Academic journal article History of Economics Review

Luxury, Crisis and Consumption: Sir James Steuart and the Eighteenth-Century Luxury Debate

Academic journal article History of Economics Review

Luxury, Crisis and Consumption: Sir James Steuart and the Eighteenth-Century Luxury Debate

Article excerpt

Abstract: The paper examines the contributions made by Sir James Steuart in his Principles of Political Economy (1767) to the debates about luxury consumption in the eighteenth century. The paper begins by highlighting the main contemporary arguments both for and against luxury in France and Scotland, and why the consumption of luxury goods was a contentious issue. In the next section, Steuart's positive views on luxury are examined and located within his theory of growth. Steuart presents luxury goods as a necessary by-product of the movement from an agricultural society to an expanding manufacturing society. Unlike other contributors to the debate, such as Marquis de Mirabeau, Jean-Jacques Rousseau, Adam Smith and David Hume, Steuart purposely avoids talking about luxury as a means to refine or corrupt society. By instead focusing on the workers' role in innovation and creating desirable luxury goods, Steuart contributes a unique view of luxury not only as a generator of economic growth and increased living standards, but also as both an incentive mechanism for all economic sectors and a buffer against economic crisis. The continual creation of new luxury goods is shown to benefit society by ensuring an ongoing flow of payments, goods, and services among landlords, farmers, and manufacturers.

1 Introduction

The question of whether luxury consumption is beneficial or hurtful to individuals and the state has been present in economic writing since the Greeks and Romans. The classicals and the early Church Fathers after them regarded luxurious consumption as having negative moral, political and military consequences in the forms of avarice, loss of civic virtue and physical weakness. It was not until the late seventeenth and early eighteenth centuries that attitudes in the mercantile literature towards luxury underwent a pivotal change. Nicholas Barbon's A Discourse on Trade (1690) stressed the positive aspect of luxury consumption abroad as a boon to trade, and thus as beneficial to the state. Bernard Mandeville developed this perspective further in The Fable of the Bees (1732), presenting luxury as good for economic growth and employment, and frugality as harmful to economic activity. While neither author provided a solution to the moralists' problem of the increased greed that increased trade entailed, they did alter the discourse by focusing instead on luxury's role in economic growth. By the eighteenth century, however, with the spread of markets and new items for consumption, as well as the continuance of military conflict between France and Britain, the question of the economic, moral and physical impact of luxury consumption returned to the fore of intellectual writing. As Christopher Berry notes, the subject of luxury was '... taken up and pursued throughout the world of letters from St. Petersburg to Boston, from Naples to Aberdeen' (1994, p. 126). Luxury and its potential effects thus became an important topic for the emerging discourse of political economy to address. One author who engaged with the major views in the debate, in the context of his system of political economy, is Sir James Steuart.

As has been well documented by Andrew Skinner (1966, 1981, 1999), Steuart published the first English language treatise on economics as a subject separate from politics, An Inquiry into the Principles of Political Economy, in 1767, and was recognised as an authority on economic matters until his work was eclipsed by The Wealth of Nations in the latter decades of the eighteenth century. While Steuart's work continued to be studied on the Continent and in the colonies, he began to be excluded from English discussions of political economy. One reason for this exclusion is a false dichotomy established by Steuart's English reviewers in the eighteenth and nineteenth centuries (Anonymous 1767; Anonymous 1805), and still employed by some writers of our time, such as Anderson and Tollison (1984), Blaug (1985, 1986), Meek (1958), and Niehans (1990), to name a few, who label Steuart's work as mercantilist and absolutist, and therefore out of step not only with Smith and the rest of his Enlightenment counterparts, but also with the major economic issues of his day. …

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