[Original post here.]
The most influential poem in history is Bernard Mandeville’s “The Grumbling Hive; or Knaves Turned Honest” (1705). It challenged Western moral philosophy, Christian theology, and common sense. It changed the thinking of Western social theorists. Through Adam Smith, it changed the economic world. Yet it is not a good poem.
This gives me hope. You don’t have to write a good poem to have influence. You can write a bad poem, and still have influence.
His poem and the book that followed nine years later accomplished four things, all revolutionary. First, it rejected the idea that honesty is the best policy, which had been basic to Western social thought and moral philosophy from the beginning: Greek, Roman, and Christian. Second, it challenged the idea that there is any providential undergirding of the social order. Third, it identified individual economic actions as the source of economic order. It therefore minimized the importance of civil law. Fourth, it erected the central pillar of demand-side economics: consumer spending as the methodological presupposition of economic analysis. Keynes saw this, and he included extracts from the poem in chapter 23 of The General Theory of Employment, Interest, and Money (1936).
The poem created a sensation after a new printing, to which he added a detailed defense, published in 1714 as The Fable of the Bees. F. A. Hayek regarded this poem as having laid the foundation for Scottish enlightenment’s fundamental idea: society as the product of human action, but not human design — Adam Ferguson’s dictum in the 1760’s. It also shaped David Hume’s legal theory. It was the original basis of the Scottish enlightenment’s idea of undesigned social evolution, an idea that Darwin adopted a century later, and applied to biology. It shaped Adam Smith’s response in 1776: supply-side economics. But Smith adopted Mandeville’s methodology: begin with the acting individual, not the collective. Hayek wrote in 1967 that by 1730, “almost everybody read him and few escaped infection.”
While I did not know this when I began my studies in 1960, my calling in life — still unfinished — is to provide a comprehensive rejection of Mandeville’s poem. My strategy here is to fight fire with fire. If Hayek is correct — that the poem did all this — then I must begin my refutation of Mandeville with a poem.
There are not many economists who write poetry. This task therefore fell to me. I hereby authorize anyone to reprint the whole of this poem, as long as my name is attached to it. I would hate to think that anyone else would be blamed for it.
The Fable of the Bees Revised
In seventeen-o-five, a doctor sat down at his table,
His name was Bernard Mandeville, and he composed a fable
About a hive of bees that sounded strangely like a nation
That lived in sin and yet escaped a prophet’s execration.
The doctor was a Dutchman who in England then resided
A kingdom based on commerce, over which Queen Anne presided.
A wave of optimism was then sweeping over Europe
So strong that Scotsmen started eating oatmeal drenched in syrup.
When Mandeville began to write, he chose to wax poetic.
He titled it, “The Grumbling Hive,” and this would prove prophetic.
For European moralists grew outraged at his stanzas
The escalating confrontations were extravaganzas.
The poem was ignored for years, so Mandeville decided
To up the ante and produced the book that was derided
Throughout the eighteenth century by moralists persuaded
That Mandeville was scurrilous, and his fat book degraded.
The book contained “The Grumbling Hive” and also a defense of
Its thesis, which, this time, would prove so thoroughly offensive.
He dropped “The Grumbling Hive” and chose a better-selling title:
“The Fable of the Bees,” which for its marketing proved vital.
The year was seventeen-fourteen; the timing was prudential.
A new king sat upon the throne, and this soon proved essential.
For George the First, imported fresh from Germany’s dominions.
Was an enlightened monarch with Enlightenment opinions.
The author’s goal was clear enough to those who read his poem.
He yearned to split the kingdom like a modern Jeroboam.
Because the West was built upon a public declaration
That men reap what they sow in life in strict concatenation.
And not just individuals, but also institutions
Are subject to morality built into constitutions.
But Mandeville did not believe in providential guidelines.
He said that life’s causation places ethics on the sidelines.
So, he proposed a different scheme to deal with life’s causations.
