A part of Margaret Schabas's continuing research into the status of economics as a science, this book argues that the economics of David Hume, the physiocrats, and the early classical school was grounded in physical nature, but that a trend toward what she calls the “denaturalization” of economics began with John Stuart Mill and continued unabated to the present day. Although Schabas focuses on the period that goes roughly from 1750 to 1850, she extends her purview to Marshall and the neoclassical economists. The process of replacing natural philosophy and natural theology with psychology and human agency as the conceptual bases of economics coincided with the birth of “the economy” as a new conceptual entity that can be manipulated to achieve socially desired ends.

Schabas argues that economics, from the seventeenth century on, became more secular than other branches of science. Chapter 2 is devoted to developments in the natural sciences from the Greeks to Isaac Newton. The philosophers of the Enlightenment were so impressed with Newton's achievements that they tried to generalize them to the study of society and of the economy. Others based themselves on experimental physics (including “subtle fluids” such as electricity and magnetism) and natural history. In the influential Oeconomy of Nature of 1749, the Swedish botanist Carl Linnaeus provided the first picture of an economy combining human activities with plants, animals and natural resources to show how their Creator arranged mutually supportive relations providing for their livelihood based on an equilibrium between them. He also promoted economics as a science, although his cameralist leanings led him to advocate autarky for Sweden, even with respect to tea and cocoa!

French economics in the Enlightenment and thereafter is discussed in chapter 3. Schabas is on solid ground in arguing the overwhelming influence of natural laws on the birth of physiocracy, the first school of political economy whose very name signifies “rule of nature.” The fact that its founder, François Quesnay, was a physician throws light on his authorship of the tableau économique, where the circular flow of economic activity among landowners, agricultural laborers, and the “sterile class” of manufacturers can be compared to the circulation of blood in the human body. The physiocrats considered agriculture as the only “productive” sector of the economy capable of yielding a surplus over its inputs. They applied the maxim of laisser faire to policy measures such as free trade in grains, and combined moral and physical laws under the rubric of “natural law.”

Chapters 4 and 5 survey the two major eighteenth-century political economists in Britain, the Scots David Hume and Adam Smith. Although Schabas believes that “the case that he was well versed in and influenced by natural philosophy is a harder one to make with Hume than with Adam Smith” (p. 65), Hume's scientific outlook can be gleaned from the many thought experiments found in his writings, such as the immediate and ultimate impacts of sudden changes in the quantity of money in his essay “Of the Balance of Trade.” In elaborating the specie-flow mechanism, Hume drew the analogy of money with water, where both find their own level. He detected cycles of advance and decline in both the physical and moral realms, as illustrated by phases of economic growth and decline in different nations in the essay “Of Money.” According to Schabas, “there is enough circumstantial evidence … to suggest that Hume regarded economic processes as part and parcel of nature” (p. 78). Of course, if the term “nature” subsumes “human nature,” this is true by definition. If it does not, economic processes can be understood and explained only by taking into account historical and other forces that go well beyond nature itself.

Chapter 5 argues that Smith's writings evidence manifold “debts to nature” that Schabas ascribes to his being well-read in natural philosophy, including its latest developments. In his essay on the “History of Astronomy,” Smith anticipated parts of T. S. Kuhn's The Structure of Scientific Revolutions by showing how Newton's cosmology replaced those of Ptolemy, Copernicus, and Descartes. In both The Theory of Moral Sentiments (TMS) and The Wealth of Nations (WN) Smith resorted to metaphors drawn from natural philosophy, such as market prices “continually gravitating” toward “natural prices.” Schabas cites scholars who linked the key concept of “sympathy” in TMS to the force of gravity, while others linked it to the nervous system and human physiology. The human capacity for benevolence, like gravitational attraction, diminishes with distance. She points to the physicalist nature of “productive labor” in WN, which unlike unproductive labor “fixes” itself to vendible commodities. The very concept of equilibrium that characterizes markets in WN may derive from that observed by Linnaeus in animal species. Whereas these are apt observations, I find others less persuasive. To buttress her main thesis, Schabas calls the assertion in WN that agriculture is the most productive sector of the economy an example of “Smith's Physiocracy” and claims that “[t]he gift of nature could not be more sharply contrasted with the feeble efforts of human manufacturing” (pp. 94–95). She does not mention Smith's devastating attack on several physiocratic doctrines (including their privileging agriculture as the only productive sector of the economy) in chapter 9 of Book Four of WN; nor the central importance of the division of labor throughout the WN, the fact that it is much more extensive in manufacturing than agriculture, and the widespread benefits of industrialization such as what Smith called “that universal opulence which extends itself to the lowest ranks of the people.” In sum, Smith's “debts to nature” are not as extensive as Schabas claims.

