I have a thesis (not a university thesis) I would like to try out on you, so please interrupt and
criticise if you think I am being wrong or outrageous.
I start off with a few slogans which I expect you all have heard: Shop until you drop, there is no
such thing as society, greed is good, I'm going to spend, spend, spend.
Those slogans and more are characteristic of our consumerist times. Their basis lies in the
industrial capitalism which it is generally agreed began in the middle of the eighteenth century,
beginning largely here with Arkwright in Cromford. The usual belief is that the theory behind
capitalism was formulated by Adam Smith in his famous "Wealth of Nations". I want to differ
from general opinion and proffer a slightly different origin.
In the late seventeenth century, about 1695, a Dutch doctor by the name of Bernard de
Mandeville settled in London and began practising as a doctor in what we would now call
psychiatry, in the origins of such states as hysteria and hypochondria. He mustn't be confused
with Sir John Mandeville who had all those adventures, or with Machiavelli. Many people who
disagreed with Mandeville (Bernard) did equate him with the great villain, the notorious
Machiavelli. In 1705 Mandeville published a poem "The Grumbling Hive". He rewrote it several
times and there were several editions of "The Fable of the Bees". Most editions are based on the
The hive of bees Mandeville was writing about was a metaphor for human society - Mandeville
doesn't, by the way, seem to know much about real hives of bees. Put briefly, the hive, he says, is
kept whole and prosperous not by its Christian virtues but by its vices. This he sums up in the
famous subtitle "Private vices - Publick benefits". In notes which are much longer than the poem,
which is rather short, he expands this. Take a highwayman; the staff of an inn profit greatly from
him - the innkeeper, the waiters, the potboy, the ostler and so on. Similarly with his girl: she
keeps in work the milliner, the maker of her finery, the mantilla maker, the shoemaker, the glover
and so on. In fact the highwayman does society a great deal of good; he keeps the wheels
turning. So do the criminals keep in work the lawyers. If there had been policemen in his day he
would have mentioned them too. In fact the whole society is based on pride and self-interest; it is
those vices which provide the employment and prosperity. In the poem he envisages a god Jove, I
think not the Christian god, turns everyone virtuous. This is a disaster; prosperity deserts the
hive, the whole society disintegrates, the bees leave to find a better place. So the whole society is
based not upon Christian virtues but upon vice deriving from the pride and self-interest of the
The poem caused a scandal when it was published, many in the church calling for its suppression,
Bishop Berkely (philosopher who, as you know, suggested that nothing existed unless there was
someone about to see it) and Charles Wesley the hymn writer. It was suggested that the book
should be burned by the public hangman, but it was very popular and translations were made in
There is a bit of a puzzle about the poem. Mandeville was a contemporary of Pope and Swift
(Pope actually used some of his material). The predominant mood of literature at the time was
satire and the predominant form of satire was irony. By common consent the master of satire was
Swift; "Gulliver'sTravels" is, of course, a satire upon the politicians of the day, especially Walpole.
His best known irony was "A Modest Proposal". Now irony is saying the opposite of what you
really mean. You say "Nice day, isn't it?" when it is pouring with rain as a form of irony - sarcasm
usually called. "A Modest Proposal" is suggesting that the Irish (Swift was an Irishman) who
were starving at the time should eat their own children. Swift gives some straightforward recipes
for roast baby, boiled baby, and so on. But of course he doesn't mean any of it - he was moved by
compassion towards his own Irish people. Several other examples, Defoe, eg, "A Shortest way
with Dissenters" that we hang them. Some people took "The Fable of the Bees" as irony. Surely
Mandeville could not really mean what he said? It must be irony and when he attacks Christian
values he must be employing irony to defend them. On the whole literary people have concluded
that Mandeville was ironical, economists believe him to be literal. The controversy continues to
this day. He is often quoted as irony and if you read him for an English degree it is as an example
of irony. This attitude is now less prevalent and he is seen as a precursor of Adam Smith. His
attitude becomes clearer if we read "An Essay on Charity Schools" published at the same time as
the Fable. These schools, founded by the wealthy in each parish, took abandoned children off the
streets, gave them an education, and turned them out as useful citizens. Mandeville's objection to
the schools stemmed first from the motives of the founders. Pride and vanity and self-interest
were the motive forces behind human actions. The founders began their schools out of self-interest disguised as charity. Their desire for the world's esteem was the motive behind schools,
plus sometimes business advantages. What we do for others, was Mandeville's view, we partly do
His second objection is an economic view and is more serious. The schools take away children
from the large labour force needed for the prosperity of the country. When such labour is scarce,
wage rates rise and so prices rise. Reading, writing and arithmetic should not be taught as they
are a waste of time unless the children are going on to work where such subjects are needed, such
as clerical work. Few children, he says, make any progress at school, but the same time they are
capable of being employed in some business or other, so that every hour those of poor people
spend at their book is so much time lost to the society. So supporters of charity schools are
courting economic disaster under the names of morality and religion.
