Mandeville's market seen through the 18th century
coffee‑house culture

Satoko Nakano H

Meiji Gakuin University
2010.3.10

I. Introduction

2. The economy andwits in Coffee IIouses
3. Mandeville and Berkeley in Coffee Houses
4･ The division of labor as a coordination problem in The Fable
5･ Coordination through cognitive interactions

6･ The implications toward the economic thought after Mandeville*'Department of Economics, Meiji Gakuin University, i‑2137, Shirokanedai, Minato‑ku, Tokyo 10818636, Japan.

‑iE

Mandeville's market seen through18'th century coffee‑house culture

This paper partly relates to the confTerence theme, 'The Practices of Economists in

the Past and Today', in that it considers the role of coffee‑house culture of the 18th
century in London in shaping Mandeville's economic insight into the market
interactions･ The satirical and poetic style of Mandeville's wrltlngS StemS from theJOumalismand atheism that pervade the coffee houses in London, where not only
miters and philosophers but also businessmen and traders stayed and comunicatedeach other･ Although the role of public space such as coffee houses fわr thedevelopment or Enlightenment has been noted by v∬ious historians and the place ofMandeville in the Enlightement thought has been highly appraised, the role andimplication of coffee‑house culture in Mandeville's economicanalysis has notnecessarily been made clear.

Mandeville's economic analysis has two seemlngly contradicting aspects: on one
hand, economic liberalism, on the other hand, inteⅣentionism. These inconsistentinterpretations have been solved to some extent by uslng the concept10n Of evolutionof legal institutions in society, as is seen in Hayek's spontaneous orders･ However,this interpretation is biased toward the natural law tradition seen in Hume and Smith.

Mandeville's thought canbe, religiouslyand philosophically, distinguished from thisScottish tradition･ Mandeville has a unlque atOmistic vision, Epicurean atomism, ‑aconstruction of order through cognitive interactions in the skeptical traditionfollowed
since P･ Gassendi and P･ Bayle and in its relation to British EmplrlCISm advocated by

J･ Locke, G･ Berkeley, and D･ Hume, which is discussed in my independent paper,"Mandeville'S Skepticism Seen in His Probabilistic View fわr the Marketn presented in2007 HES ammual confTerence.
This cognltlVe discussion can be comprehensible as an economic insight into

market interactions developed in coffee‑houses, where traders are prompted to theireconomic activities under uncertainty, recelVlngand casting various infわrmation that

include decelVlng OneS･ These processes finances trading, expands the marketand
ultimately enables the development of the division or labor in the society as anunintended result･ Parts of explanations of the process share some behavioral
descrlptions with those of the behavioral economics and neural economics of thepresent day. This mechanism can be contrasted with the establishment or rules ofJustice in a moral space of a civil society･ Smith based economics on this moral

space and did not include Mandeville's cognitive processes in his economic system･
Mandeville's contradictory characteristic involving both the liberalistic

andinteⅣenlng aspects becomes comprehensible by elucidating Mandeville's
psychological philosophy as a vivid descriptive device f♭r the course of things incoffee‑house culture.

‑2‑

1. Introduction

This paper partly relates to the confTerence theme, 'The Practices of Economists in

the Past and Today', in that it considers the role of coffee‑house culture of the 18th
century in London in shaping Mandeville's economic insight into the market
interactions･ Coffee‑Houses near the Exchange Alley in London in the early 1 8th century
played a part of the stock market when new companies were being established･

Brokers called stockjobbers intermediated between sellersand buyersand everyone canfreely participate in the marketand collect infわrmation in Coffee Housesl, Mandevillewrote essaysand books within these enviror‑ents･ In order to have full understandingof the implication of Mandeville's thesis, uprlVate Vices, public benefits" in The Fable
ofBees2, which aspect of the market phenomenon Mandeville discussed, is crucialandthe coffee‑house culture is the key fわr the aspect･

In the early 1 8th century'coffee Houses near the Exchange Alley were beginnlng tO
function as a financial market that facilitates investment to the various industries of the

British Economyand at the same time, the financial market easily lead to bubblesandcollapse･ Though this brought about the increase or wealth, people are at the sametime bewildered at the changes of manners and morality in the economic world of thetime･ Steeland Addison, wits in the coffee‑house culture, described the economy
metaphorically as a foundationless castle supported by illusionsand they, in this new
situation, tried to present how to behave in proper marmers in their JOumals, Tatler andSpectator･ It isknownthat Mandeville published Female Tatler, opposlng Steel's ideal
The opposition seemed to be joumalistic and the meanlng Of it has been discussed intens of the social refb‑ (Home(1978)) of the morality and the political opposition
between Tory and Whig (Goldsmith (1985)), With the background of the broad context
of civic humanism indicated by Pocock (1975) and its relation to the economics as the

Wealthand Virtue problem (Hont and Ignatieff(1983)). Though Mandeville seemed
to be a licentious satirist amuslng and ridiculing Steele, a serious economic insight is
hidden in the context with another philosophical background･A shared impression in those JOumals that something unstable and fbundationless
navlgated people in the economy lS One Of the sources that shook the existlng moral

attitudes･ This impression, fTor example, Came fTrom the observation in Coffee Houses,
where stockjobbers exchange various information including decelVlng Oneand buyers
Asto the coffee‑house culture in general, see Lillywhite (1963 ), Cowan(2005), Ellis, Aytoun (1956) , Ellis,
Markman (2004), KobayaShi (1985)

2 The Fab/e of the Bees: or, Private Vices, Publick Benefits by Bemard Mandeville with a Commentary Critical,
Historical,and Explanatory by F･ BI Kaye, vol11･and vol12, Oxford at the Clarendon Press, 19241 This paper is basedon Kaye's edition. The history of this text is as follows: The first･version was publishedanonymously･ The

Grumbling Hive: or, Knaves Turn'd Honest, London, Sam Ballard, A. Baldwin, 1705. The Fable of the Bees: or,Private Vices, Public Benejits, London, J. Roberts, 1714; 2nd edn., Edmund Parker, 1723; 3rd edn., J. Tonson, 1724;

4th edn･, 1725; 5th edn･･ 1728; 6th edn., 1732･ The version presented in 1714 wasalso publishedanOnymously with theinclusion of the following Chapters: HThe Preface," uThe Grumbling Hive," "The Introduction," "AnEnquiry Into theOrigin of Moral Virtue,Hand "Remarks,n which were divided into 20 sections･ However, The Fable gained
recognltion and criticism fbllowlng the publication of the 2nd edition in 1723･ According to Kaye, while limited

references were made to The Fable prior to 1723, theyincreased remarkably thereafter. See, Kaye (1924)

pp･4181453･ The versionpublished in 1723 differed &om the former due to the inclusion of remarks , "AnEssayon Charityand Charityschools," uA Search into the Nature of Society,M and "The Index." The insistence on thedenial of the existence of Charityschools might have stirred the reader's antipathy.

The Fable of the Bees, Part2, uBy the Author of the First,n London, J･ Roberts, 1729; 1730; 2nd edn･, 1733･ Dialogues were added for the firsttimeinPart2.

‑31

are tempted and deceived･ Mandeville intentionally used expressions that rouseantagonistic responses among civic humanistic or pious Christianpeople･ The critical

attitude toward thefoundationless economy reached its peak around 1720, when theSouth Sea Bubbles collapsed and at the same time, Mandeville became notorious andcriticized by contemporaries for his 1723's version of The Fable ofBees･ This bubble
crisis promoted Britain to arrange some instltutions to support fair economic trades,such as accounting systems preventlng deceptlVe reports Of companies, activities･ As

these institutions were recognized as an important basis for the market, the arrangementof them was thought to be in the hands of impartial legislator independent fiom market

functions.

From the early 18th century to the latter part of the century, the main streamof
economic thought progressed toward Smith's economic liberalism, which

conceptualized individual as seeking self‑interest in the marketand as supportlng the
civic morality within institutions of rules orjustice. Under the system of natural liberty,
it is implicitly supposed f♭r individuals to acqulre the necessary knowledge if they are

free from arbitrary interventions and free to seek their interests･ Compared with thisstream or thought, Mandeville's thought has been叩praised as premature in that market
is not conceptualized as autonomous system and that therefわre there still remain

mercantile thinking in his thought3･ However, this assessment is biased toward theway or thinking of Smith's economics and the civic humanistic and natural law tradition
under which the economics was nurtured.

Although the satirical and poetic style of Mandeville's writings appears to lie, tosome extent, Outside the realm of fbmal economics, it has nonetheless contributed tothe evolution of some slgnificant concept10nS in modem economics･ For example, thedescription of the concept of the division of labor in society in The Fable is widely
recognized as a slgnificant precursor to that ofA. Smith. In another area of economic

thought, J･ M･ Keynes acknowledged Mandeville's conceptions regarding effective
demand as innuential in the formation of the General Theory･4

Though renecting

connection with Keynes, Mandeville's insight into how to acquireknowledgeunder
uncertainty has not been absorbed into the main stream of economic analysts anddismissed in thefomer philosophical context of 1 7th century･The object of this paper is to make the hidden point clear by remaking the functionof Coffee Houses as a device to manage uncertainty･ Though Mandeville,s description
seems discursive and it ca‑ot be appraised as what we call economic theory, it has adefinite structureand loglCI Mandeville remarkedanaspect of Coffee Houses asfinancial market that manages riskand uncertainty, in Mandeville's word, ignorance･
The way how traders getknowledge or information under uncertainty had been treatedby Mandeville･ This p叩er Will indicate that Mandeville saw the economic expansion as

being driven from localized cognitive adjustments of traders who interact in such amarket as Coffee Houses･ These cognitive interactions finances trading, expands themarket and ultimately enables the development of the division or labor in the society as

an unintended result･ That is, interchanglng Various infbmation in localized interaction,
traders somehow combine and interpret infbmation and have in mind indicators f♭rtheir decision of trading･ As a result, even ir the indicators are psychologlCal,
3Asto the appraisal see the section 6 "The implications toward the economic thought aaer Mandeville" of this paper
below.

4 see Keynes (1973) pp･359‑362･ Fuz (‑952), inanearly study, appraised Mandevillefrom this perspective.

‑4‑

subjectiveand even deceptive, they can constructanequlValence of confidenceand trustthat enable the economy to coordinate the division of labor as globalized effects･Mandeville realized the reliability of the indicator as contingent because it deals withlgnOranCe and uncertainty and therefわre confidence canbefragile･ He suggested that wecannot expect from them the same truth of divineknowledge･ This is the reason why
he used the similar expression as wits used in a contemptible sense, remindingfToundationless castleand fickleness of fashion or mode. However, this economic
Tositgehxtt bue,17.n覧enlO,tthOcnelnytut;.the context of the j oumals but also to the philosophicalln order to elucidate Mandeville's supporting logic, his philosophical backgroundand his opposition to Berkeley in this relation should be mentioned briefly･ The loglC

was derived fTrom his particular religiousand philosophical background, Epicurean
atomism･ Mandeville's background of thought is basically fわund in the philosophicalcontext in 1 7thcentury'Epicurean atomism in the skeptical tradition followed since P.
Gassendi and P･ Bayle and in its relation to British EmplrlCISm advocated by J･ Locke,

G･ Berkeley,and D･ Hume, which is discussed in my independent paper, uMandeville'S
Skepticism Seen in His Probabilistic View fわr the MarketM presented in 2007 HES

annual conference.

