On Spontaneous Order and naturalization of the economy, Friedrich List, Emma Rothschild and Adam Smith
This week, Marius Stan’s very generous review of my Newton’s Metaphysics appeared (here) in Journal of the History of Philosophy. It is the first time that JHP has given any attention to any of my books, so it is especially gratifying.
My friend, Karen Horn, just published a fascinating review article on recent work on Adam Smith, “Challenging the clichés: How recent scholarship refreshes the interpretation of Adam Smith’s oeuvre.” (here) It originally appeared in German, which also hints at its strength. It covers and integrates a very broad range of scholarship. And that’s the bridge to today’s post.:)
Back in 1992 Emma Rothschild, argued that “Dugald Stewart's “Account of the life and writings of Adam Smit must be set within this frenzied scene. It is by far the most important biographical work on Smith, and an early source of Smith's subsequent conservative renown.” (p. 80) The “frenzied scene” is the political fall-out of the French revolution that created a panic around purveyors of radical ideas in Great Britain. She developed the point in her majestic book Economic Sentiments (2002). Today’s post is a modest further confirmation of her claim.
Stewart’s Account was published in 1795 as a kind of appendix to the posthumous publication of Smith’s Essays on Philosophical Subjects. Dugald Stewart was by then professor of moral philosophy at Edinburgh. And his biography has shaped Smith's reception since.
I noted last week (recall) that Friedrich List’s (1841) The National System of Political Economy is (inter alia) one long polemic against Smith and free trade advocacy. (I am relying on Sampson S. Lloyd’s (1885) translation of Das nationale System der politischen Oekonomie—caveat emptor!). List summarizes his main criticisms in Book 3, in the fourth chapter, “The System of Values of Exchange (Falsely termed by the School, the ‘'Industrial’ System)—Adam Smith.” As I noted, in the first few lines of the chapter, List argues that “Adam Smith fell into these fundamental errors in exactly the same way as the physiocrats had done before him, namely, by regarding absolute freedom in international trade as an axiom.” Last week I focused on how List de-politicized Smith as a cosmopolitan utopian. Today I want to focus on a related angle.
In his chapter, List writes the following:
Dugald Stewart (Adam Smith's able biographer) informs us that Smith, at a date twenty-one years before his work was published in 1776 (viz. in 1755), claimed priority in conceiving the idea of universal freedom of trade, at a literary party at which he was present, in the following words:
'Man is usually made use of by statesmen and makers of projects, as the material for a sort of political handiwork. The project makers, in their operations on human affairs, disturb Nature, whereas people ought simply to leave her to herself to act freely; in order that she may accomplish her objects. In order to raise a State from the lowest depth of barbarism to the highest degree of wealth, all that is requisite is peace, moderate taxation, and good administration of justice; everything else will follow of its own accord in the natural course of things. All governments which act in a contrary spirit to this natural course, which seek to divert capital into other channels, or to restrict the progress of the community in its spontaneous course, act contrary to nature, and, in order to maintain their position, become oppressive and tyrannical.'
Adam Smith set out from this fundamental idea, and to prove it and to illustrate it was the sole object of all his later works. He was confirmed in this idea by Quesnay, Turgot, and the other coryphaei of the physiocratic school, whose acquaintance he had made in a visit to France in the year 1765.
In List Stewart is quoted in German (here).
Now before I continue it is worth noting that when Adam Smith uses ‘spontaneous’ in Wealth of Nations, he only uses it to describe the natural fruits/produce of a country of unaided nature. So, I was surprised to see it used by List’s Stewart.
So, I was briefly tempted to suggest in line with Emma Rothschild’s general argument that Stewart was the originator of using ‘spontaneous’ to describe a certain kind of social order in English. (I put it like to hedge my bets because I would not be surprised if one could find an earlier French equivalent in this period.)
However, the phrase “spontaneous course” is not in Stewart’s Account. In the 1795 original, Stewart writes, “All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.”
In a further twist, it turns out, alas, the phrase is also absent in List’s 1841 German! List quotes in German, ,diesem natürlichen Lauf sich entgegenstellen, welche die ,,Capitale in andere Canåle leiten oder die Fortschritte ,,der Gesellschaft in ihrem Lauf aufhalten wollen, handeln der Natur zuwider und werden, um sich zu halten, unterdrückerisch und tyrannisch.” I am unsure whether Stewart’s “Account” had been translated into German, or whether this is List’s own translation.
So what’s happened? I suspect that Sampson S. Lloyd in following the train of thought of List’s argument — which naturalizes and depoliticizes Smith’s political economy — had recourse to a phrase we find in J.S. Mill’s Principles of Political of Political Economy. For when Mill introduces what he calls the “system of protection,” (which is, in fact, List’s although he goes unnamed by Mill) he uses ‘spontaneous’ to describe the “play in supply and demand” and also in the context of “mischievous interferences with the spontaneous course of industrial transactions.” (An important example of this in Mill is, in fact, Smith’s defense of maximum interest rates!)
I have not looked to what degree “spontaneous order” and its variants were phrases used to describe a political economy without government interference during the nineteenth century. But it is not wholly impossible that the phrase originates, thus, in a kind of mistranslation!
To be very clear, I do not mean to deny that Stewart is accurately conveying Smith’s view when he writes that “All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.” This is indeed a fair representation of Smith’s position. And List’s German translation of this is fine. But in Stewart that’s not presented as an exception-less axiom or even the master-maxim of Smith’s thought.
