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• Contributors
• Liberty and American Experience In the Eighteenth Century
• David Womersley, Introduction: a Conservative Revolution
• Jack P. Greene, “of Liberty and of the Colonies”: a Case Study of Constitutional Conflict In the Mid-eighteenth-century British American Empire
• Barry Shain, Religious Conscience and Original Sin: an Exploration of America’s Protestant Foundations
• David Wootton, Liberty, Metaphor, and Mechanism: “checks and Balances” and the Origins of Modern Constitutionalism
• R.g. Frey, Moral Sense Theory and the Appeal to Natural Rights In the American Founding
• John W. Danford, “riches Valuable At All Times and to All Men”: Hume and the Eighteenth-century Debate On Commerce and Liberty
• Ronald Hamowy, Scottish Thought and the American Revolution: Adam Ferguson’s Response to Richard Price
• Gordon S. Wood, Is There a “james Madison Problem”?

“Riches Valuable at All Times and to All Men”:

Hume and the Eighteenth-Century Debate on Commerce and Liberty

john w. danford

In almost precisely the middle of the eighteenth century (one could use as a marker the publication of Rousseau’s Discourse on the Sciences and Arts in 1750), a variety of thinkers on both sides of the Atlantic engaged in a vigorous, complex, and extensive debate about commerce. Reduced to its essentials, the argument was about whether a free society is possible if commercial activities flourish, that is, if citizens are allowed to devote themselves to the enterprises associated with gain and prosperity. Free societies were generally believed to depend on patriotic citizens, and it was alleged that patriotism cannot survive in a commercial society. “A nation in no other period of its progress is so flourishing, as when patriotism is the ruling passion of every member: during that period, it is invincible,” averred Lord Kames (Henry Home, Scotsman, friend and “cousin” to David Hume). But, he also observed, “successful commerce is not more advantageous by the wealth and power it immediately bestows, than it is hurtful ultimately by introducing luxury and voluptuousness, which eradicate patriotism.”1

This controversy about commerce and liberty echoes in the writings and debates of the American Founding generation. James Madison’s 1790’s essays in the National Gazette, in particular, show one Founder wrestling with some of the central issues in the debate about commerce. My focus here, however, will be on the political economy essays of David Hume, arguably the first great political economist. No one any longer disputes the claim that Hume had an important influence on some members of the American Founding generation, and on Madison in particular.2 But Hume’s influence seems to have been confined to his earlier and more purely political essays (and his History of England); the political economy essays appear to have had negligible influence. Yet it is difficult to believe these essays were not familiar to the Americans—according to Hume himself the Political Discourses (as the 1752 set of essays was first known) was “the only work of mine that was successful on the first publication.”3 What can explain this failure of the American Founders to appreciate Hume’s political economy, or, to put it the other way around, why did Hume’s views make not even a dent in the Founders’ preconceptions about the characteristics of a free society? I will argue here that the widespread admiration for the classical republics of Sparta and Rome4 and the mistaken belief that they were free societies (of a sort that would be desirable in the new world) presented especially powerful obstacles to the success of the “modern project”—the project of Hume’s intellectual forebears Hobbes and Locke (from whom he is more commonly separated because of his criticisms of early modern rationalism). At the core of that project was a new understanding of politics and its place in human life, and Hume was one of the clearest proponents of the new view whose success he helped to assure.5 Perhaps it would be too much to expect political men—statesmen—to welcome with open arms the denigration of politics.6

1.

SCHOLARSHIP AND THE POLITICAL ECONOMY ESSAYS

Hume’s political economy essays, when not simply ignored, have been read for the most part in two ways. The first is quite narrow. Hume himself noted in an early essay that “trade was never esteemed an affair of state till the last century; and there scarcely is any ancient writer on politics, who has made mention of it,”7 and thus his interest in political economy has led to his being considered one of the founders of modern economic science. Though occasionally dismissed as little more than an unsystematic precursor to Adam Smith, Hume’s solid contribution to the emerging science of economics is not really in dispute. Read in this way, the significance of Hume’s political economy has been thought to lie in his attack on mercantilism, a school of thought as prominent in 1750 as it is today. The most thorough presentation and analysis of Hume’s political economy essays from this perspective is still without doubt Eugene Rotwein’s excellent monograph, now five decades old.8

More recently scholars have turned to the political economy essays with an eye toward assessing their broader significance in the history of political thought. The primary focus has been on Hume’s relevance to what is called the civic humanist or classical republican paradigm in eighteenth-century British politics. This approach has illuminated the eighteenth-century controversy about republics and has convincingly demonstrated the importance of that controversy to an understanding of Hume. But there is less agreement than one might wish on the question of Hume’s relation to civic humanism. John Robertson, for example, who attributes his understanding of the civic humanist tradition to the “magisterial investigations” of J. G. A. Pocock, sees in Hume’s “The Idea of a Perfect Commonwealth” a design for a political order which shows that “Hume’s thinking remained to the end within the framework of the civic tradition.”9 On Robertson’s view, Hume accepted the classical republican view that political participation—necessary for a fully human life—can only occur where citizens have achieved the material basis for political activity (wealth and leisure). But Hume grafted onto this understanding a progressive view of economic development, which he believed “will . . . tend to bring an ever larger proportion of society within reach of material independence and moral fulfillment—and thus will tend to universalize the capacity for citizenship.” Robertson sums up the claim as follows:

As Robertson reads him, then, Hume understood economic life as a means to participation in political life, which is of higher dignity. This is indeed the classical or Aristotelian view. But is it Hume’s?

