The revolution that did not happen: Terence Hutchison on the political economy of Jeremy Bentham


 The three-volume edition of Jeremy Bentham’s Economic Writings, edited by Werner Stark, was published between 1952 and 1954, and reviewed by Terence Hutchison in the Economic Journal in 1956. Based on the Stark edition, Hutchison argued that there had been a dramatic shift in Bentham’s views and policy recommendations between his earlier and later writings on political economy. With the benefit of a new, five-volume edition of Bentham’s Writings on Political Economy, edited by Michael Quinn, it can now be seen that the revolution in Bentham’s views on political economy proposed by Hutchison did not take place. On the contrary, an examination of Bentham’s treatment of fiscal and monetary policy in his principal general works on political economy, the Manual of Political Economy and the Institute of Political Economy, show a remarkable consistency, both in policy recommendations, and in the body of economic analysis in which they were based.


Introduction
Jeremy Bentham (1748Bentham ( -1832 left a great quantity of written material, of which only a small proportion was published in his lifetime. Even what was published at the time cannot be assumed to be what he would have wanted to say: he tended to lose interest and dump disorganised material in an editor's lap, allowing the latter a very wide discretion in how to deal with it. 1 The unpublished material comes to tens of thousands of unnumbered and often undated, near-illegible, hand-written pages. It is thought that put before us in all their profusion and variety Bentham's ideas on the theory of money, investment and employment, and they tell a deeply interesting story of the development and the fundamental changes in his ideas on this subject. Bentham devoted about eighteen years to political economy (c. 1786-1804), and in that time moved from a thorough-going acceptance of the 'classical' Smithian doctrines on saving and investing and their implications for policy to what amounts to a thorough-going rejection. (Hutchison, 1956, p. 289) 4 Hutchison's main thesis, and the focus of this paper, is the existence of these putative 'fundamental changes' in Bentham's economic ideas, and, in particular, the policy prescriptions Bentham supposedly drew from them. A search of JSTOR suggests that Hutchison's paper has never been subjected to analysis or his conclusions contradicted. Hutchison's views on the matter may, therefore, be taken as the received view today. With the impending completion of the five-volume Bentham Project edition of Bentham's economic works, there is likely to be a revival of interest in the interpretation of Bentham's stance on economic issues. The first place that scholars will look is this major review of Bentham's political economy, in one of the major economics journals, with the Economic Journal having published nothing on the topic since then, and no other journal having subjected Hutchison's paper to any kind of critique. This paper will thus be taken as the starting point for research by any scholar interested in the topic. And yet it is wholly misleading. 2 Regarding one of Bentham's books, Dumont said he had produced 'not a translation of this work, but an interpretation, which was, in some ways, an abbreviation, and in others a commentary' (Dumont, cited by Quinn, in Bentham, 2016, p. lxxvi). Dumont 'reported that Bentham had entrusted to him a great part of his manuscripts for works which had all been abandoned before completion … [permitting] him a welcome licence' (Quinn, in Bentham, 2016, p. lxxvi). 3 Crimmins (2017) is a useful and informative review of the first volume of the Quinn edition (Bentham, 2016). 4 The term classical political economy is subject to many interpretations. In Hutchison (1956), and in the present paper, the term classical principally refers to the writings of Adam Smith-Ricardo only published later, after the writings of Bentham in question. It is notable that Hutchison himself never deviated from the views he expressed in the 1956 paper. In his essay 'The Keynesian revolution and the history of economic thought', published two decades later as Chapter 5 of On revolutions and progress in economic knowledge (Hutchison, 1978, pp. 121-74), he describes Bentham as one of a group of 'highly important figures', which included Malthus, Lauderdale, and a number of others, who opposed the 'Smithian doctrines' of James Mill and Ricardo. Indeed, Bentham is singled out amongst these 'dissenters' as 'The one major figure who … went to the root of the Smithian analysis' (Hutchison, 1978, p. 146; see also p. 32). Hutchison (1978) was reviewed in 1979 by Mark Perlman, an eminent historian of economic thought and founding editor of the Journal of Economic Literature. The review is indicative of the esteem in which Hutchison was held by historians of economic thought: for a leading historian of economic thought, Hutchison's book of essays is 'a major statement of an important scholar', whose essays constitute 'the frontier of discussion': several of them may attain 'classic' status (Perlman, 1979, p. 405).
