Lionel Robbins and The Classical Economists

Lionel Models, Lionel Production

Lionel Robbins has made many contributions to the study of the history of economic thought. Current interest in this branch of scholarship owes as much to him as to Viner and Schumpeter, and it is impossible in a brief essay to discuss all his contributions. It is important, however, to pay some attention to one particular contribution, his study of the classical approach to economic policy. His book on the subject (Robbins, 1952) is both her-meneutic and exegetical, the former also taking him close to an apologia. He himself places considerable emphasis on clarifying what the classical economists actually had to say, but he also recognises the importance of the context in which they said it. There are a great many questions that emerge from Robbins's book that are worth noting. He himself refers to the rather commonsensical and robust arguments used by the classical economists to account for the adjustment processes of the system of economic freedom. Economic policy for the most part, therefore, is about supplementing that process but for the most part allowing it to continue. Robbins says, 'their claim, in essence, was not so much that the system of markets was always tending to some refined equilibrium adjustment, but rather that it provided a rough pointer and a rough discipline whereby the tumultuous forces of self-interest were guided and held in check'.6 Now, there is a genuine intellectual difficulty here in considering the econ­omic functions of the state. These cannot be considered in­dependently of whether the economy has a tendency within a reasonable time scale to move towards a position of equilibrium and preferably one of full employment. Although the classical economists did recognise the existence of economic fluctuations, and obviously were aware of inflation and balance of payments difficulties, the economic functions of the state did not appear to include a stabilization role. Their rough and ready theory in both its normative and positive modes must have taken it for granted that the system was self-equilibrating. Their economic function of the state was predicated on this so that Keynes's famous remark is relevant

If we suppose the volume of output to be given, i.e., to be determined by forces outside the classical scheme of thought, then there is no objection to be raised against the classical analysis of the manner in which private self-interest will determine what in particular is produced, in what proportions the factors of production will be combined to produce it, and how the value of the final product will be distributed between them.

But even here Robbins reminds us that matters are not at all clear cut. How can we account, for example, for McCuUoch's advocacy of state assistance for the unemployed, if the classical economists were supposed to assume perpetual full employment?

The second of Robbins's contributions follows from the first and it is to remind us that the classical economists were not extremists in the sense of taking all their assumptions to their logical conclusions. McCulloch and Senior could be pretty exacting and harsh on occasion, but the latter did say 'It is the duty of a government to do whatever is conducive to the welfare of the governed', and the former stated 'to appeal to [the principle of laissez-faire] on all occasions savours more of the policy of a parrot than of a statesman or a philosopher'.

Finally, some remarks must be made on their attitude to socialism. Setting J. S. Mill on one side for the moment, they were strongly anti-socialist. Robbins was able to show that they saw a much bigger role for the government than that usually associated with the state but it stopped well short of social democracy, let alone pure socialism. One reason for this was the slippery slope argument - once the state really started to intervene there was no knowing where it would stop. We are given a remarkable quotation by Senior from de Tocqueville If, on the other hand the State, in order to escape from this train of consequences, does not itself find work, but takes care that it shall always be supplied by individual capitalists, it must take care that at no place and at no time there be a stagnation. It must take on itself the management of both capitalists and labourers. It must see that the one class is not injured by over trading, or the other by competition. It must regulate profits and wages - sometimes retard, sometimes accelerate, produc­tion or consumption. In short, in the jargon of the school, it must organise industry. This is Socialism.

Apart from the felicity of language this could be written by a member of the radical right today. But it is also interesting to note that it could be used to justify some backtracking on other grounds for state intervention. It is not easy to see how logically Senior and other classical economists could justify the amount of intervention that they did if they feared the slippery slope to Socialism. What seemed to happen, therefore, is that common sense replaced logic.

As for Mill, he was a passionate, emotional man who agonised on these issues. Robbins's chapter on his views is a brilliant one. There is no point in summarising it. It should be read and then used as Robbins intends as an incentive to become acquainted with the original literature.