Some of the most popular British economists of all times who have helped in the enhancement of the subject, Economics. They are: 1. Giffen, Robert (1837 – 1910) 2. Paine, Thomas (1737 – 1809) 3. Petty, William (Sir) (1623 – 87) 4. Robbins, Lionel (1898 – 1984) 5. Steuart, Sir James (1712 – 80) 6. Thornton, Henry (1760 – 1815) and Others.
British Economists of All Times # 1. Giffen, Robert (1837 – 1910):
A nineteenth century British economist, and Chairman of the Committee on Variations in the Monetary Standard, 1888-90, Giffen became well-known for his discovery of a deviation in the law of demand, a strange phenomenon called ‘Giffen paradox’ or ‘Giffen effect,’ representing an exception to the law of demand, namely, “demand varies inversely with the price.”
While, for example, according to the law of demand “less is bought as price rises” (a negatively sloped demand curve), he discovered that “demand falls as price falls” (a positively sloped demand curve).
It works in the case of ‘inferior good’ (also called ‘Giffen good’) which is necessarily the cheapest nutriment, cheapest, say, bread to the ‘low income’ group of people, via the ‘income effect’ (increase in real income resulting from the price fall of such ‘good’) outweighing the ‘substitution effect’ (tendency to expand purchase of suitable ‘good’ as price of ‘inferior good’ declines).
If, for example, the price of ‘inferior good’ falls, the low-paid wage earners will have an increase in their real income, since after purchase of a sizeable quantity of, say, bread, they will still have enough purchasing power to purchase another better ‘good’, say, meat, and the net effect will be that demand for bread (inferior good) will change in the same direction as price.
This will be the result, provided, however, that of the two effects the income effect (demand for ‘inferior good’ changing in the same direction as the price) and the substitution effect (demand for substitution good changing in the opposite direction) the former outweighs the latter.
This is what Giffen observed in the case of low-paid British wage earners, early in the nineteenth century, and it came to be known as ‘Giffen effect’, his contribution to economics.
British Economists of All Times # 2. Paine, Thomas (1737 – 1809):
Paine came of a poor English peasant family and was naturally deprived of proper education for a respectable career. He had, however, an instinctive faculty as a pamphleteer, which made him famous. He left for America and, on the recommendation of Benjamin Franklin, he secured the job of a journalist and became known in a year or so as a great advocate of economic and political freedom.
He took an active part in the American (1775) and French (1789) Revolutions, which will remain ever cherished. His contribution to economics was in the area of taxation. He proposed a system of graduated taxes upon income and spending of tax revenue for social and humanitarian works as far as possible.
Paine’s ‘Common Sense’, 1776, was an argument for ‘complete independence,’ having created a sensation, while his ‘Rights of Man’, 1781-92, a competent reply to Burke’s ‘Reflection.’ His ‘Age of Reason’ (Parts I, II and portion of III published in 1774, 1795, and 1807, respectively) dealing with ‘Deism’ (belief in God but not in Revelation) failed to attract expected popularity.
He wrote another treatise ‘Crisis’ which was published in 1777. It was Sir Lesslie Stephen who said, “Paine’s ignorance was vast and his language brutal; but he had the gift of a true demagogue – the power of wielding a fine vigorous English.”
British Economists of All Times # 3. Robbins, Lionel (1898 – 1984):
A distinguished economist and a brilliant educationist, Lionel Robbins began his career as a lecturer at the London School of Economics, served the New College, Oxford, and became Professor of Economics at Oxford, in which post he continued till 1961, when he was made the Chairman of the British Higher Education Commission.
He was also the Director of the Economic Section of the British War Cabinet (1941 -48), a member of the British team at the Bretton Woods Conference (1944), and an awardee of life Peerage (1956) in recognition of his talent and service.
Theoreticians base their deductions as a rule on two concepts which seem to be timeless: scarcity and choice between alternative uses of scarce means, and it was in this sense that Robbins defined economics as “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.” (Essay on the Nature and Significance of Economic Science, 1935).
