics textbook, Begg, Fischer and Dornbusch (1991: 9, 50, 260), and in the 1996 Nobel Prize Lecture (Mirrlees, 1997: 1311).  On the heterodox side, it is well known that Marx, for example, divided political economists into ‘scientific’ and ‘apologetic’ classes, with Smith and Ricardo representing the pinnacle of the scientific or ‘classical’ group and, roughly, everyone after Ricardo being consigned to the apologetic, or ‘vulgar’ trend (Marx, 1972: 501).  I want to argue here, however, that there is a very significant apologetic[2] aspect to Smith, which has as yet received little attention, and, further, that this apologetic aspect is intimately concerned with Smith’s conception of the articulation between micro and macro levels, between individual actions and social consequences.

 

It is of course easy to point to specific passages and throw up one’s hands at the ease with which Smith satisfies himself that we are living in the best of all possible worlds – and just as easy to dismiss such passages as obiter dicta unrelated to his basic theme.  Here, for example, is a famous passage, the second, in fact, of the three occasions on which Smith makes use of the notion of an ‘invisible hand’, but for all that not always given in full:

 

“The rich ... are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.  When providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition.  These last too enjoy their share of all that it produces.  In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them.  In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.”  (TMS IV.1.10)

 

So the poor should be content with their lot – they are just as well off as the rich in the things that really matter.  Perhaps the typical reaction on reading this is to dismiss it as a vulgar aside, a mere personal prejudice, having no bearing on Smith’s scientific researches.  This, however, would be profoundly mistaken.  The thesis of this chapter is that Smith’s whole system of thought can be understood as aiming, not so much at discovery of the world, but at reconciliation with it – indeed, he plainly says as much – and the notion of the ‘invisible hand’ lies at the heart of this reconciliation.

 

This chapter examines the evidence in Smith’s works – in particular The History of Astronomy, The Theory of Moral Sentiments, and, to a lesser extent, The Wealth of Nations – that this was indeed his approach.  The next section constitutes a bibliographical preamble discussing the relationship of each of these three works to Smith’s overall Weltanschauung.  Then a section on The History of Astronomy argues that in his major methodological work Smith presents a view of science as an activity aimed, in the first instance, at reconciling us with the world, rather than at theoretically apprehending it. Section 4 presents Smith’s stoic conception of the world as a harmonious machine operated by a utilitarian deity.  This conception first arises and is presented with great clarity in The Theory of Moral Sentiments; it is then applied to, or rather, simply imposed upon, the social world in The Wealth of Nations.  A subsequent section establishes the links between Smith and his contemporaries, showing how profoundly in tune he was with the Zeitgeist of the second half of the eighteenth century. The section also discusses his failure to deal with some critical contradictions in his system. The conclusion notes two possible responses to Smith: that an evolutionary mechanism can replace a utilitarian deity as a mechanism ensuring that macro optimality corresponds to micro rationality; and, alternatively, the recognition that there is no such automatic mechanism behoves us to construct one ourselves.

 

A preliminary caveat is in order.  My purpose is not to deny the enormous contribution which Smith has made to the development of economics.  That would be absurd.  A full account of Smith would present those contributions alongside what (as I argue in this chapter) are major shortcomings in Smith’s work.  My purpose here is far more circumscribed; namely, to trace one particular feature, albeit a key feature, of Smith’s thought.  The object is to show how Smith believed that the hand of God would invisibly, ‘by that eternal art which educes good from ill’ (TMS I.ii.3.4), ensure that uncoordinated individual actions would always lead to ‘the greatest possible quantity of happiness’ (TMS VI.ii.3.1), and to show how this belief is related to his philosophy as a whole.

 

4.2       Bibliographical note

 

I shall be referring to the two works which Adam Smith published in his lifetime, the Wealth of Nations and the Theories of Moral Sentiments – hereafter referred to as WN and TMS, and one posthumous work, known, misleadingly, as the History of Astronomy, and referred to here as Astronomy.  The edition of these works that I will refer to is that contained in Adam Smith (1976-1980) The Glasgow Edition of the Works and Correspondence of Adam Smith Oxford: Clarendon Press/OUP (reprinted (1981-82) Indianapolis: Liberty Fund).  The relevant volumes of the Works are:

 

–          Volume I (1976) The Theory of Moral Sentiments, ed AL Macfie and DD Raphael[3] (hereafter TMS);

 

–          Volume II (itself in two volumes) (1976) An Inquiry into the Nature and Causes of the Wealth of Nations, ed RH Campbell, AS Skinner and WB Todd (WN);

 

–          Volume III (1980) Essays on Philosophical Subjects, ed WPD Wightman and JC Bryce (EPS).  This volume includes the Astronomy, the Letter to the ‘Edinburgh Review’ (1756), and a number of other miscellaneous items by, and about, Adam Smith. 

 

This Works is regarded as the definitive edition: enormous scholarly efforts have been made, by comparison with all published and unpublished sources, to present Smith’s work in its most mature and finished form, with variations reported in footnotes and appendices throughout.  References to Smith’s writings, by convention, will be, as appropriate, to the Part, Section, Chapter, subsection and paragraph to preserve consistency with other editions.  Editorial introductions are listed separately in the bibliography to this thesis and referred to as such for the sake of clarity. 

 

Adam Smith (1723-1790) published two books in his lifetime.  His first, TMS, first published in 1759, was also his last: the 6th edition in 1790 contained extensive revisions and additions worked up by Smith in the last year of his life.  WN was first published in 1776; the 5th edition appeared in 1789 and a 6th, posthumous, edition in 1791.  The History of Astronomy is a fragment of an uncompleted larger work entitled The Principles which Lead and Direct Philosophical Enquiries; Illustrated by the History of Astronomy, by the History of the Ancient Physics, and by the History of the Ancient Logics and Metaphysics.  The fragments come to just under 100 pages, most of which consists of the part on the History of Astronomy, giving the whole its conventional name.  Astronomy was first published in 1795 in a posthumous volume entitled Essays on Philosophical Subjects edited by Joseph Black and James Hutton.  It was written at various times, but textual analysis reveals that even the later parts were written before 1758, and most likely the main part was drafted in the late 1740s (Wightman, 1980: 7-8).  This makes it nearly contemporaneous with the composition of TMS (1st edition, 1759).  Shortly before he died, Smith had the bulk of his papers burnt (EPS: 327n), only passing a few to his literary executors for them to make up their own minds on the question of possible publication.  In an earlier (1773) letter to Hume, Smith specifically singled out Astronomy as being possibly worth publishing (Wightman, 1980: 27; EPS: 328n).

 

The point here is to establish that the three works referred to can be viewed as the products of a unified system not as disparate milestones on an intellectual career culminating in WN – in which TMS and Astronomy have interest only as stages in Smith’s thought and as the prehistory of the later work.  Anikin is a clear example of the stance I am arguing against here: TMS, he says, ‘is important today mainly as a stage in the formation of Smith’s philosophical and economic ideas’ (Anikin, 1975: 187).  On the contrary: Astronomy and TMS are products of the same period and the same system of thought; the changes in TMS between the first and sixth editions are such only as to clarify and give more substance to this basic system; and the system remained unchanged in its basic outlines after five editions of the WN.  

 

“The so-called ‘Adam Smith problem’ was a pseudo-problem based on ignorance and misunderstanding.  Anybody who reads TMS, first in one of the earlier editions and then in edition 6, will not have the slightest inclination to be puzzled that the same man wrote this book and WN, or to suppose that he underwent any radical change of view about human conduct.  Smith’s account of ethics and of human behaviour is basically the same in edition 6 of 1790 as in edition 1 of 1759 .... It is also perfectly obvious that TMS is not isolated from WN (1776).”  (Raphael and Macfie, 1976: 20)

 

Indeed, Viner (1958: 215), contradicting his main thesis of irreconcilability between WN and TMS, notes that Smith was already including his major economic principles, ‘the essence of his fully developed doctrine, as expounded in the Wealth of Nations’ in a lecture of 1749, at the same time that he was writing the Astronomy, and long before publication of TMS.  Contrary to the view which sees major discontinuities between Smith’s views in TMS and WN, not to mention earlier works, we can treat Smith’s system of thought as a unity, rather than a process.  It is that unity which we are to investigate here, and the question to be addressed is: How are micro and macro levels articulated in Smith, how does the invisible hand actually work?

 

4.3       Smith’s methodological stance

 

“Starting with Adam Smith’s history of astronomy, the main theorists of classical economics sought to capture the essence of the scientific method in order to employ it in the sphere of economic research .... For Smith, the essence of science was the evocation of order, wonder[4] and intellectual delight; it was primarily an esthetic response.”  (Mirowski, 1989: 198)

 

As noted in the previous section, what is commonly known as Smith’s ‘History of Astronomy’ is more properly called, in full, The Principles which Lead and Direct Philosophical Enquiries; Illustrated by the History of Astronomy; by the History of the Ancient Physics; and by the History of the Ancient Logics and Metaphysics. The full title makes clear that Smith’s intention is to set out his conception of scientific method[5].  As far as Smith is concerned in his discussion of successive schools of thought in these Histories, the purpose of a system of thought is not so much to disclose the truth of how the world is, but, principally, to soothe the imagination which had previously been agitated by wonder at the marvels of the world[6]. 

 

“Smith’s doctrine ... measures the value of philosophical systems solely in relation to their satisfaction of the human craving for order … it leaves all science essentially hypothetical.”  (Richard Olson (1975) Scottish Philosophy and British Physics, 1750-1880 p 123, cited in Raphael and Skinner, 1980: 12)

 

At the level of appearances, Smith says, the world throws up phenomena which appear incoherent and therefore inflame the imagination.  This inflammation is to be regarded as a disagreeable sensation.  ‘When we first encounter anything that is nor familiar or expected, Smith argues, we are struck by the feelings we call Surprise and Wonder.  These are not welcome feelings.’ (Heilbroner, 1986: 15)  The job of a science is to soothe the imagination by suggesting connections between things, and by tracing the unknown back to the familiar, so that the observer may regain his tranquillity:

 

“Philosophy is the science of the connecting principles of nature.  Nature ... seems to abound with events which appear solitary and incoherent ... which therefore disturb the easy movement of the imagination .... Philosophy, by representing the invisible chains which bind together all these disjointed objects, endeavours to introduce order into this chaos of jarring and discordant appearances, to allay this tumult of the imagination, and to restore it ... to [its former] tone of tranquillity and composure ... Philosophy, therefore, may be regarded as one of those arts which address themselves to the imagination”.  (Astronomy II.12)

 

Or, more pithily, ‘it is the end of Philosophy, to allay that wonder, which either the unusual or seemingly disjointed appearances of nature excite’ (Astronomy IV.34).  We do not understand what we seek to explain by science, ‘but by categorizing things we come to be at peace with them … We draw the venom of Wonder by applying the poultice of familiarity’ (Heilbroner, 1986: 16).

 

For Smith, therefore, it is just irrelevant to talk about the truth or otherwise of the findings of a science – what matters is its success or otherwise in ‘smoothing the passage of the imagination betwixt ... seemingly disjointed objects’ (ibid), it is this criterion alone which we should bear in mind when considering the sequence of schools of thought in a science such as astronomy:

 

“Let us examine, therefore, all the different systems of nature, which ... have successively been adopted by the learned and ingenious; and, without regarding their absurdity or probability, their agreement or inconsistency with truth and reality, let us consider them only in that particular point of view which belongs to our subject; and content ourselves with inquiring how far each of them was fitted to sooth the imagination, and to render the theatre of nature a more coherent ... spectacle”.  (ibid, emphasis added)

 

Indeed, Smith concludes his discussion of Newton’s system of astronomy by confessing that it is so compelling that he had, himself, been seduced into speaking of the latter’s system as if it embodied real knowledge of the world:

 

“even we, while we have been endeavouring to represent all philosophical systems as mere inventions of the imagination, to connect together the otherwise disjointed and discordant phaenomena of nature, have insensibly been drawn in, to make use of language expressing the connecting principles of this one [sc Newton’s philosophical system], as if they were the real chains which Nature makes use of to bind together her several operations.”  (Astronomy IV.76)

 

And this is a measure of the success of Newton’s system.  The implication is, as Raphael and Skinner (1980: 19-21) point out, that it would be mistaken, or at best off the point, to regard Newton’s connecting principles as ‘the real chains’ of Nature.

 

There is a further point to be made about Smith’s methodology here.  For him, science starts off, as indeed all science must, with the level of appearances: but then, instead of penetrating those appearances to reality, the truth, to the essence of the thing, science remains at the level of appearances, merely contrasting one set of appearances with another.  In place of a congeries of apparently incoherent, isolated phenomena, Smithian science gives us a coherent and interconnected vision of the world[7].  But, for Smith, that vision is no more real, no less apparent than either the raw appearances or the connecting principles proposed by rival explanations.  The criterion for choosing between these appearances is not their greater or lesser degree of truth, but a purely aesthetic consideration: which is the more pleasing?  Thus a scientific explanation of a phenomenon is to be preferred to none, and a later system is preferred to an earlier one, because and to the extent to which they are able to provoke greater admiration (Astronomy II.12).  Though much to be preferred to the earlier systems, there is no suggestion – the  idea is without interest to Smith – that the Newtonian system is more profound, indeed, it may well be replaced when an even more pleasing system is proposed.  ‘Philosophy’ is to be traced, he says, ‘from its origin, up to that summit of perfection to which it is at present supposed to have arrived [with Newton], and to which, indeed, it has equally been supposed to have arrived in almost all former times’ (ibid).  In every period, Smith says, science is believed to have reached ‘the summit of perfection’ as the science of that period is just the scientific explanation the period finds most pleasing.  Whether there is any progress in this is left moot.

 

It has been suggested[8] that Smith denies that there is any such thing as the truth, an objective reality to the world apart from the models and images of it which we construct.  This in turn, it is argued, is a very modern view of the world, popular, for example among some twentieth century physicists.  His disdain for the truth has also been linked to Hume’s alleged scepticism.  This is a misinterpretation both of Smith and Hume[9].  For Smith, there is indeed objective truth, but human, finite minds cannot grasp, or even approach it: only the infinite mind of God can grasp all the ultimate ‘connexions and dependencies of things’.  There is thus an unbridgeable gulf between the finite and the infinite, between the human and the divine.  This was a very common medieval view of the nature of infinity; see Rucker (1995: 4), for example, for a discussion of this point in Thomas Aquinas.  This contrast will be touched on in the discussion of TMS below; indeed, it forms the basis for the very restricted role of reason and philosophy (the sphere of finitude), relative to that of sentiment and religion (the sphere of infinity), in Smith’s system. 