Pocock himself, writing in the same volume, presents a different view. He describes several paradigms which have been used to explain eighteenth-century Scottish thought (the “alternative paradigms” are “civic humanism, Addisonian morality, and natural jurisprudence”),11 and although he gives no definitive statement of his own view, Pocock more than Robertson sees a tension between virtue and commerce.12 He seems to lean toward a combination of the second and third paradigms, viewing Scottish thought as “a response to the civic humanist paradigm.” This, he writes, “presents the Scottish Enlightenment as directed less against the Christians than against the ancients. It replaced the polis by politeness, the oikos, by the economy.”13 According to Pocock, this approach challenges conventional wisdom: “Since it presents the ideal of republican virtue as an ideological assault on the Whig regime, it presents Scottish social theory as the latter’s ideological defense; from which it follows that the delineation of commercial society was not a criticism of aristocracy, but a vindication of it in its Whig form.”14 Although Pocock does not appear to endorse this view wholeheartedly, he observes that it “encourages us to look questioningly on the convention that the ideology of commerce sprang from the political and epistemological individualism of Hobbes and Locke.”15

There is something to be said for each of these views, but it seems to me that reading Hume in this way leads us, in the end, to miss the forest for the trees. My purpose here is to give at least a sketch of the forest. I believe that Hume’s political economy essays, indeed his writings altogether, present a subtle and complex argument against what could be called “the primacy of the political,” a primacy which was at the core of not only classical republicanism but also, with qualifications, of ancient or classical political philosophy (which in other respects was often opposed to classical political practice).16 In this denigration of the political life, Hume seems to me to be thoroughly modern and to agree in important respects with Hobbes and Locke with whom in some other ways Hume had important disagreements (above all epistemologically). If my assessment is correct, it is not too much to say that Hume’s political economy essays17 presented a set of arguments which were indispensable in tipping the scale toward Hobbes and Locke in the quarrel between the ancients and the moderns.

One final word on the historiographical issues surrounding Pocock’s interpretation. One learns with some surprise that, according to Pocock, “historians are trained to think in linear, progressive and quasi-dialectical patterns, in which the movement is ‘from’ one state of affairs ‘to’ another.” As a consequence “they are disposed to think in terms of one reigning paradigm at a time. . . . But the civic humanist paradigm, whose rise as a tool of historical explanation we have been exploring here, encourages us to think of the civic and commercial ideologies as struggling with one another at least down to the lifetimes of Adam Smith and John Millar.”18 Without presuming to comment on how historians are educated, we may observe that perhaps in one respect there is an advantage in studying political philosophy the old-fashioned way: students of political philosophy would be surprised to find any age (at least one where philosophical questioning goes on) where a paradigm rules without challenge. It should be no surprise that the civic and commercial “ideologies” could coexist in tension with each other; it would be surprising if they did not and not only during the lifetimes of Smith and Millar. There were proponents of both ways of life in Plato’s time as there were in the eighteenth century and indeed are today. It seems to me that the very historiography we are concerned with discloses this quite clearly. There are many who dislike and oppose liberal commercial social order today, and not coincidentally they call for more public spiritedness, more sacrifice (higher taxes), more virtue, and less selfishness. Their catalogue of evils (materialism, luxury, self-indulgence, etc.) cannot help but remind us of what the opponents of commercial society in Hume’s day warned against. The controversy we are considering—whether we see it as a clash of paradigms or simply as different conceptions of the good for man and society—played a large role in the eighteenth century, partly because it lies near the heart of the challenge posed by early modern thinkers to the understanding of human nature and political life which had been regnant for nearly two thousand years. In the next section I turn to a sketch of the classical formulation of the issue of politics versus commerce, or virtue versus acquisitiveness.

2.

CLASSICAL REPUBLICS AND COMMERCE

Civic humanism is generally equated with the ideals of classical republicanism, which means above all the ideals of the most celebrated republics of antiquity, Sparta and Rome. The ancient political philosophers were in some respects critical of ancient political practice, but it is not difficult to show that, in respect to the denigration of commerce, the philosophers not only agreed with political practice but offered thoughtful justifications of what might otherwise seem to have been only the prejudices of the aristocracy. Thus we can learn more from the philosophers about this aspect of the classical republic than from the record of their institutions and practices alone. We are considering—when we consider commerce or trade or economics—the “low things,” and although philosophers and statesmen or gentlemen might have disagreed about what is highest, there was general agreement about the lower part of the ranking of the human goods.

That the concern with politics, ruling, and honor—characteristic of the aristocratic class or gentlemen of the classical republics—is higher and more humanly fulfilling than a concern with trade or commerce seems to have been universally accepted by the ancients.19 Plato’s Socrates does not hesitate to tell his companions in Republic that wealth “produces luxury, idleness, and innovation”; even with regard to craftsmen, wealth (along with poverty) is said to “corrupt them so as to make them bad” (Republic, 422a1–2, 421d2).20 Socrates and his codesigners of the city in speech sneer at the idea of even attending to the details of “that market business—the contracts individuals make with one another in the market, and . . . any market, town, or harbor regulations, or anything else of the kind. Shall we bring ourselves to set down laws for any of these things?” Socrates asks, only to be answered that “it isn’t worthwhile . . . to dictate to gentlemen” (ibid.).

The ancient thinkers were nonetheless aware, of course, that most people do not share the elevated views characteristic of the gentleman. Indeed the overwhelming power or attraction of the objects of the lower desires were readily acknowledged, and precisely this fact seems to have been a major part of the justification for an aristocratic regime: the classical thinkers favored aristocracy because it would help to draw the attention of most or some men to higher things than commerce and the pursuit of wealth. On the other hand Aristotle, who surely had his feet on the ground even as a philosopher, recognized that wealth was not thought to be “the good and happiness” even by the vulgar: “the common run of people and the most vulgar” identify the good and happiness with “pleasure, and for that reason are satisfied with a life of enjoyment. For the most notable kinds of life are three: the life just mentioned, the political life, and the contemplative life” (Nicomachean Ethics, 1095b16–20). Whatever the merits of the latter two alternatives, Aristotle makes very clear his judgment of the first. “The common run of people, as we saw, betray their utter slavishness in their preference for a life suitable to cattle” (1095b19–20), although even for them “wealth is not the good . . . for it is only useful as a means to something else” (1096a7–9). The love of gain, then, is really a form of love of pleasure—and this will be important when we consider Hume’s economic psychology below.

The ancient thinkers were also alive to the connection between commerce and character. This is perhaps most succinctly expressed in Socrates’ conversation with Cephalus in Republic I, when Socrates asks the old gentleman how he came by his wealth. Upon learning that it was mostly inherited, the philosopher responds, “the reason I asked, you see, . . . is that to me you didn’t seem overly fond of money. For the most part, those who do not make money themselves are that way. Those who do make it are twice as attached to it as the others” (330b8–c3). In fact, he adds, those who make money are “hard even to be with because they are willing to praise nothing but wealth” (330c6–7). Ancient philosophers believed that the souls of merchants or traders were not suitable for political life; one could not expect in them the largeness of vision, the understanding of nonpecuniary motives, necessary for ordering the life of the city. A city or polis is not merely “an association for residence on a common site, or for the sake of preventing mutual injustice and easing exchange. These are indeed conditions which must be present before a polis can exist; but the presence of all these conditions is not enough, in itself, to constitute a polis” (Aristotle, Politics, 1280b30–34).

