1. Introduction
The theory of consumer choice represents market actors as Homo economicus: each agent has a rational preference ordering and prefers to have more commodities or at least not to have fewer (Hausman et al. Reference Hausman, McPherson and Satz2017: 70). And since it is not economists’ place to evaluate people’s preference ordering, there is nothing more to be said about someone’s best interests than could be observed through their choices in an ideal market.
Although he is associated with this tradition, Adam Smith develops a much more sophisticated and realistic moral psychology. Smith recognises that happiness practically and theoretically diverges from the wealth of nations and individuals and that our natural drive to ‘truck, barter, and exchange’ might not be congruent with the motive of self-love (Smith Reference Smith, Campbell, Skinner and Todd1981 [1776]: I.ii.1; Reference Smith, Raphael and Macfie1984 [1759]: IV.i.3). This fact opens up a prudential and moral question about markets that the theory of consumer choice obscures: Is it good for people to get what they want?
Smith worried that the answer might be ‘no’. This worry – which spurred several extended reflections in both Wealth of Nations and Theory of Moral Sentiments – has spawned an ongoing debate about whether commercial society makes its denizens better off and whether Smith’s arguments make a good case for this.Footnote 1
There are plenty of objections, originating outside of and later than Smith, to how capitalism treats those who lose out in competition or in the historical transition to private ownership of the means of production, how it stacks the deck against them and so on. But the particular objection I want to address here is Smith’s own worry that commercial society is bad even or particularly for those who count among the winners: that it is bad for us to want goods and status and to get what we want. At the extreme, this could suggest that we would be better off without commercial society at all. But although it is harder than is typically realised for a Smithian to refute this global objection, the more modest and compelling implication is that lives spent in pursuit of positional goods are to that extent wasted lives. Positional goods are those whose benefit to us lies partly in the distinction or status they give us; hence their pursuit is a zero-sum game. A society most of whose economic output was dedicated to producing positional goods would be one that is in that respect profoundly failing its members: a rat race. If Smith’s worries here are correct – that is, if economic growth depends on our self-destructive pursuit of positional goods – then individuals face a tragic dilemma between sacrificing ourselves to the rat race in the interests of material opulence, and extricating ourselves only to free-ride on others. And social planners face two associated tragic dilemmas: i) relying on their denizens’ self-destructive behaviour in order to spur economic growth, or forswearing such growth; and ii) enabling those who escape to free-ride on contributors, or penalising free-ridership in order to prod nonconformists back onto a self-destructive treadmill. Latter-day Smith scholars have taken a renewed interest in this objection and its implications (Fleischacker Reference Fleischacker2004; Griswold Reference Griswold1999; Hanley Reference Hanley2009; Hill Reference Hill2017; Rasmussen Reference Rasmussen2006, Reference Rasmussen2008; Sagar Reference Sagar2022, Reference Sagar2023a). Contrary to what these scholars argue, however, I shall find that Smith’s tragic dilemmas remain unresolved.
2. Isolating the critique of ambition and consumption
Smith’s critiques of commercial society may be divided into two categories. The most famous ones are about the inefficiency of actually existing markets. Such inefficiencies include the ‘conspiracy against the publick’ through which the merchants secure their own interests over those of workers and landowners (Smith Reference Smith, Campbell, Skinner and Todd1981 [1776]: I.x); slavery, coerced apprenticeship and restrictions on the free movement of labour (Smith Reference Smith, Campbell, Skinner and Todd1981 [1776]: III.ii.9; and I.x); and mercantilist imperialism (Smith Reference Smith, Campbell, Skinner and Todd1981 [1776]: IV.i). These critiques of commercial society as it existed in Smith’s time argue that significant gains from trade are left on the table as governments or cartels block or coerce exchanges and otherwise abuse their power. Consequently, although a rising tide lifts all boats, they’re not getting as high as they might. Some such inefficiencies are inevitable, but for the rest, Smith’s solutions are broadly liberal: balance budgets, allow free movement and exchange, beat back cronyism and periodically rebalance the scales in favour of workers.Footnote 2
The critiques that concern me here, however, have to do not with inefficiency but with counterproductivity. In his allegory of the ‘poor man’s son whom heaven in its anger has visited with ambition’ (Reference Smith, Raphael and Macfie1984 [1759]: IV.i.9) and again in his diagnosis of the mental and physical ‘torpor’ of workers under a fine-grained division of labour (Reference Smith, Campbell, Skinner and Todd1981 [1776]: V.i.f.50), Smith worries that commercial society as such is bad for us. And because commerce itself causes these problems, further liberalisation does not solve but exacerbates them. Consequently, these challenges suggest that the whole enterprise is counterproductive. Rather than lift all boats, the tide crashes over them. Smith’s counterproductivity critiques thus raise a deeper challenge for commercial society than do his inefficiency critiques.
There are two counterproductivity critiques. In response to the ‘torpor’ problem, Smith proposes public schooling and some other minor tweaks to stimulate the minds of the common people (Reference Smith, Campbell, Skinner and Todd1981 [1776]: V.i.f.52–7). Whether these proposals are adequate is another question, which I cannot address here. My concern in the current article is what I shall call the problem of ambition and consumption. It is not that market activity makes the poor man’s son suboptimally happy, but that he ‘foolishly sacrifice[s]’ a happiness that he already had or could have had for an always-receding mirage of happiness ahead. Whatever conveniences a person might attain through ambition and consumption
keep off the summer shower, not the winter storm, but leave him always as much, and sometimes more exposed than before, to anxiety, to fear, and to sorrow; to diseases, to danger, and to death. (Smith Reference Smith, Raphael and Macfie1984 [1759]: IV.1.10)
Smith’s picture here is of someone who, thinking that material goods and social advancement will buy happiness, hops onto a treadmill of striving and consuming that diverts him from the happiness he seeks. In moments of spleen and illness, he sees and is appalled by the real worthlessness of material goods and social status, until in old age he correctly concludes that his life was wasted (Smith Reference Smith, Raphael and Macfie1984 [1759]: IV.1.9).