 

Unsurprisingly, perhaps, Smith’s editors find some difficulty in dealing with this aspect of his thought:

 

“When Smith writes that scientists have imagined inventions he does not say that they have invented science fiction – or any other sort of fiction.  But he does contrast an invention by the imagination with a discovery of the truth, and so he implies that scientific theory cannot be true.”  (Raphael and Skinner, 1980: 21)

 

Raphael and Skinner make two claims here: (a) that Smith implies that scientific theory cannot be true, and (b) that Smith does not say that scientists are writing science fiction.  In my opinion these two claims are incompatible – if what scientists say ‘cannot be true’, then it must, surely, be fiction.  But aside from that, the second claim is actually false.  Smith did not, of course, use the actual term ‘science fiction’, but he did call Descartes’ work, for example, ‘an entertaining romance’[10] – and he meant no sneer by this, for he admired Descartes greatly[11]:

 

“We need not be surprised ... that the Cartesian philosophy ... though it does not perhaps contain a word of truth ... should nevertheless have been so universally received by all the learned in Europe at that time.  The great superiority of [Descartes’] method ... made them greedily receive a work which we justly esteem one of the most entertaining romances that have ever been wrote”  (Adam Smith Lectures in Rhetoric and Belles Lettres (1748-1750), cited in editorial footnote 3, EPS: 244)

 

Again, later, in his Letter to the ‘Edinburgh Review’ (1756: §5), he says of the Cartesian philosophy, that ‘in the simplicity, precision and perspicuity of its principles and conclusions, it had the same superiority over the Peripatetic system, [as] the Newtonian philosophy [had]’ (EPS p244, emphasis added).

 

Perhaps anticipating some ‘postmodern’ writers by more than two centuries, therefore, Smith regarded the narrative as the appropriate focus for the attention of an investigating philosopher.  Although completely untrue, a romance, the principles and conclusions of Descartes’ narrative are to be regarded as as much an improvement over previous approaches as Newton’s is, because it provides simple, precise and perspicuous ... entertainment.  Descartes’ vortices reconcile us to our world, even though ‘these pretended causes of those wonderful effects, not only do not actually exist, but are utterly impossible, and if they did exist, could produce no such effects as are ascribed to them’ (TMS VII.ii.4.14).

 

Contra Raphael and Skinner, ‘science fiction’ is exactly what Smith thinks scientists are producing, but science fiction with a particular slant, science fiction with the purpose of soothing the imagination and reconciling us to the world about us.  As Mirowski points out, the primary function of science for Smith is the evocation of order.

 

This section has set out the main lines of Smith’s methodological stance and suggested links between his methodology and his underlying intellectual goals.  The purpose of doing so is to illuminate his political economy and, in particular, his notion of ‘the invisible hand’.  It is standard amongst economists today to believe that philosophy is redundant, and, in particular, that Smith’s non-economic writings can tell us nothing about his economics.  The purpose of this chapter is to make the contrary case.  Smith’s writings on methodology set out a research programme which Smith then followed in his psychological (TMS) and economic (WN) investigations: ‘the philosopher who began the essay on the history of astronomy with a theory of scientific systems is himself applying that theory in his construction of an economic system’ (Raphael, 1985: 77).

 

4.4       Smith’s Weltanschauung

 

4.4.1    All is for the best in this world and we should accept our lot with joy

 

Smith’s Weltanschauung is adopted, with minor modifications, from the Stoics[12]; the points where Smith does, and does not, agree with the Stoics, are not, however, germane to the theme presented here[13].  Smith believes that the universe, or Nature, is an enormous, sophisticated and subtle machine.  This machine is supervised by an omnipotent, omniscient and beneficent, indeed, a utilitarian[14], deity.  The sole aim of the machine (and, probably, of the deity himself, see TMS VII.ii.3.18), is the maximisation of happiness:

 

“all the inhabitants of the universe, the meanest as well as the greatest, are under the immediate care and protection of that great, benevolent, and all-wise being, who directs all the movements of nature; and who is determined, by his own unalterable perfections, to maintain in it, at all times, the greatest possible quantity of happiness.”  (TMS VI.ii.3.1)  “[T]hat divine Being[’s] ... benevolence and wisdom have, from all eternity, contrived and conducted the immense machine of the universe, so as at all times to produce the greatest possible quantity of happiness”.  (TMS VI.ii.3.5)

 

So the world is perfect: we do live in the ‘best of all possible worlds’ – Smith is a true Panglossian.  Since the world is really perfect, our apparent troubles stem from our finite, partial view of the world.  The purpose of philosophy, therefore, is to cultivate a fine indifference to whatever occurs:

 

“The wise and virtuous man is at all times willing that his own private interest should be sacrificed to the public interest of his own particular order or society.  He is at all times willing, too, that the interest of this order or society should be sacrificed to the greater interest of the state or sovereignty, of which it is only a subordinate part.  He should, therefore, be equally willing that all those inferior interests should be sacrificed to the greater interest of the universe, to the interest of that great society of all sensible and intelligent beings, of which God himself is the immediate administrator and director .... [Since the] benevolent and all-wise Being can admit into the system of his government, no partial evil which is not necessary for the universal good, he [sc the wise and virtuous man] must consider all the misfortunes which may befal himself, his friends, his society, or his country, as necessary for the prosperity of the universe, and therefore as what he ought, not only to submit to with resignation, but as what he himself, if he had known all the connexions and dependencies of things, ought sincerely and devoutly to have wished for.”  (TMS VI.ii.3.3)

 

Smith sustains this theme by making use of the analogy of soldiers marching cheerfully off to be slaughtered in defence of a ‘forlorn station’, that is, an indefensible position:

 

“They cheerfully sacrifice their own little systems to the prosperity of a greater system .... No conductor of an army can deserve more unlimited trust, more ardent and zealous affection, than the great Conductor of the universe.  In the greatest public as well as private disasters, a wise man ought to consider that he himself, his friends and countrymen, have only been ordered upon the forlorn station of the universe; that had it not been necessary for the good of the whole, they would not have been so ordered; and that it is their duty, not only with humble resignation to submit to this allotment, but to endeavour to embrace it with alacrity and joy.”  (ibid VI.ii.3.4)

 

The message is clear: what is good is good and what is bad is good as well; everything is for the best, so – whatever  happens – rejoice, and accept.  Lest the reader should be tempted to wonder whether these passages represent a stage in Smith’s thought long passed by the time he came to write WN, I should point out that, though similar ideas can be found in the earlier editions, these passages themselves are taken from Part VI, a new section written by Smith, in the last year of his life, for the 1790 edition.

 

Smith has another tactic for convincing us that all is for the best.  His first move is to say that what appears bad is actually good, but we don’t see it because we are only finite minds.  His second tactic, tacitly admitting, perhaps, that the first won’t wash, is to introduce an afterlife to balance the books.  All our virtue and vice will be appropriately rewarded, if not here, then hereafter:

 

“Our happiness in this life is ... upon many occasions, dependent on the humble hope and expectation of a life to come: a hope and expectation deeply rooted in human nature .... [T]here is a world to come, where exact justice will be done to every man ... “ (TMS III.2.33)  “Nature teaches us to hope, and religion, we suppose, authorises us to expect, that it [sc injustice] will be punished, even in a life to come.  Our sense of its ill desert pursues it ... even beyond the grave .... The justice of God, however, we think, still requires, that he should hereafter avenge the injuries of the widow and the fatherless, who are here so often insulted with impunity.”  (TMS II.ii.3.12)

 

Smith combines the idea of justice in the hereafter with that of the limits to reason and the scope for religion and sentiment, which we will examine in more detail below.  To those such as the wrongly condemned man, Smith says,

 

“humble philosophy which confines its views to this life, can afford, perhaps, but little consolation .... Religion can alone afford them any effectual comfort.  She alone can tell them, that it is of little importance what man may think of their conduct, while the all-seeing Judge of the world approves of it.  She alone can present to them the view of another world ... where their innocence is in due time to be declared, and their virtue to be finally rewarded”  (TMS III.2.12).

 

Indeed, we are not only led to a belief in a life after death by our religious sentiments, but by an intellectual consideration of the idea of justice, itself:

 

“When we thus despair of finding any force upon earth which can check the triumph of injustice, we naturally appeal to heaven, and hope, that the great Author of our nature will himself execute hereafter, what all the principles which he has given us for the direction of our conduct, prompt us to attempt even here; that he will complete the plan which he himself has thus taught us to begin; and will, in a life to come, render to everyone according to the works which he has performed in this world.  And thus we are led to the belief of a future state, not only by the weakness, by the hopes and fears of human nature, but by the noblest and best principles which belong to it, by the love of virtue, and by the abhorrence of vice and injustice.”  (TMS III.5.10)

 

4.4.2    Why, then, bother with considerations of morality?

 

The idea that things seem good or bad to us only because of our limited perspective, and that, if we knew ‘all the connexions and dependencies of things’, we would realise that everything is good, is extremely important in Smith.  However, it does raise the question of why we should then be concerned as to the moral qualities of our behaviour.  The argument proceeds in three steps.  Firstly, in answer to the question, Why do we approve of moral actions and disapprove of immoral actions?, Smith says that our moral response to an action is a sentimental reaction, that is, it is produced by our instinctive feelings, in particular, the emotion of sympathy.  By sympathy we enter, to a limited degree, into the feelings of those affected by the action in question, the victims or beneficiaries:

 

“our sense of the merit of good actions is founded upon a sympathy with the gratitude of the persons who receive the benefit of them ... Gratitude and resentment ... are ... counterparts to one another; and if our sense of merit arises from a sympathy with the one, our sense of demerit [must] ... proceed from a fellow-feeling with the other.”  (TMS II.i.5.7)

 

These emotions are placed within us by the deity as part of the grand design.  Our instinctive response to murder, for example, is directly implanted in us by a Nature seen as an active and conscious principle in the world:

 

“with regard ... to this most dreadful of all crimes, Nature ... has ... stamped upon the human heart ... an immediate and instinctive approbation of the sacred and necessary law of retaliation.”  (TMS II.i.2.5)  “As every man doth, so shall it be done to him ... retaliation seems to be the great law which is dictated to us by Nature.”  (TMS II.ii.1.10)

 

Secondly, however, Smith tells us that the wise man will recognise that whatever happens to him is for the best, and that however unpleasant it appears, that is only because we as limited beings do not see the distant, but only the proximate, consequences and ramifications of actions.  Hence, morality is based only on a consideration of the proximate consequences of the action whose morality we are to appraise.  If the first round effects are unjustly detrimental to some person or group, the subsequent ramifications will prove beneficial to themselves or others to a degree that more than counterbalances the evil done at first.  Nevertheless, our appraisal of the morality of the action will focus on its first round effects alone and condemn it: ‘The ancient stoics were of the opinion,’ he reports, with approval,

 

“that as the world was governed by the all-ruling providence of a wise, powerful and good God, every single event ought to be regarded, as making a necessary part of the plan of the universe, and as tending to promote the general order and happiness of the whole: that the vices and follies of mankind, therefore, made as necessary a part of this plan as their wisdom or their virtue; and by that eternal art which educes good from ill, were made to tend equally to the prosperity and perfection of the great system of nature.  No speculation of this kind, however, how deeply soever it might be rooted in the mind, could diminish our natural abhorrence for vice, whose immediate effects are so destructive, and whose remote ones are too distant to be traced by the imagination.”  (TMS I.ii.3.4)

 

Thus Smith argues that our abhorrence of vice is due to our failure to follow through all the ramifications of an immoral act.  If we were to do so, he implies, we would accept vice with equanimity as generating remote positive effects which at least outweigh the proximate negative ones.  Reason, or ‘speculation’, however, cannot change our basic emotional instincts. 

 

The third step is thus to find a way to endorse the morality of a moral action.  Why should we bother to make the distinction between moral and immoral actions if their effects are the same?  Smith has no clear answer to this; he does, however, have two unclear answers.  The first approach is to duck the issue and say that this is a positive, not a normative science, that is moral which is considered moral:

 

“the present inquiry is not concerning a matter of right ... but a matter of fact.  We are not at present examining upon what principles a perfect being would approve of the punishment of bad actions; but upon what principles so weak and imperfect a creature as man actually and in fact approves of it.”  (TMS II.i.5.10)

 

Essentially, what distinguishes the moral from the immoral here is an aesthetic matter: it is a question of what feels better, even though reason can make no distinction.  Perhaps Smith says more than he intends to here for there is a clear logical implication in the contrast he employs: although we, imperfect creatures, may regard this action as moral and that as immoral, a perfect being, conscious of all their most distant consequences, would see matters in quite another light and, presumably, would not make this distinction.  That Smith could not accept this implication is shown by his alternative response.  For the second approach is, precisely, to argue that by acting morally we place ourselves on the same side, as it were, as the deity:

 

“by acting according to the dictates of our moral faculties, we necessarily pursue the most effectual means for promoting the happiness of mankind, and may therefore be said, in some sense, to co-operate with the Deity, and to advance, as far as in our power, the plan of Providence.  By acting otherways, on the contrary, we seem to obstruct, in some measure, the scheme which the Author of nature has established for the happiness and perfection of the world, and to declare ourselves ... in some measure the enemies of God.”  (TMS III.5.7)

 

True, this is not very logical, for it evades the question, how we could conceivably displease a god by our choice of action, given that, according to Smith, he is in a position to dictate exactly the mixture of feelings, the strengths and weaknesses and so on, making up each personality, and hence the behaviour to which each person will be led.  Again, it seems inconsistent to speak of more and less effectual means for promoting the happiness of humanity when God has already determined to maximise the quantity of happiness in the world; the means chosen are presumably those chosen by him, and hence are ‘necessarily perfect’.  Essentially, therefore, Smith’s endorsement of morality is sentimental, based on its feeling of rightness, and revealed divine sanction, without rational justification.  Morality and virtue are essentially ornaments, having no rational function: ‘those sentiments and qualities which are the great ornaments of humanity, and which seem to raise it to a resemblance of divine perfection, [are] the love of virtue and beneficence, and the abhorrence of vice and injustice’ (TMS III.5.4).

 

In spite of his harmonious view of nature, Smith senses that there is a tension between reason and sentiment, between the logic of his position and his religious feelings.  Does God love virtue and hate vice in view of their consequences, or, like us, ‘for their own sakes’?  Characteristically, he comes down on the side of sentiment:

 

“That the Deity loves virtue and hates vice ... not for their own sakes, but for the effects which they tend to produce; that he loves the one, only because it promotes the happiness of society, which his benevolence prompts him to desire; and that he hates the other, only because it occasions the misery of mankind, which the same divine quality renders the object of his aversion; is not the doctrine of nature, but of an artificial ... refinement of philosophy.  All our natural sentiments prompt us to believe, that as perfect virtue is supposed necessarily to appear to the Deity, as it does to us, for its own sake, and without further view, the natural and proper object of love and reward, so must vice, of hatred and punishment.”  (TMS II.ii.3.13, editions 1-5, omitted in 6.)

 

Smith cannot logically say that virtue is preferable to vice because it leads to the happiness of society[15], as this would be inconsistent with his claim that God has in any case arranged everything to maximise happiness in the world at every instant.  But it is equally quite illogical for him to say that virtue appears to God as it does to us – for the only reason it appears thus to us, according to Smith, is that that is how God has made us, in order that we may play our predestined part in the great plan.  But there is no higher spirit to place such feelings in God’s nature, nor any higher plan which he is supposed to play a subordinate part in. 