Gassendi introducedanatomistic approach of Epicure into the modem scientificapproach･ Epicurus advocated atomism during theancient Greek period･ His atomism
has been interpreted as atheistic in that the movement of atoms leads to the creation oforder by chance, which appears to exclude providence and God,s plans5･ This
Epicurean atomism is revived by P･ Gassendi, 6 who contributes toward thedevelopment of modem scientific atomism･ Gassendi's revival progressed toward
Britain through various routes･7

0ne orthem led to the development of natural science

at Royal Society in Britain, including Boyle's corpuscular approach･ The theory ofknowledge presented by Locke reflects the innuences exerted by Gassendiand appears
to be directly influenced by Boyle･ 8

Furthermore, Epicureanrevival gained

slgniflCanCe not Only in natural science but also in various literary fわrms including Pope

The atomistic doctrines of Epicurus are in keeping with Democritus･ Lucretius, the Roman exponent of theatomic system, reveals the Epicurean doctrine in his work De Rerum Natura. The Nature of Universe, Book II
states, "In this connection, there is another fact that I want you to grasp･ Whenthe atoms are traveling straight down

through emptyspace by their own weight, at quiteindeterminate times and places, they swerve ever so little fromtheir course, just so much that you can call it a change of direction. If it were not for this swerve, everything would

fall downwards like raindrops through the abyss ofspace･ No collision would take place, and no impact of an atom
on atom would be created･ '' With regard to the introductory explanation fわr the Atomists in Greek, see Parker(1967)I There are various interpretations on whether "Epicure believes that thereare random events at the atomic
level that kept all atom.ic motions aom being thoroughly necessitated･n See Mitsis (1988) pl1531 The relation
between Epicure's atomlSmand the 17thand 18th centu,y atheism is explained in Berman(1988) p.28. n33.
6 popkin ( 1960) t悶ed the constmctive approach of skepticism adopted by Gassendi as …constructive skepticism."

Asindicated by R･ Popkin in a series of his study on the relation between Pyrrhonism and modern philosophy,
skepticism plays a lnSitive role in constructing the scientific approach･ Abandonhg the possibilityof recognizing
the essential tmth and realities of nature, a consistent explanation on the appearances of nature has been explored innaturalscience･ This line of thought leads to the modem scientific approach, which consists of both providing
チyiohtehe:secTadn…tcsare諾iIIC.astio,nhibe:se.dfOSeesTapireiscainddataiassendi gained signi,lCWCe ｡uhng the Res.0,a.ion ,eri｡dthrough the New Castle circle, the leading figures of which were Hobbes, Charles Cavendish, WilliamCavendish,and so on･ Walter Charleton, who provides a translation and expansion of the long section on physics presented by

Gassendi in 1654, is slgnificant in the infusion ofGassendi's atomism into England･ The development ofatomismin the field of physics is elucidated in Kargon (1966).

8 with regard to this, see Norton (1981) and Alexander (1974).

‑5‑

and Defoe, particularly in Britain,from the 1640s to the early 18th century･ Kroll(1991) characterizes this period as the NeoIEpicureanRevival, distinguishing it fromthe wider concept of Europeanenlightenment･ In particular, contingency of knowledge,
which is the basis of the literary form, reflects the ethical and political background of

this period･ Mandeville's thesis can be better understood if we see him as applying
this contlngenCy Of knowledge in Epicurean atomistic vision toward the economic

phenomena such as seen through Coffee Houses.

In fact, Mandeville's positionamong the freethinkers in the coffee‑house culture
can be regarded as that of an Epicurean atheist･ The opposition between Berkeley and

Mandeville developed through their AIclbhron and A Letter to Dion canbe appraised as
the opposition between Berkeley's cognitive theory on the revealed religion and

Mandeville's one on Epicureanatheist･ Berkeley can fully understand the meaning Of
Mandeville's economic insight based on contingency of knowledge and how it isdangerous to his religious philosophy and to the Rlture Of Britain economy because it

leaves a room for the arbitrary control by humanstrategy to influence other's cognition･
These details have to be discussed in some independent papers･
Thefollowlng Can be added as a summary fわr the philosophical background･Mandeville's thesis provides his orlglnal epistemological criticism in moral sciences tothe effTect that realism, which presupposes the existence of moral values, cannot beapproved as a basis fわr the explanation of what navlgateS human actions in the moral

and economic world･ In this, Mandeville based his discussion on the Molyneux's
problem that is Lockeヲs and Berkeley's continulng interests to inqulre Whether humanvisual cognlt10n toward figure or depth is innate or not･ Mandeville insists that moral
values are fb‑ed by cognltlVe leamlng through social interactions as depth is leaned

through repeatedly combined tactile sense and visual sense･ As Mandeville pemits theleamlng Process Canbe arbitrary斤ee including deception, he reveals the probabilistic

nature of the leamlng process by chance, which is extremely radical and camot be
accepted within the religious and deistic discussions of the time9.

Against the usual understanding of the history of economic thought, the divisionoflabor in a society had been, at first, discussed, when financial markets were becomlng

active in the coffee‑house culture, in relation to artificial humaninteractions rather than
the natural course of things･ The implication toward the modem economics is that

Mandeville can be seen as investigatlng the similar type of psychological problem as
Keynes discussed, in which the role of govemment has some weight･ They both
remarked psychological aspects of trader's expectation in financial markets･

Mandeville saw emerglng Stock markets in the coffee‑house culture in the1 8th century,
where he fわund a possibility that traders cancoordinate to enhance their level ofactlVlty

underumcertainty･ Keynes saw the systematized stock market in the 20th century andhe fbcused舟agility that will occur when a state of market is subject to a change under

Mandeville attempts to construct altemative explanations for the orderliness of societyto theism, which cannot
necessarily be either based on blind chance or reduced to the Darwinian evolutionary approach･ Darwin's theory of

evolution is the alternative explanation to theism in the 19th century･ Although Shopenhauer claims that Kant is the
only exception that does not resort to either blind chance or God, Berman (1988), appraising his claim as doubtful,insists that evolutionary theories existed prior to Kant, for example, the evolutionary theories of Hume and Barond'Holbach･ Hayek appraises Mandeville and Hume as the forerunners of evolutionary approach such as the
spontaneous order･ However, it is appropriate to interpret that contlngenCy in the fbmation or social orders having
been an existing theme in the 18th century'there were variousaltematives preceding the evolutionary approachandthat they differed in their explanations nl0m Darwin's rather thantheir precursors･‑6‑

uncertainty･ It was Smith who systematized economics by converting Mandeville's
insight into a diffTerent perspective with a normative view, in which the role ofgovemment has been minimized･ Both govemment discretion and economic
liberalism in the modem economics can be reappraised in these perspectives･2･ The economy andwits in Coffee Houses
From the late 17th century to the early 18th century, coffee‑houses in London

provided gathering space whereany mancould drink a cup of coffee for a pemmy, readnewspapers and communicate together･ At that time when the postal system was notwell organizedand joumalism was not enough developed, the coffee‑houses played arole or a communication center fわr news and infbmation. Furthemore, Ⅴ∬ious
writers

for literatures, wits

and political parties gathered in some particular

coffTee‑houses, which contributed the fわrmation of public oplnlOn in the enlightenment

period･ For example, Richard Steel, JonathanSwiR, Joseph Addisonand

Alexander Pope gathered in Button'Coffee‑house in Russell street, Covent Garden. In
addition, some coffee‑houses located in the Exchange Alley in Londonfunctioned as afinancial market, where merchantsand businessmen, in particular called stockjobbers

and underwriters, intemediated between buyers and sellers or stocks and contracted

insurance･ Coffee‑houses canbe interpreted as melting pots in which various people
and infbmation interact.

In the No･l of The Spectator published in 171 1, the story teller created by Steel andAddison describes his daily life in thefollowlng･ He, a Merchant in Exchange Alleysometimes as Stock‑Jobbers, oRen comes up ln Various Coffee‑Houses, Will'S, St･
LIames'S, Grecian, Cocoa‑Tree, Jonathan'S, listens to people's conversationsand
obseⅣes as a spectator, which are the sources of infbmation of the joumal.

HI have passed my latter Years in this City, where IamfTrequently seen in mostPublic Places, tho'there are not above half a dozen of my select Friends that knowme; of whom my next Paper shall give a more Particular Account･ There is noplace of general Resort wherein l do not o氏en make my叩pearanCe; SOmetimes I am

seen thrusting my Head into a Round of Politicians at Will 'S,and listening with great
Attention to the Narratives that are made in those little Circular Audiences.
Sometimes I smoak a Pipe at Child'S;and whilst I seen attentive to nothing but the

Post‑Man, over ‑hear the Conversation of every Table in the Room･ I appear on
Sunday nights at St･ LIames's CoffTee‑House,and sometimes JOln the little
Committee of Politicks in the Inner Room, as one who comes there to hear andimprove･ My face is likewise very wellknownat the Grecian, the Cocoa‑Tree, andin the Theatres both ofDrury‑Laneand the Hay‑Market. I have been taken fわr a
Merchant upon the Exchange fTor above these ten Years,and sometimes pass fわr a

Lfew in the Assembly of Stock‑Jobbers at LIonathan 'S. In short, where‑ever I see a
Cluster of People I always mix with them, though I never open my Lip but in my
own Club･" (Addison and Steel (1957) γol.1, p.4.)

Although economics is not yet systematized at this time, John Houghton, one or the

first financial joumalists described how Coffee Houses work as a stock market in his

Collection for Improvement of Husbandry and Trade. Using his description, Dale‑71

(2004) explains how the Moneyed Man goes among the brokers at Jonathan'S or

Garaway's Coffee House･ The Moneyed Man not only collected information directly
fTrom brokers but alsofrom weekly stock prices published by Houghton･ Houghton
states that people at that time Hstudied hard to dispose of their money, that they mightcomand it whensoever they had occasion, which they fわund they could more easily doin Joint‑Stock, than in laylng Out the same in Lands, Houses or Commodities, theselshares] being shifted from Hand to Hand." (Houghton (1694) June 15) Interpreting
fTrom the description by Houghton, Dale appraises the way of Stock‑Jobbing as̀matching', ̀each share purchase was matched agalnSt a CO汀eSpOnding sale, the role ofthe broker being to match individual buyers against individual sellers.ラ(Dale (2004)

P･26) He explains, by the early 1700S, the style of this stock market develops a hybridwith brokers increaslngly actlng aS prlnClpals and trading on their own account･

The remarkable point is that the transactions at CoftTee Houses include five types ofsophisticated financial trading, 'spot'transactionsfor immediate delivery of shares;'time bargains Or fbrward'fTor future delivery and settlement; 'refusals'or call options
which allowed the purchaser to buy or refuse to buy stock at a stated price at somefuture date in retum for payment of a premium; 'put'options which allowed thepurchaser to sell stock in a similar manner; and simultaneous buy/sell or sell化uytransactions which today we should call repurchase agreements or ̀repos'. (Dale (2004)
P･28) According as transactions become complicated, the process fわr managing
infbmation become strategic f♭r traders･Cof托e Houses arefull of misinformation and false information because traders tried
to eam by influenclngand controlling market prlCeS･ Defわe described making false

report in his Anatomy of Exchange Alley written in 1 719.
㍍There

are

those

who

tell

us

that

letters

have

been

ordered,byprlVatemanagement, to be written from the East Indies, withanaccount of the loss of ships
which have been arrived there, and the arrival of ships lost; war with the Great

