The Denaturalization of Economic Thought

In the early 1990s, a number of scholars made strong claims about connections between economic discourse and natural science. Anson Rabinbach's The Human Motor (1990), Philip Mirowski's More Heat than Light (1990), and Charles Clark's Economic Theory and Natural Philosophy (1992) all presented histories of eighteenth- and nineteenth-century economic thought that stressed its indebtedness to models of the physical world. Margaret Schabas revives that conversation, but also revises its fundamental premise. She agrees that political economy began, in the eighteenth century, with analogies to nature. Wealth was studied as a physical phenomenon; the laws that governed it were both analogous to, and continuous with, the laws that governed physical nature. But Schabas argues that a "denaturalization of the economic order" set in toward the middle of the nineteenth century, in the work of neoclassical economists, and a few late classical ones, notably J. S. Mill (16). In fully developed neoclassical theory, prices are no longer imagined to measure quantities of labor, or any other physical quantity. They are instead psychological effects: they reflect "the distinct calculations of different minds" (15). Only when economic life has been thus psychologized and separated from the physical world, Schabas argues, does "the economy" become visible as the distinct entity we now imagine.

Interpreted narrowly as an observation about theories of value, this argument would not be altogether surprising. It has long been recognized that classical economists (Adam Smith, J.-B. Say, David Ricardo, Karl Marx) sought to explain wealth by tracing value back to the physical agencies that produced it. Neoclassical economists dispensed with that realist theory of value, interpreting price more simply as a point where the supply and demand curves intersect. It is not controversial to say that economic theory was "denaturalized" in this sense. The denaturalization thesis becomes surprising largely because Schabas generalizes it, so that it applies not simply to theories of value, but also to styles of reasoning and conceptual models that pervade economic discourse as a whole.

The first half of the book shows how heavily eighteenth-century thought about wealth depended on analogies to the physical world. The book begins by surveying eighteenth-century science broadly, but with a particular emphasis on analogies between human commerce and the "oeconomy of nature," for instance, in the works of Carl Linnaeus. The second chapter discusses François Quesnay and other French economists. Quesnay is best known as the founder of a "physiocratic" school of economics, which held that all wealth was produced by nature. Pushing beyond this theory of value, Schabas cites Vernard Foley, Loïc Charles, and Paul Christensen to show that Quesnay was also strongly interested in physiology and in theories of subtle fluids. Physiocracy thus not only appealed to nature as a source of value, but modeled its account of human behavior on the agencies of physical nature. Schabas advances a similar argument about The Wealth of Nations. Though Adam Smith moved toward a labor theory of value, Schabas persuasively demonstrates that he imagined labor itself as a natural agency. For instance, Smith's notion that labor "fixes and realizes itself in some vendible commodity" depends not just on Locke but on an analogy to the "fixed" agencies of eighteenth-century chemistry (90). Smith also imagined nature as a laborer, holding that agriculture was more productive than other employments, because "in agriculture, . . . nature labours along with man." David Hume presents a slightly more complex case for the book's thesis, since his economic thought is less systematic than Smith's, and since he explicitly criticized universal explanations founded on natural philosophy. But Schabas is able to find many instances where Hume's acquaintance with natural science may have helped to shape his thinking about money.

The book offers a detailed and closely argued account of the transition from classical to neoclassical theories of value, with attention not just to David Ricardo but also to John Ramsey McCulloch and Nassau Senior. For Schabas, however, J. S. Mill is ultimately the...