The Ancients and the Scholastics

The study of the economy in Western civilization began largely with the Greeks, particularly Aristotle and Xenophon, with minor contributions
by other writers. We refer to these as the "Ancients". The "Scholastics" refer to the group of 13th and 14th Century theologians, notably the
Dominican St. Thomas Aquinas, that set down the dogma of the Catholic Church in light of the resurrection of the Greek philosophy in the
hands of 12th Century Islamic scholars. In the economic sphere, we can discern roughly four themes the Scholastics were particularly
concerned with: property, justice in economic exchange, money, and usury.
The coexistence of private property with Christian teachings was never comfortable. In the 5th Century, the early Church fathers (the
"Patricians", e.g. St. Augustine) had struck down "communistic" Christian movements and the Church itself went on to accumulate enormous
amounts of property. In the 12th Century, St. Francis of Assisi began a movement (the "Franciscans"), which insisted on vows of poverty,
"brotherhood" and deplored the accumulative tendencies of the Church. Against the Franciscans were arrayed St. Thomas and the
Dominicans, who dug out of Aristotle and the Bible the necessary arguments to put down their challenge. The Thomists took a practical
stance: they argued that private property was a "conventional" human arrangement with no moral implications, and furthermore, it had the
nice side-effect of stimulating economic activity and thus general welfare. The Thomists cautioned that this did not mean they blankly
endorsed all private enterprise: the "love of lucre", they noted, was a serious sin. They stressed the fact that man only has "stewardship" of
God's property and should make property available for communal use. They also claimed that theft in times of need was justifiable.
Another question that arose was that of entrepreneurship. Should a merchant be allowed to profit from differentials in prices? The
Scholastics replied with a qualified yes, provided the merchant is not motivated by pure gain and profit be only just enough to cover his labor
expenses (sacrifices) of the merchant. They went on to argue that the trader, far from being a parasite, is performing a valuable service and
increasing general welfare by meeting different needs. But why are needs different? Perhaps, as the Salamanca School argued, God
wanted men across the world to engage in exchange and therefore get to know each other, so as to increase their sense of "brotherhood" -a universalistic perspective that contrasts starkly to the "warfare" notion of trade later employed by the Mercantilists.
The issue of "justice in exchange" was a more complicated issue. In his Ethics, Aristotle had discussed this as an application of
commutative justice. The just exchange ratio of goods (i.e. their just price) should be in proportion to their "intrinsic worth" to men. It is
notable that Roman law was much more flexible: it considered a price "just" simply if it was agreed to by the contracting parties -- the notion
of intrinsic usefulness or worth was not a consideration.
The Thomists attempted to reconcile Aristotle's notion with the Bible. They originally interpreted this as the "intrinsic worth" of goods (bonitas
intrinseca) in terms of the order of appearance of things in the book of Genesis. This led to some problems -- to take one popular example,
rats are of higher Biblical order than wheat, but are they really worth more? As such, the Scholastics (esp. Jean Buridan) broached the
alternative idea that the intrinsic value of a good is more loosely connected to "human needs" and thus related to their "usefulness" to man.
However, this seemed to undermine the idea that goods have "intrinsic worth". "Usefulness" is not quite a characteristic of a good itself but
rather lies in the relationship between goods and people. Aristotle had argued that people's needs were different and thus the degree of
usefulness varied and many of the Scholastics adopted this. This might justify why goods should be allowed to exchange at different prices
in different places and times. Also, it might explain why wheat should be worth less than flour, even though one is derived from the other.
Even if we hang the intrinsic value of a good on its "usefulness", how does one estimate what the price should be. What is the "just price"
(justum pretium) of a good? Following the Golden Rule ("Do unto others as you would have them do unto you"), the Scholastics decided
that a person should not charge more for a good than what he would be willing to pay for it himself. This not only to make ethical sense but
also seemed like a good way to estimate the "usefulness" of a good. If a bearskin is so useful to you that you would be willing to pay two
deerskins for it, then if you own a bearskin you must sell it for two deerskins.
Duns Scotus, the Franciscan theologian and Thomas's great rival, was disturbed by the unwillingness of the Thomists to commit themselves
to a precise idea of "intrinsic worth" and "just price". He came down on the side that argued that the just price of an object was its cost of
production, i.e. the labor and expenses of the provider of the good. However, Scotus realized that this might imply waste: it is not unlikely for
expenses to be exaggerated beyond what is necessary to produce the good, thus the "just price" might be artificially inflated. Scotus
struggled with these questions and went on to make some quite modern reflections about the necessity of competition to determine just
price, and thus the immorality of monopoly.
A more disturbing question was posed by another Scotist, Gabriel Biel. If the rule of justice in exchange is followed so that only goods of
equal worthiness are exchanged, then, in modern language, Golden Rule-guided exchange is not utility-enhancing for either party. But,
suggested Biel, what if there were advantages to both parties in exchange? What is the just price then? This was not clarified by the
Thomists, but it is evident that Biel's argument would undermine the concept of just price entirely.
The Salamanca School resolved the problem by arguing that the estimation of usefulness varies from person to person. Consequently, the
just price of a good is nothing other than the natural, exchange-established price. There is no need to go beyond that. In a competitive
market, they noted, buyers will not be able to pay less for a good than its usefulness to them and sellers will not be able sell that good for
more than what it is useful to them. In this manner, the Salamanca School was also able to resolve the paradox of value: diamonds, which

are intrinsically useless, normally exchange at a much greater price than water, which has great usefulness. The Salamanca scholars
concluded that as men are the best judges of what is "useful" to them, then diamonds must be useful in some mysterious way.
The charging of usury, or interest on money lent, came quickly under scrutiny. There is no clear basis for a ban on usury in Christian
scriptures. The most famous injunction on interest emerges ambiguously as: "Upon a stranger thou mayest lend upon usury, but unto thy
brother thou shalt not lend upon usury." (Deuteronomy, 23: 20). To early Church fathers, like St. Jerome, the Christian notion that "all men
are brothers" necessarily implied that usury must be banned outright. Another patrician, St. Ambrose, decided that lending with interest to
enemies in the course of a just war was permissible.
However, others noted that the Hebrew term for "usury" in the cited Biblical passage is closer to "bite", so perhaps it only seeks to prohibit
excessive interest or interest levied upon the poor, but not ban it altogether. Other Biblical passages (e.g. Exodus 22:25) seemed consistent
with this qualification. But that just throws up more questions: what is "excessive" and who is deemed "poor"?
Without clearer scriptural guidance, the proponents of the ban were driven by the "hunch" that lending at fixed interest was a rather "unholy"
activity altogether -- a sentiment shared by many common people. The burden of proof, they argued, was on the defenders of interest.
Could they prove that it was at least "socially" useful to permit the charging of interest? This was far from clear in feudal economies, where
most lending was for consumption and not production. Social costs were more clearly discernable: the absurd mathematics of compound
interest increased social inequality, reduced free men into indentured servitude and burdened civil authorities with enforcement while the only
advantage it seemed to bring was to encourage consumption (a morally suspicious activity anyway). Thus, interest-bearing debt was not
only unnatural, but also a morally repugnant and socially detrimental institution.
Although clerics had been prohibited from lending at interest at least since the 4th Century, the ban was not extended to laymen until much
later. In 1139, the Second Lateran Council denied all sacraments to unrepentant usurers and, in an 1142 decree, condemned any payment
greater than the capital that was lent. Jews and Moors (being "strangers" in Christian lands) were initially exempt from the ban, but the
Fourth Lateran Council (1215) issued an admonition prohibiting non-Christians from charging "excessive" usury (thus implicitly condoning
modest usury). In 1311, Pope Clement V at the Council of Vienna prohibited usury outright and condemned as "heretical" any secular
legislation that tolerated it.
When Christian theologians, particularly St. Thomas Aquinas, finally came across Aristotle's work in the 13th century, they found ample
support for the complete ban. The Thomists argued that as money was not in Genesis, then it had no "intrinsic worth". They appealed to
Aristotle's idea (in his Ethics, not his Politics), that money is merely a human social convention which yields no utility itself, thus its value is
"imposed" by humans. Loosely speaking, as money has no intrinsic worth, then a lender of money loses nothing of worth when lending it
out. Thus, by the Golden Rule, he should not ask for compensation for doing so. Other forms of "earning without labor" (e.g. rent on land)
were acceptable to the Thomists because there was indeed "intrinsic worth" in the object lent and thus it is "costly" to part with it.
The Thomists allowed two loopholes in their argument: interest is admissible if the lender of money bears risk (dammum emergens) or if, by
lending, he is foregoing an alternative, profitable opportunity (lucrum cessans). The former loophole was intended to distinguish between
owners of debt with fixed interest earnings and investors in profit-sharing partnerships (Commenda). But as with any loan, there is always at
least default risk, then, technically speaking, usury is always admissible. The second loophole was intended to allow the charging of interest
in inflationary periods (when the creditor makes a clear loss), but the scope for ritual abuse is even more glaring -- one can always argue that
there is an "alternative" profitable use of capital.
Of course, there were always ways around this. Delayment fees, mohatra contracts ("repurchase agreement"), the contractum trinius, etc. -widely used throughout both the Christian and Muslim worlds -- effectively replicated interest-bearing contracts. The banning of usury
complicated, but did not end, debt finance. The ban was eventually repealed, after the revision of the doctrine by the School of Salamanca
and the gradual lifting of laws in Protestant countries in the mid-1600s.
The ban on usury brought up an interesting dilemma identified by Nicole de Oresme: the debasement of national currencies by their
respective governments (a practice that accelerated notoriously in 14th Century France). Oresme accepted that governments are entitled to
some amount of seignorage on account of their minting services, but it must not be forgotten that money is effectively a loan from people to
government. Consequently, debasement, by lowering the value of money, is a way of extracting negative interest, and thus is a form of
usury -- indeed, worse than usury since it was done without consent. Oresme followed Jean Buridan in endowing money with "intrinsic
worth" by moving away from the Aristotlean "social convention" perspective to a "metallic" perspective.
(See also our page on Islamic Economics. For economic thinking in the 16th Century, see our page on the First Economists).
Greeks
Aristotle, 384-322 BC. - (1) , (2), (3)
Politics, 350 BC.
Nichomachean Ethics, 350 BC.
Xenophon, 420?-355? BC - (1), (2)
Economics
Scholastics: Dominicans
St. Thomas Aquinas, 1225-1274. - (1), (2), (3), (4), Portrait
On the Principles of Nature , 1254.
Summa Contra Gentiles, 1261-64 (excerpts)
Summa Theologica - 126?-1273.(English)
Highly influential Neapolitan Dominican theologian who effectively served as the bridge between the Greek world and the European
Renaissance. His Summa Theologica, a remarkable fusion of Aristotlean rationality and Christian faith, has become the official dogma of the