This is, of course, a utilitarian view of education. He is no friend to a liberal education. He has
similar views about universities. Although he would increase the numbers of professors (that is,
teachers), especially in medicine, his own subject, he would have the courses narrowly directed to
the future careers of the students. He has a particular dislike of the idleness and wealth of the
Oxford and Cambridge colleges (he wasn't alone - Gibbon, historian of the Roman Empire, also
disliked his Oxford dons "full of port and Prejudice"). Nothing should be taught for nothing;
students should pay their teachers directly except those of theology. Thus self-interest and love of
glory (pride) should spur on the teachers at universities to labour and assiduity.
All this was revolutionary stuff in his day. He doesn't attack the church directly, perhaps because
the church wielded great power and wealth in the first half of the eighteenth century before
Voltaire and other sceptical influences began to erode them. It will be seen that Mandeville is
establishing economic activity above all others, moral and spiritual. His work is the establishment
of the priority of economic values over other human values. He never regained the prestige he
gained on the publication of the Fable. Indeed he was rather forgotten in the century and a half
after his death, although Adam Smith refers to him, so does Keynes, but he became in the hands
of literary critics the author of an ironical poem of not much account except to literary scholars.
Mandeville's originality lay in his view that public activities should be subordinated to creation of
wealth. This alone makes a country great. His desire was to increase the wealth of a populous
state (ie, increasing population is the distinction of a thriving society). This was a view which was
to be heard again nearly two hundred years after his death.
He put money making at the centre of human affairs, not virtue, love, fellowship, charity, love of
God. So he can be one of the founders of capitalism, even perhaps of economics as a subject,
although there were others of his time who were thinking along much the same lines.
But the greatest theorist came fifty years after his death - Adam Smith, whose influence is felt
even now. The two most important ideas with which his name is associated were the division of
labour and the invisible hand. I will remind you what they were. In the division of labour, Smith
takes the example of pins. One man working on his own at all the processes needed to produce
pins could hardly produce twenty, perhaps not even one. Divide up the labour into eighteen
operations and Smith declares he has seen such a factory and ten men can produce up to 48
thousand pins. He is now talking of the early processes of the industrial revolution which made
such things possible. It raises the question of which came first, capitalism or the industrial
revolution. It is difficult to say - both needed each other, but probably Smith is basing his theories
upon his experience of the industrial revolution then going on in Britain. At any rate the pin
factory is one he has seen. The theory of it he could have found in Mandeville - he refers to him
once or twice - but Mandeville uses a ship, a frigate, as his example. The division of labour was
to be immensely powerful. American car factories, or Henry Ford, took the idea to its ultimate
with one man spending his entire working life assembling one item on to a car which passed him
on the assembly line, one of the most powerful ideas in human history.
The second idea was the invisible hand, butcher and baker self-interest that could have came
straight out of Mandeville.
Adam Smith's great achievement is to have established the market. Industry and commerce were
hampered by what he considered restraints on wealth creation. They were largely left over from
the middle ages - the guilds, which decided standards of craftsmanship and the training of
apprentices, monopolies (at one time monopolies in various commodities were given by a grateful
ruler to a favourite), tariffs on imports, discouragement to exports, restrictions on capital and so
on - his whole attack was on Mercantilism, the name given to the previous economic system,
above all government should keep out of economics. He established what came to be known as
'laissez-faire' - although he is said never to have used the phrase. With Mandeville he shared the
belief in the primacy of economic values - he agreed that self-interest and pride were the driving
systems of humanity. He was, though, more tolerant and generous than Mandeville - he did not,
for example, share Mandeville's hatred of charity schools and he did not rule out government
intervention altogether. Obviously governments must provide defence, roads, bridges, ports,
those things which private capital could not or would not provide. He also advocated
government support of education, although he thought students should pay their teachers.
