ABSTRACT
Introduction: Rae and trade John Rae’s New Principles of Political Economy (1834) is, as its subtitle proclaimed, a work “Exposing the Fallacies of the System of FREE TRADE, and of Some Other Doctrines Maintained in the Wealth of Nations.” Rae’s remarkable treatise was much more than an assault on the classical case for free trade. His pioneering account of “the effective desire of accumulation” (1834: bk.II, chs. 6 and 7) brilliantly prefigured the analysis of time preference and capital accumulation by Eugen von Böhm-Bawerk ([1884] 1959) and Irving Fisher (1907, 1930). Fisher dedicated The Rate of Interest ([1907] 1982) “to the memory of John Rae who laid the foundations upon which I have endeavored to build” and held ([1930] 1970: p. ix) that “Every essential part of [my own theory] was at least foreshadowed by John Rae in 1834.” Rae’s treatment of the role of invention in social development points forward to Joseph Schumpeter’s Theory of Economic Development ([1911] 1934). Rae’s discussion of “commodities of which the consumption is conspicuous, and which cost much labor, though not better qualified…to supply real wants” (1834: bk. II, ch. 11) anticipated Thorstein Veblen’s analysis of conspicuous consumption in The Theory of Leisure Class (1899).
