History of Civilization in England, Vol. 3 of 3

In these striking generalizations, which, though they contain a large amount of truth, are far from containing the whole truth, no room is left for the magnanimous parts of our nature to act; but the system of morals, prevailing at any one time or in any one class, is solely ascribed to the dictates of unalloyed selfishness. Adam Smith, by reasoning from this principle, with that exquisite subtlety which characterized his mind, explains many other circumstances which society presents, and which at first sight appear incongruous. According to the old notions, which, indeed, are not yet quite extinct, those who received wages were under a personal obligation to those who paid them; that is to say, they were under a moral obligation, over and above the obligation of performing certain services. It was believed that a master could not only select what servants he chose, but could pay them what he chose; or, at all events, that it was the will of the masters, considered as a body, which fixed the usual and average rate of wages.682 The lower classes were, therefore, much indebted to the higher ones for giving them so much as they did; and it was incumbent upon all persons, who received wages, to take them with humble thankfulness, and with a feeling of gratitude, on account of the favour bestowed upon them by the generosity of their superiors.

This doctrine, so convenient to the upper classes of society, and so natural to the universal ignorance which formerly prevailed on these matters, began to be shaken by the speculative thinkers of the seventeenth century; but it was reserved for the eighteenth century to overthrow it, by letting in the great idea of necessity, and proving, that the rate of wages established in a country, was the inevitable consequence of the circumstances in which that country was placed, and had no connexion with the wishes of any individual, or, indeed, with the wishes of any class. To all instructed persons, this is now a familiar truth. Its discovery has excluded the notion of gratitude from the pecuniary relation between employers and employed, and has made known that servants or workmen who receive wages, have no more reason to be grateful than those who pay them. For, no choice having been exercised in fixing the wages, no favour can be conferred in their payment. The whole process is compulsory, and is the result of what had previously happened. Scarcely had the eighteenth century passed away, when this most important discovery was completed. It was decisively proved, that the reward of labour depends solely on two things; namely, the magnitude of that national fund out of which all labour is paid, and the number of the labourers among whom the fund is to be divided.

This vast step in our knowledge is due, mainly, though not entirely, to Malthus, whose work on Population, besides marking an epoch in the history of speculative thought, has already produced considerable practical results, and will probably give rise to others more considerable still. It was published in 1798; so that Adam Smith, who died in 1790, missed what to him would have been the intense pleasure of seeing how, in it, his own views were expanded rather than corrected. Indeed, it is certain, that without Smith there would have been no Malthus; that is, unless Smith had laid the foundation, Malthus could not have raised the superstructure. It was Adam Smith, who, far more than any other man, introduced the conception of uniform and necessary sequence into the apparently capricious phenomena of wealth, and who studied those phenomena by the aid of principles, of which selfishness alone supplied the data. According to his view, the employers of labour have, as employers, no benevolence, no sympathy, no virtue of any kind. Their sole aim is, their own selfish interest. They are constantly engaged in a tacit, if not in an open, combination, to prevent the lower ranks from being benefited by a rise of wages; and they sometimes combine for the purpose even of depressing those wages below their actual rate.683 Having no bowels, they think only of themselves. The idea of their wishing to mitigate the inequalities of fortune, is to be exploded as one of the chimeras of that protective spirit, which imagined that society could not go on, unless the richer classes relieved the poorer ones, and sympathized with their troubles. This antiquated notion is further rebutted by the fact, that wages are always higher in summer than in winter, although the expenses which a labourer incurs in winter, being heavier than in summer, he ought, on principles of common humanity, to receive more money during the more expensive season.684 In the same way, in years of scarcity, the dearness of food causes many persons to go to service, in order to support their families. The masters, instead of charitably paying such servants more on account of the unfortunate position in which they are placed, avail themselves of that position to pay them less. They make better terms for themselves; they lower wages just at the moment when sympathy for misfortune would have raised them; and, as they find that their servants, besides being worse remunerated, are, by poverty, made more submissive, they consider that scarcity is a blessing, and that dear years are to be commended as more favourable to industry than cheap ones.685

Adam Smith, therefore, though he failed in grasping the remote cause of the rate of wages, clearly saw that the approximate cause was, not the generosity of human nature, but its selfishness, and that the question was one of supply and demand; each side striving to extract as much as possible from the other.686 By the aid of the same principle, he explained another curious fact, namely, the extravagant rewards bestowed on some of the most despicable classes of society, such, for instance, as opera-dancers, who always receive enormous pay for insignificant services. He observes, that one of the reasons why we pay them so highly, is, because we despise them. If to be a public dancer were a creditable occupation, more persons would be brought up to it, and the supply of public dancers becoming greater, competition would lower their wages. As it is, we look on them disdainfully. By way of compensating the disdain, we have to bribe them largely to induce them to follow their pursuit.687 Here we see, that the reward which one class bestows on another, instead of being increased by sympathy, is increased by scorn; so that the more we contemn the tastes and the way of life of our fellow-creatures, the more liberal we are in recompensing them.

