Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street

By Tomas Sedlacek | Go to book overview

6
Bernard Mandeville’s Beehive of Vice

The Worst of all the Multitude did something
for the common Good
.
Bernard Mandeville

As argued in the chapter about the Old Testament, ethics has disappeared from mainstream economic thought. A debate about morality was considered the somewhat luxurious icing on the cake of profitability and wealth. For economists, ethics became uninteresting and irrelevant. There was no need to talk about ethics —it sufficed to rely on the invisible hand of the market; it would automatically transform private vices (such as selfishness) into general welfare (such as growth in efficiency). Once again, we have a historic irony: As we will soon see, the idea of the invisible hand of the market is, in reality, born of moral inquiry, but about a hundred years later the issue of morality is lost and economics is completely emancipated from ethics. An unusual reversal has taken place. Adam Smith, Thomas Malthus, John S. Mill, John Locke —the great fathers of classical liberal economics —were foremost moral philosophers.1 A century later, economics had become a mathematized and allocative science, full of graphs, equations, and tables, with no room for ethics.

How could this happen? We must search Bernard Mandeville for an important part of the answer; he may not be as well known as Adam Smith, but he is the true father of the idea of the invisible hand of the market as we know it today. The theory of the market’s invisible hand, which today is erroneously attributed to Adam Smith, left a deep mark on the morality of economics: It postulated that private ethics do not matter; anything that happens, be it moral or amoral, contributes to the general welfare. It’s not difficult to suspect that just at the moment when the principle of the invisible hand is trivialized, ethics becomes seemingly irrelevant. The originally universal notion of the relationship between ethics and economics, which we have already encountered in the Old Testament, was turned on its head. Together with Mandeville, the argument began that the more vices there were, the more material well-being

1 The topic is also examined by Amartya Sen, winner of the Nobel Prize in Economics. In the book On Ethics and Economics, he points out that economics until recently was taught as part of the moral sciences at the University of Cambridge. Sen, On Ethics and Economics, 2.

-183-

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