Academic journal article Erasmus Journal for Philosophy and Economics

Bernard Mandeville and the Doctrine of Laissez-Faire

Academic journal article Erasmus Journal for Philosophy and Economics

Bernard Mandeville and the Doctrine of Laissez-Faire

Article excerpt

I. INTRODUCTION

In the introduction to his edition of Mandeville's Fable of the bees, F.B. Kaye considered Mandeville's influence in three fields: literature, ethics and economics. Kaye concluded that it was on the course of economic theory that Mandeville's influence was greatest and identified three areas in which this influence was especially important. These were the division of labour, the defence of luxury and most important of all, the doctrine of laissez faire. Kaye saw Mandeville's doctrine of laissez faire as having two interlocking components. One was the beneficial social consequences of political non-interference. The other was that these beneficial social consequences were the result of the unhindered interaction of self-seeking individuals (Kaye, in Mandeville 1924, I: cxxxviii). In support of the first component, Kaye cited the following passage from volume II of the Fable:

In the Compound of all Nations, the different Degrees of Men ought to bear a certain Proportion to each other, as to Numbers, in order to render the whole a well-proportion'd Mixture. And as this due Proportion is the Result and natural Consequence of the difference there is in the Qualifications of Men, and the Vicissitudes that happen among them, so it is never better attained to, or preserv'd, than when nobody meddles with it. Hence we may learn, how the short-sighted Wisdom, of perhaps well-meaning People, may rob us of a Felicity, that would flow spontaneously from the Nature of every large Society, if none were to divert or interrupt the Stream (Mandeville 1924, II: 353).

However, while acknowledging the importance of such passages, Kaye argued that what made the Fable the chief source of the laissez-faire doctrine was not the issue of non-interference but the prominence that Mandeville gave to the doctrine of individualism,1 according to which man is seen as a mechanism of interacting selfish passions whose apparent discords harmonise to the public good. Kaye intimated that it was this linking of selfish private interests to the public welfare that provided the philosophical ground for laissez-faire and that, without it, the laissez-faire doctrine could hardly have developed.

Although studies of the ideological basis of classical economics emphasise the importance of the idea that individual self-seeking may entail unintended social benefits, the doctrine of laissez-faire also drew sustenance from other sources (Keynes 1926). The most important of these was the doctrine of natural right, which was developed in the course of the seventeenth century by authors such as Hugo Grotius, Thomas Hobbes, Samuel Pufendorf and John Locke. Building on theories of property and exchange that were present in Roman law, these authors emphasised the right of the individual to the enjoyment of his life, liberty, and property, and regarded transactions entered into voluntarily as inherently just. As Hobbes put it, "forasmuch as both the buyer and the seller are made judges of the value, and are thereby both satisfied: there can be no injury on either side" (Hobbes 1999, I: xvi.5). The key change related to the issue of voluntariness. Whereas in earlier thought an exchange was considered to be involuntary and unjust if there was personal compulsion and need, Hobbes was clear that such things as fear could not invalidate a lawful contract (Hobbes 2001, I: xiv.27).

The two justifications for laissez-faire have quite different structures. The first is consequentialist in character; it stresses the beneficial social results. The second is concerned with the rights people have to do things rather than the consequences of their actions. Odd Langholm (1982, 282) has suggested that the great strength and longevity of the laissez-faire doctrine derives precisely from the combination of the two justifications. Self-regard is justified by its social benefits, while its less pleasant consequences are tolerated because individuals have a priori rights to do certain things. …

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