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Home , Economic surplus, Thomas Tooke

【Notes and Communications】

More Ambitious than Might Be Expected: Matthew Smith’s Thomas Tooke and the Monetary Thought of Classical , London: Routledge, 2011, xx＋300 pp.1）

Yuji Sato

This is the long-awaited book by the author of and -and developed his who has prolifically published articles on monetary theory coherently through the use Tooke since publishing in 1996 the variorum of that approach, the analytical objects of edition of Tooke’s Considerations （1826）. which were long-term normal and This work, likely the second monograph on economic surplus. Chapter 2 sketches the life Tooke in the English-speaking area, has very of Tooke and his contributions. Detailed and ambitious aims and objectives: First, the au- valuable information about his life will, thor takes an unprecedented approach, in that among other things, be of great benefit to he explicitly tries to incorporate Tooke’s the- academia. Chapter 3 states that Tooke cer- ory of value and distribution into the tradi- tainly used the concept of the long-term nor- tion of . Second, he en- mal as the cost of production, contrary deavors to show that Tooke coherently com- to the claim of Arnon（ 1991, 70） to the ef- bines the surplus approach to the theory of fect that Tooke did not have any theory of value and distribution with the “monetary price, but only gave descriptions of changes theory of distribution”; in this context, he of prices. This chapter also insists that he co- also emphasizes the significant relevance of herently developed such a theory in the form Tooke’s theory to the modern monetary eco- of the “adding-up theory” of price, “from the nomics. very beginning”（ p. 31） to the end. This the- This book consists of eight chapters, to- ory, the author says, is the premise of Tooke’s gether with Appendices. Its content is as fol- important thesis that the long-term average lows. Chapter 1 maintains that though he has rate enters into the production cost. been often considered a mere monetary Chapter 4 meticulously follows Tooke’s view economist, in fact Tooke had a more com- that the monetary factor itself gives only a prehensive “coherent theoretical framework” minor influence over the prices of agricul- -namely, the surplus approach to the theory tural products, whereas these prices greatly

1）We invited Dr. Smith to the International Ricardo Conference on , Finance and Ricardo, September 17―18, 2011, at Meiji University, Tokyo, held under the auspices of the Ricardo Society and sponsored by the JSPS Grant-in-Aid for Scientific Research（ A）: 22243019. This review is also supported by this grant. Notes and Communications 103 depend on exogenous shocks such as seasons treats the monetary thought of the banking or the expectation of participants. In school Tooke（ 1840―57）, discusses Tooke’s addition, this chapter closely examines deployment both of the “” Tooke’s criticism of , with the and the “law of reflux” associated with the conclusion that Tooke’s assertion that Corn “dual circulation” framework. In this chapter Laws cannot protect British agriculture is it is also suggested that Tooke’s insistence “unconvincing”（ p. 76）. It is suggested that that as there was no functional relationship when accusing Corn Laws of having antiso- between the and monetary cial effects, Tooke probably envisaged their spending, the BOE had little power to con- injurious effects on the working class rather trol the -and, moreover, that its than upon agriculture per se. Chapter 5 in- interest rate policy would be almost ineffec- sists that Tooke derived the movement of the tive-is “the most important”（ p. 163） in- general price level from the natural and po- sight. It is said that the Bank Rate affected litical conditions of production. From this the economy inasmuch as it had an effect on viewpoint, the author maintains that early securities prices-and hence short-term capi- Tooke indeed supported the anti-bullionist tal flows-and inasmuch as the interest rate position, and that he asserted that would be incorporated into long-term normal was caused by real factors such as the bal- prices. Chapter 8, entitled “Tooke’s Legacy” ance of or the Continental System, etc. -which is far more informative than the However, it is suggested that there exists one-page contribution of Arnon（ 1991, 184） some inconsistency in Tooke’s analysis of -emphasizes its relevance to the modern the effect of the ’s（ BOE’s） post-. It is insisted that easy money policy and the influence of new- Tooke’s “more important legacy” to the post- ly supplied gold from mines. Incidentally, Keynesian economics compared to the con- the problem with Tooke’s reception of the ception of “consists of Say’s Law is examined in this chapter. Chap- his proposition that the rate of interest is an ter 6, meanwhile, examines the features of autonomous variable that can systematically monetary thought of the pre-banking school govern the normal rate of ”（ p. 227）, Tooke（ 1819―38）, mainly comparing them and that he was a pioneer of the monetary with Ricardo’s alleged quantity theory. First, theory of distribution who said that a long- Tooke’s position on the controversy sur- term interest rate decided by the longstand- rounding the resumption of cash payments in ing interest rate policy of the monetary au- 1819 is examined; second, the fact that thorities had considerable influence on in- Tooke supported the “reverse causation” run- come distribution. Finally, though “Tooke ning from prices to money à la anti-bullion- was an avid collector of figures”（ F. W. Fet- ist is confirmed; and third, the determination ter）, he left them only as an enumeration of of the interest rate independent of the real vast numbers in his writings, so the author factor（ profit） in Considerations（ 1826） and deserves great praise for offering Appendi- its permanent influence over later monetary ces that arrange those numbers in the form of thought are highlighted. Chapter 7, which very clear graphs. 104 経済学史研究 54 巻 1 号