Catholic Church. His economic contributions on property, "just" price, money and his condemnation of usury can be found in Part II of the
Summa.
The School of Salamanca (Navarrus, Molina, de Lugo, etc.)
Scholastics: Franciscans
John Duns Scotus, 1265-1308. (1), (2)
Sententiae, 1295?
Oxford Franciscan theologian, the Thomists' most formidable opponent. Influenced by Neoplatonic mysticism, Scotus was the progenitor of
the "Nominalist" movement that unravelled Thomism in the 16th Century. In economic affairs (as all others), he refused the "practical"
Aristotlean resolutions of the Thomists, demanding proper explanations. In the process, he created a "cost" theory of value and came to
formulate some interesting arguments about the nature of pure and monopolistic competition.
Jean Buridan, c.1295 - 1358, (1), (2), (3), portrait
Commentaries on Aristotle's Physics, 1509 - excerpts
Commentaries on Aristotle's Ethics, 1513
De caelo et mundo - excerpts
Sophismata.
French secular scholastic philosopher, a member of Ockham's "Nomalist" School who rose to become rector of the University of Paris. He
was also a teacher of Oresme. Renowned critic of Aristotlean "just exchange" and originator of the metallic theory of money. Buridan's
theory of determinism and the relationship between will and intellect was ridiculed by his opponents with the parable of "Buridan's Ass": the
dilemma of the donkey who, standing between two equal piles of hay, is so overcome with indifference that he ends up dying of starvation (a
parable which can also be inveighed against modern revealed preference theory). Buridan also initiated modern Newtonian dynamics. In
his critique of Aristotle, Buridan argued that an object moves not because of the air surrounding it but rather because it is set in motion by the
force or "impetus" of another body. Air, Buridan speculated correctly, formed the resistance which slowed and eventually stopped the
object. His critique of Aristotle's astronomy (De caelo) was to be highly influential on Copernicus.
Nicole de Oresme, c.1320-1382 - (1), (2)
Tractatus de Origine, Natura, Jure et Mutationibus Monetarum , 1373.
Tractatus de latitudinibus formarum, 1505.
Remarkable French theologian, student of Buridan, mathematician and originator of the "clockwork" theory of the universe. Oresme
produced a succint analysis of currency debasement, arguing that the government was entitled to a modest seignorage gain for its services,
but condemned alterations in money as theft.
Gabriel Biel, 1425-1495. - (1), (2)
Sententiae,
This "Last of the Scholastics" was one of the founders of the University of Tbingen. A late Nominalist, Biel is renowned for his defense of
entrepreneurship and free contract. He undermined the concept of "just price" by noting that trade would actually not occur without
advantages to the parties.
Resources on Ancients and Scholastics
"Review of Lowry, Ancient and Medieval Economic Ideas and Concepts of Social Justice" by R.B. Ekelund, 2000, HOPE
"The origin of property: Ockham, Grotius, Pufendorf, and some others", by John Kilcullen.
"Metal, money and the Prince - John Buridan and Nicholas Oresme after Thomas Aquinas" by Andre Lapidus, 1997, HOPE
"Norm, virtue and information : individual behaviour and the just price in Thomas Aquinas' Summa theologica" by Andre Lapidus, 1994,
EJHET
"Late Medieval and early modern intellectual history" by R.J. Kilcullen
"Interest" from the Catholic Encyclopedia
"Usury" from the Catholic Encyclopedia.
"Contract" from the Catholic Encyclopedia.
"Property" from the Catholic Encyclopedia.
History of Dogmatic Theology from the Catholic Encylopedia
Scholastic Philosophy at Radical Academy.
"Churches Came to Terms with Moneylending" by Curtis Fahey, Dossier
Readings at Jacques Maritain Center.
Ancient Economies by Morris Silver
History of Money by Glyn Davis

The School of Salamanca

[Note: Part of the HET Website. This page is not related to or endorsed by University of Salamanca or any other organization. See the
official University of Salamanca website]
The University of Salamanca, one of the oldest universities in the world (founded 1218), was a prominent Dominican bastion in the late
Scholastic period. It was one of the homes of Thomistic theology, even after the doctrines of St. Thomas Aquinas were disintegrating
elsewhere in Europe first under the Scotist and Nominalist onslaughts, and then from the Reformation.
The "School of Salamanca" was initiated by Francisco de Vitoria around 1536 and counted Navarrus and de Soto as its most prominent
theoreticians. The Jesuit trio, Lessius, de Lugo and the remarkable Luis Molina adhered to and further developed the Salamanca position.
During the inflationary 16th century, theologians were appealed to repeatedly on economic affairs, particularly the status of contracts in those
confusing economic times. In an effort to lay down guidelines for commercial practice and focusing on practical notions of the public good,
they moved away from past dogma and approached their questions in the spirit of natural law philosophy. The result was reversal of
centuries of Scholastic thinking on economic matters. It was the Salamanca school that defined the just price as no more and no less than
the naturally exchange-established price. Their analysis led them to trace a scarcity theory of value and employed supply-and-demand with
dexterity. They rejected Duns Scotus's "cost of production" conception of the just price, arguing that there was no objective way of
determining price.
Before Bodin, but after Copernicus, the Salamanca School independently uncovered the essential properties of the Quantity Theory of
Money, using it to explain the inflation of the 1500s arising from the influx of precious metals from Spanish America. They also providing a
resounding defense of usury.
The accomplishments of the Salamanca theorists have led scholars such as Friedrich von Hayek to note that, contrary to Max Weber's
thesis, it is the religion of the Jesuits and not the Calvinists, that set the grounds for capitalism.
[See also the our pages on the Ancients and Scholastics, the First Economists, Mercantilism and Social Philosophers.]
The Dominicans
Francisco de Vitoria, 1485-1546. - (1), (2), (3)
De potestate cilvili, 1528
Del Homicidio, 1530
De matrimonio, 1531
De potestate ecclesiae I and II, 1532
De Indis, 1532
De Jure belli Hispanorum in barbaros, 1532
De potestate papae et concilii, 1534
Relectiones Theologicae, 1557
Summa sacramentorum Ecclesiae, 1561
Spanish Dominican jurist, educated at the College Saint-Jacques in Paris, Vitoria was appointed to the all-important chair of theology at the
University of Salamanca in 1526. A deep admirer of Erasmus (whom he defended in Paris). Vitoria is widely regarded as the founder of the
Salamanca School, particularly its marriage of "natural law" philosophy with Catholic doctrine. Although he published nothing in his lifetime,
his 1527-40 lectures (Relectiones) were assiduously recorded by his students. His 1532 De Indis lecture was an eloquent defense of Indian
rights and against enslavement, which led them to be eventually placed under the protection of Spanish crown. It was here that the concept
and principles of international law were first articulated. In his De Jure belli he articulated the laws of war. He was much consulted by
Emperor Charles V.
Domingo de Soto, 1494-1560 - (1)
Summulae, 1529
De natura et gratia
De ratione tegendi et detegendi secretum, 1541
In dialecticam Aristotelis commentarii, 1544
In VIII libros physicorum, 1545
De natura et gratia libri III, 1547
Comment. in Ep. ad Romanos, 1550
De justitia et jure, 1553.
In IV sent. libros comment. 1555-6.
De justitia et jure libri X, 1556

Dominican theologian, born in Segovia and trained in Alcala and Paris. De Soto was a professor at Salamanca from 1532,
contemporaneously with Vitoria, and thus regarded as the second pillar of the Salamanca School. Confessor of Holy Roman Emperor
Charles V and the emperor's representative at the Council of Trent. Defended the price differential in usury as compatible with "just price"
Juan de Medina, 1490-1546. - (1)
De justitia et jure,
Spanish Jesuit, early promoter of scarcity theory of value.
Martin de Azpilcueta (Navarrus), 1493-1586. - portrait
Comentario resulutorio de usuras, 1556
De Usuras y Simona,
De redditibus beneficiorum Ecclesiasticorum, 1566
Comentario resolutorio de cambios.
Spanish Dominican priest and leading scholar at Salamanca and Coimbra. Early expositor of the Quantity Theory of Money (he studied at
Toulouse almost simultaneously with Jean Bodin). As he wrote, "Other things being equal in countries where there is a great scarcity of
money, all other saleable goods, and even the hands and labor of men, are given for less money than where it is abundant." Extended this
to a more general scarcity theory of value, arguing that "all merchandise becomes dearer when it is in strong demand and short supply".
Explicitly denounced price controls and defended money-changing and usury.
Diego de Covarrubias y Leiva, 1512-1577
Vararium, 1554
Opera omnia, 1568
Student of Navarrus, reformer of Salamanca, chancellor of Castile, and, eventually, bishop of Segovia. Provided the an explicit statement of
a subjective theory of value: "The value of an article does not depend on its essential nature but on the estimation of men, even if that
estimation is foolish." (1554).
Tomas de Mercado, 1530-1576.
Tratos y contratos de mercedores, 1569
Popularizer of Navarrus's theories.
The Jesuits
Luis Molina (Molineus), 1535-1600. - (1), (2), (3), (4), (5) - Portrait
Deliberacion en la causa de los pobres, 1545
Concordia liberi arbitrii cum gratiae donis, 1588
Commentaria in primum partem D. Thom, 1592.
De justitia et jure, 1593-1614.
Spanish Jesuit scholar at Coimbra, but followed Dominicans of Salamanca. Rejected Duns Scotus's cost theory of "just price" because of the
incentives to raise expenses artificially. Discussed competition and condemned "monopolies" as another way of artificially raising price.
Argued that the "just price" is the natural exchange-established price. Also held that the value of money "arises from circumstances".
Molina is well-known in Catholic theology for his "Concordia", an attempt to reconcile the freedom of the will with the grace of God - what is
known as "Molinism" in theological circles.
Cardinal Juan de Lugo, 1583-1660. - (1), Portrait
De justitia et jure, 1642
Spanish Jesuit scholar who, like Molina, followed Salamanca line on value and quantity theory of money. He was perhaps the first to
combine scarcity and utility in a single theory of value. Also defined profits as "wages" for entrepreneurial services.
Leonard de Leys (Lessius), 1554-1623 - (1), Portrait
De justitia et jure, 1605.
De gratia eficare, 1610.
Belgian Jesuit scholar who followed Molina's line on value and money. Highly influential in his day upon merchants and kings.
Juan de Mariana, 1536-1624.
Resources on the School of Salamanca
History of University of Salamanca
Catholic Liberalism - E-text links
"All Mankind is One: The Libertarian Tradition in Sixteenth Century Spain" by Carl Watner, 1984, J of Libertarian Studies
"New Light on the Prehistory of the Theory of Banking and the School of Salamanca" by Jesus Huerta de Soto, 1985, J of Libertarian
Studies
History of the University of Salamanca
Council of Trent - Canon and Decrees

Sir William Petty, 1623-1687.

When Oliver Cromwell's British forces invaded Ireland in the 1650s, a slight problem emerged: how to partition the spoils among the victors
or, more precisely, what were the spoils? The task of surveying Ireland and assessing its riches was given to a physician which had
accompanied the British army, Sir William Petty. Thus, the first "econometrician" was born.
Petty's work on Ireland is found in his 1672 Political Anatomy of the country. A pupil of Hobbes, Petty was a Mercantilist in his policies, but
one can find rudiments of the labor theory of value. He was particularly influential upon Davenant and Locke.
Major Works of Sir William Petty
A Treatise on Taxes and Contributions, 1662
Verbum Sapienti, 1664.
Political Anatomy of Ireland, 1672.
Quantulumque Concerning Money , 1682
Discourse on Political Arithmetic, 1690.
Resources on William Petty
Petty Page at McMaster
Petty Page at Akamac
John Aubrey's "A Brief Life of William Petty, 1623-87"
Wilson Lloyd Bevan's "Sir William Petty: A Study in English Economic Literature", 1894, Pub. AEA
Charles H. Hull's "Petty's Place in the History of Economic Theory", 1900, QJE.
Richard Cantillon, 1680?-1734.
Richard Cantillon, acknowledged by many historians as the first great economic "theorist", is an obscure character. This much is known: he
was an Irishman with a Spanish name who lived in France and reputedly made a fortune of some twenty million livres under John Law's
schemes before moving to England. He died in a fire in his London home - allegedly set by his discharged cook.
Cantillon's entire reputation rests on his one remarkable treatise, Essai Sur la Nature du Commerce en Gnral was written in French circa
1732 and published anonymously in England some twenty years after his death (some claim it was only a French translation of a lost English
original). Although his work was well-known to the Physiocrats and the French school, Cantillon fell into obscurity in the English-speaking
world until resurrected and popularized by William Stanley Jevons in the 1880s.
Cantillon was perhaps the first to define long-run equilibrium as the balance of flows of income, thus setting the foundations both for
Physiocracy as well as Classical Political Economy. Cantillon's system was is clear and simple and absolutely path-breaking. He developed
a two-sector general equilibrium system from which he obtained a theory of price (determined by costs of production) and a theory of output
(determined by factor inputs and technology). He followed up on Petty's conjecture about the par of labor and land, thereby enabling him
to reduce labor to the amount of necessities needed to sustain it and thus making both labor supply and output a function of the land
absorption necessary to produce the necessities to feed labor and the luxuries to feed landlords. By demonstrating that relative prices are
reducible to land-absorption rates, Cantillon can be said to have derived a fully-working "land theory of value". [click here for a review of
Cantillon's system.]
Cantillon's careful description of a supply-and-demand mechanism for the determination of short-run market price (albeit not long-run natural
price) also stand him as a progenitor of the Marginalist Revolution. In particular, his insightful notes on entrepreneurship (as a type of
arbitrage) have made him a darling of the modern Austrian School. Cantillon was also one of the first (and among the clearest) articulators of
the Quantity Theory of Money and attempted to provide much of the reasoning behind it.
Finally, one of the consequences of his theory was that he arrived at a quasi-Mercantilist policy conclusion for a favorable balance of trade
but with a twist: Cantillon recommended the importation of "land-based products" and the exporting of "non-land-based" products as a way of
increasing national wealth.
Major Works of Richard Cantillon
Essai Sur la Nature du Commerce en Gnral, 1755.
French / English combined version
English Text Version

