Why Hume explains modern capitalism better than Marx

[Celerity]

In 1752, David Hume discerned that wealth was becoming untethered from land. Here lies the origin of our political divisions

https://aeon.co/essays/why-hume-is-better-at-explaining-modern-capitalism-than-marx


The Wealth of the Nation (1942) by Seymour Fogel. Fine Arts Collection, United States General Services Administration. Photo by Carol M Highsmith Photography



Landholder vs stockholder

Describing the political map in terms of Left and Right is an accepted convention all over the world, almost to the point of cliché. Yet it is surprisingly complicated to explain whose interests lie on each side of this spectrum. For example, if the Left supports the interests of workers over the interests of employers, why are Left-leaning regions of the United States and elsewhere in the world among the richest? When Japan and South Korea sought to become economic powerhouses in the later 20th century, they adopted Leftist policies such as strong public education, universal healthcare and increased gender equality – if countries seeking to compete in capitalist arenas adopt broadly Leftist policies, then how do we explain why Leftists are always talking about overthrowing capitalism? And if the Left is somehow both the party of workers’ rights and the party of material wealth, then whose interests are supported by the Right? Given such contradictions, how did these terms become so central to modern politics?

The terms ‘left’ and ‘right’ come from the seating arrangements in the National Assembly during the French Revolution, where the combatants used the medieval estate groupings to define their battle lines. According to their writings, land-owning aristocrats (the Second Estate) were the party of the Right, while the interests of nearly everyone else (the Third Estate) belonged to the Left. This Third Estate included peasants working for the landowners but also every other kind of business owner and worker. Decades later, Karl Marx offered a different analysis of capitalism: he put owners of both land and businesses together on one side (the bourgeoisie), while grouping workers from fields and factories on the other side (the proletariat) in a single, world-wide class struggle. The trouble with both these ways of parsing Left and Right is that voting patterns never seem to line up with class. Both historic analyses leave us with questions about the contemporary world – and not just the paradox of why so many Left-leaning places are so rich. Why, for example, do working-class conservatives appear to vote against their material interests, year in and year out, across generations?


David Hume (1754) by Allan Ramsay. Courtesy the National Galleries of Scotland

The 18th-century philosopher and political theorist David Hume had answers to these questions, though he was writing decades before the French Revolution. While his essay ‘Of Public Credit’ (1752) was a warning about the dangers of Britain’s increasing reliance on debt financing, his apocalyptic vision of the future turned out to describe some features of our current political map surprisingly well. Hume was writing because he believed that debt financing had the power to upend Europe’s traditional power structure and culture by creating a new source of money divorced from tradition or responsibility: stocks and bonds. Unlike land, anyone with some cash could buy war bonds and get an immediate passive income in the form of interest. This was the thin end of the wedge caused by the debt financing that Hume believed was destroying every part of society. The governments of antiquity, Hume argued, saved money to use in battle and then waged wars in self-defence, or else to expand their territory. But the British had invented a new form of warfare that Hume saw no precedent for, even in the merchant states of Nicollò Machiavelli’s Italy: war for trade, funded with money borrowed from private stockholders.

Hume acknowledged the potential for riches in securing trade routes overseas, but the debts worried him. Of the many downsides to the practice of borrowing money in pursuit of empire, possibly the most interesting is that Hume foresaw what the historian Richard Whatmore in The End of Enlightenment (2023) describes as ‘an addiction to the idea of liberty among the populace and politicians’. Once Hume realised the connection between liberty and debt financing, he lost his taste for the philosophical concept entirely. The connection between liberty and debt financing isn’t obvious at first – it could easily seem like a coincidence that the concept of liberty became so popular among Enlightenment thinkers during the same period that their governments began habitually borrowing money. To see the connection as Hume saw it, we need to understand the contrast between these new economic practices and what had come before.

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