He said that vices of the heart increase the wealth of nations.
He set forth propositions that discomfited professors
Of faith in providential means to undercut transgressors.
His poem rested on a theme that beehives are like nations,
That hives are filled with bees involved in personal relations.
The bees, like men, pursue their goals as independent actors,
Deciding what to buy or sell, as economic factors.
He argued that demand will come from bees pursuing vices,
And this demand is what maintains the hive’s array of prices.
If this demand should fall because of moral renovation,
Depression will engulf the hive, and bankrupt all the nation.
If vices are the basis of society’s successes,
Then most reforms of moral ills will create deep distresses.
To grumble at the sins of men is wasted effort, truly.
If men reformed and changed their ways, results would be unruly.
If sinful men curtailed their lusts and said farewell to mammon,
A macroeconomic crash would soon be like a famine.
Without demand, the sky would fall, and so would indexed prices.
No nation could afford the cost of scuttling its vices.
So, men should be content with all their moral imperfections.
Ignoring calls from moralists, who always have objections
To sins that clearly do corrupt the morals of each person,
But when, if ever they repent, will cause our world to worsen.
His poem raised a real concern among all social thinkers.
Could greatness of a nation come from multitudes of stinkers?
Could personal debauchery explain the wealth of nations?
And, if so, should we jettison all moral explanations?
Mandeville began with bees, but not the bees of nature.
For bees do not assemble in a solemn legislature.
A bee declares no natural right to liberty of action.
Nor does he seek advantages by joining with a faction.
When busy bees are busy in their quest for pollen’s treasures,
They have no time to waste pursuing lust’s alluring pleasures.
They do their jobs in every post, despite a lack of orders.
For nature governs every hive, establishing its borders.
Bees serve the hive from dawn to dusk as dedicated workers,
They do not imitate the drones, those systematic shirkers.
For they know what befalls the drones within the population,
When one of them performs the task of kingly copulation.
The drones are pampered for a time, creating such dependence
That when they lose their subsidies, they also lose ascendance.
For many weeks the hive works hard to feed them their free lunches,
But then one day the doors are closed, and income sharply crunches.
The bees stay on the job, for if they don’t, then mass starvation
Confronts a hive whose bees regard their lives as a vacation.
Because they’re bees, they aren’t weighed down with moral consternation.
They just do what comes naturally, without much hesitation.
But men, unlike the bees, are always facing moral choices.
They seek to gain their top-most goals, but then competing voices
Make offers to them: “Serve me well, and you will be rewarded.”
But some of these rewards will come for services most sordid.
For there are men, and women, too, who use their many talents
To satisfy the lusts of those with moral views unbalanced.
Their income stems from those who spend to satisfy addictions,
Despite the fact that these result in capital constrictions.
They do not understand that money saved is fundamental.
For economic growth is not a process accidental.
It comes from saying “no” to spending now instead of later.
For thrift is necessary to attain a net worth ever-greater.
His poem is a hymn of praise to systematic spending,
Of output in response to sales from income never-ending.
But income is dependent on production for the buyers.
What happens to a seller if his customers are liars?
Demand that rests on services that only sinners relish.
Can falter when the buyers see that sin’s results are hellish.
But when demand for sin declines, this does not bankrupt sellers
Who specialize in servicing demand from kingdom-dwellers.
When he who sells to sinners sees his income sharply falling
He has a new incentive to re-think his present calling.
When sinners change, so does demand, and values are the reason.
What once was loved is now foresworn — a kind of righteous treason.
The aggregated spending of the hive is not what matters.
It’s not that shifting budgets cause the hive to shrink in tatters.
For what goes up comes down, and then what had been down, ascending,
Persuades producers to re-think their plans, which need amending.
It’s spending at the margin that creates arrays of prices.
As values change, so do the bids for righteousness and vices.
As bids for righteousness increase, and bids for vices falter,
Production shifts from bad to good; arrays of prices alter.
But Mandeville was blind regarding changing valuation.
