Lauderdale, James Maitland
Lauderdale, James Maitland
James Maitland, eighth earl of Lauderdale, (1759-1839) was a product of the famous Scottish educational system that flourished in the second half of the eighteenth century. He was a pupil of the great John Millar, of whom it was said that “to hear his lectures . . . students resort hither (i.e., to Glasgow) from all quarters of Britain. “Among his contemporaries in Glasgow and Edinburgh Lauderdale numbered James Mill, Sydney Smith, Francis Jeffrey, Thomas Chalmers, Francis Horner, and Henry Brougham—to name but a few members of that amazing generation. Politically he allied himself with the Whig opposition to Pitt, a policy that long kept him from high government office, an honor he would without doubt have achieved had he been of the government party. Following his teacher he was a staunch defender of democratic principles at a time when the holocaust of the French Revolution encouraged an extreme reaction in England. However, it would be a mistake to place Lauderdale in the radical tradition; he advocated limited democracy, and he lived to oppose—in a rather inexplicable volte face — the moderate innovations suggested in the 1832 Reform Bill.
Lauderdale has a rightful place in the history of economics, although not perhaps as a major figure. This is a position comparatively recently achieved and is a consequence, as with so many reevaluations in the history of economics, of quite recent developments in economic analysis.
Lauderdale’s most original contributions are to be found in his Inquiry Into the Nature and Origin of Public Wealth (1804). The frame of reference for this work is Adam Smith’s Wealth of Nations,and in an important sense Lauderdale’s Inquiry may be regarded as a commentary on Smith’s classic. It is important to remember this when considering Lauderdale’s position in the development of economic thought. Lauderdale is often regarded as being in basic opposition to the orthodox English classical school and as representing an entirely separate, although contemporary, stream of development. While there is an element of truth in this, Lauderdale’s work should not be considered too far outside the mainstream of economic thought: he did have certain criticisms of Smith’s orthodoxy, but in terms of policy—the belief in the competitive order and the minimization of interference with economic systems—Lauderdale was part of the classical school.
The central theme of the Inquiry —the nature of relations between individual and public well-being—is not as pathbreaking as Lauderdale thought. He was worried by the fact that a rise in total spending on a commodity might be accompanied by a decline in the physical volume of purchases. We would now consider the problem in terms of index numbers of output. Lauderdale, however, was forced to consider it in terms of the demand schedule and what is now called the elasticity of the schedule, and did so in a way that was highly sophisticated for the time. His emphasis on the role of utility in the determination of relative prices places him much more with the subjective school (Condillac, Say, A. Walras, S. Bailey) than with the classical writers.
Lauderdale also applied his analysis to the question of overproduction. He argued, in opposition to the central classical position—often described as a belief in Say’s Law—that saving could, nationally, be carried too far and result in an over-all excess supply of goods. It is for this reason that some contemporary economists, like Alvin Hansen or H. L. McCracken, consider Lauderdale as an early forerunner of Keynes. This is a mistaken view: since Lauderdale assumed the equality of planned saving and investment, oversaving was for him the mere production of capital equipment. This is certainly not what is normally understood as the Keynesian dilemma of capitalism. However, it must be acknowledged that when Lauderdale applied his analysis to the economic effects of national debt policy he came very close to a modern understanding of the question.
Lauderdale also wrote on monetary questions and gave an early statement of the bullionist position in Thoughts on the Alarming State of the Circulation and on the Means of Redressing the Pecuniary Grievances in Ireland (1805). Later on he defended the Bullion Report—he was a member of the committee that prepared it—and pressed for the early resumption of cash payments. Rather paradoxically, he combined these orthodox monetary views with vivid fears of underconsumption.
(1804) 1819 An Inquiry Into the Nature and Origin of Public Wealth, and Into the Means and Causes of Its Increase. 2d ed., enl. Edinburgh: Constable.
1805 Thoughts on the Alarming State of the Circulation and on the Means of Redressing the Pecuniary Grievances in Ireland. London: Longman; Edinburgh: Constable.
(1829) 1965 Three Letters to the Duke of Wellington, on the Fourth Report of the Select Committee of the House of Commons, Appointed in 1828 to Enquire Into the Public Income and Expenditure of the United Kingdom. New York: Kelley.
Cannan, Edwin (1893) 1953 A History of the Theories of Production and Distribution in English Political Economy From 1776 to 1848. 3d ed. London and New York: Staples.
Corry, B. A. 1962 Money, Saving and Investment in English Economics, 1800-1850. New York: Macmillan.
Paglin, Morton 1961 Malthus and Lauderdale: The Anti-Ricardian Tradition. New York: Kelley.