According to critics, this definition was neither scientific nor revolutionary but only a ‘smack’ of Marshallian spirit. His ideas were apparently theoretical, but this definition was not necessarily devoid of practical significance and earned him international fame, particularly in the academic circle.
Robbins admitted that a boom would lead to a depression which would run its course, but recommended a strong control ever banking operations, particularly in the area of security market as a palliative to price level fluctuations (The Great Depression).
He called for rehabilitation of the war- shattered economies and development of underdeveloped nations, and also recommended free movement of trade, labour and capital, and even unrestricted migration through an international authority, if necessary, for peace and welfare of mankind in general irrespective of nationality, exposing himself thereby, at least outwardly, as a ‘Utopian.’ (Economic Planning and International Order).
His works comprise:
An Essay on the Nature and Significance of Economic Science, 1932; The Great Depression, 1934; Economic Planning and Industrial Order, 1937; The Economic Problem in Peace and War, 1947; The Economic Policy in English Classical Economy, 1952; The Economics in the Twentieth Century, 1956; Torrents and the Evolution of Classical Economics, 1958; Politics and Economics, 1963; and The Evolution of Modern Economic Theory.
British Economists of All Times # 4. Petty, William (Sir) (1623 – 87):
Son of a poor weaver in Hampshire, England, Petty was a self-made man and an “all-rounder.” An Oxford degree holder and a Fellow of Brasenose College, he was an outstanding economist and statistician of his time, having had the influence of Hobbes in politics and of Bacon in economics. Samuel Pepys, the diarist, called him “the most rational man that ever he heard speak with a tongue.”
Petty was a pioneer in the use of “statistical method” in dealing with social and economic phenomena to “express myself in terms of Numbers, Weight, or Measures; to use only Arguments of Sense, and to consider only such causes, as have visible Foundations in Nature; leaving those that depend upon mutable Mind, Opinion, Appetite and Passion of Particular men, to the Consideration of Others.” (Discourses on Political Arithmetic, 1690).
His ‘Treatises on Taxes and Contributions’ was an orientation of earlier views on public finance, and his taxation formula anticipated to a considerable degree Adam Smith’s “canons of taxation,” and his suggestions for economy in collection expenses and for use of the surplus by “transferring the same (surplus over necessary expenditure) from the Landed and the Lazy to the Crafty and Industrious,” were more or less in keeping with what came to be known as “welfare economics.”
It was Petty who said, “Labour is the Father and active principle of Wealth, and Lands are the Mother,” and accordingly, he was an advocate of the “labour-time theory of value,” proclaiming that “Equal quantities of labour at all times and places, may be said to be of equal value to the labourer,” and also that the “price of corn in silver depended upon amounts of labour required to produce each commodity.”
Interest or “use-money”, he said, “was a reward for forbearing the use of your money for a Term of Time agreed upon whatsoever need your-self may have of it in the meanwhile.” He admitted the necessity of money, but considering its “circulation velocity”, urged upon the banking system for proper and timely control over the issue and use of credit.
He said, “There is much more to be gained by Manufacture than Husbandry, and by Merchandise than Manufacture,” which exhibited his support of the Mercantilist principles, and although his empirical approach and use of statistical data as regards production, value, rent and money appeared to be “anti-Mercantilist,” his belief in “political absolutism” and “economic self-sufficiency” was indicative of “Mercantilism.”
Summarily, his views on a number of issues — for example public works for employment, taxation policy proportionate to property holding, concept of “capitalized taxation,” rent and differential rent, labour-time theory of value, theory of surplus value, concept of circulation velocity of money etc. — were all far in advance of his time.
Petty’s concept of “surplus value” did evidently lay the foundation of Ricardo’s labour theory of value and also of Marx’s “theory of surplus value,” and, these apart, his use of statistics and views on public finance were none the less original contributions to the subject of economics. ‘Treatises of Taxes and Contributions’, 1662; ‘A Tract Concerning Money,’ 1682, and ‘Discourses on Political Arithmetic,’ 1690, are his major works.