The present paper compares Hutchison's conclusions with the material which is now coming into the public domain in the form of the new, five-volume edition of Bentham's Writings on Political Economy, edited by Michael Quinn, focusing on Bentham's macroeconomic policy recommendations, specifically his understanding of (a) the potential effectiveness, but also (b) the undesirability, of expansionary fiscal and monetary policy.
The finding of the paper is that while there is certainly development, filling out and shifts of emphasis according to occasion, the dramatic shift in view from a classical liberal laissez-faire stance to something more 'Fabian' (Hutchison, 1956, p. 302), perceived by Hutchison, can be seen with the benefit of recent scholarship to have been an illusion.
Hutchison distinguishes two important periods in Bentham's literary oeuvre, firstly the late 1780s and early 1790s, when Bentham published the Defence of Usury and drafted the Manual of Political Economy and related works, and secondly the early 1800s when he worked on the Circulating Annuities, the Defence of a Maximum, The True Alarm and the Institute of Political Economy. The 'turning point' for Hutchison (1956, p. 295) occurs with an appendix to the Manual of Political Economy, in which Bentham draws attention to the question as to whether or not we have full employment, when judging the possibility of an expansionary monetary policy raising national wealth (Bentham, 2016, p. 240). 5 We will return to this 'turning point' later.
The change which Hutchison identifies in Bentham's fundamental economic ideas between these two periods is summarised as follows: His starting point was that of a thorough-going … disciple of Adam Smith. He accepted, to start with, the Turgot-Smith analysis of saving and investment 6 … and, what went logically with it, the unqualified approval of 'parsimony' and saving, and what came to be the Ricardo-Treasury view of the uselessness and waste of public works and public investment. On the other hand, in his later economic writings we find Bentham completely and fundamentally rejecting this self-same set of ideas, putting his finger very precisely on the limitations in its assumptions and applicability, and advocating in consequence completely different policies and a very different attitude to the role of the state in economic life. (Hutchison, 1956, p. 292)

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The structure of the paper is as follows. The next two sections outline Hutchison's presentation of Bentham's analysis and corresponding policy prescriptions in the early and late periods. The subsequent two sections examine Bentham's treatment of macroeconomic policy in the Manual of Political Economy, and in the Institute of Political Economy, representing the early and late periods, respectively. The conclusion drawn is that the ideas and policy recommendations in the two works are broadly in line, and that the hypothesis of a radical change in Bentham's outlook cannot be sustained.
A referee for this Journal points out, drawing on Gunn (1968) and Roberts (1959), that Bentham's conception of the social interest remained stable over his entire literary career. It would be surprising if this stability were accompanied by the profound transformation of economic analysis and economic policy proposal which Hutchison proposes.
It should be noted that the paper takes no view on whether Hutchison was justified in proposing this revolution in Bentham's economic thought on the basis of the Stark edition of Bentham's writings on political economy.
The positions regarding macroeconomic policy articulated by Bentham constitute a small fraction of his economic policy recommendations. Focus on macroeconomic policy is nevertheless justified by the fact that this is what Bentham himself focuses on in the two works taken as representative of the two periods of his economic writings, and that, consequently, that is what Hutchison, too, concentrates on. How Bentham's policy recommendations in other areas-abolition of the anti-usury laws, setting maximum prices for cereals, state-held buffer stocks of cereals, a state monopoly of paper money, a system of industry houses for the indigent poor, and … virtually everything, it seems, from frozen peas to a canal at Panama (Harrison, 1995, p. 89)-how these recommendations, in various other works in addition to the Manual and Institute, relate to Hutchison's proposed narrative, will be the subject of future work.

