In 1705 there appeared in London a little volume of wretched doggerel verse entitled the Grumbling Hive: or, Knaves Turn’d Honest. It was a fable about a hive of bees, prosperous but dissatisfied with its perceived lack of moral virtue. Listening to their grumbling, through his divine power the god Jove removes their selfishness and instills them with a natural love of virtue. The result is a steep loss of prosperity and standard of living. Commerce, arts, and industry, you see, are dependent on a certain level of social vice.
The author of the poem was Bernard Mandeville (1670-1733) or “Man-Devil” — as some of his detractors liked to call him — a Dutch physician who had settled and taken up practice in London. In 1714 Mandeville decided to expand The Grumbling Hive, re-issuing it with extensive notes and commentary. Subsequent printings contained further additions until it became the sprawling and ramshackle work that became notorious under its new title, The Fable of the Bees: or, Private Vices, Publick Benefits.
The basic moral of The Fable of the Bees is that without selfishness, there is no motivation to employ one’s skills and arts. More controversially, Mandeville would have us believe that without thieves there would be no work for locksmiths, without crimes or quarrels over property there would be no work for lawyers, and without overindulgence in food, gin, and sexual debauchery, there would be no work for physicians like himself, (nor for undertakers where physicians fail). Even among the very poor, he claims, liquor has its beneficial place, for it helps to stupefy the destitute, giving them comfort and supplying "the Places of Meat, Drink, Clothes and Lodging."
Where we might see social ill, Mandeville sees no such thing, for "the short-sighted Vulgar in the Chain of Causes seldom can see further than one Link; but those who can enlarge their View, and will give themselves the Leisure of gazing on the Prospect of concatenated Events, may, in a hundred Places, see Good spring up and pullulate from Evil, as naturally as Chickens do from Eggs." Thus, as the famous subtitle heralds, private vices result in public benefits.
There are many distinguishable — though not always distinguished — arguments contained in the Fable. Speaking generally, it is a vicious and no-holds-barred attack on the prevailing morality of its time. For example, it makes the case that virtue is a sham imposed on a gullible public by those who would like to take advantage of their gentleness. Furthermore, Mandeville argues, the gullible public buys into this morality because they like to think of themselves as more virtuous than they really are: cunning politicians indoctrinate the herd into morality, and the herd willingly accepts this because it flatters them. As Mandeville pungently sums up the whole con, “moral Virtues are the political Offspring which Flattery begot upon Pride.”
Predictably, the book generated a lot of controversy in its time, provoking responses like George Berkeley’s Alciphron, or, the Minute Philosopher (1732), Francis Hutcheson’s Observations on the Fable of the Bees (1726), and William Law’s Remarks Upon a Late Book Entituled the Fable of the Bees (1725). (Law was better known as the author of the classic 1728 devotional work, A Serious Call to a Devout and Holy Life.) Most of these refutations — for few wrote in Mandeville’s defense — were focused mainly on the Fable’s analysis of the foundations of morality. In the rest of this posting, I will concentrate on its economic doctrines, particularly the doctrine that expenditure on vice is just as conducive to economic prosperity as any other kind of expenditure.
A Dollar is a Dollar
A simpler way of putting this claim is that a dollar spent is a dollar put into the economy, regardless of what it’s spent on. For example, the fact that theft is rife and many homes are broken into is an incentive for homeowners to invest in good locks. That investment is of net benefit to the economy as a whole, for it provides locksmiths and their employees with jobs, enabling them to earn money. And hopefully they will spend that money on gin, because their heavy gin consumption provides several more spin-offs: money for the excise man, employment for growers of grain and distillers of spirits, and — eventually — a clientele for physicians and undertakers.
So you see, says Mandeville, contrary to what prudish moralists would have us believe, theft and alcoholism are conducive to the public good. Actually, he makes the rather stronger claim that vices are not only good for society, but that society couldn’t survive without them. This is because, for the most part, dollar for dollar, money spent on vice goes farther than money spent on virtue. In part, this is because, by “virtue”, Mandeville seems to have the more ascetic and self-denying virtues in mind. Ascetics don’t spend money on luxury, or on much else for that matter. A society of such people would not make for a growing economy. Of course, what he ignores is that such a society would already have most of its meagre wants met, which means that it would in theory not require a vigorous commerce.
I leave it as an open question whether such a society of monks and ascetics is possible in anything more than a conceptual sense. I suspect that Mandeville's opinion has some limited validity. Nonetheless, we needn’t defend asceticism in order to refute him. While accepting that economic man has almost limitless wants, we can still demonstrate that there is a qualitative difference between vicious and non-vicious expenditures.
