The Wall Street Journal Resurrects Mandeville

Power house mechanic working on steam pump, 1920 © Lewis Hine | The Work Progress Administration

Although not often read today, the early eighteenth-century Anglo Dutch philosopher Bernard Mandeville is sometimes cited as the intellectual godfather of capitalism. In his book Fable of the Bees (1714), he argued that markets should largely be left free from governmental interference, in order to produce the greatest aggregate wealth and maximal employment. Central among his arguments is his insistence that the wages of the working class be kept very low. 

This is because he assumes the vast majority of humanity is naturally lazy: “Man never exerts himself but when he is rous’d by his Desires,” such that when his needs are met he never achieves his “Excellence and Abilities,” but rather becomes a “lumpish Machine,” who can “be justly compar’d to a huge Wind-mill without a breath of Air.” 

For some, according to Mandeville, the inspiration to work can come from vanity—the desire to be recognized for one’s talents. But this is not the motive he understands to be most operative for the working class. For them, the primary motivation to work comes from their “bellies.” Because of their “extraordinary proclivity to Idleness, what reasons have we to think that they would ever work, unless they were oblig’d to it by immediate necessity?” As Mandeville asks, “why should we imagine he would go to it at all, if he had fifteen or twenty pounds in his Pocket?” 

Thus, it is the civic duty of employers, on this logic, to pay low wages, such that the laborer must return to the job again tomorrow and every day thereafter: “The only thing then that can render the laboring Man industrious, is a moderate quantity of Money; for as too little will, according as his Temper is, either dispirit or make him Desperate, so too much will make him Insolent and Lazy.” In other words, employers should pay workers just enough so that they don’t start a revolution, but no more.

At the time, Mandeville’s arguments were perceived as profoundly immoral and anti-Christian.  Indeed, his early critics took his name, Man devil(le), as evidence that he was the Antichrist. Adam Smith described him as “almost wholly pernicious,” and his doctrines “in almost every respect erroneous.” Karl Marx, by contrast, described him as “an honest man with a clear mind”—because he was the one capitalist who spoke honestly about the real implications of capitalism—that it must, by definition, impose poverty on the vast majority of workers.

Of course, as capitalism evolved in the twentieth century and economic crises pushed workers to the brink of “dispirit” or “desperation,” the United States and many other Western economies decided that it was wise to reduce economic inequality, effectively transferring wealth from their richest citizens to the poorest. Economists have come to call this the “Great Compression,” in which inequality was radically reduced and the working and middle classes came to thrive. Some of this was achieved by increased unionization. But much of this was also fostered by the social programs of the Roosevelt and Johnson Administrations, such as Medicare, Medicaid, Social Security, and the like. The immediate effect was initially to reduce poverty and inequality.  

While many of these programs are still in place, inequality in America has continued to grow, as the wealthiest Americans have seen their fortunes skyrocket since 1980. As an example, in 1965 the average CEO earned 21.1 times as much as a typical worker at the same company. By 1978 that number grew to 31.4 times; by 1989 it was 61.4 times. The average CEO as of 2021 earned 351.1 times as much as a typical worker at the same company. Per a recent study by the Department of Economics at U.C. Berkeley, while the wealth of the poorest 50 percent of Americans have seen their wealth grow an average of $12,000 per household since 1976—scarcely enough to cover a single major medical crisis, much less a single year of college tuition—those occupying the top 10 percent have seen their wealth grow by nearly $3 million. Those in the top one percent have seen their wealth grow by $16 million. Those in the top 0.1 precent have seen theirs grow by $85 million. And those occupying the top 0.01 percent have seen their net wealth grow by $440 million per household. 

Yet according to a recent Wall Street Journal op-ed by Phil Gramm and John Early—a former chairman of the Senate Banking Committee and a former assistant commissioner at the Bureau of Labor Statistics, both now affiliated with the American Enterprise Institute (AEI)—the problem is not that the wealthiest Americans have seen their fortunes dramatically explode. It is rather that the poorest Americans have too much! There is an “extraordinary equality of income among the bottom 60 percent of American households,” they write, which has robbed the poor of the incentive to work or, at least, work very hard. By providing a safety net to the poorest Americans, the U.S. government has created, in Mandeville’s words, “lumpish Machines,” who can “be justly compar’d to a huge Wind-mill without a breath of Air.” If only workers had the threat of genuine, desperate poverty, one can assume from Gramm and Early’s arguments they would become the industrious workers our market economy requires.  

It’s important that while Gramm and Early’s argument is putatively about equality and inequality,they say nothing about the wealthiest American households I have referenced above. Gramm and Early want to increase the degree of inequality in America by increasing the degree of poverty—making our historic present inequality even greater by nudging down the lowest rungs of the economic ladder. Their goal of creating incentives for those presently in the safety net could easily be achieved with the carrot of doing something about wage stagnation for the working classes—with money that can already be found in the presently record-high profits of many corporations.  

Gramm and Early have instead chosen the Mandevillian stick—threatening the poorest Americans with the removal of housing, healthcare, and food.

David Lay Williams is Professor of Political Science at DePaul University and author of a forthcoming book on economic inequality in Western political thought.