John Rae and the Problems of Economic Development

Abstract

The problems of development confronting the newly emerging countries have kindled an interest in the writings of early political economists, especially those of the Classical period, in hopes of finding ideas which may be still relevant today. However, ignored to a great extent have been the works of many relatively obscure writers who primarily discussed the causes of wealth (i.e., economic progress). They have remained relatively unknown because their views were not in accord with the dominant ideas of their time, they refrained from giving space to practical or contemporary discussion, or they failed to develop a comprehensive or refined theory. In many cases, their major work(s) were modified or rediscovered by others who were interested in re? defining traditional concepts or who were searching for answers to new problems as old ones receded or became unpopular. A major example of these circumstances was John Rae's (1786-1873) New Principles of Political Economy (1834) which remained relatively unknown until the 1950's except for the abortive attempt by C. W. Mixter in 1905 to resuscitate it from obscurity.1 At first glance, Rae's major treatise appears only to be an attack against the classical (Smithian) view that there was a natural harmony between the interests of individuals and states, and that national wealth could only be increased by the accumulation of private wealth. Instead, Rae's lucid and original ideas on capital accumulation and invention, and how the government helped to stimulate economic development in newly emerging countries, such as Canada and the United States in the early nineteenth century, far transcends his assigned role in the history of economic thought as a nationalist critic of Smithian economics.2 Also Rae's historical descriptive empiricism of the different levels of wealth in various countries showed the importance of social and political forces for accelerating development. He believed these forces were endogenous to any system and were espe? cially important in a newly emerging capitalist economy, or what Rostow has referred to as the take-off into sustained economic growth. The purpose of this article is to discuss the major strands of Rae's theory of economic development and to note whenever possible the rele 97