Given that we live in commercial society, Smith proposes, we would be better off abjuring ambition and consumption altogether.
In what constitutes the real happiness of human life, [the poor] are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for. (Smith Reference Smith, Raphael and Macfie1984 [1759]: IV.1.10)
Put succinctly, the problem of ambition and consumption is twofold: first, people systematically make choices to pursue material goods and status which they believe to be in their best interests but which are in fact not.Footnote 3 These choices are driven by their own misjudgment of what will make them and others happy. That is bad enough on its own, but the second part is that commercial society depends on their being and continuing to be systematically self-deceived in this way.
As we shall see, some interpreters chalk this self-deception up to vanity, others to an attraction to utilitarian mechanisms. Either way, though, most think Smith resolved this problem somehow or other (Griswold 1998; Hanley Reference Hanley2009; Hill Reference Hill2017; Rasmussen Reference Rasmussen2006, Reference Rasmussen2008; Sagar Reference Sagar2022). But I will argue that standard interpretations of Smith and defences of commercial society do not put the critique to rest. My aim in the current paper is to revisit this Smithian critique of the wages of commerce and to show that these interpreters of Smith have in fact not satisfactorily answered him. Although each response commits its own unique errors, a pattern emerges: they undersell the critique by individualising the problem but oversell the solution by collectivising the cure. That is, they blame individuals for our predicament and then expect us to be satisfied with solutions that improve the average. This move is normatively illiberal. A more humane response would be the reverse: to see the problem as structural and solve it through strategies that achieve individuals’ well-being. Through this inversion, these authors lose the humanitarianism that is a hallmark of Smith’s moral worldview. The result is that their vindications of commercial society fail; hence, Smith’s counterproductivity critique stands.
One might doubt whether this negative thesis makes a new contribution or what value interpreting Smith has for political philosophy today. Critiques of capitalism, in particular, can seem like old news, and anyone who challenges Smith’s ‘commercial society’ by reference to any feature of ‘actually existing capitalism’ obviously risks anachronism. In response, I hope it may not be too pointed to observe that the authors I’ll be discussing here think the most accurate interpretation of Smith would be one that showed him (1) to ultimately endorse commercial society, (2) for good reasons, (3) which are also relevant to our own assessment of commercial society today. Hence Dennis Rasmussen justifies his own project – namely, taking seriously (what I’ve called) the critique of ambition and consumption and overcoming it by showing that the best interpretation of Smith vindicates commercial society – by referring to Smith as ‘one of history’s foremost proponents of our own way of life’. Footnote 4 A similar motivation can surely be ascribed to Hanley, Fleischacker, Hill and others. So it would be odd now to suddenly turn around and deny that Smith’s concerns about ‘commercial society’ have any bearing on how we should understand our own institutions and predicament. In my own view, the most successful interpretation of Smith would not be one that insisted upon his embrace of ‘commercial society’, but rather, would be one that maintained his fundamental humaneness and liberalism. My arguments will show that his apparent endorsement of commercial society is in tension with that basic moral outlook and that he himself offers a powerful statement of this deep tension, so more credence should be given to that powerful statement and its implications than typically is. For this reason, my argument here will necessarily have to move back and forth between features of commercial society as we know it and the interpretation of Smith.
Although Smith sees the gap between opulence and happiness, he and most interpreters think his own arguments have the resources to bridge it and hence to reconcile the defence of commercial society with the counterproductivity critique that he articulates. I disagree; the reconciliation, I shall argue, fails. But the lessons of the current analysis go beyond this negative result, because in the process I discern a common error that besets these reconciliations, namely, the aforementioned illiberal inversion of individual and collective. Further, in the conclusion I shall suggest that Smithian defences of our contemporary commercial societies often confuse a (highly plausible) prudential judgement for a (deeply dubious) moral one. That is, they are asking whether we are better off now than we would otherwise be, rather than whether what was chosen at each stage was choiceworthy at that stage. In other words, a Whiggish retrospective comparison subtly replaces an appropriate attention to consequences in the moral assessment of institutions. The paper thus concludes with a call to avoid this subtle but momentous slippage. So in addition to advancing our understanding of a particular problem raised by Smith, the paper contains at least two important lessons for contemporary normative political philosophy.
3. Be careful what you wish for
In its account of moral development, Theory of Moral Sentiments envisions a broadly congenial social context for virtue: goodness tends to be rewarded, and virtuous agency tends to promote a convergence of individual and collective happiness. But Section 4 of that work – Smith’s most careful investigation of the moral psychology of utility – raises serious doubts about that congeniality, specifically through the allegories of the poor man’s son and the greedy landowner. The poor man’s son ‘sacrifices a real tranquillity that is at all times in his power’ in hopes of achieving the condition of the rich. Yet, if he ever achieves it, he will find it
in no respect preferable to that humble security and contentment which he had abandoned for it. It is then, in the last dregs of his life, … that he begins at last to find that wealth and greatness are mere trinkets of frivolous utility, no more adapted for procuring ease of body or tranquillity of mind than the tweezer-cases of the lover of toys. (Smith Reference Smith, Raphael and Macfie1984 [1759]: IV.1.8)
Though Smith’s example of the rich landowner whose ‘eye is larger than [his] belly’ rhetorically inverts that of the poor man’s son, it comes to the same thing. Desiring to engross more and more for himself, the landowner pays labourers to cultivate his land, tend his livestock, process his crops and so on. We can imagine the poor man’s son trying to schmooze the greedy landowner while he is being ‘led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions’ (Smith Reference Smith, Raphael and Macfie1984 [1759]: IV.1.10).