Berkeley and Hutcheson
The first attempts at this task came from George Berkeley and Francis Hutcheson. I say “attempts”, because they didn’t clearly distinguish between vicious and non-vicious expenditure in a qualitative sense so much as a quantitative sense. To see what I mean, here is an exchange from Berkeley’s dialogue Alciphron (1732), between Lysicles, the stand-in for Mandeville, and Euphranor, who is Berkeley’s mouthpiece; they debate the evils and benefits of gin consumption:
EUPHRANOR: Say, Lysicles, who drinks most, a sick man or a healthy?
LYSICLES: A healthy.
EUPHRANOR: And which is healthiest, a sober man or a drunkard?
LYSICLES: A sober man.
EUPHRANOR: A sober man, therefore, in health may drink more than a drunkard when he is sick?
LYSICLES: He may. [….]
EUPHRANOR: A sober healthy man, therefore, in a long life, may circulate more money by eating and drinking, than a glutton or drunkard in a short one?... You seem to me to have proved nothing, unless you can make it out that it is impossible to spend a fortune innocently. I should think the public weal of a nation consists in the number and good condition of its inhabitants…
Berkeley’s argument here relies on the idea that it’s not so much that gin (or food, or sex, or whatever) is evil in itself, but rather it is evil in excess. There is of course much to this argument, but more can be said.
Hutcheson gets a little closer to the mark in his Observations on the Fable of the Bees (1726), when he poses the following drawn-out question: “Would there be a less consumption, if those of greater wealth kept themselves within the bounds of temperance; and reserved the money thus sav’d to supply the interest of money lent gratis to a friend, who may be thereby enabled, consistently with temperance, to drink as much wine, as, had it been added to the quantity drunk by the lender, would have taken away his senses?” Here the crux is not so much the quantity drunk, as it is the inefficient allocation of resources it represents. Although he doesn’t put it in terms quite so modern, Hutcheson is grasping at something like the concept of diminishing marginal returns: resources could be drawn from the drunkard’s excess consumption and put to better use elsewhere. An extra unit of consumption by the drunkard is worth less than the same unit consumed by another who has not reached the plateau of his personal utility curve, as it were.
This is a much more sophisticated argument, and it can be taken further.
What is Seen and What is Unseen
The French politician and economist Frédéric Bastiat (1801-1850) in his 1850 essay “What Is Seen and What is Unseen,” introduced what has come to be known as the “broken windows fallacy”. It is so named after the following scenario: a boy kicks his ball through his father’s window, shattering it. The father’s neighbour, no doubt in an attempt at consolation, proclaims that “it’s an ill wind that blows no one any good”, since at least employment will now be provided for the glazier that the man will have to call in to fix the broken window.
So you see, in Mandeville’s theory, the boy’s negligent — or just plain unfortunate, as the case may be — action, is transformed by the subtle alchemy of economics into net social good: private vices are really public benefits, no?
No, says Bastiat. This is an incomplete accounting. Looking at the situation from a Mandevillian viewpoint, what is seen is the benefit to the glazier, perhaps along with the dubious “benefit” to the man of having his broken window fixed. But the Mandevillian viewpoint contains a blind spot, for what is not seen is what the man would otherwise have spent his money on, to his greater satisfaction, if he hadn’t been compelled to hire a glazier. Let us say he had been saving up for his daughter’s wedding. Note first, that spending money on his daughter’s wedding would have produced greater overall utility for him than spending it on a broken window. Note second, that the same money would have been spent and added to the economy in either case, only it would have been spent on different products or services.
Opportunity Costs
To put Bastiat’s reasoning in more modern economic terms, each expenditure one makes represents an opportunity cost: a dollar spent on X, means that same dollar is no longer available to be spent on Y. Now, if for you Y > X in terms of utility, then to have to spend money on X instead of Y means, other things equal, you are worse off than you would otherwise have been; you are down on the whole deal to the tune of Y - X.
It’s this kind of full-cost accounting that we need to do before we surmise that cleaning up after the Exxon Valdez oil spill produced a net economic benefit, or that extravagant US military expenditures have the same effect.
Externalities
In economic parlance, an externality is a cost of production borne by someone other than the producer. For example, the folks who distribute all those junk mail flyers that litter the inside of your doorstep when you get home do not pay the disposal or recycling costs when you throw them out (at least not in my jurisdiction) — you do.
Similarly, when a company pollutes the environment, it’s a lucky break if that company itself foots the bill for the cleanup. After all, it may have long gone out of business. That cost too often gets transferred to the public.
We can broaden the application of this concept, from production, to activity more generally. Thus, cigarette smoking is not really “production”, but there are usually externalities associated with that activity, including (but not limited to) health care costs and illness from second-hand smoke.
