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A HISTORY OF ECONOMIC THOUGHT



A. GENERAL INTRODUCTION

HISTORY OF ECONOMICTHOUGHTCHAPTER I

ECONOMIC THOUGHTThere are at least three different ran!hes "f st#d$ %h"se na&es !"ntain the %"rds Hist"r$ and E!"n"&i!s. There i

n the "ne hand' E!"n"&i! Hist"r$' "r Ind#strial Hist"r$' as it is fre(#entl$ !alled) and "n the "ther' there are the !l"sel$elated s#*e!ts' Hist"r$ "f E!"n"&i!s and Hist"r$ "f E!"n"&i! Th"#+ht. The first !"n!erns itself %ith the hist"r$ "f"&&er!e' &an#fa!t#res' and "ther e!"n"&i! ,hen"&ena' dealin+ "*e!ti-el$ %ith the %a$s in %hi!h &en +et their li-in+) e!"nd and third treat ,ri&aril$ "f s#*e!ti-e &atters' dealin+ f"r the &"st ,art %ith the ideas &en ha-e !"n!ernin+ e!"n"&a!ts and f"r!es.

N"% these last t%" ha-e een !"nf#sed' and their l"+i!al relati"nshi, is !"&&"nl$ "-erl""ed. The hist"r$ "f

E!"n"&i!s deals %ith a s!ien!e / %ith a "d$ "f !lassified n"%led+e) it is li&ited t" ti&es in %hi!h e!"n"&i! ideas ha-ee!"&e distin!t' #nified' and "r+ani0ed) it is a hist"r$ "f s$ste&s "f e!"n"&i! th"#+ht. The 1a$l"nians had ideas !"n!erninterest and &"rt+a+es) the Ph!eni!ians th"#+ht a"#t !"&&er!e and ills "f e2!han+e) the Grees %r"te "n the s#*e!t "f

di-isi"n "f la"r. D"es the hist"r$ "f E!"n"&i!s' then' date t" s#!h re&"te ti&es3 1$ n" &eans. 1#t the hist"r$ "f 4 e!"n"&h"#+ht4 d"es' and fr"& its ,"int "f -ie% the #nrelated ,ri&iti-e ideas "f the earliest ti&es are f#ll "f &eanin+. Indeed' f"r a#ll #nder5

standin+ "f the "ri+in and +r"%th "f the s!ien!e' the #nderl$in+ ideas are i&,"rtant. The hist"r$ "f e!"n"&i! th"#+s r"ader than the hist"r$ "f the s!ien!e6 it &a$ ,r",erl$ e di-ided int" t%" ,arts' "ne "f %hi!h taes #, the +ri+in and

de-el",&ent "f e!"n"&i! ideas ,ri"r t" the e2isten!e "f an$ distin!t and se,arate s!ien!e) %hile the "ther e+ins %ith the risf P"liti!al E!"n"&$' "r the s!ien!e "f E!"n"&i!s. The ,"int "f -ie% t" e taen in the f"ll"%in+ ,a+es is the r"ader "ne..

The s#*e!t' the Hist"r$ "f E!"n"&i! Th"#+ht' &a$ e defined as a !riti!al a!!"#nt "f the de-el",&ent "f e!"n"&i! ideas'ear!hin+ int" their "ri+ins' interrelati"ns' and &anifestati"ns.

The !l"se relati"nshi, et%een e!"n"&i! hist"r$ and the hist"r$ "f e!"n"&i! th"#+ht is at "n!e t" e e&,hasi0ed.That &en7s th"#+hts de,end lar+el$ #,"n their s#rr"#ndin+s' n" "ne d"#ts. And s" it is that e!"n"&i! ideas' t" sa$ n"thin+$ste&s "f e!"n"&i!s' are !"l"red and li&ited / deter&ined s"&eti&es / $ ind#strial en-ir"n&ent. Th#s the a+ri!#lt#ral

S"#th elie-es in free trade) as &an#fa!t#res de-el",' that elief %eaens. 1#t this intera!ti"n is re!i,r"!al) f"r ",ini"ns anhe"ries "n!e f"r&ed are tena!i"#sl$ adhered t"' and &a$ e!"&e a deter&inin+ ele&ent in their t#rn. 8itness the infl#en!etraditi"nal ,"li!ies4 in sha,in+ the ,latf"r&s and ad&inistrati"n "f7 A&eri!an ,"liti!al ,arties. The indi-id#alis& "f theaisser5faire e!"n"&ists and states&en %as t" a +reat e2tent the res#lt "f ind#strial e-"l#ti"n) #t in its t#rn it e!a&e a"nditi"n rea!tin+ #,"n ind#str$.9 The hist"r$ "f e!"n"&i! th"#+ht' then' is an essential ,art "f +eneral hist"r$' "th2,lainin+ it and ein+ e2,lained $ it.

