Margaret Schabas and Carl Wennerlind, A Philosopher’s Economist: Hume & the Rise of Capitalism (Chicago: University of Chicago Press, 2020), 316pp. $45.00. ISBN: 9780226597447
by Tyson Leuchter, King’s College London
Margaret Schabas and Carl Wennerlind announce their intentions in the title: David Hume, a “philosopher’s economist” and not “an economist’s philosopher.” Hume has long enjoyed a towering reputation in fields ranging from ethics to political theory to metaphysics to epistemology. While his economic thought, particularly on monetary matters, has been studied, until now there has been no full-length, English-language work on his economic doctrines as a whole (16).[1] Schabas and Wennerlind, both leading scholars in the history of economic thought, seek to redress this oversight in A Philosopher’s Economist: Hume & the Rise of Capitalism. Their aim is to “restore the sense in which Hume’s life and writings form an integral whole centered on economics, broadly construed, as a unifying thread” (6). Rather than a philosophical giant with brilliant, but piecemeal insights into economics, for Schabas and Wennerlind Hume is equally a thoroughgoing economist, whose doctrines were developed in tandem with his philosophical dispositions. In this interpretation, Hume’s thought on the specie-flow mechanism – the means by which international specie circulation might, in the long run, smooth out trade imbalances – must therefore be thought together with his empiricist epistemology. The result is an effective reconstruction of Hume’s cosmopolitan economic vision.
The authors’ task is in some ways archaeological. The bulk of Hume’s economic thought resides in his Political Discourses (1752), later collected in Essays Moral, Political, and Literary (1741-77). But, Schabas and Wennerlind suggest, focusing solely on these works gives an incomplete picture of the expansiveness of Hume’s economic thought, as well as its connection to the rest of his philosophical oeuvre. Hume’s works must be mined deeply and assembled into a coherent form for his economic doctrine to fully come to light. Schabas and Wennerlind thus examine the Political Discourses, but also find significant economic theory in more unexpected places, such as Hume’s youthful (and, much to his disappointment, far from sensationally received) tome on epistemology, metaphysics, and moral philosophy A Treatise of Human Nature (1739-40), as well as in its later reworkings as An Enquiry Concerning Human Understanding (1748) and An Enquiry Concerning the Principles of Morals (1751). Hume’s bestselling The History of England (1754-62), they find, contains significant material on economic topics, as does his posthumously published Dialogues concerning Natural Religion (1779). What emerges, Schabas and Wennerlind argue, is a particular kind of economic thought, attentive both to the quantitative implications of economic growth, but also to the moral dimensions of global economic transformations. Hume, in this view, uncannily anticipated recent developments in economics, such as the behavioral turn and the dramatic increase in attention to distributional issues and inequality, inspired by figures such as John Rawls and Thomas Piketty; such “ethical and behavioral foundations” to economics, the authors claim, were strikingly absent for much of the twentieth century (5). Hume thus becomes a sort of epistemological econometrician with interests in both prices and psychology, an economist whose normative orientation is not simply towards efficiency or individual preference maximization, but also towards the virtues of “nonpecuniary goods,” such as happiness, justice, and friendship.
Schabas and Wennerlind pursue this argument across seven tightly argued chapters. They first place Hume’s long-standing pursuit of economic knowledge in biographical context. The authors detail Hume’s birth in 1711 (as “David Home,” changed to “Hume” in 1734) to modest circumstances in Scotland, his brief clerkship to a Bristol sugar importer (a position from which he was dismissed for correcting his employer’s grammar – surely a sobering warning to aspiring pedants everywhere), his time living abroad in continental Europe, where he observed the cultural and demographic effects of differing levels of economic development (25-39). This chapter also reveals Schabas and Wennerlind’s main approach to contextualization: they take great care to reconstruct Hume’s intellectual network, combing through his correspondence to trace the paths of influence and intellectual development. Throughout the book, the authors note his interactions with a diverse range of figures, such as the Dutch financier Isaac de Pinto, Scottish “stadial theorists” Adam Ferguson and Lord Kames, famed natural historian Comte de Buffon, as well as with other leading Enlightenment figures including Adam Smith, Diderot, and Rousseau (from whom he later became estranged, a not unusual occurrence given Rousseau’s temperament) (27-28). These reconstructed intellectual networks are connected with significant events in Hume’s life – the authors note, for instance, that his time in Bristol would have exposed him to complex economic transactions, surely influencing his later thoughts on economic flows and monetary issues. Indeed, with Bristol’s leading place in the sugar industry, Hume would have had firsthand experience of one of Britain’s most dynamic economic sectors, but also a sector that was fundamentally connected with Caribbean slavery and the Atlantic slave trade (32).