It’s not hard to understand that externalities are bad (although Mandeville seems to have had a hard time understanding it). But they may be bad for more than one reason. My hunch is that the general public thinks they’re bad because there’s something immoral about the idea of making others pay for your pleasures. After all, those who produce externalities are getting a free ride, which seems unfair. However, immoral though this is, such an explanation will presumably cut no mustard with Mandeville, who doesn’t really believe in morality anyway (or so he claims).
On the other hand, we can say that externalities are inefficient, because they represent a misallocation of resources that could have been expended to much better effect elsewhere. This is the gross flaw at the heart of Mandeville’s “private vices, public benefits” thesis: whatever “prosperity” flows from it hides the opportunity for greater prosperity that has been squandered.
I confess that I’ve read The Fable of the Bees several times. After all, “know your enemy”, as they say. However, the book’s doctrines have always appalled me, as has Mandeville’s own vulgar and disjointed prose style (attentive readers may already have noticed that The Spectacled Avenger has no sufferance for ugly prose). It is therefore with some sadness that I must report that two of the thinkers I most admire, Samuel Johnson and Friedrich Hayek, have praised Mandeville’s work. Johnson was a master prose stylist, and Hayek was a Nobel Prize-winning economist, so their lack of judgment in this instance is not to be excused.
Thursday, November 19, 2009
Are Private Vices Really Public Benefits?
In 1705 there appeared in London a little volume of wretched doggerel verse entitled the Grumbling Hive: or, Knaves Turn’d Honest. It was a fable about a hive of bees, prosperous but dissatisfied with its perceived lack of moral virtue. Listening to their grumbling, through his divine power the god Jove removes their selfishness and instills them with a natural love of virtue. The result is a steep loss of prosperity and standard of living. Commerce, arts, and industry, you see, are dependent on a certain level of social vice.
The author of the poem was Bernard Mandeville (1670-1733) or “Man-Devil” — as some of his detractors liked to call him — a Dutch physician who had settled and taken up practice in London. In 1714 Mandeville decided to expand The Grumbling Hive, re-issuing it with extensive notes and commentary. Subsequent printings contained further additions until it became the sprawling and ramshackle work that became notorious under its new title, The Fable of the Bees: or, Private Vices, Publick Benefits.
The basic moral of The Fable of the Bees is that without selfishness, there is no motivation to employ one’s skills and arts. More controversially, Mandeville would have us believe that without thieves there would be no work for locksmiths, without crimes or quarrels over property there would be no work for lawyers, and without overindulgence in food, gin, and sexual debauchery, there would be no work for physicians like himself, (nor for undertakers where physicians fail). Even among the very poor, he claims, liquor has its beneficial place, for it helps to stupefy the destitute, giving them comfort and supplying "the Places of Meat, Drink, Clothes and Lodging."
Where we might see social ill, Mandeville sees no such thing, for "the short-sighted Vulgar in the Chain of Causes seldom can see further than one Link; but those who can enlarge their View, and will give themselves the Leisure of gazing on the Prospect of concatenated Events, may, in a hundred Places, see Good spring up and pullulate from Evil, as naturally as Chickens do from Eggs." Thus, as the famous subtitle heralds, private vices result in public benefits.
There are many distinguishable — though not always distinguished — arguments contained in the Fable. Speaking generally, it is a vicious and no-holds-barred attack on the prevailing morality of its time. For example, it makes the case that virtue is a sham imposed on a gullible public by those who would like to take advantage of their gentleness. Furthermore, Mandeville argues, the gullible public buys into this morality because they like to think of themselves as more virtuous than they really are: cunning politicians indoctrinate the herd into morality, and the herd willingly accepts this because it flatters them. As Mandeville pungently sums up the whole con, “moral Virtues are the political Offspring which Flattery begot upon Pride.”
Predictably, the book generated a lot of controversy in its time, provoking responses like George Berkeley’s Alciphron, or, the Minute Philosopher (1732), Francis Hutcheson’s Observations on the Fable of the Bees (1726), and William Law’s Remarks Upon a Late Book Entituled the Fable of the Bees (1725). (Law was better known as the author of the classic 1728 devotional work, A Serious Call to a Devout and Holy Life.) Most of these refutations — for few wrote in Mandeville’s defense — were focused mainly on the Fable’s analysis of the foundations of morality. In the rest of this posting, I will concentrate on its economic doctrines, particularly the doctrine that expenditure on vice is just as conducive to economic prosperity as any other kind of expenditure.
