Institutions and approaches

A range of important economic ideas thus emerged and/or were developed in the Scottish enlightenment. There were disagreements about some of the key ideas, such as the division of labour.

Political economy had become a university subject in its own right in the Scottish universities in the nineteenth century, after a period during which it was taught within the discipline of moral philosophy. The University of Edinburgh appointed the first Professor of Political Economy in the Scottish universities in 1871. Only in 1947 did the University of St Andrews do likewise, though from 1900 a Lectureship in Political Economy was instituted. (Incidentally the first incumbent of this Lectureship was William Scott, who invented the term ‘Scottish enlightenment', and who became the second Professor of Political Economy appointed by the University of Glasgow in 1915.)

In effect the new university discipline reinvented the political economy of the Scottish enlightenment in Scotland to constitute the curriculum. History of thought was integral, and Smith figured centrally in the economic thought that was taught. The philosophical roots of the discipline were also respected and there was a concern for the practical, a desire almost that economic knowledge should be used to do good. In particular this tendency is to be found in the work of Smart, who was appointed in 1896 to be the first Professor of Political Economy at the University of Glasgow.

Indeed there was an ‘applied economics' characteristic of much of the work undertaken by Scottish-based economists in the middle of the twentieth century (Dow, Dow and Hutton, 2000). Public service was an important contribution: the great exemplar of this approach was Sir Alec Cairncross, who had a career spanning public service and academic life. But William Smart, William Scott and Alec Macfie, likewise Professors in Political Economy at the University of Glasgow, shared this ethos, and served on many government committees as a result. Economic theory was used but not developed by the Scottish economists who founded (or revived if an earlier organisation is credited as predecessor) the Scottish Economic Society in 1954. But Macfie explicitly articulated their continuing commitment to the Scottish tradition in economic thought in 1955 (reprinted in Mair, 1990).

The main features of this Scottish political economy approach can be summarised as follows. First there was an awareness of the inevitability of more than one legitimate approach to know­ledge, given the complexity of the subject matter and the basis of knowledge in human nature, and an acceptance therefore of the limitations of any theory and therefore of its provisional nature. There followed the need for persuasive argument based on recognition of the sociological and psychological aspects of theory appraisal. Theory was designed to address practical issues and to draw on several disciplines in an integrated manner. Arguments were developed from first principles (to be distinguished from axioms), and first principles were to be approached by discussing their contextual development, using a historical approach both to evidence of different contexts and as to ideas within their context.

On the basis of this theory of knowledge, whereby there was no scope for demonstrable truth, theories prevailed or not on the basis of persuasive discourse. The strength of the Scottish education system and the practical, policy focus of the economic ideas being developed meant that the range of individuals involved in this discourse was remarkable. As Rutherford (2012, 306) puts it: ‘How they argued!'

Over the history of modern economics, the most influential figure in the development of economic ideas and the approach to economics within the Scottish enlightenment was Adam Smith. Given that many of his ideas can be traced to earlier figures and were also developed by contemporaries in Scotland, the reason for this influence is arguably the fact that, more than any of his contemporaries, he took an open-systems approach (Skinner, 1996). Developing his psychological theory of theory appraisal, Smith (1795) likened theories to ‘imaginary machines', whose aesthetic appeal arose from being derived from a few principles and connecting in a novel way with existing conventional knowledge. But, as with Hume, real experience was to be the arbiter of theory, in contrast to the deductivist axiomatic theory of Descartes. Experience, in turn, was to be analysed using what Skinner (1965) terms ‘analytical history', i.e. incorporating historical evidence into a (provisional) theoretical system. Steuart (1767), for whom a systems approach could only support short chains of reasoning applied to particular contexts, had much less influence than Smith.