James K. Maitland, Earl Lauderdale, 1759-1838.

James Maitland studied at the University of Edinburgh, and after an interlude in Paris and Oxford, completed his studies at the University of Glasgow under John Millar.  He subsequently studied law at Lincoln's Inn and was admitted to the bar in 1780.   Lauderdale promptly launched his political career.  With his father still sitting in the House of Lords, the younger Maitland ran and was elected to a seat in the House of Commons in 1780.  In parliament, Maitland quickly aligned himself with Charles James Fox's Whigs, backing their motions on America and the East India bill of 1783.  Lauderdale was appointed to the house committee to impeach former India governor Warren Hastings in 1787.

After his father's death in 1789, James Maitland became the 8th Earl of Lauderdale and was bumped upstairs as a Scottish peer in the House of Lords in 1790. As a Tory majority was elected, Lauderdale would remain in constant opposition throughout.  The French Revolution had by now broken out.  Lauderdale was enthusiastic, going on to found the "Friends of People" in 1792, a political association to push for parliamentary reform in Britain.  On his way to a vacation in Italy, Lauderdale was in France in summer of 1792, witnessing the bloody pangs of France's conversion into a republic and cut their trip short.  Nonetheless, on his return, Lauderdale continued to defend the French cause in parliament, pushed for peace with France and protested the crackdown on civil liberties in Britain.  Despite his principled stances on the floor, the outspoken and often violent-tempered Lauderdale was not above jutting his elbows, making numerous political enemies.  Lauderdale struck at his opponents in a stinging 1794 pamphlet, and spitefully attempted to use a technicality to strip Edmund Burke of his pension.  As a result, the Tory government arranged it so Lauderdale was not summoned back to the parliament of 1796 (nor that of 1802). After fruitless protests, Lauderdale contemplated surrendering his noble title in order to run for a seat in Commons.  

Excluded from Parliament after 1796, Lauderdale took to pamphleteering.   Lauderdale's 1797 and 1798 pamphlets were direct attacks on the prime minister William Pitt's reputed economic wizardry, compiling budget data to show the amount of government waste that had been going on.  Lauderdale opposed Pitt's income tax and in an anonymous tract (1799), explained how its incidence would be shifted unequally, and promoted an inheritance tax instead. As part of his research, Lauderdale took to reading economics.  The high treatise of the time was Adam Smith's 1776 Wealth of Nations, which he duly dug through.  But apparently Lauderdale also read John Law's 1705 Money and Trade Considered, which posited a demand-and-supply theory of value.   Lauderdale found the theories contradicted each other, and came to the conclusion that Law was right and Smith was wrong.

Laurderdale published his thoughts in his 1804  Inquiry into the Nature and Origins of Public Wealth.  Although broadly sympathetic to Adam Smith, Lauderdale adamantly denounced his labor theory of value was confused and mistaken.   Goods, Lauderdale asserts, have no "real, intrinsic or invariable value" (cf. also p.38).  Instead,  "to confer value...two things appear requisite: 1. that the commodity, as being useful or delightful to man, should be an object of his desire; 2. that it should exist in a degree of scarcity" (p.12).  He proposed that the demand-and-supply mechanism should be used to determine long-run price ("the degree of value....would vary according to the proportion betwixt the quantity of them and the demand for them" p.13).  As such, Lauderdale can be considered a precursor of the Marginalist Revolution.  Lauderdale also gives a clearer statement than Smith on the new definition of the "wealth of a nation" as the volume of consumption goods (p.55).

Lauderdale's 1804 pamphlet was noticed, and Henry Brougham gave a deep review of it in the Edinburgh Review.  Lauderdale replied to the review, which provoked a sharp rejoinder from Brougham. Lauderdale put out a second, enlarged edition in 1819.

Lauderdale would remain a thorn in the side of Classical School.   David Ricardo himself took pains to refute his thesis.  Interestingly, Lauderdale was among the first to propose that capital was a substitute, not a complement, of labor.  He was consequently among the first to have raised the possibility of technological unemployment. Lauderdale's concerns (articulated in the 1819 edition) prompted Ricardo to write his famous chapter on machinery in 1821.  Lauderdale was also an early proponent of the underconsumption thesis, i.e. that excess saving can be the cause of crisis.  He also defended the Corn Laws in 1814. In money matters, Lauderdale was a Bullionist, urging immediate resumption of convertibility (1812, 1813) but at the same time was a prescient proponent of functional finance (cf. 1829 Three Letters), urging increased government expenditure and denouncing the sinking fund as contractionary to the economy, and consequently inimical to public welfare.

In 1804, Lauderdale had promised a second volume to follow up on his Inquiry dealing with more practical matters of economic legislation, but political events soon took over.  Pitt died in January 1806, and the new "All Talents" government of William Grenville was opened up to Fox and his Whigs.  Lauderdale was first offered the governor-generalship of India - but it was withdrawn after the EIC directors balked at their old tormentor being foisted upon them (Cobb).  So Lauderdale was instead given the position as keeper of the seal of Scotland, making him a member of the Privy Council.   In the summer of 1806, Lauderdale was in France as a British emissary to peace negotiations, but returned by October after the talks broke down.  After the All-Talents miinistry collapsed in March 1807, Lauderdale resigned from government.  Lauderdale remained in opposition in the House of Lords for a few more years, but gradually shifted his views, giving support over to the Tories (although he was never made a minister in any of of the Earl of Liverpool's many Tory governments) and becoming a proponent of the Corn Laws of 1815 and an opponent of parliamentary reform.

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