Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Taste Formation in Classical Economics

Thomas Alex, Azim Premji University

Owing to the mainstream interpretation of classical economics as being supply-side, studies examining the analytical role of demand and consumption have been scarce. In this paper, I bring together such passages in Cantillon, Steuart, Smith and Ricardo and forge an analytical link between social tastes and consumption—an attempt at reconstructing a classical theory of consumption. A classical theory of consumption has as its foundation methodological holism—viewing social classes as the fundamental unit of analysis. Hence, Section I reviews and concisely articulates the analytical role of social classes and ranks in classical economics. In Section II, the social determination of necessaries and luxuries is presented. Section III puts forth taste as a key element of autonomous consumption (a Keynesian concept) in the work of Cantillon, Steuart, Smith and Ricardo. Section IV contains a discussion on how taste is both a cause and an effect of foreign trade. Section V concludes by bringing together the key elements already available in the construction of a classical theory of consumption.

Area: Eshet Conference

Keywords: Consumption, Classical economics, Taste formation

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