Tuesday, May 2, 2017

Economists that have Influenced Civilization by Oliver J. Thatcher 1901

Economic Ideas that have Influenced Civilization by Oliver Joseph Thatcher 1901

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The economic ideas of Adam Smith, as Pultenay said in 1797, convinced the thoughtful of the living generation and ruled the next. But before we find a political application of them in the repeal of the corn laws and English free trade, the system had been more minutely developed and several important new ideas had been added.

In 1791 Alexander Hamilton in his Report on Manufactures reviewed the question of protection and free trade. It is the first great argument,—and a classical one,—for protection, since it was forced to defend itself against Smith's doctrines. Hamilton argues for the greater productiveness of manufactures, for the national necessity of their existence, and for the superiority of a tariff for protection as against a tariff for revenue. His "Report" is given in the first of this volume.

In 1798 Malthus developed his principle»of population—that population naturally increases far faster than food, and that it always increases up to the very limit of sustenance. The importance of this idea in its applications is enormous. It has been used to explain such diverse things as the poverty of the lowest classes and the evolution of species.

Thomas Robert Malthus was born on a small estate owned by his father in the county of Surrey in 1766. He received his secondary education from private tutors and was sent to Cambridge in 1784, becoming a fellow of his college in 1797. The same year he took orders and assumed charge of a small parish in Surrey, though he still retained his fellowship.

He published his Essay on the Principle of Population as It Affects the Future Improvement of Society in 1798. This was much enlarged in later editions. In the essay Malthus develops the idea that population has a constant tendency to increase faster than the means of subsistence. The consequences of this principle are of the greatest importance. From it would follow the iron law that the lowest order of humanity must always be on the verge of starvation, because population will increase beyond the utmost limit of a fair subsistence.

Malthus died in 1834, having been for almost thirty years before his death Professor of Political Economy in the East India Company's college at Haileybury. He was one of the first modern investigators in Social Science and his work has had an immense influence.

Ricardo (1772-1823) is perhaps the most abstract theorist of the Adam Smith school. The principle for which he is particularly noted is his theory of rent—that rent is the difference between the production of any given land and the poorest forced into use. Rent would not, therefore, affect the price of the product. He considered that price depends upon the quantity of labor required in production. Capital he treats as accumulated labor. Starting from Malthus' theory of the increase of population, he developed his "iron law of wages" that the lowest wages will always be just sufficient to sustain life.

David Ricardo was born at London April 19, 1772. His father was a Dutch Jew, a member of the stock exchange. Young Ricardo entered a commercial school in Holland and at fourteen was given a place in his father's office.

In 1793 he had the courage to join the Episcopal church and marry Miss Wilkinson, a Gentile. This estranged him from his family and threw him on his own resources, but his ability or good luck was such that at twenty-five he was said to have already won riches on the exchange.

In 1799 he met with Adam Smith's Wealth of Nations and became greatly infatuated with political economy. In 1809 he published The High Price of Bullion a Proof of the Depreciation of Bank Notes. His Principles of Political Economy and Taxation was published in 1817. It was made famous by his theory of rent. This starts from the ideas of Malthus and argues that rent is equal to the difference in productiveness between any given land and the poorest land which the increase of population has forced into cultivation. If this principle is allowed he declares many propositions to follow, such as: that the increase of wages does not increase prices; that profits are increased only by a fall in wages and lessened only by a rise; that the profits depend upon the cost of the production of food raised at greatest expense.

In 1819 he entered Parliament and finally overcame his bashfulness enough to take a prominent part in economic questions. He died September 11, 1823.

Jean Baptiste Say (1767-1832) was probably the first French writer to disseminate the views of the new school. One idea traceable to him is the denial of the possibility of a general over-production.

Sismondi (1773-1842) protested against the doctrine of laissez faire and believed in some sort of government intervention to regulate the progress of wealth.

Taken altogether, political economy, in the first third of the century, is marked by a rapidly growing popularity and dissemination, and by the development of these few important principles. It must be remembered, however, that it is often the work of a century to develop one great idea in a given field.

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