Resources on Cantillon
HET Pages: Cantillon's "Land Theory of Value" - a review of Cantillon's two-sector model (HET)
Bio @ Mises Institute
Page at McMaster - includes bibliography on Cantillon
Beer. Another Cantillon legacy?
Anne-Robert-Jacques Turgot, 1727-1781.

Jacques Turgot (Baron de l'Aulne) was perhaps the leading economist of 18th Century France. Although often lumped together with
Quesnay and the Physiocrats, his contributions were quite distinct and advanced considerably upon Physiocratic theories. Turgot can be
said to have formed a distinct school of his own, counting the Abb Morellet and the Marquis de Condorcet as close friends and disciples.
More importantly, Turgot exercised a deep influence upon Adam Smith, who was living in France in the 1760s and was on intimate terms with
Turgot. Many of the concepts and ideas in Smith's Wealth of Nations are drawn directly from Turgot.
Born to a prosperous merchant family in Paris, Jacques Turgot's father was the Michel Turgot to whom, apparently, is owed the celebrated
"Map of Paris" of 1739. A brilliant student at the Sorbonne, Jacques Turgot was originally destined for a clerical-academic career. He was
made a prior of Sorbonne in 1749 and requested to composed two discourses to be read in Latin.
Turgot's second discourse, on the progrs successifs de l'sprit humain (1750) outlined his famous philosophy of history. Turgot argued that
human societies pass through cycles of barbarism and civilization, the former attended by superstition, the latter the fruits of reason. He
discussed the transfer from one to the other and back again. Human restlessness, a taste for liberty and a critical spirit elevates societies
into civilization, but then these impulses become institutionalized and conservative and become the very impediments of further progress.
Reason morphs into superstition, and society is driven back into barbarism.
So, for Turgot, human progress is not self-reinforcing but contains the seeds of its own demise. On the optimistic side, demise is never
permanent. Turgot was confident that the human spirit would always drive a society out of stagnation. In many ways, Turgot's thesis has a
rather prescient Comtian character. Turgot hailed the France of Louis XV as very much in the upswing of the cycle. It is interesting that he
pointed out entrepreneurs were a progressive driving force and that the State would do well to permit great latitude. It also predicted the
eventual revolt and independence of the American Colonies from the English Crown.
Not long after delivering the discourse, Turgot decided against ordination in the Church and instead entered a career in the royal
administration. From 1751 to 1760, Turgot worked at the parlement in Paris. He hobnobbed with the philosophes and contributed several
articles (two of them on linguistics) to the famous Encyclopdie of Denis Diderot. In 1753, Turgot wrote his Lettres urging toleration of
Protestants in France. In 1755-6, Turgot accompanied the free-trade advocate Vincent de Gournay on his official tours of France and, on
their travels, Gournay got him thinking about economic matters. Upon Gournay's death, Turgot penned a marvelous eulogy to his fallen
mentor (1759).
From 1761 to 1774, Turgot was chief administrator (intendant) for Limoges. He immediately set himself to work -- fixing roads and drainage,
improving tax collection, reducing internal tariffs, introducing a better relief system for the poor, etc. Limoges, hitherto one of the poorest
areas of France, became a showpiece for what a determined and enlightened administrator could accomplish. Many of the reforms he
would later institute throughout France were first tested out here at a smaller scale.
Intellectually, this was also Turgot's most productive period. His masterpiece was undoubtedly his Reflections on the Formation and
Distribution of Riches (1766). Here, Turgot introduced the concept of capital into the Physiocratic system. He also clarified the meaning of
"surplus" and provided the link between the "surplus" and "growth" and relating the profit rate to the rate of interest. He was also among the
first to make clear the distinction between "market" price and "natural" price. As a result, Turgot differed from original Physiocrats on the
nature of the produit net, i.e. that surplus could be generated by industry as well as agriculture. All of these ideas were to be taken up by
Adam Smith and the Classical School.

Turgot can also be considered a forerunner of the Marginalist Revolution. His Valeurs et Monnaies (1769) contains a strikingly welldeveloped demand-based theory of price. In that same work, he presents a remarkably prescient account of how large number of traders
reduce the degree of indeterminacy of exchange, a topic later taken up Edgeworth. Another notable economic contribution (in his 1768
Observations) was the introduction of variable input proportions in production. Turgot was also the first to conceive of the notion of
diminishing marginal productivity to factor inputs. Finally, his 1766 discussion on money included the distinction (not made hitherto) between
the real and nominal rates of interest.
On account of his success as an administrator in Limoges and his impressive intellectual abilities, the Comte de Maurepas asked Turgot to
join his new reformist cabinet. Turgot served as contrleur gnral (the equivalent of a minister of finance) under King Louis XVI from 1774
to 1776.
Turgot was adamant about saving the finances of the decrepit Ancin Regime. He figured that if he could keep government spending in
check and encourage private economic enterprise, tax revenues would rise and state finances would return to solvency. However, he
believed that the old Colbertiste strategy of state-sponsored corporations and protectionist measures kept industry uncompetitive and
unproductive. Inspired by Vincent de Gournay, Turgot intended to unleash the forces of competition and free markets. To do so, not only
would he have to reverse Colbertiste economic policies, he would also have to dismantle the Medieval institutions that kept the French
economy in thrall.
Turgot started slowly, propping up growth industries such as the Lyons silk manufactures, improving roads and transportation, simplifying the
tax system, improving tax collection, abolishing some monopolies, paying back public debts, etc. He also began reigning back the lavish
spending of the French court and government. His slogan "No bankruptcy, No new taxes, No loans" left little room for anything else.
In 1775, Turgot took one of his boldest moves and lifted the controls on the internal trade of grain. This measure had been long advocated
by Herbert, Gournay and Turgot himself (e.g. 1763, 1770). Alas, the immediate beneficial impact of that policy was canceled by the crop
failures of that same year. Turgot dealt rather harshly with the ensuing riots -- the so-called "Flour Wars" -- earning him much notoriety
among the populace.
In 1776, Turgot issued his famous "Six Edicts". The first four were of little consequence. The fifth dissolved the guild system, which had
since the Middle Ages kept a stultifying hold over commerce and industry. The sixth eliminated the corve (i.e. the yearly labor owed by
peasants to the state) and implemented the Physiocrats' favorite policy -- l'impt unique (the single tax on property). The nobleman and the
landed gentry rose up in protest against both these measures. Turgot was unmoved and enforced his policies by royal decree -- itself an
unpopular strategy.
By now, Turgot had successfully made enemies with practically every class of person in France -- except the economistes, who cheered him
on. In the French court, his back was covered only by the king but, when Turgot crossed Queen Marie Antoinette by refusing favors to her
protegs, the die were cast. Turgot was dismissed in 1776. Before departing, Turgot presciently warned Louis XVI, "Do not forget, Sire, that
it was feebleness that placed the head of Charles II on the block." Condorcet (then at the royal mint) attempted to resign in protest. Turgot
was succeeded by Jacques Necker, who proceeded to reverse most of his edicts and policies.
Turgot did not live to see the 1789 Revolution created by the economic tensions which his policies purportedly sought to defuse. Given his
record, it is an open question whether Turgot might have been driven to guillotine by the revolutionaries. Unlike his disciple, Condorcet,
Turgot was not a republican and was unpopular among the people. He was a staunch royalist who believed in radical reform as a necessary
step to avert an even more radical revolution. His methods may have been heavy-handed at times, but he realized, like nobody else did, the
absolute urgency of reform.
Major works of Jacques Turgot
Lettre M. l'abb de Cic, depuis vque d'Auxerre, sur le papier supple la monnaie, 1749 (copy)
Les avantages que la religion chrtienne a procurs au genre humain, Discours prononc en latin, dans les coles de la Sorbonne, 1750.
Tableau philosophique des progrs successifs de l'sprit humain, Discours prononc en latin, dans les coles de la Sorbonne, 1750.
Plan de deux discours sur l'histoire universelle, 1751.
Plan d'un ouvrage sur la geographie politique, 1751.
Fragmens et pensees detachees pour servir a l'ouvrage sur la geographie politique, 1751.
Lettres sur la tolrance, 1753-4
"tymologie", "Existence", Expansibilit, "Foires et Marchs", "Fondation", "Langues", 1757, articles in Encyclopdie of Diderot and
d'Alembert.
"loge de Vincent de Gournay", 1759, Mercure.
Le commerce des grains: Projet de lettre au contrleur gnral Bertin sur un projet d'dit, 1763.
Rflexions sur la formation et la distribution des richesses, 1766 (Eng: Reflections on the Formation and Distribution of Wealth) (copy)
Circulaire aux officiers de police des villes, 1766
Observations sur les mmoires de Graslin et Saint-Pravy, 1767.
Lettres sur les meutes populaires que cause la chert des bleds et sur les prcautions du moment , 1768 (attrib.)
L'impt indirect: Observations sur le mmoires rcompenss par la Socit d'Agriculture de Limoges, 1768.
Lettres Hume, 1768.
Valeurs et Monnaies: Projet d'article, 1769
Lettres DuPont de Nemours, 1766-70
Mmoire sur les prts d'argent, 1770.
Lettres au contrleur gnral (abb Terray) sur le commerce de grains, 1770.
Extension de la libert du commerce des colonies, 1772

Lettre au contrleur gnral (abb Terray) sur la marque des fers, 1773.
Arrt du Conseil tablissant la libert du commerce des grains et des farines l'intrieur du royaume et la libert de l'importation, 1774
Mmoire sur les moyens de procurer, par une augmentation de travail, des ressources au peuple Paris, dans le cas d'une augmentation
dans le prix des denres, 1er mai 1775, 1775
Des administrations provinciales : mmoire prsent au Roi, 1788
Mmoires sur le prt intrt et sur le commerce des fers, 1789
Oeuvres de Turgot. (ed. Dupont de Nemours), 1844
Resources on A.R.J. Turgot
Notice Biographique by Paulette Taieb.
"Biography of A.R.J. Turgot: Brief, Lucid, and Brilliant" by Murray Rothbard
"Notice sur la linguistique de Turgot" by D. Droixhe, 1993, Encyclopedia of language and linguistics
Turgot Page at McMaster
Turgot Page at Akamac
Jacques Turgot at Catholic Encyclopedia
Another Portrait
Turgot page at Strasbourg
Map of Paris, 1739 by Michel Turgot at University of Southern Maine
Franois Quesnay, 1694-1774.

