IRISH CASE STUDY:
Chapter 1: Economics and the Economy & Chapter 19: Privatization and Regulation

The Invisible Hand of the Celts
by Daniel Blackshields, Department of Economics, University College Cork.

 

That men do not learn very much from the lessons of history is the most important of all lessons that history has to teach.
Aldous Huxley, Novelist.

National growth rates tend to indicate that the more economic liberty individuals have the more economic growth there is likely to be in a country.  Currently, Ireland’s economic success continues at a time when international indicators reflect a growing level of sovereignty and individual control amongst Irish people.  However, many reject (or at least are sceptical about) letting individuals in free markets pursue their own interests with little interference from government.  They reject Adam Smith’s famous concept of the ‘invisible hand’, that those pursuing their own interests could be in the interest of society as a whole.  This case explores the ‘invisible hand’ within the historic context of Celtic Ireland.  It provokes you to think carefully about this most important and misunderstood of economic concepts and its possible relevance for the Ireland of today. This case should be read in conjunction with chapters 1 and 19 of your book.

Many believe Economics began with Adam Smith’s famous book The Wealth of Nations in 1776 and the first Industrial Revolution.  Actually, there were thriving and complex economies long before the 18^th century.  However, Smith is the philosopher who did most to distil the essential concepts of the economic world.  He asked fundamental questions about how it was markets and prices seemed to address the issue of what, how and for whom to produce? One of the keys concepts for answering this question was, Smith argued, that individuals, pursuing their self-interest without any central direction would ‘as by an invisible hand’ act in a way benefiting the interests of society as a whole.  This concept has become controversial over the years with many suggesting that a complex, peaceful society is not possible without central authority.  Is this true? Are there historical precedents which could inform our discussion of order in a complex society?

Over 2,000 years ago the Celts were the most powerful and numerous people in Europe, stretching from Ireland to Bulgaria and Turkey, emerging as one of the dominant cultural groups in history.  The Celts were essentially successful farmers who were not merely self-supporting but who generated a surplus.  A key aspect of the Celtic economy was its capacity to feed and clothe itself and have enough purchasing power to acquire some of the more luxurious things in life.  They traded in food, metals, fine ceramics, jewellery, olive oil. perfumes, wines etc.  As well as more localised trading, Ireland, West Scotland, Wales, Cornwall, Gaul and Brittany were all linked by trade.  Throughout Europe, the peoples of the Mediterranean set up entire cities on the border of Celtic areas to take advantage of their trade.  The Phoenicians had a trading post near Cadiz in Southern Spain and Greek entrepreneurs built Marseilles in the South of France.  How was such a complex and widespread society maintained?

Celts organised themselves into small regional groups.  In Ireland, each person belonged to an extended family - a ‘tuatha’.  There was specialisation of trade within each tuatha; with wool, hides, other farm produce and iron ore acting as negotiable substances.  Each tuatha had a centre, functioning as a market, in the Irish case, mainly in a crannòg.  There was an absence of central organisation, no legislature, no police and no public administration of the law.  The law was enforced by the tuathas concerned.  Loose alliances of tuathas were common, emerging spontaneously as co-operative clusters.  They collaborated in what became effectively a national legal system, establishing Irish laws as the oldest surviving law in Europe.  The power of custom and tradition was vital to its successful organisation. The maintenance of customary law was due to its own venerability and popular acceptability.  The threat of sanctions or reduction of status was paramount in upholding its effectiveness.

An important aspect of individual participation in a tuatha was suretyship.  In its earliest form, it consisted of a group of neighbours, often though not always, members of the same clan or kinship.  It involved members of the tuatha assuming responsibility for any unpaid debts, defaults on agreements, negligence etc of other members of the group.  It also served as a kind of credit reference and guarantee by vouching for integrity and agreeing to make recompense if the situation required.  Why would individuals bear such risk?

Firstly, the burden of surety was dispersed among the tuatha and secondly, the frequency of contact and voluntary nature of the bond helped to deter actions against custom.  Individuals were under no obligation to agree to stand as surety for an individual whose reputation they questioned, which made the maintenance of one’s reputation vitally important and further restrained dishonest or criminal behaviour.

The rules and norms characterising suretyship allowed it to function and survive, in some form, through centuries of political and social change.  As populations became more mobile and international commerce increased, suretyship continued to maintain its power even as the kinship ties began to loosen. Why?  Because it created stabilising tacit norms of trust and fellowship promoting the interests of individuals.  People recognised that it was better to uphold the customs and traditions which, as an unintended consequence, increased the welfare of those unknown to the individual. 

Such voluntary co-operation of individuals through these institutions played a crucial role in the development of Celtic society.  In the economic arena, they were vital to the expansion of trade and economic enhancement of individuals through greater wealth and a more flexible and productive economy and often were central to the maintenance of social peace and civil order. Such organising systems were not unique to the Celts. Anthropological evidence exists for similar systems amongst such societies as the Saxons of England, early Rome and as antecedent as the Eastern Mediterranean in 10^th century B.C.

The key theme to take from this is that co-operation evolved in a society of self-interested individuals, creating a peaceful and productive social order through repeated interaction, without consciously intending to do so.  Reciprocity served to reinforce co-operative behaviour since the benefits of cheating were often outweighed by the cost of losing the trust and business of other members of the community.  In many societies, laws have existed and enforcement was informal and primarily governed by custom, rather than the state. Maintained, as it were, by an invisible hand.