 

*     *     *

 

To conclude, the message of the present subsection is that, for Smith, morality has an aesthetic basis.  For example, Smith lists as one of the four sources of approbation, that

 

“when we consider [ethical] actions as making a part of a system of behaviour which tends to promote the happiness either of the individual or of the society, they appear to derive a beauty from this utility, not unlike that which we ascribe to any well-contrived machine.”  (TMS VII.iii.3.16)

 

Macfie is at pains to point out that beauty is more important to Smith than usefulness, indeed, utility seems only to be considered to the extent that it, itself, entails beauty.  In Smith, Macfie says,

 

“a sense of propriety is something different from good consequences in some sense pleasant.  Here, indeed, Smith is consistent and specific.  It is to the ‘beauty’ of ‘fitness’ that he constantly returns - the beauty of the ‘well-contrived machine.’  Such a machine, says Smith, provides ‘a thousand agreeable effects,’ while a rusty jarring machine ‘would displease’ and be ‘necessarily offensive.’  So what is valuable from the point of view of virtue is the fitness of the machine, the ‘fine polish’ it gives ‘to the wheels of society,’ not the results for which the machine is the necessary means.”  (Macfie, 1961: 15.  Macfie’s references to Smith are from TMS VII.iii.1.2)

 

To put it in modern terms, Macfie says, ‘there is no doubt that for him [sc Smith] it is beauty that has final value, utility instrumental value (apart from its own inherent beauty or fitness)’ (Macfie, 1961: 16 n 13).

 

4.4.3    Every cloud has a silver lining

 

I said in the previous subsection that, according to Smith, God was in a position to choose the mental composition of individual persons, and hence to lead them to desirable behaviours.  We now need further to investigate this theme, epitomised in Smith’s view that ‘That [sc God’s] wisdom ... contrived the system of human affections, as well as that of every other part of nature’ (TMS VI.ii.2.4).

 

This is important for a number of reasons.  Firstly, I need to justify this claim of predestination in Smith.  Secondly, Smith’s argument here is a further illustration of his Panglossian view that everything is predetermined by the deity, predestined to turn out for the best.  And, thirdly, because, again, these arguments further illustrate Smith’s view, mentioned before, that if we are misled by appearances, then this deception, too, is part of the plan and hence a Good Thing.

 

A major instance concerns the predisposition to benevolence and the very much stronger one, not just to obey, but to enforce, the ‘sacred laws of justice’ (TMS II.ii.2.3), which God has placed in our personal make-up, what Smith calls ‘this constitution of Nature’ (TMS II.ii.3 title).  Man, he says, ‘who can only subsist in society, was fitted by nature to that situation for which he was made’ (TMS II.ii.3.1).  While it would be nice if everyone could cooperate from sheer love of one’s fellows (ibid), we can still live without society-wide benevolence; but not without justice: ‘Society may subsist, among different men, as among different merchants, from a sense of its utility, without any mutual love or affection ... but the prevalence of injustice must utterly destroy it’ (TMS II.ii.3.2-3).

 

Nature has therefore endowed men with consciences in order that they may behave justly:

 

“Though Nature, therefore, exhorts mankind to acts of beneficence, by the pleasing consciousness of deserved reward, she has not thought it necessary to guard and enforce the practice of it by the terrors of merited punishment in case it should be neglected.  It is the ornament which embellishes, not the foundation which supports the building, and which it was, therefore, sufficient to recommend, but by no means necessary to impose.  Justice, on the contrary, is the main pillar that upholds the whole edifice.  If it is removed, the great, the immense fabric of human society, that fabric which to raise and support seems in this world ... to have been the peculiar and darling care of Nature, must in a moment crumble into atoms.  In order to enforce the observation of justice, therefore, Nature has implanted in the human breast that consciousness of ill-desert, those terrors of merited punishment which attend upon its violation, as the great safe-guards of the association of mankind, to protect the weak, to curb the violent, and to chastise the guilty.”  (TMS II.ii.3.4)

 

It is clear that Smith is saying here that Nature, in order to preserve society, has placed in our personalities a desire for justice, even if it is unclear whether this is based on a love of justice for its own sake, or a fear of retribution.  A sense of justice is an endowment of nature, but nature seen as an active force in the world, conscious and intentional.  Speaking of TMS, Heilbroner says

 

“But whence come these higher principles of nature? … What is necessary is that we assume human nature to contain such a saving element.  The imperatives of duty and the voice of conscience must be there from the start, available to us in critical situations.  They must be part of the human makeup, placed there by the Deity that has arranged for our collective well-being.”  (Heilbroner, 1986: 60)

 

Despite Smith’s claim that justice is fundamental for society, order is in reality of more basic importance to him.  Speaking of the tendency for members of the different ‘orders and societies’ in the state to resist any diminution in their ‘powers, privileges and immunities’, he argues that

 

“This partiality, though it may sometimes be unjust, may not, upon that account be useless.  It checks the spirit of innovation.  It tends to preserve whatever is the established balance among the different orders and societies into which the state is divided; and while it sometimes appears to obstruct some alterations in government which may be fashionable and popular at the time, it contributes in reality to the stability and permanency of the whole system.”  (TMS VI.ii.2.10)

 

The assumption is that what is, is likely to be best, and should in general be preserved, even at the expense of justice.  Having said that, however, we should note that, for Smith, just as there can be no profound antagonism between investigation and reconciliation, there cannot be any serious conflict between order and justice.  Indeed, everyone always gets their just deserts in the end: 

 

“notwithstanding the disorder in which all things appear to be in this world, yet even here every virtue naturally meets with its proper reward, with the recompense which is most fit to encourage and promote it; and this too so surely, that it requires a very extraordinary concurrence of circumstances entirely to disappoint it.”  (TMS III.5.8)

 

And should such extraordinary circumstances occur, everything can be set to rights, and the books balanced, as we have already seen, in the hereafter.  It is precisely this concept of heaven as a mechanism for balancing the books that allows Smith to defend principles, such as the partiality of the orders of society in defence of their own interests, and the contempt ‘unjustly’ bestowed upon poverty and weakness instead of on vice and folly (TMS II.ii.3.4), when they conflict with the claims of justice.

 

When  Smith speaks of justice he is thinking of order, when he talks of order he is thinking of property:

 

“The poor man must neither defraud nor steal from the rich, though the acquisition might be much more beneficial to the one than the loss could be hurtful to the other .... by [doing so] he renders himself the proper object of the contempt and indignation of mankind; as well as of the punishment which that contempt and indignation must naturally dispose them to inflict, for having thus violated one of those sacred rules, upon the tolerable observation of which depend the whole security and peace of human society.  There is no commonly honest man who does not more dread the inward disgrace of such an action, the indelible stain which it would for ever stamp upon his own mind, than the greatest external calamity which, without any fault of his own, could possibly befal him; and who does not inwardly feel [that such an action] is more contrary to nature, than death, than poverty, than pain, than all the misfortunes which can affect him”  (TMS III.3.6).

 

Thus theft by the poor from the rich  - even when, as he concedes, it would augment social welfare - calls down more Smithian abuse upon their heads than any other crime.  In one passage a murderer or parricide, by contrast, is dismissed as merely ‘ungrateful’ (TMS II.ii.3.11), while in another, murder, though stigmatised as ‘this most dreadful of all crimes’ (TMS II.i.2.5), is dealt with matter-of-factly without any of the excitement shown in his discussion of theft from the rich.  Again, it is well known that Smith regarded the state as an institution guarding the rich from the poor:

 

“Till there be property there can be no government, the very end of which is to secure wealth, and to defend the rich from the poor.”  (Smith Lectures on Jurisprudence, cited in WN V.i.b.12 n21)  “Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.”  (WN V.i.b.12) 

 

This fact, however, has been subjected to the almost comical misinterpretation that somehow this represented a complaint, a plea on behalf of the underdog.  Viner (1958: 233), for example, cites these passages as evidence for Smith’s desire to limit government activity, and Raphael (1985: 8) says that the WN passage strikes a ‘radical note’.  Nothing could be further from the truth.  The context of these passages shows unambiguously that Smith was simply, and, in his view, uncontroversially, setting out how things were and how they should be:

 

“The affluence of the rich excites the indignation of the poor, who are … prompted by envy to invade his possessions … which [are] acquired by the labour of many years, or perhaps of  many successive generations …. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it [sc the injustice of those enemies].  The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government.”

 

Robert Heilbroner gets closer to the real meaning of these passages:

 

“We come to Smith correctly expecting to find a great social thinker in the conservative tradition, but we are not likely to anticipate finding in him that ‘Laws and government may be considered … as a combination of the rich to oppress the poor’[16] … Smith could speak in these seemingly radical … terms because neither he nor any of his contemporaries imagined a society in which exploitation and oppression would not be present”  (Heilbroner, 1986: 3).

 

*     *     *

 

“In the Theory of Moral Sentiments, Smith develops the doctrine of a beneficent order in nature, manifesting itself through the operation of the forces of external nature and the innate propensities implanted in man by nature …. [T]he essence of Smith’s doctrine is that Providence has so fashioned the constitution of external nature as to make its processes favourable to man, and has implanted ab initio in human nature such sentiments as would bring about, through their ordinary working, the happiness and welfare of mankind.”  (Viner, 1958: 216-17)

 

Our strengths are thus implanted in us by divine providence.  Not only our strengths but our weaknesses, too, however, are endowed by nature.  A particularly striking example concerns the tendency of a fickle public to admire people merely for being lucky:

 

“Fortune has ... great influence over the moral sentiments of mankind, and, according as she is either favourable or adverse, can render the same character the object, either of general love and admiration, or of universal hatred and contempt.  This great disorder in our moral sentiments is by no means, however, without its utility; and we may on this as well as on many other occasions, admire the wisdom of God even in the weakness and folly of man.  Our admiration of success is founded upon the same principle with our respect for wealth and greatness, and is equally necessary for establishing the distinction of ranks and the order of society.  By this admiration of success we are taught to submit more easily to those superiors, whom the course of human affairs may assign to us; to regard with reverence, and sometimes even with a sort of respectful affection, that fortunate violence which we are no longer capable of resisting; not only the violence of such splendid characters as those of a Caesar or an Alexander, but often that of the most brutal and savage barbarians, of an Attila, a Gengis, or a Tamerlane.” (TMS VI.iii.30)

 

This is a remarkable passage.  Admiration for the merely lucky is, admittedly, a ‘great disorder’ in our morals.  But even our folly reflects God’s wisdom, and this particular folly, like everything else, has been given us by God for a reason.  The good thing about this weakness is that it reconciles us with our rulers, even those who only achieved this status by means of ‘fortunate violence’, inspiring us even to a kind of affection for brutal tyrants such as Tamerlane (or Timur Lenk), who reputedly made mountains of his enemies’ skulls. 

 

As Smith reminds us, this view of the role of fortune in moral sentiments parallels that of public admiration of the great in preference to the good:

 

“This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition ... is ... the great and most universal cause of the corruption of our moral sentiments.  That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; and that the contempt, of which vice and folly are the only proper objects, is often most unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages.”  (TMS I.iii.3.1)

 

And they were wrong – in Smith’s view – since, as we have seen, even injustice can be part of a higher Good.  Smith, himself, incidentally, was happy to contribute to this contempt for the poor (though the case of the rich who become poor was another matter altogether):

 

“The mere want of fortune, mere poverty, excites little compassion.  Its complaints are too apt to be the objects rather of contempt than of fellow-feeling.  We despise a beggar; and ... he is scarce ever the object of any serious commiseration.  The fall from riches to poverty, as it commonly occasions the most real distress to the sufferer, so it seldom fails to excite the most sincere commiseration in the spectator.”  (TMS III.3.18)

 

Even this ‘universal cause of moral corruption’, however, is god-given and has its purpose: it is ‘necessary both to establish and maintain the distinction of ranks and the order of society’ (TMS I.iii.3.1).

 

“The distinction of ranks, the peace and order of society, are, in a great measure, founded upon the respect which we naturally conceive for [the greatly fortunate ... the rich and powerful] .... The peace and order of society is of more importance than even the relief of the miserable .... Moralists ... warn us against the fascination of greatness.  This fascination, indeed, is so powerful, that the rich and the great are too often preferred to the wise and the virtuous.  Nature has wisely judged that the distinction of ranks, the peace and order of society would rest more securely upon the plain and palpable difference of birth and fortune, than upon the invisible and often uncertain difference of wisdom and virtue.  The undistinguishing eyes of the great mob of mankind can well enough perceive the former: it is with difficulty that the nice discernment of the wise and the virtuous can sometimes distinguish the latter.  In the order of all those recommendations, the benevolent wisdom of nature is equally evident.”  (TMS VI.ii.1.20)

 

So even this particular weakness, which Smith has earlier damned in the most severe terms, is evidence of the ‘benevolent wisdom of nature’, and it is so because there has to be a ruling stratum, and Nature has judged it best to have an obvious one to which the masses can easily be led to give their loyalty.

 

There is a further point concerning the admiration of wealth which illustrates Smith’s view that deceptive appearances can still be desirable.  For Smith, the outward appearance of great disparity in wealth between the rich and the poor conceals a very large measure of real equality in welfare.  In the passage from TMS (IV.1.10) cited at the beginning of this chapter, Smith argued that ‘In what constitutes the real happiness of human life, they [sc the poor] are in no respect inferior to those who would seem so much above them.’  So the sources of real happiness were divided by divine providence – or by the rich who are, in turn, led by divine providence – so that we all get an equal share.  This theme is repeated throughout Smith’s works, often combined with the notion that great happiness and grief are occasioned not by a state or condition but by a change in condition.

