Luxury, crisis and consumption: Sir James Steuart and the eighteenth-century luxury debate.

Abstract: The paper examines the contributions made by Sir James Steuart in his Principles of Political Economy (1767) to the debates about luxury consumption in the eighteenth century. The paper begins by highlighting the main contemporary arguments both for and against luxury in France and Scotland, and why the consumption of luxury goods was a contentious issue. In the next section, Steuart's positive views on luxury are examined and located within his theory of growth. Steuart presents luxury goods as a necessary by-product of the movement from an agricultural society to an expanding manufacturing society. Unlike other contributors to the debate, such as Marquis de Mirabeau, Jean-Jacques Rousseau, Adam Smith and David Hume, Steuart purposely avoids talking about luxury as a means to refine or corrupt society. By instead focusing on the workers' role in innovation and creating desirable luxury goods, Steuart contributes a unique view of luxury not only as a generator of economic growth and increased living standards, but also as both an incentive mechanism for all economic sectors and a buffer against economic crisis. The continual creation of new luxury goods is shown to benefit society by ensuring an ongoing flow of payments, goods, and services among landlords, farmers, and manufacturers.

1 Introduction

The question of whether luxury consumption is beneficial or hurtful to individuals and the state has been present in economic writing since the Greeks and Romans. The classicals and the early Church Fathers after them regarded luxurious consumption as having negative moral, political and military consequences in the forms of avarice, loss of civic virtue and physical weakness. It was not until the late seventeenth and early eighteenth centuries that attitudes in the mercantile literature towards luxury underwent a pivotal change. Nicholas Barbon's A Discourse on Trade (1690) stressed the positive aspect of luxury consumption abroad as a boon to trade, and thus as beneficial to the state. Bernard Mandeville developed this perspective further in The Fable of the Bees (1732), presenting luxury as good for economic growth and employment, and frugality as harmful to economic activity. While neither author provided a solution to the moralists' problem of the increased greed that increased trade entailed, they did alter the discourse by focusing instead on luxury's role in economic growth. By the eighteenth century, however, with the spread of markets and new items for consumption, as well as the continuance of military conflict between France and Britain, the question of the economic, moral and physical impact of luxury consumption returned to the fore of intellectual writing. As Christopher Berry notes, the subject of luxury was '... taken up and pursued throughout the world of letters from St. Petersburg to Boston, from Naples to Aberdeen' (1994, p. 126). Luxury and its potential effects thus became an important topic for the emerging discourse of political economy to address. One author who engaged with the major views in the debate, in the context of his system of political economy, is Sir James Steuart.

As has been well documented by Andrew Skinner (1966, 1981, 1999), Steuart published the first English language treatise on economics as a subject separate from politics, An Inquiry into the Principles of Political Economy, in 1767, and was recognised as an authority on economic matters until his work was eclipsed by The Wealth of Nations in the latter decades of the eighteenth century. While Steuart's work continued to be studied on the Continent and in the colonies, he began to be excluded from English discussions of political economy. One reason for this exclusion is a false dichotomy established by Steuart's English reviewers in the eighteenth and nineteenth centuries (Anonymous 1767; Anonymous 1805), and still employed by some writers of our time, such as Anderson and Tollison (1984), Blaug (1985, 1986), Meek (1958), and Niehans (1990), to name a few, who label Steuart's work as mercantilist and absolutist, and therefore out of step not only with Smith and the rest of his Enlightenment counterparts, but also with the major economic issues of his day.

However, the basis of evaluation of Steuart's work should lie neither in the 'unenlightened' Steuart vs. 'enlightened' Smith distinction, nor indeed in the mercantilist/absolutist characterisation, as Steuart himself denies that he is either (1966, pp. 3-5). As shall be shown, Steuart fits sometimes into the French and sometimes into the Scottish Enlightenment, and sometimes into neither. The arguments in the literature that consider the rise of Smith in relation to Steuart centre on Smith's emphasis on free markets versus Steuart's advocacy of intervention. However, Steuart favours intervention in times of crisis in order to preserve markets, rather than to control them. A deeper exploration of the reasons for Steuart's exclusion from the canon is outside of the scope of the present paper. What the paper shall argue, however, is that Steuart was very much abreast of the economic issues of his day, and speaks more definitively than Smith on what was an important contemporary concern. The purpose of the present article is not necessarily to shed new light on the eighteenth-century luxury debate alone, but to use the debate to shed more light on Steuart's differences from his contemporaries and his contributions to economic discourse in the luxury debate.

As Maxine Berg and Helen Clifford (1999, p. 3) opine, the debate 'thus far has been but little investigated' in the economics literature, often being presented as an issue solely of morality or a topic on the border between politics and morality, and it is certainly part of all of these. Although trying to fill the gaps in the economics literature, Berg's recent works on luxury make only passing reference to Steuart, which is unfortunate given the new perspective Steuart brought to the debate. Other in-depth studies of luxury, such as Berry (1994) or Dwyer (1987), tend to focus on the philosophy and politics contained in the works of David Hume and Smith, rather than their economics, when examining Scottish Enlightenment thought on the debate.

A consideration of Steuart's theories in the context of the luxury debate in France and Britain is curiously missing from the Steuart literature and so this paper seeks to fill the gap. In the sections below, Steuart's theories on luxury's role in the modem economy are compared with those of his French and Scottish Enlightenment contemporaries. Besides bringing to light the development of economic thought on luxury in the eighteenth century, this comparison also demonstrates the difficulty in categorising Steuart solely within any one Enlightenment tradition. Section 2 examines the debate in France, in particular in the work of Marquis de Mirabeau. Section 3 explores the role of luxury in the context of Steuart's view of modern consumption and economic growth. Here, his key contributions of separating the economic from the moral and political issues, and linking luxury to consumption, employment and crisis alleviation are analysed. Steuart's views are then compared to those of David Hume and Smith in Section 4. The paper demonstrates that Steuart not only took part in one of the most highly contested economic discussions of the period, but also made vital contributions to economic thought on the matter of luxury and consumption.