For the classical thinkers, then, (1) there is a ranking of the goods human beings seek, and the pursuit of wealth through commerce ranks low; (2) the appreciation of this principle is unfortunately confined to a few, generally wellborn or perhaps of philosophic disposition. This is a fact with political implications. And (3) there is an unavoidable connection between commercial pursuits and the souls or characters of those who are preoccupied with them. From these three principles or tenets it follows that a well-ordered city will enact restrictions to prevent commercial men from engaging in political activity or ruling.21 It is also important, in the better sort of political order, to make sure economic activity is not considered honorable. (Hume, as we shall see, recognized this attitude as characteristic of monarchies and thought it harmful to economic progress.)

One of the most careful analyses of the place of economics in human life and perhaps the one with the most enduring legacy is Aristotle’s account of the two kinds of acquisition in the first book of his Politics. That treatment is important here because the distinction Aristotle drew between natural and unnatural acquisition became the basis for condemning a certain kind of economic activity that I will call arbitrage. The belief that there is something objectionable about such activity has persisted for more than two thousand years; Hume’s political economy sought to overcome the opprobrium attached to what Aristotle called unnatural acquisition.

The first book of Aristotle’s Politics is devoted to subpolitical matters, including household management generally (and the unattractive issue of slavery). One subpolitical matter is the “business of acquiring goods” (chrematismos). “One kind of acquisitive expertise (chrematistikê), then, is by nature a part of expertise in household management (oikonómia),” Aristotle concludes approvingly. This is the art of acquiring what Aristotle calls “genuine wealth,” which means “those goods a store of which is both necessary for life and useful for partnership in a city or a household” (1256b26–29). The key words here are “necessary” and “useful,” since Aristotle teaches that such acquisition must aim only at “self-sufficiency.” There is a natural limit or “boundary” to such acquisition, “just as in the other arts; for there is no art that has an instrument that is without limit either in number or in size, and wealth is the multitude of instruments belonging to expert household managers and political [rulers]” (1256b33–37). One with a proper understanding of economic affairs, then—even a gentleman—knows that the acquisition of wealth is necessary, that it may involve trade (even exchange using money or currency), but that when pursued naturally it is a bounded or limited activity.

In the next chapter Aristotle continues: “But there is another type of acquisitive expertise that they particularly call—and justifiably so—expertise in business, on account of which there is held to be no limit to wealth and possessions” (1256b40–1257a2). And this kind of acquisition or business is by most people confused with the first kind, notwithstanding the fact that “the one is by nature, while the other is not by nature but arises through a certain experience and art.” The difference can be seen most clearly, according to Aristotle, if we “take the following as our beginning. Every possession has a double use. Both of these uses belong to it as such, but not in the same way, the one being proper and the other not proper to the thing” (1257a6–8). What follows is a lucid account of the distinction between use-value and exchange-value, as drawn later by Adam Smith and Karl Marx. Aristotle seems to say that exchange is perfectly natural if you exchange for some necessary object, that is, if you barter. But the invention of money—at first only a convenience because “the things necessary by nature are not in each case easily portable”—led to the second, unnatural kind of acquisition. “Once a supply of money came into being as a result of such necessary exchange, then, the other kind of expertise in business arose—that is, commerce” (1257a42–b2). At first this was probably quite simple, but “later through experience it became more a matter of art—[the art of discerning] what and how to exchange in order to make the greatest profit” (1257b3–5). Commerce and maximizing profit on this view should be regarded as not merely low, but unnatural (some things are low even though natural, that is, necessary or appropriate, for human beings).

Now if Aristotle means only that we should remember that wealth and material things are not the only important things in life, his counsel is obviously quite sensible. But something else lurks here. The enduring legacy of these passages (and they are not untypical of classical philosophy, indeed of classical poetry and history) was, in the West at least, the view that economic activity as such—commerce or the acquisition of wealth—is not merely low; it is unnatural, a perversion of nature, and unworthy of a decent human being. (It is worth noting that the formulation is in terms of wealth acquisition, not wealth generation—as if the wealth already exists somewhere, and needs only to be acquired in what thus must amount to a zero-sum game. More on this below.) Nobel laureate Harry Markowitz told a story which captures nicely the attitude:

If arbitrage is making a profit by buying and selling in view of price discrepancies (which is what “moving goods from where they are to where they are needed” means), Aristotle’s condemnation of unnatural acquisition seems to be echoed very precisely in the Russian condemnation of arbitrage.23 The attitude toward commerce here is connected to a variety of other conceptions (or misconceptions): the doctrine of just price and the “natural” value of things, the idea that wealth is acquired rather than generated, the notion that money is wealth, and so forth. In his political economy essays, Hume attempted to rethink some of these matters and to put us right about them.

3.

THE LIMITS OF THE POLITICAL

It is a commonplace that political economy developed only in modern times (after 1650, if Hume’s remark quoted above is accurate). The elevation of trade to “an affair of state,” however, can be viewed from a different angle. Perhaps it would be better to describe the change as the devaluation of politics and the political rather than the elevation of trade. At least in a general sense this seems obvious and undeniable. Hobbes was perhaps the first to articulate the new understanding of the place of politics, captured some eighty years later in Pope’s famous lines from the Essay on Man: “For forms of government let fools contest; Whate’er is best administered is best.”24 This amounts to an emphatic rejection of the core of ancient political science which was the study of regimes, the various constitutions or forms of government, and the types of character or soul they engender or depend on. Curiously enough the ground of that wholesale rejection of Aristotelian political science was a deeper agreement with Aristotle about human nature: Hobbes agreed with the ancients that most people, left to themselves, will pursue prosperity, wealth, well-being, or “commodious living.” The difference was that Hobbes was prepared to let them do so rather than try to direct political life to higher aims. On Hobbes’s view, the political order will be more stable (peaceful) if it is grounded solidly on the common, indeed nearly universal, human desire for security and prosperity. If the political order can be understood as merely a means to security and prosperity rather than virtue (or salvation or empire), no shaping of souls or characters need occur, because the shape most are already in (as even Aristotle agreed) is perfectly acceptable. Of course this amounts to an enormous demotion of politics, now to be seen as merely instrumental, as something we engage in only to satisfy what Aristotle would have said are our lowest, most animal needs.