Mogul, when they have been in perfTect tranquility;and of peace with the Great
Mogul, when he was come down agalnSt the factory of Bengal with one hundred
thousand men一一一JuSt aS it was thought proper to calculate those rumors f♭r the

ralSlngand falling of the stock,and when it was fわr this purpose to buy chap, or tosell dear･" (Defわe (1719) in Fransis (2009) [1849] p.139)

Defbe had rather venomous appraisal toward Stock Jobbing, reflecting that he hadgone through undischarged bankrupt･ However, the stock market around Exchange

Alley and Coffee Houses in the early eighteenth century is different fTrom today'ssecurities markets1 0n the one hand, today's market are secured by "a officialandself‑regulation designed to protect inventors by ensuring the solvency of intermediaries,
price transparency, fair dealing and the suppression of insider dealing." (Dale (2004)
P･35) On the other hand, the stock market in CoffTee Houses lacked those safTeguards.
Institutional safTeguards fTrom ordinary Investment risks have been historically arranged

since then･ Admittlng the difference between the stock market of pastand today, Dale
remarked that in splte Of these arrangements, there remains the phenomenon of bubbles

even today･ He tried to find the factors causlng bubbles in the past history ofbubbles,such as tulip bubble and South Sea bubble by suⅣeylng the literatures of the time･‑8‑

Murphy (2009), investigating the origin of English financial market, remarks thefunctions of infbmation circulation in the Coffee Housesand pays attention to theverbally transmitted infTormation. How verbal infわrmation communicated in CoffTee
Houses works in the stock markets can be a hint f♭r better understanding of flnanCial

markets.

uThe infTormation circulating in the Royal Exchange was supplemented by thatgenerated in the network of coffee houses and tavems located in its immediate
vicinlty･ The most important information was, however, communicated verbally･Indeed, the debate encouraged by the atmosphere of the coffee houses wasan
important part of the assessment of the market value･ It may also beargued that the

information to be found in these places was sometimes more useful thanthat
available through official channels･ It has been suggested that coffee houses
were places where new investors could lean about the market fbm experienced

brokersand stock ‑jobbers." (Murphy (2009) p. 1 191120)
However, in these historical investigations or stock markets, Mandeville is notrefTerred･ Because Mandeville did not describe any detail of procedures of stock
dealing as Houghton and Defわe did. However, Mandeville was interested some

psychologlCal aspects of the dealings in Coffee Houses fTrom his particular philosophicalcontext･ The context is embedded in the satirical and poetic style of Mandeville's
wrltlngS, Which stems from the joumalism that pervade the coffee houses in London.

In particular, the joumal, Tatler, published by R. Steel is Mandeville's target as hepublished Female Tatler by imitating lbtler･ Steeland Addison wrote their articles
and essays in Tatler, afterwards in Spectator, So as to reveal to their audience theconcrete way to behave, in other words, the proper mamer or code of the society･ The
marmer is not necessarily bound by the court but required in the newly expanding

economic society.
Mandeville is consistently straggling with the idea that there is a stable standard fわr

the morality and mamers of the society and the idea that those standards can be

detemined by the reason･ He tried to reveal the hypocrlSy Ofthose who states that hecanrationally judge the standard. Mandeville'S objection to this idea is not asuperficial one only to ridicule Steel's stance but a consistent one rooted in his

philosophical and religious stance･ Mandeville's basic motif presupposes that
Pulchmm 皮 Honestum (beauty and tmth) ∬e not stable. The background of this idea

is suggested in philosophical and religious context available up to 18th century, askeptical tradition that is susplCIOuS about the necessary comection between humanintension and its result as a whole･ For example, in Erasmus's idea that good isbrought about fTrom bad, Epicureanway of thinking that the order is detemined bychance, and Bayle's probabilistic providence･ Though Mandeville did not develop
fTormal presentation, his motif is related to one ofunintended results･ Even though he
had a deep Insight into the working of economy, he used a satirical and metaphoricalexpression being conscious of the contemporary oplnlOn about the economic world andatmosphere in the Exchange Alley, which appeared in those JOumals and essays writtenby the people of coffee house culture･ The representative attitude or contemporary

oplnion seen in Steel and Addison toward the increaslng economic activities of the time‑9‑

is to situate economic activities on a social fわundation shared in their civic humanistic

ideal.

Against their ideal, the oplnlOn Of the time, particularly presented by Steel, is that

economic activity displayed in Coffee Houses is like buying Lottery, loose or win of
which depend on chance and no mles, as in the fbllowlng･ CaprlCe and GroundlessImaglnary Motive are seen as a driving force of the economyand it is indicated thatthose would lead to Bubbles of Economy even befわre the crash of the South Sea

Bubble.

"When a Man has a mind to venture his Money ln a Lottery, every Figure of it
appears equally alluring, and as likely to succeed as any of its fTellows･ They all of
them

have

the

same

Pretensions

to

good

Luck,

stand

upon

the

same

fわot

of

Competition, and no manner of Reason can be given Why a Man should prefTer one tothe other befわre the Lottery is drawn･ In this Case therefわre C叩rlCe Very O鮎n actsin the Place of Reason,and fわrms to itself some Groundless Imaglnary Motive,

where real and substantial ones are wanting." (Addison and Steel (1957) γol.3 p249,

no.191)

There isanarticle on Bubble economy in Spectator, written also by Steel, in August
1 712, which allegorically describe the economy as an imaglnary palace dominated andcontrolled by vanlty through flattery, affectation and fashion. The visitors to thepalace ofvanlty are Self‑Conceited through these illusional processes and, as a result, theeconomic trading lS raised above the level or plain‑dealing･ However, once someshock broke the credit of the economy, visitors realize that the palace is in the air

without its fbundation･ The fbllowlng is the descrlptlOn Or the Palace or Vanity･"The Foundation hardly seemed a Foundation, but a Set or curling Clouds, which

it stood upon by magical Contrivance･ ･････････ The Top of the Building being

rounded, bore so far the Resemblance of a Bubble. ･.･‑･･･The Condition of

Mankind, which is thus managed by the Breath of Opinion, deluded by Errour,fired
by Self‑Conceit, and given up to be trained in all the Courses of Vanity, 'till Scom
or Poverty come upon us. ‑ ‑= ‥ ･Folly and Broken Credit were seen in the House

befわre they entered, Trouble, Shame, In払my, Scomand Poverty brought up the

Rear･ ‑ ‑ ‑When they had touched the Threshold, it was a strange Shock to themto find that the Delusion of Errour was gone, and they plainly discemed the

Building to hang a little up in the Air without any real Foundation･ At first we
saw nothing but a desperate Leap remained fわr us,and I a thousand times blamed

my unmeanlng Curiosity that had brought me into so much Danger･ But as they

beganto sink lower in their ownMinds, methought the Palace sunk along with us,'till they werearrived at the due Point of Esteem which they ought to have fわrthemselves; then the Part of the Building ln Which they stood touched the Earth･ M(Addison and Steel (1957) γol. 3 p420, no.460)

In this article, it is presumed that there is a kind offundamentals, on which economic
activlty Canbe substantially based and departlng fTrom which lead to bubbles. In temsof this perspective, misinfわrmation and decelVlng infわrmation exchanged in coffee
houses are seen as a source of conRlSion that makes the economy f♭r bubbles and‑10‑

ultimate collapse･ Though it was in the 1720 that South Sea Bubbles collapsed, We
could infer that people had already worried about the fickleness or caprlCe Seen in
investment of money lntO some COmpanies and had recognized those activities as being
similar to buying lottery, therefわre groundless･

It is inferred that the vocabulary of the above descrlPtlOn Of imaglnary Palace ofvanlty Partly corresponds to Mandeville's in The Grumbling Hive published in 1705, fTor
example,̀And odious Price a Million more:
Envy Itself,and Vanity,

Were Ministers of Industry;
Their darling Folly, Fickleness,

In Diet, Fumiture and DressThat strange ridic'lous Vice, was madeThe very Wheel tha tun'd the Trade'(Mandeville(1 924) vol. 1 , p.25)
Vanity through fickleness of tastes fわr consumptlOn is here described as a driving

force of the economy･When Mandeville added remarks and essays to the poem in
1714 and 1723 in The Fable of Bees, the similarwords used by Steel, such as 'flattery','deceit', 'mode'and 'fashion', are adopted in Mandeville's framework. It is obviousthat Mandeville made use of Steel's stylefor his rhetorical purpose, as is also inferredfrom the fact that Mandeville imitated Tatler by Steel and wrote essays in Female
Taller, which attracted the audience around the coffTee houses of wits. Their relation ofwriting stance canbeanalyzed from some politicaland molar attitudes, such as Whig
and Tory or the refわrmation of manners in that period･ However, Mandeville wasserious in criticizing Steel's instructions of manners based on some particularconception of politenessand sophistication shared by contemporary audience･In

the essay, 'AnEnqulry into the Origin of Moral Virtue', added in 1714, Mandevillestates, "Sir Richard Steele, in the usual Elegance of his easy Style, dwell on the Praisesof his sublime Species, and with all the Embellishments of Rhetoric sets fb血the

Excellency of Human Nature, it is impossible not to be cham'd with his happy Tums ofThought,and the Politeness of His Expressions･ But tho'I have been often moved by
the Force of his Eloquence, and ready to swallow the ingenious Sophistry with Pleasure,yet I could never be so serious, but reflecting on his artful Encomiums I thought on the

Tricks made use of by the Women that would teach Children to be marmerly･"(Mandeville(1 924) γol. 1 , P.53)

Mandeville and wits are interested in the social innuence and significance of thedealings and trades that occur around them in the coffee houses, which brought about

the wealth through economic expansions in Britain･ Without conceptual fTramework of
economics, they saw the phenomena from the perspective of moral problem, the virtue
problem, that is, what is and should be the motivation and navlgation orhuman action in
the expanding economic world. Steeland Addison tried to find the fわundation in theproper malmer and code of a society based on the civic virtue･ In their perspective,
therefわre, in the oplnlOn Of the time, Mandeville seemed to ridicule and amuse theirperspective intentionally uslng the rhetoric that emphasizes the fbundationless andfTortuitous nature of economic activities. However, Mandeville's essence cannot beseen in the superficial opposition to those wits.

‑ll‑3･ Mandeville and Berkeley in Coffee Houses
When Mandeville was characterized as atheist, fTreethinkerand minute philosopher
by Berkeley, Berkeley was critical toward Mandeville on a specific point relating to his
emplrlCal philosophy and its relation to religious point of view, as discussed in the

independent paper of mine discussed in the introduction･ Berkeley criticized

Mandeville in AIciphron published laterand his critic has been interpreted to be directed
toward Mandeville in that he recommends human greediness･ In fact, he hasanaspectof Epicurean hedonism and the moneyed man is generally averted and criticized･
Therefわre, it is not totally irrelevant to criticize Mandeville f♭r his recommendation of

greediness･ However, is that the only opposition between Mandeville and Berkeley?
Mandeville's loglC is underpinned by the philosophical and religious context, which

belongs to Gassendi,s and Bayle,s skeptical tradition in the 17th century･ Mandeville
tried to apply their cognitive critic towards the economic phenomenon in the early 1 8th

century problem･ Mandeville's application of the skeptical philosophy to the newproblem provided destructive fわrces in Berkeley's conceptual basis, in particular, in

relation to the revealed religion that considers that God infbms us of the way of

behavior･ The opposition between Berkeley and Mandeville is deep rooted and subtle
surrounded by the coffee‑house wits･ In this section, how Berkeley and Mandeville
opposed each other is discussed in this section through the Coffee House culture･
Berkeley has been an Irish philosopher since his major WOrks on the philosophy was

published in 1709 and 1710, An Essay towards a New Theory of Vision (1709) A
Treatise Concerning the Principles of Human Knowledge, Part I (1710), which areappraised partly as the extension of Locke's EmplrlCal philosophy･ Berkeley's famous
prlnCiple is esse is percl'pi, to be is to be perceived. Berkeley objected materialism.