Chapter two details Hume’s approach to economic methodology. Hume’s principal concern, Schabas and Wennerlind argue, was to create a true “science” of economics. His approach was thus nomothetic, with the variety of human experience brought into lawlike order and unity (51-52). The authors draw nuanced connections to Hume’s epistemological skepticism regarding the limits of human knowledge. Hume’s critique of these limits regarding the physical world has become famous enough to be called the ‘Hume Induction Problem’. In brief, given the epistemic apparatus of our senses, we are essentially locked out from knowing the “inner causes” of most phenomena covered by the physical sciences. Thus, while we may have seen one event constantly follow another – billiard balls striking each other, in Hume’s famous example – and thus may strongly expect (or mentally associate) that they will act similarly in the future, this sort of induction from experience does not, in the end, produce sure knowledge of the necessary logical connection between cause and effect. However, Schabas and Wennerlind observe, for Hume this is not the case with economic behavior. As they write,
Whereas in the physical sciences, we must ‘confine our speculations to the appearances of objects,’ as Hume had said, with human actions we can also venture into the internal causes, presumably via the same process of introspection that Hume used to establish the mental laws of association. The moral sciences have this advantage of permitting us to grasp a layer of causation that is blocked for the most part in the natural sciences (62).
Because economic behaviour is the interaction of human agents, in principle we can probe the nexus of causal factors: willed action, moral dispositions, habit, customs, and so on. On an epistemological level, then, for Hume economic science was actually more secure than the physical sciences.
Schabas and Wennerlind next tackle Hume’s account of the institutions of property and commerce. Hume placed property rights at the center of his theory of justice, they argue, so that the rule of law could securely channel individual economic interests into virtuous circuits of exchange. Hume, they write, put much stock in the potential of commerce to engender more refinement, prudence, and liberty. He also believed that the concomitant urbanization would induce more civility, friendship, and humanity. Above all, the modern economy would foster a wide array of social virtues, notably honesty, politeness, and beneficence. All of this depended critically on upholding the system of property rights and hence the rule of law. It was these beneficial outcomes, the effects of the law, that gave it warrant, not a more primitive appeal to fairness or equality (96).
The putative utilitarian logic of mutually beneficial commercial exchange, in this view, would polish manners, pacify hostilities, and lead to aggregate increases in happiness. To do so effectively, the authors note, required two further institutions: markets and money. Schabas and Wennerlind’s focus is mostly on the latter – fittingly, given Hume’s attention to monetary issues. They suggest that money, for Hume, was “intrinsically semiotic” (99). Rather than constituting an inherent store of value, money was a kind of language, in which different commodities could be “translated” into each other through market exchange. Monetary transactions thus represented a kind of pledge, a promise that two commodities were, in the minds of the transacting parties, of commensurable value. Insofar as monetary transactions depended on the fulfillment of a promise, Schabas and Wennerlind note, Hume thus saw money and credit as residing on the same continuum (100-103). Hence the importance of maintaining faith in the security of the money supply and, as the authors examine in later chapters, of avoiding the seductive pitfalls of public credit.
What moral qualities might characterize this improving world? Schabas and Wennerlind suggest that, for Hume, the material particularities of commerce produced a host of moral benefits: greater urbanization, greater equality between the sexes, the softening of hostile impulses, the promotion of cross-cultural trade, the development of new tastes, the fostering of a spirit of “industry” (115-119, 127). Schabas and Wennerlind compellingly argue that industry was particularly important for Hume not only for the commodities and wealth it might produce, but also for the virtuous habits and dispositions it might inculcate: “Hume insisted that by working diligently in one’s profession, one could not only find happiness but also inadvertently cultivate various virtues and thus contribute to the refinement of society. Because work occupies the majority of one’s waking hours, it offers the means to discipline and dignify one’s life” (121). The authors further connect this dispositional advantage of industry to Hume’s sociology: the “middle ranks” of society were those most able to sustainably produce the spirit of industry, while also integrating the honest virtues of the lower classes and the generous sociability of those above (136).
