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Subject Area: Political Theory

Political Economy, Politics, & Paradigm Shifts - Leonard P. Liggio, Literature of Liberty, Autumn 1982, vol. 5, No. 3 [1982]

Edition used:

Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.

Part of: Literature of Liberty: A Review of Contemporary Liberal Thought, 20 vols. 19781-982

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Political Economy, Politics, & Paradigm Shifts

Salim Rashid

  • University of Illinois

Review Essay of The Economist in Parliament. By Frank Whitson Fetter. Durham, N.C.: Duke University Press, 1980; & Economic Doctrine and Tory Liberalism, 1824–1830. By Barry Gordon. London: The Macmillan Co., 1979. In History of Political Economy 13 (Winter 1981): 860–864.

Students of classical economics owe an enormous debt of gratitude to the pioneering studies of E.R.A. Seligman and Frank Whitson Fetter. Seligman, in 1903, directed attention to such previously ignored ‘lesser’ classical economists as Nassau Senior and Mountifort Longfield. Fetter further broadened the horizons of economic history by his careful study of early 19th-century periodicals. His research of the sources and social context of classical economics culminated in his book, The Development of British Monetary Orthodoxy, 1797–1875 (1965). Fetter continued illuminating the drama of classical economics by detailed discussions of economic arguments used in Parliament. He presented this analysis in his two volumes, the first being an excellent account of Ricardo's years in Parliament, Political Economy in Parliament, and the second being the volume reviewed in Rashid's essay. Barry Gordon's Economic Doctrine and Tory Liberalism similarly clarifies our understanding of the strange ways in which political economy influenced British parliamentary politicians.

Professor Fetter's The Economist in Parliament studies those parliamentarians who performed serious economic analysis. Mainly Whigs and Radicals, they entered Parliament with a sense of a reforming mission. They sought to advance public education, remove the legal privileges of the Anglican church, curb imperialism, and achieve democratic electoral reform. Those Tories who joined the ranks of these reformers did not hold fast to Tory economics but rather endorsed the new political economy. Fetter's two chapters on government regulation—of working conditions and of business practices—reveals how willing the economists were to compromise their faith in laissez faire.

Barry Gordon's Economic Doctrine and Tory Liberalism chronicles the paradoxical role of the Tory Party leaders in forcing free trade and some of the tenets of political economy on Britain's Protectionists. The old Tories were baffled by the conversion of their leaders to the Smithian free trade and anti-protectionist policies of political economy.

Both Gordon and Fetter erroneously believe that Smithian classical economics was a new beginning, a first systematic attempt to apply rational thinking to economic problems. In fact, commercial, capitalist society and economic theory arose in England around 1660. As William Grampp convincingly showed in “The Liberal Element in English Mercantilism” (1952) Smith differed from his predecessors not in espousing freer trade but in his world view that believed in the automaticity of full employment in free-market economics. Smith, however, opened a Pandora's box by allowing unprincipled ad hoc exceptions to his free trade beliefs. We need to investigate what higher principles Smith and others invoked in order to go beyond the principles of political economy.

Both volumes underline the intimate relationship between economic and political power. Left unanswered is why such a high percentage of Tory leaders converted to the new Smithian paradigm of ‘political economy’ after 1815: Canning, Castlereagh, Peel, Huskisson, Robinson, Wallace, Courtenay, and even Wellington. Rashid suggests that it was not so much rational understanding of the principles of political economy as prestige and awe that effected the conversion to the new paradigm.