T"5da$ it is n"t s" ne!essar$ t" defend the st#d$ "f the Hist"r$ "f E!"n"&i! Th"#+ht as it "n!e %as. E-en n"%'h"%e-er' there are th"se %h" den$ the #sef#lness "f st#d$5

: Thr"#+h 8illia& Pitt ;see ,. <<=> and R"ert Peel' f"r e2a&,le' and the e!"n"&ists "f the d"&inant Fren!h s!h"

The f"r&er %ere a!ti-e in a,,l$in+ the hisser5faire d"!trine t" the !"& la%s) the latter did &#!h d#rin+ the nineteenth !ent#"th as +"-ern&ent "ffi!ials and %riters' t" rin+ int" ,ra!ti!e their ",ti&isti!' let5al"ne the"ries. Of !"#rse' Pitt 7s!!"&,lish&ents %ere -er$ li&ited.

in+ earlier e!"n"&i! th"#+ht. And' in an$ !ase' it %ill e "f -al#e t" state !learl$ the ad-anta+es t" e +ained fr"&#!h a st#d$ as the ,resent) f"r the state&ent &a$ &ae "ne7s readin+ &"re ,#r,"sef#l and s#++est ne% ,"ints "f -ie%.

First "f all' a !ertain #nit$ in e!"n"&i! th"#+ht is t" e ) e&,hasi0ed' a #nit$ %hi!h !"nne!ts #s %ith an!ient ti&esC"ntin#it$ in e-"l#ti"n has een denied'9 #t s#!h !"nti5 7 n#it$ !an e de&"nstrated. M#!h "f the diffi!#lt$ !"&es a"#thr"#+h an e2a++erati"n "f the ne+ati-e as,e!t "f the Middle A+es. 1#t s#!h an e2a++erati"n &isinter,rets the ,eri"d' f"r th

&edie-al al""fness "r (#ietis& i&,lied a ,"siti-e ,hil"s",h$ %hi!h has !"#nted in the hist"r$ "f th"#+ht in a ,"siti-e %a$.



N"r %as this ,eri"d a !"&,lete rea) in it %ere n"#rished Gree ideas !"n!ernin+ &"ne$ and interest' !"&&#nis&' and "th!"n"&i! &atters'/ n"t t" &enti"n the 4 nat#re ,hil"s",h$'4 / %hi!h %ere handed d"%n t" &"dern thiners. The d"!trinehe first e!"n"&ists !"n!ernin+ the i&,"rtan!e "f land and the enefi!ent la% "f nat#re %ere dra%n thr"#+h a !"ntin#"#s linf thiners fr"& 5Plat" and Arist"tle. As %ill a,,ear f#rther "n' &"re"-er' n"t "nl$ d" Oriental ideas inherited fr"& a still &e&"te ,ast !"&e d"%n t" #s thr"#+h Gree!e' #t thr"#+h Christianit$ the$ ha-e e2erted a !"ntin#"#s th"#+h !han+in+ effe

#,"n the e!"n"&i! th"#+hts "f &en. It is l"+i!al' then' t" e+in a hist"r$ lie the ,resent %ith s"&e a!!"#nt "f an!ient th"#+

A+ain' there is +reat -al#e in #nderstandin+ the "ri+in "f a s!ien!e' es,e!iall$ "ne lie e!"n"&i!s' %h"se s!",e andnat#re ha-e een #nder dis,#te. F"r "ne thin+' it +i-es a tr#er !"n!e,t "f the relati"nshi, a&"n+ s!ien!es' an i&,"rtant &att"r the thiner l""in+ t"%ard the tr#e a,,li!ati"n "f e!"n"&i! ,rin!i,les. Thr"#+h a st#d$ "f the hist"r$ "f e!"n"&i! th"#+

&a$ e +ained a !lear reali0ati"n "f the ,"siti"n "f E!"n"&i!s as a distin!t &e&er "f a +r"#, "f s"!ial s!ien!es6 Ethi!s'#ris,r#den!e' Phil"s",h$' S"!i"l5