Schabas and Wennerlind return to monetary matters in chapter five. This is where the authors examine Hume’s antimercantilist arguments about the specie-flow mechanism, in which individual consumption patterns in the aggregate necessarily frustrated any top-down political attempts to dominate the global marketplace (143-146). Schabas and Wennerlind also lay out the “non-neutrality” of Hume’s quantity theory of money: money might be a kind of language, for Hume, but it was a language that could create real effects in the system of production. The authors build this argument by exploring one of Hume’s characteristic thought experiments: a galleon, laden with specie, arrives from Cadíz and unloads in a local port. What happens to the local economy? Both authors agree that, for Hume, this influx of money stimulates economic growth. But at this sole point in the book, the authorial voices splits in two. Wennerlind favours a broadly demand-side explanation: the influx of foreign specie is a result of increased demand for exports, raising both domestic wages and output, which increased wealth, in turn, filters into other sectors of the local economy through market exchange. Schabas, on the other hand, expounds an initially supply-side account, focusing particularly on the money supply. The influx of foreign specie replaces the poor-quality money in which wages were normally paid – in a kind of inverse of Gresham’s Law, good money here drives out bad. With workers now paid in high-quality specie, they happily work more intensively, allowing manufacturers to respond dynamically to increased foreign demand for output, with spillover effects on other domestic sectors as workers also increase domestic spending. Whichever explanation is favored, the authorial voice reconverges in suggesting that Hume had thus foreseen the economic concept of the multiplier (153-158).
Hume was deeply concerned about the distributional and political implications of international trade and public finance. The authors here find him at, simultaneously, his most and least cosmopolitan. Schabas and Wennerlind dissect Hume’s critique of the “jealousy of trade” plaguing eighteenth-century capitalism. In a world crisscrossed by imperial rivalries, Hume noted a distressing tendency to towards zero-sum thinking, with one nation’s economic ascendancy thought to entail another’s decline. This, in turn, dictated protectionist policies, destructive imperial competition, and devastating wars. Hume pleaded for nations to abandon the malevolent passion of jealousy and instead, through free trade, channel “envy and emulation” to more globally salutary ends (177-180). Free trade would not eliminate interstate competition but domesticate it, with nations spurring each other to ever-greater heights of improvement and wealth. For Schabas and Wennerlind, Hume here becomes an early theorist of globalization: given the variety of initial conditions, free trade policies would set countries along differing developmental paths, with rich countries specializing in high-quality manufactures and poor countries specializing in agriculture and rougher commodity production. But, given the mobility of labour and capital, in the long run the benign effects of emulation and trade would spread improvement across the globe (182-186). Free international trade would thus accomplish the economic ends of empire, but, supposedly, without the need for violence or conquest. Hume’s cosmopolitanism did, however, slam into racial barriers. As the authors note, though he opposed slavery and the slave trade, his dismissive opinions regarding the developmental capacities of non-white peoples, particularly Africans, were nothing short of appalling (191-194). This chapter also sees the authors explicating Hume’s pessimistic account of public debt. Since debt funded imperial warfare, led to burdensome taxation, perverted the political order, and so offered an irresistible tool for irresponsible policymakers, to Hume it represented an existential threat to states (195-202). Thus, as he put it, “either the nation must destroy public credit, or public credit will destroy the nation” (195-202). Hume preferred the former.
The seventh and final chapter discusses Hume’s lasting influence on economic thought. Schabas and Wennerlind make a convincing argument for Hume’s enduring influence on his friend and younger contemporary Adam Smith (211-221), as well as on later economic theory of both libertarian and liberal convictions (230-237). Other connections are drawn a bit more thinly. The authors, for instance, claim that the Encyclopédie’s famous plates, which promoted the dignity and importance of the mechanical arts, “reflects Hume’s own emphasis on the economic importance of manufacturing and practical knowledge” (222). But while Hume was undoubtedly influential, the Encyclopédie plates drew from a vast array of intellectual wellsprings.[2]
The book ends on a decidedly ambivalent note. Until the end of his life, Hume remained optimistic about the potential of actions enmeshed in the web of commerce and capitalism to improve the world. But were he to land in current times, the authors ask, would he hold the same opinions (240)? They leave it a provocatively open question.
A Philosopher’s Economist marks an important scholarly intervention. The authors make a compelling case for the importance, if not the centrality, of economics to Hume’s work. They skillfully reconstruct Hume’s multiple and interlocking economic doctrines, a difficult task given both the complexity of Hume’s thought and the comparatively short length of the volume. Particularly impressive is the way that they connect these doctrines to Hume’s epistemological and metaphysical stances, connections which otherwise might have been overlooked. Their contextualization of Hume’s social and intellectual networks, and how they shaped his work, is also well executed. In their overall construction, Hume articulates a broadly optimistic vision of how commerce might lead to an improved world, but it was still a world vulnerable to human vanity, weakness, and jealousy.
