The Pathos of Politics – Mercantilism


The Christian view of economics in the Middle Ages was one of deprecation. The focus was on the next world, not this one. Into the 18th century, the Protestant work ethic had yet to permeate western culture in extoling the spiritual value of earthly endeavors.

Agrarian economies pervaded the 18th-century world. In Europe, a sizable aristocracy and nobility fed off the land and its peasant tillers with relative ease. The skilled trades were circumscribed by guilds, which above all protected its members.

The discovery of the New World and attendant colonialism, both west and east of Europe (the Americas and Asia), wrought significant societal changes. Widescale emigration facilitated more open societies in Europe, as the ruling class had incentive to reform so as to render society more livable.

Colonialism fueled the rise of nation-states. As the spoils of new territories became apparent, the military means for conquest and defense grew paramount. This spurred technological innovation in many corners, and in the minds of men. Most poignantly, the discovery of the New World fired the imagination, leading to questioning established maxims.

Concepts of polity and political economy were affected by this gyre of societal changes. The knee-jerk response was mercantilism: promoting governmental regulation of the economy to augment state power and thereby be able to best rival nations.

Mercantilism was the dominant policy of European governments from the 16th century into the 18th. It intended to provide the means for countries to compete at the national level. Around the world, a mercantilist mentality lingers in statist politicians to this day. American President Donald Trump is exemplary (even as Trump is schizophrenically statist in his authoritarian reflexes and anarchist in his destruction of effective governmental power).

The prime dictate of mercantilism was accumulation of monetary reserves through a positive balance of trade, particularly of manufactured goods. Policies directed to this goal motivated colonial expansion, and frequently led to war.

High tariffs were a ubiquitous centerpiece of mercantilist policy. Other tactical policies aimed at enriching state coffers included restricting domestic consumption through non-tariff trade barriers, limiting wages, export subsidies, and banning the export of precious metals (silver and gold).

This political emphasis pushed innovation, beginning with ways to generate and apply mechanical power as a means to empower more production. The steam engine was a key component of industrial development, as it allowed factories to be located where waterpower was unavailable.

The elites in ancient times afforded affluence by owning slaves. The antebellum American South illustrated how slavery discourages practical scientific progress. The South’s technological backwardness practically guaranteed its loss to the North in the Civil War.

In a very real sense, machines are modern slaves: a substitute of metal for flesh and bone. During industrialization, this replacement meant displacement of manpower.

The advent of the machine age begat what Austrian American economist Joseph Schumpeter called “creative destruction”: destroying old ways and creating new ones. Especially for experienced workers, this meant livelihood losses by devaluing traditional skills. It also meant lower wages, as there was a surfeit of labor.

These developments kicked exploitation of every sort into a higher gear: the paradoxical practice of being inhumane in the ostensible service of humanity. The societal effects were to reverberate to present day.

Adam Smith

The 1st duty of the sovereign is that of protecting the society from the violence and invasion of other independent societies.

The 2nd duty of the sovereign is that of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice.

The 3rd and last duty of the sovereign or commonwealth is that of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain. ~ Adam Smith

Scottish moral philosopher Adam Smith (1723–1790) is remembered as an apostle of capitalism. His 2nd book, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), earned him everlasting fame and enormous influence. His espoused policies were generally adopted in 19th century Britain.

Smith was not the first to write a systematic treatise on economics. That distinction belongs to Scottish economist James Steuart, who published An Inquiry into the Principles of Political Economy in 1767. Steuart’s book harkened back to the mercantilist era, and so was largely forgotten.

Governments in Smith’s day were wasteful and inefficient, misdirecting resources, with poor taxation practices and stifling regulations on both the economy and society. The major goal of social philosophers at the time was figuring ways to reduce the extent and custom of inept government in all areas.

Smith’s mode of thinking in this regard was conventional. What was exceptional about Smith was his fantastic optimism about the positive consequences of what self-interested individuals could create. Whereas mercantilists regarded a country’s resources as properly serving the state, Smith thought that a nation’s economic engine was fueled through the efforts of individuals, and so these people were the ones who deserved its fruits.

That was just the warm-up. Smith went much further: stepping through the looking glass to ludicrously claim that selfishness was a societal good.

Every individual, by pursuing his own interest, frequently promotes that of the society more effectually than when he really intends to promote it. ~ Adam Smith

This irrationality sanguinely squared the circle for Smith: that unfettered enterprise was the formula for “universal opulence”; a reality never realized anywhere in the nearly 3 centuries since Smith fantasized his economic utopia. Instead, the maturation of capitalism as an exercise in self-interest has witnessed the growth of egregious inequities in every society where it is practiced.

Smith prescribed the role of government as largely limited to protecting property, succoring commerce, and picking up the tab where ‘free’ enterprise faltered, including “the authority of the state regularly employed in the enforcing the payment of debts.”