 

“The never-failing certainty with which all men, sooner or later, accommodate themselves to whatever becomes their permanent situation, may, perhaps, induce us to think that the Stoics were, at least, thus far very nearly in the right; that, between one permanent situation and another, there was, with regard to real happiness, no essential difference .... Happiness consists in tranquillity and enjoyment.  Without tranquillity there can be no enjoyment; and where there is perfect tranquillity there is scarce any thing which is not capable of amusing.  But in every permanent situation, where there is no expectation of change, the mind of every man, in a longer or shorter time, returns to its natural and usual state of tranquillity.”  (TMS III.3.30)

 

He illustrates the point with an anecdote about an imprisoned count who amused himself ‘with feeding a spider’ (ibid)!  The view that all permanent conditions are alike, and that it is only changes which matter, is reflected in his statement, reported earlier, that the poor are, at best, ignored, while the impoverished rich are pitied.  Smith draws the conclusion that much of the evil in life can be attributed to failure to understand this point:

 

“The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another.  Avarice over-rates the difference between poverty and riches .... The person under the influence of those extravagant passions [sc avarice], is not only miserable in his actual situation, but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires ... [although] in all the ordinary situations of human life, a well-disposed mind may be equally ... contented .... In all the most glittering and exalted situation that our idle fancy can hold out to us, the pleasures from which we derive our happiness, are almost the same with those which, in our actual, though humble station, we have at all times at hand, and in our power.”  (TMS III.3.31)

 

But in even this cloud there is a silver lining!  It is in the extremity, or extravagance, of the emotion that the problem lies.  Merely to be deceived by appearances, on the contrary, is often desirable:

 

“The poor man’s son, whom heaven in its anger has visited with ambition ... admires the condition of the rich .... He is enchanted with the distant idea of this felicity .... and, in order to arrive at it, he devotes himself for ever to the pursuit of wealth and greatness .... Through the whole of his life he pursues the idea of a certain artificial and elegant repose which he may never arrive at, for which he sacrifices a real tranquillity, that is at all times in his power, and which, if in the extremity of old age he should at last attain to it, he will find to be in no respect preferable to that humble security and contentment which he had abandoned for it.  It is then ... that he begins at last to find that wealth and greatness are mere trinkets of frivolous utility .... And it is well that nature imposes upon us in this manner.  It is this deception which rouses and keeps in motion the industry of mankind.”  (TMS IV.1.8-10)

 

This ‘deception by nature’ (Raphael and Macfie, 1976: 8), which leads people to fulfil what they think are their own purposes, only to find they were fulfilling the purposes of a superior force or interest, is the counterpart in Smith of the ‘cunning of reason’ in Hegel[17], and the ‘divine tactic’ of history in Burke (Sabine, 1951: 519), both whom are known to have read and admired Smith[18].

 

The deception of nature is not ancillary but fundamental to Smith’s principal doctrine.  This becomes clear in the first few pages of TMS (I.i.1.1-13), where we find that, according to Smith, the whole structure of moral sentiments is built on illusion.  The basis for morality is sympathy, that is, our ability to a limited extent to enter into the emotions of other people.  But this participation in the pains and pleasures of others is achieved solely by an act of the imagination, divorced from the material causes of those pains and pleasures in the person we sympathise with.  This sympathy even extends to fictional characters, people in the past and the dead - people, that is, who are incapable of feeling pain and pleasure in the first place, as well as to the insane, who are incapable of comprehending the degradation their illness has brought them to, and persons experiencing what we can never experience, such, if we are male, as a woman in labour.  This shows sympathy to be a ‘very illusion of the imagination’ (TMS I.i.1.13), the imagination of ‘what perhaps is impossible’ (TMS I.i.1.11).  We place ourselves, in the imagination, in the position of the other person, without in fact being in that position, and often without it being possible that we ever could be in such a position.  We cannot help it: it is a god-given compulsion from which even the most hardened criminal is not completely immune (TMS I.i.1.1). 

 

Smith’s God treats individual humans in an extremely cavalier manner, subjecting them to all sorts of illusions and deceptions, and other weaknesses and indignities, and in general treating them like puppets, often with quite deleterious consequences to the individual in question, supposedly in the interest of maximising human welfare.  A classic case of this occurs at the end of the first chapter of TMS, where he applauds even the fear of death as bad at the individual but good at the social level: ‘one of the most important principles in human nature [is] the dread of death, the great poison to the happiness, but the great restraint upon the injustice of mankind, which, while it afflicts and mortifies the individual, guards and protects the society’ (TMS I.i.1.13).

 

In connection with this we should perhaps recall the value which Smith really placed on the individual in the context of the overall system of which he is part.  Before his God, says Smith, man appears as a ‘vile insect’ (TMS II.ii.3.12[19]).  Again, in The History of the Ancient Physics he describes ‘a God of all … who governs the whole by general laws, directed to the conservation and prosperity of the whole, without regard to that [sc the conservation and prosperity] of any private individual’ (Astronomy: Physics 9). 

 

So Smith’s God teaches us that it is permissible to ‘poison the happiness’, to ‘afflict and mortify the individual’, to disregard ‘the conservation and prosperity … of any private individual’ – in the interest of society, of ‘the whole’; and if we are to consider the individual a ‘vile insect’ relative to the totality of which he is part, we will certainly be unrestrained by respect for individual lives and individual suffering in pursuit of what we take to be the interest of that totality.  Smith’s love of ‘the ennobling hardships and hazards of war’ (TMS III.2.35) is germane here: ‘War is the great school for acquiring and exercising ... magnanimity.’  It teaches a ‘habitual contempt of danger and death’ which ‘ennobles the profession of a soldier, and bestows upon it ... a rank and dignity superior to that of any other profession’ (TMS VI.iii.7).  Indeed, a ‘great warlike exploit’ attracts a measure of ‘esteem’ just because it is military, even ‘though undertaken contrary to every principle of justice’ and by ‘very worthless characters’  (TMS VI.iii.8)  Passages showing a quite militaristic outlook on society (TMS VI.ii.3-4), passages introduced in the 6th edition of TMS at the end of Smith’s life, have already been cited above.  Twentieth century individualists and ‘libertarians’ claim intellectual descent from Smith: one wonders whether they have read him.  As Alec Macfie says,

 

“[T]he belief, so popularly accepted in the economic world, that Smith was primarily an individualist, is the very reverse of the truth.  For him as for Hume, the interests of society were the end.  By all means let the individual be encouraged to chase ‘trinkets’, so long as this conduced to that end.  Smith’s ‘invisible hand’ had a good smack of cynicism in its composition.” (Macfie, 1961: 23)

 

*     *     *

 

The message of this section is thus that, according to Smith, people do things for apparent reasons – the real reasons being often hidden from them, and it is desirable that they should do so.  They act justly from a sense of justice, but the reason why justice has been given us in this way is so that society may subsist; we admire the rich, the fortunate and the powerful, instead of the wise and virtuous, because it is in our nature to do so, but those feelings have been implanted in us to reconcile us to our lot; we mistake wealth for happiness, and are led to do so, so that trade and industry may flourish; we investigate the world thinking to discover its truth, so that by means of ever more pleasing stories about the world we may be reconciled to it.

 

4.4.4    Review

 

It is worth pausing here to summarise the points made so far about Smith’s Weltanschauung:

 

1          The universe is a machine administered by a deity.

2          The sole purpose of the machine is to maximise happiness.

3          All parts of that machine, including individual people, play their allotted roles.

4          We do what we do because it is what we are led to do by the feelings implanted in our nature by the deity.  All is part of the plan.

5          Even human folly and weakness are part of God’s plan.

6          Everyone has nearly the same level of happiness.

7          We should therefore be content with our lot.

8          The failure to realise this, mistaking wealth for happiness, leads people to be      industrious: the economy depends on their being so deceived.

9          People mistake wealth and good fortune for wisdom and virtue.

10        This allows them to be reconciled to class distinctions and oppressive rulers.

11        We like morality and dislike immorality because we only see their proximate effects on human welfare.

12        This weakness is also a good thing as (a) it allows us to be moral and hence on the same side as God, and (b) morality, particularly justice, is a prerequisite for society.

13        Appearances are part of the divine plan.

 

In the next subsection we will see how these ideas relate to Smith’s notion of an ‘invisible hand’.

 

4.4.5    The invisible hand

 

Smith uses the term ‘the invisible hand’ on three occasions. The first occasion is in referring to ‘the invisible hand of Jupiter’ in Astronomy.  There is a contrast between the role of the invisible hand here, on the one hand, and in TMS and WN, on the other: the action of the former is seen only in ‘the irregular events of nature’ rather than the ‘ordinary course of things’ (Astronomy III.2).  In polytheism and ‘early heathen antiquity’, Smith says,

 

“it is the irregular events of nature only that are ascribed to the agency and power of their gods.  Fire burns, and water refreshes ... by the necessity of their own nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those matters.  But ... irregular events were ascribed to his favour or his anger .... Those ... intelligent beings, whom they imagined, but knew not, were naturally supposed ... not to employ themselves in supporting the ordinary course of things, which went on of its own accord, but to stop, to thwart, and to disturb it.”  (ibid)

 

Smith says that this was because humans acted in this way to change the course of events which would have occurred without human intervention and so primitive peoples supposed that their gods acted likewise (ibid).  This, says Smith, is ‘the lowest and most pusillanimous superstition’ (ibid).  Smith contrasts this view of gods, like men, as responsible for only the exceptional, with his own view of the whole world, including societies and individuals within it, as a great machine designed and managed for the best interest of all by a divine administrator:

 

“In the first ages of the world, the seeming incoherence of the appearances of nature, so confounded mankind, that they despaired of discovering in her operations any regular system.  Their ignorance, and confusion of thought, necessarily gave birth to that pusillanimous superstition, which ascribes almost every unexpected event, to the arbitrary will of some designing, though invisible beings, who produced it for some private and particular purpose.  The idea of an universal mind, of a God of all, who originally formed the whole, and who governs the whole by general laws, directed to the conservation and prosperity of the whole, without regard to that of any private individual, was a notion to which they were utterly strangers.”  (Astronomy: Physics 9)

 

So, firstly, not only the irregular, but, and much more importantly, the most regular occurrences are the work of the deity; and, secondly, human actions, too, far from being contrary to nature, are profoundly in harmony with it. Natural events and human actions alike and without exception[20] are part of the divine plan: ‘Instead of acting capriciously, it [sc the invisible hand] becomes [the hand of] the ‘all-wise Architect and Conductor’, the ‘author of nature’, who governs and animates ‘the whole machine of the world’’ (Macfie, 1971: 598).

 

In contrast to that in the Astronomy, Smith’s use of the expression in TMS and WN is in a context where Smith is presenting his own views, not criticising someone else’s.  The second instance of Smith’s use of the term ‘invisible hand’, in TMS, has already been given at the beginning of this chapter.  In WN he says:

 

“By preferring the support of domestick to that of foreign industry, he [sc ‘every individual’[21]] intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.  Nor is it always the worse for society that it was no part of it.  By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”  (WN IV.ii.9)

 

In both cases he claims that the invisible hand will ensure that the unintended outcome of self-seeking behaviour will be socially desirable.  Without it, in the TMS case, individuals would be subject to large differences in welfare; and in the WN case, the total wealth available to society would be smaller than it actually is (and more of it will fall into the hands of foreigners[22]).

 

It should by now be clear that the use of the phrase ‘an invisible hand’ is just another expression of Smith’s particular interpretation of Stoic philosophy.  The machine of the universe is managed by a deity determined on the utilitarian objective of the maximisation of happiness, and our emotions and motives are predestined by that deity to lead us to behave in a manner consonant with the divine plan.  The administration of the plan is carried out by God – but, of course, we cannot see anything: his hands are invisible[23]: ‘[T]he invisible Hand [is] the name that Smith gives to the covert intervention of the Deity into the affairs of humankind’ (Heilbroner, 1986: 57).  Hence the concept of the invisible hand requires no separate treatment.  We have already seen how agents are ‘deceived by nature’ to act in socially desirable ways, how the unintended consequences of our desire for justice, or riches, make society possible.  The notion of an invisible hand is of a piece with this philosophy. 

 

This is essentially the view of the invisible hand, and of the continuity of the invisible hand between TMS and WN, taken by Peter Gay:

 

“Adam Smith … was something of a cosmic optimist who trusted unintended consequences.  The “benevolence and wisdom” of the “divine Being” have “contrived and conducted the immense machine of the universe” in such a way that man may follow his private inclination and obey his most powerful passions, and yet benefit the social order.  By taking care of his own happiness, man is led to promote the happiness of others – this is the notorious “invisible hand which leads men to “advance the interest of society” without intending it, without even knowing it.  All is for the best in the only possible world that God could have made.

 

“In The Wealth of Nations, Adam Smith keeps these philosophical concerns alive, but with greater subtlety than before, with far greater respect for harsh truths and for the exceptions that modify all rules, and with an impressive command of social realities.  Like Diderot, Adam Smith learned much in the 1760s; like Diderot, he did not discard his essential philosophy, but complicated it.” (Gay, 1969: 361)

 

Heilbroner reads Smith in much the same way.  The theme of the invisible hand, he writes,

 

“runs through all of the Moral Sentiments.  The idea behind it is … [that] [m]an is by his human nature incapable of foreseeing the consequences of his actions beyond a very narrow range.  How then does he know what course to follow, when he cannot use his faculties to anticipate the outcome of his own actions, much less those of his fellow actors?  The question is answered in much the same way as the provision of a sense of duty and conscience.  The Deity, when he created the world, gave to humankind a surer guide than reason.  This was the call of its passions … the Invisible Hand refers to the means by which ‘the Author of nature’ has assured that humankind will achieve His purposes despite the frailty of its reasoning powers.  The means are a number of powerful instincts and promptings that the Deity has instilled within us, which we obey because we have to, quite unconscious of their long-term social purpose.  In this way, ‘without intending it, without knowing it’ the pursuit of our immediate desires brings us to follow courses of action that would otherwise require a Godlike intelligence to pursue.” (Heilbroner, 1986: 60)

 

“[In The Wealth of Nations] the remarkable capacities of the market system … are again evidence of the Invisible Hand.  No participant in the market has in mind – or … has the power to effect – the orderly provisioning of society … [G]rowth starts as a consequence of the Invisible Hand, which has implanted within us that all-important confusion of wealth with betterment.”  (Heilbroner, 1986: 152-153)

 

In a similar vein, Alexander Gray criticised Smith’s invocation of

 

“the invisible hand, the divinity which shapes our selfish ends to public purposes.  Frankly, we do not believe it; rather we have learned that the interests and the prosperity of the individual may be in conflict with the well-being of the community, that no such simple process of mathematical integration as Smith suggests is permissible” (Gray, 1931: 147). 

 

Latter day Smithians, however, wishing to propagate a very different interpretation of Smith’s theory, have had much trouble explaining the meaning of Smith’s use of the phrase ‘an invisible hand’. 

 

“Smith’s ‘invisible hand’ had nothing to do with divine guidance.  The phrase makes only one unfortunate appearance in The Wealth of Nations – unfortunate because it has been so totally misrepresented.  There is no question, either in the specific context where he used the phrase or in the larger context of the argument of the entire book, but that the invisible hand is the hand of competition, which places immense pressure on individuals to behave in ways that simultaneously promote the public interest as well as the private interest.”  (Rosenberg, 1990: 21)

 

The fallacious view that the ‘invisible hand’ is not to be taken literally, but was a metaphor (or even simile), for competition, is extremely widespread.  The invisible hand had, as we have seen, everything to do with divine guidance, and Rosenberg makes no attempt to make the contrary case.  His argument that Smith’s invisible hand is ‘the hand of competition’ is not to the point.  Of course this is true: Smith’s whole argument is that God’s wisdom works itself out through competition, through the ‘simple system of natural liberty’, as well as in other ways, such as our desire for the approbation of the ‘impartial spectator’.  But the notion of competition by no means exhausts the notion of the invisible hand, to which it is wholly subordinate. 