He held that ordinary objects are only collections of ideas, which are mind‑dependent.
Berkeley was an immaterialist and held that there are no material substances. As there

is Bayle's cognitive criticism in their basic philosophy both in Mandeville and in
Berkeley, they are seemlngly qulte near in their stance toward skepticism･ Tn fact, thecorrespondence between Berkeley and Percival reveals that when Berkeley's books
were published･ readers reckoned Berkeley as a skeptic and his idealistic philosophy as
incredible. 】 0

Berkeley visited London in January, 1713 and stayed until the fall of the year11･

Berkeley had a good company with JonathanSwiR, his countrymanand old friend,
together with Steel, Addison, Pope and Arbuthnot, which made Berkeley known in the

Coffee Houses companies･ At the same time, Berkeley became acquainted withfree‑thinkers, for example, A･ Collins,and became conscious of their theory as a threat
to the Christianity･ As Berkeley tried to make his new philosophy compatible with
Christianity based on the revealed religion, he did not presuppose any existence ofmaterial substance in the world and based his philosophy exclusively on the humanperceptlOnS･ However, against his intension to refute skeptical philosophy, he was10

A reader states "Erasmus was not the worse thought or for writ‑ng ln praise offolly, but that you are not gone

sofaras a gentlernan in town ､油O asserts not onlv thaHhere is no such thing as matter but that we have no being at

aH.小Rand (1914) pl80 Erasmus is a Dutch Renaissance humanist and a Catholic priest and theologianofRotterdam.

Mandeville, who is also from Rotterdam, is said to be innuenced by Erasmus･
ll As to Berke一ey,s stay in London is infわ‑ed in Fraser (1994 ) p.xxxvii‑X1.

‑12‑

interpreted as near to SkeptlC･ While he was in London between March and September
1 713, he wrote several essays in the Guaridian in order to refute those fTree‑thinkers.
Mandeville canbe one of the Berkeley's targets as is infTerred fTrom his fbllowlng
essay･ Guardian No･39, April 25 1713 tells a story that one man, in his imagination,

went to the Grecian coffee‑house to find a comprehensiveknowledge of all things inaneminent fTree‑thinker and realized that theknowledge is narrowand unsatisfactory.
The essay lS On the imaginary Castle of Prejudice, Vanity and Passions, which reminds
us of the Palace of Vanity by Steel. The Castle is a metaphor of Free‑thinking thatassumes their theory as if not contradicting with church･"on the 1 lth day of October, in the year 1712, having left my body locked up safein my study, I repaired to the Grecian coffee‑house , where entering into the Pineal
Gland of a Certain eminent Free‑thinker, I made directly to the highest part of it,which is the seat of the Understanding, expecting to丘nd there a comprehensive

knowledge of all things human and divine; but, to my small astonislment, I fToundthe place narrower than ordinary lnSOmuCh that there was not any room fわr a miracle

prophecy, or separate spirit." (Berkeley (1 994) γol.3, p. 1 50‑1 5 1)

Berkeley compares the grotesque castle with the calmand peaceful churchandconsiders that the freethinking lS a false system pretending the latter in the following
descrlptlOn.

''I saw a great castle with a fortification cast round it,and a tower adjoining to itthat through the windows appeared to be filled with racksand halters. Beneath thecastle l could discem vast dungeons, and all about it lay scattered the bones ofmen･

It semed to be garrisoned by certain men in black, of gigantic size,and most terrible

forms･ But, as I drew near, the terror of the appearance vanished; and the castle I
found to be only a church, whose steeple with its clock and bell‑ropes was mistaken
fTor a tower filled with racksand halters. The terrible Giants I Black shrunk in to afTew innocent clergy men･ The dungeons were tuned into vaults designed only fわr
the habitation of the dead;and the fわrtification proved to be a church yard, withsome scattered bones in it, and a plain stone wall round it." (Berkeley (1994) vol.3,
p.151)
Though the fTree‑thinker who used the concept of "vanity, prejudice, and passions"among Berkeley's targets can be Mandeville, Berkeley does not mention the name of
Mandeville in the essay･ However, as seen the fbllowlng quotation, Berkeley allures
to the EpicureanSystem, which considers that the world is made from the atomic

movement fbmed by chance･ Furthemore, Berkeley suggested that the theory ofVanity is related to Locke'Stype of empirical ideasand that the theory is transformed
by Free‑thinkers into various heathen notions such as Epicurean and Gassendi･
The discussion that stored ideas are arranged and combined by chance is developedby Mandeville in volume 2 0fthe Fable.
uThe Brain of a Child, newly bom, is Charte Blance; and, as you have hinted very
Justly, we have no Ideas, which we are not obliged fわr to our Senses･ I make noquestion, but that in this Rummaglng Ofthe Spirits through the Brain, in hunting a鮎r,

‑13‑

joining, separatlng, Changing,and compounding of Ideas with inconceivable
SwiRness,under the Superintendency of the Soul, the Action of Thinking consists･門((Mandeville(1924) γol.2, p. 168)

Because this part is written 16 years later, the phrases camot be the direct target ofBerkeley's essay ln 1713･ However, this part clearly indicates Mandeville's orlglnal
philosophical stance. The first sentence that refTers to Charte Blance is Locke's
empirical philosophy. The second sentence, ̀we have no ldeas, which we are notobliged fわr to our Senses', can be derived fTrom Berkeley's idealism and immaterialism.

The third sentence is Mandeville's philosophy that brain as colpOreal organ changes andcompounds ideasunder supervison of the soul･ This philosophy is a derivation fTrom
Gassendi's philosophy and Epicurean tent that thinking can be processed throughcorporeal system and its process can be composed of atomistic constitution andsometimes ordered by chance･ This way of thinking camot be hold by Berkeley, whoconceives that perception is revealed through god and based on divine languages･ The

fTollowlng Part from Berkeley's essay suggests his antagonistic interpretation of

Mandeville's stance.
Away Posted Vanity,and I a氏er her, to the storehouse of ideas; where I beheld agreat number of lifTeless notion confusedly thrown together, but upon the approachof Vanity they began to crawl･ Here were to be seen among other odd things,

sleeping deities, corporeal spirits,and worlds formed by chance; With an endlessvariety of heathen notions, the most irregularand grotesque imaginable･ And withthese were Jumbled several of Christian extraction; but such was the dress and lightthey were put in, and their fTeatures were so distorted, that they looked little better
than heathens." ( Berkeley (1994) γol.3, p.151‑152)

Though it is infTerred that Berkeley targets here generally Epicurean, Gassendi or

nominalists including Hobbes, Bayle and Mandeville, one possibility is that
Mandeville's later discussion on thinking process was verbally transmitted through
CoffTee‑Houses conversations while Berkeley was in London･ It was not until Berkeley

published AIclbhron: or the Minute Philosopher in 1 732 that Berkeley starts to attack
free‑thinkers in eamest.

From 1713 to 1732, Mandeville enlarged The Fable of Bees three times, in 1714
1723 and 1729･ Through this extension, Mandeville's thought had been dispersed tothe public out of the Coffee Houses. However, it is sometimes remarked that it was

fTrom 1723 edition that Mandevill's Fable became provocativeand object of various
criticism. It is infTerred that one of the reasons of this can be the crash of the South Sea

Bubbles that occurred in the sprlng Of 1720, because Mandeville's thought had been
comected with bubble economy without fわundation expressed in Steel's essay

discussed above･ Not only those who had loss through the crash but also those who
were critical to Robert Walpole'S settlement a洗er the crash may have directed theircriticism toward what promoted the bubble economy･
SwiR wrote a poem, ㍑The BubbleM, in 1720 and publishedanonymously in January

1721.

While some build Castle in the Air,
‑14‑

Directors build Gem in the Seas;
Subscribers plainly see Gem there

For Fools will see as Wise‑Men please(Emmett (2000) vol.3, p.184 )The Castle in the Air is a metaphor used as a bubble economy by Steel and used as

freethinking as Berkeley･ According to SwiR's poem, he described the South Sea
company as a castle in the Sea, which was built by the directors of the company.
Subscribers of the company appraised the value or the stock in a deceptive way thatskillful wise government temptedfools, as Mandeville suggested･ In fact, Mandeville
was conscious that the metaphor of ̀the Castle in the Air'is used as a criticism toward
him･ He states in "An Essay on Charity, and Charity‑SchoolsM inserted in The Fable

in1723, 'What I have said in the Four or Five last Paragraphs, I foresee will with
abundance of Scom be Laugh'd at by many of my Readers, and at best be call'd
Building Castles in the Air; but whether that is my Fault or theirs is a (〕uestion."p.320

Berkeley also wasanxious about the future of the Great Britain a洗er the crash. He
wrote in 1721,日An Essay Towards Preventlng the Ruin of Great Britaln,M in which

Berkeley tried to distinguish the liberty of virtuous man and the licentious liberty of
injudicious patrons･

While the fわrmer is consistent with the duties of a good subject

and a good Christian, the latter discredits what they would seem to propagate･

Berkeley was critical to the situation: "when money is shined from hand to hand in sucha blind, fTortuitous manner that some men shall fTrom nothing lnaninstant acqulre Vastestates without the least desert; while others are as suddenly stnpped of plentiful
fTortunes,and le允 on the parish by their ownavariceand credulity･' The distinction

antlClpateS the distinction between the system or natural liberty by Smith andMandeville's licentious system Smith called.
ARer the crash, Berkeley planed to establish a mission college, the Bermuda project,and moved to Newport, Rhode Island inAmerica, in order to attain the proJeCt･ Fraser
described the project as 'ideal of Christiancivilization, which so moves the heartand
touches the imaglnation in our retrospect of the eighteenth century･ Of all who haveever landed on the American shore, none was ever moved by a purer and more

self‑sacrificing spirit･'(Fraser (1994) vol.1.p.lix) But he went to America only tofind the project tO be failed because the funds were not forthcomlng because Walpole
rejected the payment ofthefund･ ARer retum to London, in 1731, Berkeley criticized
Mandeville, Shaftesburyand other freethinkers as the minute philosophers in his
AIclbhron, in 1732.
0n the one hand, Mandeville's discussion in the Fableand probably in the CoffTee
Houses was interpreted to promote the bubble economy and the 和in orthe Great Britain･On the other hand, institutional fわundations of the economy to prevent illegal maneuver

and misinfわrmation, fTor example, accounting system through the third party, has been

established aRer the South Sea Bubbles. In this direction, institutionalization of the
Britain economy has proceeded through establishing the govemance or the economy･

When Smith systematized economics, economics has fbcused on the analysis of pricemechanism that works within some appropriate law institutions, where rational

economic behavior as an autonomous individual has been nomatively characterized.