A Dollar is a Dollar
A simpler way of putting this claim is that a dollar spent is a dollar put into the economy, regardless of what it’s spent on. For example, the fact that theft is rife and many homes are broken into is an incentive for homeowners to invest in good locks. That investment is of net benefit to the economy as a whole, for it provides locksmiths and their employees with jobs, enabling them to earn money. And hopefully they will spend that money on gin, because their heavy gin consumption provides several more spin-offs: money for the excise man, employment for growers of grain and distillers of spirits, and — eventually — a clientele for physicians and undertakers.
So you see, says Mandeville, contrary to what prudish moralists would have us believe, theft and alcoholism are conducive to the public good. Actually, he makes the rather stronger claim that vices are not only good for society, but that society couldn’t survive without them. This is because, for the most part, dollar for dollar, money spent on vice goes farther than money spent on virtue. In part, this is because, by “virtue”, Mandeville seems to have the more ascetic and self-denying virtues in mind. Ascetics don’t spend money on luxury, or on much else for that matter. A society of such people would not make for a growing economy. Of course, what he ignores is that such a society would already have most of its meagre wants met, which means that it would in theory not require a vigorous commerce.
I leave it as an open question whether such a society of monks and ascetics is possible in anything more than a conceptual sense. I suspect that Mandeville's opinion has some limited validity. Nonetheless, we needn’t defend asceticism in order to refute him. While accepting that economic man has almost limitless wants, we can still demonstrate that there is a qualitative difference between vicious and non-vicious expenditures.
Berkeley and Hutcheson
The first attempts at this task came from George Berkeley and Francis Hutcheson. I say “attempts”, because they didn’t clearly distinguish between vicious and non-vicious expenditure in a qualitative sense so much as a quantitative sense. To see what I mean, here is an exchange from Berkeley’s dialogue Alciphron (1732), between Lysicles, the stand-in for Mandeville, and Euphranor, who is Berkeley’s mouthpiece; they debate the evils and benefits of gin consumption:
EUPHRANOR: Say, Lysicles, who drinks most, a sick man or a healthy?
LYSICLES: A healthy.
EUPHRANOR: And which is healthiest, a sober man or a drunkard?
LYSICLES: A sober man.
EUPHRANOR: A sober man, therefore, in health may drink more than a drunkard when he is sick?
LYSICLES: He may. [….]
EUPHRANOR: A sober healthy man, therefore, in a long life, may circulate more money by eating and drinking, than a glutton or drunkard in a short one?... You seem to me to have proved nothing, unless you can make it out that it is impossible to spend a fortune innocently. I should think the public weal of a nation consists in the number and good condition of its inhabitants…
Berkeley’s argument here relies on the idea that it’s not so much that gin (or food, or sex, or whatever) is evil in itself, but rather it is evil in excess. There is of course much to this argument, but more can be said.
Hutcheson gets a little closer to the mark in his Observations on the Fable of the Bees (1726), when he poses the following drawn-out question: “Would there be a less consumption, if those of greater wealth kept themselves within the bounds of temperance; and reserved the money thus sav’d to supply the interest of money lent gratis to a friend, who may be thereby enabled, consistently with temperance, to drink as much wine, as, had it been added to the quantity drunk by the lender, would have taken away his senses?” Here the crux is not so much the quantity drunk, as it is the inefficient allocation of resources it represents. Although he doesn’t put it in terms quite so modern, Hutcheson is grasping at something like the concept of diminishing marginal returns: resources could be drawn from the drunkard’s excess consumption and put to better use elsewhere. An extra unit of consumption by the drunkard is worth less than the same unit consumed by another who has not reached the plateau of his personal utility curve, as it were.
This is a much more sophisticated argument, and it can be taken further.
What is Seen and What is Unseen
The French politician and economist Frédéric Bastiat (1801-1850) in his 1850 essay “What Is Seen and What is Unseen,” introduced what has come to be known as the “broken windows fallacy”. It is so named after the following scenario: a boy kicks his ball through his father’s window, shattering it. The father’s neighbour, no doubt in an attempt at consolation, proclaims that “it’s an ill wind that blows no one any good”, since at least employment will now be provided for the glazier that the man will have to call in to fix the broken window.
So you see, in Mandeville’s theory, the boy’s negligent — or just plain unfortunate, as the case may be — action, is transformed by the subtle alchemy of economics into net social good: private vices are really public benefits, no?
No, says Bastiat. This is an incomplete accounting. Looking at the situation from a Mandevillian viewpoint, what is seen is the benefit to the glazier, perhaps along with the dubious “benefit” to the man of having his broken window fixed. But the Mandevillian viewpoint contains a blind spot, for what is not seen is what the man would otherwise have spent his money on, to his greater satisfaction, if he hadn’t been compelled to hire a glazier. Let us say he had been saving up for his daughter’s wedding. Note first, that spending money on his daughter’s wedding would have produced greater overall utility for him than spending it on a broken window. Note second, that the same money would have been spent and added to the economy in either case, only it would have been spent on different products or services.