2 The Friend of Man: Mirabeau and the Foundation of the 1750's Luxury Debate

Steuart became familiar with the French luxury debate during the period in which he began to write the Principles and was resident in France. Exiled to the Continent in 1746 for his involvement in the Jacobite uprising of 1745, Steuart met many influential members of the parlement of Paris while he and his family lived in Angouleme (Coltness Collections 1842, pp. 299-301). (1) The members of the parlement, lawyers and policymakers, socialised with the Steuarts and continued to do so when the family moved to Paris in 1755. Through this connection, Steuart met the Physiocrat, Mercier de la Riviere, a friend of Francois Quesnay's (p. 83). Through de la Riviere, Steuart met the Baron Charles de Montesquieu and, according to Skinner's conjecture, Mirabeau, 'whose Friend of Man was one of the sources which most affected the shape of Steuart's future work' (1966a, p. 13). Although Mirabeau's work, as shall be seen, served a completely different purpose to that of Steuart's, his Friend of Man dominated the luxury discussion in 1750s France and must be examined to understand where the debate stood in Steuart's time.

France in the 1750s was not only mired in debt from its wars with Britain, but also in the grip of a consumer frenzy. The appearance of new luxury goods and the growth of the merchant class both changed patterns of consumption and blurred the lines between the classes. Whereas previously class distinctions could be made on the basis of dress and possession of luxury goods, the rise of the merchant class and rise of manufacturing allowed the lower classes to consume luxuries as well. The increase in consumption, however, was a nationwide phenomenon and not just confined to the new merchant class. Faced with a large debt, defeat in the Seven Years War, and the prospect of a declining population, French thinkers began to wonder whether France's current difficult economic and martial state was the fault of luxurious consumption.

Writers on luxury and consumption had by this time split into two main camps. On the one hand were those, such as Mandeville, Jean-Francois Melon and Voltaire, who promoted luxury and increased consumption as means to promote the social good. Not only did seemingly selfish acts of increased consumption result in unintended economic benefits, such as increased employment, increased food supply and thus increased population, and an increased diffusion of wealth, but also in unintended positive social benefits. Voltaire felt that if a society had an increasing demand for ever more refined luxuries and commerce, this implied an increased sensibility or civility in those societies. Therefore, the increased consumption of luxuries was interpreted not as a sign of decline in a state, but rather as a sign of the continued progress of mankind, in particular a progress or refinement of the tastes of man. Luxury, therefore, could improve a nation's standard of living, its distribution of income, and its civility. (2)

Holding the opposite view were Jean-Jacques Rousseau and his adherents. In his Discours sur les Sciences et les Arts (1750), Rousseau contended that luxury and increased consumption had corrupted the French culture and nation. Not only had luxury made men physically weak, but it had also made them forget civic virtue. Regardless of how he himself lived, Rousseau advocated a return to classical republican principles to restore the vitality and order of France. Only a return to stark simplicity could save the French nation.

Victor de Riqueti, the Marquis de Mirabeau, entered the fray in 1756 with the publication of the first part of his book L 'Ami des Hommes ou la Traite de la Population. Mirabeau is known today as a member of Quesnay's inner circle who disseminated his master's ideas and helped found the Physiocratic school of thought through the first publication of the Tableau Economique, which appears in part 6 of L'Ami des Hommes (1760). However, in his own time, Mirabeau's approach to the luxury debate catapulted him to celebrity status. (3) Joseph Schumpeter remarks that Mirabeau's fame in his time was greater than that enjoyed by any economist before or since (1961, p. 175n6). Such celebrity for Mirabeau is even more notable given that this was a period when publication of French books increased in triplicate, providing readers with a wide variety of books from which to choose. David Mornet's survey of private libraries found Mirabeau's to be the thirteenth most popular French book between 1750 and 1780 (Kwass 2004, p. 188). (4) In short, the L 'Ami des Hommes was both an economic and popular bestseller whose publication 'constituted a true cultural event' (Kwass 2004, p. 189).

Whereas the majority of writing on the luxury debate was locked in an argument as to the morality of increased consumption, Mirabeau uses a different approach. Rather than starting from the moral issue, he bases his argument on what he sees as the physical realities of excessive consumption, from which he can then make a moral argument. Allowing room for both economic growth and condemnation of excess, Mirabeau distinguishes between productive and destructive consumption. The latter is consumption that does not contribute to the state or to its future or present citizens. For instance, the luxurious consumption of the landlords in the form of turning extensive tracts of land into parkland and decorative avenues and gardens, Mirabeau argues, steals potential food and growth from the nation and therefore deprives the state of future citizens (Ami des Hommes, pt.1, p. 13). (5) The increased consumption of cosmetic luxuries and personal pampering, such as fine clothes, curling hair, and having a retinue of chaises is also destructive because it weakens the vigour of the people, making them physically incapable of conducting their wars (Ami des Hommes, pt. 2, pp. 113-15). Similar to later critics of speculation, such as Edmund Burke, Mirabeau also castigates the nobles for the selling of their services and titles, feeling that the nobility 'forgets that being a Grand is its own reward, and makes a title of it' (Ami des Hommes, pt. 2, p. 82) that can be bought and sold.