 

“We are used to thinking of the Invisible Hand as a term that describes the manner in which a free market economy is kept on an even course despite the absence of any steersman.  But … the Invisible Hand plays a far more important role than that of a ghostly economic planner.  Without it, neither morality nor social order would be possible.” (Heilbroner, 1986: 57)

 

A much earlier version of this chapter followed conventional usage in referring to a metaphor of ‘the invisible hand’ (see, for example, Hahn, 1982: 1; Raphael, 1985: 65).  Also, Barry (1988: 19): ‘since Adam Smith the equilibrium state has been said to be created by a metaphorical ‘invisible hand’ ...’ and ‘Adam Smith wrote … of a metaphorical ‘Invisible Hand’’ (1988: 27).  Roche (1977: 10) speaks of  ‘Adam Smith and his analogy of the invisible hand’.  I now think this mistaken.  Smith was very consistent in flagging any such comparison by the use of simile instead of metaphor.  Smith intended us to read his statements in WN and TMS of agents being ‘led by an invisible hand’ quite literally: the invisible hand leading them is just the hand of God.  Had he desired another interpretation he would have written ‘led as’ or ‘as if’, or ‘as though by an invisible hand’.  Interestingly, the word(s) ‘as’ or ‘as if’ are frequently inserted into the passage in WN in question in a - presumably unconscious - misrepresentation as simile of what Smith saw only as literal truth.  See, for example, Begg, et al (1991: 9): ‘Smith argued that individuals pursuing their self-interest would be led ‘as by an invisible hand’ to do things that are in the interests of society as a whole.’  Again, Schotter (1985: 11) informs us that ‘Probably the greatest contribution of Adam Smith was his insistence that the freedom of individuals to maximise their own interests leads ‘as if by an invisible hand to promote an end which was no part of his intention’,’ which falsifies what Smith wrote (as well as being ungrammatical).  Generations of economists have thus been taught that Smith said ‘as if by an invisible hand’, and I have found extraordinary resistance to the idea that he did not say that. 

 

Raphael, one of the editors of the Glasgow Edition TMS, is, like Rosenberg, uncomfortable with the ‘invisible hand’ imagery:

 

“Adam Smith’s image of the invisible hand is not a piece of theology …. He uses the phrase for vivid effect, to give us a picture of an imaginary controlling device, but he knows very well that the effect comes about automatically through the interplay of individual interest and the system of exchange …. He did not believe that the God of theism controlled the working of the economy …. He drew on the familiar heritage of religious language simply in order to make his readers appreciate the remarkable character of the phenomenon.  I do not mean that he deliberately placed a false halo around it.  He was led by an invisible hand to choose evocative words.”  (Raphael, 1985: 66-67)

 

As we have seen, the invisible hand concept certainly was theological, and the ‘controlling device’ quite real.  It is not a matter here of making a case for a new and radical reading of Smith’s meaning: the theological interpretation is the first and most obvious meaning to strike the reader of what Smith actually wrote.  It is the non-theological interpretation, the interpretation which says that, in spite of what Smith wrote, he actually meant something different, which requires demonstration.  What is remarkable is the regularity with which those writers who wish to separate the invisible hand from the invisible mind which guides it simply resort to assertion without setting out the case for the their alternative interpretation.  Raphael says that the working of the economy is secured ‘automatically through the interplay of individual interest and the system of exchange’.  But, again, the point is, why should this interplay lend itself to ‘automatic’ coordination?  Raphael, like Rosenberg, falsely contrasts the intervention of God with the workings of competition.  This failure to see divine intervention in the ordinary, automatic, day-to-day workings of the world, including the economy, is just what Smith deplored in the ‘pusillanimous superstition’ of primitive societies.

 

In his attempt to rescue Smith from the grasp of the invisible hand, Raphael writes ‘No doubt Smith would say that the beneficial results [of the invisible hand] are ultimately due to nature or the divine author of nature, but he does not mean that God pulls the strings all the time’ (ibid: 66).  This raises two important points.  Firstly, the idea that the reconciliation of individual plans and interests is ‘ultimately’ due to God.  This is correct.  God, in Smith, does not intervene directly, unmediatedly, in human affairs.  We do not know what Smith did or did not privately believe – very likely he shared his friend, David Hume’s well known scepticism regarding miracles.  Certainly the public Smith of the Astronomy, TMS and WN shows no evidence whatsoever of belief in such miraculous direct intervention.  What he does very clearly show is a belief that human happiness is the distal, not proximal, consequence of God’s will, mediated by the totality of natural and social phenomena.  The latter, including the ‘simple system of natural liberty’ are the indirect manifestations of God’s will.  Secondly, Raphael raises the issue of whether Smith’s God is pulling the strings ‘all the time’.  This is a profound ambiguity in Smith.  Either God is pulling the strings all the time, and we are literally puppets with no personal autonomy whatever.  In this case the correct philosophical response would be utter fatalism and apathy.  Or we need some guidance on when to treat outcomes as representing God’s will and when not to.  We will revisit this problem in Smith later in this section and again later in the chapter. 

 

The final point to note in connection with Raphael’s presentation of the issue concerns his facetious defence of Smith on the grounds that it was the ‘invisible hand’ what dunnit: ‘He was led by an invisible hand to choose evocative words’.  For the charge against Smith, which Raphael is attempting to refute, is that he sanctified the working of the economy by ‘plac[ing] a false halo around it’.  As we shall see, later in this chapter, that is exactly what Smith was trying to do, and in this he was in step with his generation.  Raphael’s defence that he did not do so ‘deliberately’, but allowed himself to be led to do it by an invisible hand, effectively concedes the case.

 

To return to the point at issue.  Hayek, too, makes it clear that he regards the phrase as unfortunate:

 

“Adam Smith and the other great Scottish individualists of the eighteenth century – even though they spoke of the “invisible hand” – provided ... an explanation [of how the interaction of the efforts of individuals can create something greater than they know]” (CRS: 392-393).

 

For details of this explanation, supposedly given by Smith, Hayek refers us, in a footnote, to the first essay, ‘Individualism: True and False’, in his earlier (1949) book Individualism and Economic Order (IEO).  Sadly, his promise is not redeemed.  What Hayek does – and this point will be amplified in the chapter on Hayek – is to argue for the spontaneity of the order which emerges from the market in Smith’s notion of the invisible hand, abstracting from the optimality with which Smith endowed it, and then tacitly to assume that optimality has been established. 

 

Blaug, after perfectly reasonably criticising the notion of the invisible hand as involving a fallacy of composition - what is good for the individual is necessarily good for society – complains that

 

“a legend has grown up that the whole of the Wealth of Nations rests on this kind of naive reasoning, the so-called doctrine of ‘the spontaneous harmony of interests’.  But ‘the obvious and simple system of natural liberty’, which is said to reconcile private interests and economic efficiency, turns out upon examination to be identical with the concept of perfect competition; the ‘invisible hand’ is nothing more than the automatic equilibrating mechanism of the competitive market.”  (Blaug, 1978: 59)

 

But the whole point is, that competition was able to act as an ‘automatic equilibrating mechanism’ in Adam Smith, solely because the individual interests which it had to balance had already been pre-reconciled by a kindly Great Administrator of the system of the universe.  While it is perfectly true that the whole of WN does not rest on this ‘naive reasoning’, it is the case that part of it does - and that part is precisely the doctrine of the invisible hand, which lies at the heart of Smith’s notion of competition.

 

Macfie, too, deprecates the role of the invisible hand in Smith: ‘It is ... not in the invisible hand that his most valuable and original contribution was made.’ (Macfie, 1967: 125) ‘If we were asked today to state in one phrase the essence of Smith’s message, we should most truly reply by calling him the apostle of natural liberty’ (ibid: 130).

 

At this point some reference should be made to Viner’s (1927, 1958) version of the ‘Adam Smith Problem’, presented in a lecture in 1926.  Viner sustains the view that TMS and WN are irreconcilable by scouring WN for exceptions to Smith’s general endorsements of ‘natural liberty’ and its corollary of free competition and laissez-faire.  On the basis of an apparently impressive mass of such exceptions Viner argues that there is a change of methodology between TMS and WN: in the former we have the theistic invisible hand type of argument (which I ascribe to both WN and TMS), where a natural harmony of interests is deduced from the assumed attributes of the deity; in the latter we have an inductive invisible hand theory, only valid where the facts justify it. 

 

Now, it is true that there are many exceptions to the desirability of laissez faire policies in WN - exceptions, indeed, to which twentieth century Smithians and invisible hand theorists would do well to give more attention – and Viner performs a valuable service by collating them.  Nevertheless, they remain exceptions.  To argue that Smith’s scientific methodology varied so abruptly between the psychological and economic aspects of his scientific work, and without a single hint anywhere that he was simultaneously adopting such contrary standpoints in the two disciplines, does unacceptable violence to the unity of Smith’s thought.  I have argued in this chapter that Smith started out with a clear conception of the nature of scientific thought; it is also the case that he carried out the programme implicit within it with relentless consistency throughout his life.  If there had been only one edition each of TMS and WN, then, while still incorrect, the case would appear more plausible, that Smith changed his position between 1759 and 1776.  However, this is not the case, and at the end of his life, in 1790, Smith was still saying substantially the same things in his revisions to both books as he had in their first editions.  The weakness of Viner’s argument can be seen when he argues that we can discount the sixth edition of TMS as Smith by now was ‘elderly and unwell’ (Viner, 1958: 231).  In the context of the corpus of Smith’s work as a whole, Viner’s hypothesis can be seen to be implausible in the extreme.  As Macfie argues on the critical question of the role of the invisible hand in TMS and WN: ‘the almost theological view of the invisible hand ... [is] exactly carried over from the Moral Sentiments into the Wealth of Nations’ (Macfie, 1959: 211[24]; see also ibid: 223‑4.)

 

In the 1920s, Viner could call it ‘a commonplace among the authorities on Adam Smith that it is impossible fully to understand the Wealth of Nations without recourse to the Theory of Moral Sentiments’ (Viner, 1958: 216).  Today this is no longer true, and, it seems to me, Viner himself must share some of the blame for the partial occlusion of that fundamental insight into the meaning of the invisible hand in WN.

 

The discussion raises two serious issues, however.  Firstly, it is the case that the expression ‘an invisible hand’ only appears once in WN, and the theistic explanation of it does not appear at all.  A great deal of empirical material, however, does appear, and, while the overwhelming bulk of that material is directed towards showing the superiority of the laissez faire system, he does indicate exceptions to its desirability.  It is easy to see how modern, nineteenth and twentieth century readers of WN in isolation from Smith’s other works and from those of his contemporaries, should assume that this was a predominantly empirical study drawing the conclusion that in general, free competition was a good thing.  It is easy to overlook the fact that the empirical material only plays the role of illustrating a preconceived order.  Smith does not in fact anywhere make the inductive judgement that, as a generalisation, individual self-seeking behaviour leads automatically to socially desirable outcomes - on the contrary, this is assumed beforehand and illustrated by details of many empirical circumstances where it is asserted, over and over again, that this has occurred, or would occur if only enterprise were free.  It is only by exploring the totality of Smith’s thought, not only in the WN but in TMS and Astronomy as well, that we can clearly see the a priori and deductive nature of Smith’s procedure, the assumption that the spontaneous system of free enterprise will lead to desirable outcomes because, in general, agents’ interests are pre-reconciled by the invisible hand of a benevolent deity[25].  Whatever the stylistic and presentational differences between TMS and WN, this faith remains the starting point of Smith’s account of the invisible hand throughout: ‘the invisible hand here [sc in WN] remains to control the individual conflicts and excesses of competition, and to safeguard the public good through healthy competition.  Such is his faith’  (Macfie, 1959: 212).

 

The second point is that the supposition that there is a divine plan, in which all agent interests are fundamentally in harmony, does not seem to allow of ‘exceptions’.  We will return to this point in Section 5c, below.  In brief, the point is that there is a difference between two kinds of inconsistency.  Viner alleges an arbitrary inconsistency in which Smith switches, without comment, between two fundamentally contrasting standpoints.  Why should Smith have done this?  In my interpretation, however, Smith is inconsistent because his standpoint compels him to be: the inconsistency is implicit in his world view.  He has adopted that standpoint and has to live with the consequences.  The exceptions he notes were, in general and in modern language, those associated with externalities, public goods and market power.  Smith was faced with the choice of being dogmatic - even in these circumstances the invisible hand will sort things out, which is what his theory actually implies, or moderate - dropping the theory without explanation when its consequences strain credulity.  Wisely, he chose the latter: a more rigorous and intellectually consistent approach would have made WN far less plausible, palatable and effective for its purpose. 

 

Hegel, deducing the State, in the Philosophy of Right, from the theological category of the Idea elaborated in the Science of Logic, should, in faith to his system, have reproduced the Prussian state exactly as it was.  As is well known, however, he could not resist idealising the existing state and ended up with an improved, more consistent version.  By breaking the link between the ideal and actual in this way, he only showed that his mode of procedure was capable of being used to deduce and justify whatever state system one desired.  Smith is in the same position.  Within his system, natural liberty, which gives the invisible hand its operational scope, must be absolute.  If the invisible hand is God’s hand, surely it must be sacrilegious to attempt to restrain or constrain its movements, however mysterious and obscure they may be[26].  The macro level is God’s sphere of competence, only the micro level is ours: ‘the care of the universal happiness of all rational and sensible beings, is the business of God and not of man’ ( TMS VI.ii.3.6).

 

In WN, however, Smith says

 

“To restrain private people, it may be said, from receiving in payment the promissory notes of a banker ... is a manifest violation of that natural liberty which it is the proper business of law, not to infringe, but to support.  Such regulations may ... be considered as in some respect a violation of natural liberty.  But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments; of the most free, as well as of the most despotical.  The obligation of building party walls, in order to prevent the communication of fire, is a violation of natural liberty, exactly of the same kind with the regulations of the banking trade which are here proposed.”  (WN II.ii.94)

 

But to say this undermines Smith’s whole edifice: what are to be the rules governing government intervention?  If God gets it wrong here, where else does he get it wrong?  Is there really a god governing our lives after all?  The idea of an invisible hand evaporates leaving us with something much more mundane and imperfect: an accidental and unreliable coincidence between individual and social interests, the spontaneity proposition without the optimality proposition.  This issue will be revisited at the end of the chapter.

 

*     *     *

 

The phrase ‘an invisible hand’ occurs throughout nineteenth century literature – in Mary Shelley (1818) Frankenstein Ch XII, Thomas Hardy (1874) Far From the Madding Crowd Ch 42, and in HG Wells (1898) The War of the Worlds Ch 6, to give just three examples – in each case in utterly pedestrian contexts.  Raphael (1985: 67) gives an instance of its use in the early eighteenth century, when a captain wrote in his log that the ship had been saved from sinking by ‘the invisible hand of Providence’.  That the idea of the guiding  hand of an unseen god ensuring the desirable social consequences of self-seeking behaviour – without the phrase of the ‘invisible hand’ itself, however – was a commonplace of late eighteenth century social commentary is shown by Hayek by reference to Smith, Tucker, Ferguson and Edmund Burke (IEO: 7).  Taking the last as example: ‘The benign and wise disposer of all things ... obliges men, whether they will it or not, in pursuing their own selfish interests, to connect the general good with their own individual success’ (Burke (1795) Thoughts and Details on Scarcity cited in IEO: 7).