After the public institutions and public works necessary for the defense of the society, and for the administration of justice, the other works and institutions of this kind are chiefly those for facilitating the commerce of the society, and those for promoting the instruction of the people. ~ Adam Smith

Jeremy Bentham

It is the greatest happiness of the greatest number that is the measure of right and wrong. ~ Jeremy Bentham

English philosopher, economist, and theoretical jurist Jeremy Bentham (1748–1832) developed utilitarianism, which considers morality a matter of utility: the measure of goodness being what does the greatest number well. Politically, the thrust of his approach was to try to ensure social stability through respect for individual rights and provide a modicum of economic security for all.

In his time, Bentham was a political radical. He advocated personal liberty, freedom of expression, equal rights for women, decriminalization of homosexuality, separation of church and state, and the abolitions of slavery, the death penalty, and physical punishment, including of children. Bentham was an early proponent of animal rights.

Though strongly in favor of individual freedom, Bentham considered natural law “nonsense upon stilts.” In a nod to practicality, property was neither natural nor inviolable.

Bentham also rejected the notion of social contract as chimera. The binding force of societal contract came from the government, not vice versa.

The notion of an actually existing unconnected state of nature is too wild to be seriously admitted. ~ Jeremy Bentham

Bentham sensed danger in social contract theory, and natural law, as justifying unwarranted governmental interference. For Bentham, the principle of utility provided the basis for all moral and political obligations.

A devout rationalist, Bentham was an atheist and denounced organized religion. His hatred of religion intensified as he aged.

Bentham’s ideas influenced the development of welfarism: a school of thought based on the premise that policies and acts should be evaluated on the basis of their consequences. Welfarism is a form of consequentialism, which holds that the consequences of conduct are the ultimate basis for judging their moral value. The nutshell of consequentialism is that the ends justify the means.

The basic premise of utilitarianism is that humans seek happiness, and that right action produces the most satisfaction for the greatest number. Utilitarianism dominated English political thought from the 1750s for a century.

Utilitarianism was recycling of Epicureanism, the philosophy of ancient Greek philosopher Epicurus, which held that pleasure and pain are the metrics of good and evil. Epicurus held that the purpose of philosophy was to attain a tranquil life, with peace of mind and free of fear.

Nature has placed mankind under the governance of 2 sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do. On the one hand the standard of right and wrong, on the other the chain of causes and effects, are fastened to their throne. They govern us in all we do, in all we say, in all we think: every effort we can make to throw off our subjection, will serve but to demonstrate and confirm it. ~ Jeremy Bentham

Bentham contended that humans were by nature hedonists. He thought that government should be structured to maximize individual happiness. Liberty was secondary. The state was a contrivance for fulfilling the needs of citizens.

Bentham’s greatest contribution was in the field of legislation and jurisprudence. He opposed incomprehensibility in legal code. Laws should be able to be understood by an average individual.

The power of the lawyer is in the uncertainty of the law. ~ Jeremy Bentham

Bentham opposed judicial interpretation of the law, as it created inconsistent precedents. Instead, laws should be carefully drafted, and terms spelled out, giving little scope for judicial elaboration.

Bentham advocated litigation reform to reduce its expense and occurrence. He thought that disputes ought to be settled in the way a judicious father handles family disputes: by considering all the facts from anyone with information to contribute. Punishment should be in accordance with the consequence of the crime, namely, the number of people affected.

Bentham appreciated the laissez-faire economic theories of Adam Smith and went to the next level. In Defence of Usury (1787), Bentham argued that market forces alone should set interest rates.

Bentham was against colonialism, viewing it as bad for both colonizers and colonies. He advocated self-government on utilitarian principles. Bentham considered war as the chief cause of human suffering.

Bentham also opposed an interventionist foreign policy, arguing that international harmony among peoples was only possible if economic interdependence was recognized and accepted. While Smith mystically defended laissez-faire by appealing to the guiding hand of providence, Bentham justified the doctrine on utilitarian grounds.

When push came to shove, Bentham’s utilitarianism overrode his laissez-faire inclinations. He demanded a ceiling on grain prices during shortages, favored protection for small producers, and wanted government action to control inflation. Bentham insisted that government should provide subsistence for the indigent through public works projects, as a steppingstone to joining the working poor in the labor market.

Bentham had a Hobbesian sense about what human life would be without legal sanctions. Law ensured security for society and economy.

Experience taught Bentham to question the infallibility of his hypotheses. Practical obstacles as well as theoretical ones diluted his fervor. These included a lack of government statistics upon which to base policy, and the apathy and inertia of English bureaucracy. Ambiguity in what utility actually meant was a conceptual sticking point.

Bentham advanced several concepts central to the liberal agenda of the 19th and 20th centuries. These included free speech and an unfettered press, support for the rule of law, faith in democracy, universal suffrage, and freedom of trade and emigration.