I rehearse these matters of common knowledge only to prepare the ground for an argument about the significance of Hume’s political economy. In the century after Hobbes’s masterpiece was published, the scene of British political thought was of course enormously complicated, as Pocock and others have ably and abundantly demonstrated. Nevertheless it is possible to say that the central and defining issue was the great contest known as the quarrel between the ancients and the moderns, that is, between the principles of classical political science and political practice on the one hand and the radically new vision of human nature and politics which issued from thinkers as diverse as Bacon, Descartes, Hobbes, Spinoza, Locke, and Defoe on the other. At the center of that controversy, I believe, was the question of the place and purpose of politics itself. It is to this issue that Hume speaks in the essays on political economy. Although he addresses the large issue only indirectly in the course of examining topics such as taxes, interest, money, luxury, and the relation of commerce to national power, Hume supplies a set of arguments critical in overcoming the lingering traces of the classical view of politics.

A good point of departure is an issue on which we find Hume in profound agreement with the ancient writers: the importance of regimes. Hume rejects Pope’s dictum that forms of government don’t matter because “whate’er is best administered is best” (this presumably rests on the Hobbesian premise that all legitimate governments are trying to do precisely the same things: to provide security and tranquillity so that individuals can pursue their own private ends). One of the recurring themes in his essays, even in the early essays which preceded the Political Discourses by a decade, is the fundamental difference between monarchies and republics (Hume saw the British government as falling somewhere in between). In “Of Civil Liberty” Hume reveals his agreement with the ancients most clearly. He speaks there of his reason for thinking that “there is something hurtful to commerce inherent in the very nature of absolute government, and inseparable from it.”25 Hume’s contemporaries who detected in monarchies an antipathy to commerce took the reason to be the insecurity of property in absolute governments, but he disagrees. “Private property seems to me almost as secure in a civilized European monarchy, as in a republic.”26 And human avarice, “the spur of industry,” is so nearly universal a passion that “it is not likely to be scared by an imaginary danger,” so its absence cannot explain the fact that commerce is less likely to flourish in a monarchy. “Commerce, therefore, in my opinion, is apt to decay in absolute governments, not because it is less secure, but because it is less honourable.” The principle of the regime (in this case honor, as Montesquieu had observed), then, does have a powerful effect on the way of life of subjects or citizens. In a monarchy “birth, titles, and place must be honoured above industry and riches,” and “while these notions prevail, all the considerable traders will be tempted to throw up their commerce, in order to purchase some of these employments, to which privileges and honours are annexed.”27 Here Hume seems in complete agreement with Aristotle on the close connection between the regime (what is honored or thought important) and the way of life of a people.

But when we come to the issue of which sort of regime is preferable, Hume is entirely on the side of the moderns. There is nothing in Hume’s writings to suggest that he believed human beings are not fully human unless they engage in politics or are interested in political considerations. Although man is a social creature, the social needs can be fulfilled in a variety of ways including even economic activity. If we take the core of Hobbes’s and Locke’s thought to have been not “the rigorous individualism of self-interest” (Pocock) but the view that political life is merely a means to satisfy prepolitical needs (and therefore not necessary to human fulfillment), Hume is in the same camp with his seventeenth-century predecessors. But Hobbes’s and Locke’s great political masterpieces had not carried the day against the classical view, and Hume undertook the task of completing what they had begun. We can begin to appreciate the significance of his political economy only when we get this issue in proper perspective. Perhaps this is only another way of saying that the historians are surely correct who have demonstrated how widely accepted was the paradigm of classical republicanism (in 1750). They are mistaken only in seeing Hume as endorsing the ancient political understanding, or indeed as ambivalent about it.

4.

CIVIC GREATNESS, LUXURY, AND MANNERS

Hume published his first volume of essays in 1741, and a second volume appeared in 1742. Ten years later he issued a new collection called Political Discourses. It is these which constitute the heart of Hume’s political economy, though the full story would need to include important passages from his masterwork, the History of England. I have suggested that Hume’s approval of the kind of society he saw emerging in England—a commercial republic—places him on the side of his early modern predecessors in the debate with the ancients over the priority of politics. But in Hume’s century, a lingering nostalgia for the grandeur of classical republics was quite strong, and he undertook to consider the basis of the various antipathies to commercial society. We find him in the political economy essays addressing (and refuting) claims which one might call relics of the classical outlook, such as the belief that commerce draws wealth away from the public treasury and thus weakens the state, or that luxury is itself vicious and should be suppressed in any decent political order. Hume lays out a subtle but compelling account of human psychology in relation to what he calls the “manners and customs” of peoples to explain his qualified endorsement of the large modern commercial republic in which politics is merely instrumental and the center of life need not be located in the public realm.

Let us begin by sketching Hume’s arguments in the first few political economy essays. We will find they address directly the kinds of anxieties voiced about commerce by a wide spectrum of statesmen and political pamphleteers in the middle of the eighteenth century, both in Britain and in her American colonies. First, according to Hume, the ancient republics were not genuinely free nor did their institutions and practices accord with human nature. Thus the classical republics are not attractive models for a free political order. Second, such republics did indeed depend on the suppression of trade, commerce, and manufactures, but the usual consequence of such suppression is not a robust polis with a virtuous citizenry but rather indolence and poverty.28 Third, although where trade and commerce flourish one generally finds luxury, luxury is not itself the source of political corruption, as is often thought, but a spur to industry (thus luxury enhances the power of the state or sovereign). The explanation of this phenomenon, which involves the psychological disposition to be active, points in turn to the benefits of a commercial as opposed to an aristocratic order of landed wealth. Fourth and finally, political men—those who exalt political action as rewarding in itself—overstate the effectiveness of political agency. Economic matters in particular are too complicated to be managed or directed by human wisdom, no matter how clear the purpose or how firm the resolve of the manager. And notwithstanding its pretensions, political activity is not directive anyway since it consists for the most part in factious struggle, for example among “zealots” who “kindle up the passions of their partizans, and under pretence of public good, pursue the interests and ends of their particular faction.”29 Hume notes that “the ages of greatest public spirit are not always most eminent for private virtue,” and in the end finds private virtue more natural and thus more to be relied on in human institutions.30

