Adam Smith's Political Philosophy

Craig Smith

• Publisher: Routledge
• Year: 2006
• ISBN:
  9781134235865
• Edition: 1
• Topic: Philosophy
• Subtopic: Philosophy History & Theory

When Adam Smith published his celebrated writings on economics and moral philosophy he famously referred to the operation of an 'invisible hand'. Adam Smith's Political Philosophy makes visible this hand by examining its significance in Smith's political philosophy and relating it to similar concepts used by other philosophers, thus revealing a distinctive approach to social theory that stresses the importance of the unintended consequences of human action.

The first book to examine the history of Smith's political philosophy from this perspective, this work introduces greater conceptual clarity to the discussion of the invisible hand and the related notion of unintended order in the work of Smith, as well as in political theory more generally.

By examining the application of spontaneous order ideas in the work of Smith, Hume, Hayek and Popper, this important volume traces similarities in approach, and from these constructs a conceptual, composite model of an invisible hand argument. While setting out a clear framework of the idea of spontaneous order, the book also builds the case for using this as an explanatory social theory, with chapters on its application in the fields of science, moral philosophy, law and government.

1 Spontaneous order in liberal political thought

All nature is connected; and the world itself consists of parts, which, like the stones of an arch, mutually support and are supported. This order of things consists of movements, which, in a state of counteraction and apparent disturbance, mutually regulate and balance one another.

(Ferguson 1973 vol. 1: 18)

The term ‘invisible hand’ is perhaps the most famous phrase to have emerged from the political philosophy of Adam Smith. The significance of the concept has been the subject of much scholarly discussion and its supposed implications the target of intense critical attacks. The purpose of the present study is to attempt to make visible the invisible hand and, hopefully, to illuminate the core concept of Smith’s political thought. The aim of this book is to clarify with some precision the meaning of the term invisible hand and the related, modern concept of spontaneous order. It will be argued that spontaneous order thought represents a distinctive approach to social theory; and the aim of the study will be to identify its core principles and to develop a conceptual model of this approach. By identifying the key features of a spontaneous order approach as they appear in the work of the two most significant groups of spontaneous order theorists – the Scottish Enlightenment and the twentieth-century classical liberal revival – the book will build a composite model of the application of the approach to the explanation of science, morality, law and government and the market. The analysis will concentrate on spontaneous order as a descriptive approach to social theory rather than as an offshoot of attempts to justify liberal principles. As a result it will be demonstrated that the use of spontaneous order as an explanatory social theory is prior to, and a prerequisite for, the use of invisible hand arguments to justify liberal institutions.

The notion of spontaneous order has appeared at various times down the centuries and has been applied in a variety of academic disciplines: spontaneous order-inspired arguments can be found in the fields of biology, science, epistemology, language, economics, history, law, theology, sociology, anthropology and even recently in management studies and computing. However, this study will focus on its appearance in what may be broadly referred to as social and political theory. This field, though it to a certain extent embraces elements of many of the above, is nonetheless more focused on the application of a spontaneous order approach to social and political interaction. Though economics and economists loom large in our study, and in most discussions of the notion of spontaneous order, the aim is to concentrate on what they have to say about the political theory of spontaneous orders. That is, we will consider the market, often taken to be the paradigmatic example of a spontaneous order, as one social phenomenon among others and not purely as an economic model. For this reason our analysis will begin by examining the application of the approach in the field of science.

Our subject matter is spontaneous order in liberal political thought and, before we commence, it is necessary to make clear exactly where within the broad church of liberalism these ideas appear. The first distinction we might usefully make is between the use of the term ‘liberal’ as it is traditionally understood in the history of political thought, and its use in the United States as a description of a particular political position. A liberal, in this American sense, is what in Europe might be called a social democrat; liberalism in America has become a term that refers, particularly, to the left-leaning intelligentsia within the Democratic Party. We are not then talking about liberalism in this sense. Hayek, in his Why I am not a Conservative, argues that ‘liberal’, as a descriptive term, is no longer accurate as a result of this development. It does not refer to the same set of ideas as once it did, and the popularity of this new meaning in the United States makes its use misleading. What instead we are concerned with is what has come to be known as classical liberalism.