@ E.+.' A. On!en' Ges!hi!hte der Nati"nal O"n"&ie' ,,. B f."+$' and "thers. 8hile it is ,r",erl$ !"n!erned %ith &an7s eff"rts t" +et a li-in+ in ass"!iati"n %ith his fell"%s' as

"!ial s!ien!e it is related t" "ther s!ien!es %hi!h deal %ith h#&an %ants "r affe!t the %a$ &en +et their li-in+. T" ill#stratene s#!h relati"nshi,' it &a$ e "ser-ed that t" the e2tent that %hat is #ne!"n"&i!al e!"&es' "n that a!55!"#nt' 4 %r"n+4

E!"n"&i!s is dire!tl$ related t" Ethi!s. E!"n"&ists' as ,ra!ti!al &en' &#st reali0e that the e!"n"&i! san!ti"n !"",erates "r"nfli!ts %ith the san!ti"ns "f "ther s"!ial s!ien!es' a fa!t %hi!h li&its its a,,li!ati"n. There is' theref"re' n" etter %a$ f"rt#dent +r"#nded in e!"n"&i!s t" find hi&self in the %ider field "f s"!ial s!ien!e than t". st#d$ the hist"r$ "f e!"n"&i!

h"#+ht. F"r in the e+innin+ s"!ial s!ien!es %ere "ne. P#rel$ e!"n"&i! ideas &a$ e a,,arent t" #s' #t in earlier ti&es' th&en %h" had the& did n"t differentiate. S#!h ha-in+ een the r"ad e+innin+' "ne &a$ %"nder if s"&e !$!le &a$ n"t e"&,leted %hen a s!ientifi! s$nthesis %ill a+ain rin+ t"+ether feelin+s' desires' ,r",ert$' fa&il$' state' *#sti!e' la%' ha,,innd "ther !"n!e,ts' "n a rati"nall$ #nified asis "f -al#ati"n.

Then' there is the -al#e "f a r"ad asis f"r !"&,aris"n %hi!h s#!h a st#d$ rin+s. Standin+ at the hi+hest ,"int $eea!hed' after !ent#ries "f e!"n"&i! th"#+ht' and l""in+ a! "-er the ,ath "f tr#th' stre%n %ith falla!ies and tr#is&s th"#t e' the st#dent feels his *#d+&ent r"adened' and a %ell5alan!ed and reas"nale !"nser-atis&' "r a %ise ,r"+ressi-is&' &ill his &ind. He is n"t s" a,t t" e s%e,t "ff his feet $ fads' n"r t" e &ade !"nf#sed and h",eless %hen !"ntr"-ersies ra+er"#nd hi&) f"r he n"%s that fads and !"ntr"-ersies ha-e !"&e and +"ne' %hile a s#stantial "d$ "f e!"n"&i! tr#th has " estalished that ,r"+ress &#st !"&e' n"t thr"#+h re-"l#ti"n' #t thr"#+h e-"l#ti"n.

The !"n!e,t "f relati-it$' the ,"int "f -ie% a!!"rdin+ t" 9 %hi!h ideas are n"t *#d+ed %ith d"+&ati! as"l#tis&' #re !riti!all$ e2a&ined in the li+ht "f the ti&es and ,la!es in

THE NATURE OF ECONOMIC THOUGHT %hi!h the$ %ere f"r&ed' e!"&es -er$ real. 1ef"re %e !an !all &edie-al thiners' l"!heads' "n the +r"#nd that t

"nde&ned interest5tain+' %e &#st e2a&ine their ,re&ises and the !ir!#&stan!es "f th"se ,re&ises. Men ein+' in ,artreat#res "f their en-ir"n&ent' their th"#+ht is "ften +#ided and li&ited $ the !han+in+ ,hen"&ena %ith %hi!h the$ are"nfr"nted.