Hutchison on Bentham's earlier period
Hutchison begins with Bentham's first economic work, the Defence of Usury (Bentham, 2016, pp. 43-163), begun in 1786 and published in 1787. 'Though devoted to criticising Smith from a more-Smithian-than-Smith point of view, it [sc the Defence of Usury] is entirely under the influence of Smith' (Hutchison, 1956, p. 292). To develop this point, and demonstrate that the early-period Bentham is entirely Smithian, Hutchison cites a passage from the Wealth of Nations: No regulation of commerce can increase the quantity of industry 7 in any society beyond what its capital can maintain. It can only divert a part of it into a direction into which it might not otherwise have gone. (Smith, 1976(Smith, [1776, IV.ii.3, cited in Hutchison, 1956, p. 293 n. 1) With tremendous emphasis, A. Smith lays it down that 'parsimony, and not industry is the immediate cause of the increase of capital'; that 'it puts into motion an additional quantity of industry'; that it does so 'immediately' (without lag) for 'what is annually saved is as regularly consumed as what is annually spent,' that is, the saver spends as promptly as the prodigal, only he does so for different purposes and the consuming is done by other people, that is, 'productive' laborers; and 'every frugal man is a public benefactor.' Turgot … had written all this before. (Schumpeter, 1997(Schumpeter, [1954 It is relevant to add here in support of Hutchison's argument the following, also from Smith: 'Capitals are increased by parsimony … Parsimony … is the immediate cause of the increase of capital' (Smith, 1976(Smith, [1776, II.iii.14-16).
Echoing the words of Smith, Bentham says that 'Whoever saves money … makes a proportionable addition to the general mass of capital … The world can augment its capital in no more than one way: viz: by parsimony' (Bentham, 2016, pp. 134-6, cited in Hutchison, 1956. Hence, for Bentham, no regulations, nor any efforts whatsoever, either on the part of subjects or governors, can raise the quantity of wealth produced during a given period to an amount beyond what the productive powers of the quantity of capital in hand at the commencement of that period are capable of producing. (Bentham, 2016, p. 140) Bentham summarises the point in the heading to §2 of the (unpublished) 'Postscript' to the Defence of Usury, 'Development of the principle No more trade than Capital, or Capital limits trade' (Bentham, 2016, p. 139, cited in Hutchison, 1956. 'More concisely', Bentham continues, 'The quantity of productive industry is limited every where by the quantity of capital' (Bentham, 2016, p. 139).
The final evidence that Hutchison adduces regarding the tendency of Bentham's early-period economic writings is taken from the Manual of Political Economy: After The Defence of Usury … Bentham's next main economic work is the Manual of Political Economy (1793-95) … In this treatise on the principles of economic policy Bentham is still to be found emphasising most strongly the laissez-faire conclusion which he takes to follow from his doctrine of 'No more trade than capital': government can only divert investment funds, not raise the total level of investment. (Hutchison, 1956, p. 294) 8 In support of this point, he cites a selection of brief phrases from the Manual: Whatever is given to any one branch, is so much taken from the rest … If the government money had not taken that direction, private money would [have taken it] if the government would have given it leave … Every statesman who thinks by regulation to increase the sum of trade, is the child whose eye is bigger than his belly. (Bentham, 2016, pp. 218, 189, 250, cited in Hutchison, 1956

Hutchison on Bentham's later period
According to Hutchison, Bentham's later period is characterised by a complete and fundamental rejection of the ideas and associated policy recommendations evident in his earlier period (Hutchison, 1956, p. 292). Hutchison starts with the qualification noted above, which Bentham introduces in (what is listed in the Quinn edition as) Appendix M of the Manual of Political Economy. Bentham asserts that issuing paper money, which increases the money supply, can bring about an increase in national wealth if there is unemployment. In Hutchison's view, this is the beginning of the end of the paradigm that Bentham had been working in hitherto: For when he returns to the subject Bentham advances straight through the cleft he had thus opened in the Turgot-Smith saving-investment analysis and in the Principle based on it, of 'No more trade than capital'. In fact, he completely abandons that Principle and the particular A. Denis assumptions on which it rests, as well as the policy conclusions he drew from it. (Hutchison, 1956, p. 295) Bentham starts this new phase in his writing with the Circulating Annuities of 1800. 'An increase in the quantity of money may, Bentham repeatedly tells us, either or both raise prices or raise output-if initially there is unemployed or misemployed labour available' (Hutchison, 1956, p. 295): In political economy as in chemistry, results are scarce ever obtained pure: while part of the new influx [of money] is employing itself in producing the beneficial result of an accession of real wealth through the medium of profitable labour, another part will be employing itself in the raising of prices of labour here and there, and thence of this and that class of goods. (Bentham, 2019A: Appendix D to Circulating Annuities, 'Miscellaneous Effects of the Proposed Measure', 9 cited in Hutchison, 1956, p. 295) Hutchison emphasises that, for Bentham, The effects of monetary expansion depend on how or where the new money initially enters the system and on the propensity to consume or save of those who initially receive it … Bentham constantly emphasises the crucial importance of whether the initial situation is one of full employment or one where there are unemployed resources. (Hutchison, 1956, p. 296-7) Bentham also