Economics 1776 Lecture Notes - Lecture 5: Civitas, De Bijenkorf
18 Jun 2018
School
Department
Course
Professor
Dutch&(1670-1733)
○
Born&in&Rotterdam
○
The&"Costerman&Riot"&(1690):&violent&opposition&to&taxes,&established&authority
§
Family&involved&in&Dutch&politics
○
Was&Mandeville&the&author&of&"The&Sanctimonious&Atheist"?
○
If&so,&already&sympathetic&to&the&Latitudinarians&
○
Father&banished&from&Rotterdam&(1693)&for&participating&in&Costerman&riots
○
Mandeville&was&a&student&in&Leiden&(1691-?)
○
Later&settled&in&London
○
Who&was&Bernard&Mandeville?
•
In&England,&especially&the&Charity&Schools
§
Widespread&concern&over&vice,&sin,&etc
○
Concerns&over&corruption&associated&with&"luxury"&and&decadence
○
In&contrast&to&the&pre-existing&traditional&economy
§
Advance&of&commercialism
○
Civil&authority&and&the&church
§
Excesses&of&established&authority
○
Against&what&was&Mandeville&reacting?
•
Distinguishing&good&practitioners&from&quacks&ex&ante&was&difficult
§
The&only&proof&lay&in&the&results
§
Desire&to&be&judged&by&medical&outcomes,¬&outward&appearances
○
For&this&purpose,&character&and&intent&don't&matter
§
Both&were&seeking&to&make&a&living
○
Mandeville&was&a&medical&doctor
•
Analogy&of&bees&to&human&society
§
The&Greek&polis,&the&Roman&civitas
§
Classical×&(Plato,&Aristotle,&Virgil)
○
Also&an&emphasis&on&efficient,&selfless&labor
§
The&monastery
§
Medieval&Times&
○
Again&efficiency&and&selflessness
§
Even&some&hints&of&division&of&labor&(!)
§
Renaissance&(Shakespeare,&Henry&V)
○
Bees&as&symbols&of&the&unity&and&obedience&of&Christian&Society
§
Puritan&Writings
○
Utah:&the&beehive&state
§
American&in&the&19th&Century
○
De&Bijenkorf&(Amsterdam)
§
Today&as&well&
○
Why&Bees?&Bees&as&a&Traditional&Political&and&Economic&Image
•
"men&are¬&to&be&judged&by&the&consequences&that&may&succeed&their&actions,&but&by&the&facts&themselves,&and&
the&motives&which&it&shall&appear&they&acted&from"
§
What&matters&for&moral&purposes&is&intent?
○
Any&action&taken&from&mixed&motives&is&vicious
§
Together&with&an&extreme,&rigorous&definition&of&virtue:&no&element&of&self-interest&whatever
○
Mandeville&as&the&anti-Shaftesbury&(or&is&this&simply&a&rhetorical&foil)
§
Hence&virtue&is&mostly&beyond&human&capabilities:& most&human&action&is&vice
○
Hence&a&difference&kind&of&optimism
§
But&vice&can&be&useful&nonetheless:&because&what&is&ultimately&matters&is&outcomes
○
In&the&"economic"&sphere&in&particular,&vice&is¬&just&useful&but&necessary&for&good&outcomes
○
Virtue&is&collectively&counterproductive
○
Collapse&of&economic&activity
§
Unemployment&and&idleness
§
Decline& of&prosperity
§
Depopulation
§
Vulnerability&to&foreign&attack
§
And&as&a&result
○
"Vice&is&beneficial"&and&it&is&necessary
§
Mandeville's&conclusion
○
Mandeville's&Fable-of-the-Bees-(1714)•
In&particular,&no&sense&of&the&role&of&competition&in&markets
§
No&other&economic&mechanism&either
§
Hence&no&explanation&to&satisfy&an&era&trained&to&think&in&Newtonian&terms
§
No&explicit&awareness&of&the&role&of&markets&in&bringing&about&the&result
○
Why&isn't&this&Smith's&idea?•
Smith's&mentor/professor&of&Moral&Philosophy&at&Glasglow
○
"the&most&extensive&affections&could&scarce&encourage&a&man&to&industry&if&no&property&ensued&from&it"
§
Accepts&the&role&of&self-interest&in&economic&motivation
○
"the&moral&sense&of&mankind"&(also&a&sense&of&beauty)
§
But&comes&to&an&optimistic&moral&conclusion&about&human&nature
○
God&could&have&created&man&differently,&so&as¬&to&feel&benevolently&toward&others
§
God&didn't&do&that
§
Hence&by&having&created&man&to&be&benevolent,&God&is&himself&proven&to&be&benevolent&toward&his&creation
§
Attributes&this&to&divine&will
○
Reactions:&Francis&Hutcheson•
"Luxury&is&a&word&of&uncertain&significance…&The&bounds&between&the&virtue&and&the&vice&cannot&here&be&exactly&
fixed."