This is a compact volume, Hume’s thought is expansive, and the authors have written elsewhere on the topic.[3] That said, for a standalone work, there are two areas that might have been profitably addressed. Firstly, the question of how Hume’s personal stances on slavery and empire may, or may not, have intersected with his economic thought. As mentioned, Hume, despite his contempt for the mental capabilities of nonwhite peoples, was an opponent of slavery. However, he also seems to have lent money to a friend involved in the slave system, as well as maintained friendships with those connected to Atlantic slavery (192). Schabas and Wennerlind do not obscure any of this. But they also do not press these connections much beyond the charge of hypocrisy. For all his disapproval of slavery, Hume was nonetheless willing to carve out a degree of space for the circulation of slave-produced commodities. As the authors note, Hume at one point suggested that, however temporarily, tariffs might be designed to steer domestic demand away from foreign brandy and towards British rum (180) – a distilled molasses product, the sugarcane for which would have been produced within the hellish world of the Caribbean slave complex. Similarly, they rightly note that Hume was firmly opposed to military conquest and empire by the sword (177-178). But that does not necessarily imply being opposed to empire tout court. Indeed, Hume served (as a noncombatant) in the abortive invasion of Lorient in 1746, and later as undersecretary of state during an age of imperial expansion (xiv, 177). And as Hume’s friend and correspondent Diderot, in his contributions to the Abbé Raynal’s massively influential Histoire des Deux Indes, argued, colonies were theoretically permissible under certain circumstances.[4] The degree to which Enlightenment thought was or was not sympathetic to empire, colonization, and enslavement continues to be a live topic.[5]
Second is Hume’s position on finance. Schabas and Wennerlind observe that, in 1761, Hume invested about one thousand pounds in securities, likely publicly traded “bonds or shares in a mercantile company” (41). Hume was, apparently, adamant that his financial holdings were ‘real’, as opposed to the speculations of stockjobbers. How might this notion of ‘real’ financial wealth intersect with Hume’s overall starkly negative account of public debt, along with his theoretical concerns over money and credit? Given that capital mobility and the liquidity of money were central to his accounts of the specie-flow mechanism, global development, and economic multiplier effects, it would be valuable to know more not just about what Hume thought of the concept of finance, but also about the mechanics of financial markets.
Such explorations would perhaps have added further to what is already a strong and important intellectual contribution. A Philosopher’s Economist is an insightful, well-argued, and compelling volume, written and researched with great skill by two expert scholars. It will be of great interest to readers in the history of economic thought, the history of capitalism, and Enlightenment studies.
Tyson Leuchter (@inkybrained) is a lecturer in Global History at King’s College London. He is currently composing a book manuscript on financial capitalism, the Paris Stock Exchange, and the transformations of the French empire in the early nineteenth century.
[1] In English, the closest work the authors note is Eugene Rotwein’s editor’s introduction to a collection of Hume’s economic writings, originally written in 1955, then revised and reissued in 1970 and 2007; other book-length studies have addressed Hume’s economics, though Schabas and Wennerlind argue that these works do not take as systematic an approach as their own.
[2] John R. Pannabecker, “Representing Mechanical Arts in Diderot’s ‘Encyclopédie’,” Technology and Culture, 39 (1998), 33-73.
[3] Both authors have written several articles specifically on Hume, in addition to hosting a workshop on his economics (241), and co-editing David Hume’s Political Economy (Routledge: Abingdon, 2008).
[4] As Diderot wrote, “Both reason and equity permit the establishment of colonies, but they also mark out the principles from which one must not stray when founding them.” See Denis Diderot, “Extracts from the Histoire des Deux Indes,” in John Hope Mason and Robert Wokler, eds, Diderot: Political Writings (Cambridge: Cambridge Unversity Press, 1992), 175.
[5] The classical statement of the issue is Michèle Duchet, Anthropologie et Histoire au Siècle des Lumières (Paris: Albin Michel, 1971). See also Sankar Muthu, Enlightenment Against Empire (Princeton: Princeton University Press, 2003); William Max Nelson, “Making Men: Enlightenment Ideas of Racial Engineering,” American Historical Review, 115 (2010), 1364-94; Jennifer Pitts, A Turn to Empire: The Rise of Imperial Liberalism in Britain and France (Princeton: Princeton University Press, 2005); Anthony Pagden, Lords of All the World: Ideologies of Empire in Spain, Britain and France c. 1500-c. 1800 (New Haven: Yale University Press, 1998).