However, Mirabeau does not criticise the consumption patterns of nobles alone. It is the increased ability of the merchant class to consume goods that had previously been available only to the upper classes that distorts the established social system. Nobles traditionally dressed far more extravagantly and flamboyantly than the commoners and professionals. They were also allowed to carry certain items, such as swords, that were proscribed from the lower classes (Roche 1994). Previous to the growth of luxurious consumption, those who dressed both above and below their station were regarded with suspicion and contempt (Roche 1994). The distinction between classes was no longer as visually apparent now that the lower classes could afford the same trappings as the aristocrats, and 'everyone became Monsieur' (Ami des Hommes, pt 1, p. 152, emphasis in text). Both the nobles and commons are degraded, in Mirabeau's view, when anyone can be a Monsieur. Consumption in excess of extravagant clothes, furniture, houses, coaches and the like, when they 'designate no more than wealth, from that moment on ... luxury reigns. Emulation then turns to wealth, where the emulation of wealth is nothing but cupidity' (Ami des Hommes, pt. 2, p. 106).

Mirabeau is also critical of luxurious consumption, on a state level, in the decorations and state-funded works around Paris. Large-scale excessively decorative Paris projects, or symbolic capital as David Garrioch (2002) calls it, are also wasteful and degrade the capital rather than glorify it. Mirabeau feels that the end result of contemporary French consumption is an erosion of the nation's moral fibre, an erosion of the nation's physical well-being, and the waste of resources that could be put to better uses. Luxurious consumption in and of itself is not seen as morally bad because it connects all aspects of society and provides employment and income. However, when such consumption causes a shift of resources away from agricultural production, then Mirabeau sees it as an evil, as it means that subsistence is being taken from some present or future segment of society, such that, 'The double consumption of an individual is nothing other than the murder of his neighbor' (Ami des Hommes, pt. 2, pp. 99-100).

Given that it could be generated solely from destructive consumption, the mere fact of economic growth is not enough to ensure the prosperity of a nation. Thus Mirabeau concludes, 'You, who look only for money without taking care where it goes or where it comes from, you are the true ministers of chaos' (Ami des Hommes, pt. 2, p. 21). Because decadence and decline are a part of Mirabeau's cycle of history, there can be no sustained linear progress. While economic maturity in the form of a free commercial economy is desirable, it is so only as long as decadence can be curtailed or prevented.

Mirabeau is sympathetic to Rousseau's position, but does not believe that such an absolute position condemning all luxurious consumption has to be taken. His own policy prescription is Physiocratic: implement free trade policies to allow goods to circulate more freely and also to end the state's policies that privileged the production of luxury goods over agricultural goods, and therefore restore the market of basic goods. Mirabeau's political solution is to replace the debt-ridden state and its system of speculative finances with a republican state ruled by a monarch. Rebuilt on the idea of the civic virtues of honour, sacrifice, and service, rather than payment and finance, consumers would be encouraged to curb their greedy desires, to think of the greater good, and, in the case of landowners, to promote agriculture (Kwass 2004, pp. 197-201). Such a system would also result in the reduction of taxes, decoration in the capital, debt and interest rates, and the number of superfluous offices in the French administration, thus ending the flow of goods to royal servants, which would now be given to the monarchy as a matter of honour rather than as a matter of purchase (Kwass 2004, p. 201). Educating the landowners in republican principles would reduce the competition between consumers because as the landowners would curtail their consumption, so too would the lower classes. The great landowners would also manage their land more efficiently and spend their money in a more productive manner. All people would be investing for productivity, coming largely from agriculture, rather than spending solely for their own gratification and decoration.

3 Luxury as a Component of Growth: Steuart on Consumption and Demand

Although it is never explicitly addressed as such, Steuart's Principles takes a direct and spirited part in the eighteenth-century luxury debate. Indeed, Steuart does not have to mention the debate, as the associated arguments were well known to his eighteenth-century audience. References to the debate are peppered throughout the Principles. In the Preface to Book I, when speaking of how it is necessary to define terms in order to avoid misunderstandings, he presents the arguments of both major sides of the debate: 'Luxury, says one, is incompatible with the prosperity of a state. Luxury is the fountain of a nation's welfare and happiness, says another' (p. 8). (6)

So too is Steuart aware that both sides in the debate were arguing about slightly different views of the term:

   The first may consider luxury as prejudicial to foreign trade,
   and as corrupting the morals of a people. The other may
   consider luxury as the means of providing employment for such
   as must live by their industry, and of promoting an equable
   circulation of wealth and subsistence, through all the classes of
   inhabitants. (pp. 8-9)

The first contention represents the opinion of the Rousseauists and the second that of the progressive consumptionists.

Within the Principles, Steuart addresses and casts aside the arguments of both, and at the same time answers Mirabeau's Physiocratic concerns. Steuart specifically addresses the case of France in Book I, where he first enters the argument by altering the definition of luxury:

   By LUXURY, I understand the consumption of any thing
   produced by the labour or ingenuity of man, which flatters our
   senses or taste of living, and which is neither necessary for our
   being well fed, well clothed, well defended against the injuries
   of the weather, or for securing us against every thing which can
   hurt us. (pp. 43-4)

He relates that he is 'no patron of vice, profusion, or the dissipation of private fortunes', but that he is here considering 'only the influence they have as to feeding and multiplying a people' (p. 44n2). He re-emphasises in Chapter XX, Book II that luxury is not 'superfluity and excess', but 'the providing of superfluities, in favour of a consumption, which necessarily must produce the good effects of giving employment and bread to the industrious' (p. 265, emphasis Steuart's). The appearance of luxury is thus treated as a positive development because it indicates an improvement in human capital and an increase in the demand for workers. Therefore, the poor do not suffer from the appearance of luxuries, as it is the moneyed class who exchange their money for such goods, and thus the poor benefit from the resulting increase in employment, and thus he counters the Rousseauists.

