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1. Jean-Baptiste Say, 1767-1832.

Jean-Baptiste Say was born in Lyons to a family of textile merchants of Huguenot extraction.  In 1787, after spending two years in England apprenticed to a merchant,  Say took a job at an insurance company in Paris run by Clavie (later to become Minister of Finance).  An ardent republican, Say was overjoyed by the French Revolution.   He served as a volunteer in the 1792 military campaign to repulse the allied armies from France.

It was around this time that Say read Adam Smith's book and the work of  and fell into with a group of laissez-faire economists, known as the idlogues, who sought to relaunch the spirit of Enlightenment liberalism in republican France.  From 1794 to 1800, Say served as the editor of their journal, La Dade philosophique.  His 1800 essay, Olbie, was submitted to a contest run by the Institut de France.  Say's eminence grew such that he was nominated to the Tribunate in 1799, sitting in the finance section.

In 1803, he published his most famous work, Treatise on Political Economy.  Say's distinctive approach to economics was an outcome of the muddled marriage of Condillac's utility theory of demand and Adam Smith's cost theory of supply.  Value, Say claimed (with some inconsistency), was the outcome of the interaction of these two.   In this respect, it departs considerably from the Classical Ricardian School, where value is determined purely from the cost side.  Say's approach was taken up by French Liberal School and he can be considered a precursor of the Marginalist Revolution.  Like Cantillon before him and the Austrian School after him, Say also placed great emphasis on the risk-taking entrepreneur and even tried to include him as the "fourth" factor of production in his analysis.

It was also in the Treatise that Say outlined his famous "Law of Markets".  Roughly stated, Say's Law claims that total demand in an economy cannot exceed or fall below total supply in that economy or as James Mill was to restate it, "supply creates its own demand."  In Say's language, "products are paid for with products" (1803: p.153) or "a glut can take place only when there are too many means of production applied to one kind of product and not enough to another", (1803: p.178-9.).  Or:

"It is worth while to remark, that a product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value.   When the producer has put the finishing hand to his product, he is most anxious to sell it immediately, lest its value should diminish in his hands.  Nor is he less anxious to dispose of the money he may get for it; for the value of money is also perishable.  But the only way of getting rid of money is in the purchase of some product or other.  Thus the mere circumstance of creation of one product immediately opens a vent for other products." (J.B. Say, 1803: p.138-9)

The radical laissez-faire notions expounded in the 1803 Treatise caught the attention of Napoleon Bonaparte himself.  Summoning Say to a private meeting, Napoleon demanded that Say rewrite parts of the Treatise to conform with his attempt at creating a war economy, built on protectionism and regulation.  Say refused.  Napoleon proscribed the Treatise and had Say ousted from the Tribunate in 1804.

Although offered another post as compensation, Say was too disgusted by the imperial regime.  He moved to Pas-de-Calais and set up a cotton factory at Auchy-les-Hesdins.  He grew fabulously rich.   In 1812, Say sold his shares and returned to Paris, living as a speculator.

After the fall of Napoleon in 1814, Say finally published the second edition of the Treatise.  He then spent some time in England, met Ricardo and Godwin, and, upon his return in1815, published his 1815 reflections.  The Bourbon restoration government showered Say with numerous dignities and honors.  In 1816, he was invited him to deliver a course of lectures on economics at l'Ath Royale, a private college.  In 1819, he was appointed as Chair of Industrial Economy at the Conservatoire National des Arts et Metiers.  His popular lectures were published in 1828.

Say's Law of Markets came to divide economists in the General Glut Controversy around this time.  Say joined in the fray, attacking the underconsumption thesis in his letters to Malthus (1820) and in his 1824 exchange with rival countryman Simonde de Sismondi in the Revue Encyclopique.

In 1831, Say was granted a chair (the first in economics) at the prestigious Colle de France.  The French Liberal School which followed up on Say maintained an even more intimate connection with the establishment.

2. The French Liberal School

The "French Liberal School" is how we shall term the 19th Century French economists which followed the tradition, both in politics and economics, set by the theorist Jean-Baptiste Say.  In economics, this meant pursuing a loose sort of Classical School economics while maintaining a prominent role for utility and demand.  They also eschewed most of the Classicals' pessimistic stories about the iron law of wages, the inexorable rise of rents, the wage-profit trade-off, unemployment by mechanization, general gluts, etc., preferring instead to emphasize the happier "harmonies" between the classes and the infallibility of a self-regulating system of markets.  Politically, that meant upholding a radical laissez-faire line.  In sum, they can be considered the French counterparts of the British "Manchester School" with a dash of better theory and a good deal of optimism.  Karl Marx would later deride them as the "vulgar" economists.