Passing to another, and somewhat different, class, Adam Smith threw new light on the cause of that hospitality for which the clergy were famous during the Middle Ages, and for the magnificence of which they have received great praise. He shows that, although they undoubtedly relieved a large amount of distress, this is not to be ascribed to them as a merit, since it resulted from the peculiarity of their position, and since, moreover, they did it for their own advantage. In the Middle Ages, the clergy possessed enormous wealth, and their revenues were mostly paid, not in money, but in kind, such as corn, wine, and cattle. Trade and manufactures being hardly known, the clergy could find no use for these commodities except to feed other people. By employing them in that way, they benefited themselves in the most effectual manner. They gained a reputation for extensive charity; they increased their influence; they multiplied the number of their adherents; and they not only advanced themselves to temporal power, but they secured to their spiritual threats a respect, which, without this contrivance, it would have been impossible for them to obtain.688

The reader will now be able to understand the nature of that method of investigation which is adopted in the Wealth of Nations, and of which I have given more instances than I should otherwise have done, partly because the question of philosophic method lies at the very root of our knowledge, and partly because no attempt has hitherto been made to analyze the intellect of Adam Smith, by considering his two great works as the opposite, but yet the compensatory, parts of a single scheme. And, as he is by far the greatest thinker Scotland has produced, I need hardly apologize, in a history of the Scotch mind, for devoting so much attention to his system, and endeavouring to examine it at its base. But, having done so, it would be a needless prolixity to treat with equal fulness the productions of those other eminent Scotchmen who lived at the same time, and nearly all of whom pursued a method essentially, though not entirely, the same; that is to say, they preferred the deductive process of reasoning from principles, to the inductive process of reasoning to them. In that peculiar form of deduction which consists in a deliberate suppression of part of the principles, Adam Smith stands alone. For, though others attempted to follow that plan, they did so irregularly, and at intervals, and did not, like him, see the importance of keeping close to their method, and of invariably abstaining from letting into the premisses of their arguments, considerations which would complicate the problem that they wished to solve.

Among the contemporaries of Adam Smith, one of the first, in eminence, as well as in reputation, is David Hume. His views respecting political economy were published in 1752,689 that is, the very year in which Adam Smith taught the principles subsequently unfolded in the Wealth of Nations. But Hume, though a most accomplished reasoner, as well as a profound and fearless thinker, had not the comprehensiveness of Adam Smith, nor had he that invaluable quality of imagination without which no one can so transport himself into past ages as to realize the long and progressive movements of society, always fluctuating, yet, on the whole, steadily advancing. How unimaginative he was, appears, not only from the sentiments he expressed, but likewise from many traits in his private life.690 It appears, also, in the very colour and mechanism of his language; that beautiful and chiselled style in which he habitually wrote, polished as marble, but cold as marble too, and wanting that fiery enthusiasm and those bursts of tempestuous eloquence, which, ever and anon, great objects naturally inspire, and which rouse men to their inmost depths. This it was, which, in his History of England, – that exquisite production of art, which, in spite of its errors, will be admired as long as taste remains among us, – prevented him from sympathizing with those bold and generous natures, who, in the seventeenth century, risked their all to preserve the liberty of their country. His imagination was not strong enough to picture the whole of that great century, with its vast discoveries, its longings after the unknown, its splendid literature, and what was better than all these, its stern determination to vindicate freedom, and to put down tyranny. His clear and powerful understanding saw these things separately, and in their various parts, but could not fuse them into a single form, because he lacked that peculiar faculty which assimilates the past to the present, and enables the mind to discern both with almost equal ease. That Great Rebellion, which he ascribed to the spirit of faction, and the leaders of which he turned into ridicule, was but the continuation of a movement which can be clearly traced to the twelfth century, and of which such events as the invention of printing, and the establishment of the Reformation, were merely successive symptoms. For all this, Hume cared nothing. In regard to philosophy, and in regard to the purely speculative parts of religious doctrines, his penetrating genius enabled him to perceive that nothing could be done, except by a spirit of fearless and unrestrained liberty. But this was the liberty of his own class; the liberty of thinkers, and not of actors. His absence of imagination prevented him from extending the range of his sympathy beyond the intellectual classes, that is, beyond the classes of whose feelings he was directly cognizant. It would, therefore, appear, that his political errors were due, not, as is commonly said, to his want of research, but rather to the coldness of his temperament.691 It was this which made him stop where he did, and which gave to his works the singular appearance of a profound and original thinker, in the middle of the eighteenth century, advocating practical doctrines, so illiberal, that, if enforced, they would lead to despotism, and yet, at the same time, advocating speculative doctrines, so fearless and enlightened, that they were not only far in advance of his own age, but have, in some degree, outstripped even the age in which we live.

