On early Friedrich Engels on Adam Smith and the theorist's responsibility for consequences.

Kristen Collins interviews me at Virtual Sentiments Podcast (here). It’s two hours on Adam Smith, liberalism, and other topics. It was my first late-long-covid podcast, so I was quite apprehensive about it. But Melody McDonald (the producer) and Collins did a great job editing!

Last week, I did a post on Friedrich Engels’ (1843/44) “Outlines of a Critique of Political Economy” ([Umrisse zu einer Kritik der Nationalökonomie]: hereafter Umrisse), and its connection to Foucault and Chicago economics. I will be using Martin Milligan’s translation in what follows. Today, I want to look at a theme Engels (correctly) discerns in Adam Smith.

The Umrisse starts with a kind of potted history of economics from feudalism, “mercantilism,” and “liberal economics.” The intellectual transition between each stage of thought is characterized as a “revolution.” And he clearly implies these have a progressive and regressive stage in it. So, for example, Liberal economics is founded by Adam Smith, completed by Ricardo and then declines or regresses in the hands of McCulloch and Mill. (The very idea of classical economics still awaits invention!) As aside, for Engels, whatever merits can be found in liberal economics is completely overshadowed by “Malthusian population theory.” (Perhaps some other time more on his criticism of Malthus.)

While I was a bit surprised to find this proto-Kuhnian philosophy of science narrative in Engels, as my regular readers know Adam Smith (who Engels clearly knew well) has an account like it both in The History of Astronomy and (more subtly) in Book IV of Wealth of Nations. Such proto-Kuhnian narratives became ubiquitous in late nineteenth and early twentieth century political economy (see here), but I did not realize how early we find it in Engels. (More on this in a second.)

In this narrative, Engels pays attention to two features. First, (be aware, Foucault and Milton Friedman fans) what he calls, “The art of the economists.” (That there is an art of economics is common ground between him and Mill.) By this Engels means the main programmatic policy feature of the particular stream of economics. So, for example, according to Engels the mercantilists art “consisted in ensuring that at the end of each year exports should show a favourable balance over imports.”

Second, he pays attention to the internal “contradictions” at each stage of intellectual development. (The terminology is soft Hegelian.) Unlike later Marxism, he is quite moralistic about these. That Smith’s proto-Kuhnian philosophy of science became bread and butter in neo-Hegelian nineteenth century thought is, I think, not well understood. About that some other time more.

So much for set up. I was struck by the following passage in Engels. I have emphasized the part that interests me (in the second quoted paragraph below):

The eighteenth century, the century of revolution, also revolutionised economics. But just as all the revolutions of this century were one-sided and bogged down in antitheses…the new economics was only half an advance. It was obliged to betray and to disavow its own premises, to have recourse to sophistry and hypocrisy so as to cover up the contradictions in which it became entangled, so as to reach the conclusions to which it was driven not by its premises but by the humane spirit of the century. Thus economics took on a philanthropic character. It withdrew its favour from the producers and bestowed it on the consumers. It affected a solemn abhorrence of the bloody terror of the Mercantile System, and proclaimed trade to be a bond of friendship and union among nations as among individuals. All was pure splendour and magnificence – yet the premises reasserted themselves soon enough, and in contrast to this sham philanthropy produced the Malthusian population theory – the crudest, most barbarous theory that ever existed, a system of despair which struck down all those beautiful phrases about philanthropy and world citizenship. The premises begot and reared the factory system and modern slavery, which yields nothing in inhumanity and cruelty to ancient slavery. Modern economics – the system of free trade based on Adam Smith’s Wealth of Nations – reveals itself to be that same hypocrisy, inconsistency and immorality which now confront free humanity in every sphere.

But was Smith’s system, then, not an advance? Of course it was, and a necessary advance at that. It was necessary to overthrow the mercantile system with its monopolies and hindrances to trade, so that the true consequences of private property could come to light. It was necessary for all these petty, local and national considerations to recede into the background, so that the struggle of our time could become a universal human struggle. It was necessary for the theory of private property to leave the purely empirical path of merely objective inquiry and to acquire a more scientific character which would also make it responsible for the consequences, and thus transfer the matter to a universally human sphere. It was necessary to carry the immorality contained in the old economics to its highest pitch, by attempting to deny it and by the hypocrisy introduced (a necessary result of that attempt). {emphasis added}

The “theory of private property” is another phrase for what Engels calls the mercantile system. While neither Engels (nor Smith) associate it with Locke, it’s pretty clear that’s what Engels has in mind. This fits (recall) with the eighteenth century reading of Locke as a mercantile propagandist we find in the earliest reception of Smith’s Wealth of Nations.

By ‘‘private property” here Engels means the rights of monopoly against everyone. And, in fact, for Engels (but not Smith) private property is always a kind of monopoly; he calls property, “the one great basic monopoly.” By contrast to the Mercantile theory, Smith (the “economic Luther”) “proved that humanity, too, was rooted in the nature of commerce; that commerce must become “among nations, as among individuals, a bond of union and friendship” instead of being “the most fertile source of discord and animosity” (cf. Wealth of Nations, Bk. 4, Ch. 3, § 2); that after all it lay in the nature of things for trade, taken overall, to be advantageous to all parties concerned.” (Emphasis in Engels) So, Engels recognizes in Smith a cosmopolitan and pacific instinct and an embrace of a non-zero-sum outlook. In fact, in the Umrisse Engels explicitly recognizes that Smith’s whole theorizing is an attack on all kinds of partialities (in overcoming Mercantilism, “all these petty, local and national considerations to recede into the background.”)

But Engels also notices — correctly I think — that for Smith theorizing has four aspects: first, to provide a correct empirical theory; second, (the “art” part) that is policy oriented, but also, third, thereby a program of world-making. And, fourth, a kind of scientific accountability or integrity, which (to quote Engels again) “would also make it responsible for the consequences” of theorizing.

Now, in my big (2017) book on Smith, I also emphasized the significance of this fourth aspect to Smith’s theorizing, which I discuss in terms of ‘responsible speech’ (and the more recent terminology of ‘inductive risk’). That Engels got there almost two centuries before me pleases me greatly. It also inspires in my melancholic reflections because contemporary philosophers (with the possible exception of Serene Khader) always think that nature of uptake should be sharply distinguished from the evaluation of the theory. (Even today’s uber-long-range-consequentialists in Oxford think it’s bad taste to point this out.)

Now, in the Umrisse, the fact that responsibility for the consequences is part of the Smithian project, also provides the basis for Engels’ rather moralistic judgments on it. Those may interest you if you have a taste for that. (Engels and Marx clearly distanced themselves from this kind of thing later.)

However, there is lurking in Engels’ early text also another insight: “once a principle is set in motion” by a scientific program like Smith’s “it works by its own impetus through all its consequences, whether the economists like it or not.” That is, the worldmaking aspects of a theory may have all kinds of unintended, perhaps even unforeseen, consequences that are larger than his own project.

All of this is, of course, also Smith’s own understanding of the relationship between theory and progress. Engels elevates it to a revolutionary principle: “the great transformation to which the century is moving – the reconciliation of mankind with nature and with itself.” To what degree Engels is here hoisting Smith at his own petard, or, more amusingly, Engels is a pawn advancing Smith’s philosophic prophecy I leave to the reader’s proclivities.