The Passions and the Interests

"The story is that western Europe seemed to be moving into a new kind of society, a commercial society, in which people were no longer concentrated so much in traditional professions, or constrained by what their parents had done, or by their social position, in determining what they should do. The individual’s place in society shifted from being embedded in a network in which pretty much everyone you interacted with, you knew quite well and had very strong expectations about what kind of person you were, given your particular role in society, to a society in which there were all these market exchanges, which were in large part, more or less at arm’s length. Human societies require a substantial division of labor. We’re much more powerful and competent and capable in groups than we are on our own. But, in order to have a division of labor, we have to be dependent on each other. We have to rely on each other to fulfil a great deal of each other’s needs. And that requires an awful lot of social trust. And how do you build that? If you’re making something for someone else or doing a service in return for something else, how certain are you that they’re going to reciprocate, that this is going to be win-win, rather than win-lose? How can you know someone won’t just take the stuff you made for them and then get out of Dodge, leaving you holding the bag? Back in the original and rude state of humanity, there really are only three groups of people whom you could count on. You could count on your close kin, and not all of them; you could count on your close friends, although not all of them; and you could count on your close neighbors. All of these groups are people to whom you have immensely thick sociological ties. You see them again and again and so you can have confidence and trust that you’re in a gift-exchange relationship, or a guest-host relationship, with this fairly small circle of people whom you know well. And then we invent money. And we trust money. And, all of a sudden, you don’t have to know the person you’re transacting with well or trust them a lot. You still have to do due diligence and you still have to look in the horse’s mouth, at its teeth, to see how old it is. You still have to ask around to see if they have a reputation. You still need to test out their products. But once you have money, all of a sudden, you can form a win-win division of labor, not just with your close friends, your close neighbors, and your close kin, but with pretty much anyone in the world. “They viewed themselves as having very important things to say about how the world worked because they understood the… “laws of economics”” In so doing, you greatly expand the size of the division of labor you can effect, and you greatly expand humanity’s and your potential productivity because you can source whatever you get from the best and most efficient producers in the world, and all because there’s this thing called money that serves as liquid trust. Instead of saying, ‘I’ll do you this favor and make this thing for you now and you’ll do me another favour—we’re not quite sure what it will be—and make something for me in three months’, all of a sudden a transaction can be open and closed in an hour or a minute. And so, all of a sudden, we are not only vastly more productive, but we begin looking at everyone else in society as a potential friend because they don’t regard us as a clan enemy to be killed, or as a stranger to be robbed. You can trust people beyond the members of your clan, because practically everyone is a potential participant in a win-win exchange. I might wind up being on the other side of a counter and they might do me a favor or provide me with something useful. I provide them with money, which enhances their social power, as well. All of a sudden life becomes potentially a lot better and easier, because the people you run into are not people to fear, but people to welcome, with whom you might be able to trade. At the same time the economy, as a whole, acquires a kind of logic and power and capability that no individual has. An example of how this works: there used to be a huge, 30- or 40-foot tall bronze statue of Athena on top of the Acropolis in Athens. You could see the sun gleaming off of it as you rounded the southern cape of Attica, sailing into Athens. It weighed something like 80 tons and it’s bronze. To make bronze you need copper, which is very soft, and you need tin, around 10 per cent as much tin as copper. So, they needed about seven tons of tin in order to make this statue. The historian Herodotus was wandering around Athens and he got curious as to where all this tin came from. There was no tin in Greece. There was no tin he knew of in the Aegean. In fact, there was no tin anywhere in the Mediterranean that he knew of. He asked people and found that nobody in Athens knew where this seven tons of tin had come from. He talked to more people and to the sailors who actually brought the tin. They told him they had bought it in a market in Sicily, in the city of Syracuse. He talked to other sailors and they began telling him more and more outrageous lies about where the tin came from and how it got there. They told him that, beyond the pillars of