French liberalism can trace its roots to the Enlightenment philosophers and economists, notably the Physiocrats, Turgot and Condillac.  After the French Revolution of 1789, a group of philosophers and economists tried to re-launch the liberal spirit of the Enlightenment in a republican France that was still suspicious of any intellectual relics of the Ancien regime.  These were known as the the idlogues.  Leading the fray was Destutt de Tracy and Jean-Baptiste Say.  The journal La Dade philosophique was their principal organ.

The rise of the imperial regime of Napoleon Bonaparte, who sought to create a "war economy" buffeted by protectionism and regulation, led to the suppression of the idlogues.  However, after 1815, the restored Bourbon rulers showered the remnants of the liberals with honors and dignities, initiating the long tradition of deep intimacy between liberals and the establishment.  However, many liberals (such as Charles Dunoyer and Charles Comte) were discontented with the absolutist tendencies of the Bourbons and supported the 1830 July Revolution.  Their liberals' greatest competitors were Sismondi and the French socialists.  The amorphous doctrines of Saint-Simon hovered between the two camps.

Around the mid-19th Century, the French liberal banner was carried by a group of academic and writers which we shall refer to as the journalistes (they were also known as the laissez-faire ultras or the Paris Group).  The central figures in this movement include Michel Chevalier, Jean-Gustave Courcelle-Seneuil and Gustave de Molinari. Their advocacy of laissez-faire economic policy was even more extreme than their Anglo-Saxon counterparts and their influence on government policy was unmatched anywhere else.  Only in the battle for the hearts and minds of the French population did their socialist rivals register any success, but even that quickly waned after the debacle of 1848 and the formation of the Second Empire under Napoleon III. .  It was during this time that popular laissez-faire satirist Fric Bastiat had his greatest hits.

In order to ensure that economics of any other persuasion could not take root in France, the orthodox liberals exercised an iron grip over the economics profession. In 1842, they founded the Socionomie Politique and the highly-influential Journal des onomistes.  They also controlled the publishing house of Guillaumin, which produced Coquelin's famous Dictionnaire d'onomie politique (1852), restating economic debates from a liberal slant.

Throughout the Second Empire, most positions in French universities were filled by orthodox liberals.  The prestigious research perch at the Colle de France remained in their hands from its creation in 1831 until the next century -- passing from J.B. Say to Rossi to Chevalier to Leroy-Beaulieu.  They also controlled the economics section of the all-powerful Institut de France, the academy of sciences that looms over so much of French intellectual life.

We should also note that already by the 1830s, the French Liberal School had jettisoned serious economic theory.  Most of the journalistes focused on the art of economic policy, allowing a loose sort "supply-and-demand" logic to guide their thinking without adhering to any specific foundations.  Serious economic theory -- especially of the mathematical kind -- was pursued by lone figures such as Augustin Cournot and Auguste Walras and engineers like Jules Dupuit.  But the liberal school could not tolerate this on methodological grounds.  Their concerted assault on Cournot and Walras crushed these men and drove their works into the underground.  The engineers were spared only because they were safely sheltered by the grandes oles, the only academic institutions not controlled by the orthodox liberals.

The liberals' fall from grace came slowly after 1878, when chairs in political economy were established in law faculties throughout France. These were filled mostly by members of the French Historical School.  Thereafter, France veered in an empirical direction in its economics and a corporatist direction in its policy proposals.   The Journal des economistes's monopoly was broken in 1887 by the considerably more pluralist Revue d'onomie politique.

3．Thomas Robert Malthus, 1766-1834.

Robert Malthus (he went by his middle name) was born in "the Rookery", a country estate in Dorking, Surrey (south of London).  He was the second son of Daniel Malthus, a country gentleman and avid disciple of Jean-Jacques Rousseau and David Hume (both of whom he knew personally).  Accordingly, Malthus was educated according to Rousseauvian precepts by his father and a series of tutors.  Malthus entered Jesus College, Cambridge, in 1784 and was ordained a minister of the Church of England in 1788.  He earned his M.A. in 1791.

Around 1796, Malthus became a curate in the sleepy town of Albury, a few miles from his father's house.  Having been elected Fellow of Jesus College in 1793, he divided his time between Cambridge and Albury.  It was in the course of his interminable intellectual debates with his father over the "perfectibility of society" thesis then being advanced by William Godwin and the Marquis de Condorcet, that Malthus's decided to set his ideas down on paper.  It was eventually published as a pamphlet known as the Essay on Population (1798).