The humbly-born Franois Quesnay trained himself in medicine, rising to become a physician in Louis XV's court and the leader of a sect of
Enlightenment thinkers known as the Physiocrats or the conomistes. The working-class boy who could not read until he was 11 was
eventually elected to the Academy of Sciences and hailed as the "Confucius of Europe", the "modern Socrates", by his gentlemen-disciples.
Born in Mr to a family of laborers, Quesnay was orphaned at thirteen. He learned to read from a household medical companion and
quickly acquired a voracious appetite for more books and more learning. After a brief apprenticeship, some schooling at Saint-Cme, and
marrying a Parisian grocer's daughter (a huge step up in social status), Quesnay set himself up as a country barber-surgeon in Mantes. His
(rapid) self-education and skills shone through and, recommendation upon recommendation, he gradually climbed up the greasy pole,
entering into the service of local aristocrats. This gave him some time to do more reading, studying and writing.
Quesnay's numerous tracts on surgery cemented his reputation. He was particularly keen on elevating the status of surgery into a medical
science (much to the medical establishment's horror). The King's edict of 1743 separating surgeons from barbers and the later creation of a
royal college of surgeons was partly his doing.
In 1749, on the strength of a strong recommendation, Quesnay became the personal physician of the King Louis XV's mistress, the
Madame de Pompadour. Quesnay settled in Versailles, finally entering the highest circle of power. He was elected to the Academi des
sciences in 1751 and fell in with the philosophes, who curiously sought out the little country surgeon who had so bravely challenged the great
doctors.
Quesnay's interest in economics arose in 1756, where, hoping to draw on his country background, he was asked to contribute several
articles on farming to the Encylopdie of Diderot and d'Alembert. Quesnay delved into the works of the Marchal de Vauban, Pierre de
Boisguilbert and Richard Cantillon and, mixing all these ingredients together, Quesnay gradually came up with his famous economic theory.
In 1757, he met the Marquis de Mirabeau, his first convert. He was followed by Mercier de la Riviere and DuPont de Nemours and several
others. In 1758, Quesnay wrote his Tableau conomique -- renowned for its famous "zig-zag" depiction of income flows between economic
sectors-- to explain his doctrine. It became the founding document of the Physiocratic sect -- and the ancestor of the multisectoral inputoutput systems of Marx , Sraffa and Leontief and modern general equilibrium theory. (See our analysis of Quesnay's Tableau).
Quesnay began with the axiom that agriculture is the only source of produit net (net product, or surplus of output above cost). He believed
that manufacturing and commerce were "sterile" as (in his view), the value of their output was equal to the value of their inputs. Only land,
Quesnay reasoned, produced more than went into it. The wealth of a nation, Quesnay argued, lies in the size of its net product.
Quesnay opposed the mercantilist doctrines of Colbert, which still held in the French court, believing that they concentrated too much on
propping up industry and commerce rather than agriculture. Influenced by Vincent de Gournay, an advocate of laissez-faire, Quesnay
wished to see many of the Medieval rules governing agricultural production lifted, permitting the economy to find its "natural state". The
natural state of the economy was conceived as the balanced circular flow of income between economic sectors and thus social classes

which maximized the net product. In these concepts, Quesnay saw analogies to the circulation of human blood and the homeostasis of a
body.
Quesnay was largely responsible for the distinction between the ordre naturel (nature's order) and the ordre positif (positive, i.e. humanidealized, order). A good government, Quesnay argued, should follow a laissez-faire policy so that the ordre naturel could emerge.
Quesnay went on to write numerous articles on economics in 1766-8 in the Journal de l'agriculture, du commerce et de finances and in the
Ephmrides du Citoyen under pseudonyms like M.N., M.H., M.A., M. de Isles, etc. (sometimes having his alter-egos enjoin in journal
debates with each other). His 1766 formule article is perhaps his clearest presentation. However, it was presentations, commentaries and
elucidations upon Quesnay's system by Mirabeau (1760, 1763), Mercier de la Riviere (1767) and DuPont de Nemours (1767) that gave
Quesnay's ideas a more systematic feel. Their worship of Quesnay knew no bounds.
Major works of Franois Quesnay
Observations sur les effets de la saigne, 1730
l'Art de gurir par la saigne, 1736
Essai physique sur l'oeconomie animale, 1736
Examen impartial des contestations des mdecins et des chirurgiens, (by M. de B), 1748
Trait de la suppuration, 1749.
Trait des fivres continues, 1753
"vidence", "Fermiers", "Grains" in Encyclopdie of Diderot and d'Alembert, 1756-7.
"Questions intrssantes sur la population, l'agriculture et le commerce", with de Marivelt, 1758, in Mirabeau, l'Ami des Hommes: P. IV.
Le Tableau conomique
"First" 1758 Edition (Tableau with base of 400l., accompanied by Remarques sur les variations de la distribution des revenus annuels d'une
nation; manuscript; no printed copy found): Fascimile, Text.
"Second" 1759 Edition (the Tableau with base of 600l. accompanied by Extrait des oeconomies royales de M. de Sully):` Fascimile, Text
(another copy)
"Third" 1759 Edition (the Tableau with base of 600l. accompanied by Explication du tableau ecoomique and an expanded and footnoted
Extrait des conomies royales de M. de Sully)
Further editions contained in Mirabeau (1760: Pt. 6; 1763), Quesnay (1766a, 1766b, 1767) and DuPont de Nemours (1767). (the Estrait
retitled Maximes gnrales du gouvernement conomique d'un royaume agricole)
Essai sur l'administration des terres, (by Sieur Ballial des Vertus), 1759
"Observations sur le droit naturel des hommes runis en socit", 1765, Journal de l'agriculture, du commerce et de finances - Copy (2)
"Mmoire sur les avantages de l'industrie et du commerce et sur la fcondit de la classe prtendue esterile", (by M.H.) 1765, J de l'agric
"Rponse au Mmoire de M.H. sur les avantages de l'industrie, etc.", 1766, J de l'agric
"Rponse la question propose dans la Gazette du Commerce sur les profits de fabrication des bas de soie en France", 1766, J de l'agric
"Rptition de la question propose dans la Gazette, etc." (by M.N.), 1766, J de l'agric
"Suite de la rptition de la question, etc." (by M.H.), 1766, J de l'agric
"Obsrvations sur l'interet de l'argent" (by M. Nisaque), 1766, J de l'agric
"Questions sur les deuils" (by M.N.), 1766, J de l'agric
"Remarques sur l'opinion de l'auteur de l'sprit des lois concernant les colonies", (by M. de Isle), 1766, J de l'agric
"Analyse de la formule arithmtique du Tableau Economique de la distribution des dpenses annuelles d'une Nation agricole" 1766, J de
l'agric. (copy)
"Premier Problme conomique", 1766, J de l'agric
"Du commerce, premier dialogue entre M.H et M.N.", 1766, J de l'agric
"Observations sur le commerce de M. Montandouin.....dans le Mercure", (by M.H.), 1766, J de l'agric.
"Sur les travaux des artisans, second dialogue", 1766, J de l'agric.
"Analyse des gouvernement des Incas de Prou", (by M.A.) 1767, Ephmrides du Citoyen
"Despotisme de la Chine", 1767, Ephm Citoyen
"Lettre de M.Alpha .... sur le langage de la science conomique", 1767, Ephm Citoyen
"Second Problme conomique", 1767, in DuPont de Nemours, La Physiocratie.
"Lettres d'un fermier et d'un propritaire", (by M.A.) 1768, Ephm Citoyen
"Examen de l'Examen du Livre intitul, Principes de la libert du Commerce des grains.", (by M. N.), 1768, Ephm Citoyen (attrib. to
Quesnay by Paulette Taieb).
Recherches philosophiques sur l'vidence des vrits gomtriques, 1773
Oeuvres conomiques et philosophiques de F. Quesnay : fondateur du systme physiocratique, A. Oncken, editor, 1888
Resources on Franois Quesnay
HET Pages: Quesnay's Tableau Economique
Eloge historique de M. Quesnay, contenant l'analyse de ses ouvrages, 1775, by Claude C.F. d'Albon
loge de M. Quesnay, 1778, by Jean Le Rond d'Alembert
Quesnay's Complete Bibliography -- Tableau complet d'oevres de Quesnay, by A. Oncken, 1888.
"Thorie des prix et libert du commerce des bls chez Quesnay", by Loic Charles, 1998, Cahiers d'conomie Politique
Franois Quesnay Page by Paulette Taieb
Notice Biographique by Paulette Taieb

Bibliography by George Zizka.

The Physiocrats

The Physiocrats were a group of French Enlightenment thinkers of the 1760s that surrounded the French court physician, Franois
Quesnay. The founding document of Physiocratic doctrine was Quesnay's Tableau conomique (1759). The inner circle included the
Marquis de Mirabeau, Mercier de la Rivire, Dupont de Nemours, La Trosne, the Abb Baudeau and a handful of others. To contemporaries,
they were known simply as the conomistes.
The cornerstone of the Physiocratic doctrine was Franois Quesnay's (1759, 1766) axiom that only agriculture yielded a surplus -- what he
called a produit net (net product). Manufacturing, the Physiocrats argued, took up as much value as inputs into production as it created in
output, and consequently created no net product. Contrary to the Mercantilists, the Physiocrats believed that the wealth of a nation lies not
in its stocks of gold and silver, but rather in the size of its net product.
The Physiocrats argued that the old Colbertiste policies of encouraging commercial and industrial corporations was wrong-headed. It is not
that commerce and manufacturing should be discouraged, they said, but rather that it is not worthwhile for the government to distort the
whole economy with monopolistic charters, controls and protective tariffs to prop up sectors which produced no net product and thus added
no wealth to a nation. Government policy, if any, should be geared to maximizing the value and output of the agricultural sector.
But how? French agriculture at the time was still trapped in Medieval regulations which shackled enterprising farmers. Latter-day feudal
obligations -- such as the corve, the yearly labor farmers owed to the state -- were still in force. The monopoly power of the merchant
guilds in towns did not permit farmers to sell their output to the highest bidder and buy their inputs from cheapest source. An even bigger
obstacle were the internal tariffs on the movement of grains between regions, which seriously hampered agricultural commerce. Public works
essential for the agricultural sector, such as roads and drainage, remained in a deplorable state. Restrictions on the migration of agricultural
laborers meant that a nation-wide labor market could not take shape. Farmers in productive areas of the country faced labor shortages and
inflated wage costs, thus forcing them to scale down their activities. In unproductive areas, in contrast, masses of unemployed workers
wallowing in penury kept wages too low and thus local farmers were not encouraged to implement any more productive agricultural
techniques.
It is at this point that the Physiocrats jumped into their laissez-faire attitude. They called for the removal of restrictions on internal trade and
labor migration, the abolition of the corve, the removal of state-sponsored monopolies and trading privileges, the dismantling of the guild
system, etc.
On fiscal matters, the Physiocrats famously pushed for their "single tax" on landed property -- l'impt unique. The logic, as laid out by
Mirabeau (1760) seemed compelling. Any taxes levied throughout the economy will just passed from sector to sector until they fall upon the
net product. As land is the only source of wealth, then the burden of all taxes ultimately bears down on the landowner. So instead of levying
a complicated collection of scattered taxes (which are difficult to administer and can cause temporary distortions), it is most efficient to just
go to the root and tax land rents directly.
However practical many of the Physiocrats' policy measures were, they wrapped their arguments in metaphysical clouds. They
differentiated between the ordre naturel (natural order, or the social order dictated by nature's laws) and the ordre positif (positive order, or
the social order dictated by human ideals). They charged that social philosophers had gotten both of these mixed up. The ordre positif was
wholly about man-made conventions. It was about how society should be organized to conform to some human-constructed ideal. This,
they argued, was what the "natural law" and "social contract" philosophers, like Locke and Rousseau, were concerned with. However, there
was, the Physiocrats argued, nothing "natural" in them at all -- and so these theories ought to be dumped. In contrast, the ordre naturel were
the laws of nature, which were God-given and unalterable by human construct. The believed that the only choice humans had was either to
structure their polity, economy and society in conformity with the ordre naturel or to go against it.
The Physiocrats felt that they had figured out what the ordre naturel actually was. They believed that the policies they prescribed would
bring it about. The term "Physiocracy" itself (introduced by Dupont de Nemours (1767)) literally translates to "the rule of nature".

