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Thomas Tooke and the Monetary Thought of Classical Economics

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Thomas Tooke and the Monetary Thought of Classical Economics Thomas Tooke and the Monetary Thought of Classical Economics Matthew Smith Routledge Studies in the History of Economics Thomas Tooke and the Monetary Thought of Classical Economics This study provides a comprehensive account and reconsideration of the contri- bution to political economy of Thomas Tooke (1774–1858), English classical economist and influential monetary historian and theorist. It clarifies Tooke’s monetary thought and its legacy to modern economics. The study shows Tooke possessed a rich and extensive political economy, covering many aspects of eco- nomic activity relevant to key policy issues. Tooke’s political economy is shown to be a unified and coherent body of intellectual thought in the classical tradition which, like most of his nineteenth-century contemporaries, was much influenced by Adam Smith’s economics. More particularly, Tooke’s monetary thought, especially his novel banking school theory, is shown to be theoretically coherent from the standpoint of nineteenth- century classical economics. It is also shown that, besides contributing towards a better understanding of the behaviour of monetary systems in general, key elements of Tooke’s banking school theory make an important contribution to explaining distribution, growth and price inflation in modern economics. In reconstructing Tooke’s political economy the study provides insights into the conceptual properties of classical economics: into, for example, the approach to explaining market prices and their fluctuation, into explaining income distri- bution, the doctrine of free trade, the meaning of ‘Say’s Law’ and explaining the fluctuation and trend movement in the general price level. The focus of the study is on reconstructing Tooke’s monetary thought and, in doing so, to clarify the conceptual framework of monetary theory in classical economics. It is shown that Tooke’s banking school theory contributes not only towards the construc- tion of an ‘endogenous money’ theory as an alternative to the quantity theory of money approach, but that in the modern formulation of classical analysis it con- tributes towards a well- grounded conception of monetary forces, in particular, monetary policy, exerting a lasting influence on real economic variables such as income distribution, aggregate output and employment. This book will be of interest to students and researchers of the history of eco- nomic thought and those interested in the foundations of the development of monetary thought and policy. Matthew Smith is a Lecturer in Economics at the University of Sydney, Australia. 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