Anamnesis Journal

An earlier version of this essay was presented at the 2012 Ciceronian Society Annual Meeting.

Most people would regard Adam Smith’s The Wealth of Nations, published in the auspicious year of 1776, to be the foundational text for modern economics. Yet 70 years before, Bernard de Mandeville published a text that, though far less scholarly, was far more foundational. That text was first called, The Grumbling Hive; or Knaves Turned Honest. It was a short doggerel poem, but so popular that it was expanded into the combination poem and essay, The Fable of the Bees. You can learn pretty much the whole point of the poem from its subtitle: Private Vices; Publick Benefits, that is to say, our prosperity depends upon our vices, and not upon our virtues. Thus at the beginning of the modern age, we see the split between the world of business, and the world of ethics.

The Grumbling Hive is worth our attention, not for its literary merit, but for the attention it has received and the influence it has had. Some might deny that it has had this influence, a question I’ll examine in a minute. But let us look a moment at this poem. It starts with a general description of a prosperous hive:

A Spacious Hive well stock'd with Bees,

That lived in Luxury and Ease;

And yet as fam'd for Laws and Arms,

As yielding large and early Swarms;

Was counted the great Nursery [5]

Of Sciences and Industry.[i]

Politically, it was a state that many of us would long for:

No Bees had better Government,

More Fickleness, or less Content.

They were not Slaves to Tyranny,

Nor ruled by wild Democracy; [10]

But Kings, that could not wrong, because

Their Power was circumscrib'd by Laws.

Yet the economy of the hive was rooted firmly in the vices:

Vast Numbers thronged the fruitful Hive;

Yet those vast Numbers made 'em thrive;

Millions endeavouring to supply

Each other's Lust and Vanity;

Despite the general prosperity, the workers were confined to hard labor for bare sustenance:

And some were damn'd to Sythes and Spades,

And all those hard laborious Trades;

Where willing Wretches daily sweat,

And wear out Strength and Limbs to eat:

These working people were the victims of their more enterprising neighbors:

And all those, that, in Enmity

With down-right Working, cunningly

Convert to their own Use the Labour

Of their good-natur'd heedless Neighbour:

These were called Knaves; but, bar the Name, [55]

The grave Industrious were the Same.

All Trades and Places knew some Cheat,

No Calling was without Deceit.

It was a society, Mandeville assures us, in which lawyers did their best to drain their clients estates with useless suits, where doctors were more interested in money than in medicine, and where even the priests were full of “Sloth, Lust, Avarice and Pride.”  Nor was the army immune from vice:

Some valiant Gen'rals fought the Foe; [105]

Others took Bribes to let them go:

Of course, government was no better than the rest of the social order:

Their Kings were serv'd; but Knavishly

Cheated by their own Ministry;

Many, that for their Welfare slaved, [115]

Robbing the very Crown they saved:

Justice, of course, was for sale:

Justice her self, famed for fair Dealing,

By Blindness had not lost her Feeling; [140]

Her Left Hand, which the Scales should hold,

Had often dropt 'em, bribed with Gold;

And in any case, justice only worked to protect the rich from the poor:

Yet, it was thought, the Sword she bore

Check'd but the Desp'rate and the Poor; [150]

That, urg'd by mere Necessity,

Were tied up to the wretched Tree

For Crimes, which not deserv'd that Fate,

But to secure the Rich, and Great.

Now, you would think that Mandeville was describing a dystopia, but you would be wrong:

Thus every Part was full of Vice, [155]

Yet the whole Mass a Paradice;

Flatter'd in Peace, and fear'd in Wars

They were th'Esteem of Foreigners,

And lavish of their Wealth and Lives,

The Ballance of all other Hives. [160]

Such were the Blessings of that State;

Their Crimes conspired to make 'em Great;

Despite living in this paradise, there was grumbling in the hive against corruption. So the gods are determined to punish the hive. With the curse of honesty:

But Jove, with Indignation moved,

At last in Anger swore, he'd rid [230]

The bawling Hive of Fraud, and did.