In this famous work, Malthus posited his hypothesis that (unchecked) population growth always exceeds the growth of means of subsistence.  Actual (checked) population growth is kept in line with food supply growth by "positive checks" (starvation, disease and the like, elevating the death rate) and "preventive checks" (i.e. postponement of marriage, etc. that keep down the birthrate), both of which are characterized by "misery and vice".  Malthus's hypothesis implied that actual population always has a tendency to push above the food supply.  Because of this tendency, any attempt to ameliorate the condition of the lower classes by increasing their incomes or improving agricultural productivity would be fruitless, as the extra means of subsistence would be completely absorbed by an induced boost in population.  As long as this tendency remains, Malthus argued, the "perfectibility" of society will always be out of reach.

In his much-expanded and revised 1803 edition of the Essay, Malthus concentrated on bringing empirical evidence to bear (much of it acquired on his extensive travels to Germany, Russia and Scandinavia).  He also introduced the possibility of "moral restraint" (voluntary abstinence which leads to neither misery nor vice) bringing the unchecked population growth rate down to a point where the tendency is gone.  In practical policy terms, this meant inculcating the lower classes with middle-class virtues.  He believed this could be done with the introduction of universal suffrage, state-run education for the poor and, more controversially, the elimination of the Poor Laws and the establishment of an unfettered nation-wide labor market.  He also argued that once the poor had a taste for luxury, then they would demand a higher standard of living for themselves before starting a family.  Thus, although seemingly contradictory, Malthus is suggesting the possibility of "demographic transition", i.e. that sufficiently high incomes may be enough by themselves to reduce fertility.

The Essay transformed Malthus into an intellectual celebrity.  He was reviled by many as a hard-hearted monster, a prophet of doom, an enemy of the working class, etc.  The ridicule and invective rained down on Malthus by the chattering and pamphleteering classes was relentless. But a sufficient number of people recognized his Essay for what it was: the first serious economic study of the welfare of the lower classes.  Even Karl Marx, who deplored his conservative policy conclusions, grudgingly granted him this.

In 1804, Malthus got married and thereby forfeited his fellowship at Cambridge.  In 1805, Malthus was appointed Professor of Modern History and Political Economy at the East India College in Haileybury, thereby becoming the England's first academic economist.

Malthus got interested in monetary in 1800, when he published a pamphlet (much praised by Keynes), expounding an endogenous theory of money.  Contrary to the Quantity Theory, Malthus argued that rising prices are followed by increases in the quantity supplied of money.  Around 1810, Malthus came across a series of tracts by a stockbroker, David Ricardo, on monetary questions.  He immediately wrote to Ricardo and the two men initiated a correspondence (and a friendship) that would last for over a decade.  The Malthus-Ricardo relationship was warm in all respects but one -- economics.  They found themselves on opposites sides of the fence on practically every issue.

In 1814, Malthus launched himself into the Corn Laws debate then raging in parliament.  After a first pamphlet, Observations, outlining the pros and cons of the proposed protectionist laws, Malthus tentatively supported the free traders, arguing that as cultivation as British corn was increasingly expensive to raise, it was best if Britain at least in part on cheaper foreign sources for its food supply.  He changed his mind the next year, in his 1815 Grounds of an Opinion pamphlet, siding now with the protectionists.  Foreign laws, he noted, often prohibit or raise taxes on the export of corn in lean times, which meant that the British food supply was captive to foreign politics.  By encouraging domestic production, Malthus argued, the Corn Laws would guarantee British self-sufficiency in food.

In his 1815 Inquiry, Malthus came up with the differential theory of rent.   Although it was simultaneously discovered by Torrens, West and Ricardo, Malthus's pamphlet was the first of the four to be published. Refuting older contentions that rent was a cost of production, Malthus argued that it was merely a deduction from the surplus.  Rent, Malthus argued, is enabled by three facts: (1) that agricultural production yields a surplus; (2) that the wage-fertility dynamics guarantee that the price of corn would remains steadily above its cost of production; (3) that fertile land is scarce.  Ricardo own 1815 essay was actually a response to Malthus.  Ricardo dismissed Malthus's arguments, arguing that Malthus's "third" cause -- that land differs in quality and is limited in quantity -- is sufficient to explain the phenomenon of rent.  He incorporated Malthus's theory of rent with his own theory of profits to provide the "Classical" statement of the theory of distribution.  He also dismissed Malthus's feeble attempts to defend parasitical landlords and the Corn Laws.