 

The next section looks in more detail at the relationship between Smith and his contemporaries.

 

4.5       Smith’s intellectual environment[27]

 

4.5.1    The ‘Heavenly City’ of the 18th Century Philosophes

 

All are but parts of one stupendous whole,

Whose body nature is, and God the soul;

....

All discord, harmony not understood;

All partial evil, universal good:

And, in spite of pride, in erring reason’s spite,

One truth is clear, Whatever is, is right.

(Alexander Pope, cited in Becker, 1932: 66[28])

 

Adam Smith was very much a man of his time.  Smith’s ‘modified Stoicism typical of Cicero’ was ‘almost conventional in the Enlightenment’ (Macfie, 1959: 210).  Robert Heilbroner stresses the need to locate Smith in his times in order to understand his works (Heilbroner, 1986: 1).  He also stresses that what links Smith and his contemporaries is the conservatism of both:

 

“We come to Smith expecting to find a great monument of conservative economic thought, and we will not be disappointed – Smith is indeed the greatest of all conservative economists … his conclusions about mankind are profoundly conservative … Adam Smith, like all his contemporaries, believed firmly in the need for a well-defined social hierarchy and a firm adherence to the principle of property. … In this essentially conserving vision of social continuity and order, the Enlightenment thinkers found the basis for their distinctive brand of philosophical and historical conservatism.  [They were] [c]onvinced of the need for – indeed, the inescapable necessity of – a stratified, property-based social system … Neither he [sc Smith] nor any of his contemporaries imagined a society in which exploitation and oppression would not be present … [A]ll the Philosophes, including Smith, share one limit to their social imaginations.  This is an inability to imagine that the lower orders might some day exercise sovereignty over society.  Democracy, with all its implicit threats to property and hierarchy, was not yet on the political agenda and would not be put there until the French Revolution” (Heilbroner, 1986: 1-3). 

 

This is a theme which is taken up at length in Carl Becker’s The Heavenly City of the Eighteenth-Century Philosophers (Becker, 1932), in which, especially in Ch II ‘The Laws of Nature and of Nature’s God’ (Becker, 1932: 33-70), he makes a powerful case that the intellectuals of this period[29] were not in any meaningful sense ‘modern’, but that, on the contrary, they were living in a medieval world and ‘demolished the Heavenly City of St Augustine only to rebuild it with more up-to-date materials’ (Becker, 1932: 31):

 

“We are accustomed to think of the eighteenth century as essentially modern in its temper .... And yet I think the Philosophes were nearer the Middle Ages, less emancipated from the preconceptions of medieval Christian thought, than they quite realized or we have commonly supposed .... [T]hey speak a familiar language .... But I think our appreciation is of the surface more than of the fundamentals .... [I]f we examine the foundations of their faith, we find that at every turn the Philosophes betray their debt to medieval thought without being aware of it .... They had put off the fear of God, but maintained a respectful attitude towards the Deity.  They ridiculed the idea that the universe had been created in six days, but still believed it to be a beautifully articulated machine designed by the Supreme Being according to a rational plan as an abiding place for mankind .... they renounced the authority of church and Bible, but exhibited a naïve faith in the authority of nature and reason .... [T]he underlying preconceptions of eighteenth century thought were still ... essentially the same as those of the thirteenth century.”  (Becker, 1932: 29-31)

 

On the overall aim of the philosophers, he cites Hume – with whom Smith shared a mutual admiration and close friendship – as an example, ‘Hume is representative of his century’ (Becker, 1932: 39).  Like Smith, Hume was sufficiently concerned with preservation of the social order to be willing to lay down his pen in its service.  In his own words:

 

“I am at present castrating my work ... that is, endeavouring it shall give as little offence as possible.”  (cited in Becker, 1932: 38)  “A man has but a bad grace who delivers a theory, however true, which leads to a practice dangerous and pernicious.  Why rake into those corners of nature, which spread a nuisance all around? ... Truths which are pernicious to society ... will yield to errors, which are salutary and advantageous..”  (ibid)

 

Here, as in Smith, we find the idea that error can be ‘advantageous’.  Following through the programme just mentioned,

 

“in mid career Hume abandoned philosophical speculations for other subjects, such as history and ethics, which could be treated honestly without giving ‘offense’”  (Becker, 1932: 38-39).  “These are, no doubt, the reasons why Hume locked his Dialogues away in his desk[30] ... his contemporaries, could they have looked into that locked desk, would have found ... the brilliant argument that demolished the foundations of natural religion .... Hume ... refused to publish his Dialogues, and never, in public at least, failed to exhibit a punctiliously correct attitude toward the Author of the Universe.”  (Becker, 1932: 78[31])

 

It is well known that Adam Smith was a close friend of Hume’s and admired his work enormously.  He described Hume as the nearest possible to ‘a perfectly wise and virtuous man’ (TMS p383).  Hume’s words are in perfect agreement with Smith’s project of prioritising reconciliation over investigation. 

 

In Becker’s view, the Philosophes faced

 

“the ugly dilemma, emerging from the beautiful premises of the new philosophy: if nature is good, then there is no evil in the world; if there is evil in the world, then nature is so far not good .... Will they, closing their eyes to the brute facts, maintain that there is no evil in the world?  In that case there is nothing for them to set right.  Or will they, keeping their eyes open, admit that there is evil in the world?”  (Becker, 1932: 69)

 

The philosophers were at a crossroads: reason pointed forwards, to atheism and to the project of rebuilding a haphazard, spontaneous and irrational society in the image of the order they had previously ascribed to nature; the alternative was the denial of reason and a return to medieval Christian faith.  Open-eyed, they could adopt an empirical, materialist standpoint, recognising the need to take control of, and responsibility for, spontaneous human institutions; or with eyes closed they could take an a priori stance, imposing on the world a scheme derived from religious belief.  ‘Well, we know what the Philosophers did in this emergency.  They found ... that reason is amenable to treatment.  They therefore tempered reason with sentiment ...’ (Becker, 1932: 69).  ‘Sometime about 1750, men of sense became men of sentiment ...’ (Becker, 1932: 41).

 

None of this was written with Smith specifically to the forefront of Becker’s mind – but the description fits like a glove.  Smith is the epitome of this intellectual retreat of the enlightenment in the late eighteenth century, the retreat from rationalism to romanticism[32].  In every respect, reason is belittled and sentiment and religion brought to the fore[33].  At best, reason only confirms what we know anyway by means of sentiment and religion:

 

“This reverence [for general rules] is still further enhanced by an opinion which is first impressed by nature, and afterwards confirmed by reasoning and philosophy, that those important rules of morality are the commands and laws of the Deity, who will finally reward the obedient, and punish the transgressors of their duty .... [R]eligion ... gave a sanction to the rules of morality, long before the age of artificial reasoning and philosophy.  That the terrors of religion should thus enforce the natural sense of duty, was of too much importance to the happiness of mankind, for nature to leave it dependent on the slowness and uncertainty of philosophical researches.  These researches, however, when they came to take place, confirmed those original anticipations of nature.”  (TMS II.5.3, my emphasis)

 

Reasoning, for Smith, is artificial, and only sentiment is natural:

 

“That the Deity loves virtue and hates vice ... for the effects which they tend to produce ... is not the doctrine of nature, but of an artificial, though ingenious, refinement of philosophy.  All our natural sentiments prompt us to believe [the opposite] ...”[34] (TMS p91 note, editions 1 and 2[35])

 

For Smith reason is ‘the abstruse syllogisms of a quibbling dialectic’, and sentiment, ‘the great discipline which Nature has established’ (TMS III.3.21).

 

The medieval view of the world, and the role of reason within it – the view of the world to which Smith and his contemporaries turned – is well summarised by Becker:

 

“Existence was ... regarded by the medieval man as a cosmic drama, composed by the master dramatist according to a central theme and on a rational plan.  Finished in idea before it was enacted in fact ... the drama was unalterable either for good or evil .... the duty of man was to accept the drama as written, since he could not alter it; his function, to play the role assigned .... Intelligence was essential, since God had endowed men with it.  But the function of intelligence was strictly limited .... The function of intelligence was therefore to demonstrate the truth of revealed knowledge, to reconcile diverse and pragmatic experience with the rational pattern of the world as given in faith.”  (Becker, 1932: 7)

 

Smith, therefore, was in many ways typical of the philosophers of the period – on Becker’s interpretation of the eighteenth century.  Like Hume, who was a major influence on his philosophy, Smith regarded the preservation of the social order as of primary importance.  Like his contemporary, Kant, who was also, though in a different direction, influenced by Hume[36], Smith wanted to place limits on the legitimate field of action of reason, to find a space for instinct and religious belief[37].  Perhaps the greatest overlap between Smith and his contemporaries lay in their application of the doctrine of natural law.  This is the topic of the next subsection.

 

4.5.2    ‘Nature’ and the natural in Smith

 

“With Adam Smith and his disciples ... nature means the totality of impulses and instincts by which the individual members of society are animated; and their contention is that the best arrangements result from giving free play to those forces in the confidence that partial failure will be more than compensated by success elsewhere, and that the pursuit of his own interest by each will work out in the greatest happiness of all”  (AW Benn, 1906, History of English Rationalism in the Nineteenth Century cited in IEO: 12 n 15)

 

The reader may have noticed the number of times, in the passages cited above, Smith uses the term ‘Nature’ interchangeably with that of the Deity. Far from being the passive background or substrate of our activities, nature is seen as a direct manifestation of the deity, as an active principle intervening in our lives.  These citations illustrate Smith’s adoption and adaptation of the archaic conception of natural law[38] so popular amongst eighteenth century philosophers (Becker, 1932: Ch II; Sabine, 1951: Ch XXVIIff). 

 

The late eighteenth century French philosopher, Comte de Volney, defined natural law in eminently Smithian terms:

 

“What is natural law?  It is the regular and constant order of facts by which God rules the universe; the order which his wisdom presents to the sense and reason of men, to serve them as an equal and common rule of conduct, and to guide them ... towards perfection and happiness.”  (Cited in Becker, 1932: 33, 45).

 

Here again we see the universe as an orderly system administered by a god.  The order implicit in it, which is presented to both the senses and the reason of humans, issues in both factual statements about the way the world is, and normative statements as to how people are to behave, so as to correspond with the divine will.  Again the god is utilitarian, maximising the happiness of mankind.

 

Becker cites this definition as typical of the eighteenth century philosophers, among whom he explicitly includes Adam Smith (Becker, 1932: 33).  His commentary certainly applies well to Smith:

 

“The language is familiar, but the idea, once we examine it critically, is as remote as that of Thomas Aquinas.  Important if true, we say; but how comes it, we ask, that you are so well acquainted with God and his purposes?  Who told you ... that there is a regular and constant order of nature? ... Indeed it is all too simple.  It assumes everything that most needs to be proved and begs every question we could think of asking.”  (Becker, 1932: 45)

 

I keep stressing the primacy of order in Smith, and the same is true of the Philosophes: they wanted to be able to point to an ordered natural world in order to justify the conceptions of social order to which they variously subscribed:

 

“Most eighteenth-century minds were too accustomed to a stable society with fixed ranks, too habituated to an orderly code ... to be at all happy in a disordered universe.  It seemed safer, therefore, ... to retain God ... as a ... guaranty that all was well in the most comfortable of common-sense worlds.”  (Becker, 1932: 49-50)

 

And if a god did not exist, it would be necessary, as Voltaire (in)famously declared, to invent one.  But a god in isolation, separate from the world, was not to the point.  Their programme demanded that God directly reveal himself in nature:

 

“God had revealed his purpose to men in a ... simple and natural ... way, through his works.  To be enlightened was to understand ... that it was ... in the great book of nature ... that the laws of God had been recorded.  This is the new revelation ... This open book of nature was what Jean Jacques Rousseau and his philosophical colleagues went in search of when they wished to know what God had said to them.  Nature and natural law – what magic these words held for the philosophical century! ... Hume, Voltaire, Rousseau, Volney: in each of them nature takes without question the position customarily reserved for the guest of honor .... Search the writings of the new economists and you will find them demanding the abolition of artificial restrictions on trade and industry in order that men may be free to follow the natural law of self-interest .... controversialists of every party unite in calling upon nature as the sovereign arbiter of all their quarrels.”  (Becker, 1932: 51-52)

 

Perhaps we can best see the importance of this view of nature in the popular and scholarly response to a figure towering over the eighteenth century, that of Newton.  During the course of the century, a large number of popular guides to Newton’s philosophy were published.  The point of interest was not the technical detail but the overall philosophy, in particular Newton’s approach to the most fundamental of human problems – the relations between humanity, nature and God.  Colin Maclaurin, Professor of Mathematics in the University of Edinburgh, set out the nature of these relationships in his own guidebook, An Account of Sir Isaac Newton’s Philosophical Discoveries, published in 1775:

 

“To describe the phenomena of nature, to explain their causes ... and to enquire into the whole constitution of the universe, is the business of natural philosophy .... But natural philosophy is subservient to purposes of a higher kind, and it is chiefly to be valued as it lays a sure foundation for natural religion and moral philosophy; by leading us, in a satisfactory manner, to the knowledge of the Author and Governor of the universe....

 

“We are from his works, to seek to know God, and not to pretend to mark out the scheme of his conduct, in nature, from the very deficient ideas we are able to form of that great mysterious Being ....

 

“Our views of Nature, however imperfect, serve to represent to us, in the most sensible manner, that mighty power which prevails throughout ... and that wisdom which we see displayed in the exquisite structure and just motions of the greatest and subtilest parts.  These, with perfect goodness, by which they are evidently directed, constitute the supreme object of the speculations of a philosopher; who, while he contemplates and admires so excellent a system, cannot but be himself excited and animated to correspond with the general harmony of nature.”  (Maclaurin, 1775, cited in Becker, 1932: 62-63)

 

After citing this passage, Becker immediately adds: ‘The closing words of this passage may well be taken as a just expression of the prevailing state of mind about the middle of the eighteenth century.  Obviously the disciples of the Newtonian philosophy had ... deified nature’ (Becker, 1932: 63).

