A History of Scottish Economic Thought Modern economics has at its foundation scholarly contributions from many prominent Scottish thinkers. A History of Scottish Economic Thought examines the roots of this great tradition, places in perspective a selection of authors and assesses their contribution over three centuries in the light of a distinctive Scottish approach to economics. Scottish Enlightenment thought more widely is an established area of research interest. This volume offers new scholarship on key Enlightenment figures; but the emphasis is on the approach to economic thought which developed in that period and continued through to the twentieth century. Smith and Hume may be key figures, but other less familiar authors are also of substantial interest as economic thinkers, and include a murderer, a revolutionary, a medical practitioner and a novelist (John Law, Sir James Steuart, John Rae and Shield Nicholson, respectively). Also included in the volume are discussions of Francis Hutcheson, James Mill, J. R. McCul- loch, Thomas Chalmers and William Smart. The nature of the advances made in this historical development is also highly relevant to modern methodological discussion in economics. The Scottish approach identifies principles of human nature from detailed observation and historical study, but as these principles are manifested in different ways in different contexts there is little scope for laws of eco- nomic behaviour. The principles, together with a combination of induc- tive and deductive methods, help us to derive theory suited to particular contexts, with attention paid to the historical, political, social and moral aspects of each context. Alexander Dow is Professor of the Scottish Economy in Glasgow Caledon- ian University, UK. Sheila Dow is Professor of Economics at the University of Stirling, UK. Routledge history of economic thought Edited by Mark Blaug Co-Director Erasmus Center for History in Management and Economics, Erasmus University, the Netherlands A History of Japanese Economic Thought Tessa Morris Suzuki A History of Australian Economic Thought Peter Groenewegen A History of Indian Economic Thought Ajit K. Dasgupta A History of Canadian Economic Thought Robin Neill A History of Swedish Economic Thought Bo Sandelin A History of Portuguese Economic Thought Jose Luis Cardoso and Antonio Almodovar A History of Latin American Economic Thought Oreste Popescu A History of Norwegian Economic Thought Olov Bjerkholt and Pal Lykkja A History of Russian Economic Thought Vincent Barnett A History of Scottish Economic Thought Edited by Alexander Dow and Sheila Dow A History of Scottish Economic Thought Edited by Alexander Dow and Sheila Dow I~ ~~o~!~~n~~~up LONDON AND NEW YORK First published 2006 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business © 2006 editorial matters and selection, Alexander Dow and Sheila Dow; individual chapters, the contributors Typeset in Baskerville by Wearset Ltd, Boldon, Tyne and Wear The Open Access version of this book, available at www.taylorfrancis.com, has been made available under a Creative Commons Attribution-Non Commercial-No Derivatives 4.0 license. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN13: 978-0-415-34437-1 (hbk) Contents List of contributors vii Acknowledgements x 1 Introduction 1 ALEXANDER DOW AND SHEILA DOW 2 John Law and the Scottish Enlightenment 9 ANTOIN E. MURPHY 3 Francis Hutcheson, 1694–1746 27 ANDREW S. SKINNER 4 David Hume as a political economist 46 CARL WENNERLIND 5 Sir James Steuart, Principles of Political Oeconomy 71 ANDREW S. SKINNER 6 Adam Smith: real Newtonian 102 LEONIDAS MONTES 7 Adam Smith: common sense and aesthetics in the age of experiments 123 FLAVIO COMIM 8 James Mill as economist: theory dominated by deductive method 146 THOMAS S. TORRANCE 9 John Ramsay McCulloch 163 D. P. O’BRIEN vi Contents 10 The place of Thomas Chalmers in Scottish political economy 178 A. M. C. WATERMAN 11 John Rae 198 DOUGLAS MAIR 12 Economics in the Scottish universities from the late nineteenth century 213 ALEXANDER DOW AND ALAN HUTTON 13 A Scottish tradition of applied economics in the twentieth century 228 ALAN HUTTON 14 Postscript 245 SHEILA DOW Index 254 Contributors Flavio Comim holds various positions in St Edmund’s College, Cam- bridge, and UFRGS, Brazil. He received his PhD from the University of Cambridge in 1999, with the thesis ‘Commonsense Economics: essays on the role of common sense in the history of economic thought’. His areas of research comprise the history of economic thought, develop- ment ethics and development economics, with emphasis on poverty and environment issues. He has published papers in HOPE, Review of Political Economy, Structural Change and Economic Dynamics and Review of Social Economy. Alexander Dow is Professor of the Scottish Economy in Glasgow Caledon- ian University, having served as Head of the Department of