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William Cunningham and his influence on early economic theory

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The star of our article is William Cunningham, a Scotsman born in rural Edinburgh in the year 1849, the year when the first gold prospectors arrived in California, and the first ever air-raid took place when bombs were dropped from balloons over the city of Venice.

When William was growing up, he had little interest in finance, or how the money of great nations was spent. He was far more interested in becoming a Minister and his plan was to spend the rest of his life within his local church1. However, like many young men, after he experience life abroad, his interests suddenly changed.

In 1868 William Cunningham had the opportunity to travel and this journey took him to the University of Tübingen. Tübingen University was founded in the year 1477, which was twenty six years after the opening of Glasgow University, and 106 years before the Edinburgh University. Tübingen, and in those days it specialized in liberating the mind of its students through Theology, Law, Medicine, Philosophy.

Tübingen, in the south of Germany, was the home where Keplar studied, and where Philip Melanchthon, who was an astronomer and theologian worked with his close friend of Martin Luther and many others, to help bring about the protestant reformation.

It was thus at Tübingen that William was exposed to the independent thoughts of mid 19th century central Europe. It was also within that year Cro-Magnon man was discovered, and much debate began to circulate about both the origins of life, and about the many rapid changes in science and industry that were occurring all over Europe. It was only just two years prior that the first trans-Atlantic cable had been successfully laid.

It is thus not surprising that William became interested in machines, industry and economics, and with his strong religious background it was natural that he would begin to link everything he saw around him into a more consistent more human theory, and perhaps with the discovery of Cro-Magnon man, and the effect that had on the field of anthropology, he began to think of the flow of money and the creation of early industrial cities in a manner that was linked to “evolution”.

And that can be seen in his writing. In his earliest books on what actually drives word economies, he looked at the economy as being a mirror of human life, and he firmly believe that we must always keep the human element firmly in mind.

Some of the key points that William raised within the first few pages of The Growth of English Industry and Commerce2 were that (1) the ability for one country to purchase goods from another is not dependent on money, but instead on the ability of the countries involved to produce items that other countries need; (2) there were no events in world history, wars and revolutions, court intrigues and religious “revivals” that did not have an “industrial side” (3) industrialisation plays the major role in determining how wealth is lost by some, how it alters the conditions under which wealth can be obtained, and it will strongly affect how wealth was divided; (4) in understanding how industrialisation affects the economy of a country you need to look at all aspects of the economy – this includes the well-being of the workers; and it is here that he states that, in biology, every single part of the body needs to by nourished, and when life only concentrates on one part of the body, the entire body will ultimately fail; and (5) you cannot study economy and industry without considering the form of government.

These, and many more insights made William Cunningham’s book on commerce the first to look at the British and world economy with scientific thinking being at the forefront of every single idea. His argument was every single aspect had to be considered in well thought out groups, and not as isolated items, which all publication before him had done.

However, at his core, William was a realist. He knew that when two people looked at the exact same facts, more often than not, they will reach entirely different conclusions, with their final conclusions depending on what was their vantage point from which they began from. In William’s case he was born in rural Edinburgh and he very religious, and he saw industrialisation from the viewpoint of the person.

Though he talked about 19th century economic theory the one comment, that is as valid now as it was then, is any economic theory which forgets the human element can not look at the economy as a whole.

This is because humans are innovative, humans experience hardships and learn how to do things in better ways, they also understand what other humans need, and that is why many modern economic theories which concentrate only upon the profits are unable to predict the long-term future.

Sometimes humans make bad choices, but more often than not we will always strive to make things better for ourselves and our children. Wars and the desire by politicians to control how other people think are the darker forces. The forces that drive greed, anger and hate, and allow theft by those who gain control over us.

Though William lived in a different era, I feel that he would fully understand the world we live in now. He was not the first to argue the economic theory of supply and demand, but he was the first to understand that the models then in place, which separated the needs of the people who undertook the labour from the wants of the people making the profits was not a true model of what was actually taking place in any real economy. In fact the need to hire motivated people, he argued, was the difference between countries which had successfully made the transition to industrialisation and those which then had not, and this single idea is what made William a visionary. He placed an entirely new spin on various old ideas, by understanding that people who created ideas, and drove industry needed the financial security to create these ideas, but what actually drove them was not the money, but the desire to work and do something new. Few theories today considered that needs may change with circumstances, and all aspects must be considered and fully understood.

So, why are William Cunningham’s works ignored. The problem is William argued against free trade3, but his actual arguments are very different from what the title might indicate today.

William, in his studies was not arguing for closed borders, and preventing international business deals. Instead he was arguing that the idea that any attempt to regulate free trade must always result in waste was wrong.

At the beginning of the 20th century he realised that the major world forces had no more land to grab. It was clear to everyone that it had all been “claimed”, or the remaining lands outside of the control of the major powers was considered far too difficult to acquire without substantial cost. Thus, he argued if economies were to continue to grow, it was time to start developing the underdeveloped regions, which meant that Africa, India, Canada and Australia would need to become as fully developed as Britain. In other words, he was amongst the first economist to openly argue that the countries working hard to benefit the colonial nations had to be given their fair share of the wealth, for all their hard labour they had given over the years.

Thus, if the world economy was to grow to its full potential, governments should step in to help steer investments into the regions where growth would make the greatest difference. That is very different from saying trade should be regulated to divert money to help those who had no desire to work. That he was totally against.

This task he stated would by far more “humdrum” than the prior work undertaken, and it would be a very difficult task, given the scale, but the task was was not impossible. The problem he noted was the political class had often squandered all the hard work of others, mainly because their selfish narrow interests were very different from those who they claimed to lead.

Now, at this point, you might see why William’s works were not well received. William’s ideas were based on the need to elect people to power who did not have vendettas and did not look at government as a way to control people, or had plans to use the levers of power to benefit only themselves. Instead what each country needed were leaders who would actually sit down and do some hard work themselves, to help develop the entire economy of the world, and to make the economy flourish and grow.

Perhaps prophetically, William noted that when there was inequality, and when people repeatedly have doors slammed in their faces, the stable situation the leaders might want, that being their desire to maintain a status quo and to keep all the money within their own personal sphere, will always fail. Just three years later World War I broke out.

That is not to say William predicted the events that were about to happen, but it is clear that there was a desire amongst most of the leaders of that time to gain greater wealth, and they were very unwilling to put in the hard work to make sure that the economy was working for others.

The lesson for us now? If all your leader is doing is shouting and trying to make you angry, ask why? If there is the suspicion that they just might be trying to grab power to gain financial rewards for themselves or their immediate family, then it might be time to think about what you really want…In the end, the politicians job is to concentrate only on the economy, an economy that works for your family.

References

  1. In some records it is sad he planned to become a minister of The Free Presbyterian Church of Scotland. This however formed in the year 1893.
  2. William Cunningham, The Growth of English Industry and Commerce, Cambridge University Press, 1882 edition.
  3. William Cunningham, The Case Against Free Trade with preface by Joseph Chamberlain MP, Published by James Murray, London, 1911. edition.

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