Hands hidden, change unseen

William Kennedy tries to see economic lift-off with 18th-century eyes

The tumultuous half-century from 1770 to 1820 has more than a fair claim to mark the birth of the modern age. Contemporaries were only too aware of the major political upheavals of that time, first on the European periphery in North America, then at the European centre in France. These two revolutions, and the reactions to them, set the developed world on the political trajectory it still recognisably follows.

Contemporaries were much less aware of another, economic revolution working itself out in the same period, but one arguably possessing even more enduring significance. Although the industrial revolution moved at a slower pace than the political ones, its ramifications have proved more persistent and pervasive. As a consequence, economic historians often discuss the half-century after 1770 with barely a nod (or none at all) to the political revolutions.

Emma Rothschild, director of the Centre for History and Economics at King's College, Cambridge, however, turns that convention on its head. Her book examines the period from the vantage point of two of the most influential economic writers of the time - Adam Smith and the marquis de Condorcet - and their followers. At first glance, it might appear these two thinkers are mismatched. Smith has long been considered the father of modern economics, a towering figure for many generations of economists. The 20th-century reputation of Condorcet, on the other hand, is distinctly more modest: Schumpeter, in his influential History of Economic Analysis , considered Condorcet to be a mathematician whose "contributions to economics are not worth mentioning", a view still widely held. But for Rothschild's purposes, Condorcet is a worthy partner of Smith.

While Condorcet's life was cut short at the age of 51 (by comparison, Smith was 53 when his greatest work, The Wealth of Nations , was first published), he nevertheless had political influence in France far beyond anything achieved by Smith in Britain, as well as contemporary recognition - by Smith, among others - as an important writer on economic affairs. It is Condorcet's role in key policy disputes that attracts Rothschild, and she makes full use of his writings to develop her themes. The pairing of Smith and Condorcet also illuminates the multiple facets and international scope of the economic reasoning of the Enlightenment.

Her principal objective is to cast light on late 18th-century economic thought and the policy controversies that occupied it: to see these matters as they seemed to people at the time, and to use the resulting insights to better understand some important controversies of our own time. Two controversies in particular interest her, both marked with extreme ambiguity. First, how best to regulate the pursuit of economic self-interest (the agent of Smith's "invisible hand") when possibly transient economic successes may bring to a lucky few the political power to change the rules so as to perpetuate their early successes, whether subsequently earned or not. Second, the willingness of individuals to be bound by rules in the knowledge that the rules might be changed at some indeterminate time in the future, either by themselves or by others.

But in adopting this vantage point, Rothschild turns her back firmly on the industrial revolution. For as E. A. Wrigley has persuasively shown, neither Smith nor any of his contemporaries was meaningfully conscious of the industrial revolution (as historians have come to understand it) gathering force around them.

To see the years 1770-1820 truly through the eyes of Smith and his contemporaries is to see the age of revolutions as one where huge political change is manifest and its impact inescapable, while fundamental (and truly revolutionary) economic change is almost invisible. Thus the French revolution appears on page two of her book, the industrial revolution not until page 44, and then only in passing.

Rothschild's objectives mean that hers is not a book for those who think the history of economic thought should become shorter with the advance of economics as a logical discipline - as Jean-Baptiste Say thought should happen for the history of chemistry, on the grounds that greater understanding reveals the "absurd opinions" we can safely ignore, thereby sparing us long detours into analytical dead ends. For Rothschild, the opposite is true. To see how Smith and Condorcet struggled with key policy issues, it is necessary to become familiar with their sense of the past (putting in abeyance our own) and with their own (rather than our) sense of context. This is accomplished here by a close reading of key texts and commentaries, the citation of which turns many pages into a veritable thicket of quotation marks.

Two 18th-century policy issues receive particular attention: disputes over free commerce in subsistence food (this affords fascinating insights into how Turgot, recognising both the possibilities and limitations of market solutions, dealt with incipient famine in the Limousin in 1770); and disputes over apprenticeship and mastership guilds, particularly the extent to which laissez-faire in the market for labour and public instruction is both feasible and desirable.

The book's distinctive approach brings real and unexpected insights. For example, by resolutely attempting to place Smith's use of the metaphor of the "invisible hand" in its late 18th-century context, Rothschild raises the intriguing possibility that Smith (who, among other talents, lectured on Shakespeare's use of metaphor) intended the meaning to be closer to Shakespeare's invoking of the "bloody and invisible hand" of night to conceal Macbeth's crime than to the modern concept of Pareto optimality.

But there are limitations too. Eighteenth-century thought is inevitably restricted in the light it can throw on the present because it evolved with no reasoned view of the implications of sustained economic growth and how such possibilities might affect the pursuit of self-interest subject to rules and the changing political specification of such rules. The possibility of sustained growth radically transforms the calculus of consent and opens new dimensions of bargaining and conflict, introducing trade-offs, side-payments and options without any 18th-century counterpart and which were therefore beyond the purview of even the most penetrating thinkers of the day. Hence, one learns much more from this book about the 18th century than about the present, even if the fundamental dilemmas of economic liberty remain unchanged.

William P. Kennedy is lecturer in economics, London School of Economics.