discusses the inverse case, that of 'hoarding' by government to provide a contingency fund: at the end of his pamphlet Paper Mischief Exposed (1800-1) 10 Bentham examines the effects of what he calls 'the money-hoarding system', or 'the system of laying up hoards of money on the part of government, in reserve for casual exigencies' by some kind of budget surplus … In a period of full employment, or over-full employment, with prices rising, such 'government hoarding' will not lower output but will damp down the rise of prices. But … 'let us suppose that there exists in the country a quantity of unemploy'd capacity for labour … In this case the defalcation from the mass of money is really productive of a correspondent … defalcation from the mass of wealth. (Hutchison, 1956, p. 297;citing Bentham, 2019B: 'Thoughts on Paper Money') 11 Thus, if we have full employment and prices are rising, an increase in money hoarded by the government will not reduce national wealth. However, In any other than this last-supposed case, the defalcation thus made from the mass of money will be productive of a defalcation to a certain degree from the mass of wealth. (Bentham, 2019B: 'Thoughts on Paper Money') Hutchison therefore judges that there has been a transformation in Bentham's political economy, from a laissez-faire classical starting point, to a Fabian position in which macroeconomic policy is effective if there is unemployment.

The Manual of Political Economy
This section and the next will review key writings on political economy from both the early and later periods of Bentham's writings on political economy to assess Hutchison's claim of a revolution in outlook, starting, in this section, with the Manual of Political Economy (Bentham, 2016, p. 165). The following section will then consider the Institute of Political Economy. The Manual was unpublished at the time, like so much that he wrote, but Bentham seems to have started work on it in 1790, and then sent what he had completed to Dumont in the mid-1790s (Quinn, in Bentham, 2016, p. lxix, lxxv).
We do not need to give the Defence of Usury special attention. It was a tract for the times and addresses one particular issue, the merits of having a legal maximum rate of interest. Although Hutchison supposes that Bentham switches from an extreme laissez-faire position to a more 'Fabian' standpoint in the later writings, it is to be noted that Bentham never criticised the Defence of Usury, and indeed referred to it favourably on several occasions in subsequent years, including in the Institutes (Bentham, 2019B: 'Method and Leading Features'). That he did not utter other views expressed in the Institute in the Defence of Usury does not mean he did not hold them, only that this was not the occasion to express them. The Manual, however, is intended as a general treatise on economic policy and therefore constitutes a better comparator.
The Manual is fiercely pro-market. Bentham's attitude can be seen from the list of contents. There are just two books, 'General Matter' and 'Encouragement-Ineligible Modes'. So criticising 'ineligible modes' of encouragement of industry forms the heart of the work. He is not interested here in theory but in practice: the opening words of the Introduction are This little treatise is meant to serve as a manual of political economy. Political economy may be considered as a science or as an art. But in this instance as in others, it is only as a guide to the art, that the science is of use. Political economy considered as an art [is] exercisable by those who have the government of a nation in their hands [, it] is the art of directing the national industry … The object of this little treatise is to shew … what ought to be done in the way of political economy, and what ought not to be done. The general result is that … scarce anything ought to have been done: and … almost the whole consists in undoing what has been done. (Bentham, 2016, p. 167) Bentham gives credit to Smith and states that 'the groundwork of the whole' is 'the limitation of industry by the limitation of capital'-as indeed is underlined by the subtitle of the work, 'Fundamental principle-Limitation of industry by capital' (Bentham, 2016, p. 169, 165).
Bentham begins Book II, on 'Ineligible modes' of encouragement of industry by considering 'forced frugality', subsidies to industry in the form of loans to capitalists: Of all measures capable of being taken on the part of the sovereign with a view to encrease the mass of wealth in the nation by giving direction in particular instances to the current of industry, that of issuing money or money's worth in the way of loan to individuals, on condition of its being employ'd in the shape of capital towards the carrying on a particular branch of industry, stands the clearest from objection. (Bentham, 2016, p. 185-6) The objection is one of injustice. If the sovereign is the trustee of the people he governs, this policy is a A. Denis breach of trust which … can not be vindicated from the imputation of injustice. All money thus employ'd by the sovereign is the produce of taxation: whatever, therefore, is lent in this way to B must first have been taken from A, and that by force: for whatever is yielded in payment of a tax is taken by force. (Bentham, 2016, p. 185-6) Bentham argues that the tax will fall on both the consumption and the savings of the tax-payer. The latter constitutes a transfer from A to B, while only the former, the deduction from consumption, can form 'an addition to the general mass of capital in the nation' (Bentham, 2016, p. 186). At another point, in a preparatory brouillon, 12 he says 'Capital-modes of encreasing … By taxing, and employing the whole produce in the shape of capital, whereas but a small part of it would have assumed that shape in private hands' (Bentham, 2016, p. 245). Bentham believed that in Britain 90% of income was spent, and 10% saved (Quinn, editorial footnote 2, in Bentham, 2016, p. 186).