Opportunity Costs
To put Bastiat’s reasoning in more modern economic terms, each expenditure one makes represents an opportunity cost: a dollar spent on X, means that same dollar is no longer available to be spent on Y. Now, if for you Y > X in terms of utility, then to have to spend money on X instead of Y means, other things equal, you are worse off than you would otherwise have been; you are down on the whole deal to the tune of Y - X.
It’s this kind of full-cost accounting that we need to do before we surmise that cleaning up after the Exxon Valdez oil spill produced a net economic benefit, or that extravagant US military expenditures have the same effect.
Externalities
In economic parlance, an externality is a cost of production borne by someone other than the producer. For example, the folks who distribute all those junk mail flyers that litter the inside of your doorstep when you get home do not pay the disposal or recycling costs when you throw them out (at least not in my jurisdiction) — you do.
Similarly, when a company pollutes the environment, it’s a lucky break if that company itself foots the bill for the cleanup. After all, it may have long gone out of business. That cost too often gets transferred to the public.
We can broaden the application of this concept, from production, to activity more generally. Thus, cigarette smoking is not really “production”, but there are usually externalities associated with that activity, including (but not limited to) health care costs and illness from second-hand smoke.
It’s not hard to understand that externalities are bad (although Mandeville seems to have had a hard time understanding it). But they may be bad for more than one reason. My hunch is that the general public thinks they’re bad because there’s something immoral about the idea of making others pay for your pleasures. After all, those who produce externalities are getting a free ride, which seems unfair. However, immoral though this is, such an explanation will presumably cut no mustard with Mandeville, who doesn’t really believe in morality anyway (or so he claims).
On the other hand, we can say that externalities are inefficient, because they represent a misallocation of resources that could have been expended to much better effect elsewhere. This is the gross flaw at the heart of Mandeville’s “private vices, public benefits” thesis: whatever “prosperity” flows from it hides the opportunity for greater prosperity that has been squandered.
I confess that I’ve read The Fable of the Bees several times. After all, “know your enemy”, as they say. However, the book’s doctrines have always appalled me, as has Mandeville’s own vulgar and disjointed prose style (attentive readers may already have noticed that The Spectacled Avenger has no sufferance for ugly prose). It is therefore with some sadness that I must report that two of the thinkers I most admire, Samuel Johnson and Friedrich Hayek, have praised Mandeville’s work. Johnson was a master prose stylist, and Hayek was a Nobel Prize-winning economist, so their lack of judgment in this instance is not to be excused.
Saturday, November 14, 2009
Of Anger
November 14, 1755Sir,
A Man may have need of Philosophy not only when holding fast against the Wrath or the Blandishments of Tyrants, or in the Smoke and Din of Battle, but also in his dealings with his Family and his Household. I was the other Day entering the Kitchen just as one of my Servants was pouring a Bucketful of scalding Water on the Floor, to which she was about to employ her Mop. The Water landed on my Legs, rendering my Breeches and Shoes sodden. By Luck I was not burn’d, but I found myself immediately as much awash in Rage as I was in Water.
But pray, at whom was I vexed? At the Girl? Why, the poor Wench cou’d have no inkling that I was about to enter the Room, nor was she doing anything which lay outside the normal Course of her Duties. Was I to visit my Anger upon her for doing precisely that which I pay her to do, and for which I wou'd equally visit my Anger upon her for not doing?
It is Man's Misfortune that Anger of such a kind is a most natural Passion, and one which wou’d seem to well up of its own accord, without Reflection. Not only is it natural, but if we are to believe ARISTOTLE, it is also a most necessary Passion, for he wou’d convince us that Courage, that most worthy Virtue, celebrated through the Ages by Moralists and Poets alike, wou’d be impossible without a just Measure of Anger.
This is not only a hoary Opinion of the Ancients, for our modern Mr. HOBBES in his Leviathan defines Anger as “sudden Courage” [See chapter 6 — Ed.], against which Definition the witty and elegant Lord SHAFTESBURY most acutely observ’d that if this be so, we must be made to believe that the Virtue of Courage, as being the Disposition to act courageously, is “Anger constantly returning” [Characteristicks of Men, Manners, Opinions, Times (1711), Vol. I, p. 119 — Ed.]. Hobbes is reputed to have been a Man rare at Definitions, but we here find him involv’d in gross Error, for he does Violence to common Sense in asserting that the Virtue of Courage is the same as the Vice of Irascibility.