1a! "f the different s$ste&s "f e!"n"&i! th"#+ht' there lie &"re f#nda&ental fa!t"rs %hi!h !"nditi"n the& and'deter&ine their nat#re and f"r&. The &"re i&&ediate "f these fa!t"rs are ;I> the #nderl$in+ ,hil"s",h$ and ;II> the &eth"d he thiner' thr"#+h "th "f %hi!h the e!"n"&i! life %"rs. The ,hil"s",h$ and the &eth"d f"r& ,art "f a ,re&ise "f the$ll"+is&' as it %ere. One e!"n"&ist rea!hes "ne !"n!l#si"n' an"ther a different "ne. 8e sa$ their ,"ints "f -ie% %ere

different. 1#t ea!h ,"int "f -ie% is &ade #, "f a !ertain asal ,hil"s",h$ "f life and a !l"sel$ allied tenden!$ t" a !ertain&eth"d"l"+$ in th"#+ht. N"t the least ser-i!e "f a hist"r$ "f e!"n"&i! th"#+ht is the li+ht it thr"%s #,"n this (#esti"n "f ,"

f -ie%' and it is desirale here t" set!h the hist"ri!al "#tlines "f ,hil"s",h$ and &eth"d as a a!+r"#nd f"r the &"re

detailed hist"r$ "f stri!tl$ e!"n"&i! th"#+ht %hi!h is t" f"ll"%.I. Phil"s",h$. / Sin!e the fifth !ent#r$ ef"re Christ' t%" +reat tenden!ies in ,hil"s",h$ ha-e e-er ",,"sed and

ea!ted #,"n "ne an"ther. These tenden!ies %e &a$ !all res,e!ti-el$ Idealis& and Materialis&' #sin+ the ter&s in a r"ad+eneral seilse' and %ith f#ll re!"+niti"n "f the fa!t that the "ld &eta,h$si!al ,r"le& that the$ f"r&erl$ den"ted has e!"&&"re !"&,li!ated than %as the !ase %hen the$ %ere first #sed. As here #sed' the$ %ill e taen t" !"-er tenden!ies in th"#+he tenden!$ &anifestin+ itself ,erha,s in &eta,h$si!s' ,erha,s in e,iste&"l"+$' ,erha,s in ethi!s "r s"!ial s!ien!e.

In a stri!t &eta,h$si!al sense. Idealis& &eans the elief that &atter has n" inde,endent realit$' #t is si&,l$ aresentati"n "f the &ind. The elief is rarel$ if e-er f"#nd



in s" stri!t a sense' h"%e-er' s"&e r""& ein+ +enerall$ all"%ed f"r a de+ree "f inde,endent e2isten!e "f &atter. Ts d#alis&) #t if a !a,a!it$ t" f"r& *#d+&ents n"t de,endent #,"n the &aterial is re!"+ni0ed' and the i&,"rtan!e "f thee!#liar !"nstit#ti"n "f "#r ,er!e,ti-e fa!#lties is e&,hasi0ed' it &a$ e said that the tenden!$ is t"%ard idealis&. In thisense' "th Plat" and ant &a$ e !alled idealists6 Plat"' in that he all"%s ,hen"&ena t" e as"red in ideas that are realitind elie-es in the realit$ "f s#!h astra!t thin+s as 4 +""dness 4) ant' in that he held that the &ind !"#ld ,r"d#!e +en#ine

n"%led+e fr"& its "%n res"#r!es. In fa!t' "ne "f the &"st &ared e-iden!es "f the tenden!$ here !alled idealis&' is f"#nd

he the"r$ "f "ri+in "f ideas' "r *#d+&ents' the idealisti! tenden!$ ein+ indi!ated %hen a thiner h"lds that these &a$ arisende,endentl$ "f sense data. This %"#ld see& t" i&,l$ a elief that the tr#e nat#re "f thin+s is intelle!t#al n"t sens#"#s. Theh"r"#+h+"in+ idealist' t""' &#st ass#&e the e2isten!e "f s"&e di-ine &ind "r "f a s#,re&e %"rld)9#r,"se t" e2,lain thee+#larities "f ,hen"&ena) f"r %ith"#t s"&e s#!h s$ste& "f deter&inati"n a!tin+ as a !""rdinatin+ f"r!e' all !"ntin#it$ ande+#larit$ %"#ld e de,endent #,"n indi-id#al h#&an &inds. It f"ll"%s that idealists attri#te an inde,endent f"r!e t" ideas#d+&ents. The$ re+ard &an' n"t as a !reat#re "f &aterial en-ir"n&ent' #t as a &"re "r less inde,endent f"r!e' !a,ale "fda,tin+ "r !"n(#erin+ 4 nat#re.4 A!!"rdin+l$' the$ e&,hasi0e #ni"ns "f &an in s"!iet$ as ein+ &anifestati"ns "f !"&&#nf ideas and the &"st effe!ti-e %a$ "f assertin+ the ,"%er "f ideals) and the$ readil$ e!"&e %hat &a$ e !alled s"!ietists /" ad",t a ter& that %ill !"-er the elief in the ,"ten!$ "f s"!ial a!ti-it$ and instit#ti"ns. F"r reas"ns that %ill e!"&e !lear