However, Steuart is aware that limiting the definition may give the impression that he has:

   purposely confined the meaning of a general term to a
   particular acceptation, in order to lead to error, and with a view
   to conceal the vicious influence of modern oeconomy over the
   minds of mankind; which influence, if vicious, cannot fail to
   affect even their political happiness. (p. 265)

He defends his definition and makes a distinction between the benefits and the harms of luxury. Negative luxury, or excess, is that which produces a bad effect on the mind, body, fortune, or the state. He then makes a clear distinction between what is physically necessary and the 'political-necessary', which 'has for its object, certain articles of physical superfluity, which distinguishes what we call rank in society' (p. 270, Steuart's emphasis). He does not condemn luxurious consumption outright because he is aware that the political necessary varies greatly across time and from society to society. Luxury in moderation, however, is always to be desired and to be increased because it indicates increases in the productive and creative capacities of man. Thus a state of stark simplicity is to be avoided, as it would indicate a regress or a stagnation of both the ingenuity of labour and the demand of consumers.

As for the utopians, Steuart counters their policy prescriptions in Book II in the context of the development of symbolic money. He compares nations which circulate only metals as a form of exchange with those which circulate their metals, lands, houses, 'their services, even their hours'. The latter encourages industry to develop far more and far faster than those nations that circulate metals only (p. 316). Steuart encourages such circulation when 'the progress of industry demands a circulation beyond the power of metals to perform' (p. 316). The use of 'symbolical money' allows those who have possessions of value to take part in the economic process: 'In other words, it is a method of melting down, as it were, the very causes of inequality, and of rendering fortunes equal' (p. 316). Steuart then addresses the utopians directly:

   The patrons therefore of Agrarian laws and of universal
   equality, instead of crying down luxury and superfluous
   consumption, ought rather to be contriving methods for
   rendering them more universal ...

      Some have persuaded themselves, that an equality of
   fortune would banish luxury and superfluous consumption ...
   Equality of fortune would certainly change the nature of luxury,
   it would diminish the consumption of some, and would
   augment the consumption of others; but without making people
   idle, it could never destroy industry itself, and while this
   subsists to an equal degree, there must be the same quantity of
   what it produces regularly consumed. Farther, this proposition
   never can be advanced, but on the supposition that the
   luxurious person, that is, the consumer, must be richer than he
   who supplies him ... Must the carter who drinks a pot of beer
   be richer than the alehouseman? ... the client than the lawyer?
   the sick than the physician?

      How then does it appear that equality must prevent luxury,
   unless we suppose every one confined to an absolute
   physical-necessary, and either deprived of the faculty of
   contriving, or of the power of acquiring any thing beyond
   it ...

      Absolute equality, de facto, is an absurd supposition,
   if applied to a human society. Must not frugality amass, and
   prodigality dissipate? (pp. 316-17)

As Steuart indicated elsewhere, nation states should be encouraged to take measures to allow equality to develop. He is opposed to contemporary arguments that called for superficial measures to enforce equality of possessions. For instance, he counters the suggestions of Robert Wallace, Hume, and Montesquieu (8) that an equal distribution of lands, as suggested by the ancients, would solve many ills, because the economy of the day, and the situations of people's lives, are different from those of the ancients, and thus their plan will not suffice for the problems of the modem state (pp. 125-32).

Instead, Steuart seeks to promote industry as a better way to economic equality because 'dissipation may correct the effects of hoarding, and hoarding again corrects those of dissipation ... This is the most effectual remedy both against poverty and riches; because the rich and poor are thereby perpetually made to change conditions' (p. 318). Steuart thus offers an insight into another societal benefit of luxury consumption: an alteration in the distribution of income. Other scholars such as Douglas Vickers (1960) and Maria Louisa Pesante (1999) have noted this argument in the Principles, but they do so in the midst of larger points about monetary theory and not Steuart's argument about luxury. Steuart believed that, in a modern monetary economy, goods do not exchange for goods, but for 'an equivalent', as he often calls it, or money. As the wealthy purchase more goods produced by the manufacturing sector, money is redistributed from one class to another. Luxury thus serves for Steuart as a means for a more equal distribution of income, or as he calls it .a vibration in the balance of wealth'.

In the course of such exchanges and changes in income, there will come a time when the sides will be equal before they surpass each other again. Clearly, Steuart does not believe that equality can be maintained permanently between the classes in the modem commercial society. It is apt to say that he believes not in an equal distribution of goods, but that each person has 'an equal chance, I may say a certainty, of becoming rich in proportion to his industry' (Steuart 1805, ii, p. 156).

Steuart also uses his text to conduct a dialogue with Mirabeau, as there are many places where Steuart feels he must counter 'a very polite French writer, the author of the L'Ami de l'Homme' (p. 136). However, Steuart does share some common ground with the Physiocrat. Mirabeau and Steuart are in agreement that the growth of economies is cyclical, and that a higher level of consumption is neither necessarily sustainable nor desirable. Steuart observes, as does Mirabeau, that the emergence and spread of wealth from market transactions has blurred the lines between the social classes. Both reject a state of stark republican simplicity while retaining the notions of classical republican virtue in the administration of the state. However, Mirabeau is more zealous in stating this vision than Steuart. Whereas Mirabeau wants all of society to be re-educated in republican virtue, Steuart knows that this is not realistic in the modem society, and thus places the onus of civic virtue on the statesman, by whom Steuart means the entire legislature, to find ways to bring about public good from private vices. Mirabeau and Steuart are also in agreement that there are both productive and destructive results of luxury. However, again Mirabeau is much more far-reaching than Steuart in his condemnation of luxurious consumption and its effects.

There are instances, though, where Steuart states he is countering 'the author of the L'Ami de l'Homme' (p. 136). Counter to the Physiocrats in general, Steuart does not see agriculture as the sole source of valuable production in society. He also does not feel that France is fully cultivated or populated. Therefore, he does not condemn consumption that allegedly takes resources away from agriculture. As for the effects of consumption on an individual's morality, the danger of excessive consumption:

   appears to be relative to the character of the consumers, and
   seems in no way to proceed from the effects of the
   consumption. The vices of men may no doubt prove the cause
   of their making a superfluous consumption; but the
   consumption they make can hardly ever be the cause of this
   vice. (pp. 136-7)

The consumption and production of luxurious goods themselves, he concludes, are equally compatible with virtue and vice.