Bentham retained Lockean liberty with due regard for property, but suggested gradual redistribution of wealth via inheritance tax, so that the poor had some economic security, while the rich did not feel threatened. In this, Bentham laid the foundation for the welfare state.


The French Revolution accented the political divisions within Europe: democrats became more radical, conservatives more reactionary. Reform in England was delayed for a generation, but the war with France did not staunch the spread of liberalism, which had its vital roots in the parliamentary victories in the English Civil War and Glorious Revolution, capped by the Bill of Rights in 1689, which established Britain’s modern constitutional monarchy, and served as an inspiration for the United States Bill of Rights.

By contrast, the political philosophy emanating from the French Revolution seemed to threaten the foundation of established order on the continent. Napoléon perversely solidified the autocratic inclinations of the Germans.

Enthusiasm for liberal French ideals had been strong among the middle classes and peasants in Germany. If the victorious Napoleonic armies had followed up demolishing a millennium of German feudalism with creating a German republic, European history would have been much different. Instead, the French, having entered Germany as torchbearers of liberty, left as enemies of the German people. The German ruling classes were thus able to discredit democracy and its liberal ideals. This left the orthodoxy of German authoritarianism intact. Whence came Hegel.

Georg Hegel

The German spirit is the spirit of the new world. ~ Georg Hegel

German philosopher Georg Wilhelm Friedrich Hegel (1770–1831) was a deep thinker with strong biases. For Hegel, there was a natural order of “inherent rationality.”

What is rational is actual and what is actual is rational. ~ Frederic Hegel

In the political realm, the natural order is found in the power of the state.

The nation-state is mind in its substantive rationality and immediate actuality and is therefore the absolute power on Earth. It follows that every state is sovereign and autonomous against its neighbours. ~ Georg Hegel

Individual freedom is not found the ability to do what one pleases. On the contrary.

The state is the actuality of concrete freedom. In duty the individual acquires his substantive freedom.

Virtue is the ethical order reflected in the individual character so far as that character is determined by its natural endowment. When virtue displays itself solely as the individual’s simple conformity with the duties of the station to which he belongs, it is rectitude. ~ Georg Hegel

For Hegel, “the state is absolutely rational” but its subjects are not assuredly so; thus, democratic participation could represent an infection of irrationality.

To hold that every single person should share in deliberating and deciding on political matters of general concern on the ground that all individuals are members of the state, that its concerns are their concerns, and that it is their right that what is done should be done with their knowledge and volition, is tantamount to a proposal to put the democratic element without any rational form into the organism of the state, although it is only in virtue of the possession of such a form that the state is an organism at all. ~ Georg Hegel

Hegel declared democracy a silly idea.

This idea comes readily to mind because it does not go beyond the abstraction of “being a member of the state,” and it is superficial thinking which clings to abstractions. The rational consideration of a topic, the consciousness of the idea, is concrete and to that extent coincides with a genuine practical sense. ~ Georg Hegel

Eschewing false freedom to do as one pleases, Hegel explained how a virtuous ethical order can only be attained by individuals serving the state, whereby winning their real freedom.

Since the laws and institutions of the ethical order make up the concept of freedom, they are the substance or universal essence of individuals, who are thus related to them as accidents only. Whether the individual exists or not is all one to the objective ethical order. It alone is permanent and is the power regulating the life of individuals. Thus the ethical order has been represented by mankind as eternal justice, as gods absolutely exist, in contrast with which the empty business of individuals is only a game of see-saw.

Duty is a restriction only on the self-will of subjectivity. It stands in the way only of that abstract good to which subjectivity adheres. When we say: “We want to be free,” the primary meaning of the words is simply: “We want abstract freedom,” and every institution and every organ of the state passes as a restriction on freedom of that kind. Thus duty is not a restriction on freedom, but only on freedom in the abstract, i.e. on unfreedom. Duty is the attainment of our essence, the winning of positive freedom. ~ Georg Hegel

However keen or disinterested Hegel’s appreciation of diplomacy may have been, he considered the savagery of war rational.

If states disagree and their particular wills cannot be harmonized, the matter can only be settled by war. War is not to be regarded as an absolute evil or something which ought not to be. ~ Georg Hegel

It is hard to imagine how anyone with a lick of sense took Hegel seriously, as his abounding abstractions were mired in fantasy; but appealing ideas have a way of solidifying in men’s minds to give them a vitality entirely underserved. As such, Hegel was quite influential, particularly his dialectic method of argumentation, whereby concepts negate themselves via internal contradictions: as if logical dissonance acts to torture out the truth. Marx applied Hegel’s dialectic to social and economic processes.

Hegel’s unshakable but paradoxical faith in human rationality resonated with later thinkers who sought to hope that societies could be logically structured for the benefit of all. Hegel planted the seeds that sprouted Marxist socialism, and which later took actual form in totalitarian communism, which was actually nothing more than naked tyranny in socialist garb.