%hen &aterialis& is !"nsidered' idealists tend t" ",,"se e+"is& and t" fa-"r its re,ressi"n $ the State as re,resentin+ s"!iThis tenden!$ the$ &a$ !arr$ s" far as t" re+ard s"!iet$ as a tr#e "r+anis&' in %hi!h the indi-id#al &ind is s#"rdinated t" "!ial &ind. It see&s t" f"l5

THE NATURE OF ECONOMIC THOUGHT l"% fr"& these tenden!ies that idealists %ill l"+i!all$ defend s"!ial instit#ti"ns' and !"nse(#entl$ the$ are essential

"nser-ati-e. Of !"#rse' t" th"se %h" h"ld t" the ",,"site ,hil"s",hi!al tenden!$' the$ %ill see& t" e the radi!als) #t in aeal sense it is th"se %h" elie-e in n" s#,re&e rati"nal ,#r,"se "r di-ine %ill' and %h" re+ard s"!iet$ as a shiftin+ e2,edieased #,"n a &e!hani!al indi-id#alis&' %h" are the dist#rers. A ,ra!ti!al e2,ressi"n "f all this is the fa!t that idealisti!hiners stress &"ralit$ and d#t$' and fre(#entl$ set the +""d a"-e the 4nat#ral.4 The$ are i a,t t" a,,eal t" astra!t s,iri"nsiderati"ns. Indeed' ethi!al idealis&' %hi!h has een "ne "f the ,hases "f idealis& &"st infl#ential in e!"n"&i! th"#+hl"sel$ related t" the &"re &eta,h$si!al idealis& des!ried a"-e) ant7s ethi!s %as idealisti!' and the +"lden r#le %as ase

#,"n the ass#&,ti"n that the idea &a$ e inde,endent "f the &aterial en-ir"n&ent. The idea "f the +"lden r#le is that the &s an inde,endent fa!t"r' and %ith a re!"+niti"n "f the ri+hts "f "ther &inds ha-in+ "ther ideas' !an de!ide %hat "#+ht t" e

d"ne' in s,ite "f &aterial li&itati"ns and !lashes "f interest. 1elie-in+ in innate ideas and tenden!ies' and their ,"ten!$'dealists +enerall$ re+ard indi-id#al &en as ein+ inherentl$ different in !a,a!ities and as earin+ s"&e &eas#re "f real

es,"nsiilit$ f"r their "%n destinies. 8ith res,"nsiilit$ +"es ,"%er' !a,ale "f &#lti,li!ati"n $ s"!ial !"",erati"n' t" &aheir "%n destinies 4 $ tain+ th"#+ht.4 In a %"rd' idealis& stands f"r the inde,endent i&,"rtan!e "f &ind and h#&annstit#ti"ns as ",,"sed t" the &aterial en-ir"n&ent. In the rans "f idealists &a$ e ,la!ed &"st Oriental thiners) Plat" andhe St"i!s' "f anti(#it$) the Ne"5,lat"nists' St. A#+#stine' Th"&as A(#inas' and H#+" Gr"ti#s' in the Middle A+es) the

En+lish&an' 1erele$' the Ger&an ,hil"s",hers' Lienit0' ant' S!hellin+ and He+el' and the Fren!h thiner' C"&te' in &"&"de& ti&es.:

Nat#rall$ there are &an$ ,"ints "f differen!e a&"n+ idealists' as s"&e tend t"%ard d#alis& ;Plat"> %hile "thers t"%ard &"nis& ;1erele$>) s"&e t"%ard D"ttids& ;ant and C"&te>' "thers n"t.

lO HISTORY OF ECONOMIC THOUGHTThe &aterialisti! tenden!$' "n the "ther hand' n"t "nl$ re+ards &atter as e2istin+ inde,endentl$ "f &ind' #t &a$ +