Economics during 1989–99. He taught previously at the Universities of Manitoba, Toronto and Stirling, after working for several years with the Common- wealth Secretariat. He studied History and Political Economy at the University of St Andrews, and Economics at Simon Fraser University and the University of Manitoba. Areas of research interest and publica- tions over the years have included the economic history of Canada, British economic performance and Scottish political economy. Sheila Dow is Professor of Economics at the University of Stirling, where she has taught since 1979, following previous employment by the Bank of England and the Government of Manitoba. She has a long-standing interest in the Scottish political economy tradition, with a particular focus on Hume and Smith, as part of a wider interest in the methodol- ogy of economics. Her other interests include the theory of money and banking. Her latest book is Economic Methodology: An Inquiry (2002). Alan Hutton, Senior Lecturer in Economics at Glasgow Caledonian Uni- versity, is a political economist who writes and teaches in and about the Scottish political economy tradition. Recent publications address issues in energy utility regulation in Scotland and the ideological significance of mainstream economics, as well as the history of economics in Scotland. viii Contributors Douglas Mair is Professor Emeritus at Heriot-Watt University. He has a long-standing interest in the history of economic thought, particularly Scottish political economy. He edited The Scottish Contribution to Modern Economic Thought (1990) and co-edited The Economics of John Rae (1998). He has a particular interest in John Rae, on whom he has published papers in the Scottish Journal of Political Economy (1990) and the Journal of the History of Economic Thought (2001). Leonidas Montes is Associate Professor of Economics at Universidad Adolfo Ibáñez, Santiago, Chile. After studying Engineering, Philosophy and Political Science as an undergraduate in Chile, he obtained his MPhil, and in 2002 his PhD, in Economics at King’s College, University of Cambridge. His PhD dissertation has been published as Adam Smith in Context: A Critical Reassessment of some Central Components of his Thought (2004). Antoin E. Murphy is an Associate Professor of Economics in Trinity College, University of Dublin. His special interests are in macro- economics, monetary economics and the history of economic thought. He is one of the joint managing editors of the European Journal of the History of Economic Thought. His books include Richard Cantillon: Entrepre- neur and Economist (1986), John Law’s Essay on a Land Bank (1994), Mon- etary Theory 1601–1758 (ed., 1997), John Law: Economic Theorist and Policymaker (1997) and Du Tot: histoire du système de John Law 1716–1720 (ed., 2000). D. P. O’Brien is Emeritus Professor of Economics, University of Durham. He was Professor of Economics at Durham 1972–97, and was at Queen’s University, Belfast 1963–72. It was at Queen’s that his interest in McCulloch began, under the guidance of Professor R. D. C. Black. His work in the history of economic thought, which covers writers from Bodin to Hayek and Robbins, includes J. R. McCulloch (1970), The Corre- spondence of Lord Overstone (3 vols, 1971), Thomas Joplin and Classical Macroeconomics (1993) and The Classical Economists Revisited (2004). Andrew S. Skinner continues to teach part-time at Glasgow University, where he has taught since 1964 (following posts at Queen’s University Belfast and Queen’s College Dundee, and an influential period of study at Cornell University). Professor Skinner has published a number of articles on eighteenth-century subjects. He has edited James Steuart’s Principles (1966, 1998) and Smith’s Wealth of Nations, both in Penguin books; and, with R. H. Campbell and W. B. Todd, the Glasgow edition of Smith’s Works and Correspondence. He is the author of A System of Social Science: Papers Relating to Adam Smith (1979, 1996). Thomas S. Torrance is a Senior Lecturer in Economics at the School of Management and Languages of Heriot-Watt University, Edinburgh. He Contributors ix has an MA degree from the University of St Andrews and a PhD from the University of Edinburgh. Previously he held a teaching position at the Department of Economics at the University of Aberdeen. His research interests and publications are in the two different areas of open-economy macroeconomics and the methodology and history of economic thought. A. M. C. Waterman is a Fellow of St John’s College, Winnipeg, and Profes- sor of Economics in the University of Manitoba, where he teaches history of economic thought and works on various aspects of the rela- tion between Christian theology and economic theory. His Revolution, Economics and Religion: Christian Political Economy 1798–1833 (1991) was awarded the Forkosch prize for intellectual history in 1992.