One argument, in particular, that Bentham deploys against such measures is worthy of note: 'this sort of forced frugality is attended with one bad effect which is inseparable from it: viz: the accelerating in this forced and artificial way the reduction of the market rate of interest' (Bentham, 2016, p. 187). Bentham is arguing that by successfully augmenting capital, the policy hastens the tendency of the rate of profit to fall, and that this is reflected in a fall in the market rate of interest. Not the fall itself, but its artificial acceleration, is for Bentham objectionable. This doctrine of the tendency of the rate of profit to fall, a central part of the classical, and in particular, the Smithian apparatus, though expressed and explained in many ways, says that as capital accumulates, the rate of profit on it must decline. To argue that this is a disadvantage of the policy in question presupposes that the policy will indeed be effective in augmenting national capital.
Even more significant than fiscal policy, in investigating the development of Bentham's views, is his attitude to monetary policy. We have seen, above, that Hutchison places the 'turning point' between the old and the new Bentham in a passage in a preparatory brouillon. According to Quinn, these brouillons were notes drafted for, but not used in, the Manual. They constitute 'insight into Bentham's thinking at this time' (Quinn, in Bentham, 2016, p. lxxxvii). So they tell us that these ideas were known to Bentham at some point prior to his dispatch of the manuscript to his editor, and are not an afterthought that has occurred to Bentham later, between the two periods of his economic writings. This tends to undermine the notion of a 'turning point'. Bentham's brouillon in question concerns the 'Connection of Paper-money question with the rest of the Manual' (Bentham, 2016, p. 238): Ought the Government to emit paper-money of its own? Ought it to encourage or discourage the emission of it by individuals-or do neither? Consequence of paper-money issued … If all were fully employ'd, it could not encrease industry. If any were unemploy'd, or not fully employ'd, it might encrease industry pro tanto … Paper-money … can add to the quantity of produce … In so far as it encreases the quantity of labour [or] In so far as it encreases the productiveness of the given quantity … Paper-money … actually is productive of an addition to the mass of national wealth, in so far as it gets extra hands or sets them to work at extra hours. (Bentham, 2016, p. 240-1) Bentham's understanding of the effectiveness of monetary policy, at the time of writing of the Manual was therefore that monetary policy can be effective, but only if there is unemployed labour which can be set to work by capital to produce new values. He doesn't say explicitly what happens if new money is introduced when there is full employment, but his complaint that the effect of money is partly 'A tax upon capital' and partly 'a tax on consumption, in so far as it raises the prices of all commodities' (Bentham, 2016, p. 241) tells us the direction of his thought.
We now turn to the Institute of Political Economy of a decade later to see whether Bentham's understanding of macroeconomic policy has meanwhile undergone a revolution.

Introduction
In this section, we examine Bentham's latest drafted works, asking whether those later writings are consistent with the earlier ones. Bentham's final economic works are contained in Volume V of the new edition of Bentham's Writings on Political Economy (Bentham, 2019B), edited by Michael Quinn, and currently approaching completion. The last major item in that volume is Chapter 7, 'Method and Leading Features of an Institute of Political Economy (including Finance 13 ) considered not only as a Science, but as an Art'-referred to henceforth as the Institute. This was drafted in three or four phases between December 1800 and March 1804. It is therefore of central concern for the purposes of this paper as it is a general treatise setting out Bentham's mature views on the matters of interest, and it was completed later than anything else. It is true that there two further items after the Institute, an unsent letter to a periodical, on paper money and gold, drafted in 1819, and some fragments from the following year about the prospects for paper money in Spain. However, these documents make no substantial points relevant to this paper.