When Steele, SwiR described the economy as a fbundationless castle, they tried tofind the moral basis of the society of the time, where there is a collision between wealth‑15‑

and virtue･ Smith,s system of economics in the latter half of 18th century lS One Way

for avoiding the collision. Using the phrase of Phillipson (1983) which characterizes
Smith's economics and moral philosophy under the tradition of a civic moralist, thepursuit of proprlety by Steel and Addison had become "analtemative to the pursuit ofvirtue, and the voluntary societyand the coffTee‑house had emerged asanaltemative tothe polis･"(Phillipson (1983) p.199) However, Mandeville's insight into CoffTee
Houses is different fTrom an altemative to the polis, therefTore different fTrom Smith's wayof thinking.

The establishment of law institutions is also discussed by Mandeville in The Fable･
The discussion has been remarked by Hayek asanevolutionary approach in his

discussion on the spontaneous order･ However, this part fTor Mandeville is only an
excuse f♭r escaplng the misconceptlOn Of his thesis, that he recommended an illegal

action･ Mandeville rhetorically made use of the fbundationless in order to exaggerate
the opposition between wealth and virtue･ In this literary strategy, Mandeville's main

point diverges fTrom Smith's solutionand the civic virtue. Mandeville's vice would benavlgated to hamless one by the instmction through law institutions, if the bad action is

publicly admitted harmful to others･ However, his 'vice'is orlglnally conceived not as
tamedand introverted self‑love. Mandeville's vice conception hasanaspect of stirrlng
emotion of others and being influenced by the incitement, which is offensive to the ear

whose ideal is directed to Christianlty and the civic virtue･ Mandeville was qulteconscious of his polarized position in the opposite side of their ideal, civic virtue･ For

Mandeville, CoffTee Houses are no way altemative to polis･Mandeville described the process in detail, through which two merchants in a coffTeehouse reach their agreement in their trading contract･ Interpreters tried to see thisprocess as haggling and prlCe negOtiation･ However, the point Mandeville fbcused
would be lost sight of, if his descrlPtion were interpreted through the eyes of the modem

prlCe theory based on rational behaviors･ Mandeville's interest in prlCe itself or the
price mechanism is too week throughout The Fable. He does not seem to credit an
economic prosperlty tO PrlCe information, even if he found the division of labor as asource of the prosperlty･ On the one hand, market prlCe and natural prlCe analysis was
systematized by Smith and they areunder the tradition of the natural law, where the fairtrade and reasonable prlCe are the result of convention of the society with some properinteractions･ In this tradition, reflecting the civic virtue as a moral attitude toward fairtrading, individuals are rational according to their self‑interests consistent with therulesofjustice･

On

the

other

hand,

what

Mandeville

saw

in

economic

tradingthat

propagated in Coffee Houses is infわrmation andknowledge construction under

uncertainty, in his words,under ignorance･ He saw trading in CoffTee houses as aresult of accidental consensus through psychological expectations of each individual

sometimes biased and controlled･ Even if market prlCefluctuate according to theconditions of the amount of supply and Mandeville may notice the underlying prlCe
mechanism in the level or common sense or his time, he fわund the crucial market fわrce
in the expectation fわrmation, such as made in Coffee Hoses as a market place fTor

financial market.

In the remark (B), Mandeville tries to concretely explain what type or person whom

he called 'Knaves'in his poem･ Mandeville indicates uthe innumerable Artifices, bywhich Buyers and Sellers out‑wit one another, that are daily allowed of and practices

among the fairest ofDealer･" (Mandeville(1924) vol.1, P61.) In particular, Mandeville‑16‑

fTocuses here the Artifices, Tradesman's hiding 'the DefTects of his Goods'and extolling̀his Wares beyond their Worth'･ Though the problem seems to be partly related to theasymmetry of infわrmation of the modem perspective, Mandeville'S problem differsfrom it in that in his example, he presupposes that both buyersand sellers does notknow the true infbrmation･ Therefわre, what he is analyzlng is the situation in which

both buyersand sellers face uncertainty･ In addition, buyersand sellers in a Coffee
Houses try to invest their surplus money ln a quasi financial market･ This setting lS

derived not from some abstract analytical interest but fTrom Mandeville's everyday
observation in Coffee Houses.
The scheme that he has is the moral problem, and in particular, the possible scheme

canbe Thomas Aquinas,s problem, which considers thefraud12･ Thomas Aquinas
questioned whether it is admitted to hide the infbmation and sell his grains at a highprlCe When one merchant comes to sell grains in a district where grains are short and heknows that numbers of carts will come with grains after him･ Thomas Aquinas
answered 'yes'but he indicated that this deed is against the words fTrom Matthew, udo
fTor others what you wanted to be done." As Mandeville refTers to these words from
Matthew twice in the remark (B), he is conscious of Thomas Aquinas,s problem.
However, the focus of the point is different fTrom Thomas Aquinas's problem･
Mandeville's problem concems that of under ignorance and uncertainty i血erent in
CoftTee House rather than hiding true in丘)rmation.

Decio, a Man of great figure, that had large Commissions f♭r Sugar from several

Parts beyond Sea, treats about a considerable parcel of the Commodity with AIcanderaneminent West‑India Merchant; both understood the Market very well, but could

not agree: Decio was a Manof Substance, and thought no body ought to buy cheaper
thanhimself; AIcander was the same,and not wanting money, stood for his Price･

While they were driving their Bargaln at a Tavem near the Exchange, AIconder'S
Man brought his Master a Letter from the West‑India, that infbrm'd him of a muchgreater quantlty Of Sugers comlng fTor England thanwas expected･ AIconder now
wish'd fわr nothing more thanto sell at Decio's price, befわre the News was Public;

but being a cumlng Fox, that he might not seem too precipitant, nor yet lose his

Customer, he drops the Discourse they were upon,and putting the Weather, fTrom
whence falling upon the Delight he took in his Gardens, invites Decio to go alongwith him to his Country‑House, that was not above Twelve Miles from London. It
was in the Month of May, and, as it happened, upon a Saturday in the ARemoon:
Decio, who was a slngle Man,and would have no Business in Townbefbre Tuesday,
accepts of the other's Civility,and away they go in AIcander's Coach. Decio wassplendidly entertain'd that Night and the Day fbllowlng; the Monday Mornlng, tO get
himself an Appetite, he goes to take the Air upon a Pad ofAIcnader's and comlng
back meets with a Gentleman of his Acquaintance, who tells him News was come theNight before that the Barbadoes Fleet was destroy'd by a Storm,and adds, that
befわre he came out it had been conflrm'd at Lloyd's Coffee‑House, where it wasthought Sugars would rise 25per Cent･ By Change‑time･ Decio retums to his
Friend,and immediately resumes the Discourese they had broke off at the Tavem:
AIcander, who thinking himself sure of his Chap, did not design to have moved it till

12 S･ Thomae Aquinstis (1985) Qu.77, art.I‑17‑

aRer Di‑er, was very glad to see himself so happily prevented; but how desirous soever he was to sell, the other was yet more eager to buy; yet both of them afraid of
one another, for a considerable time counterfTeited all the lndifference imaginable;'till at last Decio fired with what he had heard, thought Delays might prove

dangerous, and throwlng a Guniea upon the Table, struck the Bargaln at AIcander'sPrice･ The next Day they went to London; the News prov'd true,and Decio got
Five Hundred Pounds by his Sugars･ AIcander, whilst he had strove to over‑reachthe other, was paid in his ownCoin: Yet all this is called fair dealing; but I am sureneither of them would have desired to be done by, as they did to each other.
(Mandeville(1 924) γol. 1, pp.61 ‑3)

The trade between Decio and AIcander in a Coffee House near the Exchange Alleyis a speculative trade in which they are expectlngfuture market conditions of sugars thatwill be sent from distant places･ They both have prlVate infomation on the market

conditions and the reliability of the information is uncertain. Coffee Houses are full of
infわ‑ation including decelVlng One and traders do not have to reveal to the opponent

what infわrmation he has･ They could pretend or fTake his ownexpectation in favor of

his benefltS･ How can they stick a balance even if they at first did not agree in price?
It is due to the changes of their expectation that was caused by their recelVlng new
infわ‑ation hour by hour. Therefわre, a4justlng mechanism is psychologlCal one.

Although Mandeville did not elucidate adjusting processes in the above example,
interpretlng it from the perspective of the whole context of The Fable suggests that

there is both structureand logic that attain the adjustment in Mandeville's thought.
There are interactions of expectation fbmation between traders, in Mandeville's word,
psychologlCal adjustment through flattery and docility, which promotes public benefits.

In modem perspective, the interactions can be interpreted as expectation fbmation thatwill support a level ofeffTective demand in the whole economy･ In fact, expectation of
Decio and AIcander based on their prlVate infわrmation that canbe deceptlVe, fTorms apart of investment and finances not only the sugar market but also related industry,
because they are dealing sugars not fわr their use as a comodity but fわr their

speculation.

Mandeville interprets this psychological process based on his onglnal cognltlVe
discussion based on skepticism･ Constructiveand scientific skepticismunder the
tradition of Gassendi, it is supposed that we cannot recognize the substance of things,
but we have cognltlOn through phenomena if there is some consistency ln apparent

things･ Mandeville could have applied this skeptical methodology on the economic
sphere, presupposing that people are motivated in their economic activities (buying andselling) by apparent infわ‑ation even if they are ignorant whether the infbmation istrue or not･ They canmake use of uncertain infわrmation in building guide fTrom
perceptible infbmation under uncertainty･ In other words, they can adoptively fわrm

their expectations. In the above trade between Decioand AIcander, even if traders do
not have true infわ‑ation in distant places or concemlng Others, they are navlgated bycurrent information as long as it is supposed to hold his psychological confidence
sometimes endorsed by his economic galnS aS he thinks proper･ Mandeville fbcusedon this probable and temporary nature of cognltlVe leamlng developed in speculative

markets in Coffee Houses･ This unstable leamlng Was Critically suggested by Steel as
the fbundationless and fわrtuitous nature or economy and was not included in the main‑18‑

stream of economics by Smith.

Furthermore, this way of leamlng Partly corresponds to Berkeley's cognltlVe
discussion of depth in the Molyneux problem･ He indicates that depth is notrecognized directly as an object but suggested by other perceptions such as colors,

faintnessand touches･ This idea is one of his presumptions Of his immaterialism･They are common in that indirect and apparent infわrmation plays a part of human

cognltlOn･ However, they are diffTerent inanimportant respect. While Mandeville
includes decelVlng infbmation devised by human in the process, Berkeley conceived
that divine language, never deceivlng and never by chance, is slgnS fわr humanrecognltlOnS･

According to Mandeville, as will be explained in the fTollowlng Section,

to exchange deceptive infわrmation that canbe true or false canbe used fわr traders tofind a path f♭r economic coordination that will attain the division of labor. A

psychologlCal balance or deceptlOn that depends on chance and some human control isthe very target of Berkeley･

4･ The division of labor as a coordination problem in The Fable

Mandeville'S Fable is seemlngly a fiagmental essay but it has a consistent structure
and logic that support his economic insight･ First of all, Mandeville sees the wholestmcture or economy that develops the division or labor and promotes the publicbenefits･ Secondly, he recognlZeS that the structure is underplnned by psychologicaladjustments within local trading. The adjustment providesamalgamated eftTect to thewhole interactions that will coordinate the division of labor. This section fわcuses on

the first point and the next section on the second point･Mandeville's discovery of social mechanism is ultimately with respect to the extent
of the probability with regard to the transitions of the division of labor･ He perceives
that increased variations in desires, which are accidentally created, likely makes thesociety lager and richer･ In other words, seemlngly chance creates systematic
regularities within economic interactions.