The first of the political economy essays, “Of Commerce,” contains Hume’s most direct consideration of classical republicanism, along with “Of the Populousness of Ancient Nations” which concludes the set. He approaches the theme by way of an inquiry concerning the foundation of “the greatness of the state” by examining the apparent tension or “opposition between the greatness of the state and the happiness of the subject,” an opposition not “merely chimerical” but “founded on history and experience.” The relevant history is the history of the two greatest of the ancient republics, Sparta and Rome. Hume does not doubt the greatness of these two republics, and in fact he appears to admit that those who see a danger in commerce are correct. “The republic of Sparta was certainly more powerful than any state now in the world, consisting of an equal number of people; and this was owing entirely to the want of commerce and luxury.”31 But Hume is at pains to show that it would not be possible for modern sovereigns to “return to the maxims of ancient policy,” not least because of the system of slavery Hume shows ancient policy to have rested upon. Considered in light of a broad historical survey, “ancient policy was violent, and contrary to the more natural and usual course of things.” The freedom of the ancient republics was not freedom for the citizens themselves as individuals; it was only freedom from foreign domination. “A continuall succession of wars makes every citizen a soldier: He takes the field in his turn: And during his service he is chiefly maintained by himself. This service is indeed equivalent to a heavy tax; yet is it less felt by a people addicted to arms, who fight for honour and revenge more than pay, and are unacquainted with gain and industry as well as pleasure” (259).

Hume believed that only very special circumstances made it possible for Sparta and Rome to flourish by the suppression of trade and commerce. The more general effect of “the want of trade and manufactures” is simply poverty and indolence, which are “the consequences of sloth and barbarity” (260). The ancient republics did not, as many writers claimed, decline because of the spread of commerce and luxury. “It would be easy to prove, that these writers mistook the cause of the disorders in the Roman state, and ascribed to luxury and the arts, what really proceeded from an ill modelled government, and the unlimited extent of conquests. Refinement on the pleasures and conveniencies of life has no natural tendency to beget venality and corruption” (276). The explanation for this claim is one of the key insights of Hume’s political economy:

The second argument, then, is based on Hume’s insight that at the most general level our genuine alternatives are societies which suppress commerce (and thereby condemn themselves to rustic poverty and aristocratic extravagance), and those in which commerce flourishes and produces luxury, which in turn stimulates most people to productive labor.32 Hume calls the latter, with his customary delicacy, “ages of refinement,” and insists they are “both the happiest and most virtuous.”33

Many others believed, however, that commerce is inimical to liberty because they accepted what one might call the life-cycle theory of republican government, according to which only in the middle period of a republic’s life can citizens be free and the polity healthy and vigorous. As Richard Price observed in the year of the Declaration of Independence,

Most desirable, in this view, is the middle stage of economic self-sufficiency and virtuous liberty; this is, however, eventually and inevitably replaced by a corrupt phase of luxury and vice. The corrupt stage is associated with urbanization, manufacturing, and in general too much wealth.35 James Madison expressed a similar view sixteen years later in one of his National Gazette essays, “Republican Distribution of Citizens.” According to Madison, “the life of the husbandman is pre-eminently suited to the comfort and happiness of the individual. . . . Competency is more universally the lot of those who dwell in the country, when liberty is at the same time their lot. The extremes both of want and of waste have other abodes. ’Tis not the country that peoples either the Bridewells or the Bedlams. These mansions of wretchedness are tenanted from the distresses and vices of overgrown cities.”36 McCoy cites dozens of such passages (one example from Samuel Deane: “Continued prosperity is apt to bring political evils in its train; such as luxury and idleness, dissipation and extravagant expenses; which tend to, and end in, wretchedness and ruin”).37 Although in one case Hume uses language which seems to accept this,38 he is without doubt arguing against the life-cycle view. In the passage just alluded to, for example, he suggests that the only time fancy has not confounded her wants with those of nature is “in the first and more uncultivated ages of any state,” when “men, content with the produce of their own fields, or with those rude improvements which they themselves can work upon them, have little occasion for exchange, at least for money, . . . the common measure of exchange” (291). This is part of his larger argument that in “rude, uncultivated ages,” or when “men live in the ancient, simple manner” (293), they must necessarily be divided into two classes, a prodigal and extravagant landed gentry who consume their wealth in rustic hospitality, and a peasantry condemned, with no outlets for their energy or industry, to hardship at least, and probably to “sloth and an indifference to others.”39

The chief problem centers on the misleading term “luxury.” Hume understands that the notion of luxury is relative to time and place.

Without tracing the reasoning here, Hume’s conclusion is that “Refinement on the pleasures and conveniencies of life has no natural tendency to beget venality and corruption. The value, which all men put upon any particular pleasure, depends on comparison and experience; nor is a porter less greedy of money, which he spends on bacon and brandy, than a courtier, who purchases champagne and ortolans. Riches are valuable at all times, and to all men” (276). Hume’s understanding of this issue—if correct—means that Madison, Jefferson, Franklin, and others who decried the spread of luxury are thoroughly wrong.

The principle that “riches are valuable at all times, and to all men; because they always purchase pleasures, such as men are accustomed to, and desire” is at the core of another argument taken up by Hume in the third and fourth essays of the set (“Of Money” and “Of Interest”), which are normally read quite narrowly since they appear to be no more than careful examinations of widely held mercantilist prejudices (in the former case, that “any particular state is weak, though fertile, populous, and well cultivated, merely because it wants money” and in the latter that plenty of money leads to low interest rates).41 In both cases Hume’s approach is the same. He finds that the common misunderstanding results from regarding as a cause what is really only a “collateral effect: . . . a consequence is ascribed to plenty of money; though it be really owing to a change in the manners and customs of the people.”42 The deeper argument, then, rests on Hume’s understanding of human nature and specifically his understanding of the effects of certain “manners and customs of the people.” The basic principle is found in many of Hume’s writings (here is his formulation from the fourth essay, “Of Interest”): “There is no craving or demand of the human mind more constant and insatiable than that for exercise and employment; and this desire seems the foundation of most of our passions and pursuits” (300).