As this book is an extremely ambitious contrary to the ingot plan. Further- work, I cannot refrain from saying that I more, I cannot understand why the author have some doubts about its assertions. seems to have no doubt about Tooke’s case First, we all know that Ricardo’s criticism for the BOE’s deflation policy of taking up a of the “adding-up theory of price” was based hasty and “spiteful”（ B. Hilton） resumption on the inverse relationship between （pp. 127―32）-although Tooke’s attitude has and profit, and also on the theory of differen- long been questioned before, at least since T. tial rent. The author claims that Tooke sys- E. Gregory and J. Viner. Generally, the au- tematically developed the adding-up theory thor tends to dwarf Ricardo and set him up while simultaneously accepting the Ricardi- as a “straw man” who adhered to a stubborn an theorem of the absence of rent at the mar- quantity theory, seemingly only to highlight gin（ pp. 32, 35―37, 70）. How could an “add- Tooke. However, for example-as Arnon ing-up” theorist advocate Ricardian rent the- （1991） points out-proposals for BOE re- ory? There seems to be some information form in Considerations （1826） （pp. 154― missing here in the author’s interpretation of 55） are in fact very likely to have been influ- classical price theory. enced by Ricardo’s Plan for a National Bank Second, the author suggests that Tooke （1824）. developed a certain theory concerning the Fourth, the author’s arguments against “cyclical behavior in the economy”（ pp. 83― Arnon’s（ 1991） claim that Tooke got closer 84）. However, when it comes to his claim to free banking from 1844 onwards seem to that Tooke’s thought was in fact akin to that be weak, because the author has only two of the anti-bullionists, the author insists that pieces of evidence to rebut Arnon’s claim: Tooke considered the cause of price inflation vol. 3 of A History of Prices（ 1840） and to be not the monetary factor but “exogenous Tooke’s Evidence before Commons Commit- real shocks” such as seasons, wars, or bal- tee（ 1848）（ pp. 186―88）. A little more ex- ance of trade（ pp. 138―45）. If so, it was-as planation is needed about why Tooke Arnon（ 1991） puts it-only a “waves” theo- showed an interest not in establishing a new ry, rather than a theory of cyclical fluctua- -like Ricardo’s national bank- tions. but in improving the existing BOE.（ Inci- Third, the author takes up some topics dentally, one of Tooke’s sons was a BOE di- and tries to contrast the monetary thought of rector between 1843 and 1857.） pre-banking school Tooke with the supposed Fifth, the well-known incompatibility be- Ricardo’s “quantity theory,” but it is difficult tween the monetary theory of distribution to agree with the author’s interpretation of （see Pivetti 1991） and the surplus approach why Tooke refused Ricardo’s ingot plan and to the theory of value and distribution does adhered to a scheme involving the resump- not seem to be resolved in this work. The tion of specie（ gold coin） payment. Indeed, surplus approach argues that the social sur- Tooke’s claim resembles Liberal Tories con- plus is determined only if the social output, siderably, and there is no denying that his the production technique, and the real claim is likely to be in line with admitting are given. From this book’s explanations, it Notes and Communications 105 does not yet seem to be clear whether the be heartily welcomed by Japanese research- theoretical consistency of the surplus ap- ers of the history of economic thought and proach would be maintained, even if we were the history of monetary thought. to put the rate of interest in place of real Yuji Sato: Shonan Institute of Technology wages（ or profit）. For Japanese researchers, this book is written in comparatively accessible English. References The author s effort to both reconsider and re- ’ Arnon, A. 1991. Thomas Tooke: Pioneer of habilitate classical monetary thought entitles Monetary Theory. Aldershot, U. K.: Edward him to great praise, and his claim that Elgar. Tooke’s monetary thought is highly relevant Pivetti, M. 1991. An Essay on Money and Distri- to the post-Keynesian bution. Basingstoke, U. K.: Macmillan. also deserves examination. This book must