British Economists of All Times # 5. Steuart, Sir James (1712 – 80):
An outstanding British economist on the Mercantilist tradition and regarded as the last in the line, Steuart’s labour and penetrating insight yielded him little recognition because of Smith’s keen analysis of the logical and practical shortcomings of Mercantilist doctrine which had fallen to disrepute.
Steuart was possibly the first economist to use the term ‘Political Economy’ in an English book and his ideas of the science was “… What economy is in a family, political economy is in a state … The principal object of this science is to secure a certain fund of subsistence for all the inhabitants.”
Steuart claimed that any study of society’s origin included a study of its challenging character resulting from change in the methods of production and the inter-relation between different classes, and he said that:
“Civil and domestic liberty, introduced into Europe by the dissolution of the feudal form of government, set trade and industry on foot; these produced wealth and credit; these again debts and taxes ; and all these together have established a perfectly new system of political economy, the principle of which is my intention to deduce and examine.”
His views on population, industry, value, interest, credit and taxation were mostly in keeping with those of his time, and he considered population as a ‘blessing,’ since more goods implied more people to produce them, which meant larger exports, a larger balance of trade and an influx of precious metals, for which people ought to work hard.
While developing the concept of agricultural surplus, division of classes, rise of industry, he created a distinction between labour creating ‘use-value’ and ‘exchange-value’, and he held that industry created a separate category of labour which, by alienation, made a case for ‘universal equivalent.’
As in the case of value, so in the case of profit, which was the result of exchange, he made a distinction between ‘positive profit’ meaning ‘public good’ and ‘relative profit’ involving transfer of existing stock.
He distinguished between value and profit as well, and these apart, he spoke of the dual functions of money, namely, medium of exchange and settlement of indebtedness, declaring in these contexts that demand for money was determined by trade, manufactures, and habits of people.
As regards money and its quantity, Petty, North and Steuart declared that the quantity of money in a national economy should neither be too small nor too great, and they endeavoured to find the factor which determine its optimum amount.
Thus developed on the one hand the quantity theory of money (Locke), on the other hand an analysis of the progress of inflation (Hume). (History of Economics — In its relation to Social Development, 1945: W. Stark).
Steuart pleaded for a sort of ‘paternal’ responsibility of the State in the matter of regulating, controlling and directing economic activity for national interest.
His principal work is inquiry into the Principles of Political Economy, 1767.’
British Economists of All Times # 6. Thornton, Henry (1760 – 1815):
A prominent banker and an economist (English), Henry Thornton’s contribution lies in his discussions of paper money problems while a Member of Parliament in the latter part of the eighteenth century.
The chief point of issue throughout the eighteenth and early nineteenth centuries was the unfortunate economic situation, resulting from the controversy between bullionists and anti-bullionists upsetting the normal banking procedures.
Henry was an outstanding bullionist and was a party to the contention that constant currency depreciation was the over-issue of bank notes (difference in value between specie and bank notes), advocating a return to “specie payments” (Bullion Committee Report, largely the work of Ricardo). The issue was pertinent in those days and even in later days —perhaps in a different way.
Henry’s views on paper money and credit found place in his principal work ‘Enquiry into the Nature and Effects of the Paper Credit of Great Britain’ published in 1802, which was admired by Ricardo who said that the work proved a “rare blend of institutional materials and analytical understanding.” He retired as a Director of Sierra Leone Company in a British Crown Colony on the West Coast of Africa.
Another Thornton (William Thomas Thornton — 1813-80) who was a clerk in the East India Company and became a civil servant (Secretary for public works for India) after dissolution of the Company, was a diligent student of economics and wrote at length on current economic problems. His most important contribution was his refutation of the Wage Fund Theory. (Economists – Past and Present: John W. McConnell).
