 |
| (1789-1864) |
John Ramsay McCullogh follows the tradition of classic British economists, such as Adam Smith, Ricardo and Malthus. He is definitely not a very original thinker, but his work is a representative example of this current of thought and takes its ideas to a certain extreme. Good example is McCullogh’s opinion on labour as a source of wealth. This thought goes back to at least Adam Smith, but McCullogh upholds it in a very one-sided manner, explicitly denying that anything else could ever produce any wealth. In a famous example, he tries to show that passage of time as such does not produce any additional wealth. McCullogh asks the reader to think of a barrel of wine that its owner locks in cellar. Seemingly, McCullogh notes, the barrel appears to become more expensive just by itself, but actually, McCullogh insists, it is the act of placing the barrel in the cellar and waiting that has produced the additional wealth.
McCullogh’s example is rather unconvincing in itself - certainly the act of putting the wine in the cellar has the least to do with the chemical and biological changes in the wine that make it more valuable. A clear counterexample is provided by the generation of oil and diamonds. The starting point of the process is something relatively cheap - dead life forms and coal. These have become valuable just because they have lied underground for several generations, under the pressure of Earth’s crust, and no person has definitely buried them there.
What engages McCullogh most is the question how to increase the effectiveness of labour. Answer he provides are familiar from previous economists: guaranteeing property rights makes it possible to amass capital to different endeavours, which enables different persons and even different nations to specialise on their own type of industry. McCullogh's three main classes - workers, landlords and entrepreneurs - and their respective sources of income - wage, rent and profit - follow the ideas of previous economists, but feel a bit outdated nowadays, when landlords rarely exist and individual entrepreneurs have been replaced by global corporations.
McCullogh, like other economists of his time, is thus more than a bit blind to the influence of his own cultural context - this is somewhat paradoxical, since McCullogh begins his work with an account of the history of economy. His special blindspots - which he shares with other economists - are the questions of population growth and gluts. On the first issue, McCullogh follows Malthusian idea that increased wages will eventually lead to an increase of population and thus to a return of wages to the old level, when the amount of potential workers has grown. As we know from the state of Western Europe, this “eventual” link is no law of nature, since there the development of effective contraceptives and liberation of general mores have suppressed the population growth.
When it comes to gluts - that is, excess of supply in relation to demand - McCullogh is far more radical than either Malthus and Ricardo, who agreed that gluts were a real problem. McCullogh, on the other hand, simply states that gluts appear only in cases where markets are unnaturally regulated e.g. by monopolised fields of commerce. In a completely free market, on the contrary, gluts would be only temporary and would - again, eventually - vanish when capital was transferred to more lucrative fields of business and workers would find new type of employment. One might agree that this happens eventually, but it could still be that this transfer would take an inordinate amount of time, especially from the viewpoint of an individual worker. This is especially important question in our time, when many jobs require extensive, specialised training. Indeed, there might be whole generations full of people who have basically educated themselves to an outdated and obsolete profession.
In addition to the reliance on eventual change of things, McCullogh’s work, like that of Ricardo before him, suffers from emphasis on mass market products, like corn or wool, where one item is just like any other and easily reproducible. Indeed, McCullogh himself admits that there are items, like rare artworks, which create natural monopolies, since e.g. there is only one artwork of certain sort in existence and their supply cannot be augmented. Just like with Ricardo, we may well ask whether the modern economy contains more and more examples of industries concentrating on such rare goods.
By far the most interesting part of McCullogh’s work is the last chapter on consumption. His definition of consumption is rather problematic. While labour, he says, changes matter into a form useful for us, in consuming we at the same time take advantage of this usefulness and turn matter into a form in which it is not anymore useful for that purpose. This definition works well in case of food items, where eating something both benefits us and destroys what we eat. Still, it seems clear that this combination of using and destroying things is not necessary. Firstly, we may well lose usefulness of a thing without using it, for instance, when we break a household item. Secondly, there are a lot of things we can use without destroying them, such as a book which can be read many times over.
Despite the flaw in the definition, we can at least agree upon the general sentiment behind it: we use things, and while we use them, they tend to lose their cohesion. McCullogh notes that this process of using things does incite us to produce new things and thus increases the amount of labour. Hence, McCullogh concludes, consumption is not as such a bad thing, but can increase the wealth of a nation. Indeed, McCullogh goes even further. While earlier economists had considered service sector to be of secondary importance in comparison with industries, McCullogh sees no essential difference between them. Thus, he says, there’s no clear economic difference between farmer’s work of producing corn and cook’s work of preparing corn for a dinner. In fact, McCullogh quite radically suggests that even seemingly useless tasks, like building a house of cards, can be economically useful, if they incite people to work harder for the rest of time - an important concession for the importance of spare time.
Although McCullogh is thus positive about the power of consumption, he admits that in some cases consumption should be restricted. The ground for such a restriction, McCullogh insists, is formed by the limits of consumable resources. The main target of McCullogh’s point is frivolous government spending, but nowadays, instead of this laissez faire -reading, one might as well choose its unintended ecological meaning - resources form a strict limit for consumption, and human race cannot continue its economic growth unless it will take care that this growth remains sustainable and does not overstep the boundaries.
