The Passions and the Interests (Albert Hirschman)

I stumbled upon The Passions and the Interests: Political Arguments for Capitalism Before its Triumph, which seemed both a strange title for a book, and a strange book to have written. Indeed, the final section of this short volume contains a justification by the author for doing just that. Nonetheless, it is a classic text, and like Karl Polynani's The Great Transformation, a book that makes you look at the world a little differently afterwards.

The idea of the The Passions and the Interests is to look at European political and economic thought in the 16th century as capitalism was emerging, and to see the intellectual justifications put forth at the time. The point here is that we are always prone to notice and 'learn lessons' from unintended consequences, but what of the consequences that were intended but never came to fruition? Hirschman's argument is that the maxim 'those who cannot learn from history are destined to repeat it' applies especially to the history of ideas, and that if we cannot understand why something came about we do not truly understand it.

The 16th century was a time when the Reformation, the Renaissance and advances in science had shattered previous certainties about human conduct. Where the potential conflict between passion and reason was previously solved with reference to the strictures of Christianity, thinkers began to concentrate on trying to see people for who they really are. Philosophers as different as Machiavelli, Spinoza and Hobbes began to concentrate on the is rather than the ought, and generally speaking the intellectual challenge of the time was the avoidance of chaos - and replacing 'people should be good but aren't' with 'a leader should be good but isn't' was an unsatisfactory solution. An idea took hold that rather than tame the destructive passions of men ('Reason is a slave to the passions', Hume), one could replace one passion for a less harmful one. Hume said that luxury is an evil, but a lesser evil than sloth (the experience of the Soviet Union bears this out). Indeed, the separation of powers in democracy can be attributed to this line of thinking - Alexander Hamilton himself saying 'ambition must be used to counteract ambition' with reference to the U.S. Constitution.

The age old struggle between passion and reason was seemingly resolved in this time with the idea of 'interest' - that if one were to follow one's interest this would overcome both the wickedness of the passions and the ineffectual nature of pure reason. The term was never satisfactorily defined, but over time Hirschman demonstrates convincingly that interest (what we would today call self-interest) came to refer to matters of money and wealth. There are two reasons why the idea of acting in one's interests became intellectually appealing in this period. The first was predictability - the idea that as a merchant I would have to behave a certain way even if I would wish to be less honourable - purely for my own long term self interest. In a time of unsettled political systems, and inconsistent economic policies this predictability had great value. The second reason it was deemed attractive for men (it was at the time only men) was that the pursuit of material wealth through commerce was seen as harmless or even innocent. On reflection this is understandable - for commerce wasn't at the time even considered the best way to get rich - the alternative was conquest or war. For philosophers of the time, commerce was innocent compared to the alternative, but what was also largely unknown was the power that can come from earned wealth; as Hirschman says "in a sense, the triumph of capitalism, like many modern tyrants owes much to the widespread refusal to take it seriously".

From the above discussion comes the heart of the narrative of the book - the ideas of French political philosopher Montesquieu and James Steuart, of the Scottish Enlightenment. Both asserted that capitalism was a way to bring order to the world, because it curbed political power. A Prince might encourage international trade by it's citizens in order to increase the wealth and therefore prestige of a country (and therefore the prince), but there were unseen consequences. This trade greatly strengthened what was called then the 'middle order of men', and this kind of capital was far more difficult to control or seize than the traditional aristocracy, whose wealth was land. Just as previously one could invade a country and seize farmland, no country to could roll tanks into silicon valley and seize the wealth contained there.

These thinkers essentially saw capitalism as a way to make people behave in a manner that was righteous even if it was against their nature - for example Roman Emperors would regularly debase the currency, robbing the citizenry of wealth for their own gain. By the 17th century, any printing of money by a sovereign would be self-defeating, owing to foreign exchange markets. This is true of today's capitalism - McDonalds didn't switch from plastic to paper straws because the shareholders cared about the environment - it was a calculation of the effect of the public relations exercise on profits. Since the outcome is the same, Steuart would likely argue that Capitalism did it's job.

The justification of capitalism as a calming political force may seem farcical in light of the 19th and 20th centuries, from both the perspective of international peace and the plight of many workers. Adam Smith's emphasis on the material justification of commerce in The Wealth Of Nations obscures his own broader justifications (to be found in his 'other book', The Moral Theory Of Sentiments) for the upside of trade, and in this light the arguments of influential thinkers like Montesquieu and James Steuart are largely lost in the history of thought. Indeed Hirschman points to John Maynard Keynes making a similar argument to them in the 1930s, unaware of his point being a repeat of earlier thinking.

The specific narrative of The Passions will be of interest to anyone who wishes to learn about political economy, economic history and indeed the history of thought. The broader benefit from reading this marvellous little book is the very concept of searching for the intellectual justification of an occurrence which happened, but the justification itself turned out to be partially or entirely wrong. For this is a hidden history that is possible to find, and can be illuminating.