Hercules, beyond the Strait of Gibraltar, there were these strange islands where it was foggy all the time and there was tin. You practically just scratched the ground and there was tin. And the tin had gotten all the way from there to Greece. Herodotus disbelieved them. He refused to believe that anyone would live somewhere where it was foggy all the time and so cold. But the Athenians had bought the tin from the markets in Syracuse in Sicily; and the people in Syracuse had bought the tin from the markets in Massilia (what’s now Marseille in France); and it had come down the Rhone through another chain of merchants; and had been transported from the Seine to the Rhone by another group; and then it had been carried down the river by the merchants of northern Gaul. Before that, it had been carried across the English Channel by yet another group of merchants, who had bought it from the tin miners of Cornwall, who had dug all this stuff out because, for some reason, these weirdos from the east were willing to pay an awful lot of money for this strange metal that was not terribly useful for them, but very, very useful when you have lots of copper, as you do in Greece, and when you can alloy it with ten per cent tin to make hard and durable bronze. It’s called the Bronze Age for a reason. The economy as a whole knew that there was tin in Cornwall, that you could combine it with copper in Greece to make large and durable statues, but no individual person anywhere in western civilization, such as it was back in the mid-300s BC, actually knew this or knew where tin mining was going on, or how it was produced. And this enormous expansion of human capabilities, together with how it changed human manners and attitudes toward each other, changed the world. It generated a genuinely commercial society, powerful and productive and rich and peaceful relative to earlier societies. And these societies were ones in which you looked upon people as benevolent partners in trade, rather than either strangers you might steal from, or enemies you had to kill, or maybe clan members to be aided. Get the weekly Five Books newsletter That shift away from a world in which entrepreneurship is exercised and social power gained primarily by oppressing people and taking their stuff, or making them work for you, to a wealthier, more sophisticated world based much more on win-win exchange is the meat of Hirschman’s book. It’s a look back on how European intellectuals reacted when, all of a sudden, it became possible to run a civilization based not on the passions for those we love and those we hate, but rather on the interests we have in all cooperating, even though we do not terribly care about each other. We’re all useful to each other and so we can live in peace. It’s a wonderful book. I have always loathed the Institute for Advanced Study , ever since I arrived at Harvard in 1978 and was reading books by Albert Hirschman. I thought he was wonderful and was planning to take his course in the fall of 1979 as a sophomore. Then, in the summer of 1979, the Institute for Advanced Study offered him a zero-teaching job and he went off to Princeton and no one ever saw him in the classroom again. That made my life worse and I didn’t have the choice to take his course. I’ve never had a chance to do an injury to Princeton’s Institute for Advanced Study so far, nothing’s come around. But they should know I’m in the weeds waiting for them. Well, passions are important. Once we start thinking that we ought to regard other people with benevolence because society has gotten peaceful and other people are participants in win-win exchange, that does change how we think we ought to view the world and how we ought to think we view our fellow man. Yes, but as Michael Ignatieff pointed out, Hume’s passions are very pallid things. They’re things like ‘I would like to eat some roast duck tonight’, or ‘I would like to read a book’ or ‘I would like to go to Paris and look at clothes.’ One of the very interesting things about Adam Smith is how he paints a world of a commercial society, of peaceful exchange in 1759, just 14 years after the ’45 rebellion in Scotland and 44 years after the ’15 . One of the major themes of The Wealth of Nations is the transition from the old feudal society in all its incarnations, one in which power is acquired by having lots of dependents with weapons and in which the principal use of your wealth is to feed more warriors meat in your hall so that they will fight for you, to a world in which the Duke of Argyll can no longer put 400 Campbell dependents in arms to fight at a week’s notice but, instead, one in which he’s busily buying Louis XV furniture. Yes. But only with the coming of luxury does the Duke of Argyll think that having all these angry, belligerent, drunk wastrels hanging around his palace is not what he really wants. And that plays a major role in moving from a society of acquisition and dominance, to a society of exchange, cooperation and productivity. And, of course, things work the other way around. The passions remain, and one of the passions is that we want people to think well of us, including ourselves. In The Theory of Moral Sentiments there is a very nice set piece, in which Smith asks a question: what would a philosopher think if you told him that a hundred thousand people are going to die in China in an earthquake tomorrow? Well, the philosopher would feel a little bit sad, but he’d say, ‘They’re far away. I don’t know any of them.’ He’d have some reflections about the vanity of human desires, the imperiousness of chance and the uncertainty of life and these days he’d say, ‘That’s a great topic for my next web-log column.’ He’d spend a couple of hours productively and happily outlining his article and then go to sleep and sleep like a baby. But, if you were to tell a philosopher that tomorrow morning a madman is going to come into your house, terrorize you, and tear off your little finger, you wouldn’t sleep a wink all night long. “Ricardo and Malthus, especially, were close to being the best of friends” The passions are very firmly engaged in avoiding bodily damage, even to your little finger, as opposed to the lives and livelihoods of distant people of whom you know nothing. And, yet, Smith says that we have taught ourselves that we would regard ourselves as moral monsters to sacrifice the livelihoods of a hundred thousand people who we do not know simply to retain a little bodily integrity. Every philosopher in every London drawing room would be lining up to say, ‘I’m would give away my little finger in order to prevent that earthquake’ and would regard themselves as a good and sane and happy person to be willing to make this sacrifice, even for people whom they did not know at all, even if the people would never know what they had done. And that move into a much more peaceful, friendly and productive civilization—where even war has laws that mitigate its damage—was an important part of the Enlightenment and an important part of the world the classical economists hoped to construct."

"The book isn’t really about that. There’s one section called The Thesis of Doux Commerce in which he talks about the gentling effects of commerce and the late seventeenth century French theory that trade amongst individuals polishes the manners and creates civilité, but that’s a minor part of the book. The book is about the two notions of the passions and the interests. If you go back to the philosopher David Hume, he says “Reason is, and only ought to be the slave of the passions.” What drives and animates us as human beings is our passions. Reason should be the slave of them. The great victory of the Enlightenment was to make passions the slave of the interests and to push interests forwards. So if we think about it in the context of economics in the modern world, people follow their interests not passions. People who follow their passions are a bit weird. What does this all mean? He takes us back to the 1700s to show that what you had at the end of the feudal and medieval world was a search for certainty. If you take away the church and the fear of death – which the Enlightenment was busy doing through the scientific revolution – you are left with the potential for anarchy. So something was needed to contain those passions. Hirschman goes back through a reading of Machiavelli and others all the way to the American Federalist Papers, where you have the notion of the balance of passions and the division of powers. He is showing us the search for Newtonisation, a search for the law-like social world, which is the beginning of the mathematical side of the social sciences. What Hirschman is showing is that it’s all about power. This whole notion of trying to find a balance of the passions to produce interests is about a particular economic society that’s emerging which we now call capitalism. It used to be that people had interests, of course, but no one regarded them as primary. Your interests were often referred to by your ‘corporate’ interests or occupation – you were a peasant or a priest, for example. But notions of individuals having interest in money were very much frowned upon in the Christian medieval world. But all this was coming apart, and what Hirschman does is show how a series of thinkers – up to and including Adam Smith and David Hume – basically tried to find a balance of the passions but ended up creating, through the emergence of a mercantile society, a notion of self-interest which is uniquely individual and uniquely to do with money and earning cash. The notion in the whole book, which Keynes echoes in his, is that it is far better for man to lord it over his bank balance than it is over his fellow man. What capitalism does is give everyone the same self-interest, and that same self-interest gives us predictability, and with predictability you have very small, low cost government because you have self-regulating beings, running around playing the same game – the pursuit of money. This book has all this wonderful intellectual history which tells us something important about the modern world. We didn’t always think of ourselves as individuals. We didn’t always think the pursuit of money and markets was natural. These things were constructed by people with a particular interest at a particular point in time. That interest, in many ways, had very little to do with the making of money. It was a means to an end to control people rather than an end in itself, which is where we have got to today."