Mandeville's descrlption of thiscontlngenCy repeatedly appear in both volumes of The Fable, as seen in the fbllowlng
quotation:uWe shall丘nd likewise that the more their Pride and Vanity are display'd andall their Desires enlarg'd, the more capable they must be of being rais'd into large

and vastly numerous Societies." (Mandeville (1924) vol. I. p.3461347.)
H The greater the Variety of Tradesand Manufactures, the more operose they are,and the more they are divided in many Branches, the greater Numbers may becontained in a Society without Being ln OneanOther's way,and the more easily

they may be render'd a Rich, potent and Flourishing People." (Mandeville (1924)
γol.1. p.367.)

Mandeville unfailingly included the proposition of probability in his conclusion
to the second volume, as seen in the fbllowlng quotation:119‑

u the larger the Numbers are in a Society , the more extensive they haverendered the Variety of their Desires, and the more operose the Gratification of themis become among them by Custom; the less mischievous is the Consequence ofthat Evil, where they have the use of Money." (Mandeville (1924) vol.2. p.350.)
The contents of Mandeville's thesis, 'Private vices, Public Benefits', are explainedin this proposition that as the variety of desires increased, the society likely becomes
more rich and nourishing･ In the same way, the opposite proposition that the less thedesire, the poorer the society, is described in the poem of The Fable･ How these
propositions are derived?

On one hand, Mandeville perceives the division of labor to essentially provide anincrease in production as well as improvement of technology, as seen in the fbllowlng
quotation:

uWatch‑making, which has come to a higher degree of perfection, that it
would have been a汀ived at yet, if the whole had always remain'd the employment

of one person;and I am persuaded, that even the plenty we have of clocksand
watches, as well as the exactness and beauty they may be made of, are chiefly

owlng tO the division that has been made of that art Into many branches･M(Mandeville (1924) vol.2, p. 284.)
On the other hand, Mandeville perceives the difficulty in the development of thedivision of labor to lie in the coordination of trading actions13･ As shown in thefTollowlng description, Mandeville perceives the difficulty of coordination regarding thedivision of labor in the spontaneous arrangements of production and trades･uSavage People all do the same thing: This hinders them fTrom melioratlng their
Condition, though they are always wishing fわr it: But if one will wholly apply

himself to the making or Bows and Arrows, whilst another provides Food, a thirdbuilds Huts, a fわurth makes Garments,and a flRh Utensils, they not only become

useful one another, but the Callingsand Employments themselves will in the same
Number of Years receive much greater Improvements, than if all had beenpromiscuously fbllow'd by every one of the Five." (Mandeville (1924) γol.2, P.

284.)

13

Recent study on the division of labor by Becker and Mu叩hy (1992 ) delineates the neglected aspect by Smith.

"The traditional discussion of the division of labor initiated by Adam Smith emphasizes the limitations to
specialization imposed by the extent of the market･ Limited markets occasionally curtail the division of labor, but

we claim that the degree of specialization is more often determined by other considerationsI Particularly
emphasized are the various costs of 'coordinating'Specialized workers who perform complementary tasksand theamount of general knowledge availablej' They perceive general knowledge to be significant to the decrease incoordinating costsI Mandeville conceives the division of labor in a society rather than in a factory･ Therefore, thegeneral knowledge discussed by Becker and Mu叩hy does not co汀eSpOnd with the knowledge required fわr thedivision of labor considered by Mandeville･ However, since firms and enterprlSeS COnSidered by Mandevillearelimited in the scale, essentially produced by an individual, there must be overall coordination among the independent

specialized producers in the market. Therefore, something that correspondswith the general knowledge to decrease
coordinating costs can be conceived by Mandeville. Mandeville perceives that accidental and tacit a4justments
through fashion aJld "mode," which are accompanied by implicit knowledge, promote coordination･‑20‑

In this, Mandeville insists that five savage people will do the same thing ln a Way
that all are promiscuously engaged in every production･ Therefわre they cannot enter

into a society with the division of labor, even if they know the general benefits of it･

The difficulty exists in to expect one's definite benefit fTrom engaglng a specificproduction while making sure of others' doing different production properly.

Mandeville sees the problem as how people in a society can selfJenfbrce theirconsumptlOn and production according to the pattems of their activities the possible
division of labor precisely requlre･That is, each producer and trader has to co汀eCtly expect the galnS Ofthe division orlabor, which essentially concems with futureand uncertainty. Here lies the problem

of infbrmationa1 limitations in that the buyers and suppliers are unaware of the futurestate and there丘)re how to coordinate their demand and supply actions･ Even though theincrease in productivity provides potential public benefits, the entire economy lS

constrained by the difficulty in coordinating every detail of their economic actions,which provides the expansion of the market, that is, the increase in effective demand.

It becomes evident through Keynesand the recent fTormulation of Keynes problem by
Cooper and John (1988) that the problem regarding expectations and coordination is

crucial in determ1nlng the extent of effective demand.
Furthermore, each individual has to adjust his trading actions differently in theentire economy. The infbmational basis of their economic actions must be localized
individually･ In other words, since the data used by each person are numerous anddivergent, it must be changed and updated, Corresponding to the changes of others'
trading actions･ In this sense, trade interactions leading to the development of thedivision of labor are enormously complicated, as described below by Mandeville:" What a Bustle is there to be made in several Parts of the World, befわre a fine

Scarlet or crimson Cloth can be produced, what Multiplicity of Tradesand Artificers
must be employ'd! Not only such as are Cloth‑workers, the Scourer, the Dyer,
The Setter the Drawer and the Packer; but ithers that are more remote and mightseem fわreign to it; as the Millwright, the Pewterer and the Chymist, which yet are allnecessary as well as a great Number of other Handicrafts to have the Tools, Utensils

and other Implements belonging to the Trades already named." (Mandeville (1924)
vo1.1, P. 356.)

Mandeville's problem is interpreted as coordination of trade networks such that it

suitably leads to the development of the division of labor. Even if Mandeville did not
develop, what we call, economic concepts, his fわcus of the problem cmcially relates tothe core of the economics, how coordination can be attained under some uncertainty･The examples discussed by Mandeville that the coordination is attained are two types･
One type concems investment market such as in Coffee Houses and the other type isconsumption market such as dresses or silk clothes with mode and fTashion.

The important polnt interpreting the working of these markets is that the concept ofmarket as we think today is deficient in Mandeville's insight. It was at least aRer
Smith that we presuppose an independent individual rationally subject to self‑interest in

the market place･ Mandeville does not systematically analyze the prlCe mechanism toconsider the mamer in which the division of labor is promoted･ Therefわre he has noframe that market mechanism works partially under the incomplete information･ He‑21‑

conceives a probability that various interactions of traders who try to directly influenceother trader's cognlt10n unintendedly promote benefits of all･ Depending on the wayof influence toward others, these interactions can be a part of the so‑called market,

however, in a polar case, it would be a case that non‑independentand non‑autonomous

individuals are skillfully controlled under arbitrary or tyrannical systems･

5･ Coordination throughCognitive interactions
Mandeville's descrlptlOn Of the entire process of cognltlOn involves the fbllowlng:
the recelPt and storage of infわrmation through the senses fわllowed by the arrangement

and manlpulation of stored infbmation to fbm ideas. 14

Based on this conceptlOn Of the process of cognltlOn, Mandeville sumised theexistence of imbibed notions, that is, modes of thinking that reflect customs and dictate
the ma‑er in which ideas are arranged and combined, and even the existence or ideas.

Based on this, it is evident that the mamer in which the brain processes infbmation is

not just physiologically determined but also crucially influenced by custom or "modes"of behavior･15

Mandeville calls forth the power of custom to provide some implication

to the modes of thinking as himbibed notionM in the fbllowlng:

uAnd to this Day, taking off the Hat is a dumb Sew ofaknownCivility in Words:
Mind now the Power of Custom, and imbibed Notions･ We both laugh at this
Gothick Absurdity, and are well assured, that it must have had its Origin from thebasest Flattery: yet neither of us, walking with Hats on, Could meet an Acquaintancewith whom we are not very familiar, without shewing this Piece of Civility; nay, lt

would be a Pain to us not to do it. But we have no Reason to think, that theComplement of saylng, Your Servant, began among Equals; but rather that, Flatters
having given it to Princes, it grew a鮎rwards more common." (Ibid. γol.2 p.151.)

Locke's influence on Mandeville is seen in the conception of uimbibed notions"･
Locke discusses the possibility of varylng ideas among individuals･ h his search fわrabsolute certainty regarding knowledge, he argues that one has to endeavor to

distinguish simple ideas fTrom compound notions with respect to things･ In other words,

before reaching a certainty, humanminds are subject to confusion through imbibednotions orlglnating from customs. While Locke considers the imbibed notions to be
temporal deviations from the process of arrlVlng at true ideas, Mandeville regards the】4 In this way, Mandeville,s hypothesis fわllowed the emplrical studies ofLocke and Berkley orthe late 17th and thelate 18th centuries･ The above cognltive discussions reveal certain innuences of Locke. First, Mandeville denies
innate ideas･ Second, uslng the word Charte Blanche, which is similar to the word utabula rasaw used by Locke, hesupposes the process of acqulrlng ideas through experiences･ Third, while he assumes the ignorance of men, he

presumes that God is cellain of what reality lS･ In other words, Only God or divine wisdom guarantees complete
knowledge and its existence.
15

These cognitive discussions resemble Hume'S philosophical conceptions in his work Treatise of Human Nature.

Mandeville'S "image" co汀eSpOnds with Hume'S "impression･H Mandeville'Sいcustom" co汀eSpOnds with Hume'S"Convention･" Both are similar in their tone f♭r assuming a type of inductive reasoning･ it is tme that

MandevilIe's statement is vagueand dispersed･ Mandeville may have influenced Hume in some manner; however,further research is required to demonstrate this･ Contrary to Mandeville, Hume's main theme is found in a stable
convention such as propelly rights･ However, Mandeville is interested in umode''in a luxurious economic society･Although Hume also paid attention to uluxury'.and designatedanimportant role to it, he changed the expression"luxury" to urefinement" in the later version1 0n the contrary, it appears that Mandeville's cognitive discussion isdiluted in Hume's philosophy.

‑22‑effects of imbibed notions to be continuous16･ while Locke presupposes a trueleamlng Process that requires intellectual functionlng, Mandeville denies such a stable
and converglng process Of the intellect･ Mandeville's skeptical critic toward Locke's

idea for intellectual functionlng lies in this denial. Mandeville considers that
judgments resulting fTrom one's intellectualfunctionlng Can err in processlng theinfわ‑ation received through senses.

According to Mandeville, each individual in a society, ln particular in the market, issubject to deceit through such a communicative process seen in "imbibed notion."

