Published by EH.NET (January 2010)

Murray Milgate and Shannon C. Stimson, After Adam Smith: A Century of Transformation in Politics and Political Economy. Princeton, NJ: Princeton University Press, 2009. x + 309 pp. $35 (cloth), ISBN: 978-0-691-14037-7.

Reviewed for EH.NET by Donald E. Frey, Department of Economics, Wake Forest University.

The ambitious goal of Milgate and Stimson is to demonstrate how classical political economy “sought to influence and alter the understanding of politics and political life,” especially in Britain (p. 1). They produce a very careful and detailed analysis of early economists’ ideas on issues shaping the modern concept of the political order, in the process displaying a rich array of competing ideas. Milgate and Stimson cast a wide net, catching in it thinkers around the edges of economics, especially the Utilitarian philosophers and a variety of other reformers. However, discussion of continental Europeans and Americans is sparse. Milgate and Stimson use Adam Smith as a benchmark for the developments they discuss, although later ideas often deviated significantly from Smith’s due to his eighteenth-century outlook. Indeed, Milgate and Simson are very systematic in exposing how various later writers, who sometimes cloaked their ideas in Smith’s authority, were simply attributing to Smith what wasn’t unambiguously there. Consider the authors’ approach on a few topics they examine.

A major early chapter addresses the uneasy relationship between the concept of civil society and economic society. Prior to Smith, feudal thinkers and mercantilists had interpreted both civil and economic developments through the lens of state, or government, actions. Their premise was that society operated only with intentional control from the top. However, if society had its own inner, independent dynamic, then any state role would be greatly diminished; further, any explicit public morality, or virtues, would become irrelevant.

It was precisely this latter view ? that society has its own inner dynamic ? that the political economists advocated, thereby revolutionizing the concept of civil society. For Smith, the market system, at the center of society, diminished the significance of “both the state and the direct influence of statesmen” (p. 48). In addition, public virtues were displaced; for Smith, morals reflected the highly particular and individual relationships that people developed with those closest to themselves. Yet, according to Milgate and Stimson, Smith did not go to the extreme in which “the concept of the self-regulating market … came to play the more politically constraining role” that eventually emerged with modern economics (p. 50). David Ricardo added a new element to the notion of the self-guiding market system, arguing that economic classes, not individuals, were the relevant locus of economic and social action. This sharply contradicted the harmonious individualism of many other early economists’ theories. Milgate and Stimson consistently demonstrate that classical economics opened the door to multiple interpretations of civil society.

This richness of possibilities, however, was killed by the ultimate arrival of neoclassical economics. Milgate and Stimson put it this way: “Economics moved from thinking of civil society composed of social classes, professional groups, corporate entities, trade unions, and cooperative societies, to a civil society of isolated individual utility maximizers” (p. 56; emphasis added). They quote Ronald Meek approvingly: “the new starting point became, not the socioeconomic relations between men as producers, but the psychological relation between men and finished goods” (p. 58). In short, civil society was reduced to a neoclassical oxymoron as the isolated castaway Robinson Crusoe became their favored model of what was worth understanding about society! Milgate and Stimson obviously find that true political economy died with the ascendancy of neoclassical economics. They are not any kinder to the various theories of society (e.g., public choice) that have lately emerged from the neoclassical perspective. Their conclusion on the neoclassical vision: no social values exist beyond efficiency, no moral or social obligation remains, only arbitrary individual preferences matter, and anti-institutionalism saturates the literature (p. 59). For Milgate and Stimson, classical economics is always seen in tension with neoclassical theory.

Another significant political issue (covered in two chapters) was extension of the franchise in early nineteenth-century Britain. Milgate and Stimson give major attention to James Mill and David Ricardo, who each favored widening the electorate, but for very different reasons. Because everyone’s individual utility mattered to Mill, government by the rich was intolerable from a Utilitarian perspective. Yet, equally intolerable would be a vote for the ignorant, or those with no stake in the community, thus leaving out the large poor and working classes. Mill, however, favored the vote for the (reliable and safe) middle classes. Before being enfranchised, workers and the poor would need to be educated to know their own true interests, which Mill blandly equated with those of the middle class. They should also acquire the middle-class propensity to accumulate, as property presumably was the most meaningful stake in society that one could have. Mill favored enfranchisement provided it created a bourgeois republic.

Ricardo, on the other hand, did not believe that workers needed conversion to a middle-class mentality, for workers correctly assessed their interests, which also tended to coincide with those of the larger community (p. 176). As defined by Ricardo, the interest of the nation was to increase its net product, and this depended on accumulation (from profits, not middle-class savings). In turn, this required ending the diversion of income to land rents, luxuries, and even general government, an agenda Ricardo believed the working class would accept as being in their interest. In short, Ricardo meshed his case for voting rights to his understanding of economics. Milgate and Stimson drop the subject at this point, leaving implicit some key questions: for example, whether the enfranchised workers would really have an affinity with Ricardo’s essentially capitalist agenda. Implicitly, the authors also expose how tentative and limited was the reasoning that passed for significant reform in the classical era. The very richness of this book’s scholarship sometimes leads the authors away from their main thread. For example, the entire chapter on nineteenth-century utopias and stationary states seemed to have little relationship to political philosophy, politics or statecraft. In general the early political economists (in line with Smith) disparaged reformers as “utopian” if reform ventured in directions that would change the status quo too much. For their part, the political economists predicted the coming of a stagnant steady-state future. The relation of this to the interface of economics and politics is not clear to this reader. However, an exception occurred when colonies, and government policies toward colonies, were debated as an antidote to the steady state. Provocatively, this chapter closes with an interpretation of neoclassical economics as the victory of a sort of utopianism, in which competitive efficiency defines the best world (subject to constraints imposed by the status quo, which lie outside economics of course).

As noted, the authors compare classical economics as much to neoclassical economics (at its endpoint) as to Adam Smith at the starting point. Ironically, according to the authors, neoclassical economics reflected Utilitarian philosophy more than the actual classical economics. Neoclassical economics reduced a variety of classical questions by considering them in merely two dimensions ? individualistic utility and competitive efficiency. This, argue the authors, destroyed the interplay of economics and politics by its narrow focus on the self-oriented individual. This judgment applies as well to more recent neoclassical developments such as public choice; the putative “citizens” populating public-choice “societies” are simply homo economicus of the neoclassical world. At the conclusion of the book the authors contrast Smith’s “tenuous, equivocal, and open-ended” views on the affirmative roles of government against the “quite otherwise” views of neoclassical economics (p. 267).

In short, this book provides a striking perspective on classical political economy. The reader will benefit from some prior familiarity with Smith, Malthus, Ricardo and J. S. Mill, along with the Utilitarians. Some digression from the main thread may be forgiven as it always explores interesting concepts. The book makes only rare references to American thinkers, some of whom could have added a dimension lacking among the British authors. Alexander Hamilton, for example, clearly possessed a philosophy of politics and government informed by economic ideas and pragmatic financial experience; and his outlook clearly differed from that of the major British figures. In addition, nineteenth-century American thinkers often provided a religious interpretation to their economic and political ideas, which could have provided a welcome counterpoint to the predominantly secular outlook of the British classical economists considered.

Donald Frey is author of America’s Economic Moralists: A History of Rival Ethics and Economics (Albany, NY: SUNY Press, 2009; paper 2010).