" far as t" den$ the e2isten!e "f an$thin+ #t &atter. If &aterialists d" n"t +" s" far' the$ at least re+ard ,h$si!al fa!ts asdeter&inin+ &ental ,r"!esses. This tenden!$ is l"+i!all$ ass"!iated %ith the the"r$ that ideas !"&e int" e2isten!e "nl$ thr"

he senses as sti&#lated $ &atter. Instead "f ass#&in+ a s#,re&e &ind %h"se rati"nal ,#r,"se d"&inates the %"rld' the$ h" a &e!hani!al !"n!e,t "f nat#re and re+ard the %"rld as r#led $ la%s "f &atter. Nat#rall$' theref"re' &aterialists %ill tene+ard &an as d"&inated $ his nat#ral en-ir"n&ent' and %e !an see the reas"n %h$ th"se %h" h"ld this ,hil"s",h$ are

+enerall$ indi-id#alisti! 9 and laisser5faire. If &atter al"ne !"#nts' then it is eas$ / t" sa$ the least / t" elie-e that all &eein+ &ade "f the sa&e !la$' are nat#rall$ e(#al) and that &en' ein+ deter&ined $ sensati"ns and a!ted #,"n $ the sa&e"r!es' %ill tend t" a!t in the sa&e %a$. The state itself' far fr"& ein+ the e2,ressi"n "f !"&&"n ideas' is a &ere a++re+ati"f at"&i! indi-id#als &ade ne!essar$ $ the &aterial nat#re "f &an ;H"es>. Man !ann"t ,res#&e t" di!tate ter&s t" nat#rheref"re' laisse0 faire In an$ e-ent' the f"r!es "f nat#re %ill at last ha-e their %a$. Let thin+s al"ne' that the$ &a$ freel$ r#nd that the nat#ral "rder &a$ estalish itself. Th#s' the !r$ "ften is6 4 D"%n %ith h#&an instit#ti"ns 4 Under the s%a$ "f



&aterialis&' indi-id#alis& e!a&e an effe!ti-e fa!t"r in ,"liti!al and e!"n"&i! th"#+ht t"%ard the end "f the Middle A+esThe th"#+ht "f its adherents has een the fer&ent that has led t" the diss"l#ti"n "f inherited reli+i"#s and &"ral s$ste&s andhe !astin+ "ff "f "#tli-ed !#lt#res.7 It is eas$ t" #nderstand %h$ &aterialis& %"#ld re,la!e !"n!e,ts "f ideal and s,irit#al +nd "f astra!t d#t$ $ a,,eals t" the 4nat#ral'7: tendin+ t" &ean $ 4 nat#ral4 %hat see&s t" e &at!5

Of. 1"nar' FSi"s"fii$ and P"liHeafE!n&$' !ha,ters "n E,i!#reans: H"s. L"!e' et!. 1#t. "n the "ther h&an$ ,hases "f s"das& are ased #,"n a d&ir ,il"fl",h$. / th"#+h ,erha,s ill"+i !a ll $ t".

S9&"Jer' Gn&iHfS i9 Mf&&n& K"is%irlse9tan' ,. .riall$ ne!essar$. The$ ha-e th"#+ht &"st "f the i&&ediate &aterial res#lt' !allin+ it #tilit$' and the +reatest &ateria

+""d f"r the +reatest n#&er "f at"&i! and nat#re5d"&inated indi-id#als' has een their +"al.Nat#rall$' &aterialis& finds e2,ressi"n in ethi!s. N" &aterialist !"#ld l"+i!all$ e !"ntent %ith the +"lden r#le' as

a#+ht $ Christ' as the asis f"r an ethi!al s$ste&. 5Rather %e find the th"r"#+h+"in+ &aterialist f"r&#latin+ his d"!trine "i+ht and %r"n+ %ith an e$e t" the ,r"le&s "f ad*#st&ent t" &aterial en-ir"n&ent' ad-"!atin+ that &en d" #nt" "ne an"the#!h thin+s as %ill enale the& t" s#r-i-e' and fiiin s#r-i-al the test "f ri+ht.

The leaders in this s!h""l "f ,hil"s",h$ ha-e een s#!h &en as the S",hists and E,i!#reans in anti(#it$) H"es'L"!e' and R"#ssea#' in earl$ &"dern ti&es) and the Fren!h En!$!l",edists and 1entha&' a little later. Arist"tle' in&aintainin+ that the sensile %"rld &#st f#rnish the &aterial f"r th"#+ht and that ideas !"&e "nl$ thr"#+h the senses) and ?St#art Mill' in his earlier th"#+ht' &a$ als" e said t" sh"% a &aterialisti! tenden!$.