So what was this ordre naturel? The economics of it are simple. The Physiocrats identified three classes of the economy: the "productive"
class (agricultural laborers and farmers), the "sterile" class (industrial laborers, artisans and merchants) and the "proprietor" class (who
appropriated the net product as rents). Incomes flowed from sector to sector, and thus class to class. A "natural state" of the economy
emerged when these income flows were in a state of "balance", i.e. where no sector expanded and none contracted. Once the "natural
state" was achieved, the economy just continued humming along, reproducing itself indefinitely. The Physiocrats explained their system in
the famous Tableau conomique (1758) of Franois Quesnay. (click here for an analysis of Quesnay's Tableau).
It has been argued that Quesnay developed this idea because, as a physician, he drew an analogy with the circulation of blood and the
"homeostasis" of a body. But, in truth, the idea of a natural balance of income flows had already been expounded in the economic theories
of Pierre de Boisguilbert and Richard Cantillon. Indeed, the Physiocrats also owed to Cantillon their "land theory of value". (see our review
of Cantillon's sytem).
It is interesting to note that the Physiocrats defended their laissez-faire policy conclusions not by pragmatic arguments about improving
agricultural production, but rather by mystical views about the role of the government in their ordre naturel. The Physiocrats, unlike many of
their contemporaries, continued to view the State as a parasitical entity. It lives off the economy and society, but it is not part of it.
Government has no prescribed place in the ordre naturel. Its only role is to set the laws of men in a way that permits the God-given laws of
nature to bring the natural order about. Any attempt by the government to influence the economy against these natural forces leads to
imbalances which postpone the arrival of the natural state and keep the net product below what it would otherwise be. A general laissez-faire
policy and the "single tax" were the speediest, least distortionary and least costly ways of arriving at the natural state.
The Physiocrats believed that net product of the natural state was the maximum net product sustainable over the long-run. Unlike the
Mercantilists, the Physiocrats did not really spend too much time thinking about whether maximizing the net product was a "good" idea (e.g.
did it enhance the power of the sovereign? did it produce general happiness? did improve general morality?, etc.). Following up on Cantillon,
the "friend of mankind", Mirabeau (1756) mumbled something about the true wealth of a nation being its population, ergo the greater the net
product, the greater the population sustainable. But most of them focused on the fact that it was the "natural" thing to do. And anything that
is "natural", according to the spirit of the age, was the "good" thing to do.
The policy measures advocated by the Physiocrats went very much against the interests of the nobility and the landed gentry (however much
they claimed to have their interests at heart). But because Quesnay was the private physician to Madame de Pomapadour, the mistress of
Louis XV, the Physiocratic clique enjoyed a good degree of protection in the French court.
After Pompadour's death in 1764, the Physiocrats influence did not diminish. In 1765-7, they were publishing furiously in the Journal
d'agricultures, du commerce et des finances, which was then edited by DuPont de Nemours. After DuPont was removed in 1767, they
switched to the Ephmrides du Citoyen run by the Abb Badeau. Mirabeau organized his exclusive "Tuesday dinners" that same year and
DuPont de Nemours published his Physiocratie, the definitive statement of the school. The Physiocrats and their ideas were sought out all
over Europe -- from Baden to Russia, Tuscany to Austria.
Many of their writings were distributed in contemporary journals, notably the Journal d'agricultures, du commerce et des finances (founded
1765, ceased 1783), the Ephmrides du Citoyen (founded 1765, ceased 1772) and the Nouvelles Ephmrides Economiques (1774-1776,
1788?).
The Physiocrats' own style did not help their case. Their pompousness, their mysticism about the ordre naturel, the affected, flowery way in
which they wrote their tracts, their petty "cliquishness", their unrestrained adulation and worship of Quesnay -- whom they referred to as the
"Confucius of Europe", the "modern Socrates" -- irked just about everybody around them. Even those who ought to be their natural allies,
such as Voltaire, Diderot, Rousseau and de Mably, despised the Physiocrats with a passion. In a letter to Morellet regarding his upcoming
Dictionnaire, the otherwise good-natured David Hume expressed his disdain for them thus:
"I hope that in your work you will thunder them, and crush them, and pound them, and reduce them to dust and ashes! They are, indeed, the
set of men the most chimerical and most arrogant that now exist, since the annihilation of the Sorbonne." (Hume, Letter to Morellet, July 10,
1769)
Adam Smith killed them with faint praise, arguing that the Physiocratic system "never has done, and probably never will do any harm in any
part of the world" (Smith, 1776).
Ferdinando Galiani saw them as anything but harmless. For him, this was a dangerous group of impractical men with wrong ideas. In 1768,
as France collapsed in a near-famine, the Physiocrats still called for "non-action", muttering on about their ordre naturel and the glorious
wisdom of Quesnay. This galvanized Galiani and his followers into making their own remarkable contributions in opposition.
Opposition to the Physiocrats also energized the Neo-Colbertistes. Franois Veron de Forbonnais and Jean Graslin sharpened and
modernized Mercantilist doctrines, bringing them in touch with the Enlightenment spirit partly in order to combat the Physiocrats' appeal.
Although the Physiocratic system was accused of being "mysticism parading as science", the truth was perhaps quite the opposite.
Physiocracy was more "science parading as mysticism". For this reason, the Physiocrats still exerted a considerable amount of influence on
the development of economics. Of particular interest are the modifications introduced by Jacques Turgot and taken up by the Turgotian
sect (which includes, at one step removed, Adam Smith). They were the first to argue that industry, and not only agriculture, could produce a
net product. The modified system, in the hands of Adam Smith, yielded up the "labor theory of value", which was later taken up by the
Classical School.
Whatever the case, the influence the Physiocrats had on French economic policy was minimal. The high-water mark was Turgot's brief
tenure as contrleur gnral from 1774 to 1776, where many of the Physiocratic policy propositions -- e.g. the lifting of internal tariffs, the
abolition of the corve, the single tax -- were instituted (but subsequently repealed). Emperor Joseph II of Austria also experimented with
Physiocratic policy proposals.
(see also our page on the Enlightenment Economists).

The Founder
Franois Quesnay, 1694-1774
The Physiocratic Sect
Victor de Riqueti, Marquis de Mirabeau, 1715-1789. (1)
L'ami des hommes, ou Trait de la population, Parts 1-3, (1756), Part 4 (1758), Part 5 (?), Part 6 (1760).
La theorie de l'impt , 1760.
La philosophie rurale, with the collaboration of Quesnay,1763
Leons conomiques (by L.D.H), 1770
The "friend of mankind" was also known as "Mirabeau the Elder" to distinguish him from his estranged revolutionary son, Gabriel Honor
(whom he had jailed several times, incidentally). Mirabeau was one of the first members of Quesnay's inner circle. Mirabeau was also the
Physiocrat best-acquainted with Cantillon, whose work he consulted when crafting his 1756 treatise. Most of the public became first
acquainted with Quesnay's Tableau through its reproduction in Mirabeau's L'ami des hommes: Pt. 6 (1760). Mirabeau was the primary
architect of the "single tax" doctrine, expounded in his 1760 impt book. His 1763 text has been considered the best statements of early
Physiocratic doctrine.
Paul Pierre le Mercier de la Rivire, 1720-1794.
L'ordre naturel et essentiel des societes politiques, 1767.
L'intrt gnral de l'tat, 1770
L'heureuse nation ou Relations du gouvernement des Fliciens, 1792.
Promoted the Physiocratic political philosophy of the State in accordance with "nature's plan".
Guillaime Franois Le Trosne 1728-1780
Mmoire sur les vagabonds et sur les mendiants, 1764.
Libert du commerce du grains, 1765.
De l'intert social, 1777.
Vues sur la justice criminelle, 1777
De l'administration provinciale, et de la reforme de l'impot, 1788
Abb Nicholas Baudeau, 1730-1792.
Exposition de la loi naturelle, 1767.
Avis au peuple sur son premier besoin, ou Petits traits conomiques, 1768
Avis au peuple sur l'impt forc qui se percevoit dans les halles et les marchs sur tous les bleds et toutes les farines, 1774
Lettres et mmoires un magistrat du parlement de Paris sur l'arrt du 13 septembre 1774, 1774
Explication du tableau conomique madame de ***, 1776
Correspondance entre M. Graslin et M. l'abbe Baudeau, 1776 with Graslin.
Founder of the Ephmrides du Citoyen in 1765 (ceased 1772). In 1766, Baudeau converted from Neo-Colbertisme to the Physiocratic
doctrine, and eventually became one of its most forceful proponents.
Pierre Samuel DuPont de Nemours, 1739-1817. (1)
"Review of Mercier de la Riviere's Ordre naturel" Ephmrides du Citoyen, 1767
La Physiocratie: ou constitution essentielle du gouvernement le plus advantageux au genre humaine, with collaboration of Quesnay, 1767.
De l'origine et des progres d'une science nouvelle, 1768.
"Avertissement," Ephmrides du Citoyen, 1769
Eloquent popularizer of Physiocracy, editor of the Gazette du Commerce and, from 1769, the Ephmrides du Citoyen. His Physiocratie was
perhaps the best statement of the Physiocratic doctrine. Dupont took particular care in explaining the social welfare implications of their
policy positions, although asserting (against Montesquieu) their universality of application. An adventurer, businessman and rake, DuPont de
Nemours was the founder of the famous American industrial dynasty which takes his name: Dupont.
Claude-Camille-Franois Comte d'Albon, 1753-1789 - (1)
"Eloge historique de M. Quesnay, contenant l'Analyse de ses Ouvrages", 1775, Nouvelles, Ephmrides Economiques
Resources on the Physiocrats
HET Pages: Cantillon's "Land Theory of Value", Quesnay's Tableau Economique,
"The Physiocrats" by Karl Marx, Ch. 2 of Theories of Surplus Value, Vol. 1.
"Physiocracy" by Ianik Marcil and Steve Pressman, 1999, in Phillip A. OHara, editor, Encyclopedia of Political Economy
Paulette Taieb's site: "Le Jardin aux Sentiers qui Bifurquent"
Collection des Principaux Economistes. Les Physiocrates by Eugne Daire, editor, 1846
Les ides politiques des physiocrates by Lon Cheinisse, 1914
Physiocrats and the Impot Unique
Phyiocrats at Catholic Encyclopedia
Physiocrats at Enlightenent glossary
David Hume, 1711-1776.

