Joyce Appleby

Capitalism and a New Social Order

Cataloguing the influences at play in the ebullient English economy, certain authors discovered a pattern. They began to discern connections everywhere-effects of interest rates on agricultural investments, of wage rates upon foreign sales, of coin shortage on the volume of trade. The consequences of one action became the causes of another. Effects and causes produced conditions; conditions became variables open to manipulation. Through these rather ephemeral publications a concept of the market emerged as the market itself was taking shape. The word market was transformed, another of those sleights of tongues obscuring a change of meaning. Less and less did market refer to that palpable affair of village stalls and rustic hawkers, of wagons and carts lumbering toward a country town laden with the farmer's produce. Instead, market denoted an invisible flow of goods and payments girdling the globe and crisscrossing the English countryside. No one could see more than a tiny fraction of this market, so it began to figure as an abstraction, something that represented the aggregation of all market bargains condensed into a price, a number, a word that went back along the lines of communication to influence people's decision. 'Let me sell as the market goes,' readers were told, was the husbandman's creed. Another pamphleteer claimed that the market was the best judge of values.

The actual round of economic activities in early modern England was not at all suggestive of uniformities. Raising and marketing food and fibers involved a thousand variations of soil, seed, technique, and lore. Weather changed from year to year. Bargains were influenced by the wits, information, resources, and moral latitude of those involved. To reduce these various influences at play in daily life to a system of generalizations represented an intellectual act of great consequences. Despite its evident diversity, the newly extended commercial system nonetheless suggested order to those who observed and analyzed it. Writers traced that order more and more to the human bargainers who put the flow of goods and payments in motion. Because more and more individuals exercised control over their resources with scant reference to old usages or even existing statutes, commercial writers treated these market participants as autonomous negotiators. Yet even though acting voluntarily, men and women seemed to converge on the same estimation of value. Behind this convergence analysts discerned the influence of the profit motive. Self-interested individuals determined value in their bargains; the aggregate of those discrete private bargains determined the rates and prices that prevailed over the entire market. Thus observers concluded that the law-like regularity of economic relations came from a consistent force inside each market participant.

Obvious—even banal—as these conclusions may appear to us, in seventeenth- and eighteenth-century England they had radical implications, for they meant that however socially differentiated people might be, in their market dealings there was an overriding similarity. Rich and poor, old and young, wise and innocent, male and female, genteel and vulgar, as buyers and sellers people revealed a common human nature. 'All men by Nature are alike,' Sir Josiah Child, the great merchant prince of the East India Company, once wrote, adding by way of emphasis, 'as I have before demonstrated and Mr. Hobbs hath truly asserted.' To give specificity to his point he amplified: 'Shopkeepers like all other Men are led by their profit.' We find it a bit stale, and, I think, a little depressing to be told that people inevitably pursue personal advantage, but we are living at the end of this world view, not at the dawn when it contained exciting possibilities. Its social impact must be measured against the old conviction that human beings were impulsive, fickle, passionate, unruly, and likely to come to no good end regardless of what they did. Self-interest in market transactions presumed a rationality that was actually complimentary to human nature. Men and women made choices that served them well. When this self-interest was extended to the planting of the most profitable crops, the location of the best markets, borrowing at the cheapest rate, and calculating the optimal times to sell, a wide range of powers had been added to society through a new conception of human nature. Moralists lamented the materialism and here-now-ness of commercial preoccupations, but the economic writers who detailed the orderly round of buying and selling displayed an enthusiasm for these newly discovered attributes of ordinary people. They also often adopted that superior tone common when one is in the van of an intellectual movement and understands developments that are obscure to others.

Self-interest could only be accounted socially benign if it could be demonstrated that all this incessant striving after private ends did not lead to chaos. Herein of course lay the brilliance of Adam Smith's liberal economic theory, that marvelously detailed description of the way in which the urge to improve oneself through profitable exchanges prompted each to commit her and his resources most advantageously and, when disciplined by competition, led inexorably to the greatest good for society. No writer before Smith had had the wit to detail the workings of the invisible hand of the market, but the principle was clearly stated during the century before The Wealth of Nations was published in 1776. For example, an English landlord writing to defend the conversion of common fields into private farms had earlier claimed that whenever there was the least need for grain men would plant it for their own profit because 'every one by the light of nature and reason will do that which makes for his greatest advantage.' This seventeenth-century writer went on to make the crucial connection by adding that the advancement of private persons will be 'the advantage of the publick.' A generation later such observations had become commonplace as when Charles Davenant declaimed that 'Trade is in its Nature free, finds its own Channel and best directs its own Course.' Davenant's additional comment that 'Wisdom is most commonly in the Wrong, when it pretends to direct Nature' drew attention to the most protean implication of this new line of reasoning-the idea that market relations represented a natural system.

It takes an act of imagination on our part to realize how startling it was to claim that the multifarious bargaining of commerce made up a natural system. As I just mentioned, the critical reliance of the whole society upon each harvest had long justified government control of everything from the working of the land to the times and places where grain might be sold. Such a well-defined set of economic obligations clearly formed a system that was social in origin, but with the increase in free exchanges, observers began to construe the voluntary but uniform acts of market participants as elements in a natural system. The new economic relations were undirected but patterned, uncoerced but orderly, free but predictable.