Each of these agents is mistaken about what will make him happy, and though this mistake materially enriches others and himself, it does so by sacrificing his own happiness. As Rasmussen (Reference Rasmussen2006: 311) notes, although ‘neither the pursuit nor the attainment of wealth brings true happiness’, Smith regards us as virtually doomed to ‘struggle mightily for wealth in any case’. Late in life we come to recognise the real disutility derived from ‘forever pound[ing] away, foolishly thinking that one day we will reach the end goal of satiated contentment, as achieved via more and more consumer goods’ (Sagar Reference Sagar2022: 179). These allegories, then, raise a serious challenge for the entire normative structure of the theory. They paint a picture of a society that is uncongenial to individual well-being, where we manufacture opulence at our own real expense. This is the problem of ambition and consumption.
So it is surprising that, only moments after presenting this disturbing challenge, Smith (Reference Smith, Raphael and Macfie1984 [1759]: IV.1.10) waives it, opining brightly, ‘And it is well that nature imposes upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind’. This sunny response is incongruous. Smith has just told us that the necessary condition of ‘public happiness’ (Griswold Reference Griswold1999: 225) is the self-deceptive and self-destructive ambition and greed of individuals who fail to make themselves happier despite temporarily fooling themselves into thinking that luxury is success. How could it be well that nature imposes on us in this manner?
The obvious response is that growth is good for us and being imposed upon in this manner is necessary for growth. But this answer requires more careful inspection to determine whether
-
(i) economic growth really is good for the denizens of commercial societies,
and whether
-
(ii) such growth causally depends on at least some people’s pursuing a self-defeating life of self-deception.
If we could have growth without all this pounding away, then the pounding away is pointless (or done to excess). And if economic growth isn’t even good for us, then all the pounding away is self-destructive both in process and in outcome. But if both are true – some or all people’s self-destructive self-deception is necessary for growth, and growth is good – this conjunction raises question
-
(iii) how do we commensurate the costs and benefits of growth?
As David Schmidtz (Reference Schmidtz2023) argues, doing such a cost-benefit analysis would be a way of showing that it matters to us whether our theory is true.
Smith’s allegories seem to affirm both (i) and (ii), accentuating the incongruity of his failure to address (iii). Some interpreters argue, however, that he did not ultimately believe (ii). In what follows I will first engage with these interpreters; finding their arguments unsuccessful, I then look at those who confront Smith’s acceptance of both (i) and (ii), but who believe commercial society can be vindicated even so, on consequentialist or negative consequentialist grounds. Throughout the paper I shall have one eye on normative theory rather than merely on the interpretive questions, but it will be engaging with these consequentialist arguments that brings the paper most directly into contemporary relevance. For, the failure of these vindications raises doubts also about (i). The best arguments, that is, show that Smith accepted (i) and (ii), but that both he and his latter-day interpreters have either glossed over (ii) or not successfully answered (iii).
4. Opulence without ambition?
Perhaps Smith’s cheerful dismissal of our counterproductive ambition and greed is justified because we are able to overcome these traits or keep their effects at bay? If so, those who fail to keep them at bay are outliers or vicious or both. In different ways, Ryan Hanley (Reference Hanley2009) and Paul Sagar (Reference Sagar2022) have made this case, arguing that we can conquer the self-destructive drives of the poor man’s son through individual fortitude. Hanley’s Smith follows Rousseau in worrying that vanity drives commerce, which in turn stokes further vanity in a reinforcing feedback loop: ‘markets are driven by solicitude for praise and recognition, and [] such dependence on the esteem of others is also the source of the corruption of all our moral sentiments’ (Hanley Reference Hanley2008: 141; Reference Hanley2009: 38). Fortunately, ‘Smith’s remedy for the problems posed by vanity, or the love of praise, rests on the fact that this disposition is, by nature, educable’ (Hanley Reference Hanley2009: 104). Hanley’s Smith thus urges us to transcend the love of praise and even of praiseworthiness and pursue higher virtues that make us self-sufficient; he urges fathers to educate their sons to this virtue; and he argues for a prudence that ‘substitute[s] long-term for short-term self-interest’ (Hanley Reference Hanley2009: 119). Thus, for Hanley, the poor man’s son and greedy landowner passages are fables; they do not describe us as we are, but warn us how not to be.
Sagar’s Smith, by contrast, is unperturbed by Rousseau and less concerned about vanity; he finds the spark of commerce to lie in a ‘quirk of rationality’ (Sagar Reference Sagar2022: 133–34) that causes us to mistakenly value the means to happiness over happiness itself. Though he insists that Smith finds this quirk to be nearly universal, Sagar nonetheless thinks that most of us can resist the quirk and the desires it stokes. He thus dismisses the poor man’s son as an outlier – unable to ‘keep the deception in check’ the way most of us can (Sagar Reference Sagar2022: 179, 181; Reference Sagar2023 a: 154–55). Thus, although Sagar and Hanley differ on what causes our self-destructive behaviour, the two agree that individual fortitude – be it moral virtue or strength of will – solves the problem.
Whether these answers succeed depends on a counterfactual: what would happen if everyone overcame ambition and consumption? Sagar, for his part, does not even attempt this counterfactual. He accepts premise (ii) – that commercial society depends on treadmill behaviour – and recognises that this impugns (i) the general benefit of living in commercial society. His response is to posit an ability to get off the treadmill while still living in commercial society. But rather than solve the problem, Sagar has iterated it. Those with strength of will get the socio-economic benefits of commerce without its personal cost (Sagar Reference Sagar2023a: 150), but only by free-riding on the strivers who do pay that personal cost. And this is excused because the latter can be blamed for their weakness of will.
Hanley’s solution initially avoids iterating the problem in this way because, unlike Sagar, Hanley (and Hanley’s Smith) denies premise (ii) – that economic growth requires someone to be on the treadmill (Hanley Reference Hanley2009: 115). This response can be supported with two arguments which are developed by Samuel Fleischacker. First, Fleischacker argues that most demand in the economy is not rich or ambitious people’s luxury consumption but poor people’s consumption of necessities (Fleischacker Reference Fleischacker2004: 109, quoting Smith Reference Smith, Campbell, Skinner and Todd1981 [1776]: V.ii.k.43). This is because, although rich people consume much more per capita, there are so many more poor people that the latter’s spending – their frugal and prudent consumption of absolute rather than positional goods – constitutes the bulk of all consumption. Hence the counterproductivity critique misses the real weight of the economy. Second, invoking Smith’s claim that ‘Capitals are increased by parsimony and diminished by prodigality and misconduct’ (Reference Smith, Campbell, Skinner and Todd1981 [1776]: II.iii.14), Fleischacker argues that frugality rather than prodigality drives economic growth.
