Groups versus individuals in Hume's political economy

Monist, The, April, 2007 by Margaret Schabas

Another example where groups serve as the unit for economic analysis is Hume's celebrated account of the real growth effects of an unanticipated injection of money (Hume 1985, 286-88). Merchants bring in specie from Cadiz and employ more workmen, at the same time becoming better paymasters. The weavers they employ, now confident of no longer begging for credit from their shopkeepers, and possibly better remunerated, purchase more food and drink. The farmer and gardener, stimulated by this increased demand, increase their production. The money, as it courses through this scene, thus quickens the diligence of every individual, without, as Hume emphasizes, any change in intention or expectation. The weavers, for example, "never dream of demanding higher wages." Hume's account is couched at a physiological level; the behavioral changes are augmentations of existing traits, and they are prompted solely by the availability of more money, not by calculation or a rational response to any new conditions. Indeed, reason would argue against such changes, since the price level will eventually catch up and no one will be the richer. (4) The growth effect happens under an act of deception, at the level of the "mob." The arrival of new money prompts people to work more intensively because they believe, falsely, that they are richer. "In every kingdom, into which money begins to flow in greater abundance than formerly, everything takes a new face: labour and industry gain life; the merchant becomes more enterprising, the manufacturer more diligent and skilful, and even the farmer follows his plough with great alacrity and attention" (Hume 1985, 286-87). Hume's account operates entirely at the level of groups, or representative individuals. I would hesitate to say there are emergent properties. But there is no sense in which any given member of that group acts differently than another and, in that respect, the causal path emanates from the group as a whole.

Hume's naturalism has almost canonical standing in the secondary literature (see e.g., Baier 1991). While the focus is primarily on human nature, there is much to support the claim that Hume's treatment of economic phenomena, money, and the like, is congruent with the naturalist stance (see, e.g., Barfoot 1991; Schabas 2001). While he recognizes that money stems from barter and is replete with convention, it has acquired the same sort of standing as an "institutional fact" in the sense articulated by John Searle. (5) Certainly, Hume grasps that money operates at a level that overrides individual interventions, and possibly even those of nation states. Money operates like a fluid, achieving its own level regardless of human legislation. It would be highly foreign to impose on Hume's account of money anything approximating Keynes's theory of the demand for money. Again, it is not that Hume ignores jobbers, investors, or other kinds of speculators (he implicitly refers to the practice of arbitrage as gold crossed north over the Pyrenees), but rather that they act as groups, and the traits that matter in the causal accounts are at the group level. When domestic labor becomes too costly, manufacturers move en mass like a flock of birds, almost "flying" to other countries where wages are lower, till they "are again banished by the same causes" (Hume 1985, 283-84).