Refining Economics

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Margaret Schabas, a professor at the University of British Columbia, is a historian of the philosophy of science who has previously written on the mathematization of economics by William Stanley Jevons. Her work is deep and profound. Her knowledge of the classical economists from David Hume and Adam Smith to John Stuart Mill is exceptional. And her familiarity with French and other continental European economists of the same era is unusual in a North American author.

“The Natural Origins of Economics” is an important work deserving of wide consideration, and readers who wish to learn more about the economic views of Hume, Smith, Mill, and other philosophers and economists will profit from reading it. Schabas’ scholarship is wide-ranging, and her writing style attractive.

From the perspective of economic theory (as opposed to history), the most important chapter is the first, in which she discusses her thesis of a break in so- cial discourse occurring about the mid- dle of the 18th century. These were the decades not just of Hume and Smith, but of the French physiocrats, whom Smith so admired and from whom he learned much.

Schabas emphasizes that before the mid-18th century, the concept of “an economy” was not prevalent. While there were discussions of particular economic topics, including monetary policy and the charging of interest, the idea of a largely autonomous process of productive relationships has developed in the past few centuries, particularly the 20th.

Schabas does not believe the mathematization of economics has been fruitful, presenting this movement more from an elegiac than a triumphant perspective. This view is not shared by many economists, for whom the math- ematization of economics is seen as a reflection of the increasing maturity of economic theory.

Schabas calls attention to the “nat- ural” conception of wealth that the physiocrats and, to. a lesser extent, Adam Smith held – hence the title of her work. The physiocrats’ concept of wealth was largely agricultural, tied to the bounty of nature. By way of contrast, particularly starting with John Stuart Mill – whose influence on eco- nomics Schabas emphasizes – the no- tion became current that the economy is created by humans, that wealth· de- rives from human activity, not nature’s bounty.

Schabas’ focus on Mill is appropriate. In politics, economics, and philosophy, he was the leading intellectual inspiration in Britain and its English-speaking colonies from about 1840 through perhaps the 1890s. Every instructor In economics read him. Very few economists from the 19th century – Marx is the preeminent example – are read today, though Marx and Mill are read mainly for their works in politics (“The Com- munist Manifesto” and “On Liberty”) rather than. their works in economics. Marx, moreover, did not acquire world- wide fame until after the Russian Revo- lution. Schabas sees Mill as redirecting economic thought from a natural to an artificial or invented perspective (in the best sense of the word “invented”). Though Mill did not share the mathe- matical and marginalist terminology of his successors, he did share the concept of the economy as mostly human-made and not primarily a product of nature. Mill was, in a sense, both the last and the greatest classical economist and the first modem economist.

Though Schabas mentions John Locke, she does not adequately ac- knowledge his accomplishments. Locke was a giant in so many areas of political and social discourse. The labor theory of value, ideas about revolution, and, perhaps most importantly, ideas about the justification of government all find well-used sources in Locke’s work. A century and a half before Mill, (about the same length of time from his major work in the 1840s and 1850s to our time), Locke stressed in his “Second Treatise of Civil Government” (1690) that human ingenuity, not nature, creates virtually all worth. Speaking of the Native American tribes of his day.

Mill was, in a sense, both the last and the greatest classical economist and the first modern economist.

 

he wrote: “A king of a large and fruitful territory there, feeds, lodges, and is clad worse than a day-labourer in England.”

With the idea that the economy is mostly human-made has come the idea that the economy is largely subject to human control. Schabas’ thesis is not that any form of economy is possible, but that humanity has considerable choice with respect to the economy it has. Starting with the “natural origins” of economics, Schabas ultimately points to the human choices that determine economic results.

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