As the capital of an individual can be increased only by what he saves from his annual revenue or his annual gains, so the capital of a society … can be increased only in the same manner. (Smith Reference Smith, Campbell, Skinner and Todd1981 [1776]: II.iii.15)
Unfortunately, each step in Fleischacker’s argument includes a mistake. First, that poor people’s consumption constitutes the bulk of spending in any given year does not mean that it drives growth. It may be true in any given year or in every year of history so far that the majority of all consumption was poor people’s consumption of necessities; even so, since ‘the necessaries of life’ are roughly static,Footnote 5 economic growth would have to come from some combination of population growth and luxury consumption. Fleischacker’s point could be that perpetual growth is driven by the basic consumption of an inexorably growing population, the large majority of which is permanently poor.Footnote 6 This is mathematically possible. But apart from being a deeply unattractive (if not in fact ‘repugnant’) prospect, growth driven solely by natural increase would not generate the increasing well-being and freedom that commercial society seemed to promise.
Fleischacker’s other claim is that frugality drives economic growth. His explanation here commits the compositional fallacy. Smith does think that frugality profits individuals relative to other individuals and particular countries relative to other countries. But frugality cannot by itself drive economic growth. Frugal people do not pull money out of the market; they invest it. Such investments can build capital only if they spur economic activity, i.e., consumption by others. In Smith’s words:
What is annually saved is as regularly consumed as what is annually spent, and nearly in the same time too; but it is consumed by a different set of people…. The consumption is the same, but the consumers are different. (Reference Smith, Campbell, Skinner and Todd1981 [1776]: II.iii.18)
A frugal person or country can invest and earn some of the proceeds of economic enterprise; a prodigal gives this opportunity to other people or other countries. But either way, the money ‘will not be allowed to lie idle. The interest of whoever possesses it, requires that it should be employed’ (Smith Reference Smith, Campbell, Skinner and Todd1981 [1776]: II.iii.23). To get the result that Fleischacker wants would require not frugality but removing a portion of one’s labour or capital from the system altogether. But notwithstanding any other benefits of such idleness, what it cannot do is spur growth.
In short, frugality and prodigality are not about whether people are on treadmills; they are about who is on a treadmill. Combined with the counterproductivity critique of TMS IV, Smith’s discussion of frugality might in fact ground a moral critique of investors who make money by building treadmills and luring us onto them. If we could not be so lured, then investors’ frugality could not build capital. I conclude that the frugality defence is unsuccessful; we do not have a Smithian account of economic growth on which the harms of self-destructive ambition and greed are causally inert.
That frugality cannot drive economic growth shows that Hanley’s solution, like Sagar’s, walks right back into the problem it was trying to solve. Economic growth requires someone to be on the treadmill, so individual escape is no solution. In the process, both authors individualise a structural phenomenon, in effect blaming the poor man’s son for hopping on the treadmill and then using his putative blameworthiness – be it prudential or moral – to justify exploiting him. But since economic growth requires someone or other to be on the treadmill, this individualisation of the problem is illiberal and inhumane.
5. Consequentialisms
Although participation in commercial society is bad for us in some ways, however, it may yet be optimal on balance. Indeed, the preponderance of the relevant Smith scholarship holds that this is Smith’s view and is also true, and hence the challenge is to reconcile it with Smith’s account of happiness (Griswold Reference Griswold1999; Fleischacker Reference Fleischacker2004; Rasmussen Reference Rasmussen2006, Reference Rasmussen2008; Hill Reference Hill2017). The current section considers the prospects for this approach by canvassing what I take to be the most compelling consequentialist vindication, namely, Dennis Rasmussen’s negative consequentialism. I begin, however, by looking at two other consequentialist proposals that require us to accept individual unhappiness in exchange for the great goods that commerce generates for everyone. These proposals, due to Charles Griswold (Reference Griswold1999) and Lisa Hill (Reference Hill2017), usefully clarify what is at stake as we consider Rasmussen.
5.1. Ersatz and merely public happiness
Charles Griswold (Reference Griswold1999: 225) suggests that Smith’s juxtaposition of the unhappiness of the poor man’s son with the social progress spurred by such self-destructive ambition is an instance of Smithian ‘comic irony’: private unhappiness causes ‘public happiness’. Rasmussen rightly retorts, however, that ‘Smith explicitly argues against the notion of a ‘public happiness’ that is separate from – indeed opposed to – the happiness of each individual’ (Rasmussen 2006: 312, Reference Rasmussen2008: 133–34). I want to emphasise Rasmussen’s point that, for Smith, the happiness of society is the happiness, not of the whole, but of each and especially of the working-class majority. If the only good we gained from all this pounding away were a ‘public’ happiness purchased at the cost of the individuals whose labour realises it, commercial society would be vampiric. Crucially, we are trying to vindicate, not the life of Smith’s comfortable beggar, but the life of the worker and consumer whose labour and purchases seem self-destructive.