This principle—the constant craving of the mind for exercise and employment—has enormous social and political implications which Hume simplifies here to make his point about the superiority of commercial societies. In the second essay, Hume suggests that “in rude unpolished nations, where the arts are neglected, all labour is bestowed on the cultivation of the ground; and the whole society is divided into two classes, proprietors of land, and their vassals or tenants” (277). He characterizes these classes more specifically. “The latter are necessarily dependent, and fitted for slavery and subjection; especially where they possess no riches, and are not valued for their knowledge in agriculture; as must always be the case where the arts are neglected.” The landed proprietors, on the other hand, will “erect themselves into petty tyrants,” and Hume thinks it most likely something like a feudal order will emerge, where the aristocracy submits to a master “for the sake of peace and order.” Now the consistent lesson (in history) of societies based on landed wealth is that those with wealth dissipate it on frivolities.

Something quite different happens when commerce and trade disrupt the stability of a landed aristocracy, as they inevitably do. In a stable order of landed property, most men are “content with the produce of their own fields, or with those rude improvements which they themselves can work upon them” (291). Thus they have “little occasion for exchange, at least for money.” The result is largely a sort of barter economy. “The wool of the farmer’s own flock, spun in his own family, and wrought by a neighboring weaver, who receives his payment in corn or wool, suffices for furniture and cloathing.” Even the landlord himself, “dwelling in the neighbourhood, is content to receive his rent in the commodities raised by the farmer.” But “after men begin to refine on all these enjoyments, and live not always at home, nor are content with what can be raised in their neighbourhood, there is more exchange and commerce of all kinds” (291). Obviously there is nothing mysterious in this, but the economic effects are dramatic. In the stable landed order, as we have seen, the tendency on the part of those with wealth is toward prodigality (“deprive a man of all business and serious occupation, he runs restless from one amusement to another; and the weight and oppression which he feels from idleness is so great, that he forgets the ruin which must follow from his immoderate expenses” [300–301]).

But when commerce enters the picture, the life of the idle landlord is transformed.

The lesson is that trade and commerce, where they are permitted to flourish, produce not luxury (or not only luxury) but industry and frugality. One could say that what begins as a desire for pleasure of activity is converted into a narrower kind of activity: “It is an infallible consequence of all industrious professions, to beget frugality, and make the love of gain prevail over the love of pleasure.”43 As Hume sums up his argument, “thus an encrease of commerce, by a necessary consequence, raises a greater number of lenders, and by that means produces lowness of interest” (302).

5.

STABILITY, INNOVATION, AND THE LIMITS OF POLITICS

In one of the best known of his National Gazette essays, “Fashion,” James Madison laments that mere changes in the taste of consumers can result in thousands of workers being thrown out of work. He has learned, he writes, that “the buckle manufacturers of Birmingham, Wassal, Wolverhampton, and their environs,” who employ “more than twenty thousand persons,” are fallen on hard times, and of that number many, “in consequence of the prevailing fashion of shoestrings & slippers, are at present without employ, almost destitute of bread, and exposed to the horrors of want at the most inclement season.”44 This leads Madison to conclude that “the most precarious of all occupations which give bread to the industrious, are those depending on mere fashion, which generally changes so suddenly, and often so considerably, as to throw whole bodies of people out of employment.”

One might quibble about the use of the word despotism, but Madison’s sentiment is familiar in all ages. Changes in economic arrangements often result in hardship and are almost always disturbing. It is always easier to see the costs of change (which are relatively immediate) than the benefits, which take time to emerge. Hence we are tempted to regard change itself as the problem.

Hume would have us ask, first, what are the genuine alternatives here? Would not the elimination of innovation—by the name of fashion or any other—require us to extinguish liberty? The only real alternative to the situation Madison deplores would be somehow to freeze all economic development or change (perhaps by rigorous sumptuary laws, which however are always unavailing) and then to live in a state of rude simplicity, a state which has its own drawbacks. As Hume says in a different context, “that provisions and labour should become dear by the encrease of trade and money, is, in many respects, an inconvenience; but an inconvenience that is unavoidable, and the effect of that public wealth and prosperity which are the end of all our wishes.”45 Moreover, as Hume points out, all economic activity is subject to changes and shocks and dislocations, and that economy is best able to cope with them which is wealthy and diversified. As Hume puts it, once a nation has developed commercially, it “may lose most of its foreign trade, and yet continue a great and powerful people. If strangers will not take any particular commodity of ours, we must cease to labour in it. The same hands will turn themselves towards some refinement in other commodities, which may be wanted at home. And there must always be materials for them to work upon; till every person in the state, who possesses riches, enjoys as great plenty of home commodities, and those in as great perfection, as he desires;which can never possibly happen” (264; emphasis added). In a later passage, Hume addresses the issue even more directly, acknowledging that “any people is happier who possess a variety of manufactures, than if they enjoyed one single great manufacture, in which they are all employed. Their situation is less precarious; and they will feel less sensibly those revolutions and uncertainties, to which every particular branch of commerce will always be exposed” (330).

The last of Hume’s insights demanding our attention here is one scattered widely throughout Hume’s later writings, including especially the The History of England. One of the clearest formulations is in the eighth and briefest of the political economy essays, “Of Taxes.” “I shall conclude this subject with observing, that we have, with regard to taxes, an instance of what frequently happens in political institutions, that the consequences of things are diametrically opposite to what we should expect on the first appearance” (347). This happens in political matters, as we learn from the first essay, because they are of awesome complexity, so that general reasonings about them are rarely accurate. Most people judge tolerably well about particulars, but

Hume is attempting in his political economy to “regard the general course of things,” and he hopes to explain, for example, why Sparta and Rome are poor models because they are rare exceptions to the “general course of things,” according to which “industry and arts and trade encrease the power of the sovereign as well as the happiness of the subjects” (260).