"The core question in Hirschman’s book is actually in its subtitle: ‘Political Arguments for Capitalism before Its Triumph’. Like Weber, Hirschman realised that, first, there is nothing natural about capitalism. Certain institutional and moral preconditions were required in order for initially mercantile capitalism and then other forms to arise over the course of the sixteenth and seventeenth century. Mercantile activity was initially a niche activity — monarchs and churches were at best neutral about it and did not necessarily approve of it — and there was always the moral problem of how to justify the mindset of the trader and the money-handler. How was it that the making of money and trading over long distances could be seen as admirable and worthy pursuits? What Hirschman does is to read back, particularly though certain political and moral philosophers of the seventeenth century to show that the core problem of political philosophy, particularly in Thomas Hobbes, is what they call passions or what we what we might now call emotions. Reason may be true and good but that unfortunately, tragically humans are more likely to be drawn by their passions, and this created a serious threat to the social order. “ Like Weber, Hirschman realised that there is nothing natural about capitalism” Hirschman notes that over the course of the seventeenth century a new psychological and moral category begins to emerge. Before, there had been reason on the one hand, which is mathematically true but not very persuasive, and passion on the other, which is very seductive but rather destructive. The new category is called ‘interests’ and it refers to certain things we recognise as being in our interests and we will pursue them more or less rationally. This new category emerges around mercantile culture because it starts to make sense in an era when you are keeping account of assets and liabilities. It doesn’t require us to be equipped with the brilliant rationality of Thomas Hobbes or Rene Descartes, but each of us nevertheless can recognise it will be in our interest to act in one way rather than another. It carves a path between reason and passion. And it then becomes a way of governing us. Think of incentive structures. If you want to get people to eat more fruit or something like that you can cut the price of fruit or raise tax on things which aren’t fruit. But one way or another there is some attuned psychology there which is neither speaking to pure rationality nor simple emotion, although it might appeal to elements of both. But what is interesting in Hirschman’s work is that he shows it has a beginning – that it emerges in a particular time and place. And what made it an attractive category is that it pacified people and solved a problem that was tearing Europe to pieces — religious conflict. And that’s a key thing about interests: that they are secular, and bring together the moral and the scientific. You don’t all have to believe in the same God. It is the beginnings of an individualised, privatised and quite atomised culture because what you have is a moral agent oriented primarily to his or her own wellbeing —the beginning of the vision of Homo economicus ."

"This is a great book. It traces the history of an idea that is central to our whole civilisation today. The idea is that human nature is basically unruly and destructive, or has the potential to become so, but that we’ve designed a society that sets a space for this kind of impulse, where it’s acted out in a civilised manner – and that’s capitalism. So when we reflect on some of the horrors of capitalism, we have to consider that things could have been much worse if we didn’t have this system. Our fights would have been on real battlefields, rather than economic battlefields. That’s a theory, that’s an idea that really led to the adoption of capitalism, or the free enterprise system, around the world. In medieval times, the dominant intellectual tradition was one of sin and the avoidance of sinful behaviour. Lust for power or wealth were unambiguously bad things. Even in a feudal society, such passions were acknowledged by society as, in some sense, legitimate, but the view didn’t have any authority. In the Renaissance, the authority of these self-denial concepts began to recede. Hirschman talks about Machiavelli representing a different ideal (of sorts) that was emerging. “You have to understand people first before you can understand how to devise an economic system for them” But it wasn’t until the early 1700s that we saw clear thinking about really having a system that becomes stable in a military sense — because you develop a business class that has an interest in the political stability of the system, as they fight it out for their economic interests. He emphasises the philosophy of the French writer Montesquieu and the Scottish writer James Steuart. They both wrote in the mid-1700s about the ideal of a merchant society that would be orderly and looking out for the material interests of people. Hirschman doesn’t emphasise communism, though he does emphasise that all along, during this course of history, there were critics of capitalism. Montesquieu and Steuart didn’t have the final answer. Marx was obviously among these critics, but the kind of criticism that Hirschman emphasises is a kind of criticism which may be in Marx but is not a major theme. The criticism is that capitalist society is so good at reducing our passions to passions about business, that we become a kind of vulgar, low-brow society – it doesn’t serve the spiritual interests of people."