Mandeville’s precursor to Smith’s invisible hand

Bernard Mandeville is one of the most controversial and interesting thinkers of the eighteenth-century. Mandeville was born in 1670 in Rotterdam, the Netherlands, where he  studied medicine before moving to London in the late 1690s. In 1705 he published The Grumbling Hive, which he later developed into The Fable of the Bees: or Private Vices, Publick Benefits (1714). It was so scandalous at the time that it is said only one person, Dr Johnson, publicly praised the work. 

Mandeville was critiquing republicanism and its emphasis on a frugal society focused on civic virtue. Johan de Witt, a Dutch republican, published the Fly and Ant in 1703, which contrasted the nature of flies—consumers, who are addicted to commercial goods and though they may eat jam at times, their life is short, as they are ultimately killed by humans—with the nature of ants—who are hard-working and virtuous, sustaining their states—to show the advantages of republics. Mandeville’s Fable, which may have been a direct reaction to de Witt’s treatise, amounts to a scathing critique of republicanism, civic virtue, and mercantilism. Its underlying doctrine, that there are unintended positive consequences of self-motivated action, can be viewed as a precursor to Adam Smith’s ‘invisible hand’.

Mandeville argued, as the full title of the Fable suggests, that, without noticing, seemingly selfish acts of individuals are necessary for a prosperous and thriving society; in short, personal vices make a whole society successful. He concludes this through examining a bee hive, which was a traditional symbol of a hard-working eighteenth-century citizen, who was fully dedicated to the state, valuing the whole over themselves. 

At the start of the Fable, the hive is very successful, powerful and prosperous, even though—or because—all bees follow their self-interest. For instance, doctors are in their profession for the fame, not for benevolence; politicians are all corrupt; lawyers wanted to create more feuds, instead of ensuring peace. As Mandeville pointedly states: ‘Thus every Part was full of Vice, Yet the whole Mass a Paradise’. Nevertheless, this vicious hive was the envy of all other hives, due to its strong economy and large population.

Then honesty and traditional virtue is introduced in the hive, which undermines its power. Many bees lose their jobs, as there is less economic activity due to the frugal nature of traditional Christian virtue. Rich bees no longer spend money on luxury goods, such as great houses, which destroys the building industry. Similarly, bees no longer go to taverns to spend their money on alcohol, which leads to pubs closing. There is no more innovation and little manufacturing, as the now-frugal bees are content with the bare minimum. 

In sum, the people no longer spend money on luxury goods—which Mandeville views as everything that is not immediately necessary—this puts many out of jobs, meaning they can no longer support themselves and starve to death. What remains of the once so powerful hive is a hollow tree. Mandeville concludes that ‘fools only strive to make great an honest hive…fraud luxury, and pride must live, while we the benefits receive’.

The relation to Adam Smith’s ‘invisible hand’ is obvious. Just like Smith, Mandeville’s core idea is that the unintended impact of the many serving their own interests, as merchants in the market system, is positive. Smith, in the section of the Wealth of Nations where he discusses the ‘invisible hand’, he explains first that the annual revenue of a state is the sum of its produce or the exchangeable value of it. Hence, when merchants trade goods for their self-interest, they increase the wealth of the whole state. For Smith, ‘By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it’; it is as if an invisible hand is guiding the merchants’ promotion of the public good. 

Smith was not advocating for dishonesty but rather for a self-interested motive as the best way to incentivise innovation, economic growth, and thereby promote the liberty of the people. Smith’s invisible hand relies, like Mandeville’s moral, on a doctrine of unintended consequences, where people promote the common good unintentionally through following their own interests in a market system.

However, Smith was deeply sceptical of Mandeville’s ethics and he critiqued it thoroughly in the Theory of Moral Sentiments. Hence, though there is a connection between the theories, we should be mindful of the differences, too.