Economics in Sense and Sensibility
Jane Austen was an economist
Sense and Sensibility is full of economic ideas and thinking. Elinor has a rich brother, John, who inherits the money that ought to have gone to support Elinor and her sister Marianne. When they are all in London, John, idle doofus that he is, pays the list price at the jeweller while Elinor haggles over a period of three days about some items she is selling. It’s not just that Austen prefers what Frost might have called the honest commercialism of Elinor, she is also opposed to the status-optimising behaviour of John.
Elinor is selling some of the mother’s jewellery. The family lives on a budget, so the price she gets really matters. John pays full price to buy his wife a status-enhancing piece of jewellery. The price is part of the purchase. It’s a luxury, to be shown off. If prices are signals, John and Elinor are sending, and responding, to almost opposite signals in society.
The same dynamic is evident in Willoughby. All of his caddishness is inspired by his need to inherit money. As Samuel Johnson said, “The whole world is put in motion by the wish for riches and dread of poverty.” There is an honesty to commerce that the aristocracy and gentry do not enjoy, cannot replicate, and mostly do not want to emulate.
There was a terrible crop failure in Britain in 1795, which had an effect comparable to the Great Depression. It came at the end of decades of inflation. John is not just a representation of people who inherit money: he represents a bigger dichotomy in contemporary society. Pitt wanted to reform the poor law: his opponents claimed that it “rewarded the idle and negligent”. As Katherine Toran says, John represents Parliamentary unconcern about contemporary conditions.
Austen also uses economic ideas like the knowledge problem. One of the lessons of Sense & Sensibility is that gossips are not inclined to good deeds but those who are inclined to them don’t gossip enough to be able to do them effectively. Elinor knows everything and says nothing. The novel is a study of asymmetric information and matching problems. Jethro Elsden says this about Mansfield Park:
Mary Crawford in the novel Mansfield Park says that marriage “is a manoeuvring business. I know so many who have married in the full expectation and confidence of some one particular advantage… who have found themselves entirely deceived, and been obliged to put up with exactly the reverse! What is this but a take in?”. It’s a neat summary of the problem of information asymmetry in an exchange, almost two centuries before George Akerlof published his seminal The Market for Lemons paper, which would later win him the Nobel prize for economics.
Austen also understands positive-sum and zero-sum thinking, and mocks the characters that do not. When Fanny is upset about her brother’s marriage, Elinor has to refrain from saying that “Fanny might have borne with composure an acquisition of wealth to her brother, by which neither she nor her child could be possibly impoverished.”
Perverse incentives are used to show how the status-obsessed rich are losing out to commerce and rising individualism. The triumph of bourgeois values over lingering feudalism is seen in the way that Edward Ferrars is cut off when he wants to marry Lucy. So appalled is she that he would marry an unsuitable women, Edward’s mother gives what would have been his annual income to his younger brother. With this newfound financial independence, and therefore no need to comply with his mother, the younger brother runs off and marries the unacceptable Lucy, who was only ever interested in Edward’s income. As Elinor says, the mother brought upon herself a most appropriate punishment.
Austen seems strikingly clear about opportunity costs and trade-offs throughout Sense and Sensibility. Marianne is blind to the costs of pursuing Willoughby, an obvious piece of bad news: he appears out of nowhere, has a flighty attitude, and makes no serious or permanent communication of intent. To modern people, he might seem roguishly charming and romantic, but the clues to Austen’s contemporaries were all there. As Shannon Chamberlain said,
Arguably, the 18th-century reader would have recognized Willoughby for the shallow playboy he is sooner than Marianne ever did. Samuel Richardson’s Lovelace and a pantheon of earlier smooth-talking men with hunters and sweet promises under their mustaches prepared them for the type.
Brandon might be a trade-off, but he is obviously the superior choice. Marianne’s romantic attachment to wealth and status obscures all of this from her. (Hence the irony that Brandon turns out to have the same income as Willoughby.) It is the pursuit of unearned income that sends people awry in Sense and Sensibility.
Sensibility, the great theme of the novel, means something like emotional awareness and capacity. Johnson defined it as “Quickness of sensation” and “Quickness of perception.”1 Cecil Bohanon and Michelle Vachris have shown in detail how Austen’s ideas about sensibility and self-control come from Adam Smith, the economist and moral philosopher.
For Smith, self-control is a cardinal virtue, represented in Austen by Elinor. This is not about repressing your emotions, Bohanon and Vachris argue, but governing them, “like a sailor governs the wind in a sail to steer a boat.” Elinor is so good at this, she is able to remain calm and supportive of Marianne when Marianne gets upset that Elinor has been rejected by Edward. Elinor says your own happiness is not (and cannot be) entirely dependant upon one person, which closely echoes Smith.
Elinor is not repressed or emotionless. She understands the world. She is not the victim of fakery or status play. Marianne’s romantic emotionalism is easily deceived by appearances, hence the deep lows that follow the fanciful highs. And Elinor does indulge in big emotions, such as at the ending when she thinks Edward has married Lucy and then learns he hasn’t.
Smith was writing about the changes to society as it commercialised. Commerce made people honest. Smith was interested in the way that wealth came from a combination of self-interest and fellow-feeling. Some people think Smith’s view was that being rich was bad for individuals but good for society as a whole. He emphasises in The Theory of Moral Sentiments that honesty is essential to commerce. Markets require morals. When we look at the behaviour of John and Willoughby versus Elinor, we might agree.
Marianne has to learn this. She believes that trade has to involve one person profiting at the expense of another, which many silly people still believe. This is partly why many people thought of trade as “low.” Austen’s characters often divide into those who think this and those who do not. The ones who dislike “inferior” tradesmen are old-fashioned, aristocratic, selfish. Analogously, Marianne comes to see that Brandon is not dull but reliable, just as other characters are shown to be not inferior but full of bourgeois dignity, a new and uncomfortable concept at the time.
Jane Austen was not a romantic comedy writer. She was a radical economic novelist.
My next salon, on 1st March, is Samuel Johnson: Reading for Wisdom where we will discuss Rasselas (US link), pessimism and pragmatism, and the good life. The attendee list has some interesting Johnson enthusiasts on already — join them.
My tours of the City of London are on Tuesday 22nd Feb, Sunday 27th Feb, and Saturday 5th March. If you are interested, but can’t make those dates, let me know.
He quotes Addison: “Modesty is a kind of quick and delicate feeling in the soul: it is such an exquisite sensibility, as warns a woman to shun the first appearance of every thing hurtful.”