This laissez faire industrial capitalism was the economic and political basis for the next two
hundred years and persists to this day. Smith had enormous support not only from capitalists and
entrepreneurs but from politicians and thinkers. Pitt the Prime Minister was an advocate and
economists almost without exception followed him even if with some divergencies. His
opposition, the opposition to the primacy of economic values, came as would be expected from
the Romantic poets. Wordsworth, in particular his sonnet "The World is too much with us".
Shelley in his Defence of Poetry (poetry means all the arts) sees poetry as battling against the
rules of the worldly Mammon, god of wealth.
The best known opponent to laissez faire capitalism was Charles Dickens. It is well known that
his early years were spent working in a blacking factory and this gave him an enormous sympathy
for the workers and a hatred of the conditions undergone by the industrial working class. You
can find his hatred of economic conditions in practically all his novels. His attack is often seen as
the conflict between commercial values and humane values. So in "Dombey and Son" it is
commerce, in "Oliver Twist" the workhouse system, in "Little Dorrit" and "Our Mutual Friend"
the law, and so on. The clearest statement of his opposition to laissez faire capitalism is in what
until recently was probably the least read of his novels, "Hard Times". It hasn't got a dominating
humorous figure like Mr Pickwick, Mr Micawber, or outstanding personalities like Fagin. Today
it owes its influence and fame to F R Leavis, the literary critic, and his wife Queenie. The two
prominent characters are Mr Gradgrind the teacher and Mr Bounderby the archetypal capitalist.
Gradgrind teaches reading and writing, but in his utilitarian way has no time for imagination,
beauty or the arts. Fact, fact, fact. He knows his pupils by numbers, not names. Girls number
twenty. Bounderby's aim is profits; a self-made man, he has no time for the arts or anything
outside money. He doesn't notice the pollution which Coketown suffers or if he does relishes it as
a sign of his growing wealth (in the phrase "where there's muck there's money"). The whole novel
is permeated by the economists' slogans, those by Mandeville or Smith. Bitzer, the boy who
moulds himself on Bounderby, says "You must always appeal to self-interest, a person's self-interest; it's your only hold".
But the main theme is summed up in Dickens' own comment "The good Samaritan was a bad
economist". Notice how the word 'economist' has bad connotations, a pejorative term.
The other great critic of the system is John Ruskin. He started as an art critic, he was a great
supporter of Turner, and became the best known commentator on art and architecture in the
country. But he came to realise the close connections between living conditions and art of the
period. Thus the Gothic architecture came from the culture of the mediaeval workers. Why was
the art of his own century generally so bad? Because working and living conditions weren't
favourable to good art and architecture. So he launched his attack on the political economists
(mostly Ricardo), those who saw profit making and economics as a set of rigid, almost scientific,
dogmas. You could not, for example, increase the income of workers; if you did the whole
system would collapse like a bridge having its essential support taken away. His views were
conveyed in a series of essays and lectures. They had Latin or obscure titles, "Unto this Last",
"Munera Pulveris", "Praeterita" and so on. Despite this he had an enormous influence,
particularly among the working class. Many Ruskin societies sprang up. He tried to start self-sufficient agricultural communities at Barmouth, for example, and there was one near Sheffield.
He liked Sheffield because there were many individual craftsmen still there. His society, the Guild
of St George, he gave specimens of art, minerals, natural history, architectural fragments, objects
of beauty which the working class could see and educate themselves by. It still survives, after
many vicissitudes including, I believe, a period in the cellars of Reading University. It is now
housed in a museum in Sheffield (opposite the Crucible Theatre). Ruskin himself was a very rich
man for most of his life - he inherited money from his father, a wine merchant (with Domecque?)
still going strong. Had his blind spots, noticeably over race (Jamaica rebellion), his reputation
sank, but beginning to revive now (Lancaster University Library grant funded by lottery money -
would he have disapproved?). But his saying sums him up - "There is no wealth but life".
