Morality at play in the market

Riches and Poverty
May 24, 1996

Samuel Taylor Coleridge, one of the great conversationalists of his age, feared that Britain faced imminent danger: it would be ruled by "a contemptible democratical oligarchy of glib economists, compared to which the worst form of aristocracy would be a blessing".

The economist as eminence grise, seducing politicians into folly, is an interesting theme in 20th-century history, from Maynard Keynes to Nicholas Kaldor and Milton Friedman. Few, however, can have been denounced with the vigour and force which another romantic, Robert Southey, visited upon Malthus's "rascally metaphysics. Break him on the wheel. You ought to set your foot upon such a mischievous reptile and crush him". Such is the passion and anger hidden in the pages of Donald Winch's impressively subtle and meticuously argued study of the debates within political economy as Britain faced up to the implications of its shift from a landed to a manufacturing nation.

One of the many virtues of Winch's study is to rescue the economists of the period from modern economists in teleological pursuit of founding fathers. The result of their search for the origins of modern wisdom is that they misunderstand the intellectual project of Adam Smith and Robert Malthus, limiting their enquiry by present-day technical professionalism. Winch, in his very last footnote, cites with despair the unnamed "prominent historian of economics" who, despite being convinced by an article on Malthus's theology, declared: "So much the worse for Malthus." Here is the sin of pre-mature secularisation, which distorts the Christian morality that informed the debate over economic policy well into the 19th century. Caught between the contempt of Southey and the anachronisms of modern economists, Malthus is in need of the sympathetic understanding provided by Winch's perceptive analysis of his career as a political moralist. What was at stake went far beyond the realms of narrowly technical economics Q which is precisely why poets and seers from the Lakes form such an important part of Winch's discussion.

The issue which aroused such passion was well described by another great conversationalist of an earlier age, Samuel Johnson. He referred to the "secret concatenation of society, that links together the great and the mean, the illustrious and the obscure". Society was held together by luxury so that one person's consumption was another's employment, uniting the fortunes of rich and poor in a commercial society. Such a view rejected the earlier notion that luxury and commerce led to corruption and a loss of republican virtue. The implications of the secret concatenation for politics and morality were vast and controversial, and both sides of the dispute between Malthus and Southey had many fears and diagnoses in common. Smith is seen, not as the misappropriated icon of the modern new right, but as a moral philosopher concerned with the extent to which economic and cultural improvement in a commercial society was compatible with the classical ideal of an active, participatory citizenship.

The secret concatentation was more than the pursuit of vanity and selfish pleasure which led, unwittingly, to economic benefits; there was a search for self-betterment which resulted in frugality and abstinence. Commercial society could not rest simply on selfishness, for it was also necessary to have legal and political institutions which created the circumstances in which capital could accumulate and be invested. The invisible hand of the market was only one part of his system; it was complemented by the wise legislator who could create the institutions and practices for a commercial society.

Smith was far from being the extreme advocate of laissez faire imagined by some of his supposed disciples on the new right: he was a supporter of purposive government who believed that public expediture would take a larger share of income in prosperous commercial societies. "When we say that one government is more expensive than another, it is the same as if we said that the one country is further advanced in improvement than another". Smith's wise legislator was concerned to ensure that institutional devices and constitutional machinery were best suited to ensuring that private interests were harnessed to public purposes Q a concern which makes him as relevant to new Labour in the 1990s as to the new right in the 1980s.

Martin Daunton is professor of British history, University College London.

Riches and Poverty: An Intellectual History of Political Economy in Britain, 1750-1834

Author - Donald Winch
ISBN - 0 521 55105 6 and 55920 0
Publisher - Cambridge University Press
Price - £50.00 and £16.95
Pages - 428

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