David Hume is primarily known as a philosopher, and his contributions to economics are typically thought of as secondary to his philosophical concerns. Schabas and Wennerlind aim to correct this impression, contending that, once we survey the breadth of Hume’s economic thought, we will realize that, rather than being a philosopher who occasionally commented on economics, “Hume was engaged in thinking and writing about economics for his entire adult life and… his contributions are extensive and significant” (5) and that “Hume’s life and writings form an integral whole centered on economics” (6).
This book is an important contribution to Hume scholarship, and makes a good case for its novel thesis. If this review focuses on its flaws, it is only because flaws are even more salient against when raised from a quality background.
In their introduction, the authors sometimes wax rhapsodic about Hume’s accomplishments, writing, for instance, of “his vision for the future of humanity” (1), or declaring that “His philosophical tenets continue to spread like the roots and branches of a majestic tree” (3). Such praise seems to be more suited to a hagiography than an intellectual biography.
And the authors’ desire to endorse Hume sometimes seems to lead them to sloppy scholarship. For instance, in making the case for Hume’s support for European minorities, the authors write:
“Hume had written sympathetically about the Jewish money lenders in York, who in 1189-90 were severely persecuted under King John. About 500 of them were burned to death to annul outstanding debts.” (47)
A reader might be forgiven for thinking that King John had ordered 500 Jews burned at the stake in York at that time. But our authors’ contention faces several problems, the foremost of which is that John did not become king of England until 1199, a decade after which he was supposedly persecuting Jews. What’s more, every source I can find gives a number of about 150 Jews… who actually burned themselves, by lighting fire to the tower where they had sought the crown’s refuge from an angry mob. This was certainly an awful incident, as the Jews only burned the tower due to their fear of the mob besieging it. But to find this incident so inaccurately described in a book of historical scholarship is troubling.
Similarly, the authors contend that Hume’s status as an economist is bolstered by noting that the topics he addressed: “Population, Industry, Coin… Circulation, Banks, Exchange, Public Credit, and Taxes”: still constitute the core of economics, and that that there is a “dearth of genuinely novel phenomena”(53) taken up since Hume. This evaluation essentially wipes the marginalist revolution and the emergence of economics as the study of choice under conditions of scarcity (see Robbins 2007) out of the history of the subject. (To be fair, the authors later do recognize the existence of the marginalist revolution… but why not here?)
The authors also mention, in order to cement Hume’s status as a precursor to much of modern economics, that:
“Many of the formal principles and methods the became de rigueur in twentieth-century economics — game theory, decision theory, and the binomial theorem — were formulated before Hume… Much of the… calculus that was adopted in economics by the end of the nineteenth century had been cemented by the mid-eighteenth century by, for example, Jean d’Alembert, whom Hume had befriended.” (53)
OK, very well, but what does the fact that Hume had befriended an important figure in calculus, which came to be extensively used in economics a century after Hume’s death, have to do with Hume’s status as an economist? And if, as the authors contend, the binomial theorem is actually important to modern economics, how is it relevant to our evaluation of Hume’s status as an economist that someone else had developed it before him? The authors generally make a good case for Hume’s importance in the history of economics, so why introduce irrelevancies like these into the discussion?
Although the focus of this work is not on Hume’s metaphysics, I note that Hume’s own take on the status of natural laws – that we have no real knowledge of causes, and no reason to think natural laws always have and always will hold – clearly undermines his argument against accepting evidence for miracles (they violate natural laws, so we should never believe in them). Since the authors discuss both of these aspects of Hume’s thought, it might have been useful to point out this inconsistency.
Schabas and Wennerlind briefly discuss Hume’s take on the infamous enclosures that took place in Britain, noting, “He blamed the English peasantry for their poor work habits and lack of initiative. With hindsight, Hume argued, it was clear that they benefited from the enclosures by being forced to become more industrious and frugal” (109). The authors let this pass without comment, but it does seriously call into question how sincere Hume was in his defense of property rights. The peasants had generations-old rights to the commons that were being taken from them, but apparently Hume thought this was fine, so long as it made them work harder! One wonders what he would have thought of a proposal to take all of his property from him, since then he would really get busy writing.
In discussing Hume’s ideas on price formation, the authors write: “Hume makes plain that, while prices fluctuate because of supply and demand, the core or long-standing price is governed by the costs of production…” (148) Here, it is hard to know if they are just mentioning Hume’s mistake, since their “makes plain” seems to indicate they actually believe it. If the latter is true, that is puzzling: that Hume did not anticipate the Marginalist Revolution by a century is not surprising, but it is now 150 years in our past, and anyone writing today ought to realize that there are no “costs of production” separate from “supply and demand”: the cost of using my labor to produce nails is the demand for my labor in its most valuable alternative employment.
In many accounts of the history of economic thought, Hume’s monetary theory is seen as his most important contribution. Naturally, this work addresses this aspect of his thought, devoting an entire chapter to it. Most of the chapter is an excellent exposition of Hume’s ideas about money: Hume was, indeed, a pioneer in this field. But one passage here struck me as odd: “Inasmuch as Hume identified the significance of a variety of self-correcting mechanisms, money had achieved a considerable degree of autonomy from human agency” (176). But all of the “self-correcting mechanisms” are themselves the result of humans acting. Specie does not make its own way out of a country experiencing inflation: it leaves because human agents are employing it to buy cheaper goods from abroad.
The penultimate chapter highlights Hume’s general support for free trade. It demostrates that Hume had an inkling of Ricardo’s “comparative advantage” case for doing away with trade barriers. He also anticipated “infant industry” arguments for restricting trade in special cases. And besides the economic benefits Hume saw accruing from free trade, he argued that nations tied by trade would be less likely to go to war with each other.
In this chapter, the authors note Hume’s racist views about sub-Saharan Africans, adding that such views were common among Enlightenment intellectuals. They also document his strong opposition to government debt. Interestingly, Hume thought the property of government bondholders is “is the most precarious of any” (197), quite contrary to the typical contemporary view that the return on such assets represents the “risk-free” rate of interest. Hume also held a negative view of investors in government bonds, writing that they “sink into the lethargy of a stupid and pampered luxury, without spirit, ambition, or enjoyment” (199).
The last chapter sums up the case for Hume as a significant figure in the history of economic thought. The authors document at length his influence on Adam Smith (with whom Hume became a close friend), as well as on such modern figures as F.A. Hayek, James Buchanan, John Maynard Keynes, Paul Samuelson, Amartya Sen, Vernon Smith, and Paul Krugman.
The authors conclude their case for the importance of economics to Hume and Hume to economics by claiming: “Hume is without equal among philosopher economists; to grasp the full compass of his economic analysis demands a careful reading of his entire oeuvre and a concerted effort to situate his economics within his philosophical tenets” (209)
And I conclude my review by claiming that, while I have quibbles with various particulars in this book, it is nevertheless an important survey of Hume’s economic thought, which makes a convincing case that his importance as an economist has been underestimated. I highly recommend it to both Hume scholars and historians of economic thought.
Robbins, L. (2007). An essay on the nature and significance of economic science. Auburn, Ala: Mises Inst.