There were, of course, many other writers who made their dislike of a society which asserted the
primacy of economic values known. But this is becoming a quick run through the nineteenth
century. It is also a bit like describing the Himalayas without mentioning Mount Everest, for the
foremost critic of capitalism hasn't so far had even a mention and that is, of course, Karl Marx.
So big a subject warrants an evening to himself. And the naked selfishness was never quite as
prominent as the economists sometimes made out. The politicial currents (although the British
Left owed, it has been said, more to Methodism than to Marx, unlike the left on the continent).
There were various Factory Acts, Education Acts against child labour, Public Health Acts and so
on, so that the Governments of the day intervened in industry and commerce much more than
Adam Smith and certainly Mandeville would have liked. But capitalism found some strong
support in Bentham's Utilitarianism and above all from 1859 from Darwin's evolution. To be fair
to Darwin, he was always very unwilling to draw human conclusions from his biological theories.
It was his followers, particularly Herbert Spencer, who equated capitalism with evolution and the
so-called survival of the fittest. But many successful entrepreneurs saw their financial success as a
sign that somehow superior to the rest of the human race. On the other hand there were some
successful businessmen who conducted their businesses with great concern for their workforces,
the Quakers for example, or the greatest of all, Robert Owen.
In the 20th century came theWelfare State, which it is customary to mark its beginning with the
Liberals' first National Insurance Act of, I think, 1910 or 1911. After the Labour victory in 1945
at the end of the war the Welfare State was in place. Government intervened in many areas. The
National Health Service provided a free service which greatly exceeded anything which had gone
before. Railways, utilities, and many other activities were nationalised. Most now have been
returned to private industry and we are modifying or even scrapping what is left of the Welfare
Getting back to the Bees now. In the 1960s there were two groups of economists who were
questioning the economic and political systems they had known since before the war. One group,
the Chicago group, was led by Milton Friedman who, rejecting the Keynesian economics of the
immediate past, put forward new theories of Monetarism. One of Keynes' preoccupations was to
get rid of unemployment without running into inflation. One of the standard beliefs of
conventional economics is that unemployment and inflation can't co-exist; if you have one you
can't have the other. So some concluded that a measure of unemployment was necessary to
counter inflation (Weimar, Hitler, totalitarianism). The Chicago school put forward another
theory - inflation is caused by the money supply, get the government to stop printing so much
money and hey presto you will cure inflation.
The other group, also with a geographical name, was the Mont Pelerin group (Mont Pelerin is, I
think, in Switzerland, where they met every year). It was an informal conference of politicians
and economists. Keith Joseph was a frequent visitor, Enoch Powell went once or twice. I don't
think Margaret Thatcher went - but that didn't matter as she was not an economist and she seems
to have got all the relevant economic knowledge from Keith Joseph. The most prominent
member was Friedrich von Hayek. He was associated with that group of Germans who settled in
Britain as refugees from Hitler. There was Gombrich, Pevsner and Popper and several others.
Strictly speaking Hayek wasn't a refugee, he came over before Hitler came to power to a job at
LSE. The Mont Pelerin group were not very fond of the Welfare State and wanted to get back to
a purer form of capitalism. How far they overlapped in personnel with the Chicago school I am
not very sure.
Mandeville and the bees had languished somewhat during the 19th century. After his great
influence in the 18th century he seems to have been somewhat of a footnote in literature. Keynes
did devote two or three paragraphs to him but certainly couldn't be thought of as a follower. But
Mandeville caught the attention of Hayek. I have not counted up the references, but I suspect he
refers to Mandeville more often than he does to Adam Smith. In 1960 he gave a lecture to the
British Academy on Mandeville. It was one in a series called "Lectures on a Mastermind". It is
rather odd that after all those years of neglect Mandeville should be thought of as a mastermind.