The Institute is very clearly a treatise on economic policy. Bentham does not go deeply into the theory-he regards that as already having been substantially completed by Adam Smith: 'Genesis of the matter of wealth-Causes and mode of its production-under its several modifications. See for the present Adam Smith, who has not left much to do, except in the way of method and precision'. Contra Hutchison, he at least believed himself to be as much in Smith's debt in the later works as in the earlier. 'Method and precision' refers to Smith's literary and discursive mode of presentation, where Bentham preferred something more axiomatic.
Without preamble, Bentham launches into a survey of possible economic policiesthose he believes constitute the legitimate business of the state he calls the Agenda of Government; the illegitimate activities are the Non Agenda; 14 and the activities that private agents will spontaneously engage in themselves are the Sponte Acta. As in the Manual, his bias against state action is apparent from the outset, in the context of discussion of policies designed to increase the wealth of the nation:

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Non agenda. Ineligible measures, on the part of Government.-Almost all that have been employed or been proposed in this view [sc towards the encrease of the mass of National Wealth]. Agenda. Eligible measures on the part of Government. In point of effect and importance, these in comparison of Sponte Acta and Non Agenda, are very inconsiderable. (Bentham, 2019B: 'Method and Leading Features') Whence this bias? Firstly, such policy to augment national wealth is unnecessary: The National wealth, is the sum of the particular masses of the matter of wealth, belonging respectively to the several individuals of whom the political community-the nation-is composed. Every atom of that matter, added by any one such individual to his own stock, without being taken from that of any other individual, is so much added to the stock of National wealth. To add to his own particular stock … is, with a very few exceptions, the constant aim and occupation of every individual, in every civilized nation. Enjoyment is the offspring of wealth-wealth of labour. What men want from government is-not incitement to labour-but security against disturbance. (Bentham, 2019B: 'Method and Leading Features') Secondly, it is oppressive: Coercion-the inseparable accompaniment, precedent, concomitant, or subsequent, of every act of government, is in itself an evil: to be any thing better than a pure evil, it requires to be followed by some more than equivalent good. Spontaneous action excludes it [sc coercion and its concomitant evil]: action, on the part of Government, and by impulse from Government, supposes it. (Bentham, 2019C: 'Method and Leading Features') Examining non agenda, or illicit, policies aimed at increasing national wealth, he divides them into broad and narrow measures: Measures which present themselves in the character of Non Agenda, may be distinguished into Broad Measures, and Narrow Measures: broad measures, having for their effect, or their object, the augmentation of wealth in all its shapes, without distinction: narrow measures, having for their object the augmentation of wealth, by the encrease of profit-seeking industry, in this or that particular branch in preference to others, under the notion of its producing more wealth in that than in others. (Bentham, 2019B: 'Method and Leading Features') For Bentham, there are four broad, or-roughly-macroeconomic, measures to be avoided: 1. 'Forced frugality'-to be thought of approximately as expansionary fiscal policy; 2. 'Encreasing money'-expansionary monetary policy; 3. 'Reducing interest': at that time the maximum legal rate of interest was 5%, a legacy of medieval anti-usury laws; the policy refers to lowering that maximum; and 4. 'Increasing Land'-that is, by colonisation.
We will focus on the first two.

Fiscal policy
Starting with 'forced frugality', a subdivision of inadmissible policies to increase national wealth, Bentham says Forced Frugality. Adding to National Capital (real capital) by money raised on purpose; which must be by Taxes. Of all ineligible measures this is the least ineligible, and most effective. The objection is-that it is a defalcation from individual property without necessity. The collation, how great soever the ratio of it to the ablation, is not compatible with justice: the defalcation is from the property of Paul; the addition is to the property of Peter. (Bentham, 2019B) 15 Bentham is thus opposed to the use of fiscal policy to increase national wealth, although his opposition is muted, and although he believes it works. His opposition is entirely on the grounds of justice: it is robbing Paul to pay Peter. For classical thinkers, such as Adam Smith, wealth can only be produced to any significant extent by the means of capital. And according to the Turgot-Smith theory, which in Hutchison's view Bentham had by now abandoned, capital can only be augmented by frugality, by saving, by reducing the part of one's income spent on consumption. As noted above, Bentham believes that the propensities to spend and to save are of the order of 90% and 10% (Quinn, editorial footnote 2, in Bentham, 2016, p. 186), so the bulk of the tax falls on individual consumption. By levying a tax, the government compels the individual to reduce his consumption-this is the 'forced frugality' in question. The part of the tax falling on saving is simply a transfer from the capital of one individual to the capital of another and there is no aggregate increase in national capital. In the theory and in Bentham's view, there is no limit to the possibility of increasing capital by this means.