What Mandeville describes as "flattery" or "docility" Canbe interpreted as thecommunicative process where each individual is exposed to various and even empty orerroneous infbmation･

The market process described by Mandeville is navigated byskillful controlsand tactics used by traders, who try to influence others'cognltlOn
toward market realities by employlng Pride andflattery･ He remarked a characteristicof humannatureknownas "docility,H which allows people to feel easily natteredandpersuaded to perfbm some actions･ Mandeville explains that consumers are easily
flattered by sellers'navlgations or influenced by trends in such a manner that they areprompted to demand some new goods･ This promptitude is a driving fわrce fわr themarket process to create and adjust the potentially effective demands of the market.
The fbllowlng descrlptlOn Or negotiating traders can be interpreted as a process oftrials f♭r creatlng desires through flattery:"His Business is to sell as much as Silk as he can at a Price by which he shall getwhat he proposes to be reasonable, according to the Customary Profits of the Trade･

As to the lady, what she would be at is to please her Fancy, and buy cheaper by aGroat or Sixpence per Yard than the Things she wants are commonly sold at･

but attacking her Vanity makes her believe the most incredible Things in the World,
Concemlng his own Weakness and her superior Abilities; … It is possible that thisLady f♭r want of being sufficientlyflatter'd, fTor a Fault she is pleased to find in his
Behaviour, or perh叩S the tying or his Neckcloth, Or some other dislike as

Substantia1, may be lost,and her Custom bestow'd on some other of the
Fratemity･ " (Ibid.γol.1 p.350‑352. )Mandeville's prlmary COnCem is to understand how払ncyand vanlty ln a buyer's

mind are stimulated and taken advantage of by a seller while trading. Schabas (1994)
interprets this descrlptlOn aS a negotiation of prlCeS between a buyer and aseller‑haggling･ Price of a good certainly fわrms a part of their concem･ However,they do not concentrate on the pnces of trade alone but also on the additional values

attached to the traded goods. Moss (1987) perceives, in the above description, some16

Locke states in the following quotation:"If it should happen that ally two thinking men should really have different ideas, I do not see how they could

discourse or argue one with another･ Here I must not be mistaken, to think that every f一oating lmaglnation in

men's brain is presently of that sort of ideas I speak of･ It is not easy for the mind to put off those confusednotions and prejudices it has imbibed fiom custom, inadvertency,and common conversation. lt requlreS palms
and assiduity to distinct simple ones out of which they are compounded; and to see which, amongst its simple ones,
have or have not a necessary connexion and dependence one upon another･ Till a man doth this in the prlmary

and origlnal notions of things, he builds upon noatlng and uncertain prlnCIPles, andwill oRen find himself at aloss. "

237

‑23‑

subjective expectation fTrom the economic galnS in exchanges. This paper shares with

Moss (1987) the view that Mandevillefocuse? on the individual'S perception of reality
as an important determinant of the economlC PrOCeSS･17

while Moss refers to thepeculiar aspect of Mandeville's thought as "subjective mercantilist," the aspect can beunderstood better within the philosophical context in relation to Berkeley ･This paper interprets that Mandeville proposes a solution in the fbm of a strateglC
urglng toward consumptlOn uSlng trends and modes, which is possible, at anindividual's level, through the psychologlCal leamlng Of the action of making demands･
For example, although an individual, at first, is indiftTerent to the colors of her dress, heradditional demand fb∫ red color dresses, which is the current trend, could develop thedivision or labor in some related area orproduction such as the dye industry as well as
those that are distantly related, as discussed in the example of fine Scarlet cloth in theprevious section･ In order to coordinate the trading pattems in the entire economy, an
empty and seemlngly useless trade can link the networks of the economy, which causes

an expansion of the market･ For example, some beneficial effects through the
expansion, such as lowerlng costs, Provide welfare to each consumer through thecomplex linkages ortrade･ As a result, even ira trade is initially useless to the trader,itisrationalized

followlng

anawarenessOf

its

amalgamatedeffTectsIThe

characteristics of the leamlng lie in that her cognlt10n toward her gains from the market
is developed through various perceptions, that is, the perception of the red productsbought by her and that of the economic galnS through all trade she engages in･ In otherwords, cognltlOn Of economic galnS is based on cognltlVe leamlng With amalgamatedeffTects.

This fbms the basis of the cognitive and psychologlCal leamlng Of the market

process conceived by Mandeville, which can be derived from applying Mandeville'S
skeptical extension of Molyneux problem･

Mandeville discusses Molyneux'S

problem in his essay A Search into the Nature ofSocieO) because the problem regarding
cognltlOn toward market reality has a constmction similar to that of cognition toward

space attributes･ Having indicated what type of cognitive ability enables men tounderstand their relations in a social space, he identifleS a Similar cognltlVe leamlng ln
the market processes discussed in the cognltlOn Or depth by Berkeley･ Since depth is
not the direct object of sight and is suggested by the collaboration of different senses,
individual cognition in the market process is synthesized by combining heterogeneous
data through various trading relations･ Mandeville obseⅣed the psychological aspectsof human nature, particularly by comparlng how individuals receive, interpret, andmanage the infbmation received through daily market interactions to a blind personwith restored vision who initially leans to recognize depth by combining what he views
and the way he touches.

Depth is dete‑ined through a synthesis of visual and tactile experiences･ Colors,
lights, and shades are translated into measures of distance since a percelVlng individual
repeatedly leans how things appear depending on the distance of the thing fTrom him･Economic gains fTrom the division of labor are learned by synthesizing information from
17

While Moss interprets that subjective valuation creates redistribution of wealth in zero‑sum game, this paper

viewsanindividual'S perceptions that are embedded in the endogenous processes for developments of the division oflabor, which promotes the benefits ofall･ One person'S subjectively high valuation for goods not only temporally
adds demands for the goods but also in the long term is sustained as real economic galnS through the division of labor
For example, an entire economy is able to enjoy the benefits of high productivlty through the division of labor, which
was made possible by an accidental increase in demand.

‑24‑

direct purchasing actionsand their total effects, which emerge through the entire
economy with complicated interactions･ In the latter case, measure of economic galれsfrom the division of labor, dependent on every detail of individual trading actions,cannot be stable as compared to that in the fbmer case.

The nature or market

realities is a derivation from the relative composition of trade interactions. In this, theobjects of cognltlVe leamlngrmarket realities‑are not predetermined factors but
endogenously dete‑ined within the market process･
Mandeville observes that causal relations between a consumer's motivations and hispurchasing actions are not rigidly fixed since he is easily influenced by strategic urglng･
Prideandflattery through market communication influence each individual's cognition

toward market realities･ However, this does not imply that he is capable of being
maneuvered in any direction･ He allows this until the certain state of things, that is,market realities, rise up to his interest･ However, the extent of its perceptual
appearances that are acceptable to each individual is so broad that the economic path ofthe market process is dependent on their unconscious psychological leamlng･ As

suggested by "imbibed notion,H Mandeville does not perceive the leamlng process aS
straightforward, Converglng, and stabilizing as the leamer gathers certain information
through interactions･ He perceives it as rather twisted,fluctuatlng,and Dickering,depending on how each person isflatteredand persuaded by others'intentional actions･In this case, the dete‑ination of concrete economic perfbmances by way of deceptlVecontrols depends on how things appear and how things are allowed to appear withrespect to an economic environment, even if they had no entities in advance･

The overall cognltlVe interactions are processes for construction ofknOwledge fromseemlngly lnCOherent perceptions･ The processes are occasionally fわrtuitous and canbe interpreted as probabilistic, which is targeted by Berkeley's criticism･ Mandevilleindicated the processes as a paradoxical and atheistic vision and, in no way, Interprets

the process to lead to a systematic analysis･ However, Mandeville's insight into theprocess including the explanation through chance factors reveals the innovative aspectsof his probabilistic vision at a period dominated by the deteministic approach･6･ The implications toward the economic thought after Mandeville
The debate18 continues over the exact categorization of Mandeville,s thinking ln
the history of economic thought･ From the perspective of economic thought,

Mandeville'S studies continue to present one difficulty in that he has two seemlngly
contradicting aspects: on one hand, they appear to be aforerunner of economic
liberalism such as Smith's natural libertyand Hayekian type of uspontaneous order"; onthe other hand, they are suggestive or inteⅣentionism such as mercantile systems andthe control of effective demand as suggested by Keynes･ These inconsistentinterpretations have been solved to son.e. extent in literature (Chalk (1966), Tanaka(1966)) by placing Mandeville in translt10n from mercantilist thought to.economic
liberalism･ The studies into the evol山ion of legal institutions in soclety have

18

There have been broadly two types or appraisals on Mandeyille's thought: one fわcuses on Mandeville's work舟om

the perspective of it being a.precursor to Smith's economic liberalism (Kay (1924)) and the other views Mandevilleas being within the interventlOnlSt Or merCantilist mould. For example, while Viれer (1958) recognized Mandeville's
conception of inteⅣentionism, Landreth ( 1 975) viewed Mandeville's work as typical mercantilism‥‑25‑

Contributed this interpretation of Mandeville's thought. Rosenberg (1 963) perceived
an explanation for the emergence of legal institutions in The Fable, whereby thegovemment had to inevitably inteⅣene in order to establish and administer the

享nstitutional fhmework of a society･ Hayek (1967) interpreted Mandeville's ideas on

lnStitutional stmctures as being based on the evolution of spontaneous orders･

The unlque logic that underpins Mandeville's descrlptlOn Can be partly highlighted
through the evolutionary framework･ However, there can be two different types of
construction on the basis of the fiamework･ On the one hand, the evolutionary loglCthat can be applied to the Hspontaneous orderH approach presupposes the existence of apath, Hnatural course of thingsM, which an economic order converges on in the long run･This pathfollows a natural course where natural humaninclinations are supposed toprovide harmony under the system of natural liberty･ The evolutionary logic fits aselective process that eliminates hindrance to the overallfunctionlng Of the liberalsystem, which is basically under the tradition of naturalism. In Mandeville'S second
volume of The Fable of Bees published in 1 729, the similar evolution of law institution
has been discussed, which is interpreted by Rosenberg and Hayek as Mandeville's
evolutionary approach. However, this Mandeville's discussion has been overestimatedsince it was inserted fわr the first time in the second volume in order to defbnse his

orlglnal thesis in the first volume, uprlVate Vices, public benefits"･ As Mandeville wascriticized as recommending the bad action agalnSt laws, One of the objects of publishing
the second volume is to explain that he did not intend to agitate criminals･ For that

purpose, he presupposes common goods that should be institutionalized in law system,

even if there remains breaching by cunnlng perSOnS･ Mandeville's conception orvice
would be minimized in its implication, if it is appraised in the evolutionary process thatconverges to common goods.

On the other hand, Mandeville basically supposes in his thesis, uprlVate Vices, publicbenefitsM, that social pattems do not converge on a predetermined pattem but create
various ones depending on the intentional and artificial controls exercised by humans

even inanevolutionary process･ Since Mandeville admits fallibility of human
cognlt10n, the social orders are subject to various controls through human cognition.

Mandeville's essence relates to a formative process that fits individual actions intosocial requlSlteS Since it is difflCult to understand them by the simple application ofevolutionary loglC aS a Selective mechanism･ The unlque fbmative construction of theprocess is cmcial to the understanding or Mandeville's liberal autonomy withintentional influences.

The difrlCulty in placlng Mandeville in terms of general categorizations in economic
thought has been discussed in some literature. Hutchison (1988) argues that it isdifficult to appraise Mandeville in terms of "mercantilism" or "economic liberalism."
Moss (1987) uses the concept of "subjective mercantilism" to distinguish Mandevillefrom other mercantilists･ Hundert (1994), who provides a new interpretation that

Mandeville's Fable exerted significant influence on the entire European enlightenment
thoughts･ The Fable is also considered to be specifically within the contexts of theuvirtueM problem of the 1 8th centu,y (see Home (1978)and Goldsmith (1985)).