Among his speculative views, the most important are his theory of causation as discarding the idea of power, and his theory of the laws of association. Neither of these theories are, in their primary conception, quite original, but his treatment made them as valuable as if they had been entirely his own. His theory of miracles, in connexion, on the one hand, with the principles of evidence, and, on the other hand, with the laws of causation, is worked out with consummate skill, and, after having received the modifications subsequently imposed by Brown, has now become the foundation on which the best inquirers into these matters take their stand.692 His work on the principles of morals, by generalizing the laws of expediency, prepared the way for Bentham, who afterwards incorporated with them an estimate of the more remote consequences of human actions; Hume, having chiefly confined himself to their more immediate consequences. The doctrine of utility was common to each; but while Hume applied it mainly to the individual, Bentham applied it to the surrounding society. Though Bentham was more comprehensive, yet Hume, having come first, was more original. The praise of originality must also be accorded to his economical theories, in which he advocated those principles of free trade, which politicians began to adopt many years after his death.693 In opposition to the notions then prevailing, he distinctly asserted, that all commodities, though apparently bought by money, are in reality bought by labour.694 Money, therefore, is not the subject of commerce, and is of no use except to facilitate it.695 Hence, it is absurd for a nation to trouble itself about the balance of trade, or to make regulations to discourage the exportation of the precious metals.696 Neither does the average rate of interest depend on their scarcity or abundance, but upon the operation of more general causes.697 As a necessary consequence of these positions, Hume inferred that the established policy was wrong, which made trading states look upon each other as rivals, while, in point of fact, the question, if considered from a certain height, was one, not of rivalry, but of coöperation; every country being benefited by the increasing wealth of its neighbours.698 Those who know the character of commercial legislation, and the opinions of even the most enlightened statesmen a century ago, will consider these views as extremely remarkable to have been propounded in the year 1752. But what is more remarkable still, is, that their author subsequently detected the fundamental error which Adam Smith committed, and which vitiates many of his conclusions. The error consists in his having resolved price into three components, namely, wages, profit, and rent; whereas it is now known that price is a compound of wages and profit, and that rent is not an element of it, but a result of it. This discovery is the corner-stone of political economy; but it is established by an argument so long and so refined, that most minds are unable to pursue it without stumbling, and the majority of those who acquiesce in it are influenced by the great writers to whom they pay deference, and whose judgment they follow. It is, therefore, a striking proof of the sagacity of Hume, that in an age when the science was but dawning, and when he could receive little help from his predecessors, he should have discovered a mistake of this sort, which lies so far beneath the surface. Directly the Wealth of Nations appeared, he wrote to Adam Smith, disputing his position that rent is a part of price;699 and this letter, written in the year 1776, is the first indication of that celebrated theory of rent, which, a little later, Anderson, Malthus, and West, saw, and imperfectly developed, but which it was reserved for the genius of Ricardo to build up on a broad and solid foundation.