Another kind of reply is possible, however, which may evade the vampirism to which Griswold’s labourer resigns himself. Lisa Hill (Reference Hill2017) denies that public happiness is opposed to individual happiness; rather, what is available to individual strivers is an ‘ersatz or second-rate happiness that is the mainstay and very engine of commercial societies’ (Hill Reference Hill2017: 16). For Hill, Smith embraces developing calm virtue as the route to true eudaimonic happiness, but at the same time insists not only that many others will inevitably choose the life of ambition and consumption, but that it is good that they do so, for commercial society depends on it.Footnote 7 What this divergence captures, Hill argues, is Smith’s own ambivalence between two perspectives on society: ‘the moralist in Smith’ and ‘the social scientist who appears to win the day’ (Hill Reference Hill2017: 18). When wearing his social scientist hat, Hill’s Smith is observing that the ‘decrees of “Nature”’ guide most of us, most of the time, ‘to admire prosperity and despise the failures of the poor’ (Hill Reference Hill2017: 19). And in this mode, Smith embraces a teleological conception on which the decrees of Nature provide ‘ends [that] justify the means’ (Hill Reference Hill2017: 19). The key is that ersatz happiness – ‘second-rate, social system happiness’ – ‘makes a society strong and prosperous (system-utility)’ (Hill Reference Hill2017: 22) and is good enough for the average person.
There are two problems with Hill’s resolution. First, ‘ersatz happiness’ is not happiness but a noble lie. At best, the solution could work if the noble lie were never unmasked, but Smith emphasises that in moments of spleen and again in old age we do unmask it, and we end our lives accurately feeling them to have been wasted in pursuit of ‘trinkets of frivolous utility’. Second, Hill is drawing a contrast quite different from Smith’s. She distinguishes the moralist’s eudaimonic happiness from the social scientist’s ersatz happiness of ‘individual wealth accumulation, sympathy attraction and conspicuous consumption’ (Reference Hill2017: 22). But what Smith is worried about in TMS IV.i and again in WN V.i.f – where he is raising and attempting to allay the counterproductivity critiques – is not the contrast between a demotic consumption-happiness and a hieratic eudaimonia, but the contrast between being caught on the treadmill, on one hand, and a genuine happiness that is also demotic. This real happiness he characterises in many ways: in health, out of debt, clear conscience (Reference Smith, Raphael and Macfie1984 [1759]: I.iii.1.7); the consciousness of being beloved (Reference Smith, Raphael and Macfie1984 [1759]: I.iii.5.1); ease of body, peace of mind, security (Reference Smith, Raphael and Macfie1984 [1759]: IV.i.10); and being capable ‘of relishing or bearing a part in any rational conversation,… conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning … the ordinary duties of private life’. (Reference Smith, Campbell, Skinner and Todd1981 [1776]: V.i.f.50). These are not available only to eudaimonic philosophers, these are or ought to be available to all. But these are what Hill’s ersatz happiness forswears. Thus, like Hanley’s and Sagar’s, Griswold’s and Hill’s resolutions end up being illiberal and inhumane.
5.2. Rasmussen’s vindication
To be clear, Hill does not take Smith to be recommending ersatz happiness on its own merits, but only as a response to a forced choice between the treadmill and starvation. We need to know, then, whether this choice is indeed forced upon us. Dennis Rasmussen seems to think it is not; instead, he purports to resolve this problem by showing how growth is overall good for us, even for the treadmill runners, and hence Smith is right to celebrate ‘this deception’.
Rasmussen’s vindication of commercial society relies on a distinctive aspect of Smith’s theory of sympathy, namely, the asymmetry of positive and negative experience. Smith does not think that our baseline level of well-being is neutral; rather, for most people, the ‘natural’ level of well-being is quite close to the upper limit of human happiness (Reference Smith, Raphael and Macfie1984 [1759]: I.ii.4.1). Consequently, there is only so much higher that positive experiences can take us and only so long that such experiences can last before we revert to the baseline. This is one reason for the eventual spleen of the poor man’s son: all that toil and obsequiousness, and his abiding level of happiness barely budges from about a 7 out of 10. Negative emotions, by contrast, are more ‘pungent’ because there is so much farther down to go from the baseline, and we can be stuck there chronically or for extended periods (Rasmussen Reference Rasmussen2006: 314, citing Smith Reference Smith, Raphael and Macfie1984 [1759]: I.iii.1.8). Hence a small move up – I win $50 in the weekly poker game, say – makes more instantaneous subjective difference than an objectively equivalent move down (I lose $50); but for total impact on human well-being, even the greatest benefit can only raise me 3 notches, whereas larger harms might drop me all the way from 7 to 0. Worse, we tend to revert to the mean faster after benefits than after harms. Wedded bliss may give way to abiding happiness: our honeymoon takes us from 7 to 10, but soon enough we revert to 8 as daily life takes over. By contrast, an injury that produces chronic pain requiring extended therapy or job loss and experiencing housing insecurity might drop us from 7 to 2 for an extended period and make us vulnerable to additional insults.
For Rasmussen, this asymmetry helps to resolve the counterproductivity critique, for it entails that social policy should aim at promoting happiness not by producing positive benefits, but by preventing misery and reducing suffering: raising our floor, not trampolining us toward the ceiling. Thus the crucial question for social planners is what are ‘the key prerequisites for avoiding misery’; and Rasmussen thinks we know the answer, namely, ‘liberty and security’, that is, ‘a sense of relative safety and freedom from direct dependence on another individual’ (Rasmussen Reference Rasmussen2008: 139–40). Fortuitously, these are the signature achievements of commercial society. This is in stark contrast with pre-commercial societies, ‘hunting societies’ and ‘savage nations’ (Rasmussen Reference Rasmussen2008: 141, citing Smith Reference Smith, Campbell, Skinner and Todd1981 [1776]: intro.4 and Reference Smith, Raphael and Macfie1984 [1759]: V.2.15). There, certain episodic pleasures might be greater, but exposure to hunger and want are common plights, and virtually everyone is prey to the whims of ‘chiefs and lords’ and the plenipotent patriarch of every family (Rasmussen Reference Rasmussen2008: 142). Commerce, however, breaks down feudal dependencies and spurs the establishment of ‘regular government’, thereby ‘provid[ing] liberty and security’ for virtually everyone. Free enterprise emancipates more and more people worldwide from want and arbitrary power. He concludes:
people’s mistaken view of happiness, which leads them to try to find satisfaction in material goods and in the fulfillment of their vanity, does in fact tend to promote their happiness, albeit for very different reasons than they expect. While people will find little true happiness in material goods themselves, their tendency to strive for these goods plays a crucial role in paving the way toward liberty and security and thereby removing the great obstacles to happiness that had so dominated pre-commercial societies. (Rasmussen Reference Rasmussen2008: 150, emphasis in original)
Rasmussen admits that commercial society brings perpetual disappointment; we work hard and delay gratification in order to purchase things we think will make us happy, but which inevitably don’t. We suffer serial and perpetual buyer’s remorse. Taken together, however, the consumption behaviour of a large number of perennially disappointed individuals spurs the economic growth that drives security, independence and good government, which are what actually make us happy. Our perpetual struggle fails to take us from 7 to 10, but our efforts, taken in the aggregate, systematically reduce the severity and frequency of drops below 7.