He looked at what was visible, but not at adaptation.
He saw that prices would decline for men’s preferred corruptions,
He feared the changes that would come from moral interruptions.
He thought that cheats and charlatans would never lose advantage,
As if the morals of these cheats were not a disadvantage.
He saw demand as unrelated to success and winning.
As if the cheater’s customers enjoyed his constant skinning.
He looked at the results of sin, as if sin were productive.
He thought that men would not repent, for sin is so seductive.
He feared repentance, for this would upend the sellers’ visions,
Of endless income, without change, with no need of revisions.
But plans must be revised in life, for history is movement.
For men change ways of doing things to gain some small improvement.
It’s changes at the margin that transform the social order.
The aggregate won’t be the same — the inside or the border.
Mandeville appalled his peers for arguing that vices
Can make us rich and prosperous, and also keep up prices.
He aimed his poem at the heart of Christian social teaching.
He warned his readers to ignore reformatory preaching.
He challenged social theorists to reject explanations
Of sources of prosperity as moral aggregations.
He said that individual demand will bring us blessing.
The aggregate fares best without reformers’ loud distressing.
The moralists cried out in rage, for Mandeville had broken
With moral teachings of the world, and had been so outspoken.
They did not see that he had built his poem on a notion:
That productivity is high when men have no devotion.
He thought that honest men cannot compete with skilled deception,
That buyers are not motivated by alert perception,
That competition is a factor that can be demoted,
That honest sellers do not gain consumers most devoted.
For Mandeville, demand is king, production is a servant.
He preached this in two volumes and a poem boldly fervent.
But then, two generations hence, he got his full comeuppance.
A Scot named Adam Smith arrived to offer Scottish tuppence.
Smith saw the flaw in fabled hive: reliance on demanding
With no consideration of production as commanding.
And so, by resting all consumption on production’s favor,
He focused our attention on the builder and the saver.
Demand must have production first: without it, it’s a fiction.
Smith saw this clearly, and announced the poet’s full eviction.
Like drones within the hive’s domain, the poet’s day was over.
Smith kept the worker bees alive, but made them search for clover.
“Produce or starve,” he told mankind, “Your work will shape the nation.
“But don’t think that consuming will result in an ovation.
“We need demand, of course, but this is crucial to the story:
“Demand without production is a myth, not hunky-dory.”
From Smith’s day unto ours, the great debate has gained attention.
Supply-side or demand-side? Production or state pension?
Supply-side says we all must work; demand-side says we needn’t.
As if demand could register — no output antecedent.
When clever Johnny Keynes began to write his General Theory.
He sensed his convoluted prose would make most readers leery
Of his arcane defense of concepts long known as fallacious:
Ideas dear to every heart of governments rapacious.
And so, in chapter twenty-three, penultimate in placement,
To justify his call for debt and currency debasement,
He reproduced as proof secure from logical contention
Some stanzas from the ancient tract of Mandeville’s pretension.
He recognized the poem as a tool of transformation,
A challenge to the Western view of ethics as salvation.
He saw that Mandeville had preached the gospel of demand-side.
And politicians had agreed, wherewith to gain a landslide.
For politicians love to spend, and voters cheer them loudly.
And by invoking Johnny Keynes, they do so ever proudly.
It’s true, of course, they can’t explain the logic of his treatise,
But if they quote him, they believe, “taxpayers won’t defeat us.”
Taxpayers are deluded by the power of assertion:
To borrow and to print at the behest of state coercion.
To kick the can whenever budgeting reveals a deadline.
That might call into question the survival of some breadline.
For breadlines are the basis of the Keynesian revival
Of Mandeville’s conception of demand-side hive survival.
But in that hive, there was a missing fact that gives us warning.
The drones would not have honey in the post-conjugal morning.
For every breadline has two ends: the one in front and after.
And those who line up at the end should listen for the laughter
Of fallen angels who convince the lemmings of the promise
That politicians offer them: “Don’t be a doubting Thomas.”