The passage that List is quoting is introduced by Stewart as follows:
I am aware that the evidence I have hitherto produced of Mr Smith's originality may be objected to as not perfectly decisive, as it rests entirely on the recollection of those students who attended his first courses of moral philosophy at Glasgow; a recollection which, at the distance of forty years, cannot be supposed to be very accurate. There exists, however, fortunately, a short manuscript drawn up by Mr. Smith in the year I755, an presented by him to a society of which he was then a member; in which paper, a pretty long enumeration is given of certain leading principles, both political and literary, to which he was anxious to establish his exclusive right; in order to prevent the possibility of some rival claims which he thought he had reason to apprehend, and to which his situation as a Professor, added to his unreserved communications in private companies, rendered him peculiarly liable. This paper is at present in my possession. It is expressed with a good deal of that honest and indignant warmth, which is perhaps unavoidable by a man who is conscious of the purity of his own intentions, when he suspects that advantages have been taken of the frankness of his temper. On such occasions, due allowances are not always made for those plagiarisms, which, however cruel in their effects, do not necessarily imply bad faith in those who are guilty of them; for the bulk of mankind, incapable themselves of original thought, are perfectly unable to form a conception of the nature of the injury done to a man of inventive genius, by encroaching on a favourite speculation. For reasons known to some members of this Society, it would be improper, by the publication of this manuscript, to revive the memory of private differences; and I should not have even alluded to it, if I did not think it a valuable document of the progress of Mr Smith's political ideas at a very early period. Many of the most important opinions in The Wealth of Nations are there detailed; but I shall quote only the following sentences: 'Man is usually made use…[see below for the remainder of this passage—ES] —Essays on Philosophical Subjects, pp. 321-322 in Libertyfund’s Glasgow edition.
So, as List suggests the passage he quotes pertains to Stewart’s treatment of a priority dispute between Smith and an unnamed other. This was presumably Adam Ferguson (Stewart’s predecessor at Edinburgh). Let’s leave aside that, unfortunately, List’s translator, Sampson S. Lloyd, also misunderstands List’s “literarischen Gesellschaft” which was not a “party,” but a literary/learned society (as Stewart indicates).
Now the point in Stewart is to secure Smith’s priority. It is not to reduce Smith’s views into a master-argument. Nor is it to attribute to Smith the idea that he “set out from this fundamental idea [grundansicht], and to prove it and to illustrate it was the sole object of all his later works.” And, in addition, in Stewart the claim is not an exception-less axiom about the role of government interference.
Later in the chapter, List, thus, appeals to Stewart’s authority in order to make the following claim:
In the passage above quoted from Dugald Stewart, Adam Smith's whole system is comprised as in a nutshell. The power of the State can and ought to do nothing, except to allow justice to be administered, to impose as little taxation as possible. [This is all correctly translated—ES]
List has turned Smith into the apostle of (Manchester) laissez-faire by appealing to Stewart! (As I noted the effect is magnified by List’s recurring tendency of treating Smith as a a variant on Physiocracy.)
In fact, as I noted last week, earlier in The National System of Political Economy, in chapter 11 of Book 2, List had already partially quoted the very same passage from Dugald Stewart’s Account:
The idea of a perpetual state of peace forms the foundation of all his arguments. Moreover, according to the explicit remarks of his biographer, Dugald Stewart, his investigations from the commencement are based upon the principle that 'most of the State regulations for the promotion of public prosperity are unnecessary [die meisten Staatsmaaßregeln zu Beförderung des öffentlichen Wohlstands ſeyen unnütz,], and a nation in order to be transformed from the lowest state of barbarism into a state of the highest possible prosperity needs nothing but bearable taxation, fair administration of justice, and peace.' Adam Smith naturally understood under the word 'peace' the 'perpetual universal peace' of the Abbé St. Pierre.
I have already engaged with the misrepresentation of Smith on the role of perpetual peace here. But it is worth noting that in this quote from Stewart, List does far more justice to Stewart’s view of Smith. Yet, it is also based on a faulty quotation.
In Stewart the key passage reads as follows:
'Man is generally considered by statesmen and projectors as the materials of a sort of political mechanics. Projectors disturb nature in the course of her operations in human affairs; and it requires no more than to let her alone, and give her fair play in the pursuit of her ends, that she may establish her own designs.'-And in another passage: 'Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.-
So let me wrap up. As Rothschild noted Stewart de-radicalized Smith greatly. In Stewart we see also already hints of a naturalization of the economy (viz. natural course…unnatural); yet Smith is not yet a one-sided advocate for laissez-faire. As I have noted at Liberal Currents, in the 1830s the identification of Smith’s invisible hand with the harmony of interests probably originates in a quite remarkable (1834) book, a Statement of Some New Principles on the Subject of Political Economy written by the Canadian economist (and protectionist) John Rae. Shortly thereafter, in his more famous, work List presents Smith as somebody who naturalizes and depoliticizes the economy. While Marx and Engels were highly critical of List (who they thought regressive), I suspect List’s misrepresentation probably shapes the Marxist reception of Smith. List cites Stewart as his authority, but also ends up doing no justice to Stewart’s more careful and more rounded presentation of Smith. Meanwhile in the mistranslation of List, Smith as the theorist of spontaneous economic order is invented.
To be continued.