5.3. The compositional fallacy
Negative consequentialism depends on the truth of a causal claim, namely, that the aggregate effect of all of our commercial labour is to reduce misery. Let us grant this causal claim for a moment. But while it is plausible that people’s ‘try[ing] to find satisfaction in material goods… tend[s] to promote their happiness’, it does not follow that any individual’s efforts tend to promote that individual’s happiness. To make this inference is to commit a fallacy of composition. Put otherwise: Rasmussen avoids the vampirism of Griswold’s resolution and the ersatzism of Hill’s, for the real happiness gained by each is indeed their own. But Rasmussen has still severed the link between each person’s actions and that person’s own happiness. Given that enough others are consuming, the impact of my actions is to erode my happiness. I would be better off if I lived in commercial society without participating. Rasmussen’s Smith, however, tells us to keep pounding away against our own best interests.
Rasmussen’s resolution needs to show that an economy built on consumption and ambition benefits those who participate. Even if we grant his causal thesis and the negative consequentialism that recommends commercial society in light of it, Rasmussen’s resolution cannot secure this conclusion; provided enough others stay on the treadmill, there are no bads that we succumb to if we step off. Put otherwise: we started from the paradox that the beggar sunning himself by the side of the highway is the happiest member of a commercial society; Rasmussen’s challenge was to reconcile us with being on the treadmill in that society. But now it seems we are back to square one, because Rasmussen has vindicated the life of the beggar as opposed to the life of the ambitious worker and consumer.
It may be objected that Smith’s claim about the beggar in commercial society – that he is happier and more secure than the king – is causally and psychologically implausible. I can grant that we should not take Smith’s statement literally. The nub of the point, however, is that participation is a rat race, and just to the extent that we can extricate ourselves from that rat race while still benefiting from the public goods produced by others’ participation, we are better-off doing so. If I go thrifting for clothes and housewares, drive a used car and buy store-brand groceries, I benefit from others’ self-destructive drive for the newest thing. I could then work only enough to secure a modest but sufficient income, say, as a tutor for standardised tests, benefiting from the fact that others are trapped on the accelerating treadmill that is elite college or professional school admissions.Footnote 8 If at the same time we accept that the self-destructive treadmill behaviour is indeed what ‘rouses and keeps in continual motion the industry of mankind’, then the problem maintains its force even if the story about the beggar is nonliteral. We abolish misery only because most people are on the treadmill; yet given that collective achievement, I can grasp personal utility only because I am not and because I exploit others’ treadmill behaviour.
Rasmussen’s causal thesis about raising the floor does not, then, secure the negative-consequentialist conclusion. For even granting that our presence in commercial society benefits us, it does not follow that we have prudential reason to participate in it. And it is participation that needs to be defended if it is to be ‘well that nature imposes upon us in this manner’.
5.4. The causal claim
The foregoing granted Rasmussen’s causal thesis that commercial society frees its denizens from personal dependence and insecurity. But it is not clear that we should grant this. And throwing this into question also returns us to Hill’s forced choice. Are we really forced to choose between starvation, personal dependence and insecurity, on the one hand, and ersatz happiness, on the other?
Attempting to fully answer this question would mire us in perennial debates about ideal vs. actual societies and about whether various good or bad outcomes should be attributed to markets or states and so on. We can, however, say two helpful things here. First, any attempt to validate the causal thesis would put pressure on Rasmussen’s linkage between ‘commercial society’ and ‘our own way of life’, and hence, on both the baseline of comparison and the individuation of vague terms like ‘commercial society’ and ‘our way of life’. These terms are simply not well enough specified, in Rasmussen or in the relevant Smith literature, to justify an affirmation of the causal thesis. Second, whatever else might have been the case in an alternative timeline, and wherever causal responsibility for defects lies, Rasmussen’s assertion about freedom from dependence and want does not describe this commercial society. Arne Kalleberg (Reference Kalleberg2011, Reference Kalleberg2018) and Elizabeth Anderson (Reference Anderson2017), among others, have recently catalogued the ways the lives of many if not most workers, even in the wealthiest countries, are shot through with direct dependence, precarity and want. This is to say nothing of the tens of millions working in debt bondage as modern slaves (Bales Reference Bales2016; Fraser Reference Fraser2018: 35–6) and the working poor worldwide (Deveaux Reference Deveaux2021). So whatever might or might not be the case in the ideal and to whatever extent government rather than the market or something else is responsible, the fact is, the commercial society we have, ‘our own way of life’, is characterised by significant quantities of insecurity and dependence.
With these caveats we can leave aside Rasmussen’s first conjunct – that commercial society does elevate people out of insecurity and direct dependence – and focus on his second, namely, that insecurity, want and direct dependence are typical of noncommercial societies. For if that is true, then at least commercial society comes out no worse than its alternatives.Footnote 9
Rasmussen portrays the denizens of non-commercial societies as dependent, insecure and vulnerable to sheer want. Although Smith is less compromised than most of his contemporaries by racism or approbation for colonialism and the slave trade, the fact is, such generalisations wrongly assume that there is only one way that non-commercial societies are or were arranged. There may indeed be very many societies that are characterised by dependence and want, but even so, there might be many others that are not so characterised.Footnote 10 To say the least, Rasmussen’s generalisation is Whiggish.