§
Neutrality&in&moral&judgment
○
Moral&advantages&of&higher&levels&of&economic&development
○
Hence&a&neutral&moral&attitude&toward&luxury
○
Yet&still&a&condemnation&of&Mandeville
○
Reactions:&David&Hume•
Behavior&motivated&by&self-interest&can,&and¬&infrequently&does&lead&to&good&outcomes&for&others
○
And….
○
But&even&Hutcheson&and&Hume&accept&two&crucial&elements&of&Mandeville's&argument•
A&long-standing&challenge
§
Integrating&both&self-interest&and&the&acquisition&of&goods/property&into&a&coherent&theory&of&economic&activity
○
Identifying&a&mechanism&underlying&the&globally&beneficial&consequences&of&actions&motivated&solely&by&self-
interest
§
Explaining&the&Mandeville¶dox
○
The&&Challenge&to&Smith•
Focus&narrowly&on&economics?
○
Or&foreseen&and&intended&(like&Shaftesbury&and&Hutcheson)?
§
Represent&the&consequences&of&human&activity&as&unintended&and&unforseen&(like&Mandeville)?
○
And….
○
Three&Choices&of&strategic&direction&of&confronting&Smith•
On&each&dimension,&Smith&tried&both&approaches,&but&in&the&end&-- in&the&Wealth-of-Nations--- settled&on&one•
9/13/17
Wednesday,& September& 13,&2017
10:05&AM
Dutch&(1670-1733)
○
Born&in&Rotterdam
○
The&"Costerman&Riot"&(1690):&violent&opposition&to&taxes,&established&authority
§
Family&involved&in&Dutch&politics
○
Was&Mandeville&the&author&of&"The&Sanctimonious&Atheist"?
○
If&so,&already&sympathetic&to&the&Latitudinarians&
○
Father&banished&from&Rotterdam&(1693)&for&participating&in&Costerman&riots
○
Mandeville&was&a&student&in&Leiden&(1691-?)
○
Later&settled&in&London
○
Who&was&Bernard&Mandeville?•
In&England,&especially&the&Charity&Schools
§
Widespread&concern&over&vice,&sin,&etc
○
Concerns&over&corruption&associated&with&"luxury"&and&decadence
○
In&contrast&to&the&pre-existing&traditional&economy
§
Advance&of&commercialism
○
Civil&authority&and&the&church
§
Excesses&of&established&authority
○
Against&what&was&Mandeville&reacting?•
Distinguishing&good&practitioners&from&quacks&ex&ante&was&difficult
§
The&only&proof&lay&in&the&results
§
Desire&to&be&judged&by&medical&outcomes,¬&outward&appearances
○
For&this&purpose,&character&and&intent&don't&matter
§
Both&were&seeking&to&make&a&living
○
Mandeville&was&a&medical&doctor•
Analogy&of&bees&to&human&society
§
The&Greek&polis,&the&Roman&civitas
§
Classical×&(Plato,&Aristotle,&Virgil)
○
Also&an&emphasis&on&efficient,&selfless&labor
§
The&monastery
§
Medieval&Times&
○
Again&efficiency&and&selflessness
§
Even&some&hints&of&division&of&labor&(!)