Steuart traces the development of France to its current state and acknowledges that it has done so 'by slow degrees' (p. 137). Increases in consumption have therefore been met with equal increases in production, and thus also employment. He then implies that an increase in the demand for goods will increase agricultural production, due to the workers now being able to purchase more goods with their increased incomes following from the increase in demand for their work. While he concedes that the increase in national demand can cause all prices to rise, Steuart argues that current higher prices help agriculture by making it more profitable, and thus cause more people to improve and cultivate their land. This will, in turn, cause a surplus that will make food cheaper and increase the population; thus 'improvement and population are carried to their height' (p. 138).

The concept of the surplus and the demand for it are central to Steuart's theory of growth and economic development. From even the earliest stage of society, Steuart points to luxurious consumption as a key factor in causing the growth process to take place. In Steuart's conjectured view of economic growth, society begins with two economic classes: landowners and farmers. Once there is an agricultural surplus sufficient to support people not working on the land, a new class of manufacturers will emerge. Growth will be spurred then by the landlords' desire for the luxury goods being produced by the manufacturers. Further stages of growth will then come about by increases in innovation by the manufacturers as they strive to improve their own standard of living and by the other classes' desire for the new goods that the manufacturers produce.

The upper class will purchase luxuries from the manufacturers, who will begin to produce more and different kinds of luxuries to satisfy the wants of the upper class. (9) Both the freehands and the farmers will be paid in money by the upper class, and thus can also use money as an equivalent with which to purchase their subsistence and luxuries, respectively. As a consequence of the introduction of money, 'those who have the money will cease to labour, and yet will consume; and they will not consume for nothing, for they will pay with money' (p. 45). Therefore, money will itself become a new object of want for the farmers and the freehands.

Steuart is explicit in stating the view that the wants of society are vital to growth: 'Wants promote industry, industry gives food, food increases numbers ...' (p. 67). There will be no long-run growth in the economy unless the demands of consumers increase, unless 'their wants be multiplied' (p. 43). (10) Wants are shown to increase naturally with an increase in population and through the creation of new luxury goods by the freehands. However, Steuart places special emphasis on the role of the increased wants of the lower classes as they seek to attain the standard of living of the upper class. Workers' aspirations to higher standards of living induce them to be more productive, and thus to earn more income with which to buy goods. Robert Eagly (1961) has called this resulting increase in labour productivity the 'aspiration effect'. Likewise, as the farmers' wants increase, they too become more productive, increasing the amount of the agricultural surplus. This increase serves to increase the amount for which farmers can exchange the surplus for an equivalent, and thus buy more luxury goods, increase population, and allow more agricultural workers to transfer to the manufacturing sector to produce more luxuries (Steuart 1966, pp. 46-7).

4 Consumption, Effectual Demand, and the State

Steuart believed that the statesman's role is to increase the reciprocal wants between the sectors of society through the circulation of money and the promotion of luxury. Before the country is open to foreign trade, the statesman influences the fashion of the country by either increasing or decreasing his own luxury consumption, and also increasing or decreasing taxes on luxury goods (pp. 60-1, 243-4). Demand for luxury goods increases demand and worker aspirations, and thus output, productivity and employment (pp. 151, 244, 261). Therefore, an important source of demand arises from the continued luxurious consumption of the landlord class. By owning and displaying their luxury, the landlords cause a desire to own and display similar luxury goods to arise in the other sectors of society (pp. 60-2, 137-8, 157).

There is a difference, however, between the increased productivity of the workers and application of their genius to increase economic growth, and an increase in growth due to fashion alone. Steuart is explicit in stating that it is those who engage in imitative consumption 'who principally support and extend the system' (p. 244). The need to imitate causes more consumption than need alone because 'the taste for imitation blends all ages together', such that, the 'old fellow delights in horses and fine clothes; the youth rides in his chariot on springs, and lolls in an easy chair, large enough to serve him for a bed' (p. 244). Fashion to Steuart seems to be a category above and beyond his definition of mere luxury: 'it is frequently a load upon the person who complies with it' (p. 244). There is an implication that imitation due to fashion is a disease of the monied class, while imitation due to aspiration is a function of the productive farmer or manufacturer. In any case, such fashion is changeable and can be adjusted by the statesman and those prominent in government by setting a new fashion.

Mirabeau's protest about landowners turning their pastures to parkland is answered within this context. An individual landowner turning a portion of his fields into ornamental gardens is very different from a nation-wide movement or a state-sanctioned plan to do the same thing. The former can impoverish the people and hurt future generations, 'were the laying waste the cornfields a sudden revolution, and extensive enough to affect the whole society; and were the sea-ports and barriers of the kingdom shut ...' (p. 138). Additionally, if a landowner turns his fields into parkland, by taking this land out of cultivation, he has still improved the lot of agriculture by reducing the amount of competition the farmers and husbandmen face (pp. 138-9).

Increases in demand for goods have their limits besides. Although Steuart acknowledges that 'there are no bounds to the consumption of work', the case is different for food (p. 139). There is a limit to how much one can eat, and thus a limit at any one time to the demand for nourishment, and this is especially the case with exotic luxury foods. Steuart seems almost to caution Mirabeau that if he wants to find out who is being a spendthrift with food products, he should not look to those who are consuming luxuries:

   It is not in the most expensive kitchens where there is found the
   most prodigal dissipation of the abundant fruits of the earth;
   and it is with such that a people is fed, not with ortolans,
   truffles, and oysters sent from Marenne. (p. 139)

As long as industry increases its capacity to meet society's demands and there are unused resources in the nation, leaving foreign trade aside, then Steuart does not see luxury and increased consumption as a misuse either of natural resources or of men's labour. He concludes with a 'recommend[ation] to moralists, to study circumstances well, before they carry a pretended reformation so far, as to interrupt an established system in the political oeconomy of their country' (p. 139).