British Economists of All Times # 7. Hobbes, Thomas (1588 – 1679):
An English philosopher and one of the first and ablest exponents of the ‘Social Contract Theory’, Hobbes was the son of a poor vicar, having had his education at the Magdalen College, Oxford, by virtue of his merit and the financial backing of his sympathetic relatives.
He was the oldest of the exponents of ‘social contract theory,’ the other two being Locke and Rousseau. While Hobbes conceived of an order in all things for ‘protection of the right to life,’ Locke reckoned ‘protection of liberty and property,’ as significant, and Rousseau held on a ‘surrender to the general will.’
He believed, like the Calvinists, in the sinful nature of man, for example, “every man against every man,” and that life was “solitary, poor, nasty, brutish and short,” and he taught that if men were “sociable with one another like bees and ants,” there was no necessity for any ‘artificial covenant’ to bind themselves to ‘solidarity,’ but since men were not so, they were “continually in competition for Honour and Dignity … and consequently amongst men there ariseth on that ground, Envy, and Hatred, and finally War…” He held, therefore, unlike other philosophers, that it was not scarcity that had underlain the ‘dismal view’ of society but three principal causes, namely, competition, difference and glory.
The first for gain, the second for safety and the third for reputation, and his theory was that in order to escape from the resulting turmoil and keep peace, people consented to the establishment of the ‘absolute state,’ delegating their natural rights to it by a tacit ‘social contract.’
Contrary to the Utopian concept (Utopia, 1516: Thomas More) that “land would be held in common and production and distribution would proceed on a basis of equality,” Hobbes advocated for individually-owned property, free from external control, highlighting the importance of individual rights in property but admitting, nevertheless, the King’s/State’s power to order for change with or without compensation for the sake of justice. It was his view that the State has the “mission to foster National Welfare,” by an appropriate “economic and power policy.”
As regards value, he held that the “value of all things contracted for, is measured by the appetites of the contractors.”
‘Leviathan’ is his principal work.
British Economists of All Times # 8. Hobson, John Atkinson (1858 – 1940):
Born in Derby and educated in the classics at Linton College, Oxford, Hobson began his career as a teacher. He also delivered a series of ‘extension lectures’ and contributed regularly to the ‘Nation’ and other periodicals mostly on social, political and economic issues, but his ideas and expressions were so ‘radical’ that he was branded as a ‘heretic,’ causing him loss of his teaching job.
In the area of distribution, he discovered, ‘three levels’ of return to the factors of production, namely, returns necessary to ‘maintenance’ and to ‘growth’, and “surplus unnecessary to social production,” the last one being ‘grasped,’ in an “expanding industrial economy,” by the “elements in the strongest bargaining positions,” causing ‘dissatisfaction and economic imbalance’ in society.
Hobson was critical of the classical theorists’ ‘capitalistic’ system, their ‘quantitative approach’ and ‘laissez-faire policy,’ none of which, he held, had any contribution to justice in income distribution, human welfare and prevention of market fluctuations. His concept of under-consumption caused by the “great disparities of income between rich and poor,” fall in demand for consumer goods followed by a fall in prices and a decline in the business activity was applauded by Keynes, and even Marx highlighted under-consumption in his discussion of trade cycles in a capitalist economy.
He did also anticipate the economic ground of imperialism.
Hobson was a vehement critic of the classicists’ quantitative argument which gave little importance to ‘human cost’ and cared little for consumer welfare, and had no faith in monetary valuation of welfare in the mechanical method of the orthodox theorists who “treated every human action as a means to the production of ‘non-humanly valued’ welfare.”
He was essentially a ‘social reformer’ and considered ‘economics’ as a ‘qualitative science’ of social value, any departure from which would make economics a ‘dogma’. He realized the necessity of bringing economic theory more in harmony with the economic development of the times with structural changes.