The very Moment it departs,

And Honsty fills all their Hearts;

There shews 'em, like the Instructive Tree,

Those Crimes, which they're ashamed to see? [235]

And what is the result of honesty? First, all the lawyers lose their employment, since they depend on greed. The goalers next are laid off, since they have nothing to do. Then the doctors lose their employment, since people learn to heal themselves with herbs. Even the priests turn honest. Ministers of state are content to live within their salaries and no longer raid the treasury.  The vast military establishment is cut down, since now they only fight when necessary for defense and not for glory. And as the lust for luxury is removed, so too are all the arts that luxury supported.  And what is the result of this cursed honesty?

So few in the vast Hive remain;

The Hundredth part they can't maintain

…

Hard'ned with Toils, and Exercise

They counted Ease it self a Vice;

Which so improv'd their Temperance, [405]

That to avoid Extravagance,

They flew into a hollow tree,

Blest with content and Honesty.

And so the logical conclusion, or at least logical to Mandeville, was:

THEN leave Complaints: Fools only strive

To make a Great an honest Hive. [410]

T'enjoy the World's Conveniencies,

Be famed in War, yet live in Ease

Without great Vices, is a vain

Eutopia seated in the Brain.

Fraud, Luxury, and Pride must live; [415]

Whilst we the Benefits receive.

I have said that this view is foundational to the modern world, but now I will venture a bit further to say that all of economics since his day is merely a commentary on Mandeville. Indeed, there is a certain contemporary quality to this poem, and many of its doggerel arguments we meet today in many a learned tome.  But before I turn to the similarities, let me point out one big difference: no one today would launch a direct assault on virtue. No, indeed, we would praise virtue to the very heavens. But, it would be a privatized virtue, a “virtue” of individual choices, one that can have no public place, and where all ethical decisions are made on the basis of personal preference; that is to say, there are no strictly ethical decisions at all.

As an example of this, in our business schools, we have a thriving industry in something called “Business ethics,” which turn out to have little to do with business and less to do with ethics. Indeed, I have the honor, such as it is, of laboring in that industry. Students are asked to analyze “case studies” (which are almost never actual cases, but highly contrived hypotheticals) using a smörgåsbord of “ethical systems”: utilitarian, consequentialist, deontological, “virtue ethics,” rights ethics, or such mystical systems as “servant leadership.” The clear message of this proliferation is that there is no “real” approach to ethics, but rather a variety of ways by which one may rationalize one's actions. This “knowledge” is more likely to encourage cynicism than ethical behavior.[ii] Any authentic study of business ethics is confined to a black art called “sustainability,” whose arcane details I will not here recount, except to note that is often something to be pursued if and only if it can increase profits. The upshot of this is that there is nothing in the business ethics industry which would give the slightest offense to Mandeville and his economics of vice.

Why was it necessary for Mandeville to launch a frontal attack on the very notion of justice, whereas we have nothing but praise for virtue, so long as it privatized? The reason is that in Mandeville’s day, virtue, and particularly the virtue of justice, was regarded as an integral part of economics, indeed, as the foundation of economic order. The understanding of economic order expressed in the Politics and Nichomachean Ethics of Aristotle, was carried forward by the Scholastics and was a living presence in the minds of Mandeville’s contemporaries.

But if virtue was present in the minds of his contemporaries, it was disappearing in the practice of business. New concentrations of wealth, based initially on land enclosed from the peasants or seized from the monasteries and guilds, had gained control of the most important institutions of society, the government, the professions, the universities, the Church, and the courts. New companies of “merchant adventurers,” as they called themselves, companies such as the East India Company, with its own army and navy, its own flag and coinage, made fortunes on conquest and pillage.

The praxis of the day was clear enough, but men need to rationalize their actions in terms of some good. For this purpose, The Grumbling Hive served the new masters well. It offers a stark choice between a virtuous poverty and a vicious prosperity. Greed is not only good, it is essential. And this choice has guided economic down to this very day.