As we learn from The History of England, the general principles of commerce or political economy are even more complex and less easy to grasp than those of “the police of the kingdom.” In the reign of Henry VII, Hume observes, regulations regarding police were “contrived with much better judgment” than were those affecting commerce. “The more simple ideas of order and equity are sufficient to guide a legislator in everything that regards the internal administration of justice: But the principles of commerce are much more complicated, and require long experience and deep reflection to be well understood in any state. The real consequence of a law or practice is there often contrary to first appearances.”47 When we consider political economy, then, our task is more difficult than one might expect, and the tendency to magnify the importance of politics is especially dangerous. This renders the political science of the ancients not only useless (in part) but dangerous for us. The exaltation of politics and ruling is fraught with problems, and Hume is happy to remind us of the inadequacy of that view. Even if political agency is effective in small, simple societies, in a complex commercial republic the sovereign power ought to be diffident about what sovereign power can accomplish.

Most political activity, as Hume saw it around him, is the pursuit of factious interests under the guise of promoting the public good, as we noted above. He concluded an early essay about the politics of court and country in the time of Walpole with an admonition to both sides of factional disputes to moderate their zeal. If politics is mostly about low matters (not virtue, but interests), surely the rhetoric of patriotic defense of the constitution is out of place:

Hume’s own temper was of course philosophic, and the imagery of this paragraph is suggestive of his view of politics, which sets Hume apart from his classical predecessors.49 For Hume, private life and private virtues are not an unsatisfactory alternative to life on the public stage. To be fully human one does not need to live in a polis; indeed a commercial republic is preferable. Hume does caution that he “would not be understood to mean, that public affairs deserve no care and attention at all. Would men be moderate and consistent, their claims might be admitted; at least might be examined.”50 But moderation is more likely to be found in the kind of society to which Hobbes and Locke pointed the way than in Sparta or Rome or indeed Athens. Hume’s rich, complex, and profound reflections on political economy were intended to persuade those with lingering nostalgia for the classical republics, or the ancient understanding called civic humanism, that modern commercial republican societies are superior.51

[1. ]Henry Home, Lord Kames, Sketches of the History of Man (1774; Edinburgh, 1813), vol. 1 (bk. 2, sketch 7), 467, 474 (emphasis added). For the relationship between Kames and Hume, see Ernest Campbell Mossner, The Life of David Hume (Oxford: Clarendon Press, 1980).

[2. ]The starting point on this matter is Douglas Adair, “ ‘That Politics May Be Reduced to a Science’: David Hume, James Madison, and the Tenth Federalist,” in Fame and the Founding Fathers, ed. Trevor Colbourn (Indianapolis: Liberty Fund, 1998), 132–51. See also Gordon S. Wood, The Creation of the American Republic, 1776–1787 (Chapel Hill: University of North Carolina Press, 1969 and 1998), 504–6. See also Samuel Fleischacker, “Adam Smith’s Reception Among the American Founders, 1776–1790,” William and Mary Quarterly 59, no. 4 (October 2002).

[3. ]David Hume, “My Own Life” in Essays: Moral Political and Literary, ed. Eugene Miller (Indianapolis: Liberty Fund, 1985), xxxvi.

[4. ]One might begin from the Founders’ predilection to assume the names of Roman patriots—Publius, Brutus, Agricola, etc.—as pen names for their pamphlets and newspaper columns. For a thorough and excellent discussion of the deployment of classical heroes as symbols and as models, see Carl J. Richard, The Founders and the Classics: Greece, Rome, and the American Enlightenment (Cambridge: Harvard University Press, 1994), especially chs. 2 and 3.

[5. ]A similar view can be found in Roy Porter, The Creation of the Modern World: The Untold Story of the British Enlightenment (New York: W. W. Norton, 2000). See esp. 247–51, where Porter writes: “Hume thus blew the trumpet for the modern: Scotland should not copy Sparta, nostalgia was wasted on that imagined community” (251).

[6. ]For a somewhat different take on the result—at least—of the American Founders’ work, see the superb study by Gordon Wood, The Radicalism of the American Revolution (New York: Alfred A. Knopf, 1992). Wood presents a compelling case that the aristocratic and hierarchical world (marked, for example, by “patriarchal dependence”) of pre-Revolutionary America was completely overturned or eliminated as a result of the American Revolution. But Wood does not trace this to any revolutionary political theory, offering instead a primarily sociological account.

[7. ]Hume, Essays, 88.

[8. ]Eugene Rotwein, ed., David Hume: Writings on Economics (1955; Madison: University of Wisconsin Press, 1970).

[9. ]John Robertson, “The Scottish Enlightenment at the Limits of the Civic Tradition” in Wealth and Virtue: The Shaping of Political Economy in the Scottish Enlightenment, ed. Istvan Hont and Michael Ignatieff (Cambridge: Cambridge University Press, 1983), 139, 174.

[10. ]Hont and Ignatieff, Wealth and Virtue, 175.

[11. ]J. G. A. Pocock, “Cambridge Paradigms and Scotch Philosophers: A Study of the Relations Between the Civic Humanist and the Civil Jurisprudential Interpretation of Eighteenth-Century Social Thought,” in Hont and Ignatieff, Wealth and Virtue, 251.

[12. ]Ibid., 252.

[13. ]Ibid., 242.

[14. ]Ibid., 243.

[15. ]Ibid.

[16. ]For an excellent and thorough discussion of this see Paul Rahe, Republics Ancient and Modern: Classical Republicanism and the American Revolution (Chapel Hill: University of North Carolina Press, 1992), 364–98 and passim.

[17. ]This means primarily the first ten essays published under the title “Political Discourses” in 1752 together with the essay “Of the Jealousy of Trade” which was written in 1758 and later added to the original (1752) collection.

[18. ]Pocock, “Cambridge Paradigms,” 244.

[19. ]The cardinal principle of classical republicanism is well stated by Pocock: “the ancient belief that the fulfillment of man’s life was to be found in political association” (J. G. A. Pocock, “Between Machiavelli and Hume: Gibbon as Civic Humanist and Philosophical Historian” in Edward Gibbon and the Decline and Fall of the Roman Empire, ed. G. W. Bowersock and John Clive [Cambridge, Mass.: 1977], 104). As Aristotle expressed it, “man is by nature a polis animal” (Politics, bk. 1, ch. 2: 1253a3; my translation). Since the nature of a thing can be seen only in its completion or perfection (its telos or end), this amounts to the belief than anyone who is not fortunate enough to be active in a polis or political association cannot be said to live as a full human being.

