John Ramsay Mcculloch D . P

9 John Ramsay McCulloch D. P. O’Brien Leszek Kolakowski started his great book on Marx with a statement of what should be, but apparently is not, blindingly obvious – Karl Marx was a German philosopher (1978: 1). We begin with a correspondingly obvious but equally neglected truth; John Ramsay McCulloch was a Scot- tish economist. The neglect of this truth seems to spring from an Anglo- centric approach to the history of economics, dating at least from Alfred Marshall and extending through most of last century, an approach which all too easily became Ricardocentric. As will, however, become clear from the following account, Ricardo’s influence upon McCulloch was one of many during a long professional life; it was, though for a time deep, tran- sient; and to understand McCulloch’s position as a whole it is necessary to look at the very wide range of influences upon him. Biography McCulloch was born on 1 March 1789 at Whithorn in Galloway.1 His child- hood was unhappy, due mainly to the behaviour of his maternal grandfather. However, he appears to have had a remarkable grounding in the classics from an Irishman employed as a labourer by his grandfather. In October 1807 he went to Edinburgh University, where he studied mathe- matics, agriculture and ethics. From the first two courses he seems to have derived considerable benefit; in particular he seems to have been exposed to the mathematical texts of Robert Hamilton, on which he was to draw and which left him with a strong appreciation of actuarial concepts. The ethics course, to judge from comments which McCulloch wrote late in life, was a disaster (1862: 44). He left without graduating in 1811. He married early, in August that year, and was to father no fewer than ten surviving children. While apparently working as a lawyer’s clerk, he seems to have engaged upon a strenuous exercise in self-education in economics. This bore early fruit in two essays on the national debt (1816a, b). In these the influence of Malthus is apparent (O’Brien 1995b). The history and literature of economics were to remain lifelong passions (O’Brien 1995a), and he 164 D. P. O’Brien produced a guide to the literature of the subject (McCulloch 1845a), two editions (McCulloch 1856, 1862) of the catalogue of the remarkable library which he built up, and a number of volumes of rare economics publications (McCulloch 1856–59). In the second half of 1817 he became editor of the newly founded Scots- man newspaper. He remained editor up to 1821. This was a vital formative period in his development, as many of his ideas were tried out on the Edinburgh public in the form of front-page essays on economics. However, the Scotsman was founded as a Whig newspaper in opposition to the ruling Edinburgh Tory establishment. McCulloch’s editorship thus involved him in the heat of Edinburgh factionalism, including violent per- sonal attacks upon him, and legal actions against the paper. It was during this period that McCulloch began to contribute to the Edinburgh Review. It was his first article (1818), an enthusiastic if not wholly comprehending account of Ricardo’s Principles, which paved the way for the association in later minds of McCulloch with Ricardo. Ricardo had, unlike Malthus (who inadvertently ignored it. James 1979: 311), responded politely to McCulloch’s first essay on the national debt; and over the years to 1823, particularly following the Edinburgh Review, McCul- loch became quite close to Ricardo intellectually, although without grasp- ing wholeheartedly the fundamental nature of the Ricardian model, let alone the role within it of the Invariable Measure of Value. McCulloch enjoyed a good relationship with Francis Jeffrey, the editor of the Review, though apparently unaware that Jeffrey’s own attitude towards him was ambiguous, and he seems to have become a close friend of Jeffrey’s successor MacVey Napier. For the next twenty years he con- tributed seventy-eight (or possibly seventy-six – there is a dispute about two: O’Brien and Darnell 1982: ch. 7) articles to the Review and there is no doubt that, despite the ostensible anonymity of the contributions, they helped substantially to establish McCulloch’s reputation. McCulloch also began to teach economics at an early stage. He started private classes in Edinburgh in 1820 and moved on to delivering lectures, beginning in 1822. It was thus natural that he should be chosen as the person to deliver the Ricardo Memorial Lectures in London, after Ricardo’s death, both because of his association with Ricardo and because of his experience in delivering lectures. These lectures seem to have been a considerable success, and they further helped to establish McCulloch’s reputation. But, more important, from 1816 onwards the stream of publications never dried up. Up to 1832 the majority of his published output concen- trated on general principles, but as a member of the Scottish school McCulloch was deeply concerned with the statistical counterparts of economic