If you think that claim is too broad, let us look, briefly, at how his ideas play out in history. The 18^th century is dominated by the Mercantilists, the leading members of that Grumbling Hive known as England. Against this group, a moral theologian, Adam Smith, raises his voice.  But Smith was caught in a trap of his making, or rather of Mandeville’s making.  The later had asserted that “Man… [is] a Compound of various Passions, that all of them, as they are provoked and come uppermost, govern him by turns, whether he will or no.” This idea became, of course, the utilitarianism of Bentham and Hume. The later attempted to temper it with a sentimental notion of “sympathy.” But this sentimental sympathy turns out to be only a utility to get what one wants; it tempers the passions only to make them more cunning in seeking their own ends, ends that are not guided by any moral law.

Hence, despite Smith’s best intentions, and his intentions really were good, he can only attempt to soften Mandeville’s greed to a notion of self-interest:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.[iii]

Leaving aside the question of whether the “humanity” of the butcher and brewer is something contrary to their self-love, we may ask if Smith’s self-interest is really that different form Mandeville’s greedy bees, ruled solely by their passions. Thus, even for the author of The Theory of Moral Sentiments, the unsentimental morality of the hive remains intact.

But for all that, and in despite of his own moral philosophy, Smith really was interested in justice, a word he uses no less than 100 times in the Wealth of Nations. It would remain for David Ricardo to downplay the role of justice in Smith’s work, and try to give it a mathematical formalism. This task of mathematizing economics would not be completed until the end of the 19^th century with the discovery of marginal utility, something which could be expressed in linear equations. In order to reduce political economy to mathematics, it was necessary to lose the “political” part of the economy and jettison all notions of justice.

For this new mathematics to work, man could no longer be totally passionate; in fact, he had to be totally rational, able to compute in an instant complex trade-offs between bundles of utilities.  But still, this lack passion, this walking calculator, posed no threat to the hive, since all of these calculations were still aimed at getting the maximum and giving the minimum. As to the source of this motive, the new economists will not inquire, but take it as an assumption.

This assumption of action becomes an axiom in the hands of Ludwig von Mises.[iv] As an axiom, it is self-evident, and therefore beyond either demonstration or discussion. It requires no proof, and admits of none; it is accepted sola fide. And it follows from this axiom of action that all action begins in unhappiness and is an attempt to change a less satisfactory state of affairs into a more satisfactory state. That is to say, action begins in discontent, and a contented person could not act. Nor are we permitted to inquire into the source of this dis-ease, since as individuals, our motives are incommunicable in any case. Motivations are beyond our knowledge and hence beyond our science.  Hence, we have a “science” of human action that does not permit us to ask why humans act, why one state of affairs is preferable to another.

Based on this axiom of action, Mises concludes that there can be no god, or if there is, he must be impotent, since only a discontented being can act, and a god could instantly remove all possible sources of discontent. But if Mises raises a challenge to God, he raises none to Mandeville; the grumbling hive remains grumbling through all 944 pages of Human Action, which I did as well.

And just to round out this brief survey of the influence of the Hive, I mention two modern thinkers, Milton Friedman and Michael Novak. The former assures us that the only valid motive for business action is an increase in shareholder value and that the only social responsibility of business is to increase profits.[v] Mr. Novak, going further, assures us that that in a state of democratic capitalism, which he considers the highest state to which man may attain this side of the great divide, “every vice must be allowed to flourish.”[vi] And this is true because virtue provides us with no guide for political or economic action; “No intelligent human order—not even within a church bureaucracy—can be run according to the counsels of Christianity.”[vii] Indeed, we might be permitted to call Novak the Theologian of the Grumbling Hive.

Nevertheless, the Chief Counselor of Christianity, or at least of Catholic Christianity, begs to differ with the Hive’s theologian. Benedict XVI, Bishop of Rome, counters all the sages from Mandeville to Novak with a contrary principle in his 2009 encyclical, Caritas in Veritate.[viii] Now this document is, in my opinion, the most stunning of all the social encyclicals, and he offers for our consideration a stunning principle, namely the principle of gratuitousness, the idea that everything starts with a gift and that—as a practical matter—we must respond to that gift with gratitude. The Pope asserts,

The earthly city is promoted not merely by relationships of rights and duties, but to an even greater and more fundamental extent by relationships of gratuitousness, mercy and communion.[ix]