Further, by Smith’s time, as Smith himself recognises, Europeans had already attacked, enslaved, trafficked, sickened and murdered millions of Indigenous peoples of the western and southern hemispheres, causing a catastrophic breakdown of extant social and political orders while undermining these societies’ resource bases, subverting their economies and grabbing their best land. These processes continue today, changed but not overthrown (Fraser Reference Fraser2018; Táíwò Reference Táíwò2021). Though Smith thought monopolistic Mercantilism was a stiff headwind against the growth that free international trade could have made possible, he did not deny that Mercantilism had massively enriched parts of Europe. By contrast, non-European societies had been critically undermined in their capacity to provide the very security, liberty and independence that Rasmussen’s Smith rightly sees as crucial to baseline happiness, and the material wealth of these societies was being systematically carried off to Europe. That a comparison between perpetrator and victim would find the perpetrators prosperous and their victims unhappy is hardly surprising. But the fatal methodological error is that such liberty and security as European and Euro-descended societies do realise seem to have been achieved in part by producing the opposite elsewhere. Even if commercial society brings liberty and security to its denizens, that cannot count in its favour if it does so by bringing enslavement, insecurity, dependence and death to others. Consequentialism is compatible with trading off some against others, but, to say the least, the case has to be made: the math has to be done. Neither Smith nor Rasmussen does it.
Rasmussen might respond that defenders of markets have in fact done the math and made the case. After all, the consequentialist defence of the market is the most familiar justification of capitalism. Proponents point to massive improvements in incomes over centuries; whereas ‘Ten thousand years ago, everyone everywhere was poor’ (Brennan Reference Brennan2012: 107), today, by some measures, less than 10 percent of world population is so (Hasell et al. Reference Hasell, Roser, Ortiz-Ospina and Arriagada2022).
Many such responses erroneously conflate income and happiness in just the way that Smith and Rasmussen reject. But even versions of this defence which appeal to more informative outcomes, such as human capabilities (e.g. Cudd in Cudd and Holmstrom Reference Cudd and Holmstrom2011), beg the question because they do not parse out the effects of commercial society or ‘capitalism’ (however they define it) from those of imperialism and neo-colonialism, the global slave economy and civilisation-threatening environmental degradation. We do not know whether (or to what extent) the market has increased total well-being or merely redistributed it – from colonised to colonisers and from future to present. So the consequentialist case for commercial society is methodologically dubious.Footnote 11 I shall return to this point in the conclusion.
My point is not that if we did all the calculations, some other system would come out ahead; in fact, one could accept everything I’ve said and yet conclude that, all things considered, commercial society is the best we can do. My point is that this case has not been made as our interlocutors believe, and an impartial analysis – even a consequentialist one, provided that it counted the lives and aspirations of the dead for anything at all – would not dispose of these problems by looking only at one side of the balance sheet.
It seems to follow that Smith’s chipper response to his own deep critique – ‘it is well that nature imposes upon us in this manner’ – is unfounded. To the contrary, the negative-consequentialist vindication at most recommends presence without participation in commercial society, and the empirical basis for even that recommendation is questionable.
6. Conclusions
Smith’s counterproductivity critique of commercial society drives a wedge between success and happiness in just the way that the theory of consumer choice makes unintelligible and hence captures the human cost paid even by those on the winning side of market competition. For this reason, the counterproductivity critique retains a depth and power that many other critiques of ‘capitalism’ lose in interminable causal and counterfactual debates about various inefficiencies and failures. Consequently, a growing number of Smith’s interpreters – including Hanley, Sagar, Hill and Rasmussen – have in recent years addressed this critique at length. But as I have shown, these authors’ vindications of the market do not succeed.
One of the most important and enduring of the unsuccessful strategies for overcoming challenges such as Smith’s is a kind of consequentialism that we saw explicitly above in Rasmussen and Hill and implicitly in Fleischacker and Sagar. This consequentialism is also evident in recent philosophical defences of ‘capitalism’, including those of Brennan and Cudd. In conclusion, then, I want to try to diagnose the core methodological error that makes these consequentialist responses fallacious. I am particularly concerned about the failure to count the dead on the balance sheet when comparing commercial society to non-and precommercial societies or even to alternative possible commercial societies.
Two generations ago, Robert Nozick (Reference Nozick1974: 159–60) attacked egalitarian liberals such as John Rawls for deploying ‘end-state’ or ‘patterned’ theories – any theory that filled in the blanks in a sentence of the form ‘from each according to _____; to each according to _____’. Nozick thought that patterned theories could not actually show a social order to be just, because they ignored the actual history of the pattern. If getting here required rights violations, then the pattern is not justified even if it mirrors what an ideal society would look like. For Nozick, justification of a social order required instead a ‘historical’ evaluation, that is, one that looked to see whether each move on the pathway from the beginning until now was just.
Like many others, I reject the particular argument Nozick made. Even so, Nozick is right that historical transitions cannot be evaluated only retrospectively but should be thought of as steps or choice points which may themselves have been just or unjust.Footnote 12 Let us therefore distinguish two importantly different claims:
RETROSPECTIVE COMPARISON (RC): (a) most people living in commercial societies now are better off than most people anywhere were in 1750, and (b) this is due to the rise and spread of commerce. Consequently, (c) most people now are better off than most people would be now if commerce had not risen and spread as it has since 1750.
NEGATIVE UTILITARIAN (NU): At each key decision point in a society’s history, given whatever had gone before, liberalizing trade and governance going forward was the policy that would have minimized expected disutility, encompassing both realized suffering and vulnerability to it.Footnote 13
One difference between RC and NU is what specifically they compare. NU compares realisable futures; RC compares the present with a relevant outcome of an alternative history since 1750.Footnote 14 Social planners might use retrospective but-for comparisons as a source of insight into what is likely to work, but fundamentally, planners are interested in the future. Thus planners face a choice situation more like NU than like RC. Put otherwise, only NU is forward-looking and hence guides choice.
