- John Rae (economist)
John Rae (
1796 ,Footdee ,Aberdeen –1872 ,New York ),Scottish/Canadian economist, was an adventurous Scotsman who emigrated toCanada in 1822, worked for a long time as a schoolmaster and finally ended up as a medical inspector inHawaii .He studied medicine for a number of years at
Edinburgh University , but was probably forced to give up his studies due to financial problems of his father [ James (1965), p. 14] . He emigrated and worked in different parts of Canada, and in very different occupations, until 1849, when his wife died ofcholera . He then moved on toCalifornia that attracted many adventurers in the "Gold rush ". In 1851 he settled on the Hawaiian island ofMaui , where he was appointed a Medical Agent for the Board of Health, involved inmass vaccination schemes againstsmallpox .His contribution to economics
In spite of some noteworthy contributions in such diverse areas as
geology ,linguistics ,epidemiology ,history andsociology , he is mainly remembered for his 1834 "Statement of Some New Principles on the Subject of Political Economy". He wrote this book while being engaged in thelumber trade inGodmanchester , a district in the vicinity ofMontreal . As he had no formal training ineconomics he had to develop most of his concepts on his own. In this book Rae introduced a remarkabletheory of capital , that can be characterised asproto-marginalist , and that was subsequently further developed byBöhm-Bawerk and theAustrian School .The book was not very well received, probably because of some
protectionist statements that it contained, and hardly noticed outside Canada. More than a decade later it was discovered byNassau Senior , who used it in his lectures in Political Economy atOxford University , and also brought it to the attention ofJohn Stuart Mill . The latter, in his "Principles of Political Economy" (1848) mentions Rae' book in very generous terms::"(...) I can refer with equal confidence to another, though a less known work, "New Principles of Political Economy", by Dr. Rae. In no other book known to me is so much light thrown, both from principle and history, on the causes which determine the accumulation of capital" (Mill, 1848/1927, p.165, Ashley ed.) [ It was only five years later that Rae heard about this. He wrote to Mill to thank him, noting that "it is the only thing connected with that publication that has afforded me any gratification, James (1965), p. 169] As a result of the reference in Mill's treatise, Rae's book found its way into vol. XI of the "Biblioteca dell' economista", together withRicardo 's "Principles" and works by other prominent English economists [ His work appeared in this collection under the impressive title "Dimostrazione di taluni nuovi principii sull'economia politica, dimonstrante gli errori del sistemo de commercio libero, e di altre dottrine contentue nella "Richezza delli Nazioni", James (1965), p. 170] .At the turn of the century things finally changed for the better, as the Austrian economist von
Böhm-Bawerk recognised the importance of Rae's theoretical innovation. This in turn led to recognition by such prominent economists asEdgeworth ,Wicksell , andIrving Fischer , who even dedicated his "Theory of Interest" (1930) to Rae (and Böhm-Bawerk). [ Fischer's dedication reads "To the memory of John Rae and Eugen von Böhm-Bawerk,who laid the foundations on which I have endeavoured to build"] .References
ources
*Goodwin, Craufurd D.W. (1961) - "Canadian Economic Thought: The Political Economy of a Developing Nation 1814-1914", Duke University Press
*James, R. Warren (1965) - "John Rae, political economist. An account of his life and a compilation of his main writings" (2 vols.), Toronto.
*Schumpeter, Joseph Aloys (1954) - "History of Economic Analysis", New York.External links
* [http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/rae/newprin.html Full text of "Statement of Some New Principles on the Subject of Political Economy"]
Wikimedia Foundation. 2010.