 

The deification of nature led, as it was supposed to lead, to the sanctification of the particular model of human behaviour the philosophers wished to hold up as ‘natural’.  The Declaration of Independence, for example, invokes ‘the laws of nature and of nature’s God’ (cited in Becker, 1932: 52) to sanction its particular programme.  Macfie, speaking of the ‘Scottish Tradition in Economic Thought’, says that ‘The main faith which the Law of Nature and Stoicism inspired in Scotland was a faith in natural liberty in a natural society.’ (Macfie, 1967: 26)  In Smith we see frequent references to the ‘sacred laws of justice’ (TMS II.ii.2.3), a ‘sacred regard to general rules’ of morality (TMS III.5.2); ‘by the wisdom of Nature, the happiness of every innocent man is ... rendered holy, consecrated, and hedged round against the approach of every other man’ (TMS II.iii.3.4).  And in WN, we read that Britain’s trade policy with America, though in fact ‘not very hurtful to the colonies’ was, in diverting trade from its spontaneous course, ‘a manifest violation of the most sacred rights of mankind’ (WN IV.vii.b.44).

 

For Smith, therefore, as was commonly the case in natural law theorists, what is natural is god-given and therefore implicitly good.  When Smith describes certain institutional arrangements in WN as ‘natural’, and others, on the contrary, as ‘artificial’ (as, for example, in WN IV.ii.3), he is saying that the former are not just spontaneous, but spontaneous and therefore an immediate expression of the will of God, whereas the latter must at the very least lie under the suspicion of sacrilege.  There are many occasions where Smith invokes nature[39] in this way in WN.  For example: ‘All systems of preference or of restraint [of trade by the government] ... being ... completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord’ (WN IV.ix.5).  ‘[V]iolations of natural liberty [are] ... unjust’ (WN IV.v.b.16 [40]).

 

In his lectures as early as 1749 Smith was linking the ideas of an active, beneficent and rational nature – in short a teleological nature – to the policy prescription of laissez-faire: ‘Projectors disturb nature in the course of her operations in human affairs, and it requires no more than to let her alone, and give her fair play in the pursuit of her ends that she may establish her own designs’ (Smith, cited in Gay, 1969: 354).  ‘To let alone’ is, almost certainly, a conscious translation of the phrase ‘laisser faire’, which had been in use in France since the end of the previous century to denote freedom from government interference. 

 

But Smith extends the idea of what is natural to include human nature.  What is instinct in us was implanted there by Nature, for a purpose – and this includes our weaknesses as well as our strengths.  Thus, speaking of resentment and its issue in revenge, ‘the most detestable of all the passions’ (TMS II.i.5.8), he remarks that even here ‘Nature ... does not seem to have dealt so unkindly with us, as to have endowed us with any principle which is wholly and in every respect evil, or which, in no degree and in no direction, can be the proper object of praise and approbation’ (ibid).  Thus resentment, like every other emotion, is divinely appointed, an endowment of ‘Nature’, but can become vicious when taken to an excess.  This tactic, however logical in itself, involves Smith in inescapable contradictions once he attempts to derive his laissez-faire policy prescription from it, as we shall see in the next subsection.

 

So Smith has a similar approach to nature and the natural as his contemporaries.  If anything, however, Smith is even more archaic than his contemporaries.  Prior to the eighteenth century, according to Becker,

 

“philosophers ... argued that, since God is goodness and reason, his creation must somehow be, even if not evidently so to finite minds, good and reasonable.  Design in nature was thus derived a priori from the character which the Creator was assumed to have; and natural law, so far from being associated with the observed behaviour of physical phenomena, was no more than a conceptual universe above and outside the real one, a logical construction dwelling in the mind of God and dimly reflected in the minds of philosophers.”  (Becker, 1932: 55)

 

In the eighteenth century, however, – he cites Hume, in the person of Cleanthes in his Dialogues, as epitome – the logical process is reversed:

 

“Cleanthes does not conclude that nature must be rational because God is eternal reason; he concludes that God must be an engineer because nature is a machine.”  (ibid: 56)  “[T]he very foundation of the new philosophy was that the existence of God, if there was one, and his goodness, if goodness he could claim, must be inferred from the observable behaviour of the world.  Following Newton, the Philosophers had all insisted on this to the point of pedantry”  (ibid: 67).

 

Smith in this respect is out of step with his contemporaries.  He clearly starts by deducing the nature of the world from a prior consideration of the ‘necessary’ qualities of the deity, and only afterwards claims to be able to support his conclusions by reference to observations of nature itself:

 

“The happiness of mankind, as well as of all other rational creatures, seems to have been the original purpose intended by the Author of nature, when he brought them into existence.  No other end seems worthy of that supreme wisdom and divine benignity which we necessarily ascribe to him; and this opinion, which we are led to by the abstract consideration of his infinite perfections, is still more confirmed by the examination of the works of nature, which seem all intended to promote happiness, and to guard against misery.”  (TMS III.5.7)

 

There is no reason to believe that Smith would have seen any opposition between these two approaches – deductive versus inductive, a priori versus empirical – to the relation between God and nature.  But he would certainly have rejected the latter as sole, or even major,  support for his philosophy.  Reason is ‘artificial’ and fallible, and our finite minds do not perceive the remote ramifications of things.  Things, as he stresses in Astronomy, often appear to us to be discordant and unconnected.  This is precisely why we need a ‘soothing’ scientific explanation of things, and God’s will, manifested in natural law, is the most pleasing general explanation available.  So it would be a mistake to deduce God’s attributes from a finite and partial examination of nature: on the contrary, it is the assumption of God’s omnipotence, omniscience and benevolence which makes the discordant world of appearances at once comprehensible and safe.  Smith in this respect is thus conservative even with respect to his contemporaries.

 

Smith explicitly links the superiority of our natural feelings over the artificiality of reason, to the preservation of social order:

 

“That kings are the servants of the people, to be obeyed, resisted, deposed, or punished, as the public conveniency may require, is the doctrine of reason and philosophy; but it is not the doctrine of Nature.  Nature would teach us to submit to them for their own sake, to tremble and bow down before their exalted station ...”  (TMS: I.iii.2.3)

 

The message is clear: the natural sentiments placed in us by a benevolent deity, expressed in established traditions, for example, of granting legitimacy to monarchs, are to be heeded in preference to whatever reason may tell us, so that social order may be preserved. 

 

In conclusion of this sub-section, we may note how Heilbroner links the philosophes’ promotion of sentiment over reason with the notion of an invisible hand in Smith:

 

“all its [sc the Enlightenment’s] leading thinkers – certainly Adam Smith – placed the ‘passions’ (feelings and emotions), not reason, at the center of human nature … Smith’s critically important conception of an Invisible Hand – an indirect intervention of the Divinity into the mechanisms of social life – is based on the inability of human reason to achieve social harmony by itself.”  (Heilbroner, 1986: 2)

 

4.5.3    Smith’s contradictions

 

There are many logical inconsistencies in Smith’s theory[41], and we have noted some of them in passing.  However, at base, there is one particular contradiction which confronts Smith, in various guises, at every turn.  In his version of the stoic theory, everything is predestined for the maximisation of the ‘quantity of happiness’ in the world at every instant.  In empirical reality, there is obvious suffering and injustice.  How is the latter to be reconciled with the administration of the machine of the universe by a beneficent, omniscient and omnipotent god?  To quote Hume: ‘Epicurus’s old questions are yet unanswered.  Is he [sc God] willing to prevent evil, but not able?  Then he is impotent.  Is he able, but not willing?  Then he is malevolent.  Is he both able and willing?  Whence then is evil?’ (cited in Becker, 1932: 68).

 

Presumably even the most pious would concede that there must be logical restrictions on what a god can do – whether or not he can create a weight so heavy that he cannot lift it, for example, he is necessarily restricted to what is logically possible in what he can simultaneously achieve[42].  It is far less obvious, however, that suffering in general, let alone any specific instance of suffering, is a logical necessity for the achievement of God’s presumed aims, and, indeed, Smith makes no attempt to put the case.  Instead, its necessity for the good of the ‘greater system’ is simply asserted and assumed  This is not a subtle point and neither is it new: it was certainly as well known in Smith’s time as in ours that it was a problem for theories of this kind.  He never addressed the issue, however, and failed to present any explicit theodicy going beyond these assumptions. 

 

Theodicy generally involves at some point an invocation of free will: God had to permit evil if he was to allow man free will and hence moral responsibility.  Here again, Smith is on shaky ground, because he has made everything, including human nature, a part of nature; all behaviour, including human behaviour, is natural, and hence god-given. Our behaviour is prompted by the sentiments placed in our breast by ‘a wise providence’.  Since we do what we are led to do, what we are predestined to do, choice is presumably an illusion.  Our judgement of the moral quality of an action, as we have seen, is for Smith essentially a sentimental judgement without rational content.  Arguably, it was open to Smith to adopt the compatibilist position of Chrysippus, (whom, incidentally, Smith only mentions in order to flay, rather unfairly, as a traitor to, rather than exponent of, stoicism (TMS VII.ii.1.41)).  But Smith carefully avoids addressing this issue, too, and the logic of his position, that we may admire ‘the wisdom of God even in the folly of man’, is surely that of determinism.

 

The problem for Smith is this: if God is maximising happiness, he cannot at the same time permit either evil and suffering or free will.  If he allows suffering, then the quantity of happiness is presumably not at its logically possible maximum; if he allows free will, then he is again not maximising happiness, as he is leaving that to the outcome of the considerations of errant finite minds.  Part of Smith’s answer, no doubt, to both sides of this point, would be to say that God is not maximising the happiness of all living ‘sensible and intelligent beings’, but of the dead as well.  Everyone has freedom of choice in their behaviour now, but they get their just deserts, in heaven, where also all unjust misery imposed in this world is undone.  Happiness is maximised.  However, this doesn’t work.  How does punishing sinners in the hereafter contribute to maximising happiness?  It cannot have more remote consequences to counterbalance the pain of the sinners’ tormented souls: it cannot deter sinners in this life; it is futile suffering.

 

Finally, the further consequence of the view that everything in the world is part of the great machine, playing its part in God’s plan to maximise happiness, and that human nature and the behaviour to which man is led is a part of nature, is that regulation and state planning are just as natural and god-inspired as free trade and laissez-faire.  Viner (1958: 233) asks, ‘was not government itself a part of the order of nature, and its activities as ‘natural’ as those of the individuals whom it governed?’  As Becker says,

 

“if nature be the work of God, and man the product of nature, then all that man does and thinks, all that he has ever done or thought, must be natural, too, and in accord with the laws of nature and of nature’s god.  Pascal had long since asked the fundamental question: ‘Why is custom not natural?’  Why, indeed!  But if all is natural, then how could man and his customs ever be out of harmony with nature?”  (Becker, 1932: 66)

 

The concept of the natural only means anything – other than fatalistic acquiescence to anything and everything – if it is contrasted with something else, something unnatural.  This Smith attempts to do by referring to liberty as ‘natural’ and regulation as ‘artificial’ in WN, sentiment as ‘natural’ and reason as ‘artificial’ in TMS.  But he cannot sustain this contrast on the basis of his theory.  The category of the artificial has no meaning in a theory where the natural is already all-encompassing.  This is clearly a critical contradiction for Smith’s espousal of laissez-faire, but again, he makes no attempt to address the issue.

 

The contradiction can be seen particularly clearly in a paradoxical passage in TMS where he attempts, unsuccessfully, to reconcile his Panglossian view of  the outcome of natural processes with the human attempt to remedy nature’s faults.   But if natural outcomes are the best which are logically possible, then such faults are inconceivable.  Smith says that ‘the general rules by which prosperity and adversity are distributed … appear to be perfectly suited to the situation of mankind in this life, yet they are by no means suited to some of our moral sentiments’ (TMS III.5.9).  In other words, God allocates prosperity by general rules which are designed to maximise human happiness, but the allocations which result, because of the finitude of human minds, do not always satisfy the moral sentiments which he has placed in us.

 

“Thus man is by Nature directed to correct, in some measure, that distribution of things which she herself would otherwise have made.  The rules which for this purpose she prompts him to follow, are different from those which she herself follows …. The rules which she follows are fit for her; those which he follows for him: but both are calculated to promote the same great end, the order of the world, and the perfection and happiness of human nature.” (TMS III.5.9)

 

So nature[43] follows rules designed to maximise human happiness, and man, ‘correcting’ this, does the same.  The inconsistency could not be clearer.  If nature’s rules lead to optimising, happiness-maximising outcomes, then man’s correction of nature must interfere with this and lead to a suboptimal outcome; if, on the contrary, man’s correction of nature is happiness-maximising then nature’s rules must themselves have been suboptimal.  Smith cannot have it both ways.  Or, rather, there is one interpretation which would allow him to have it both ways.  If he were to say that nature including humanity were designed to optimise, but that nature without man were incomplete, imperfect, suboptimal, which is more or less what Hegel says, then he could reconcile both accounts.   Then human action to correct spontaneous market outcomes and redistribute prosperity according to merit would be optimising as it would be the result of both the rules of nature and the rules of man. 

 

To draw out the point, we may say that, while Smith’s version of natural law formed a foundation for the invisible hand mechanism, it by no means follows that it undermines the case for a visible hand of state intervention.  On the contrary, his Weltanschauung forms just as good a foundation for the latter as the former, and it is only Smith’s prejudices, and not his theoretical system, which lead him to prefer one to the other.  State intervention is a product of all the human strengths and frailties of those involved in the political process.  On Adam Smith’s account, those strengths and frailties are god-given and designed to lead individuals to act so as to maximise human happiness.  There is nothing in the system of thought which Smith presents to say that the invisible hand active in the economic process will be inactive in the political process.

 

Smith cannot have been unaware of these inconsistencies in his standpoint.  Yet there is a sense in which he, himself, is not inconsistent in neglecting them.  Someone who kept faith with the Enlightenment ideal of following Reason wherever it may lead – a Ricardo, for example, a Marx, a Darwin, or an Einstein – would have concentrated attention on these contradictions and drawn the logical consequences.  But we have already seen that Smith was not in this mould[44].  The late eighteenth century philosophers turned their back on reason and, instead, promoted sentiment.  It was not Smith’s goal to present an intellectually unified, logically coherent system of thought, but to paint as pleasing as possible a picture of the world, such that the viewer would be ‘animated to correspond with the general harmony of nature’. 

 

4.6       Conclusion

 

The question we started with was, how Smith saw the articulation between individual behaviour at the micro level and social outcomes at the macro level.  The answer I have given in this chapter is that the articulating mechanism consists in the agency of a deity.  Our behaviours at the micro level are always just what is required for the optimal macro outcome because the deity’s invisible hands always lead us, through the pursuit of our own interests, our own illusions and our own fellow feeling for others, to perform just those actions required to fulfil the divine plan.  This is what Smith meant by the ‘invisible hand’.  The implication is that invisible hand theorists of more recent times, such as Hayek, to the extent that, as representatives of a secular age, they cannot rely on an interventionist god, need an alternative mode of articulation between levels.  The most frequently invoked alternative – to the extent that the problem is addressed at all – is some kind of evolutionary mechanism, but that lies beyond the scope of the present chapter. 