concepts, as became apparent from an early stage in his Edinburgh Review articles. In time he became one of the most remarkable compilers of economic data, publishing in 1832 the first edition of his great Commer- John Ramsay McCulloch 165 cial Dictionary. He seems to have had little scruple in using his contacts to obtain, at public expense, data he required. Ricardo, to whom he turned, seems to have been reluctant at first to use his parliamentary position to request official data but ultimately obtained useful information for McCul- loch, and other MPs with whom he was acquainted were successfully asked for assistance with data requests (O’Brien 1970: ch. 5). Hand in hand with the literary efforts were McCulloch’s efforts to build upon his successes as a teacher and to become an academic. These con- centrated upon possible positions in Edinburgh; but his plans were betrayed by Jeffrey to the Tory opposition, and in any case it seems unlikely that McCulloch, associated as he was with the Scotsman, would ever have satisfied the Edinburgh establishment of his credentials. But then, with the help of James Mill, and also of Henry Brougham (later to become McCulloch’s pet hate), he was appointed to the newly created Chair of Political Economy at the new University of London. He held this position from 1828 until 1837, although he seems to have given no lectures after 1835, and it was not financially of great benefit to him after the first three years, during which he enjoyed a guaranteed income from the university (ibid.: ch. 4). He thus perforce relied on his pen to support his numerous family. However, in 1838 his fortunes underwent a dramatic improvement. Lord Melbourne appointed him Comptroller of the Stationery Office, a job which he undertook with all his remarkable energy and force of character. There is no doubt that he was a successful civil servant and that his admin- istration of the office was notable for the control over public expenditure which he achieved. But the publications continued. There seems to have been some under- standing that if he accepted the civil service position he would cease his journalism, including his contributions to the Edinburgh Review. But during his time as a civil servant he produced three editions of a substan- tial work on taxation (O’Brien 1975b), albeit incorporating earlier mater- ial, and new editions of his Principles of Political Economy first published in 1825, of his Commercial Dictionary, and of a Geographical Dictionary which had been first published in 1841. McCulloch died in London in 1864. Economic writings The first thing to appreciate about McCulloch’s economic writings is that his output was extremely large – quite exceptionally so by nineteenth- century standards. It is not possible to obtain an accurate picture of his position by looking at single publications in isolation. Second, McCul- loch’s basic approach was solidly grounded in the Wealth of Nations – indeed, he referred to Smith as his ‘great economical chief’ (1862: vi). Third, McCulloch attempted to incorporate into this Smithian framework a number of Ricardian effects, apparently believing that these merely 166 D. P. O’Brien complemented Smith. Finally, he successively discarded the Ricardian ele- ments as he became aware that they conflicted with the available data. To illustrate these points, we begin by looking at his treatment of capital accumulation and growth. Capital and growth Like Smith, McCulloch’s writings focus upon the process of economic growth, brought about by the accumulation of capital and the division of labour (O’Brien 1970: ch. 12). Capital, accumulated from profits which provided both the motive and the means for accumulation, raised the pro- ductivity of labour. In all this McCulloch afforded a key role to inventions. Like Smith, McCulloch stressed the institutional requirements of growth, above all security of property. This was associated with good government and equal treatment of individuals, including religious tolerance. Import- ant to growth were natural resources, internal and external freedom of trade, good communications, a banking system and education – McCulloch attached particular importance to the concept of human capital. McCulloch began his career as an economist forty years after the publi- cation of the Wealth of Nations, and he continued writing for almost half a century. In the circumstances it is not surprising that his vision of the structure of the economy should differ from that of Smith. He rejected Smith’s view that agriculture was the key sector (though, like Smith, he paid attention to the correct institutional framework for that sector) and stressed the importance of the manufacturing sector. He appreciated its role as an engine of growth, though showing concern both about possible over-development of manufacturing, given the sectoral interdependence of the economy, and about the distributional effects of the factory system.

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