A second distinction should be made at this point: that is between Anglo-American and Continental liberalism. This distinction broadly follows that between the philosophical traditions which Popper identifies as British Empiricist and Continental Rationalist (Popper 1989: 4). The thinkers of the spontaneous order tradition take great pains to emphasize this distinction (Hayek 1979: 360; 1960: 55–7). They argue that the Cartesian-influenced constructivist rationalism of the Continental school’s methodology sharply distinguishes it from the Anglo-American tradition of empirical, analytical liberalism. Spontaneous order theorists identify themselves with the Anglo-American philosophical approach to liberalism, and expend considerable energy in a critique of continental rationalist thought.

Spontaneous order theories occur within Anglo-American classical liberal thought.¹ There is, however, a further distinction which might be drawn to specify the position of spontaneous order thought within liberalism: that is a distinction between what Gissurarson (1987: 155–6), following Buchanan (1977: 38), typifies as American libertarianism and European classical liberalism. The distinguishing feature here is the rights-based contractarian approach of libertarianism in contrast to the evolutionary gradualism of classical liberalism. The contrast arises from the evolved nature of European liberalism, as opposed to the intentional constitution building of American Libertarianism. This distinction leads Gissurarson to place spontaneous order thought within a tradition that he refers to as ‘conservative liberalism’ (Gissurarson 1987: 6).² However, given the distinctions which we have drawn thus far it would be more accurate to refer to spontaneous order thought as existing in a subset of liberalism which we might call British Whig Evolutionary Liberalism, a subset whose distinguishing characteristic, as we will see, is precisely its concern with the notion of the spontaneous formation of order.

Though we will not be undertaking a historical study, our aim being to clarify a ‘model’ of the spontaneous order approach, rather than to trace its historical development, it is necessary nonetheless to sketch briefly the history of the tradition in order that we might select the building blocks from which our model will rise. As we pass through the list chronologically it would appear best, for the sake of accuracy, to restrict our attention to those thinkers who express a significant spontaneous order theory in our chosen field of social and political theory. By limiting our attention in such a way we will be more able successfully to draw out the essential elements in a spontaneous order argument. With this in mind we may exclude from our study some of those to whom spontaneous order ideas have been attributed.

In his article The Tradition of Spontaneous Order Norman Barry conducts a study of thinkers whom, he believes, have utilized spontaneous order arguments through the centuries. This he claims, following on and building upon Hayek’s views, represents the tradition of spontaneous order thinking. But if Barry’s group of thinkers represent a tradition, then it is a tradition in a peculiar sense of the term. That is to say a tradition is more usually considered as something that directly relates its members; something passed down from one exponent to another. This being the case the early members of the tradition to whom Hayek and Barry refer (the Spanish Schoolmen, Molina and Hale) cannot really be considered as representing members of a tradition.³ If we follow Quentin Skinner’s criteria for attributing influence – ‘(1) that there should be a “genuine similarity between the doctrines” of the writers; (2) that the influenced writer could only have got the relevant doctrines from his alleged creditor; (3) that there should be a low probability of the similarities being coincidental’ (Condren 1985: 133, citing Skinner 1969: 26) – we will see that, though similar ideas may recur in the work of each of these individuals or groups, it would be difficult, nay impossible, to trace with any accuracy the influences of these early writers who are credited with applying the spontaneous order approach upon each other. As Hayek’s sketchy contentions in his article Dr Bernard Mandeville show we simply lack the evidence to assert that the Spanish Schoolmen influenced Hale, who in turn influenced Mandeville. We have no real historical record, despite Hayek’s best attempts, of such a connection except the recurrence of broadly similar or conceptually similar notions, and that, for the purposes of our study, does not constitute evidence enough to refer to them as members of a tradition. It is more accurate to refer to those early thinkers to whom Hayek and Barry attribute spontaneous order ideas as precursors of the tradition of spontaneous order. One other such figure whom we might consider in this light is Giambattista Vico.

Duncan Forbes (1954: 658–9) and others have highlighted the conceptual similarities which may link Vico (1668–1744) to the tradition of spontaneous order. Forbes cites the evidence of Vico’s Scienza Nuova Seconda, and in particular refers to one passage as the ‘locus classicus’ of his concept of the ‘Law of the Heterogeneity of Ends’ (Forbes 1954: 658). The passage in question has clear similarities with the Scots’ use of what has come to be known as unintended consequences. It reads:

The world of nations is in fact a human creation … Yet without a doubt this world was created by the mind of providence, which is often different, sometimes contrary, and always superior to the particular goals which people have set for themselves. Instead to preserve the human race on the earth, providence uses people’s limited goals as a means of attaining greater ones.