And so the lines are everywhere, and longer than our vision.
Those lining up to take outnumber those who make provision.
Demand-side economics says the front end never shortens.
That taxpayers will never cease to sacrifice their fortunes.
Supply-side economics says there’s one law so demanding
That anyone who breaks it risks a terrible hard landing.
Whenever politicians say to line up for free money,
Whoever gets dependent is a drone lined up for honey.
The day will come when busy bees will see that drones are lacking,
And they will shut the free lunch lines, and send the drone bees packing.
Demand-side economics says consumption is productive.
But busy bees will finally learn that this view is destructive.
Consumption shapes production, but the question always rises:
How did consumers get the funds that their demand comprises?
Mandeville and Keynes agreed: consumption is autonomous.
That spending what you did not earn is logically synonymous.
When Peter works, and Paul resides in low-rent public housing,
When Peter stays alert all day, and Paul spends his time drowsing,
When Peter spends his paycheck earned, and Paul spends state allowance,
It’s all the same, said Johnny Keynes; the figures always balance.
“But wait,” said Hazlitt; “something’s wrong. The state got all its money
“By taxing busy bees year-round, on rainy days and sunny.”
“Don’t worry,” say the fans of Keynes, the acolytes of taxing.
“The busy bees will always pay the taxes ever-waxing.”
“And if they don’t, the central bankers stand as ready agents
With wealth created at command — alchemical reagents!”
And so far, voters are convinced that Mandeville’s promoters
Are right, and Henry Hazlitt’s wrong. They are short-sighted voters.
Demand-side or supply-side: there is yet no resolution.
Free lunches still have great appeal: “The state is the solution!”
But output must provide the goods that keep demand-side going.
We hear the fiscal falls ahead. Which way should we be rowing?
It will take time, but those who see supply-side is the answer
To Keynes’s call for greater debt and then inflation’s cancer,
Deliverance at last draws nigh, but fiscal restoration
Will come only through bankruptcy of Johnny Keynes’s nation.
For bankruptcy — the Great Default — is now a certain factor.
Unfunded liabilities will silence each detractor.
For red ink’s sure tsunami lies ahead, and when it smashes,
The West will face the consequence: the mother of all crashes.
Then finally we’ll see that Mandeville’s glib observations
On spending as a substitute for moral reformations
Will prove to be a myth upheld by sophists, whose pretensions
Will be flushed down a vast commode: historical dimensions.
We bide our time in confidence of morals’ jurisdiction
This won’t be grim Thermopylae, but Marathon’s eviction.
The bees whose output is the sure foundation of their spending
Will rule the hive when drones are sent to darkness never-ending.
For there are no free lunches in the beehives of creation.
The drones, of course, think otherwise, before their deportation.
But honey ends when the next queen receives her penetration,
And drones discover that the end of handouts is starvation.
Yet ultimately we aren’t bees, for bees don’t give assistance.
Men offer helping hands to those in need of bare subsistence.
But charity is not the welfare state’s mode of compassion.
It rests on badges and on guns; coercion is its fashion.
Those trusting souls who take the aid and make themselves dependent
Will find themselves among the drones, no longer so resplendent.
They’re lumped together with the drones when bankruptcy discloses
That politicians’ promises are thorns, not beds of roses.
The state is not compassionate; it rests on men’s coercion.
When voters vote to end the lunches free for no exertion,
Those trusting citizens who thought that they could rest, contented
Will find out when the state goes bust that they are not lamented.
When voters plan their futures on their hopes of state resources
Delivered to them by the rules of bureaucratic forces.
They’ll learn why Moses gave the law that still binds every nation.
To use the ballot box to steal is still a violation.
And so I bid you fond adieu, with this as a reminder:
To spare you when the welfare state turns into a meat-grinder:
You have been warned that Mandeville’s collection of allusions
Reflects the moral outlook of demand-side’s dumb delusions.