 

I have also argued in this chapter that Smith’s ‘invisible hand’ mechanism is closely linked to the apologetic aspect in his political economy.  While his belief in a harmonious universe allowed him to make real scientific progress in political economy, without fear that it would destabilise the social order, Smith’s principal objective was, nevertheless, to reconcile humanity with the spontaneous social order and the status quo[45].  He invoked the idea of a divine teleological plan, of the universe as a machine administered by a god, in order to explain away suffering and evil as only the proximate manifestations of chains of connection whose distant ramifications would include more than compensatory benefits.  The idea is to convince us that we need do nothing at the macro level.  All we should do is pursue our own individual interests at the micro level, and display appropriate levels of patriotism and respect for our leaders.  The rich, the powerful and the fortunate all ensure that the big decisions of society are for the best – because they are taken by the hand and led by God to do so.   All is for the best, then, in this, the best of all possible worlds. 

 

But does Smith not ‘protest too much’?  Sometimes Smith’s protestations seem to invite the speculation that the truth is just the opposite of what he says.  Smith claims that the universe is a coherent and harmonic whole administered by a single intelligence.  But we know that this is not the case.  The world is a jungle, an arena of clashing interests: ‘It is as though cheetahs had been designed by one deity and antelopes by a rival deity.’[46]  (Dawkins, 1995: 123)  Smith claims that human nature and human society are a part of this organic unity, ‘all discord, harmony not understood’.  But, of course, society was as riven by sectional interest then as it is now.  His claim is to be understood, not as a positive statement of what is the case but as a normative statement of what is to be desired.  He claims that spontaneous human institutions, ‘the result of human action but not human design’, such as the market, and the law, order and defence functions of the state, make an optimal contribution to human welfare because guided by the invisible hand of a beneficent, omnipotent and omniscient god.  Again, we know of no reason to even suspect that any supernal agency exists, such that we can rely on its intervention to maximise social welfare[47].  Again, perhaps, Smith’s claim is to be understood in a normative sense: what is required is a higher level human agency which will reconcile our differences and lead us through the pursuit of our own interests to the maximum achievable level of welfare:

 

“the invisible hand is only one of the many names given in the Moral Sentiments  to the Deity - great Author of Nature, Engineer, Great Architect, and so on .... Adam Smith did believe (as a matter of faith) in this final reconciler .... Now, there is little doubt that we today do not accept this kind of argument .... The inevitable reaction is that, if the supernatural control is abandoned, human societies must supply their own .... [T]he state ... must take the place of the invisible hand.”  (Macfie, 1967: 111)

 

 

 

 

---

Send me an email: a.denis at city.ac.uk.

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Revised: Saturday, 13 September 2003

 


[1] An earlier version of this chapter, and material derived from it have appeared as Denis (1997, 1999a, and 2000).  The chapter as a whole is at point of writing under consideration at Research in the History of Economic Thought and Methodology. 

[2] The question of what it is that is to be defended, or apologised for, is a subsidiary theme of the chapter.  Essentially, Smith is trying to defend two potentially incompatible things: the existing system of ranks and orders of society in politics, and the ‘simple system of natural liberty’ in economics.

[3] The editors themselves sometimes seem a little hazy as to who exactly the editors of the individual volumes are, and what their order of priority should be.  According to TMS: ii, it is ‘edited by A.L. Macfie and D.D. Raphael’; everywhere else, including the title page, the order is reversed.  The title page of EPS says ‘edited by  W.P.D. Wightman and J.C. Bryce’ while everywhere else, including on the cover, Bryce’s name is omitted.

[4] Mirowski is wrong to imply, as he does here, that ‘wonder’ is something desirable.  On the contrary, for Smith, wonder was a dis-ease of the imagination, caused by the incoherent appearances of nature, the purpose of science being, precisely, to return one’s imagination to its ease.

[5] It should be noted that no clear distinction between ‘science’ and ‘philosophy’ existed at this time, ‘[i]n fact the terms philosophy, physics, arts, sciences, and natural philosophy are used almost indiscriminately’ in Smith (Wightman, 1980, 1982: 12).

[6] As we shall see in the next section, Smith held a harmonious view of nature.  He would have denied that that there was any inconsistency between investigating the world and accepting it: investigation would simply reveal harmony.  The confidence that reason would confirm the prior wisdom of religion and sentiment permitted Smith, like many philosophers and scientists of the period, from Newton to Hegel, to make genuine discoveries.  This ambivalence as to the status of reason leads to a fundamental ambiguity in Smith (as also, for example, in Hegel): ‘much in Smith ... is Janus-faced’ (Mirowski, 1989: 168).  I submit, nevertheless, that reading works such as the Astronomy allows us to see that it was always reconciliation with the natural and social order that was uppermost in Smith’s mind.

[7] Doing so is already a step towards penetrating appearances to the reality hidden behind them, but we are here concerned with Smith’s objectives, not with the discoveries he made despite them.

[8] By various correspondents in response to earlier versions of this chapter.

[9] This is not the place for a detailed consideration of Hume.  In his discussion of Smith’s ‘theistic’ invisible hand theory, Macfie (1967: 108) says ‘Smith … is stating a form of faith which was general in his school’, and notes that ‘Hume’s scepticism is mainly as to possible proof’ of that faith, not scepticism as to the validity of the doctrines of that faith.

[10] In a similar vein, David Hume referred to history as an ‘agreeable entertainment’ (cited in Marwick, 1970: 31)

[11] See Raphael and Skinner (1980: 1 n 2); also Mirowski (1989: 163 ff): ‘Smith ... has not been given adequate credit as the prime suspect in the smuggling of Cartesian economics into the backyard of Newton’ (ibid: 164).

[12] This assertion has been questioned by some correspondents; nevertheless, I think it clear that Stoicism constituted a critically important element in Smith’s thinking: ‘Stoic philosophy is the primary influence on Smith’s ethical thought.  It also fundamentally affects his economic theory .... Stoicism never lost its hold over Smith’s mind’ (Raphael and Macfie, 1976: 5-6).  The argument is also set out in Clarke (1996, 1998).  In any case, acceptance of this point is not a precondition for understanding or accepting the argument presented in the remainder of the present chapter.

[13] See Macfie (1959: 225) for some of the ways Smith modifies Stoic doctrine.

[14] Smith himself is certainly not a utilitarian.  That would require him to hold a consequentialist view of morality rather than the deontological view he actually does hold.   See Sen and Williams (1982: 3‑4) for the argument that utilitarianism lies at the intersection of welfarism and consequentialism.  It would also require him to believe, what he does not believe, that it is possible for human actions and institutions to increase the total quantity of happiness in the world.  The deity, however, is another matter.  For more on the relation between Smith and utilitarianism, see Macfie’s review of Lionel Robbins’s Theory of Economic Policy (Macfie, 1967: 152-161).

[15] Although virtue does have precisely this ‘utility’, particularly in relation to justice: see the next subsection of this Chapter, and TMS II.ii.3.1ff.

[16] The reference is to Smith (1976) Lectures on Jurisprudence Oxford: Clarendon Press, p208.

[17] See Hegel (1952: §§344, 348) for the best expression of the ‘cunning of reason’ in Hegel, even though the term itself is not employed there.

[18] For Hegel, see the favourable comments on the political economy of Smith, Say and Ricardo in The Philosophy of Right (Knox, 1952: §189 and Addition); for Burke, see the long extracts from his review of TMS and letter to Smith of 1759 in Raphael and Macfie (1976: 27-28).

[19] eds 1-5 only.

[20] We shall see later that Smith does admit exceptions - and in this he is logically inconsistent.

[21] ie, every capitalist.  Smith naively adopts the standpoint of the individual capitalist and momentarily forgets that there exist other agents, who have no role in ‘directing ... industry’.  It seems very ironic that the first of the two arguments for individual liberty which Smith gives here, is essentially a mercantilist argument: we do not need government intervention in foreign trade to give preference to domestic industry, because individual capitalists will be led by the invisible hand to prefer domestic industry without intervention. 

[22] Once again: to report Smith’s view of what is and what is not socially desirable is not to endorse it. 

[23] Smith even furnishes us with an account of why God is invisible (TMS III.2.31, eds 3-5 only).  If we could see him, Smith says, we would be so dazzled that we would be unable to go about our normal business.

[24] Even here the use of ‘almost’ shows Macfie’s hesitation to take literally what Smith explicitly says about the role of God in human affairs.  Elsewhere he describes “the purpose of the ‘invisible hand’” as ‘theological’ without qualification (Macfie, 1961: 19).

[25] In TMS ‘are to be found the fundamental doctrines of the Wealth of Nations ... and the famous work cannot be properly understood without some knowledge of the Theory’ (Macfie, 1961: 12).

[26] In another context, Flew says that the variety and contrariety of conclusions drawn from a single premiss ‘must constitute a strong reason for challenging the legitimacy of the sort of derivation proposed’ (Flew, 1967: 5).

[27] Much of this section relies on Becker (1932).  Becker has been heavily criticised, notably in Peter Gay (‘Carl Becker’s Heavenly City’ (1957) reprinted in Gay, 1964: 188-210).  The points made in this section remain substantially untouched by Gay’s criticism, which boils down to little more than the complaint that Becker exaggerates.  The same point could be made about Gay.  Unfortunately, this is not the place for a thorough analysis of the problems raised by Gay’s very interesting discussion of Becker, of Smith (Gay, 1969: passim), or of the Philosophes’ ‘Revolt Against Rationalism’ (Gay, 1969: 187-207). 

[28] The italicised concluding statement is the exact counterpart of Hegel’s assertion that ‘the real is the rational’ (Hegel, in Knox, 1952: 10), and has exactly the same purpose, namely, to ‘reconcile us to the actual’ (ibid: 12).  See also Wallace (1975: §6).

[29] He includes in the term philosophes, amongst others, from France: Montesquieu, Voltaire, Volney, Diderot, Savigny and Rousseau; from Germany: Leibniz, Lessing, Herder and Goethe; from Britain: Locke, Hume, Ferguson and Adam Smith; and from America: Jefferson and Franklin (Becker, 1932: 33). 

[30] Hume’s Dialogues Concerning Natural Religion remained unpublished until after his death.  It was Adam Smith who persuaded him to suppress it.  The manuscript was originally left to Smith, Hume’s literary executor, but at the last moment Hume gave it to a nephew who published it.  Had Smith laid hands on it he would undoubtedly have burned it.  The event had a profound effect on him: as Smith’s own death approached he became extremely agitated about ensuring that his own papers were burnt, which was done a week before his death.

[31] See also Becker (1932: 79-81), for a similar story about Diderot.

[32] Viner (1958: 216) speaks of ‘the absolutism, the rigidity, the romanticism’ which characterise TMS.

[33] This is not to criticise his rejection of a rationalist account of morality (see TMS VII.iii Ch II Of those Systems which make Reason the Principle of Approbation), epitomised in the title of The Theory of Moral Sentiments, which so far as it goes, is undoubtedly correct, though he is mistaken in the reason he gives for such sentiments arising in the first place. 

[34] Smith, incidentally, here clearly ascribes to God his own hypostatisation of the intermediate, the valuing of the means ‘for its own sake’ over the end.

[35] Editions 3-5 read: ‘... of untaught nature but of an artificial refinement of reason and philosophy.  Our untaught, natural sentiments ...’  (ibid).  The passage is omitted in edition 6.

[36] See Kant (1950: 5 ff; or Academy edition, Vol IV: 258 ff).

[37] ‘Smith ... combined with Hume to prepare the way for Kant’ (Macfie, 1967: 156).  Smith has even been presented, though not, I think, completely successfully, as a direct precursor of Kant.  Macfie (1967: 68 and n 24; 91 n 23) gives the references.  In his 1959 paper, Macfie writes ‘If, then, Hume lit the destructive spark which helped to inspire the Kantian reconstruction, Smith may well have contrived ... the revealing light which led to the Critique of Practical Reason.’ (Macfie, 1959: 216)  (In spite of the declaration in the ‘Introductory’ to Macfie’s 1967 volume that ‘I have made no changes in the texts’ (Macfie, 1967: 12), ‘the revealing light which led to’ Kant’s book is now reduced to ‘a light reflected in’ it (ibid: 68).  He also wrongly claims that ‘In the first five papers, I have kept to the order of appearance’: Paper 3 appeared in 1961 and Paper 4 in 1959, while Paper 5 was not previously published (ibid: 12).)  Elsewhere, Macfie writes ‘Smith, as well as Hume, directly influenced Kant.  What greater privilege!’ (Macfie, 1961: 26)

[38] It is interesting in this context that the very reason that Smith started to study economics was his need to include the topic in his course of lectures on Moral Philosophy.  This tradition ‘stemmed from the treatment of natural law by Roman and medieval writers’ (Raphael and Macfie, 1976: 24).  Interestingly, Physiocracy, with which, of course, Smith had much to do, is a near-synonym for natural law.

[39] ‘Natural’ in Smith often, of course, also has the ordinary meaning of ‘arising spontaneously in the normal course of events and from the circumstances of the case’, rather than the special sense of ‘divinely appointed’ which I identify here.  I do not wish to say that every use of ‘natural’ in WN has the second meaning, only that in the many invocations of nature in WN the penumbra of connotation is definitely intended to include this second meaning on many occasions.  An excellent discussion of the meanings of ‘natural’ in Adam Smith appears in Waterman (1997). 

[40] For ‘natural liberty’, see also WN I.x.c.59.  For ‘natural’, in particular, the ‘natural balance of industry’, see, to mention only a few, WN I.vii passim, WN IV.i.12, WN IV.ii.3 and WN p453 editorial footnotes 7 and 8, containing references to further passages in WN and the Early Draft of WN.

[41] ‘Consistency was not his [ie, Smith’s] shining virtue’ (Macfie, 1959: 217).  ‘Smith’s strengths lay in other directions than exactly logical thinking, and he displayed a fine tolerance for a generous measure of inconsistency’ (Viner, 1958: 230).

[42] Thomas Aquinas concedes that ‘although God’s power is unlimited, he still cannot make ... an unmade thing (for this involves contradictories being true together)’ (cited in Rucker, 1995, p4; the reference is to Saint Thomas Aquinas, 1944, Summa Theologiae London: Blackfriars Ia, 7, 2-4), showing that he, for one, clearly accepted that God is constrained to what is logically possible.

[43] The ‘nature’ at issue here has, of course, nothing to do with fields and trees and flowers and wild animals: Smith is talking about the spontaneous outcomes of social processes, in particular the distribution of ‘prosperity’, or property, wealth and income in society.

[44] Writing of Smith, Macfie (1967: 126) says ‘consistency was never the central aim or virtue of eighteenth century writers, especially of the Scottish sociological school.’

[45] That these, the spontaneous social order and the status quo, were not the same thing, did not in Smith’s time present the acute problem it presented for subsequent writers, such as Ricardo, coming after the Industrial Revolution.

[46] ‘Alternatively, if there is only one Creator who made the tiger and the lamb, the cheetah and the gazelle, what is He playing at?  Is He a sadist who enjoys spectator blood sports?’  (ibid)

[47] And, even if there were such a power, some might argue, passing up all responsibility to it for our own actions and their consequences in this fashion, might scarcely be the best method of winning its approval.