§
Renaissance&(Shakespeare,&Henry&V)
○
Bees&as&symbols&of&the&unity&and&obedience&of&Christian&Society
§
Puritan&Writings
○
Utah:&the&beehive&state
§
American&in&the&19th&Century
○
De&Bijenkorf&(Amsterdam)
§
Today&as&well&
○
Why&Bees?&Bees&as&a&Traditional&Political&and&Economic&Image•
"men&are¬&to&be&judged&by&the&consequences&that&may&succeed&their&actions,&but&by&the&facts&themselves,&and&
the&motives&which&it&shall&appear&they&acted&from"
§
What&matters&for&moral&purposes&is&intent?
○
Any&action&taken&from&mixed&motives&is&vicious
§
Together&with&an&extreme,&rigorous&definition&of&virtue:&no&element&of&self-interest&whatever
○
Mandeville&as&the&anti-Shaftesbury&(or&is&this&simply&a&rhetorical&foil)
§
Hence&virtue&is&mostly&beyond&human&capabilities:& most&human&action&is&vice
○
Hence&a&difference&kind&of&optimism
§
But&vice&can&be&useful&nonetheless:&because&what&is&ultimately&matters&is&outcomes
○
In&the&"economic"&sphere&in&particular,&vice&is¬&just&useful&but&necessary&for&good&outcomes
○
Virtue&is&collectively&counterproductive
○
Collapse&of&economic&activity
§
Unemployment&and&idleness
§
Decline& of&prosperity
§
Depopulation
§
Vulnerability&to&foreign&attack
§
And&as&a&result
○
"Vice&is&beneficial"&and&it&is&necessary
§
Mandeville's&conclusion
○
Mandeville's&Fable-of-the-Bees-(1714)•
In&particular,&no&sense&of&the&role&of&competition&in&markets
§
No&other&economic&mechanism&either
§
Hence&no&explanation&to&satisfy&an&era&trained&to&think&in&Newtonian&terms
§
No&explicit&awareness&of&the&role&of&markets&in&bringing&about&the&result
○
Why&isn't&this&Smith's&idea?•
Smith's&mentor/professor&of&Moral&Philosophy&at&Glasglow
○
"the&most&extensive&affections&could&scarce&encourage&a&man&to&industry&if&no&property&ensued&from&it"
§
Accepts&the&role&of&self-interest&in&economic&motivation
○
"the&moral&sense&of&mankind"&(also&a&sense&of&beauty)
§
But&comes&to&an&optimistic&moral&conclusion&about&human&nature
○
God&could&have&created&man&differently,&so&as¬&to&feel&benevolently&toward&others
§
God&didn't&do&that
§
Hence&by&having&created&man&to&be&benevolent,&God&is&himself&proven&to&be&benevolent&toward&his&creation
§
Attributes&this&to&divine&will
○
Reactions:&Francis&Hutcheson•
"Luxury&is&a&word&of&uncertain&significance…&The&bounds&between&the&virtue&and&the&vice&cannot&here&be&exactly&
fixed."
§
Neutrality&in&moral&judgment
○
Moral&advantages&of&higher&levels&of&economic&development
○
Hence&a&neutral&moral&attitude&toward&luxury
○
Yet&still&a&condemnation&of&Mandeville
○
Reactions:&David&Hume•
Behavior&motivated&by&self-interest&can,&and¬&infrequently&does&lead&to&good&outcomes&for&others
○
And….
○
But&even&Hutcheson&and&Hume&accept&two&crucial&elements&of&Mandeville's&argument•
A&long-standing&challenge
§
Integrating&both&self-interest&and&the&acquisition&of&goods/property&into&a&coherent&theory&of&economic&activity
○
Identifying&a&mechanism&underlying&the&globally&beneficial&consequences&of&actions&motivated&solely&by&self-
interest
§
Explaining&the&Mandeville¶dox
○
The&&Challenge&to&Smith•
Focus&narrowly&on&economics?
○
Or&foreseen&and&intended&(like&Shaftesbury&and&Hutcheson)?
§
Represent&the&consequences&of&human&activity&as&unintended&and&unforseen&(like&Mandeville)?
○
And….
○
Three&Choices&of&strategic&direction&of&confronting&Smith•
On&each&dimension,&Smith&tried&both&approaches,&but&in&the&end&-- in&the&Wealth-of-Nations--- settled&on&one•
9/13/17
Wednesday,& September& 13,&2017 10:05&AM