Aristotle was somewhat closer to the Mark than Hobbes, for at least he had the good Sense to admit that Anger is not the sole Ingredient in Courage, but that a just Measure of Reason is also wanted. But for this opinion, SENECA justly put him upon the Horns of the following Dilemma: Either Anger is stronger than Reason, or it is not. If it be stronger, then how can Reason limit or restrain Anger to the extent necessary for Courage to be properly controlled and directed? If, however, Reason be the stronger Partner, then why is Anger necessary to Courage at all? [See Seneca, De Ira, 1.8.4-6 — Ed.]
The Stoick School held that Anger, as it is a Passion, must for that very Reason be held suspect. It will always be clouding a Man’s Judgment; it wou’d make us Judges in our own Cause, magnifying the Wrong done us, and demanding unreasonable Restitution. It wou’d have us visit our Vengeance upon the Wrongdoer while we are in no fit State for making a proper Job of it. Here we ought to attend to the Counsel of honest old MONTAIGNE: “Let an hungry Man have Meat; but a Man who wou’d Punish shou’d neither hunger nor thirst for it” [Essays, “Of Anger” — Ed.].
I cannot end without a Remark upon an opinion of Lord VERULAM’s that to calm one’s Wrath, “it is the best Remedy to win Time, and to make a man’s Self believe that the Opportunity of his Revenge is not yet come: But that he Foresees a Time for it, and so to still Himself in the mean Time, and reserve it” [Francis Bacon, Essays (1623), “Of Anger” — Ed.]. Thus he wou’d have us nurse a Resentment in the hopes of forestalling rash Action. He wou’d have us apply a numbing Ointment to the Wound but not a curative one. Notwithstanding, Montaigne gives the opposite Counsel, preferring rather to produce his Passions than to brood over them at his own Expense, for “they grow languid when they have Vent and Expression.”
I confess myself unable to decide between these opposed Reasonings, but I also cannot avoid the Conclusion that it is Danger to coddle a Resentment, for a smoldering Anger may suddenly become an Anger ablaze.
I remain, Sir, ever your humble Servant,
Jos. Darlington, Esq.
Darlington Close,
Horton-cum-Studley, Oxfordshire.
Thursday, November 5, 2009
Contract and the Philosophers (Part II)
Contractarian philosophers tend to speak as if it is just natural for us to think of social structures according to the analogy of a binding contract between multiple parties. What they seem to be unaware of is that contract is a new enough an idea — relatively speaking — to make it anachronistic to conceive of a bargain struck in some primeval state of nature.Social contract theory came into existence under certain historical and cultural conditions; before that time, philosophers did not think in terms of social contracts. Broadly speaking, there were two important historical threads running through the period in question that influenced the development of contractarian philosophical thinking.
First, social contract theory begins in 17th century England, coinciding with the emergence of that nation as a mercantile entity. With a rising merchant class, and the growing social prominence of trade, the notion of a contract became a more familiar thing. Confident that their audiences would know what they were talking about, philosophers began to talk about social contracts.
Second, again in 17th century England, the common law was developing a new branch of private law, which we now call the law of contract. It began with the old common law action of assumpsit (literally “he has undertaken”, from the Latin assumere, “to undertake”). Originally, assumpsit was an action for debt, while debt itself was seen as part of tort law. For example, if you borrowed money from me and didn’t repay due to deceit, it was that deceit which generated a liability for damages in tort. But later it came to be seen that the very promise to pay the debt back could itself form the basis of the action, regardless of deceit — after all, at the time you borrowed the money you might have had every intention to pay it back, without deceit even coming into it. Thus, under the form of action called assumpsit, the law came to concern itself with obligations generated by voluntary promises or undertakings, which is the basis of modern contract law.
Thus, I submit that in 17th century England, the novelty of the social and legal conception of contract came to influence philosophers’ thinking about the foundations of moral and political arrangements. But it was a far from natural way to think about them.
Duress
Even with regard to legal contract, the social contract analogy in certain respects breaks down. For example, it is well-established in law that a contract made under duress is not valid. This has especial relevance to Hobbes’ version of the social contract: if man’s only motivation for entering into the social contract was fear of violence and death, then is the contract binding? If the fear in the state of nature was sufficiently acute, forcing people into a bargain they otherwise would not have made, then it was made under duress and would be unenforceable at law.
Privity of Contract
Another way in which the contract analogy breaks down is with respect to the legal doctrine of privity of contract: an agreement made between A and B cannot be held to be binding on a third party C without C’s express consent. And yet, isn’t this exactly what happens where a social contract is held to be binding on future generations who were not parties to its first formation?
Interpretation of Terms
It often happens that the parties to a contract were actually — unbeknownst to them — not in agreement over the terms of the contract. They may have had differing ideas about what the agreement was supposed to achieve. In such cases, a court may invalidate a contract and grant restitution to one or more parties to return them to the position they were in before the contract was made.
