Albert Hirschman and the Original Arguments for Capitalism

There have been many fine remembrances of the late Albert Hirschman. My favorite, because it recalled one of my favorite books by Hirschman, was this one by Francis Fukuyama:

The Passions and the Interests: Political Arguments for Capitalism before Its Triumph was basically a work of political philosophy, an interpretation of several writers using a humanistic approach that was and is utterly foreign to contemporary rational choice theorists. Hirschman argued that the rise of capitalism could not have occurred simply as a result of changes in underlying material conditions, as both Marxists and contemporary neo-classical economists believe. The very idea that it was morally legitimate to rationally maximize one’s income, far from being a universal postulate of human behavior, was something that took hold only during the 17th and 18th centuries. Earlier aristocratic societies had moral systems grounded in honor rather than gain, that were contemptuous of money-making and the calculating bourgeois way of life. Virtue lay rather in risk and glory in battle. The theorists that Hirschman covered, like Montesquieu, James Steuart, John Millar, and Adam Smith made political rather than economic arguments in favor of capitalism. They maintained that a commercial society would soften manners and morals, and in contrast to warrior societies would lead to greater international peace. Hirschman pointed out that these arguments have triumphed so completely in the modern world that we do not even perceive their historical contingency.

The Passions and the Interests was also near the top of Mark Blyth’s list of what to read on states and markets. Blyth’s blurb:

Possibly the most beautiful and enjoyable book in all of political economy, Albert Hirschman’s The Passions and the Interests is a tour de force that takes readers from St. Augustine and Machiavelli to the French physiocrats and the Scottish Enlightenment. Along the way, Hirschman shows that the idea that markets are “natural” was put forward not as a description of reality but rather as a political argument in their favor. He also details how the invention of capitalism depended on the creation of a new type of political actor—an individual liberal subject who was the product of a liberal state. This is magical stuff—Foucault without the long words and in less than 120 pages.