Although there is some overlap between Steuart and all three groups of French thinkers examined above, his ultimate conclusions differ from theirs. While Steuart does see an increase in consumption as progress, it is only so insofar as the nation still has the ability to supply those wants, and such growth is not unlimited, especially once foreign trade is introduced. He does acknowledge that luxury can produce negative effects on the body and hence on society, but feels that the consumption of luxury goods itself is neither virtuous nor vicious. Consumption provides for the employment and income of the people, and thus increases population, despite whatever the intentions of consumers may be. This could be said to be in agreement with the progressive consumptionists. However, like Mirabeau, Steuart views economic growth and development cyclically and thus that there will be a period of decline even if a nation has achieved great progress. As for civic virtue, Steuart sees a place for it in the education of the nobility and the establishment of an hotel militaire, but does not believe that modem society as a whole can still be modelled on the classical republican lines that Mirabeau favoured (pp. 72-3).

The policy conclusions of the two men also differ. Specifically, Mirabeau recommends a single tax on land, as the source of the net product, whereas Steuart feels that it is fairer to have a sales tax on luxury goods, rather than on land. Taxes on land and property, Steuart feels, are fine for the wealthy, but would add to the 'misery' of the working class 'without relieving the wants of the state' (1767, p. 638). One should not think that Steuart is taking the side of the workers against his own class. He is, instead, adhering to his own principle that 'Taxes ought to be imposed for the benefit of the public, not of private people' (1767, p. 640).

In even more general terms, Steuart disagrees with all the schools of French thought in their promotion of the individual over the state and the belief that, left unfettered, natural forces in the economy will result in the best social outcome. In each case presented above, Steuart's thought also has some common ground with the French, but not completely so. Similarly, although perhaps unexpectedly, when one examines Scottish Enlightenment views on luxury, Steuart's theory contains commonalities with parts of the movement, but not with the whole.

5 'Endless Desires', Taste, and Refinement: Smith, Hume, and Steuart on Luxury

As the spread of commercial culture made more luxury goods not only available but also more acceptable to greater numbers of people in Scotland than ever before, so did the question of both the merits and contributions of luxury to society arise in both intellectual and popular debate. Dwyer and Murdoch (1983) demonstrate that the topic of luxury consumed Scotland, appearing often in articles in the major newspapers of the day: the Caledonian Mercury, The Mirror and The Lounger. Not unsurprisingly then, Hume, Steuart and Smith, the three earliest authors writing on modern commerce and political economy in the Scottish Enlightenment, expressed opinions on the matter, opinions that differed in their emphasis, if not always in their content.

Drawing on Douglas Macfie's (1955) definition, Steuart belongs to the Scottish School of the Enlightenment due to his sociological historical methodology, as has been documented by Skinner (1965, 1966) and Hutchison (1988). And yet Steuart's economic thought does not rest any more easily here than in the French Enlightenment thought already outlined above. (11) The reason may have as much to do with method as with belief. According to S. R. Sen, the Scots' 'uniformitarianism, their rationalistic individualism, their appeal to concensus gentium, their cosmopolitanism, their negative philosophy of history--in fact, every characteristic feature of their general outlook, differed from that of Steuart' (p. 183). A lack of faith in the market alone to produce economic order should be added to this list. While his compatriots explore the science of man, Steuart seeks to make a science of how to:

   ... secure a certain fund of subsistence for all the inhabitants,
      to
   obviate every circumstance which may render it precarious; to
   provide every thing necessary for supplying the wants of the
   society, and to employ the inhabitants (supposing them to be
   free-men) in such a manner as naturally to create reciprocal
   relations and dependencies between them, so as to make their
   several interests lead them to supply one another with their
   reciprocal wants. (p. 17)

Steuart's focus on the need for the government to help accomplish the above goals leads us to a major difference in assumptions between Steuart and his fellow Scots, Hume and Smith. Although he does see that there are public benefits to self-interested acts of consumption, Steuart disagrees that an economic system based purely on self-interest and left to its own devices will result in optimal social outcomes. His personal experience and observations found in the Principles, and in his and his friends' and family's correspondence, first with the labouring poor in Scotland, famine in Andalusia, and then the struggles of the Jacobite community in Paris showed him that the benefits of self-interested actions did not diffuse equally or, more importantly, reliably, throughout market society. Inspired by such realities, Steuart theorises that a nation and economy is always hovering on the borders of crisis. Therefore, he would see a 'system of natural liberty', such as Smith's, as more likely to result in chaos than the provision of suitable employment and subsistence. Government's main duty then is both to provide the conditions for the people to obtain subsistence and employment, and to prevent crisis or further instability in the society and economy.

As shown above, Steuart sees luxurious consumption as a self-interested act that produces the public benefits of increased consumption, increased dispersion of wealth and increased employment. Here he is in keeping with his fellow Scottish Enlightenment scholars that the new economy has greater benefits than does a state of simplicity. Additionally, he takes the Scottish historical view that the consumption of luxuries arises out of a natural progression in history from primitivism to the evolving modern commercial society. Steuart agrees with Smith's ([1776] 1994, p. 181) later assertion that people have 'altogether endless desires' that cause luxury to grow, potentially, to infinity. And, like Hume (1987, p. 277), Steuart also emphasises the interdependence of the sectors of society and that it is the luxurious consumption of the rich that first promotes industry in society. Steuart makes interdependence the central factor of his economy and expands the analysis of the role of luxury in economic growth beyond Hume's treatment. Like Smith after him, Steuart also emphasises the role of ingenuity, or the increased skill of workers, in the creation of luxuries, and their contribution to economic growth.