One interestin+ i&,li!ati"n "f the ,re!edin+ ,hil"s",hi!al ,"ints "f -ie% is the attit#de t"%ard the f#t#re and ,r"+r

dealis& tends t"%ard ",ti&is&) &aterialis& tends t"%ard ,essi&is&. These tenden!ies are e2e&,lified in the %ell n"%nessi&isti! strain that is f"#nd in 1ritish &aterialis& and the e(#all$ a,,arent ",ti&is& "f !"ntinental %riters ha-in+ idealieanin+s / "r' at least' ein+ f"es "f &aterialis&. The l"+i!al !"nne!ti"n et%een these t%" sets "f ,hil"s",hi!al tenden!ie" e f"#nd in the fa!t that "ne7s h",ef#lness "f ,r"+ress and ref"r& &#st e affe!ted $ "ne7s elief in the ,"%er "f &an t"han+e !"nditi"ns and dire!t de-el",&ent. T" e s#re' "ne &a$ rel$ #,"n the lind %"rin+ "f nat#ral sele!ti"n t" rin+ a"f#t#re !"nditi"n %hi!h "ne &a$ 4h",e4 %ill e etter than the ,resent. 1#t' #nless "ne ass#&es s"&e ideal and the e2istenf innate tenden!ies in &an t"%ard this ideal' / %hi!h &eans idealis&' / "ne7s h",e &#st e relati-el$ faint and

!"nditi"nal and !"#ld hardl$ e !alled ",ti&is&) and the ,resent and the i&&ediate f#t#re &a$ see& harsh and"riddin+. Certainl$ thiners' %hether e!"n"&ists "r n"t' %h" ass#&e that the h#&an &ind !an rise a"-e the f"r!es "f

&aterial en-ir"n&ent and %h" elie-e in the effe!ti-eness "f &an5&ade instit#ti"ns' !an !"nsistentl$ ass#&e an attit#de t"%he f#t#re that %"#ld ill efit th"se "f a &"re &aterialisti! tenden!$.

Cl"sel$ related t" the !"ntrast et%een ,essi&is& and ",ti&is&' is that et%een the a!!e,tan!e and n"n5a!!e,tan!

he d"!trine "f the indefinite e2,ansiilit$ "f h#&an %ants' "r "f the indefinite s#& "f h#&an satisfa!ti"ns. Th"#+h fe%!"n"&ists ha-e set f"rth s#!h f#nda&ental ,re&ises as this' still it is a,,arent that the Classi!al e!"n"&ists ass#&ed the tr#f this d"!trine and that it / al"n+ %ith the ,rin!i,le "f ,",#lati"n / %as essentiall$ !"nne!ted %ith their ,essi&is& ) f"rther%ise' in the fa!e "f di&inishin+ ret#rns' it %"#ld n"t e ne!essar$ t" ,#sh ,r"d#!ti"n t" s#!h len+ths as the$"nte&,lated. The$ !"#ld ass#&e that e2!han+e -al#e %"#ld al%a$s &eas#re #tilit$ and e the !riteri"n "f %ealth' "nl$ "n

d"!trine %hi!h %"#ld ins#re that the intensit$ "f desire f"r +""ds %"#ld e &aintained at a ,"int !"nsideral$ a"-e 0er" ) fe$"nd a !ertain ,"int' the t"tal s#,,l$ "f an$ +""d %ill de!rease in e2!han+e -al#e %hile in!reasin+ in #tilit$' and if desire

%ere satisfied' +""ds' h"%e-er #sef#l' %"#ld n"t e %ealth. The &aterialisti! !ast "f this d"!trine is deri-ed fr"& thede,enden!e "f &ind #,"n &atter %hi!h it ass#&es6 H#&an %ants and satisfa!ti"ns are th"#+ht "f as ha-in+ a 4 nat#ral 4enden!$ #n!"ntr"lled $ *#d+&ents) and these #nli&ited h#&an %ants !lash %ith a li&ited &aterial en-ir"n&ent' and &#st