(Vico 1999: 489–90)

Forbes though rejects any direct relationship of influence by Vico upon the Scottish Enlightenment on the grounds of a lack of historical evidence (Forbes 1954: 658–9).⁴ Indeed Vico’s concept of unintended consequences, though it bears conceptual similarities to the Scots’, is separated from them by his constant appeal to divine providence. For Vico his Scienza Nuova represents a ‘demonstration of what providence has wrought in history’ (Vaughan 1972: 39), it establishes divine providence as ‘historical fact’ (Vico 1999: 127). Though his analysis of the growth of political institutions is undertaken through an unintended consequences approach, it is also carried out under a strong conception of divine intervention through providence.

The key difference between the Scots’ conception of unintended consequences and that deployed by Vico is precisely over this point. What Vico attributes to God’s divine providence is precisely that which the Scots seek to explain in secular sociological terms. If indeed models of divine providence and arguments from design are to be held to have influenced the Scots, whether they accepted fully the role of a providential God or whether they simply borrowed the model and then applied it to a secular social mechanism, we cannot, with any accuracy, trace this to Vico’s writings. If religious models influenced the Scots it is far more likely that their conceptions of providence would be shaped by the historical context of Presbyterian Scotland, or by the broader Enlightenment Deism of Europe. As Burke wrote, Vico ‘is on the frontier between the theological and the secular interpretation of history’ (Burke 1985: 61). The Scots, on the other hand, stand firmly on the secular side of this great transition and our tradition, if we are to seek historical accuracy, ought to begin on that side of the divide. In other words this leads us to Bernard Mandeville (1670–1733).

With Mandeville we are able to start the tradition of spontaneous order at a point where we have some record of influence, or at least acknowledgement of influence, and where there are more definite grounds for using the terms influence and tradition. We are on safer ground if we follow a tradition of thought which begins with Mandeville whose work was clearly an influence on the thought of the Scottish Enlightenment. Aside from the fact that several of the Scots cite him in their work, and attempt critiques of his views, we also have the evidence that one of Mandeville’s chief critics, Francis Hutcheson (1694–1746), was a professor at Glasgow and a teacher of Smith.⁵

It is possible to trace a distinct connection travelling from Mandeville and Hutcheson to Smith and his friends Hume and Ferguson, which we may then extend to Smith and Ferguson’s respective pupils Millar and Dugald Stewart. There is little doubt that the spontaneous order approach plays an important role in much of the thought of the Scottish Enlightenment.⁶ This, however, is not to claim that the movement, if indeed it was such, held a coherent position as regards the spontaneous order approach. The bulk of this study will focus on the relationship of the thought of the major Scottish exponents of spontaneous order to the more recent thinkers of the twentieth-century classical liberal revival. Our study will concentrate on three of the Scots: David Hume (1711–76), Adam Smith (1723–90) and Adam Ferguson (1723–1816).

In addition to these figures there are also a number of ‘second rank’, or second generation, Scots thinkers who deploy spontaneous order approaches in their thought. Ronald Hamowy (1987) has argued that spontaneous order ideas can be traced in the work of most of the Scots thinkers of this time: this includes lesser figures such as John Millar (1735–1801), Dugald Stewart (1753–1828), Lord Kames (1696–1782) and Gilbert Stuart (1743–86). In addition spontaneous order ideas are apparent in the work of Thomas Reid (1710–96), who is traditionally thought to sit somewhat outside the mainstream of the Scottish Enlightenment, and whose use of the notion shows how widespread its influence was at the time.