One of the greatest philosophers in Western history, as well as an accomplished historian, economist, perennial skeptic and delightful fellow.
David Hume was one of the most prominent figures of the Scottish Enlightenment and a close friend of Adam Smith. Hume's contributions to
economics are found mostly in his Political Discourses (1752), which were later incorporated into his Essays (1758).
Hume was a virulent anti-Mercantilist. He was adamant that wealth was measured by the stock of commodities of a nation, not its stock of
money. He was also one of the better articulators of the Quantity Theory and the neutrality of money ("It is none of the wheels of trade: it is
the oil which renders the motion of the wheels more smooth and easy", Of Money, 1752). Contrary to the Mercantilists, Hume related low
interest rates not to abundant money, but to booming commerce. He was one of the first to spell out the "loanable funds" theory of interest,
arguing that interest rates are determined by the demand for loans and the supply of saving. Low interest rates are thus symptoms of a
booming, commercial economy, where thrift and the desire for gain and accumulation take hold. However, he admitted that in the short-run
(and only the short-run), a rising supply of money could have a beneficial effect on industry.
Hume's most famous contributions are in international trade. Contrary to the Mercantilists, he did not conceive of foreign trade as a zerosum game but argued that there are mutual gains. Far from being fixed, Hume argued that the total volume of international trade is directly
related to the diversity and wealth of all nations. As he concludes, "I shall therefore venture to acknowledge that not only as a man, but as a
British subject I pray for the flourishing commerce of Germany, Spain, Italy and even France itself." (Of the Jealousy of Trade, 1758).
Hume also introduced the automatic "price-specie flow" mechanism and the "reflux principle". Its basic argument was to deny the old
Mercantilist policy proposition that the inflow of gold specie into a nation could be accomplished by manipulating the external trade balance.
Hume argued that the inflow of specie would, by his Quantity Theory, lead to a rise in domestic prices, thereby changing the terms of trade
against the recipient nation. The demand for its exports abroad would consequently decline, and its own demand for foreign imports would
increase, thereby reversing the external trade balance so that specie now would flow back out. Hume also used this logic to deny the idea
that rises in prices can be blamed on rising wages. Specifically, if there was a wage-induced rise in the price level in England, the terms of
trade between England and other nations would change in a manner detrimental to English exports and favorable to the imports from other
nations. This would thereby induce an outflow of money from England , and thus a reduction in England's money stock which would bring
the price level in England back down.
Hume's automatic flow mechanism of international trade lent credence to the idea that there was a "natural balance" of trade between
nations which deliberate policy moves could not contradict. But Hume was not a believer of the "natural law" or "social contract" theories
popular with contemporary political and social philosophers. He was a thorough empiricist in both his political and philosophical work. His
hedonistic theory of morals served as a foundation of utilitarianism. His theories of "evolution" of ethics, institutions and social conventions
and were highly influential upon the Hayek and later evolutionary theories. Other particulars of Hume's thinking are outlined in our
Introduction to David Hume.
Major Works of David Hume
A Treatise of Human Nature, Being an attempt to introduce the experimental method of reasoning into moral subjects, 1739-40.
An Abstract of a Book Lately Published, 1740 - (discovered by J.M. Keynes and P. Sraffa in 1938)
Essays, Moral and Political, 1741-1742
A Letter from a Gentleman to His Friend in Edinburgh , 1745.
Three Essays, Moral and Political, 1748
An Enquiry Concerning Human Understanding, 1748.
An Enquiry Concerning the Principles of Morals, 1751.

Political Discourses, 1752

Essays and Treatises on Several Subjects, 1754 (4 vols; 1 - 1748 ed. of Essays; 2 - 1748 Enquiry; 3 - 1751 Enquiry; 4 - 1752 Discourses)
The History of England, from the invasion of Julius Caesar to the Abdication of James II, 1688, 1754-1762.
Four Dissertations, 1757.
Essays: Moral, Political and Literary, 1758
Part I - 1741-42 Essays (several essays omitted) + 1748 Three Essays + two of the 1757 Four Dissertations
Part II - 1752 Political Discourses + new essays:
"Of the Jealousy of Trade"
"Of the Coalition of Parties"
A Concise and Genuine Account of the Dispute between Mr. Hume and Mr. Rousseau, 1766.
My Own Life, 1776.
The Latter-Will and Testament of David Hume, 1776
Essays and Treatises on Several Subjects 1777, (4 vols, as in 1754; Vol. 1 is the 1758 Essays plus the following:
"Of the Origin of Government" included in Part I of Essays
All essays omitted in 1758 included as Part III of Essays
Two Essays, 1777 (incl. in Part III of 1825 ed. of Essays)
"Of Suicide"
"Of the Immortality of the Soul"
Dialogues Concerning Natural Religion, 1779. - copy
The Philosophical Works of David Hume, 1825 Edinburgh ed. (American ed., 1854)
Resources on David Hume
HET Pages: Introduction to David Hume, Bibliography of Hume's Works, Scottish Approaches to Money
Letter from Adam Smith to William Strahan on David Hume, 1776
The David Hume Archives @ IEP
Hume: a. Life and Writings
Hume: b. Metaphysical and Epistemological Theories
Hume: c. Moral Theory
Hume: d. Writings on Religion
Hume: e. Essays, Moral, Political and Literary
"David Hume" by James McCosh, 1875 in Scottish Philosophy
"David Hume" by G.W.F. Hegel, 1892, Lectures on the History of Philosophy
"David Hume" by Alfred Weber, 1908, History of Philosophy
The Hume Society
Hume Page at McMaster
Hume Page at Akamac.
Bibliography of Hume's works at McMaster.
Britannica.com Hume page
Hume timeline

The Scottish Enlightenment

Scotland's connection to England began officially in 1603, when King James VI of Scotland inherited the English crown and became also
King James I of England. The kingdoms were still theoretically distinct, both crowns just happened to sit on the same head. This remained
the case until the 1707 Act of Union, which united the kingdoms of England and Scotland forever.
Before 1707, there had been surprisingly little contact or even less good feeling between the two nations. All Scotsmen were either
Presbyterians or Jacobites, and that alone was enough to alienate them from four-fifths of the English population. Few Scotsmen traveled
south and even fewer Englishmen traveled north. Scotland's traditional ally, France, was England's traditional enemy. Scottish scholars and
clergymen looked to the universities and seminaries of Continental Europe, rather than England, to further their educations and garner
intellectual inspiration.
The internal structure of Scotland looked nothing like England. The Edinburgh parliament was an incredibly corrupt and unrepresentative
institution dominated by "gangs" of noblemen. The interlocking system of assemblies of elders of the inquisitorial Presbyterian Kirk of

Scotland served as the only real local government Scotland had. Scottish agriculture was semi-feudal and unproductive, run via the "run-rig"
system in unenclosed fields with peculiarly short tenancies. On the upside, compared to their English counterparts, the Scottish lords were
decidedly more paternalistic and their lifestyle and culture much closer to that of their tenants -- which did wonders for social relations. And
then, of course, there were the mysterious and impenetrable Highlands, run by the "barbarous" Clans, whose social, cultural, political and
economic structures were a thousand years older than anything else in Britain.
Before 1707, economic interaction between the two nations was virtually nil, even on the borderlands (where the degree of animosity
between the populations was perhaps the greatest). English Mercantilist policies ensured that Scots were barred access to the English
colonies. Scotland's own commerce with England hampered by prohibitive trade barriers. Scottish commercial cities -- which, almost always,
just meant Glasgow -- were little more than provincial entrepts. Scotland's attempts to muscle in on colonial commerce started -- and
ended -- with the ill-fated "Darien scheme" to set up a Scottish colony in Central America in 1698-1702.
The 1707 Act of Union did not change all this overnight. The marriage was a painful one that took over a century to work itself through. At
least three bloody Jacobite rebellions -- in 1690, 1715 and 1745 -- rocked Scotland to its very foundations. In the aftermath, the Scottish
nobility lost their remaining feudal powers and the Highlands were conquered and subdued. The Kirk barely withstood the strain of their new
episcopalian relations, and eventually broke apart in a schism.
The main worry of 18th Century Scots was how the poor, backward and stagnant Scotland would fare when thrown into a common market
and destiny with England's world-class dynamic economy. The Glasgow merchants welcomed the lifting of trade barriers and access to
colonies (they were quick to hone in on the tobacco trade), but they also realized that they had nowhere near the experience, financing and
political clout of their English competitors. As the agricultural and industrial revolutions advanced in England, the Scottish gentry and
peasantry alike wondered nervously about how much time they had left before English-style capitalism transformed the Scottish countryside
into "factories of corn and beef". Would Scotland become prosperous like England, or would it descend into dependent pauperism like
Ireland? And how would the new self-seeking capitalist ethos bode on the stern morals and traditional values of the Scottish people?
These questions were foremost on the minds of the Scottish philosophers of the 18th Century. As so many times before, they looked to their
French counterparts for answers. France was then enjoying its age of Enlightenment and, quickly enough, the intellectual fire spread to
Scotland. Although sharing the French speculative-rationalist spirit, the work of the Scottish philosophers was tempered with doses of
severe skepticism and a more pronounced form of utilitarianism. Also, unlike the French, the Scottish thinkers were particularly concerned
with economic growth and development, the consequences of international trade and the mechanics of an emerging urban, commercial,
bourgeois society -- concerns reflecting the reality of post-1707 Scotland.
The "Scottish Enlightenment" stretched roughly from 1740 to 1790. Unlike in France, many of its protagonists were academics. Francis
Hutcheson, Adam Smith, Thomas Reid and John Millar were professors at the University of Glasgow. Adam Ferguson, Dugald Stewart and
William Robertson were at the University of Edinburgh. The universities of Aberdeen and St. Andrews were dominated by their students.
But there were also some important figures outside the academy who influenced the course of the dialogue, including Lord Kames, Sir
James Steuart, Dr. James Anderson and, above everybody else, the towering figure of David Hume.
The three major areas of concern for Scottish philosophers were moral philosophy, history and economics. In all three, David Hume blazed
the way, with the other Scottish philosophers following him in support or in criticism.
In moral philosophy, the main question was whether the acquisitive ethics of capitalism could be made compatible with traditional virtues of
sociability, sympathy and justice. The issue had been provoked by Bernard de Mandeville in his famous thesis that "private vices" lead to
substantial "public benefits", whereas virtuous behavior does very little good at all. The Scottish philosophers wanted to show that the choice
between private virtue and public good was a false one. The scandalous resolution forwarded by David Hume (1739-40) was that moral
values and judgments were social constructions anyway. Anything that is pleasurable, Hume argued, people will judge "virtuous" and
anything that is painful, they will call "vice". Consequently, we need not worry about the corruption of morals by capitalism. Private moral
judgments will evolve with it.
Hume's hedonistic solution was turned upside down by Francis Hutcheson (1725, 1755), who argued that virtue yields pleasure because it
conforms to our natural and innate "moral sense", while vice yields pain because it is unnatural. As a result, Hutcheson came up with the
utilitarian ethical precepts that the height of virtue was achieving the "greatest good for the greatest number". Adam Smith (1759) attempted
to reconcile the Hume and Hutcheson positions via the artifice of "natural sympathy" and the "impartial spectator".
In history, the Scots had a tendency to come with meta-sociological accounts of the "natural progress" of civilization. This "natural history" or
"conjectural history" approach was initiated by David Hume (1757). Conjectural history took a distinct "stages" form in the hands of Adam
Ferguson (1767), John Millar (1771) and Adam Smith (1776) . Smith, for instance, envisaged history as progressing through four economic
stages, attended by political and social structures: a hunting and gathering stage, a pastoral and nomadic stage, a agricultural and feudalist
stage and the final commerce and manufacturing stage (which Scotland was now entering). Like Ferguson, Smith placed division of labor
and the expansion of commerce as the fundamental driver of history. The efforts of the Scottish school led Voltaire to note that "we look to
Scotland for all our ideas of civilization".
A decidedly different form of history -- the "narrative" history -- was also pursued by the Scottish scholars. In this, David Hume (who else?)
led the way with his controversial History of England (1754-1762). With varying degrees of success, great narrative histories were also
advanced by other Scottish scholars, such as Robertson (1759, 1769) and Ferguson (1783). This historical style was taken up in England by
Edward Gibbon in his famous 1776 account of the fall of Rome.
On political economy, David Hume (1752) initiated a different approach. Instead of embedding economics in a social and historical context,
as he had morals and religion, Hume decided instead to let the laws of economics stand on their own, externally and eternally. Rejecting
both the Mercantilist doctrines which fetishized money and the French approach which emphasized the primacy of agriculture, Hume

