THE EMBARASSING IDEAS OF THE CLASSICS OF ECONOMIC SCIENCE

 I said in my previous post about Smith / Ricardo that even to this day we collectively have the misfortune to suffer the consequences of an economic ideology developed by people from peripheral and poor regions of Europe. I was referring, of course, to Adam Smith and his native Scotland, who joined the British Union in 1707.

Smith profoundly influenced Thomas Malthus, who in his well-known essay on the principle of population expressed his revolt over the indifference of the English rulers of the time, who dared to ignore the "recommendations" launched in Adam Smith's "Wealth of Nations," especially those concerning the aids for the poor. (It should be noted here that the only nations with a state welfare system for the entire population in the eighteenth century were only England and the Netherlands. In the case of England, aid laws for the poor were even several hundred years old.)

But here is what Malthus proposes in his essay, re-edited by him in 1817:

"I have been thinking for a long time about the English laws regarding the poor. (...)

... I propose to publish a law refusing parish assistance (in England, state aid was distributed to the poor by law through the network of Anglican parishes) to CHILDREN born from a marriage contracted more than one year after the publication of such laws, and all illegitimate children born two years after the enactment of the same law. "

In 1834, following campaigns mounted against continuing aids for the poor, Parliament decided to stop them ... 

William Senior, who drafted the text of the decree in question, was also the first professor of economics - the new discipline - at Cambridge. From the outset, therefore, classical British economists proved hostile to wage-earners and to the poor. From a social point of view - keeping in mind the fact that economics is a social science - this legislation represented a huge setback.

Here is how Adam Smith saw the solution to the fluctuations in the price of wheat, which quite often generated hunger among employees during that period:  "Smith made us see clearly that the natural tendency in a year of famine is to deprive workers of jobs of any kind or to force a large number of workers to work for a low wage, due to the impossibility for employers to hire the same number of people at the same price as before. An increase in wages  will only lead to an increase in the number of unemployed and would do away, warns this author (i.e. Smith) with the beneficial effects of a period of moderate famine, which tends to make people more industrious, attentive and economical "  (Thomas Malthus," Essai sur le Principe de la Population ", p. 63)

However, another Scottish economist of the time, Sir James Steuart ( 1712 - 1780 ) - who fully deserves the status of co-founder of economics - was knowingly marginalized by Adam Smith. In contrast, James Steuart was a staunch supporter of state intervention in the economy. Thus, Steuart believed neither in laissez-faire in economic policy nor in the existence of the "invisible hand" that would allow markets to self-regulate. During the debate over the increase in wheat prices in his day, Steuart recommended state intervention to stabilize prices and to ensure the quantities of wheat needed for consumption by the population.   "He proposed an intervention scheme reminiscent of the common agricultural policy (CAP) which was adopted by the European Community ". (Gilles Dostaler, "James Steuart, the fight lost against Adam Smith", Alternatives économique, 5/2010, no. 291 p. 76).

Unfortunately, Adam Smith's ideas still decisively influence the political action of some US Republicans. Members of the Washington DC Heritage Foundation for example - very influential during the Reagan and Bush administrations - wore ties printed with the portrait of Adam Smith at ceremonies, until recently. No other comments necessary...