The account that Bentham gives in the Institute thus replicates and dilates on that already given in the Manual: there is no difference of opinion here between the two works.

Regarding monetary policy, Bentham says
Encreasing Money: an indirect Income Tax 16 on fixed-incomists. Labour, not money, is the real source of wealth. All hands being employed, and employed in the most advantageous manner, wealth could admitt of no further encrease: but money would be encreasable ad infinitum'. (Bentham, 2019B: 'Method and Leading Features') As he had done in the Manual, Bentham now distinguishes between two possible states of the world-full employment, and one in which there are unemployed or underemployed or mis-employed resources, specifically, labour. The effectiveness of monetary policy depends on which state of the world we are in. If there is unemployment, increasing the quantity of money in circulation increases real wealth, while increasing the quantity of money when there is full employment raises prices. He charges monetary policy with imposing 'an indirect Income Tax on fixed-incomists'-he gives the example of the King, whose civil list is set in nominal terms (Bentham, 2019B: 'Method 15 Defalcation is 'diminution or reduction by taking away a part' (OED Online). Ablation is 'The action or process of taking away or removing something' (OED Online). Collation, where it appears in a passage from Bentham cited in this paper, just means the benefit of the policy in question; Bentham uses the term as the opposite of ablation, and instead of the word 'addition', which he had used in a previous draft of the manuscript (Michael Quinn, personal communication). The ratio of collation to ablation is just the benefit-cost ratio of the policy. 16 A tax in Bentham is always a deduction from some agent's wealth or income, but it is not necessarily the case that the wealth deducted accrues to the state, as would be assumed in today's use of the word: this is often but not always its sense in Bentham. A rise in prices, as a counter-example, is held to impose an income tax on 'fixed-incomists'. A further pitfall for a modern reader is that Bentham calls a tax, the revenue from which does accrue to government, a 'direct tax', and a tax, such as that imposed by inflation, which does not, an 'indirect tax'.

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and Leading Features')-but this effect of monetary expansion on the price level only occurs, in Bentham's view, once full employment has been achieved.
Bentham retained the apparatus of the classical school, which he had inherited from Adam Smith, to the end. Part of that apparatus is the distinction between productive and unproductive labour. 17 In Bentham's view, the effectiveness of expansionary monetary policy thus depends on whose hands the new money lands in. If the recipient is a capitalist who then uses the money to set hands to work productively, then new value is created. If the new money is in the pocket of anyone else, then no new value is created. But even if the recipient of the new money is a productive capitalist, who sets hands to work, and there is already full employment, then these cannot be new hands-all that is happening is that 'capacity for labour' is reallocated between enterprises. Again, no new value is created. So the effectiveness of monetary policy is contingent.

Fiscal and monetary policy: employment and unemployment
This line of reasoning raises several questions. Firstly, why does Bentham not apply to fiscal policy the distinction between full employment and unemployment that he applies to monetary policy? Why does he not ask himself what the limits are to augmenting national capital via 'forced frugality?' One would have thought that the limit would be exactly the same in both cases-the availability of hitherto unemployed workers. The only way around that obstacle would be the replacement of workers by machines, but then that would be equally true of monetary policy, so that cannot explain the difference of treatment between the two policies. Logically, the distinction between full employment and unemployment should apply equally to both.
Secondly, in the case of the new money entering the economy, why does Bentham stop with the first set of hands the new money lands in? For the policy to be effective, in his view, the productive capitalist must now spend the money on labour, raw materials, rent, etc. But these agents now in turn must have more money than they had before: what do they now do with it? It is illogical to ignore these knock-on effects. With the hindsight available to us, but not to him, we can see that if he had taken this step, he would have been on the brink of discovering the multiplier. He should surely also then have seen (a) that the distinction between productive and unproductive labour was irrelevant for the effectiveness of an expansionary monetary policy in an economy experiencing unemployment; (b) that the same logic applied to both kinds of policy, fiscal and monetary; and, finally, (c) had he considered these further knock-on effects, he might then have had reason to reconsider his verdict, regarding the justice or otherwise of fiscal policy.