identified commerce as the main engine of economic growth, with jealousy of trade and the misuse of money and credit as its main
obstacles. Ferguson's (1767) division of labor added another dimension.
Against Hume, Robert Wallace (1758) and Sir James Steuart (1767) attempted to revive the Mercantilist orthodoxy (albeit in more liberal
dress). But Steuart's work, in turn, provoked the great thesis of Adam Smith -- The Wealth of Nations (1776) -- which placed industry and
manufacturing in the position of honor.
Although the achievements of the Scottish scholars were toasted in France, they did not have an immediate impact south of the border.
While their northern cousins were asking hard questions about mankind, English intellectuals wallowed in the shallow self-congratulations of
the barren age of Dr. Johnson (the great exception, again, was Edward Gibbon). As Hume asked Smith, shortly before the latter published
an English edition of his work, "How can you so much as entertain a thought of publishing a Book, full of Reason, Sense, and Learning, to
those wicked, abandoned Madmen?"
The Scottish Enlightenment came to an end in the early 1800s, due largely to the rise of Christian pietism in Scotland. Radical Presbyterian
clergymen and Tory politicians, disgruntled at the "refined paganism" and Whiggish tone of the Scottish philosophers, eventually gained
control of the Scottish academies and universities and reorganized the appointments and curricula in favor of more conservative and
religious-minded academics. Both James Mill and J.R. McCulloch, the leaders of the Classical Ricardian School in the early 19th Century,
were trained in the Scottish Enlightenment tradition, but, with academia now closed to their ilk, they had to look elsewhere for a perch to
continue its work.
Outside the Academy
David Hume, 1711- 1776.
Henry Home, Lord Kames, 1696-1782- portrait
Remarkable Decisions of the Court of Session, 1728
Essays upon Several Subjects in Law, 1732
Essays on the Principles of Morality and Natural Religion, 1751
Elements of Criticism, 1762
Robert Wallace, 1697-1771
A Dissertation on the Numbers of Mankind in Ancient and Modern Times, 1753
Characteristics of the present State of Great Britain, 1758
Various Prospects of Mankind, Nature and Providence, 1761
Scottish Presbyterian minister. His 1753 thesis that population had declined since the Ancient era was famously contested by David Hume.
Influential on Robert Malthus. A latter-day Mercantilist, Wallace also opposed Hume's Quantity Theory of Money.
Sir James Steuart, 1713-1780.
Dr. James Anderson, 1739-1808.
The Glasgow Academics
Francis Hutcheson, 1694-1746
Adam Smith, 1723-1790.
Thomas Reid, 1710-1796. (1), Portrait
An Inquiry into the Human Mind on the Principles of Common Sense, 1764. (French)
Essays on the Intellectual Powers of Man, 1785
Essays on the Active Powers of Man, 1788
Philosophical Works, Vol. 1, Vol. 2, 1895
Successor to Adam Smith's Chair in Moral Philosophy at Glasgow, Reid spent spent much of his life finding arguments to oppose David
Hume's empiricist revolution in philosophy. He propounded what has become known as the "common sense" school of philosophy, arguing
that common sense justifies embracing a rationalist basis for philosophy, as opposed to Hume's deep skepticism. Reid was particularly
influential upon Dugald Stewart and the later members of the Scottish Enlightenment.
John Millar, 1735-1801. (1), (2)
The Origin of the Distinction of Ranks, 1771.
Historical View of the English Government, 1803.
Whiggish economic historian and Professor of Law at Glasgow, a deep admirer of Adam Smith.
The Edinburgh Academics
Adam Ferguson, 1723-1815.
Dugald Stewart, 1753-1828 - (1), (2), (3), Portrait
Elements of the Philosophy of the Human Mind, 1792.
Outlines of Moral Philosophy, 1793.
Account of the Life and Writings of Adam Smith, L.L.D., 1795.
Philosophical Essays, 1810.
The Progress of Metaphysical, Ethical, and Political Philosophy since the Revival of Letters, 1815
The Philosophy of the Active and Moral Powers of Man, 1828
A pupil of both Thomas Reid and Adam Smith at Glasgow, Dugald Stewart was a faithful propounder of their theories. He succeeded
Ferguson's Chair of Moral Philosophy at Edinburgh and had a long and highly influential tenure as professor. One of his more notable
students was James Mill. Stewart was probably the first academic to teach a university course explicitly dedicated to political economy (in
1799-1800).

James Dunbar ?? - ?? (1) , (2) .

Essays on the History of Mankind in Rude and Cultivated Ages, 1781.
Later Scottish Economists and Thinkers
James Mill, 1773-1836.
James Ramsay McCulloch, 1789-1864
Thomas Chalmers, 1780-1847
Thomas Carlyle, 1795-1881.
Resources on the Scottish Enlightenment
"The Scottish Philosophy as Contrasted with the German", by James McCosh 1882, Princeton Review (at Michigan)
"Aspects of the Influence of Francis Hutcheson on Adam Smith" by Enzo Pesciarelli, 1999, HOPE
The traditional Scottish universities:
University of Edinburgh
University of Glasgow
University of Aberdeen
University of St. Andrew
Scottish banking
Gazetteer for Scotland
Some Scottish folks
Ferdinando Galiani, 1728-1787

Italian abbot and official, Galiani was one of the leaders of the "Neapolitan Enlightenment" and the initiator the Italian utilitarian tradition. At
the Neapolitan embassy in France from 1759 to 1769, Galiani knew many contemporary French economists, notably the Physiocrats, of
whom he was one of the most formidable opponents. He rejected much of the Physiocratic analysis, notably its "land theory of value". In
1751, Galiani introduced an alternative theory of value based of utility and scarcity, making him therefore the "Grandfather of the Marginalist
Revolution". His 1770 piece provided a quite modern analysis of balance of payments.
Despite his theoretical brilliance and his sympathy with the idea of "natural" laws in economics, Galiani was a rather practical man, skeptical
about the reach of abstract theory, particularly when action was necessary and urgent. He was repelled by the wide-eyed policies called for
by the Physiocrats, which he believed were half-baked, unrealistic and impractical and, in times of crisis, downright dangerous. Watching
the Physiocrats dither about "natural state" during a famine in France in 1768 infuriated the acid-tongued Galiani (and many other
contemporaries). He maintained, throughout his life, a consistently healthy suspicion of any theory that purported to claim "universality" of
application, noting that propositions which may work in one time or place, might not work in others. He could count Denis Diderot as one of
his strongest supporters and followers -- as well as good friend.
Major Works of Ferdinando Galiani
Della Moneta, 1751.
Dialogues sur le commerce des bles, 1770.
De' doveri de' principi neutrali verso i principi guerreggianti, e di questi verso i neutrali, 1782
Resources on Ferdinando Galiani
"La teoria del valore di Ferdinando Galiani: uninterpretazione unitaria" by Nicola Giocoli, 1999, SdPE
Galiani Page at McMaster
Galiani (at Britannica)
The Italian Tradition

This may look odd. Italian economists don't usually figure very prominently in histories of economic thought. Most people would probably
only be able to name the giants Vilfredo Pareto and Piero Sraffa (both of whom were emigrants, incidentally). But Italy has had a very old
and distinctive heritage in economics that is impossible to ignore.
This distinctiveness emerged in the 18th Century, when Neapolitan economist, Ferdinando Galiani (1751) "broke off" from the main streams
of Enlightenment economic thinking. He joined in the general reaction against Mercantilist thought, but he did not follow the path of the
French Physiocratic and Scottish schools. Instead, Galiani initiated the two avenues which formed the "Italian tradition" in economics: the
serious analysis of government as an economic entity and a utility-based theory of natural value.
For Galiani, the economy must be analyzed more juridically than pseudo-scientifically. Government, he argued, is an important entity in any
economy. It can, via its laws and fiscal policies, influence the economy and society for good and evil. Theories of the "natural state" without a
State were, for him, hopelessly abstract and dangerously naive. The policy conclusions of the Physiocratic sect -- laissez-faire, laissezpasser -- were a consequence of their having excluded the State by assumption. This line of reasoning was closer to the French NeoColbertistes and German Neo-Cameralists.
Galiani also argued that the "cost" theories of value which the Physiocrats embraced were plain wrong. In his view, natural value arises from
utility-based demand interacting with the scarcity of supply -- an argument already anticipated by another Italian, Bernardo Davanzati. This
idea was developed in parallel in France by men like Abb Condillac, Jacques Turgot and others. By the time of the Marginalist Revolution,
the Italians were not caught by surprise and contributed much to its early construction. Indeed, the bulk of the Lausanne School came from
Italy -- Vilfredo Pareto, Enrico Barone, Giovanni Antonelli, Pasquale Boninsegni, etc. Some economists, such as Henry Schultz, preferred to
call it simply the "Italian School". The influential Neoclassical economist Maffeo Pantaleoni, the Italian "Marshallian", can be considered
part of this group.
The economic theory of the State was a more distinctively Italian concern and passed through several stages. In its earliest stage, it was
explicitly utilitarian. Cesar Beccaria, and Pietro Verri focused their analysis on the impact of the State and fiscal policy on the economy.
They viewed the state as an instrument to improve general social welfare (whether by engaging or disengaging from the economy; reshaping
its laws and practices, etc.). The Italians found in the notion of utility - or "happiness" -- a criteria by which to evaluate policy. Specifically,
they argued that social welfare was greatest when the society achieved the "greatest happiness of the greatest number", which was to
become the formula of utilitarian social policy.
However, the utilitarian perspective still held the state as a "benevolent despot". In the 19th Century, beginning with the work of Francesco
Ferrara, and following through Antonio de Viti de Marco, Ugo Mazzola, Luigi Einaudi and others (including, notably, Pareto, Barone and
Pantaleoni), the State began being analyzed as an economic entity itself. This involved examining the government as both a "productive"
agent (i.e. a producer of collective goods -- which are also inputs into private production) as well as an "optimizing" agent (i.e. a "revenuemaximizer"). They were particularly keen on analyzing the impact of fiscal policy, notably tax incidence, in this context. The Italian "fiscal
science" continued on its distinctive path through the second half of the 20th Century. Buchanan credits the Italian fiscalists as the intellectual
precursors to the "public choice" school.
The third distinctive strain of Italian economics has been the remarkable "Classical" Neo-Ricardian counter-revolution initiated in 1960 by
Piero Sraffa. Although most of the early action was at Cambridge, the Neo-Ricardian school took root in Italy as Sraffa's Italian students,
such as Pasinetti and Garegnani, returned home. There it was not only tolerated but even attained a degree of respectability that seemed
impossible anywhere else.
Early Italian Economists
Gasparo Scaruffi, 1515?-1584

Bernardo Davanzati, 1529-1606.

