Private vices and public benefits; self interest as the catalyst for communal benefits

In reading The Grumbling Hive or Knaves turned Honest by Bernard Mandeville (1670-1733), I do a little research on him.  From Wikipedia.  

Mandeville was born on 15 November 1670, at Rotterdam in the Netherlands, where his father was a prominent physician of Huguenot origin. On leaving the Erasmus school at Rotterdam he showed his ability by an Oratio scholastica de medicina (1685), and at Leiden University in 1689 he produced the thesis De brutorum operationibus, in which he advocated the Cartesian theory of automatism among animals. In 1691 he took his medical degree, pronouncing an inaugural disputation, De chylosi vitiata. He moved to England to learn the language, and succeeded so remarkably that many refused to believe he was a foreigner. His father had been banished from Rotterdam in 1693 for involvement in the Costerman tax riots on 5 October 1690; Bernard himself may well have been involved.

As a physician Mandeville was well respected and his literary works were successful as well. His conversational abilities won him the friendship of Lord Macclesfield (chief justice 1710–1718), who introduced him to Joseph Addison, described by Mandeville as "a parson in a tye-wig." He died of influenza on 21 January 1733 at Hackney, aged 62.

There is a surviving image of Mandeville but many details of his life still have to be researched. Although the name Mandeville attests a French Huguenot origin, his ancestors had lived in the Netherlands since at least the 16th century.

In 1705 he published a poem under the title The Grumbling Hive, or Knaves Turn'd Honest (two hundred doggerel couplets). In The Grumbling Hive Mandeville describes a bee community thriving until the bees are suddenly made honest and virtuous. Without their desire for personal gain their economy collapses and the remaining bees go to live simple lives in a hollow tree, thus implying that without private vices there exists no public benefit.

In 1714 the poem was republished as an integral part of the Fable of the Bees: or, Private Vices, Public Benefits, consisting of a prose commentary, called Remarks, and an essay, An Enquiry into the Origin of Moral Virtue. The book was primarily written as a political satire on the state of England in 1705, when the Tories were accusing John Churchill, 1st Duke of Marlborough, and the ministry of advocating the War of the Spanish Succession for personal reasons.

In 1723 a later edition appeared, including An Essay on Charity and Charity Schools, and A Search into the Nature of Society. The former essay criticised the charity schools, designed to educate the poor and, in doing so, instil virtue in them. Mandeville disagreed with the idea that education adds virtue because he did not believe that evil desires existed only in the poor, but rather he saw the educated and wealthy as much more crafty.[7] Mandeville also believed that educating the poor increased their desires for material things, defeating the purpose of the school and making it more difficult to provide for them.[8] It was vigorously combatted by, among others, Bishop Berkeley and William Law, author of The Serious Call, and in 1729 was made the subject of a prosecution for its immoral tendency.

Mandeville concluded that vice, at variance with the "Christian virtues" of his time, was a necessary condition for economic prosperity. His viewpoint is more severe when juxtaposed to Adam Smith's. Both Smith and Mandeville believed that individuals' collective actions bring about a public benefit. However, what sets his philosophy apart from Smith's is his catalyst to that public benefit. Smith believed in a virtuous self-interest which results in invisible co-operation. For the most part, Smith saw no need for a guide to garner that public benefit. On the other hand, Mandeville believed it was vicious greed which led to invisible co-operation if properly channelled. Mandeville's qualification of proper channelling further parts his philosophy from Smith's laissez-faire attitude. Essentially, Mandeville called for politicians to ensure that the passions of man would result in a public benefit. It was his stated belief in the Fable of the Bees that "Private Vices by the dextrous Management of a skilful Politician may be turned into Publick Benefits".

In the Fable he shows a society possessed of all the virtues "blest with content and honesty," falling into apathy and utterly paralysed. The absence of self-love (cf. Hobbes) is the death of progress. The so-called higher virtues are mere hypocrisy, and arise from the selfish desire to be superior to the brutes. "The moral virtues are the political offspring which flattery begot upon pride." Similarly he arrives at the great paradox that "private vices are public benefits".

Among other things, Mandeville argues that the basest and vilest behaviours produce positive economic effects. A libertine, for example, is a vicious character, and yet his spending will employ tailors, servants, perfumers, cooks, prostitutes. These persons, in turn, will employ bakers, carpenters, and the like. Therefore, the rapaciousness and violence of the base passions of the libertine benefit society in general. Similar satirical arguments were made by the Restoration and Augustan satirists. A famous example is Mandeville's Modest Defence of Publick Stews, which argued for the introduction of public, state-controlled brothels. The 1726 paper acknowledges women's interests and mentions e.g. the clitoris as the centre of female sexual pleasure. Jonathan Swift's 1729 satire A Modest Proposal is probably an allusion to Mandeville's title.

Adam Smith was only ten years old when Mandeville passed away but there is a clear line of continuity between the thinking of the latter to that of the former.  From Smith's The Wealth of Nations, emphasis added.

But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens.

Mandeville was prescient, tackling a core paradox that continues today, one at the center of most our public policy paradoxes and failures.  To what extent should we rely on government action to provide individual outcomes which we might wish to designate as important?  

There has been a sustained strain of thought that only government can have the disinterest to properly pursue collective benefits.  The reality, as we repeatedly have discovered, is that it almost uniformly better to rely on the paradox of private vices leading to public benefits with self-interest being the catalyst to moral outcomes rather than ostensible virtue.