It is very observable, that Hume and Adam Smith, who made such immense additions to our knowledge of the principles of trade, had no practical acquaintance with it.700 Hume had, at an early period of his life, been in a mercantile house; but he threw up that employment in disgust, and buried himself in a provincial town, to think, rather than to observe.701 Indeed, one of the capital defects of his mind, was a disregard of facts. This did not proceed, as is too often the case, from that worst form of moral obliquity, an indifference to truth; since he, on the contrary, was an ardent lover of it, and was, moreover, a man of the purest and most exemplary character, utterly incapable of falsehood, or of prevarication of any kind.702 In him, a contempt for facts was merely the exaggerated result of a devotion to ideas. He not only believed, with perfect justice, that ideas are more important than facts, but he supposed that they should hold the first place in the order of study, and that they should be developed before the facts are investigated. The Baconian philosophy, which, though it allows a preliminary and tentative hypothesis, strongly insists upon the necessity of first collecting the facts, and then proceeding to the ideas, excited his aversion; and this, I have no doubt, is the reason why he, who was usually so lenient in his judgments, and was so keen an admirer of intellectual greatness is, nevertheless, grossly unfair towards Bacon, with whose method it was impossible for him to sympathize, though he could not deny its utility, in physical science.703 If Hume had followed the Baconian scheme, of always rising from particulars to generals, and from each generalization to that immediately above it, he would hardly have written one of his works. Certainly, his economical views would never have appeared, since political economy is as essentially a deductive science as geometry itself.704 Reversing the inductive process, he was in favour of beginning with what he termed general arguments, by which he hoped to demonstrate the inaccuracy of opinions which facts were supposed to have proved.705 He did not stop to investigate the facts from which the inference had been drawn, but he inverted the order by which the inference was to be obtained. The same dislike to make the facts of trade the basis of the science of trade, was displayed by Adam Smith, who expresses his want of confidence in statistics, or, as it was then termed, political arithmetic.706 It is, however, evident, that statistical facts are as good as any other facts, and, owing to their mathematical form, are very precise.707 But when they concern human actions, they are the result of all the motives which govern those actions; in other words, they are the result, not merely of selfishness, but also of sympathy. And as Adam Smith, in the Wealth of Nations, dealt with only one of these passions, namely, selfishness, he would have found it impossible to conduct his generalization from statistics, which are necessarily collected from the products of both passions. Such statistical facts were, in their origin, too complex to be generalized; especially as they could not be experimented upon, but could only be observed and arranged. Adam Smith, perceiving them to be unmanageable, very properly rejected them as the basis of his science, and merely used them by way of illustration, when he could select what he liked. The same remark applies to other facts which he drew from the history of trade, and, indeed, from the general history of society. All of these are essentially subsequent to the argument. They make the argument more clear, but not more certain. For, it is no exaggeration to say, that, if all the commercial and historical facts in the Wealth of Nations were false, the book would still remain, and its conclusions would hold equally good, though they would be less attractive. In it, every thing depends upon general principles, and they, as we have seen, were arrived at in 1752, that is, twenty-four years before the work was published in which those principles were applied. They must, therefore, have been acquired independently of the facts which Adam Smith, subsequently incorporated with them, and which he learnt during that long period of twenty-four years. And the ten years which he employed in composing his great work, were not spent in one of those busy haunts of men, where he might have observed all the phenomena of industry, and studied the way in which the operations of trade affect human character, and are affected by it. He did not resort to one of those vast marts and emporiums of commerce, where the events were happening which he was seeking to explain. That was not his method. On the contrary, the ten years, during which he was occupied in raising to a science the most active department of life, were passed in complete seclusion in Kirkaldy, his quiet little birthplace.708 He had always been remarkable for absence of mind, and was so little given to observation, as to be frequently oblivious of what was passing around him.709 In that obliviousness, he, amid the tranquil scenes of his childhood, could now indulge without danger. There, cheered, indeed, by the society of his mother, but with no opportunity of observing human nature upon a large scale, and far removed from the hum of great cities, did this mighty thinker, by the force of his own mind, unravel the numerous and complicated phenomena of wealth, detect the motives which regulate the conduct of the most energetic and industrious portion of mankind, and lay bare the schemes and the secrets of that active life from which he was shut out, while he, immured in comparative solitude, was unable to witness the very facts which he succeeded in explaining.

The same determination to make the study of principles precede that of facts, is exhibited by Hume in one of his most original works, the Natural History of Religion. In reference to the title of this treatise, we must observe that, according to the Scotch philosophers, the natural course of any movement is by no means the same as its actual course. This discrepancy between the ideal and the real, was the unavoidable result of their method.710 For, as they argued deductively from fixed premisses, they could not take into account the perturbations to which their conclusions were liable, from the play and friction of the surrounding society. To do that, required a separate inquiry. It would have been needful to investigate the circumstances which caused the friction, and thus prevented the conclusions from being, in the world of fact, the same as they were in the world of speculation. What we call accidents, are constantly happening, and they prevent the real march of affairs from being identical with the natural march. And, as long as we are unable to predict those accidents, there will always be a want of complete harmony between the inferences of a deductive science and the realities of life; in other words, our inferences will tend towards truth, but never completely attain it.711

With peculiar propriety, therefore, did Hume term his work a Natural History of Religion. It is an admirable specimen of the deductive method. Its only fault is that he speaks too confidently of the accuracy of the results to which, on such a subject, that method could attain. He believed, that, by observing the principles of human nature, as he found them in his own mind, it was possible to explain the whole course of affairs, both moral and physical.712 These principles were to be arrived at by experiments made on himself; and having thus arrived at them, he was to reason from them deductively, and so construct the entire scheme. This he contrasts with the inductive plan, which he calls a tedious and lingering process; and while others might follow that slow and patient method of gradually working their way towards first principles, his project was, to seize them at once, or, as he expresses himself, not to stop at the frontier, but to march directly on the capital, being possessed of which, he could gain an easy victory over other difficulties, and could extend his conquests over the sciences.713 According to Hume, we are to reason, not in order to obtain ideas, but we are to have clear ideas before we reason.714 By this means, we arrive at philosophy; and her conclusions are not to be impugned, even if they do happen to clash with science. On the contrary, her authority is supreme, and her decisions, being essentially true, must always be preferred to any generalization of the facts which the external world presents.715