Following on from the Scots we can also trace ideas of spontaneous order in the thought of Edmund Burke (1729–97). Burke was himself a leading Whig politician and was known to Hume and Smith. He also served as Rector of Glasgow University and is known to have been intimately familiar with the thought of the Scots writers. From the Scottish Enlightenment we are able to trace our connection down into the next generation of political theorists by three paths.⁷

First, we have a direct link to the late eighteenth- and early nineteenth-century economists now referred to as the classical economists, particularly Say (1767–1830) and Ricardo (1772–1823) who both developed aspects of Smith’s economic analysis into a highly sophisticated abstract discipline of economic science. They pick up some of the ideas of spontaneous order but, as their focus is on economics rather than the broader field of social and political theory, this will allow us to note them and pass on. The second, and related, path of development is that which stems from Dugald Stewart to his pupil James Mill (1773–1836), also considered to be a member of the school of classical economists. From here we have a direct link to his son J.S. Mill (1806–73). Hayek has questioned the Mills’ relationship to the tradition of spontaneous order because of their relation to Benthamite utilitarianism. He has argued that the younger Mill is more properly considered as an exponent of the continental style rational liberalism which we contrasted with the tradition of liberalism which produced the spontaneous order approach.⁸ There are nonetheless significant spontaneous order aspects which may be detected in the younger Mill’s defence of liberty, particularly in On Liberty.

The third path of development that leads from the Scots is that which is to be found in the nineteenth-century evolutionists. Charles Darwin’s (1809–82) theory of evolution is, according to Hayek, an adaptation of the Scots’ spontaneous order theories applied to biology. Hayek believed that Darwin picked up these ideas through the medium of the Scots geologist James Hutton (1726–97), a member of the broader Scottish Enlightenment, and through the influence of Hume upon his grandfather Erasmus Darwin, and then applied the approach to nature.⁹ Darwin himself was not a social and political theorist and so his work is outside the scope of this study except in one feature, namely, the use by Hayek and Popper of a notion of evolution which they relate to spontaneous order and which draws on the process of natural selection formulated by Darwin. From Darwin we are able to trace a development of the spontaneous order approach through the writings of Herbert Spencer (1817–62) and T.H. Huxley (1825–95). These two thinkers are often portrayed as the leading exponents of the application of Darwinian evolution to social and political matters. Hayek, however, argues that, though Spencer in particular draws on spontaneous order ideas of evolution, he sees them through the lens of Darwinian biology. That is to say that Spencer’s use of evolutionary ideas owes most of its force to its reliance on eugenics. Hayek has argued (LLL vol. 1: 23–4, 152 n. 33) that this was a false path in the development of spontaneous order ideas. His distaste for this development of spontaneous order through eugenics leads him to omit any detailed discussion of either Spencer or Huxley from his work. Hayek’s rejection of this development of the spontaneous order approach is grounded on the assertion that it does not follow on accurately from the work of the Scots. Indeed part of Hayek’s project is to resurrect the Scots’ understanding of spontaneous order in the face of the errors of nineteenth-century evolutionists.

Moving closer to our own times spontaneous order appears in the work of the Austrian School of economists, including Menger (1840–1921), Böhm-Bawerk (1851–1914), Weiser (1851–1926) and von Mises (1881–1973). The Austrians developed a subjectivist theory of value and applied it to economics. Their chief concern was with questions of epistemology as applied to economics. The Austrians were primarily concerned with technical economics and thus fall outside the central concerns of the present study. However, it is important to note the influence of Menger’s methodological thought on the social and political thought of Hayek.¹⁰ Menger set himself the question: ‘How can it be that institutions which serve the common welfare and are extremely significant for its development come into being without a common will directed toward establishing them?’ (Menger 1996: 124). This concern was to shape Hayek’s work in Austrian economics and his move into social and political theory.

In the second half of the twentieth century there was a renewed interest in spontaneous order ideas which saw a rejuvenation of the tradition.¹¹ The members of this twentieth-century revival include: Michael Polanyi (1891–1976), whose place in the tradition of spontaneous order is assured by his apparent coining of the term; Karl Popper (1902–94) and F.A. Hayek (1899–1992), perhaps the greatest twentieth-century exponent of the tradition in the social and political sphere and the one who here will re...

Table of contents

• Cover Page
• Adam Smiths political philosophy
• Routledge studies in social and political thought
• Title Page
• Copyright Page
• Preface
• Abbreviations
• 1 Spontaneous order in liberal political thought
• 2 The science of man
• 3 The science of morals
• 4 The science of jurisprudence
• 5 The science of political economy
• 6 The evolution of science
• 7 The evolution of morality
• 8 The evolution of law and government
• 9 The evolution of markets
• 10 The invisible hand
• Notes
• Bibliography