The Nobel Prize

James E. Meade (1907–95)

James Meade was born in Swanage, England in 1907. He studied classics and economics at Oriel College, Oxford and obtained his BA in 1930. After graduating he was appointed as a Lecturer in Economics at Hertford College, Oxford but only started teaching there in 1931, after spending a year engaged in graduate work at Trinity College, Cambridge, where he participated in the ‘Cambridge Circus’ debating Keynes’s ideas. In 1937 Meade left Oxford to work as an economist for the League of Nations in Geneva. Returning to Britain in 1940, he served as a member (1940–45) and director (1946–47) of the Economic Section of the British Cabinet Office. In 1947 he returned to academic life, first as Professor of Economics at the London School of Economics from 1947 to 1957, and then as Professor of Political Economy at the University of Cambridge from 1957 until his retirement in 1969. From 1969 until his death in 1995 he was a senior research fellow of Christ’s College, Cambridge.


Meade’s many offices and honours included the chairmanship of an Economic Survey Mission to Mauritius in 1960, presidency of the Royal Economic Society from 1964 to 1966, and chairmanship of a committee of the Institute of Fiscal Studies from 1975 to 1977. In 1977 Meade was awarded, jointly with the Swedish economist Bertil Ohlin, the Nobel Memorial Prize in Economics ‘for their pathbreaking contribution to the theory of international trade and international capital movements’ (Nobel Foundation, 2004).



Meade’s main contribution to economics was in the field of international economics, primarily through his two-volume study, The Theory of International Economic Policy (Meade, 1951; 1955a). In the first volume, The Balance of Payments, published in 1951, he synthesised Keynesian theory with general equilibrium theory and extended the traditional theory of the balance of payments beyond current account transactions to include international capital movements. Analysing the relationship between internal balance (full employment) and external balance (overall balance of payments equilibrium), he demonstrated the need to use two instruments (aggregate demand management and the exchange rate) in order to achieve the two policy targets of internal and external balance (see also Meade, 1993 – his Nobel Memorial Lecture). Interestingly, the relationship between policy objectives and instruments was developed independently in the early 1950s by the Dutch economist Jan Tinbergen, the first Nobel Memorial Laureate. In the second volume of his study, Trade and Welfare, published in 1955, Meade examined the relationship between controls on international trade and factor movements, and economic welfare. In doing so he discovered the ‘theory of second best’ which soon became an important addition to the literature on welfare economics. The theory of second best was subsequently developed by Richard Lipsey and Kelvin Lancaster in an article published in the Review of Economic Studies in 1956.



Meade also made a number of other influential contributions to the field of international economics, including the development of a geometrical portrayal of international trade using ‘offer curves’ (Meade, 1952), and an extension of the work of the Canadian economist Jacob Viner on customs unions and the effects of such unions on ‘trade creation’ and ‘trade diversion’ (Meade, 1955b). Overall, his work on the theory of international trade and economic policy provided fertile ground for much subsequent research in the field.



While Meade will be remembered first and foremost for his pioneering work in international economics, he also made important contributions to a number of other areas. These include: (i) the early presentation of Keynesian ideas in his book An Introduction to Economic Analysis and Policy (Meade, 1936), and a simplified algebraic presentation (Meade, 1937) of the main arguments put forward in Keynes’s seminal book The General Theory of Employment, Interest and Money which was published in 1936; (ii) his co-authored 1944 book with Richard Stone (who was awarded the Nobel Memorial Prize in Economics in 1984 for his ‘contributions to the development of systems of national accounts’) on ‘double-entry’ accounts, National Income and Expenditure; (iii) the theory of economic growth (Meade, 1961); and (iv) the field of welfare economics. In the last, he expressed his concerns over the distribution of income and capital in a series of books (Meade, 1964; 1971; 1974; 1975; 1976). Besides writing a significant number of influential books, Meade also wrote numerous papers which were published in learned journals. Many of his most important works have been gathered together in four volumes: Collected Papers (Meade, 1988; 1989).



Main Published Works
(1936), An Introduction to Economic Analysis and Policy, London: Oxford University Press.


(1937), ‘A Simplified Model of Mr. Keynes’ System’, Review of Economic Studies, 4, February, pp. 98–107.


(1944), National Income and Expenditure (with J.R.N. Stone), London: Oxford University Press.


(1951), The Theory of International Economic Policy: I. The Balance of Payments, London: Oxford
University Press.


(1952), A Geometry of International Trade, London: George Allen & Unwin.


(1955a), The Theory of International Economic Policy: II. Trade and Welfare, London: Oxford
University Press.


(1955b), The Theory of Customs Unions, Amsterdam: North-Holland.


(1961), A Neo-Classical Theory of Economic Growth, London: George Allen & Unwin.


(1964), Efficiency, Equality and the Ownership of Property, London: George Allen & Unwin.


(1965), Principles of Political Economy: I. The Stationary Economy, London: George Allen &
Unwin.


(1968), Principles of Political Economy: II. The Growing Economy, London: George Allen & Unwin.


(1971), Principles of Political Economy: III. The Controlled Economy, London: George Allen &
Unwin.


(1974), The Inheritance of Inequalities, London: Oxford University Press.


(1975), The Intelligent Radical’s Guide to Economic Policy, London: George Allen & Unwin.


(1976), Principles of Political Economy: IV. The Just Economy, London: George Allen & Unwin.


(1988), The Collected Papers of James Meade (eds S. Howson and D. Moggridge), vols 1–3,
London: Unwin Hyman.


(1989), The Collected Papers of James Meade (eds S. Howson and D. Moggridge), vol. 4, London: Unwin Hyman.


(1993), ‘The Meaning of Internal Balance’, American Economic Review, 83, December, pp. 3–9.
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