[20. ]Quotations are from Plato, The Republic, trans. Allan Bloom (New York: Basic Books, 1968).

[21. ]For example, “In Thebes there used to be a law that one who had not abstained from the market for ten years could not share in office,” says Aristotle, and “the best city will not make a vulgar person a citizen” (Politics, 1278a20–25, 1278a7–8).

[22. ]Harry M. Markowitz, “Markets and Morality, Or Arbitragers Get No Respect,” Wall Street Journal, May 14, 1991, A16.

[23. ]Markowitz makes explicit the commonsense observation that maximizing well-being is not the same as maximizing wealth. “I believe that most people find that once some moderate needs for food and shelter are satisfied, it depends more on how you spend your time than on how much money you make.” If this is all Aristotle meant, who could disagree? But unlike Aristotle, Markowitz seems to believe that a commercial life, which accumulates (generates?) wealth, can be very satisfying so long as one finds “time for other interests” (ibid).

[24. ]Hume cites this dictum in order to take issue with it at the beginning of one of his early essays (“That Politics May Be Reduced to a Science”), Essays, 14. Obviously Hume is not of one mind with Hobbes on the issue of regimes (see below, pp. 331–33).

[25. ]Hume, Essays, 92.

[26. ]Ibid., 92–93.

[27. ]Ibid., 93.

[28. ]There is a close parallel between this claim and Locke’s account of how in the state of nature, before the invention of money, there is no way for men to escape the grinding poverty and insecurity of hand-to-mouth existence. See ch. 5 of Locke’s Second Treatise and John Danford, Roots of Freedom (Wilmington, Del.: ISI Books, 2000), 92–99.

[29. ]The formulation comes from one of Hume’s earliest essays, “That Politics May Be Reduced to a Science,” in Essays, 27.

[30. ]Ibid., 25. This receives its most extensive treatment in Hume’s treatise on morals, the Enquiry Concerning the Principles of Morals (Oxford: Oxford University Press, 1975). See Danford, David Hume and the Problem of Reason (New Haven: Yale University Press, 1990), ch. 8.

[31. ]Hume, Essays, 257.

[32. ]Compare the pithy formulation of Edward Gibbon: speaking of the various refinements “of conveniency, of elegance, and of splendour” which “under the odious name of luxury, have been severely arraigned by the moralists of every age,” Gibbon observes that “it might perhaps be more conducive to the virtue, as well as happiness, of mankind, if all possessed the necessaries, and none the superfluities, of life. But in the present imperfect condition of society, luxury, though it may proceed from vice or folly, seems to be the only means that can correct the unequal distribution of property. The diligent mechanic, and the skilful artist, who have obtained no share in the division of the earth, receive a voluntary tax from the possessors of land . . .” (Edward Gibbon, The History of the Decline and Fall of the Roman Empire, ed. David Womersley [London: Penguin Books, 1994], vol. 1, ch. 2, 80).

[33. ]Hume, Essays, 269.

[34. ]Richard Price, Observations on the Nature of Civil Liberty (London, 1776), 70. An excellent discussion of this theme can be found in Drew McCoy, The Elusive Republic: Political Economy in Jeffersonian America (Chapel Hill: University of North Carolina Press, 1980; republished as a Norton paperback, 1982), 48–67.

[35. ]See McCoy, The Elusive Republic, chs. 1 and 2.

[36. ]From James Madison, Writings, edited by Jack N. Rackove for Library of America (New York: Literary Classics of the United States, 1999), 511–12.

[37. ]Samuel Deane, A Sermon Preached February 19th, 1795 (Portland, Mass.: 1795), quoted in McCoy, The Elusive Republic, 172.

[38. ]Hume writes, “Ere fancy has confounded her wants with those of nature . . .” (Essays, 291), a passage which might be taken as a lament (in the vein of Rousseau) about the unnatural accretions to human needs caused by civilized or urbane life. But in the very sentence in which this phrase appears, Hume identifies the period of very simple wants as an age “the first and more uncultivated . . . of any state” and goes on to contrast “rude, uncultivated” ages with “times of industry and refinement” (291). There is no doubt about which Hume prefers or recommends.

[39. ]Ibid., 300–302, 280.

[40. ]Ibid., 268–69. John Dickinson, author of Letters from a Federal Farmer, wrestles with the same issue. Speaking of what today we call demand elasticity, he admits that the terms “luxury” and “necessity” change with time: “This must be decided by the nature of the commodities and the purchasers demand for them. If they are mere luxuries, he is at liberty to do as he pleases, and if he buys, he does it voluntarily: But if they are absolute necessaries, or conveniences which use and custom have made requisite for the comfort of life, and which he is not permitted, by the power imposing the duty, to get elsewhere, there the seller has a plain advantage, and the buyer must pay the duty” (73–74; emphasis added).

[41. ]For excellent discussions of them in this light see Rotwein, David Hume, lx–lxxvi.

[42. ]Hume, Essays, 294.

[43. ]Ibid., 301. It is instructive to compare Hume’s reasoning with the words of the Platonic Socrates in Republic I (at 330b8–c3), quoted above (see p. 327). As noted earlier, Hume agrees with the ancients about the psychology associated with commerce but draws contrary political conclusions.

[44. ]James Madison, Writings, 513.

[45. ]Hume, Essays, 284.

[46. ]From the introductory section to the whole set of (1752) political economy essays, in Hume, Essays, 254.

[47. ]David Hume, The History of England, from the Invasion of Julius Caesar to the Revolution in 1688 (Indianapolis: Liberty Fund, 1983), 3:74.

[48. ]Hume, Essays, 30.

[49. ]For additional evidence that Hume did not endorse “republican self-government,” see Robert A. Manzer, “A Science of Politics: Hume, The Federalist, and the Politics of Constitutional Attachment,” American Journal of Political Science 45, no. 3 (July 2001): esp. 513: “Despite all his work to cultivate public opinion, however, Hume did not embrace republican self-government.”

[50. ]Ibid.

[51. ]See also Arthur Herman, How the Scots Invented the Modern World (New York: Crown Publishing, 2001).