Since Kaye's early studies on Mandeville (1924), Mandeville'S "vice" has beenvaguely connected to his "self‑interest,n which has been a hindrance to the appraisal of

the slgnificance of Mandeville's economic thinking. Under self‑interest, while

selfislmess as the basis for individual pleasure and pain is ascribed to the image of‑26‑

Mandeville's Hvice,M it has been positioned as a premature concept befわre thebehavioral model of utility maximization that emerged under the influence ofutilitarianism in the lワth cenlury･ Recent studies, Bianchi (1993) and Hundert (1994),

shed light on the particular nuance and broad implication of Mandeville's conception Of
vice･ The emancipation of Mandevillefrom Smith in these literatures exemplifies theapproprlate direction to be fわllowed in Mandeville's studies; however, the emancipation

is partial.

Bianchi (1 993) has further extended both Rosenberg'Sand Hayek's interpretations
by emphasizing on the cmcial role played by leamlng processes in Mandeville's
concept10n･ Bianchi likened this process to those games played fTrequently by players
who leam to advance to a more efflCient equilibrium spontaneously･ From thisperspective, Mandeville's conceptlOn Or Hvice" is interpreted as being similar to adeceiving strategy (i･e･,.a non‑cPoperative strategy) in a Prison.ers Dilemma game･
Bianchi interprets bad actlOnS agalnSt laws as Hvice,M which is elimlnated丘･om the legal

institution fbllowlng its establishment･ Although Hvice," as a bad action against laws,
breaks the existing evolutionary path, it is eliminated from the path in the longrun･

However, in the main thesis "prlVate Vices, public benefits,m Mandeville conceives afine adjustment of the deep‑rooted market processes in which "vice" continues tofunction as a component of the process･ After all, the idea that legal institutions evolve

over a long te‑ can be seen as Mandeville'S secondary product when he attempts todefbnd his main thesis that relates to the economic mechanism for the division oflabor,
Hundert broadened the extent of literatures fわr Mandeville studies so as to叩praise

him in a broad context or European enlightenment thought and tried to interpret his
concept

incomparison

withSmith'sthat

hasna汀OWedtheconceptual

space

of

economics･ Hundert emphasizes on Mandeville's slgnifiCance with respect toenlightenment thoughts by highlighting his insight into the dynamic change of anindividual's pride in a social space･ Hundert uses the phrase udramatic social factM or"public market fわr token of esteem" to depict Mandeville's unlque idea of theinteractions of self‑Consciousness or pride within a society･ According to Mandeville,
the underlying motivations f♭r economic actions in individuals cannot necessarily be

reduced to only prlVate desires but can be derived from societal measures such as

reputation and prosperlty･ This aspect is partly the motif of Mandeville's precursors
such as French moralists and camot be attributed orlglnally to Mandeville･ The
consciousness exhibited in various social dimensions can be a prologue to sociologlCal

approaches, as seen in Veblen's consplCuOuS COnSumptlOnS･ Though interactions ofmotivations in an economic society are one of Mandeville's points and canbe
interpreted as common with Veblen's idea･ The polntS that the psychologlCal
adjustment works through localized interactions in the marketand that the working
attains the development of the division of labor are crucial to the orlglnality ofMandeville's idea.
The above Mandeville's insight camot be fわund as it is in the standard textbook of

economics･ However, the similar discussion can be fわund in Keynes'discussion on

the consumpt10nfunctionand its relation to national income in The General Theory･
Keynes analyzed that some reduction (rise) in the marginal propensity or consumption,
which is usually stable, brings about the decrease (increase) of national income. In
this connection, in the sense that increase or the propenslty Of savlng does notnecessarily lead to the increase or production, Keynes discussed a paradox; what is‑27‑

intended in individual level is not attained in a society･ There is a commonality

between Mandeville and Keynes as to the paradoxical relation･
Though Keynes does not refTer to the variety of consumpt10n, the paradoxical
relation is rooted in the basic prlnCiple that the amount of effective demand determines
the total production･ It is infTerred that Mandeville also presumes a kind of effTective
demand in the dete‑inant orthe wealth of a country･ The mercantilists in the late 17仙

century, fTor example, N･ Barbonand DI North including Mandeville, emphasize theeffect of luxurious consumptlOn tO Promote trade･ This canbe interpreted as the effectresulting from the increase in effective demand, and Keynes finds his precursors in them･

What is unlque in Mandeville is to investigate how a kind of effective demand
endogenously created through psychological processes･ Mandeville's uniqueness,
which is diffTerentiated from other mercantilists, lies in his fわcus on how individual

cognltlVe leamlng helps coordinate the whole instead of implicitly presupposlng the

effTects of luxurious consumptlOnS in order to increase effective demand.

Mandeville's unlqueneSS Can be also found, if the psychological process as hediscussed is applied to the case of the investment market in Coffee Houses. As
investment demand and consumptlOn demand constitute a whole effTective demand, thisapplication basically relates to psychologlCal creation of effective demand･ Though hedoes not explain explicitly how the cognitive learnlng works in the above trade between

Decio and AIcander, in this example, he tried to explain the concrete contents of Knaves,
vice oriented action･ Therefわre, We could interpret that the mechanism how vice

works in the economy lS also presupposed in this example･ When traders are facing
uncertainty in their speculation, even ir they are lgnOrant Of exact and sure infbmation,
they could infTerand construct infわrmation by combining prlVate infわrmation and, as aresult, would be induced to invest･ The point of Mandeville's insight is that amuenceof in丘)nation in Coffee Houses, regardless they are true or false, increases theprobability that will construct useRll knowledge as a result･ He directly obseⅣed thateven if traders seem to be decelVlng each other, their perpetual interactions in Coffee

Houses haveaneffect of expanding economic activities･This insight partly corresponds to Keynes'discussion in chapter 12 0fhis General
Theory･ Keynes discussed that there is nofoundationfor expectationformationfor longten investment･ Keynes explains that when stock market was not organized, ininvestlng long te‑ enterprise by establishing company, the enterprlSer had to take on
every uncertain risk at the cost of his all lifTe. However, when the stock market wasorganized, the risk was divided and spread over the many anonymous investors, because

they canwithdraw and invest his money to different enterprises at anytime･ Then, thefinancial market is compared by Keynes with the musical chairs or beauty contest,
where players expect what other players expect. This psychological adjustment partly

corresponds to Mandeville's polnt in that if their expectations are coordinated well,economic activities are supported on the corresponding level of the effective demand･

There is difference between Mandeville and Keynes in this respect･ On the one hand, as
Keynes saw the highly systematized stock market in his time, he fbcused how

expectations of speculators are deviated fTrom thefundamental level of investments.
On the other hand, as Mandeville saw the rising stock market around Coffee Houses in
his time, even ir expectations or speculators are fbundationless, Mandeville remarked
the possibility of the coordination through bilateral trading in Coffee Houses, that is, ina more decentralized way.

‑28‑

We can interpret that Mandeville's point had dis叩peared in the economic thoughtsystematized by Adam Smith･ Smith develops his concept of the division of labor in
The Wealth ofNations･ He explains that the development of the division of labor islimited by the fわllowing factors, (1) the size of the marketand (2) theamount of capital

accumulation･ However, he does not explicitly explain how the size of the market
expands with capital accumulation along the natural course of things in his natural prlCe
mechanism･ Although the size of the market is a limiting factor f♭r the division oflabor, it naturally tends to expand along with capital accumulation and increased supply

or goods in Smith,s system･19 In other words, uslng market prlCe and the natural
prlCe mechanism, even if individuals are seeking self‑interest as autonomous individuals,
they are supposed to promote the process most efficiently･ In this relation, as Smithemphasized the division of labor in a factory rather than that of in a society, the scopeindividualislimitedwithinhismanaglng

Capital･

Therefbre,

rational

andself‑interested individuals canpromote the efficiency of the economy･ According to

Smith, the efficiency lS embodied in harmony in the world of God as invisible hands･

Mandeville's religious position differs from Smith's naturalisticand deistic
approach through the invisible hand explanation･ In Smith, individuals areconceptualized as being capable of accurately and approprlately acqulrlng a part Of

knowledge on the entire state of the worldunder the system of natural liberty･ In
cases where not a slngle person is presumed to be perfTectly aware of the truth and thevalue of infわ‑ation, economic liberalism under the naturalistic tradition places trust in

the free market followlng the emphasis laid by Hayek on the function of the market, inparticular through the prlCe mechanism, in order to utilizeknowledge･This

optlmistic vision has its ongln in Adam Smith's view fわr the providence in the socialand moral order20. This is the basis of our mainstream of economic liberalism.

However, under the skeptical tradition of Gassendi and Bayle, Mandeville neverassumes either the realities of things or the human capaclty tO grasp the realities･
Mandeville叩plying Epicurean atomistic vision toward the moral and economic worldof his time, he polnted out the contradictory fTeature between the accepted moral code
19

Negishi (1989) indicates how competition as free entry and increasing retums to scale due to the division oflabor

are compatible in Smithls proposition, uThe division of labor is limited by the extent of the market･'' Natural prlCe
can decrease even if naturalrates of profits and wages are definite under the general circumstances of the society,when the division oflabor within a factory enables diminishing costswith respect to the scale of the supply. In thiscase･ the declinlng natural prlCe Curve COrreSPOnding to the increaslng quantity of supply Implies the degree ofdevelopment of the division oflabor･ The market system Smith considers is not interpreted as the organized market
with an auctioneer adjusting PrlCeS COrreSPOnding to excess demand. In other words, suppliers assume an
asymmetric subjective demand curve in status quoI If a supplier prlCeS higher than status quo, he loses his

customers, whowill buy from other suppliers who sell at the prlCe in the status quo･ However, although a supplier
prices lower than status quo, the prlCe reduction will not necessarily be known to potential demanders･ As a result,suppliers suppose that while the quantitySold at the price in status quo continues to be sold, the elasticity of pricewith a quantity more thanwhat is sold in the prlCe is smaller･ According to the interpretation, the quantlty Of
supplywith increaslng retumS tO scale is not determined by the terms of costs but by the subjective demand that islimited by the size of the market･ Within the size of the market, Competition is established through free entry of
suppliers･ If the market enlarges under some factors, the market equilibrium shifts, while the division of labor

develops along the movement･ However, how the process proceeds is not clearly explained by Smith･
20 viner ( 1972) sees that the deistic approaches in 18th century presupposed the existence of some dominating
providence and that they tried to explain how the providence works through secondary causes such as human
psychology, reason and moral senses, without revelation by God･ Based on the conseⅣative trend characteristics

in Britain, Smith's providential view stems from R･ Cumberland, Shanesbury and Hutcheson･ Viner interprets thatwithin Smith'S system orthinking Including both the moral and economic theory, human senses are embedded inhuman nature through the providence and they make no mistake under some nomal and natural circumstances.
Smith's analysis On Senses, emotion and feeling in human nature intrinsically naturalistic･‑29‑and the mechanism in the economy･ In this, reflecting his skeptical stance, Mandeville
views the state of the economic world as dependent on an individual's artificial,andoccasionally arbitrary, cognition toward the state･ Furthemore, he sees that the state of
the economic world is relational, and the relation is not deteministic but probabilistic
within the cognitive interactions of individual atoms constitutlng the world･ Since heis aware of the acquisition of knowledge merely through the appearance of things, heconsiders voluntary Involvements in the market to include complicated interactions ofcontrol and decelVlng in丘)rmation･ This market view and its philosophy in the

Epicureanrevival introduced chance factor, reflecting the Epicureanatheistic aspect thatcan not be accepted in his time.

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