A WELL-WRITTEN ESSAY AT LAST

David K. Mafabi, private secretary for Political Affairs, State House, posts (May 2017) HERE 

Uganda: The Political Economy of Take-Off (Part I)

“The work of Scottish economist Sir James Stuart, Inquiry into the Principles of Political Economy" (1767), is considered the first systematic work in English on Economics.

It, however, emerged as a distinct field of study in the mid-18th century, largely as a reaction to mercantilism, when the philosophers Adam Smith (1723 - 1790) and David Hume (1711- 1776) and French economist François Quesnay (1694 - 1774) began to approach this study in a systematic manner.

These took a new approach, refusing to explain the distribution of wealth and power purely in terms of God's will and, instead, appealed to political, economic, technological, natural, and social factors and the complex interactions between them.

It was influenced by the individualist orientation of the English political philosophers Thomas Hobbes (1588-1679) and John Locke (1632-1704), the realpolitik of the Italian political theorist Niccolo Machiavelli (1469-1527), and the inductive method of scientific reasoning invented by English philosopher Francis Bacon (1561 - 1626).

Many works by political economists in the 18th century emphasized the role of individuals over that of the state and generally attacked mercantilism. This is perhaps best illustrated by Smith's famous notion of the 'invisible hand' in which he argued that state policies often were less effective in advancing social welfare than were the self-interested acts of individuals.

Individuals intend to advance only their own welfare, Smith asserted, but in so doing they also advance the interests of society as if they were guided by an invisible hand. In the 19th century, English political economist David Ricardo (1772-1823) further developed Smith's ideas.

The holistic study of political economy that characterized the works of Smith, Georg List, Karl Marx, and others of their time was gradually eclipsed in the late 19th century by a group of more narrowly focused and methodologically conventional disciplines, each of which sought to throw light on particular elements of society, inevitably at the expense of a broader view of social interactions.

By 1890, when English neoclassical economist Alfred Marshall (1842-1924) published his textbook Principles of Economics, political economy as a distinct academic field had been essentially replaced in universities by the separate disciplines of economics, sociology, political science, and international relations.

The phenomenal work of John Maynard Keynes (1883-1946) who challenged the foundations of the idea of "the free-market" and that of Milton Friedman and other monetarists in the 1970s have been important nodal points in the development of political economy.

Today, political economy encompasses several areas of study, including the politics of economic relations, domestic political and economic issues, the comparative study of political and economic systems, and international political economy.”

COMMENT

Readers may find David K. Mafabi’s summary of the early history of political economy interesting. it is certainly better informed than most attributions I read from similar sources. Not, of course, that I have no critical comments on aspects of it. Far from that being the case.

Take this sentence:

“Individuals intend to advance only their own welfare, Smith asserted, but in so doing they also advance the interests of society as if they were guided by an invisible hand.”

Smith made no such general statement. He discussed the motivated actions of an individual who was what we would call today, ‘risk averse’ towards engaging is foreign trade and thereby preferred to engage in domestic trade only. It most certainly was not a general statement that all individuals who intend to “advance their own welfare” also “advanced the interests of society”.

As Smith showed, many “merchants and manufacturers” motivated to “advance their own welfare” often did so at the expense of the rest of a society by lobbying for tariffs on foreign goods and for general trade prohibitions on foreign imports, which decidedly did not “advance the interests of society”. Instead, such policies were detrimental to the broader interests of society.

Moreover, Smith never said anywhere that individuals were influenced “as if they were guided by an invisible hand.”  Smith taught rhetoric from 1748 to 1763 - longer, incidently than any other subject - and he knew the difference between a similie and a metaphor. “As if” is a comparison by similie, not a metaphor.

Smith said the merchant in his example “was led by an invisible hand” - his moitivated actions definitely led to their consequences. His motives, of course, metaphoricallly were invisible to outsiders and had positive affects in contributing unintentionally to the public good.

Apart from this rhetorical disagreement, I found David K. Mafabi’s post interesting because the history of economics is so neglected at present that modern economists know next to nothing about those individuls who preceded those who now dominate the discipline. 

For that alone I enjoyed reading David K. Mafabi’s well-written essay.

POSTSCRIPT

David K. Mafabi mentions the status of Sir James Stuart, “Inquiry into the Principles of Political EconomyI" (1767), as “the first systematic work in English on Economics”. This was a view shared by colleague and friend, the late Professor Andrew Skinner, who edited the modern publication of Stuart’s 2-volume edition of his “Inquiry into the Principles of Political Economy" (1767). 

Professor Andrew Skinner, at the time, the leading authority in the UK on Adam Smith’s life and works, was critical of Stuart’s treatment by Adam Smith of criticising Stuart’s ideas in Wealth of Nations, without mentioning Stuart’s name as the author of the ideas he criticised. Andrew thought this was rather shabby of Smith. I agreed. Anyway, Stuart’s 2-volume book is available in print (try Amazon). I loaned my copy to someone but it was not returned and he died before returning it. From memory, Stuart was a bit of a mecantalist and wide open to Smith’s criticism.