His preference for socialization, methodical rather than ideological, for example, control over production and distribution as a deterrent to occurrences of “private production waves,” public works expenditure as a remedy against unemployment, reviving of “flow of effective demand,” discouraging “monetary gain” incentive unless considered ‘socially useful’ would claim distinctive attention.
It was Hobson who said: “There is no wealth, and further, there was no wealth but life; life including all its power of love, joy and admiration.”
His works include:
The Psychology of Industry, 1889; Imperialism, 1901; the Industrial System, 1910; the Economics of Distribution, 1900; Work and Wealth — A Human Valuation, 1914; the Economics of Unemployment, 1922; the Political Economy of Art, etc.
British Economists of All Times # 9. Hodgskin, Thomas (1785 – 1869):
An Englishman and a socialist-cum- economist, Hodgskin was perhaps more a socialist than an economist because of his ‘analytical views’ on socialism, and was in a way, rather unwittingly, a forerunner in the Marxian way of thinking.
Hodgskin started his career in the Navy, travelled widely gathering experience and his views had naturally their origin in his “extensive contact, close observation, deeper study and sincere thinking,” which drew, in course of time, the attention of experts and others in general.
His concern for the cause of labour was derived not as much from any deductive reasoning and/or any ideological belief as from a close and in-depth study and analysis of capitalism and inductive inference.
He was in favour of drawing a line between manual and mental labour, between a capitalist and a risk bearer etc. for the cause of labour.
His definition of capital, fixed and circulating, the former representing ‘saved-labour’ and the latter ‘active labour,’ and besides, his view that the ‘capitalist’ coming in-between virtually as a ‘middle-man’ usurping the lion’s share of production, leaving inadequate remnants for the labourers but for whose active and co-operative effort production would not have been possible, did obtain general endorsement.
Hodgskin was not opposed to property if it was ‘natural,’ that is, acquired by individual labour, but was vehemently opposed to property called ‘legal’ backed by legislative sanction or otherwise, which, he felt, would lead to crimes and miseries.
His expectation for the cause of labourers was far greater than the Ricardian view that workers should not be deprived of enough wages for respectable subsistence.
He said, “I am certain, however, that till the triumph of labour be complete; till productive industry alone be opulent; and till the admirable maxim that “he who sows shall reap” be solidly established, till the right of property shall be founded on principles of justice, and not on those of slavery, till man should be held more in honour than the clod he treads on, or the machines he guides — there cannot, and there ought not to be either peace on earth or goodwill amongst men.” (The Socialist Tradition: Gray).
Hodgskin’s ‘Utopian-like’ concern for “human salvation and prosperity” made him denounce governmental machinery run by a few individuals, and suggest, instead, an individualistic form of society within the organizational framework of workers’ associations.
It was seemingly akin to ‘anarchism’ but was nevertheless ‘benevolent” and not ‘revolutionary’ in nature, and did not appear to be “implausible even to hard critics.”
His important works are:
Labour Defended against the Claims of Capital, 1825; Popular Political Economy, 1827; the Natural and Arithmetical Rights of Property Contract, 1831.
British Economists of All Times # 10. Mun, Thomas (1571 – 1641):
An English merchant and perhaps the “ablest exponent of Mercantilism,” Thomas Mun was a Director of the East India Company and a prominent figure.
His work ‘England’s Treasure by Foreign Trade’ (or ‘The Balance of Our Foreign Trade is the Rule of Our Treasure’), written about 1630 but published posthumously by his son in 1664, contains a lucid exposition of his “mercantile philosophy” with a comprehensive plan to increase the wealth and treasure of England.
“The ordinary means …,” he wrote, “to increase our wealth and treasure is by foreign trade, wherein we must observe this rule; to sell more to strangers yearly than we consume of theirs in value .. because that part of our stock which is not returned to us in wares must necessarily be brought home in treasure,” and he explained how the nation’s welfare was dependent upon foreign trade, as follows : “… the true form and worth of Foreign Trade … is the great Revenue of the King, The honour of the Kingdom, The Noble profession of the merchant, The School of our Arts, The Supply of our wants, The Employment of our poor, the Improvement of our Lands, The Nursery of our Mariners, The walls of the Kingdom, The means of our Treasure, The Sinews of wars, The terror of our Enemies.”
