ABSTRACT
The role of invention in the New Principles John Rae’s Statement of Some New Principles on the Subject of Political Economy (1834) was intended to refute Adam Smith’s analysis of the causes of the wealth of nations and the laissez-faire conclusions generally drawn from it. “Invention” plays a central role in Rae’s argument. He accused Smith of attributing economic growth exclusively to the accumulation of capital and of attributing accumulation in turn to individual savings decisions.2 Rae argued that although an individual certainly becomes rich by saving,3 things are different for a society as a whole. An individual who saves can acquire assets from others, but a society can only use saving productively by creating new capital assets. If all, or the “greater number” of individuals try to save, they may succeed for a time, but as “every branch of business within the society” becomes filled up, the desire to save will be diminished (Rae 1834: 22).
