In The Passions and the Interests, Albert Hirschman asks how the idea of capitalism won in a world where “commercial banking, and similar money-making pursuits…[had] stood condemned or despised as greed, love of lucre, and avarice for centuries past.”
The story he tells is one of an evolution of ideas, not new ones cut whole out of cloth or the replacement of a previous form in a single stroke. It is also a story of the euphemization of a rising economic system which sought to hide its worst aspects.
Hirschman begins his chronology of the idea by identifying it as “an endogenous process…whose final outcome is necessarily hidden from the proponents of the individual links.”
He takes us through a succession of thinkers, from Machiavelli to Spinoza, Mandeville to Smith, tracing the progression of the valorization of “the interests” as a vice that could be channelled for moral good. Just as a lust for glory on the battlefield could be transformed into honorable combat for one’s country, so too could the love of lucre be turned to beneficial aims.
This idea is omnipresent now, and widely accepted. The logic of capitalism, or so its defenders say, is that people are naturally selfish and greedy, and that can’t be changed. If the aim is to serve the common good this system of personal enterprise motorised by greed would seem to be a poor one for bringing about that good. But through that strange alchemy that Adam Smith would eventually call the invisible hand of the market, these forces actually could serve the common good.
How did these vices become accepted then? It coincided with a changing perception of state repression as the sole point of control in human society, as well as “the political consequences of economic growth”; in short, with the rise of commerce.
Thinkers like Montesquieu and Steuart became convinced of the moderating effects of trade on the despotic urges of the absolute rulers of their time. The focus here then, was not on the material impacts of commerce, but the changes it would effect in the behavior of rulers. Hirschman spends a bit of time treating of Machiavelli’s exploration of the subject, and there are some noteworthy details here. Among those that the idea of the interests overcoming the passions was first developed in the realm of politics, with the concept of checks & balances being one of the products and lineage of this line of thinking.
The exploration of the concept outside of politics was also exceedingly common.
“The idea of engineering social progress by cleverly setting up one passion to fight another became a fairly common intellectual pastime in the course of the eighteenth century” writes Hirschman. And “the comparatively novel thought of checks and balances gained in persuasiveness by being presented as an application of the widely accepted and thoroughly familiar principle of countervailing passion.”
Central to Hirschman’s exploration of these ideas, because this is a history of ideas, is a sort of inverse of the law of unintended consequences. Hirschman is equally fascinated by what didn’t happen and what was supposed to.
Making clear that “unintended consequences flow from human thought…no less than from human actions,” he identifies the practical result of the changing discourse around greed and the interests: “Once money-making wore the label of ‘interests,’ and reentered in this disguise the competition with the other passions, it was suddenly acclaimed and even given the task of holding back those passions that had long been thought much less reprehensible.”
This is the process of euphemization that I mentioned at the start, and Hirschman lucidly identifies it as one of the consequences of the debate around the newly emergent capitalism.
It holds an interesting parallel to the changing nature of the direction of acquisitive desires, from land and luxury goods to that of money, and how the transition motivated ever greater desires for money. Hirschman frames it through the concept of the law of decreasing marginal utility formulated by the German sociologist Georg Simmel. Hirschman describes that law like this: “Normally, he [Simmel] said, the fulfillment of human desire means an intimate acquaintance with all the diverse facets of the desired object or experience, and this acquaintance is responsible for the well-known dissonance between desire and fulfilment, which takes most frequently the form of disappointment; but the desire for any given amount of money once satisfied, is uniquely immune to this disappointment provided that money is not spent on things but that its accumulation becomes an end in itself: for then ‘as a thing absolutely devoid of quality, [money] cannot hide either surprise or disappointment as does any object, however miserable.’”
Money, then, had become a euphemism for the unrealized treasures that the industrious capitalist was capable of possessing. Part of this process intersects with the broader development of commerce, spurred onwards and made necessary by the conquest of the New World and other colonizations alongside it, with the faraway markets these adventures opened up. These long journeys over great distances needed legal instruments for their facilitation, and thus the bill of exchange was created. Montesquieu called this “an event in the history of commerce comparable to the discovery of the compass and of America.” With it there were “no limits to the expansion of commerce other than those of the globe itself.”
Here again, was a vivid representation of the process of euphemism that the infancy of capitalism created. A bill of exchange was an instrument of credit, and represented what Montesquieu called effets mobiliers, or movable property.
So, with the intellectual underpinnings of a movement that sought to bridle the excesses of despotism flourishing, and the legal framework of the thought coming into formation, this new politico-economic thought was coming into its fore. John Millar, a member of the Scottish Enlightenment then, “believe[d] it likely that…advances [in manufacturing and agriculture] will not be accompanied by the very great inequalities of fortune that were characteristic of the prior age, but by ‘such gradation of opulence, as leaving no chasm from top to bottom of the scale.’”
In a world where in the United States three men now own more wealth than the bottom half of the population, 163 million people, that Millar’s prediction has not come true is not a point that needs to be labored.
It was ultimately experience that shattered the nostrums of this high-minded thought that sought to justify the rapacious and expansionary instincts of the ascendant capital class. Alexander de Tocqueville identified some of these flaws as early as 1835, in his Democracy in America, which are acutely relevant today. Hirschman highlights Tocqueville’s observation that “if the citizens become absorbed by the pursuits of their private interests, it will be possible for a ‘clever and ambitious man to seize power.’” Perhaps Tocqueville was incorrect in maintaining that that man need be “clever,” but he is also remarkably prescient in identifying the danger of the discourse of “law and order,” expressed largely as being necessary for a “favorable business climate.” Writes Tocqueville: “A nation that demands from its government nothing but the maintenance of order is already a slave in the bottom of his heart; it is the slave of its well-being, and the man who is to chain it can arrive on the scene.”
Hirschman cites the Scottish philosopher and historian Adam Ferguson alongside Tocqueville in making an adjacent point about the effects of the pursuit of interests on the prospects for civic organisation. When “social arrangements that substitute the interests for the passions as the guiding principle of human action for the many [take hold, they] can have the side effect of killing the civic spirit and of thereby opening the door to tyranny.”
Hirschman acknowledges and accepts the lessons learned from the experience of the implementation of a system born from the minds and pens of the thinkers whose thought he lays out: “The idea that men pursuing their interests would be forever harmless was decisively given up only when the reality of capitalist development was in full view.” And in summing this up he makes the edifying point that perhaps the “failures” of capitalism were nothing such. Because the express goal was the taming of the passions, he calls the accusation that “capitalism…inhibits the development of ‘the full human personality’…a bit unfair, for capitalism was precisely expected to repress certain drives and proclivities and to fashion a less multifaceted, less unpredictable, and more ‘one-dimensional’ human personality…in sum, capitalism was supposed to accomplish exactly what was soon to be denounced as its worst feature.”
The greatest contribution of this book then, outside of being a fascinating and engaging exploration of the ideas that created the modern economic world, is its demolishing of the tacit dimension of capitalism. That ‘tacit dimension’ is the “propositions and opinions shared by a group and so obvious to it that they are never fully or systematically articulated.” Hirschman has articulated these ideas fully and systematically, and provided a perhaps unintentional road map for those who seek an alternative to the ruling propositions and opinions. There is only ever “no alternative” because of an absence of will in creating one. As Hirschman illustrates, it has been done before. And it will it be done again.