As shown in chapter 6, nature clearly played an important role in T. R. Malthus's Essay on the Principle of Population of 1798. This is evident in the two main “fixed laws of our nature” cited in the Essay: that food is necessary to human existence, and that the “passion between the sexes” will continue and cause population to grow geometrically as long as food is available. Because the supply of food can at best grow arithmetically, nature or humankind must impose checks on population growth. Malthus diverged from both Smith and Ricardo by advocating self-sufficiency for Britain in agriculture. An important difference with Ricardo was Malthus's sympathy with the landlord class and his advocacy of the Corn Laws that protected agriculture and enhanced rental income.

Although Malthus's work influenced that of David Ricardo, Schabas contends that in the latter's writings nature plays a less significant role. Ricardo, however, argued that natural processes characterize manufacturing as much as agriculture, unlike Smith who held that in the former “nature does nothing; man does all.” In the diminishing returns to labor in agriculture, the powers of nature are revealed to decline over time, resulting in an increasing share of rental income going to the landlord class. In seeking to support her main thesis, Schabas goes too far when she claims that nature figures prominently in the principle of comparative advantage, where “Ricardo highlighted the importance of natural endowments and local climate in determining what each region of the world would produce most economically” (p. 116). The last sentence more aptly describes the trade theory based on factor endowments that Eli Heckscher and Bertil Ohlin enunciated a century later. International trade textbooks attribute Ricardian comparative advantage to technology rather than factor endowments. The sources of comparative advantage mentioned by Ricardo in his Principles of Political Economy and Taxation (Cambridge: Cambridge University Press, 1951: 132) include, in addition to a country's situation and climate, “its other natural or artificial advantages” (emphasis added). He often discussed the effects on trade of “improvements” in manufactures or in machinery, some of which may even cause a reversal of comparative advantage (ibid.: 137–38). Human agency, in the form of discoveries and technical progress, and policy changes such as the liberalization of trade in wage goods, figure prominently in Ricardo's Principles. I also cannot agree with Schabas's verdict that “Ricardo, like his predecessors, still privileges agriculture over manufacturing” (p. 117). Most commentators have noted Ricardo's championing of the manufacturing and capitalist classes, his invectives against the parasitic landlord class, and passionate advocacy of repeal of the protective Corn Laws.

Whereas some commentators have labeled John Stuart Mill as an irresolute “halfway house” economist who started but did not complete the transition from classical to neoclassical economics, Schabas identifies him in chapter 7 as the economist who abandoned the reliance on nature's primacy implicit in the writings of his predecessors, and embraced human agency and institutions as key determinants of economic activity. This “enabled him to reinforce the view that political economy is essentially a mental rather than a material science” (p. 127). The last part of chapter 7, and the final chapter 8, examine how the conceptual foundations of economics after Mill focused even further on the mental attributes of human agents at the expense of natural laws and physical processes. An initial fascination with the impact of human psychology on economic behavior on the part of W. S. Jevons, F. Y. Edgeworth, P. H. Wicksteed, and Alfred Marshall explains the importance of the individual agent in neoclassical theorizing. Psychological influences gradually gave way to the more positivist and analytical approaches of Irving Fisher and Paul Samuelson, to whom Schabas could have added Vilfredo Pareto and J. R. Hicks. Samuelson “even purged economic discourse of the concept of utility because it was too subjective” (p. 139).

Economic historians may be especially interested in Schabas's musings in chapter 8 on the views of neoclassical economists on the irrelevance to their subject not only of natural processes, but of history and any type of evolutionary thinking, in contrast to their conspicuous role in classical times until J. S. Mill. As she says, “economists have embraced the view that bygones are always bygones, that the economy is always re-creating itself and, hence, that the past does not matter” (p. 151). But is it true that, for the early neoclassical economists, human deliberations became “the proximate causes of all economic phenomena” and “[a]ny given price (for there is no longer a natural price) is essentially the result of hedonic balancing rather than of labor inputs” (p. 152)? Marshall stressed that both supply and demand are needed to determine prices, making the famous analogy between them and the two blades of a scissors, both necessary to cut a piece of paper. The natural price of Smith and Ricardo became Marshall's “normal” or long-run price representing the cost of production, grounded in the current technology and hence in physical processes rather than any “hedonic balancing.”

Schabas's book is the product of a deep, lengthy, and excellently documented enquiry into the natural origins of economics, which she convincingly demonstrates. More controversial is her argument that economics became “denaturalized” with Mill and after him. Just as both demand and supply considerations help to determine prices, I would argue that both nature and human agency (though in different proportions over time) have played some role in the systems of economics that have evolved since mercantilist times. This book should encourage further research on an important topic in the intellectual history of the social sciences.