He expands on this principle:

Charity in truth places man before the astonishing experience of gift. Gratuitousness is present in our lives in many different forms, which often go unrecognized because of a purely consumerist and utilitarian view of life. The human being is made for gift, which expresses and makes present his transcendent dimension. Sometimes modern man is wrongly convinced that he is the sole author of himself, his life and society. This is a presumption that follows from being selfishly closed in upon himself, and it is a consequence — to express it in faith terms — of original sin.[x]

He goes so far as to insist that “economic, social and political development, if it is to be authentically human, needs to make room for the principle of gratuitousness as an expression of fraternity.”[xi] But in this assertion, has he not gone too far in one direction as Mandeville has in the other? Indeed, has he not validated Novak’s claim that Christianity, expressed in such an impossible principle, cannot be a guide for the practical operations of an economy? In response, I am going to assert that Benedict, and not Mandeville, gives us the truth of social order, that self-interest and the single-minded pursuit of profit cannot be our guides, that human motivations are indeed knowable, and that morality is not sentimental, but hard-edged and realistic. And finally, I will assert that the recognition of the gift—and a response in gratitude—is indeed the only real basis for order.

At the base of the grumbling hive, and of all modern economics, lies the utilitarian assumption that people always act in their own self-interest and that in doing so, they unwittingly create an economic and social order that results in “the greatest good for the greatest number.” Demand curves, reflecting as they do each person's self-interest, add up to the total interest of society and hence to the common good.

There is a certain plausibility to this, in that people would act in their self-interest, if only they had any idea of what that was. The great truth about self-interest is that it is not something known in advance; it is something discovered by experience. Who among us has not had the experience of getting exactly what we wanted, only to find it wasn't what we wanted at all? Or of fearing the worst, only to find out that it was all for the best? “Self-interest” always remains in the future, that great unknown. Hence, it is the most useless of all economic quantities.

Demand curves are not an expression of our collective self-interest, but of our collective desires. And while there might be a certain plausibility in asserting that the common good is only the summation of private goods (although surely this commits the fallacy of composition), there is no possible moral calculus that can transform private desires into the public good, Mandeville notwithstanding. In conflating self-interest with desire, economists make a childish mistake; that is to say, a mistake which all children make. But even the most petulant child vaguely suspects that his mother might be right; that a second helping of ice cream, though desirable, might not be in his best interest, or that running out into the street might not be conducive to health and longevity. With time and proper parenting, a child learns to discipline his desires; this is the process of maturation, of growing up. Indeed, children are natural utilitarians, which is why they whine so much.

In regard to desires, the only things we can know are what we desire and what we ought to desire. But modern economists fear that dreaded word, ought. But without an “ought,” there can be no analysis; desires will be disordered, and disordered desires lead to a disordered economy. If the things we desire are wasteful, we lay waste to the planet; if greed is our goal, we create systems of oppression; if we want wealth without work, we create systems of debt leading to bankruptcy. Disordered desires are the sign of immaturity, whether for a person or a society, and utilitarianism is simply immaturity raised to the level of a philosophy.

But the greatest problem with utilitarianism is that it is a philosophy of “usefulness” that cannot make any statement about why things are useful to us; “Push-pin is a good as poetry,” Bentham would say, the child's game as good as the artist's pursuit; there can be no ordering of goods beyond personal desires, and the only function of the markets is to sum the desires in a democratic fashion, on the basis of “one man, one vote” in the political markets, and “one dollar, one vote” in the exchange markets. Yet, with no way to order our goods, it is impossible to say what is the greatest good for even one person, much less for the greatest number.

For in truth, the only reason anything is “useful” to us is love: we buy the CD because we love the music; we buy her flowers because we love the girl; we buy lunch because we love ourselves. It is love that orders the good, and hence it is important that the good be loved, and not just as a moral matter, but as a practical matter as well. For a science of human relationships that cannot accurately describe human action, or flattens that action to an unknowable self-interest, will not be able to accurately describe proper relationships; it will not be a science, but an ideology.

