Hume's and Smith's defense of Clientelism.

It’s fair to say that David Hume and Adam Smith have been widely regarded, by friends and enemies alike, as champions of the rule of law and (perhaps this is the same side of the coin) critics of rent-seeking. I have no interest in undermining this idea in general, but it’s worth being alert to an important political exception that provides some nuance to their position.

In his excellent book, Parliamentarism: from Burke to Weber (Cambridge UP, 2019), William Selinger notes correctly that Hume defended Walpole’s use of patronage to defend the government’s majority in the House of Commons. In particular, Selinger quotes (p. 51) from the following passage from Hume’s (1741) essay, “Of the Independency of Parliament:”

The crown has so many offices at its disposal, that, when assisted by the honest and disinterested part of the house, it will always command the resolutions of the whole so far, at least, as to preserve the antient constitution from danger. We may, therefore, give to this influence what name we please; we may call it by the invidious appellations of corruption and dependence; but some degree and some kind of it are inseparable from the very nature of the constitution, and necessary to the preservation of our mixed government. [para 6. Emphasis in original]

Lurking in Hume’s position is that excessive use of patronage may undermine the constitution, but that its moderate and selective use is essential to its good functioning.

Obviously, one’s judgment about what counts as excessive will be, in part, a matter of judgment. It’s fair to say that this use of patronage is the kind of thing that in later generations Bentham, Mill, and all ‘clean government’ types would rail against as the power of ‘sinister’ or ‘vested’ interests.

Before you claim that the qualified use of patronage and (as we now say ‘clientelism’) is, in principle, not conceptually incompatible with the rule of law, it is worth noting that Walpole’s patronage was rather absolute over potentially lucrative “fiscal and revenue offices” (see Selinger p. 50, note 173.) The number of people involved was not small either (see this paper). There is a reason why Hume is willing to call this ‘corruption.’ It turns the machinery of government into a buddy/networking system for jobs. Anyone that has read eighteenth century correspondences will see that most everyone tried to be on the inside of this system.

As I noted yesterday (recall), Adam Smith observes (in 1776) that part of the problem the British faced with relatively self-governing colonial assemblies is that the Westminster system of patronage breaks down at a distance. Yesterday I only quoted part of the passage from Wealth of Nations, this time I quote the paragraph in full. The wider context is how to get the colonies to pay taxes that cover the expense of administering and defending them.

That the colony assemblies can ever be so managed as to levy upon their constituents a publick revenue sufficient, not only to maintain at all times their own civil and military establishment, but to pay their proper proportion of the expence of the general government of the British empire, seems not very probable. It was a long time before even the parliament of England, though placed immediately under the eye of the sovereign, could be brought under such a system of management, or could be rendered sufficiently liberal in their grants for supporting the civil and military establishments even of their own country. It was only by distributing among the particular members of parliament, a great part either of the offices, or of the disposal of the offices arising from this civil and military establishment, that such a system of management could be established even with regard to the parliament of England. But the distance of the colony assemblies from the eye of the sovereign, their number, their dispersed situation, and their various constitutions, would render it very difficult to manage them in the same manner, even though the sovereign had the same means of doing it; and those means are wanting. It would be absolutely impossible to distribute among all the leading members of all the colony assemblies such a share, either of the offices or of the disposal of the offices arising from the general government of the British empire, as to dispose them to give up their popularity at home and to tax their constituents for the support of that general government, of which almost the whole emoluments were to be divided among people who were strangers to them. The unavoidable ignorance of administration, besides, concerning the relative importance of the different members of those different assemblies, the offences which must frequently be given, the blunders which must constantly be committed in attempting to manage them in this manner, seems to render such a system of management altogether impracticable with regard to them. (WN 4.7.C.69, 619)

Somewhat strikingly there is no evidence here that Smith rejects the clientelism at the heart of Walpole’s management practices. (The prime minister is the one managing the sovereign’s interests and so functionally the eye of the sovereign.) He deems it necessary to get parliament to agree to levy sufficient taxes. But clientelism doesn’t work when the leading people in the network are near-strangers to each other and so can’t make strategic judgments about people’s relative importance; and when the patronage has to be divided over many people (which is very costly) given that the colonists have many assemblies. (As Ronald Coase noted already back in 1977, Smith also observes that the American politicians wanted, “not liberty nor democracy, but position” (p. 323) or stature.) Smith returns to the difficulty of managing colonial assemblies at (WN 4.7.C.73, 621).

As an aside, lurking here are the beginning outlines of Schumpeter’s argument for why in national development government, bureaucracy, and industry are centralized in the nation’s capital. It’s just much easier to get things done with the right people if one can keep an eye on each other.

As regular readers have surely noticed by now, Smith is an advocate of an imperial, parliamentary union (which I have claimed anticipates Kant’s and Bentham’s federalism). That is, again to quote Coase, Smith “proposed to give the colonies representation in the British parliament in proportion to their contributions to the public revenues.”

Now, one may think that while Smith did not condemn the patronage system in the passage quoted above, he need not have endorsed it. After all, one can read the passage as merely pointing out the limitations of the status quo. However, a natural implication of his argument for parliamentary union is that the representatives of the colonists would be easier to manage in an imperial parliament (which he calls an ‘estates general’). And this point he makes explicitly, and he does so by echoing Hume’s analysis of mixed government:

But if the number of American representatives was to be in proportion to the produce of American taxation, the number of people to be managed would increase exactly in proportion to the means of managing them; and the means of managing, to the number of people to be managed. The monarchical and democratical parts of the constitution would, after the union, stand exactly in the same degree of relative force with regard to one another as they had done before. (WN 4.7.C.738, 625)

Managing here means buying votes through handing out lucrative positions to members of parliament and their families, dependents, and supporters. (It’s this system of organized corruption that Bentham and the radicals proposed to tackle.)

Now, I don’t want to deny that Smith has lots of material on how to reduce corruption in administration, how to create efficient public works, and how to tackle principal-agent problems. I myself have written on how he is looking for mechanisms of governance that allow for the operation of what is now known as incentive-compatibility. But it is a peculiar fact that Hume and Smith have been lionized as heroes of the rule of law. The picture seems to me more nuanced than that.