However, whereas Steuart acknowledges ingenuity as an increase in the human capital of the nation, Smith uses the ingenuity of the craftsman to close a potentially messy intellectual gap between the price of luxury goods and their actual usefulness. Smith always felt such gaps to be disquieting to the mind, as illustrated in his History of Astronomy. (12) Ingenuity makes up for the lack of usefulness in such luxury goods, and therefore continues to contribute, not to the capital stock, but to the stock of sensibility, and thus refinement, in the society. (13)

It is in this notion of increased refinement that there is another major divergence between Steuart and his fellow Scots on the issue of luxury and economic growth in general. Luxury is shown in Hume's essay 'Refinement of the Arts' to be a part of a civilised nation's progress, something that occurs as a state grows stronger. According to Berry, Hume shows that it is possible for a state to be powerful while increasing the happiness of its people, unlike the Spartan example where the state grew powerful through the privation of its people (1994, p. 151). Hume's ([1742] 1764, p. 300) position that, 'The more these refined arts advance, the more sociable do men become', is also characteristic of Smith's view. But for Steuart an increase in luxury and consumption, rather than a refinement of tastes and sensibility, implies an increase in both the aspirations and craftsmanship of the lower classes. He begins not with tastes, but with a refinement of workers' productivity and abilities. The appearance of new and better quality goods, then, has an impact on the tastes of all. Rather than focusing on how luxury implies refinement in society and a refined society will beget more luxury, Steuart's concern is with the economic realities that will result from the workers' innovation: more goods to be consumed and a desire to work harder to be able to purchase such goods.

Unlike Steuart, Smith is personally averse to luxury. He recognises the necessity of luxury to increase the production of the nation, but not in terms either of how it causes workers to increase their productivity or how new goods are disseminated across society. (14) Rather, Smith is preoccupied with growth from a productivity standpoint and thus is not necessarily concerned with why there are new patterns of consumption. Smith addresses the topic of luxury late in The Wealth of Nations, in Book V, where he is already taking luxurious consumption for granted. As noted by Neil De Marchi (1999), Smith assumes that most of mankind's demands are for luxury goods, as necessities make up a relatively small part of total consumption, and thus fulfil largely psychological, rather than physical, needs. Rather than the virtue or vice involved, Smith's concern is more, as Istvan Hont (1983) and James Buchan (2004) explain, with how it is that even the lower classes of modem commercial societies enjoy more luxuries than the nobles of ancient, and even present, more primitive economies. The answer is, of course, due to the division of labour and the allowance for people to pursue their self-interest without having to reference public spirit or statesmen (Buchan 2004, pp. 227-31). In short, Smith's focus is on the production and proliferation of goods.

Hume is concerned with luxury being a sign of refinement within society while Smith uses the presence of luxury to demonstrate the new age of universal opulence that was not possible until the modem spread of markets, as noted by Powell (2005, pp. 43-7). However, what has not been noted in the literature is that neither Hume nor Smith emphasises the positive role that luxury plays on national consumption and employment and the alleviation of crisis. It is this very emphasis within a discussion of an economic system that is Steuart's unique contribution.

Again, this is not to say that all that Steuart has to say on the subject of luxury is completely original. In the section in 'Of the Refinement ...' on Sparta, Hume also implies that it is not necessary for a nation to cut back on all luxury spending in order to prosper. Indeed, as had already been shown by Mandeville, the extent to which choosing to be 'virtuous' can be detrimental to a society depends on a certain level of consumption being present. Sen (1957) points to the similarity between Steuart's view on such perceived 'virtue' and Mandeville's, when Steuart considers the relationship between a farmer and a rich consumer who turns frugal reformer: 'The husbandman in fury falls upon the reformer ... Do you think he will give his oats in charity to feed the poor? He is poor enough himself' (1767, p. 160). Frugality, although cherished in Smith, is viewed by Steuart as causing a disruptive gap in the reciprocal relationships of the sectors of the economy. It is Steuart's focus on the gap between sectors as a cause of economic crisis and luxury as a potential preventive that is original.

Luxury as a means to increase the exchanges between the sectors of society is also seen by Steuart as a way to strengthen the bonds of society. (15) Rather than addressing the problem from the perspective of tastes and society, as Hume does, in speaking to refinement and sociability, Steuart focuses on the economic reality of the situation, as his description of and prescription for luxury seems to say, Luxury is already here. The production of luxuries constitutes part of the economic growth process, and Steuart explains how they fit into that process, while acknowledging the implications of economic bonds and activity on social bonds and activity. Although not using it as his foundation, addressing the social implications is a necessary step for Steuart in the time in which he wrote as, according to Christopher Berry (1994, p. 142), the luxury debate at this time is both 'a debate about the character of contemporary society' and a 'characteristic of that society'. Thus, an author seeking to engage in the luxury debate must address both issues. While Hume and Smith do the same, and their views are not necessarily incompatible here with Steuart's, their focus does seem to linger more on the social, rather than the economic, and when on the economic, more on the side of production.

6 Conclusion

Steuart's focus is on consumption, on the employment of mankind, and how labour and the economy itself make use of and advance men's gifts of ingenuity in creating new objects of desire. These objects in turn cause workmen to aspire to higher levels of consumption, thus raising their productivity and income, and that of the state, while also tying different members of society together. (16) As Steuart summarises the matter: 'But no man can become luxurious ... without giving bread to the industrious, without encouraging emulation, industry, and agriculture; and without producing the circulation of an adequate equivalent for every service' (1767, p. 310). No matter how large the luxury, '... so long as it is directed to no other object than the consumption of the labour and ingenuity of man [luxury] is compatible with virtue as well as with vice' (1767, p. 142). By moving beyond the argument that luxury will necessarily lead to increased immorality, Steuart is able to offer the optimistic possibility that luxurious consumption can provide both economic growth and, through increased aspirations and productivity, betterment of individuals and society. Rather than a thinker on the fringes of the issues of his day, Steuart's engagement with the luxury debate demonstrates that not only is he familiar with important contemporary issues, but he also consciously, and in ways distinctively different from his Enlightenment counterparts, integrates those issues within his philosophy of political economy.