Hayek does not give him this title as an economist. He looks upon him rather as a great
psychologist. His great contribution was to see evolution behind institutions. So no-one
organised human society or the hive of bees. It simply came about as a response to the
environment of human needs. Everyone pursuing their own self-interest produced the order of
the hive. It is close to Adam Smith's invisible hand. You remember the butcher and baker by
pursuing their own profits and interest produced order which gave us our dinner. This order,
spontaneous order, is very important to Hayek. It appears as the free market. It came about not
from planning (Hayek hates planners, particularly socialist planners). Most things come about this
way - he gives us as an example a footpath which comes about from individuals crossing a field or
patch of ground in pursuit of their own good. Eventually a footpath is formed and this is
regarded as a good thing when no-one knows how it came about. Similarly with language - it
came about spontaneously in response to needs - no-one sat down and invented English or any
other language. He doesn't mention Esperanto, which was invented, but that has become
somewhat of a failure. Spontaneous order then is the best way to run societies. Governments
should not interfere in the activities of the members as they go about fulfilling their needs. The
only function of the government is to see fair play - to act against cheating and deception and for
the defence of the country. They should on no account try to coerce people into being morally
good. I expect he has in mind the fact that when the god tries to make the hive act morally then
the whole society collapses. Moral values have come about through the evolutionary response to
psychological and environmental pressures. Hayek was very fond of quoting David Hume: "The
rules of morality are not the conclusions of our reason". In other words no one person or group
of persons sat down and decided that murder is wrong. The concept came about from history,
tradition and evolution. Hayek is quite close to the philosopher of conservatism Edmund Burke
in this. Incidentally Hume, probably the greatest of British philosophers, seemed to owe quite a
lot to Mandeville.
The free market, says Hayek, is possessed of a knowledge or wisdom individuals cannot attain to.
If the price of carrots goes up one day you can deduce that the weather has been bad or there has
been an attack of carrot fly or whatever. But the free market knew and responded. No one
person can grasp what is happening to all the shares in the world, but the free market knows and
tells us in the share indexes.
Of course, people object, inequality is built into the market - some people get richer, some poorer.
This is desirable, says Hayek. It is necessary to have rich people in society, otherwise there is no
progress. Take refrigerators - at first only rich people had them, they tested them out and
eventually all the people have them. This is the basis of "trickle down" theories; to make poor
people richer you have to make rich people richer. As Reagan said, all boats rise when the tide
comes in. So for Hayek there is no such thing as social justice. No-one can decide who deserves
more wealth, so he is against government decisions about wage rises. Who is to decide whether
nurses or postmen deserve more money? It is no use asking the nurses or the postmen - they will
defend their own claims. It is better, indeed the only right way, to leave it to the market to
decide; after all, the market has the knowledge.
Hayek's criterion for a successful society is an increasing population enjoying an increasing
affluence. To him socialism "constitutes a threat to the present and future welfare of the human
race in the sense that neither socialism nor any other known substitute for the market order could
sustain the current population of the world". Again he talks of the death of billions and the
impoverishment of the rest if we destroy material foundation for an ethical system.
These views largely stemming from Mandeville entered the political dialogue through Keith
Joseph, who was Mrs Thatcher's guru during her years before attaining power in 1979. It does
not seem likely that she herself attended the Mont Pelerin meetings. In any case she was not an
economist. But her determination to privatise the nationalised industries came from capitalist
theory. The demolition of the Welfare State too, although there has been a massive increase in
older people who, of course, make more demands on it so that it is an increasing financial burden
upon the working population. The effect is being seen throughout the industrialised world.
We can see the origins of the slogans I quoted at the beginning. "There is no such thing as
society" came from Mrs Thatcher - only individuals and families. In other words we live among
individuals competing with each other. Society as an organic unit, members owing duties to each
other and sharing the earth's fruits, has yielded to the market. "Greed is good" (I think by Donald
Trump, the American entrepreneur and billionaire) asserted the primacy of an economic value -
what has been regarded as a weakness and vice now has become a virtue; economics has
triumphed in this estimation over moral good. Similarly with "Shop until you drop", otherwise
the whole system may well collapse. "I'm going to spend, spend, spend" says a naive winner of a
football pool, who has been conditioned by a system based upon consumption and the market.
Frugality and restraint were foreign to her. But she is like all of us now.
Copyright (c) Geoffrey Syer 1998