The Historist Reaction in English Political Economy 1870-90

Abstract

During the 1870's English political economy suffered a considerable loss of public prestige. Confidence in the Ricardian laws was undermined by bitter controversies between leading economists such as that which resulted from John Stuart Mill's recantation of the wagesfund theory in 1869, and the belief that the received doctrine was disintegrating found supporting evidence in Jevons' scathing attack on the Ricardian theory of value.2 On the occasion of the dinner given by the Political Economy Club of London to mark the centenary of the Wealth of Nations it was suggested that the economists had better be celebrating the obsequies of their science than its jubilee .3 The nadir of this movement was reached in 1877, when it was formally proposed that Section F of the British Association, dealing with Economics and Statistics, should be dropped because its proceedings and its subject-matter were unscientific.4 This loss of prestige was in part the consequence of a naive misinterpretation of the nature and functions of political economy. No clear line can be drawn between the scientific and popular writings of this period, and many persons identified the teachings of the economists with policy recommendations. Accordingly, they held those teachings in high regard during the prosperous decades after the mid-century, attributing current prosperity to the success of the free trade doctrines. After 1873, however, when the tide turned, those same persons found