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Notes

(1) The French parlements were law courts that heard criminal and civil cases and had the power to either pass the King's edicts into law or protest them by registering remonstrances against the King. The Parisian Parlement was the most powerful, and thus when it registered continued remonstrances against the King in 1753 in the Unigenitus controversy, Louis XV exiled its members purposely far from the capital, to Angouleme (Garrioch 2002, pp. 146-58). Unigenitus was a papal bull requested by Louis XIV to suppress the spread of the Jansenist heresy, but which the French lawmakers felt impinged on the rights of the parlement and the French Church to approve all papal documents before they were signed into French law. The issue arose again in the 1730s and 1750s when sacraments were denied to parishioners and clergy who could not produce certification that they had non-Jansenist confessors (Rogister 1995; Sheenan 1998, pp. 293-307). The Parlement of Paris had registered at least three remonstrances against the King on this issue, two of which were in 1751 and 1753 (Flammermont 1888).

(2) These latter notions achieved their full flowering in the Scottish Enlightenment writing of Hume and Smith on sensibility.

(3) As Kwass (2004) relates, 'admirers hung his portrait in salons and provincial halls of state; church goers paid twelve sous to sit near him at mass; fathers offered up their daughters for marriage; lawyers cited him in court; shopkeepers appropriated the book's title for their signs; and the dauphin of France himself claimed to know the text by heart' (p. 188).

(4) In comparison, Diderot's Encyclopedie ranked 21st and Rousseau's Discours sur les Sciences et les Arts 34th (Kwass 2004, p. 189).

(5) Hereafter, AH. All quotes are from volume I of the 1756-58 Avignon edition.

(6) All Steuart references herein are from the 1966 edition unless otherwise noted.

(7) A similar idea is found in Ferguson (1767): 'The necessary of life is a vague and relative term ... it has a reference to the fancy, and to the habits of living' (part 3, sec. 4, p. 218). Steuart wrote the majority of his book while in exile in the 1750s while Ferguson was a military chaplain in the Highlands, and there is no evidence that he and Ferguson had exchanged ideas prior to 1767. They were later both part of the same Edinburgh Poker Club, which was founded to stir up, as it were, support for a Scots militia.

(8) Montesquieu (L'Esprit de Lois, 1748, bk. 23, sect. 15); Wallace (Dissertation on the Numbers of Mankind (1753) and Additional Observations (1755 p. 17); Hume ('On the Populousness of Ancient Nations', 1752, pp. 9, 128).

(9) Interestingly, Steuart notes that it is then the freehand class of manufacturers who 'will determine what is called the standard of taste' by their creation of new luxuries, rather than the natural wants of the upper class (p. 46).

(10) Another source of increased output is the introduction of machinery. In the current framework, Steuart sees machines as a virtual increase of workers but without an accompanying increase in the need for subsistence. As he feels it is impossible in his time for any nation to be 'overstocked' with machinery, he does not consider the possibility of diminishing returns. Despite machinery's benefits, Steuart does not stress the need for capital accumulation as Smith does. This is perhaps because machinery would not be beneficial in every case, as Steuart also points to the dangers of introducing machinery too quickly, or in some cases at all, depending on the particular circumstances of the country, whereas increased aspirations always lead to increased production (pp. 121-5).

(11) For instance, there are many points of difference between Steuart and Smith and Hume on specific economic topics, such as the establishment of banks, paper and public credit, free trade, and the relationship of rich to poor countries in competition for foreign markets, to name a few. These topics are outside of the scope of the present section, but are covered in a forthcoming paper on Steuart and civic virtue. Steuart is closest in method to Ferguson (1767), who also sees history as a tale of mankind's aspiration to better itself, and does not view economic development as linear. John Millar, a student of Smith's, has the same starting point as Steuart: economic development begins out of the fact that people will have sex and thus will have children who will need to be provided for (Origin of the Distinction of Ranks 1771).

(12) In the History, Smith argues that philosophy will build a bridge between seemingly disconnected events or objects: 'Philosophy, by representing the invisible chains which bind together all these disjointed objects, endeavors to introduce order into this chaos of jarring and discordant appearances, to allay this tumult of the imagination ...' (1997, p. 45). A case can also be made that the point of the impartial spectator's generation of sympathy in the TMS is to bridge a gap between persons, by modulating each one's emotions to a socially acceptable level.

(13) Smith validates luxurious consumption if the value of the labour in such goods is durable and can be traded for something in the future, thus adding to the capital stock of the country (De Marchi 1999, p. 25). Steuart has an analogous analysis of the loss of value in services as opposed to durable goods. However, for Steuart, the end result is still that the consumption of both luxury goods and services will promote economic growth through employment and income creation, and therefore is still desirable consumption.

(14) Smith, seeing luxuries as a threat to virtue, 'was not only skeptical towards luxuries in general, but stern in his personal handling of them'. He burned several of his own items as an example when he found they were prohibited imports when he was Commissioner of Customs (De Marchi 1999, pp. 18-19).

(15) This can also be seen as a counter to the position that the consumption of luxuries by the lower classes had disrupted society by up-ending formerly visually identifiable social positions. While this could still be true, the consumption of luxuries by the lower classes created new economic bonds that took the place of quasi-feudal social bonds.

(16) Steuart and Smith also come to differing policy conclusions regarding consumption and luxury. Smith advocates a tax on necessities whereas Steuart advocates a general sales tax as discussed above.

Aida Ramos, Department of Economics, University of Dallas, Irving, TX 75062 USA. Email: aramos@udallas.edu.

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Author:	Ramos, Aida
Publication:	History of Economics Review
Article Type:	Essay
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Date:	Jan 1, 2011
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