While stressing upon the basic rules of international trade, he made some practical suggestions as to how a favourable balance was to be maintained. Mun’s suggested policy and programme for augmenting treasure accumulation included a “scheme of frugality, avoiding all waste and ignoring no opportunity to avail of a gain” to enjoy life, and he favoured constant effort without idleness.
He was well in advance of his time and did not fall into the fallacy of thinking that wealth and money were identical.
Besides, he did not subscribe to the idea that each merchant must have a favourable balance of trade, and laid emphasis on the sum total of exports and imports over a given period of time. ‘Multilateralism,’ not ‘bilateralism’ and achievement of a favourable balance of trade without confining such balance to individual country-wise transactions were his notable contribution to foreign trade.
British Economists of All Times # 11. More, Thomas (1478-1535):
Thomas More was a lawyer, but much more than that, a scholar and a saint, and the author of ‘Utopia’, his best-known work in which he pictured an ideal social and political system. He was born in a distinguished English family and had his early education at the household of Archbishop Norton of Canterbury, and further education at Oxford.
He became a lawyer but disliked the profession as ignominious, and became a “humanist humanitarian” and came to be regarded as a scholar of the “highest perfection discernible among men of the Renaissance.” He had the rare distinction of becoming the Lord Chancellor during the reign of Henry VIII (1529).
More lived at a time when England faced an acute land problem and following the breakdown of feudalism, there arose a movement for private ownership of land for sheep raising and rearing, causing eviction of tenants from land, and, in the circumstance, More led a forceful protest, claiming that land was “common property” and that distribution should be regulated on an “equality basis.”
His portrayal of a society in which property would be held in common, where everyone should have a say in the government, where work should be assigned according to ability, where education should be free to all, and where specialization should be encouraged, found expression in his ‘Utopia.’
More wanted reforms and improvement in life and living in such a manner as to make society a “commonwealth where neither idleness nor business toil, neither poverty nor superfluous riches existed, but where the end was the good and happy life.”
Thomism was a leading school of Catholic orthodoxy which stressed upon the power of “human reform,” and the Thomists were particularly disposed to work for Christian goals by political and social means, and even Pope Leon’s approach to problems of contemporary society, it was claimed, was essentially ‘Thomist’ in character.
More’s name and fame did have a widespread appreciation because of his ‘humanitarian’ ideas, projecting an ideal state of affairs in life and living.
British Economists of All Times # 12. Rogers, James E. Thorold (1823 – 93):
An English economist with a liking for “careful historical and statistical investigations”, Rogers was specially taken up with the economic interpretation of ‘Political History’. His investigations were particularly aimed at the “history of prices.”
He edited Adam Smith’s ‘Wealth of Nations’, and it was his considered view, unlike others, that Smith was preeminently an inductive philosopher, which coincided with Hume’s remark about ‘Wealth of Nations’ that “It has depth, and solidity, and acuteness, and is so much illustrated with curious facts, that it must take the public attention.”
He contended that the Ricardian doctrine of rent was not supported by historical evidence, and said:
“By… historical study, I began to discover that much which popular economists believe to be natural is highly artificial; that what they call laws are too often hasty, inconsiderate, and inaccurate induction; and that much which they consider to be demonstrably irrefutable is demonstrably false … Two things have discredited political economy — the one, its traditional disregard for facts; the other, its strangling itself with definitions.” (History of Economic Thought: Haney).
His works are:
History of Agriculture and Prices in England, 1866-82; Manual of Political Economy, 1866; Six Centuries of Work and Wages, 1884; the First Nine Years of the Bank of England, 1887; and the Economic Interpretation of History, 1889.