Giovanni Botero, 1543-1617
Giovanni Ceva, 1647-1734 - (1), (2), (3), (4)
De lineis rectis, 1678
Opuscula mathematica, 1682
Geometria motus, 1692
De re nummaria, quoad fieri potuit geometrice tractata, ad illustrissimos et excellentissimos dominos Praesidem Quaestoresque hujus
arciducalis Caesaraei Magistratus Mantuae, 1711
Opus hydrostaticum, 1729
Mantuan engineer and mathematician. Ceva is best known for his 1711 on monetary theory. In it, he promoted of the use of mathematical
methods and stripped-down "economic models" in economic theory. Widely considered the first "mathematical economist".
The Italian Enlightenment and Utilitarians
Antonio Genovesi, 1712-1769 - (1)
Disciplinarum metaphysicarum elementa, 1743
Elementa metaphysicae mathematicum in modum adornata, 1743-5
Elementa logico-criticae, 1745
Discorso sul vero fine delle lettere e delle scienze, 1753
Meditazioni filosofiche su la religione e la morale, 1758
Lezioni de commercio o sia d'economia civile, 1765.
La logica per li giovinetti, 1766
Diocesina: ossia filosofia del giusto e dell'onesto, 1776
Professor of ethics and philosophy at the University of Naples, and, from 1754, in "commerce and civil economics", arguably the first
academic chair in economics in Europe. Genovesi has been regarded as the leader of the "Neapolitan" branch of the Enlightenment. His
1765 lectures on economics effectively lays out the Italian tradition -- combining a utility-based theory of value, utilitarian ethics and
permitting a role for the State in economic analysis. Genovesi introduced a mathematical formula where value was equal to demand divided
by the volume of consumable goods. Highly influential upon Galiani.
Giammaria Ortes, 1713-1790. - (1)
Calcolo de' piaceri e de' dolore della vita umana, 1754
Calcolo sopra il valore delle opinioni umane, 1756
Calcolo sopra i giuochi della bassetta e del faraone, 1757
Lezioni de commercio o sia d'economia civile, 1765.
Economia nazionale, 1774.
Riflessioni sugli oggetti apprensibili, sui costumi e sulle cognizioni umane, per rapporto alle lingue, 1775
Reflessioni sulla populazione per rapporto all' economia nazionale, 1790
Venetian friar and anticipator of Robert Malthus, both in his theory of population and in the theory of underconsumption. Deeply pessimistic
about the possibility of improvement of material well-being. An early utilitarian, Ortes defined "pleasure" merely as the diminution of "pain".
Giuseppe Palmieri, Marchese di Martignano, 1721-1794. - (1)
Riflessioni sulla pubblica felicit relativeament al regno di Napoli, 1787.
Pensieri economici, 1789
Della ricchezza nazionale, 1792
Disciple of Genovesi and one of a band of consultant administrators to the Kingdom of Naples during the Enlightenment.
Ferdinando Galiani, 1728-1787.
Count Pietro Verri, 1728-1797
Cesare Bonesana Marchese di Beccaria, 1738-1794.
The Lausanne School Italians
Vilfredo Pareto, 1848-1923.
Maffeo Pantaleoni, 1857-1924.
Enrico Barone, 1859-1924.
Giovanni B. Antonelli, 1858-1944.
Pasquale Boninsegni, 1869-1939.
Luigi Amoroso, 1886-1965.
Umberto Ricci, 1879-1946.
The Italian Fiscalist School
Francesco Ferrara, 1810-1900.
Editor, Biblioteca dell' Economisti, 1850-70
Esame Storico-critico di Economisti e Dottrine Economiche, 1889-92.
Lezione di economia politica,
Opere Complete, 1955.
Sicilian economist, professor at Turin, politician and briefly Italian Minister of Finance. Although his background was in the Italian utilitarian
tradition, Ferrara was an ardent believer in laissez-faire "economic harmonies" in the Manchester School sense (and an early free banking

proponent) His distinctive theory of value is sometimes considered to be an important proto-Neoclassical contribution. His main work was in
public finance, specifically the analysis of the interrelationship between State fiscal policy and social interest in a manner that anticipates that
of Maffeo Pantaleoni and the modern Public Choice school.
Antonio de Viti de Marco, 1858-1943
Moneta e prezzi, 1885.
First Principles of Public Finance, 1888.
"La pressione tributaria dell' imposta e del prestito", GdE, 1893
One of the main Italian fiscalists. Credited with developing the "Ricardian equivalence" theory of public debt.
Ugo Mazzola, 1863-1899.
L'Assicurazione degli Operai Nella Scienza e Nella Legislazione Germanica, 1885.
Dati Scientifici Della Finanza Pubblica, 1890
L'Impostat Progressiva in Economia Pura Sociale, 1895
La Colonizzazione Interna in Prussia, 1900.
Proponent of the view of the State as "firm", providing services and charging for them through taxes. Was among the first the identify the
phenomenon of "public goods" and the associated problems of private provision and the role for public provision.
Luigi Einaudi, 1874-1961.
Studi Sugli Effetti Delle Imposte, 1902.
La Terra e l'imposta, 1924.
"Contributo alla ricerca dell' ottime imposta", 1929, Annali di Economia
Principi di Scienza della Finanza, 1932
"Il cosidetto principio della imposta produttivista", La Riforma Sociale, 1933
Saggi sul risparmio e l'imposta, 1941
Problemi Economicic della Federazione Europea, 1945.
Lezioni di Politica Sociale, 1949.
A classically-trained economist, editor of La riforma sociale, and ardent advocate of laissez-faire. His major works were on public finance in
the tradition of Ferrara. He was also an accomplished economic historian. Later became a prominent Italian statesman (he was President of
Italy from 1948 to 1955).
Italian Neo-Ricardians
Piero Sraffa, 1898-1983.
Luigi L. Pasinetti, 1930Pierangelo Garegnani, 1930Other Distinctive Italians
Marco Fanno, 1878-1965
L'Espansione commercial e coloniale degli stati moderni, 1906
Le Banche et il mercato monetario, 1912
I transferimenti anomrali dei capitali e le crisi, 1935
Introduzione allo studio della teoria economica del corporativismo, 1935.
Principii di scienzia economica
Padua business cycle theorist. Credited with the independent development of the "accelerator" principle of investment.
Gustavo Del Vecchio, 1883-1972
La theorie dello sconte, 1914
Ricerche sopra la teoria generale della moneta, 1932
Vecchie e nove teorie economiche, 1933.
Progressi della teoria economica, 1934
Lezione di economia politica e la teoria del reddito, 1950
Introduzione alla finanzia, 1950
Capitale e interesse, 1956.
Bologna economist. Developed theory of money along Walras's lines.
Paolo Sylos-Labini
Resources on the Italian Tradition
PEI - il pensiero economico italiano
Associazione Italiana per la Storia del Pensiero Economico
"James M. Buchanan and the Italian economic thought in XIX century" by Emilia Bonaccorsi di Patti
Societ Italiana degli Storici dell'Economia
Social Philosophers and Commentators

Natural Law Philosophers of the 17th Century

Jean Bodin, 1530-1596
Sir Francis Bacon, 1561-1642. - (1), (2), (portrait)
The Essays, 1601.
The Proficience and Advancement of Learning, 1605
Novum Organum, 1620.
New Atlantis, 1626.
English empiricist philosopher and originator of the modern "positivist" view of science, as opposed to the Aristotlean approach to knowledge
of the Scholastics. Argued for grounding of "natural law" doctrines in methodological individualism.
Hugo Grotius, 1583-1645
Thomas Hobbes, 1588-1679.
Sir Matthew Hale, 1609-1676. (1) , (2) , (3), Portrait
A Discourse Touching Provision for the Poor, 1683.
The History of The Common Law of England, 1713.
English legal scholar, judge, historian, chief baron of the Exchequer and burner of witches.
James Harrington, 1611-1677. (1) , (2) , (3)
The Commonwealth of Oceana , 1656.
English philosopher, his 1656 tract advocated the setting up of a state run by the landed aristocracy, albeit with a written constitution and
restrictions on amount of land-holdings to balance the power. Particularly influential on the leaders of the American Revolution.
Samuel von Pufendorf, 1632-1694 Johann Peter Sssmilch, 1707-1767
Die gottliche Ordnung, 1741.
Prussian pastor and natural law "statistician". His 1741 work on population was supposed to show the "natural" constancy of certain
population patterns ("God's order", as the title of his 1741 work). His remarkable capable use of the "law of large numbers" in appraising
demographic statistics has led him to be considered one of the fathers of econometrics.. His work was referenced extensively by Malthus.
John Locke, 1632-1704.
Augustan Commentators (early 18th Century)
Daniel Defoe, 1660-1731
Jonathan Swift, 1667-1745
Bernard de Mandeville, 1670-1733
Bishop George Berkeley, 1685-1753.
Enlightenment Social Philosophers (mid-18th Century)
Charles Louis de Secondat, Baron de Montesquieu, 1689-1755. (1) , (2) , (3) , Portrait
Of the Spirit of the Laws, 1748
French Enlightenment political philosopher, essayist and social commentator. He was among the first to attempt to apply Newtonian
analogies to political, social, economic and moral behavior. Conceived of the concepts of "social laws" and a natural "social equilibrium" as
the balance of opposing forces, that were later taken up by the Physiocrats.
Paul Henri Dietrich (Thiry), Baron d'Holbach, 1723-1789 - (1), (2), (3)
The System of Nature, 1770 - Vol. 1, Vol. 2
Good (or Common) Sense, or Natural Ideas vs. Supernatural Ideas, 1772.

German-born French Enlightenment philosopher. Outspoken atheist, materialist and radical opponent of aristocratic privileges. His
mechanical-materialist conception of the universe (and hard determinism on human nature) was outlined in his 1770 treatise. Died during the
French Revolution.
Claude-Adrien Helvtius, 1715-1771
Jean-Jacques Rousseau 1712-1788
Marie Jean Antoine Nicolas de Caritat, Marquis de Condorcet, 1743-1794.
Cesar Beccaria and the Italian Utilitarians.
Francis Hutcheson, Adam Ferguson and the Scottish Enlightenment.
Edmund Burke, 1729-1797
Thomas Paine, 1737-1809
The Romantic Era: Individualists (Early 19th Century)
Jean-Baptiste Say, 1767-1832.
Antoine Louis Claude Destutt de Tracy, 1754-1836
Frdric Bastiat and the French Liberal School
Henry C. Carey and the Manchester School.
The Romantic Era: Collectivists (Early 19th Century)
William Godwin, 1756-1836.
Jean-Claude-Leonard Simonde de Sismondi, 1773-1842.
Claude Henri de Rouvroy, Comte de Saint-Simon, 1760-1825
Jeremy Bentham 1748-1832
Robert Owen and the Utopian Socialists
The German Hegelians
The Victorian Era (Late 19th Century)
Thomas Babington Macaulay, 1800-59
Thomas Carlyle, 1795-1881
John Ruskin, 1819-1900
Herbert Spencer, 1820-1903.
John Stuart Mill, 1806-1873.
Henry Sidgwick 1838-1900
Pierre-Joseph Proudhon 1809-1865.
Ferdinand Lassalle 1825-1864
Gustav von Schmoller 1838-1917
Henry George, 1839-1897.
Karl Marx, Friedrich Engels and the Marxians
Sidney Webb and the Fabian Socialists
William Graham Sumner, Simon Nelson Patten and the American Apologists
The Sociologists
Auguste Comte, 1798-1857
mile Durkheim, 1858-1917.
Georg Simmel, 1858-1918
Vilfredo Pareto, 1848-1923
Max Weber, 1864-1920
Werner Sombart, 1863-1941.
The Twentieth Century
Richard T. Ely, Thorstein Veblen and the American Institutionalists
Ludwig von Mises, Friedrich August von Hayek and the Austrian School
Frank H. Knight, James Buchanan and the Public Choice School
Milton Friedman and the (modern) Chicago School
Maurice H. Dobb, Paul Sweezy, Paul Baran and the Neo-Marxian/Radical School
Resources
Natural Law Philosophy at Internet Encyclopedia of Philosophy
"The Origin of Property: Ockham, Grotius, Pufendorf" by John Kilcullen
"Mr. Ruskin's Recent Writings" by Leslie Stephen, 1874, Fraser's Magaine
Liberty Library of Constitutional Classics