Malthus's own criticism of Ricardo's 1815 essay led them into a debate on the question of "value".  Malthus supported Smith's old "labor-commanded" theory of value, whereas Ricardo favored the "labor-embodied" version.  The outcome of the discussion was Ricardo's Principles in 1817, which set down the doctrine of the Classical School on value, distribution and production, incorporating at least two of Malthus's own contributions: the "natural wage" version of Malthus's population theory and an expanded version of Malthus's theory of rent.

Malthus was never comfortable as a member of the Classical school.  Nowhere is this more evident than in Malthus's own treatise, Principles of Economics (1820). He differs from the Classical Ricardians at several points.  For instance, Malthus introduced the idea of a demand schedule in the modern sense, i.e. as the conceptual relationship between prices and the quantity sought by buyers rather than the empirical relationship between prices and quantities sold.  He also paid much attention to the short-run stability of prices.   insisting on a labor-commanded theory of value and,

Thirdly, and most famously, Malthus denied the validity of Say's Law and argued that there could be a "general glut" of goods. Malthus believed that economic crises were characterized by a general excess supply caused by insufficient consumption.  His defense of the Corn Laws rested partly on the need for landlord consumption to "make up" for shortfalls in demand and thus avert crisis.  See our more extensive discussion of the General Glut Controversy.

4．Piero Sraffa and the Neo-Ricardians

One of the economic giants of the century, Piero Sraffa was at the same time one of the sparest writers of economics - yet each one of his few pieces was tremendous in its turn. Sraffa's 1926 article on returns to scale and perfect competitions (a revised version of his 1925 Italian paper) highlighted a glaring inconsistency in the Marshallian theory of the firm.  As he concluded at the end of the famous 1930 Symposium on his work:

"I am trying to find what the assumptions implicit in Marshall’s theory are; if Mr. Robertson regards them as extremely unreal, I sympathize with him. We seem to be agreed that the theory cannot be interpreted in a way which makes it logically self-consistent and, at the same time, reconciles it with the facts it sets out to explain. Mr. Robertson's remedy is to discard mathematics, and he suggests that my method is to discard the facts; perhaps I ought to have explained that, in the circumstances, I think it is Marshall's theory that should be discarded."

This led to developments in two directions -- towards a theory of production in general equilibrium terms and, more daringly, the development of theory of imperfect competition by Joan Robinson (apparently Sraffa was the only male she respected -- and feared.)

The shy, Italian-born Sraffa was brought by John Maynard Keynes to Cambridge in the 1920s. A close friend of the Italian revolutionary Antonio Gramsci, Sraffa has been sometimes considered a "closet Marxian" - and, apparently, he would sometimes be quite explicit about his loyalties - although the 1920s England was not exactly welcoming to Marxian radicals.

Sraffa quickly became a fixture in the Cambridge world. He was part of the legendary "cafeteria group" with Frank Ramsey and Ludwig Wittgenstein which explored the 1921 probability treatise of J.M. Keynes. Sraffa ganged up with Keynes to bury Friedrich Hayek in the business cycle debates.

Nonetheless, Sraffa's shyness in front of his students made lecturing a hellish experience.  Ever resourceful, Keynes arranged for Sraffa to be appointed as a librarian of King's College and, to keep him busy, got the Royal Society to hand over the task of editing a new collected edition of David Ricardo's works over to him.  Sraffa's painstaking and meticulous collecting and editing of Ricardo's works, begun in 1931, turned out to be a 20-year-task!    Although already in the printers in 1943, the edition was delayed after the last-minute discovery of a trunk full of Ricardo's papers in Ireland.  Publication finally began (after Maurice Dobb got on board as assistant) in 1953.  It was a formidable edition.  As George Stigler was to put it later in his review, "Ricardo was a fortunate man. And now, 130 years after his death, he is as fortunate as ever: he has been befriended by Sraffa." (Stigler, 1953).  Sraffa's introduction to the works was perhaps one of the most remarkable interpretations of the tenets of Classical and Neoclassical theory in the history of economic thought.

The outgrowth of these efforts was one of the longest-gestating works in economic theory.  Begun in the 1920s, Sraffa's Production of Commodities by Means of Commodities, a terse, hundred-page text which finally emerged in 1960. This book solved and restated Ricardo's theory for the moderns - inspiring the "Classical Revival" spearheaded by the Neo-Ricardians at Cambridge and elsewhere in the 1960s and 1970s. He was also the first to depict the famous "reswitching" problem in capital theory for an industry as well as an economy - which led to the Cambridge Capital Controversy and fuelled the Neo-Ricardian School.

An interesting contribution of Sraffa was his relationship to philosopher Ludwig Wittgenstein - who claimed that it was Sraffa who helped provide the important stepping stones for his Philosophical Investigations - arguably the most important philosophical work of the twentieth century.