Nothing so much as Bentham's treatment of monetary and fiscal policy, which reached its apogee for clarity and concision in the Institute, demonstrates, in my view, his lack of interest in economic theory, and retrospectively confirms Keynes's intuition, that Bentham 'was not an economist at all' (Keynes, 1926, p. 5).
Bentham inherited the Smithian apparatus of thought and adopted it in its entirety. But he added to it the idea that an economy operating at less than full employment runs on a different logic. Bentham was not a modest man, and I think we can be sure that, if he had realised the significance of that point, he would have made a bit more of it. It is almost a throw-away line for him, something presumably he believes must be obvious to anyone once they think about it. But it wasn't obvious: James Mill and David Ricardo couldn't understand it at all, and neither could Dumont (Hutchison, 1956, p. 298;Quinn, personal communication). And he did not know how to articulate it with the Smithian analysis. He just added it on in the context in which it occurred to him, that of monetary policy. A more logical treatment would have been to retain the entire Smithian edifice for the consideration of economic growth, and to have developed the analysis of economies in recession, as we would now say, independently of that Smithian body of theory. But that would have required an interest in economic theory, and the corresponding intellectual resources, which were not available to him.
It is of interest in this context that he displayed so little interest in Ricardo's work: 'Nor … did Bentham ever seem to have shown any interest in … Ricardo's Principles' (Hutchison, 1956, p. 305). To someone interested in economics this theoretical work by a personal friend would have been a wonderful opportunity to explore the deep questions which Ricardo asked about Smith's work, to ask who had the better case in the differences between them, to consider where Ricardo went beyond Smith. This opportunity was of little interest to Bentham. We already had the theory, he thought: what was wanted now was to apply it to the job of policy, and of maximising happiness. Political Economy was just part of Bentham's grand plan for rational legislation-what he wanted above all was to do good. Absorption in questions of economic theory would for Bentham have been a distraction.
The effectiveness of macroeconomic policy is the question that Bentham himself thought most important, it is what he placed at the head of both the Manual and the Institute, and what he was most concerned to discuss. As Hutchison says, 'Bentham's economic writings deal mainly with macro-economic questions' (Hutchison, 1956, p. 291). These passages on the effectiveness of monetary and fiscal policy in the Institute are very clear and explicit. They show that the basic ideas and attitudes, which were earlier stated in the Manual, are now worked up in greater detail in the Institute. Certainly, there is development. But Hutchison's inference, from the versions of Bentham's writings which were available to him at the time, of Bentham in his later work 'completely and fundamentally rejecting' the ideas of his earlier writings, 'and advocating in consequence completely different policies and a very different attitude to the role of the state in economic life' (Hutchison, 1956, p. 292), simply cannot be sustained from the versions of Bentham's writings which are available to us now.

Conclusion
Jeremy Bentham left an enormous quantity of written material, on a wide range of subjects. Only a small proportion was published in English in his lifetime, most of the remainder taking the form of tens of thousands of mostly unnumbered and often undated manuscript pages, now held in collections at University College London, the British Library and the Bibliothèque de Genève. The highly confused condition of these papers, and the work of previous editors, such as Dumont and Bowring, who were uninhibited in jumbling together disparate material, in filling in the gaps themselves, and in suppressing what they either did not like or did not understand, has presented major challenges to more recent, more scholarly editors. The three-volume edition of Jeremy Bentham's Economic Writings, edited by Werner Stark, andpublished A. Denis between 1952 and, was reviewed by Terence Hutchison in the Economic Journal in 1956. Most of Bentham's economic writings can be divided into two periods, the earlier between the late 1780s and the mid-1790s, and the later period in the early 1800s. Based on the Stark edition, Hutchison argued that there had been a dramatic shift in Bentham's views and policy recommendations between these two periods. With the benefit of the new, five-volume edition of Bentham's Writings on Political Economy, edited by Michael Quinn, it can be seen that the revolution in Bentham's views on political economy proposed by Hutchison did not take place. On the contrary, an examination of Bentham's treatment of fiscal and monetary policy in the principal works of the two periods, the (earlier) Manual of Political Economy and the (later) Institute of Political Economy, shows a remarkable consistency in his policy recommendations, and in the body of economic analysis in which they were based. How Bentham's policy recommendations in other areas, and in other publications than the Manual and Institute, relate to Hutchison's proposed narrative, will be the subject of future work.