Now, in the case of a social contract, can we honestly say that those who under its arrangements have ended up getting the short end of the stick, by winding up poor or otherwise disenfranchised, actually understood the implications of what they were getting themselves into? Maybe, but maybe not. If you entered into a contract that was supposed to guarantee your security and human flourishing, should you still be bound by it if that is not what you were getting after all? Courts decide this question in different ways according to the particular contract in question. But given that in this case the consequences are so dire and far-reaching, it is not unreasonable to suppose that a court would invalidate it.
In any case, the social contract was entered into so long ago (we assume) that nobody can really be said to be an expert on what its actual terms are. We have to interpret those terms as we go along. But if that’s the case, then why can’t we deliberate on just social arrangements without the device of a contract? In the absence of an actual explicit contract, we must negotiate anew, in which case, there is effectively no contract.
Implied Terms
In a similar vein, rather than invalidate a contract, courts will sometimes fill in gaps through the imposition of implied terms where some element necessary for the carrying out of the contract is missing. We could say that in our social contract, there are many such gaps.
One common implied term is an assumption of good faith. A court will interpret what obligations would be generated if the parties entered into the contract in a spirit of good faith. Here, “good faith” implies honesty and lack of intent to deceive or withhold information vital to the other party’s free and informed consent to the contractual obligation.
This raises an interesting dilemma: if we are already assuming good faith on the part of the contractors, and if — as is undoubtedly the case — good faith presumes a fairly robust moral content, then it would seem that philosophers who use the device of a contract to ground morality are already smuggling morality in by the back door. If morality is needed to ground a contract that will ground morality, then… well, you get the picture. We can just as well cut out the middle man.
Limitation
The terms of most contracts will give some indication of when the contract is to be considered discharged or rendered void, for example, upon completion of performance by the parties involved, or after a certain length of time has run out. If there isn’t such a limitation, courts may imply one that seems reasonable.
The social contract, on the other hand, has no such limitation. It would seem to be a rare instance where the contract is to remain valid indefinitely, from the moment I sign on to the day I die (not to mention that it continues to bind future generations).
Unenforceable Terms
Certain kinds of “contracts” are considered unenforceable at common law. Examples would be most gambling contracts, contracts demanding performance that is illegal, or a contract selling oneself into slavery (because certain rights are considered inalienable and cannot be waived). Now, imagine a contract whereby I give someone (or some body) the right to exercise extensive coercive powers over me, including restrictions on freedom of travel, imprisonment, and possibly even death. Such a contract would likely be unenforceable, and yet, this is exactly what a social contract involves.
*******
For those who are curious, the above illustration is a reference to what is perhaps the most famous case in contract law, Carlill v. Carbolic Smoke Ball Company [1893] 1 QB 256.
Contract and the Philosophers (Part I)
In my two previous postings I attempted to deflate a traditional philosophical notion of property by looking at some of the characteristics of the law of property. My presupposition in doing so was that property has as much claim to being a legal concept as a philosophical one. As far as I’m concerned, the same goes for the concept of contract, a claim I’ll explore in this and the next posting.
Since the 17th century, the device of a social contract has been used by many philosophers, in both political and moral philosophy. In the former, it has been used to ground our obligation to obey political authority (e.g. Thomas Hobbes), or to ground a certain regime of political rights and freedoms, (e.g. John Locke and Robert Nozick), or else to generate the fundamental principles of justice that ought to structure the basic institutions of a free and reasonable people (e.g. John Rawls).
In the realm of moral philosophy, the contractarian approach has been used to test and sharpen our intuitions about what reasonable principles of morality would look like, as well as to justify the principles of morality.
This notion that the device of a contract can be used to justify morality or political authority is particularly problematic. As Lord Shaftesbury wittily pointed out with regard to Hobbes’ version of the contract, “A Man is oblig'd to keep his Word. Why? Because he has given his Word to keep it. — Is not this a notable Account of the Original of moral Justice, and the Rise of Civil Government and Allegiance!” (Characteristicks of Men, Manners, Opinions, Times (1711), Vol. I, p. 110). In other words, in order for my promise to abide by the original social contract to be morally binding, some morality must already exist that will bind me to my promise. The very notion of a contract presupposes morality and cannot be the foundation of it. Shaftesbury was not the first to point this out. He likely got the argument from Richard Cumberland’s De Legibus Naturae (1672), e.g. ch. V, §56.