The implication of this distinction is as follows. Even if RC is true, it cannot show that it is or ever was right to choose a commercial path. For only NU requires an assessment of the impact on those who are living at the time of the choice or who come into or go out of existence between the choice point and the eventual retrospective comparison. Put otherwise, unlike RC, NU must factor in transition costs. Suppose 1000 people are suffering at t; if planners choose option A, then 500 people will be suffering at t 1, but if they choose option B, then only 250 people will be suffering at t 1. A reduces suffering by 50 percent, B by 75 percent. At t 1, Retrospective Comparison has all the information it needs to prefer B: only half as many people are suffering than would be under A. But NU needs to know what will have brought about this result and what life will have been like in between. Suppose that option B involves letting loose a group of utility monsters who consume and replace the extant population. NU would, or at least could, reject B due to these transition costs.
It may be objected that NU is likely too demanding: like disaster avoidance or maximin, minimising expected disutility is an overly cautious decision procedure, but unlike them, it is also highly specific and rules out every choice except for the single one that minimises suffering.Footnote 15 On the second point, consequentialisms may be interpreted in scalar rather than binary fashion. The negative utilitarian can then view decisions as better or worse, not merely right or wrong. Such an approach – scalarity, satisficing or accepting a feasibility constraint – makes consequentialism tractable and realisable and in the process, less demanding. The first half of the objection may raise a bigger concern: negative utilitarianism might forswear massive amounts of economic growth in order to bring up the most vulnerable. It is an open question whether this is true; if market proponents are right, the ambient suffering in pre-commercial and non-commercial societies is so great that even a deeply imperfect liberalisation might minimise expected vulnerability.Footnote 16 But on the other hand, if the arguments here (and indeed, Smith’s insistence that opulence and happiness diverge) are plausible, they make it difficult to understand what ‘demanding’ might mean in this objection. Demandingness references opportunity costs, but these costs cannot be calculated in dollars, because opulence and happiness diverge. Demandingness may simply come to this: given the mistaken conception of benefit that gets us onto the treadmill, it is psychologically difficult and politically costly to forswear future opulence in the name of real happiness. This is an abiding challenge to democracy in practice, but not an objection to the analysis here.
What this distinction suggests is that the kind of argument that Rasmussen gives – and still more so, the kinds found in Smithian and other defenders of ‘capitalism’ who are less circumspect than Rasmussen – mistakes a Retrospective Comparison for a Negative Utilitarian moral justification. And the difference is crucial because RC is a prudential claim, not a moral one. This difference becomes more evident when we jump to the present to ask whether the route we are on is a good one to stay on. We may be glad that a certain option was pursued, because it has led to our lives’ being better or to our existing at all. In my own case, I need look no further than North American settler colonialism, without which I would surely not exist; my closest modal counterpart in a world without settler colonialism, if that idea even makes sense, is living a life that is unfathomably different from mine. So prudentially, insofar as I am glad to be alive, I must prudentially affirm the world that includes the causally necessary conditions of my being here and thriving. But this says nothing about morally affirming it. Quite the contrary: I can and should morally condemn or at least regret evil behaviours that were causally necessary for my existence. And I should be committed to not repeating them or their moral equivalents, even if I could significantly enhance my descendants’ lives by doing so.
Consequentialist defences of commercial society of the sort we have been discussing commit this category error between prudential and moral evaluation. Arguably, however, their proponents miss the distinction because of the shift from individual to collective. The question, ‘aren’t you glad your parents were able to provide you with resources?’ is clearly prudential, but when applied to a larger group it feels moral because it elicits an other-directed or even altruistic response: ‘aren’t you glad that all these people’s parents were able to leave them with resources?’ But no moral conclusion can be drawn unless we know, among other things, where all the parents got all the resources. When we fail to add that information, we are doing Retrospective Comparison rather than Negative Utilitarianism: prudence rather than morality.
It does not follow that defences of commercial society are doomed to fail. Its defenders typically echo Smith’s efficiency critique in attributing historical crimes such as colonialism and neocolonialism to the Mercantilist order and to the self-aggrandisement of states interfering with markets through coerced and blocked exchanges and by the creation of parasitic markets. It will obviously be impossible here to come up with a theory of the individuation of systems and an uncontroversial historiography enabling us to ascribe blame to commerce or states or whatever. The point I am making is both smaller and larger than this. It is that defences of commercial society (as we know it) must not fall into the faux-moral prudential reasoning that yields RC-type judgements. By de-moralising putatively moral justifications, these scholars are changing the subject. What matters for the moral justification of commercial society (or any broad historical trend) is the moral judgement that, at each relevant choice point, it was right to choose market liberalisation (or whatever broad trend is in question). And philosophical defences of commercial society, including Rasmussen’s and ultimately Smith’s blithe celebration of the ‘deception’ that sets commerce in motion, typically fail to support this judgement. They are not alone in doing so. It is in fact shockingly rare for any defender of capitalism to count the dead. Dead people simply disappear from the calculation. But untimely deaths are, to say the least, disutilities.Footnote 17
Acknowledgements
I am grateful to John Gibson, Kristen Hessler, Cindy Holder and Linda Radzik for comments on and discussion of previous drafts of this essay. I’m also grateful for excellent feedback from an audience at the University of Tennessee, Knoxville, where I presented an earlier draft. And I benefited from both excellent comments and encouragement from the anonymous reviewers. Numerous colleagues, friends and family members allowed me to bend their ears about this material and the arguments presented here. I am grateful for their indulgence and, in many cases, helpful conversation.
Competing interests
The author declares none.
Avery Kolers is Professor and Head of Philosophy at the University of Tennessee, Knoxville, and co-Editor in Chief of the Journal of Applied Philosophy. He is the author of Land, Conflict, and Justice: A Political Theory of Territory (Cambridge University Press, 2009), A Moral Theory of Solidarity (Oxford University Press, 2016), as well as numerous articles in applied ethics and social & political philosophy.
Open access