Desire becomes self-interest only when it is guided by the intelligence and disciplined by the virtues. Thus, intelligence and virtue, and not undifferentiated desire, is the practical foundation of economic and social order. But what motive can we have for disciplining our desires? Only this: we recognize the world as a gift to us, and respond in gratitude.

In the same way that self-interest cannot be a guide for action, shareholder value by itself cannot be a guide for business. This is not to say that profit is not a necessary condition of business; indeed, without making a profit, the businessman cannot know if he is properly allocating resources. I would go even further, and say that there really is no such thing as a “non-profit,” since every institution must find funding or must cease to be. But while profit is a necessary condition, it is not a sufficient one.

The problem with shareholder value—aside from the fact that capital is not the only contributor to a firm’s value—is that, like “self-interest,” it cannot be known in advance.  You can only know what it was yesterday. “Shareholder value” is often critiqued on the grounds that it encourages short-term thinking. Alas, if only that were true; in truth, it looks only to the past, or at best the present moment. This leads to the joke that an MBA is a person who would burn all the furniture and then boast that he had reduced the heating bills.

Profit is a good, but not the good. The shareholder model reduces employees and the community to mere instruments of wealth creation.  This turns out to be problematic even in terms of business profits because it fails to recognize the value of the human contributions to the firm, which in fact are crucial. Firms advance and grow not so much on the basis of physical capital, but on the basis of “human capital,” the creativity and innovation that each person is capable of bringing to the enterprise. Indeed, most people want to be enterprising at their work, but quite often the culture of the firm prevents their making a full contribution. “Organizations thrive by gifts of human excellence—skill, industry, and a spirit of cooperation that does not stop to count costs.”  In a shareholder-only culture, these gifts tend to be thrown away and agency problems tend to proliferate.

But if neither self-interest nor shareholder value can properly shape the world, then what should give form to the social void? It is, I believe, as Benedict says it is: it is gratitude for the gifts we have received. And what are these gifts? They begin with our very being, for we do not create ourselves, but are called into being by our parents into the ready-made community of family. And from this little society we receive the gifts of language, nationality, religion, community, our first experiences of love, our moral norms. Indeed, the most important things about us, the things that really determine who we are, come about not as consumer choices, but as gifts, given to us when there was no possibility of an exchange. And our life consists largely in the reception and appropriation of these gifts, imprinting on them our own unique contribution, and in the decision to either pass them on, whole and entire, if not improved, or to waste them entirely and leave nothing for those who come after.  Our entire moral universe is located within these boundaries.

And not just the moral universe, but the material one as well, including the world of getting and spending, of production and distribution. For all production begins with the gifts of nature. All of our wealth begins with an inheritance; it begins with on the farms, fields, forests, fisheries and mines.  To these original gifts of God, we add our own gifts of labor, skill, and creativity to create the secondary values upon which our material life depends. For if life is to be preserved, we must make the decision to use these original gifts according their natures, and if economic order is to be preserved, we must distribute the output according to the dictates of justice.

This principle of gratuitousness, this recognition of the essential “gifted-ness” of things, extends even into an ordinary price system.  For the value of a thing must always exceed its price; in economic terms, price cannot absorb all the utility of a thing, or there will be no trade. Academics, perhaps, can understand this intuitively. Our stipends fund our work, but our work is not, one hopes, reducible to such paltry stipends. Our teaching, research, and writing is a gift which our pay enables, but certainly does not explain.

In the same way, every product must embody a gift that exceeds its price. It most embody those priceless things, the skills, talents, labor, and creativity of its makers. When things are no more than their price, when they are just a way of getting money, then we will never get more than we pay for, if we even get that. We will find ourselves creating  dystopias whose very principle of being is dysfunctional, and whose hallmark is oppression and instability.

That the world and our very being is a gift is a fact which no reasonable person can deny. Therefore reason and realism come down on the side of the recognizing the world for what it is—a gift. It is sheer romanticism to believe that we can simply deplete the gift and continue in being. Realism thus lies with Benedict, and not with Mandeville and all of the Romantic raiders that follow in his path.  In gratitude lies the roots of world order, and in greed, the very end of the world.

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