William Blake on the Effects of Government Fiscal Policy on Activity and Prices

In 1823, William Blake (1774-1852) published the pamphlet Observations of the Effects Produced by the Expenditure of Government during the Restriction of Cash Payments, which made a significant contribution to debate about the economic effects of government fiscal policy during the French wars (1793-1815) and the postwar period of economic stagnation in Britain. This article is concerned with critically examining Blake’s arguments on the effect of British government war expenditure and taxes on economic activity and price inflation during the wars and then on the role of the subsequent retrenchment of government expenditure in explaining postwar economic stagnation. The essay shows that Blake was an ardent critic of Say’s law and argued that the postwar British economic depression characterized by a persistent general glut of commodities was the result of a lack of demand, which was mainly brought about by a policy of fiscal austerity. In this connection it is shown that Blake believed capital accumulation to be demand constrained, with many of his insights into the accumulation process essentially “Keynesian” (or “Kaleckian”) in spirit.