Another philosophical problem with contract theory is this: depending on your initial assumptions regarding human nature and the corresponding state of nature, just about any moral or ethical theory can be generated from the machinery of contract theory. For example, if your state of nature is one of violence and misery resulting from a brutal and selfish human nature (I’m thinking of Hobbes here), then you would naturally drift towards a coercive and authoritarian theory robust enough to put an end to such a deplorable situation. On the other hand, if you generally think that human nature is redeemable and contains some “spark of better hope,” then your theory will tend to be one that emphasizes either representative or direct democracy and a minimal coercive role for government (e.g. John Locke).
Furthermore, as Amartya Sen explores in his recent book, The Idea of Justice (Harvard University Press, 2009), there is a tendency for social contract theorists to become preoccupied with ideal justice in the institutions and social arrangements generated by their theories, while paying scant attention to real injustices that could plausibly be ameliorated here and now. This is the natural result of too much speculation about idealized human agents under idealized initial conditions. Such philosophers spend too much time theorizing about “spotless” justice (the term is Sen’s), instead of about how they could make the world more just than it is. The latter is perhaps less ambitious, but more realizable.
Similarly, when philosophers employ the device of a social contract, they often do so in the context of finding the kind of ideal institutions that would embody their notion of an ideal justice. Unfortunately, they tend to have the unrealistic expectation that such institutions would be monolithic and unchanging — after all, if institutions are perfectly just, then why change them, right? But in the real world, circumstances inevitably change, necessitating institutional change as well.
The notion of ideal and unchanging institutions is a mere dream, but one which could too easily become a nightmare. As Adam Ferguson judiciously observed in his Essay on the History of Civil Society (1767), “our notion of order in civil society is frequently false: it is taken from the analogy of subjects inanimate and dead; we consider commotion and action as contrary to its nature; we think it consistent only with obedience, secrecy, and the silent passing of affairs through the hands of a few. The good order of stones in a wall, is their being properly fixed in the places for which they are hewn; were they to stir the building must fall: but the order of men in society, is their being placed where they are properly qualified to act. The first is a fabric made of dead and inanimate parts, the second is made of living and active members. When we seek in society for the order of mere inaction and tranquility, we forget the nature of our subject, and find the order of slaves, not that of free men.”
Finally, social contract theory is not descriptive, insofar as it does not accurately describe most people’s reasons for why they obey political authority, or why they think the exercise of such authority is legitimate. This point was well made by David Hume in his essay “Of the Original Contract” (1752). He there argued that, given a certain rough physical and mental equality between men (in the bare sense that any man is able through strength or guile or confederacy to kill any other), it was natural for men in their “rude state” to form an agreement to live together on certain terms “so clear and obvious that it might well be deemed superfluous to express them.” In other words, the original “contractors” knew the terms of whatever bargain they were striking, though they might be obscure to us, given the distance of time and circumstance and the lack of written documentation. Even on this minimal view, such “original contracts” were imperfectly realized and quickly lost in subsequent times by the conquest and usurpation of the powerful.
In any case, Hume notes, this minimal original contract is a far cry from the sort of contract theorized by philosophers, for “would these reasoners look abroad into the world, they would meet with nothing that in the least corresponds to their ideas or can warrant so refined and philosophical a system. On the contrary, we find everywhere princes who claim their subjects as their property and assert their independent right of sovereignty from conquest or succession. We find also everywhere subjects who acknowledge this right in their prince and suppose themselves born under obligations of obedience to a certain sovereign, as much as under the ties of reverence and duty to certain parents. These connections are always conceived to be equally independent of our consent, in PERSIA and CHINA, in FRANCE and SPAIN, and even in HOLLAND and ENGLAND, wherever the doctrines above mentioned have not been carefully inculcated.”
In other words, in the real world, people feel themselves obliged to obey the sovereign power of their particular nation, and they do so (or at least did so, in Hume’s times) without rarefied notions that this was legitimated by consent expressed in some explicit contract. For Hume, political obligation was more akin to the duty owed to a parent than to another party to a contract. It was a relationship that did not have to be entered into by free consent, just as we all owe certain duties to parents, even though we didn’t enter voluntarily into that relationship.
In fact, continues Hume, “almost all the governments which exist at present, or of which there remains any record in story, have been founded originally either on usurpation or conquest or both, without any pretense of a fair consent or voluntary subjection of the people.” And yet, at least for those of us lucky enough to live in one of the generally well-ordered democracies of the West, not only do we generally obey these governments, but we also believe that it is right to do so, and we further believe that everyone else ought to do the same. True, we may quibble with certain policies or actions of government, but obedience to political authority tout court is never fundamentally questioned by anyone who is not motivated by ignorance or self-interest, or deluded by the airy dreams of political philosophers. And we do not need the idea of an imaginary contract to tell us that this is the correct attitude to have.