$ield.Idealists' "n the "ther hand' !"n!ei-e "f *#d+&ents in !"ntr"l "f ,h$si!al fa!ts / "r at least inde,endent "f the& /

nd a!!"rdin+l$ d" n"t a!!e,t the ne!essit$ "f #nli&ited %ants. In fa!t' the$ are ,r"ne t" ha-e s"&e ideal "f %hat is 4 +""d f&an "r is 4 needed 4 $ hi& %ith the !"r"l5lar$ that e$"nd this he need n"t +" in his !"ns#&,ti"n. T"

THE NATURE OF ECONOMIC THOUGHT &aintain this ideal the inter-enti"n "f the State &a$ e dee&ed desirale. This is ill#strated $ the th"#+ht "f

S"!ialists and "f Sis&"ndi.9 Als" it is &anifest in the %"r "f Malth#s' %h" f"#nd diffi!#lt$ in re!"n!ilin+ a &aterialisti! laf ,",#lati"n %ith an idealisti! 4 &"ral restraint4 #,"n ,r"!reati"n.



An interestin+ !"r"llar$ is the attit#de t"%ard "-er,r"d#!ti"n6 &aterialists' elie-in+ in #nli&ited e2,ansi"n "f %anr+#e that "-er,r"d#!ti"n is i&,"ssile. The idealisti! tenden!$ is t" set s"&e ideal li&it t" !"ns#&,ti"n and t" !all an$thin2!eedin+ that li&it "-er!"ns#&,ti"n. Of this' "ne !an find +""d ill#strati"ns in the %ritin+s "f the Fren!h e!"n"&ist'

Sis&"ndi.Kal#e ein+ the heart "f E!"n"&i!s' the e!"n"&ist7s ,hil"s",h$ is "#nd t" sha,e his -al#e the"r$. The a+el"n+'

#nda&ental antithesis et%een idealisti! and &aterialisti! tenden!ies in th"#+ht finds n" !learer e2,ressi"n than an

!"n"&ist7s state&ent that -al#e &a$ e defined as the &eas#re "f nat#re7s ,"%er "-er &an) #tilit$ as the &eas#re "f &an7s"%er "-er nat#re.9 This thiner &eans that -al#e in e2!han+e is a f#n!ti"n "f the resistan!e "ffered $ ,h$si!al fa!ts t" the

#tili0ati"n "f &atter $ &an. That he is hi+hl$ idealisti! is a,,arent fr"& the fa!t that he re+ards &an as 7: a!(#irin+ d"&ini"-er nat#re.4 He elie-es that %ealth !"nsists in s#!h d"&ini"n and that it in!reases %ith a#ndan!e. C"nsistent idealists ar#*e!ti-e in their the"ries "f -al#e' treatin+ -al#es as &en7s esti&ates "f the i&,"rtan!e "f thin+s f"r h#&an ,#r,"ses. The

%riter *#st &enti"ned refers t" 4 the !a#se "f the e2isten!e in the h#&an &ind "f the idea "f -al#e' %hi!h is si&,l$ "#r esti&f the resistan!e t" e "-er!"&e ef"re %e !an enter #,"n the ,"ssessi"n "f the thin+ desired.4 Materialists' "n the !"ntrar$end t" f"r&#late their definiti"ns "f -al#e in "*e!ti-e ter&s' &ain+ -al#e a (#alit$ "f &aterial thin+s and definin+ it as"%er t" e2!han+e "r (#antit$ "f +""ds !"&&anded in e2!han+e. 8e find !"rres,"ndin+ differen!es

:.Se! el"%' ,,. 5. : See el"%' ,. <=.in the"ries !"n!ernin+ the deter&inati"n and f#n!ti"n "f e!"n"&i! -al#e. Idealists re+ard !"ns#&,ti"n as a &eans'

&ain+ %ants / "r' as the$ are %"nt t" sa$ 4 needs 4 / a f#n!ti"n "f a!ti-it$. De&and de,ends #,"n states "f &ind and

#d+&ents) n"r are these &ental fa!ts &ere refle2es "f &aterial ne!essit$. Pr"d#!ti"n' t""' is desirale a!ti-it$' and is t" ee+arded as an end $ &an. 1#t !"nsistent &aterialists !"nsider !"ns#&,ti"n as the end "f e!"n"&i! a!ti-it$' and #tilit$ as t

+"al ;#tilitarianis&>. A!!"rdin+l$' de&and de,ends #,"n &aterial thin+s' and arises in states "f !"ns!i"#sness that are ind#!$ sensati"ns that are !a#sed $ ,h$si!al fa!ts. Nat#rall$ &aterialists are &"st at h"&e in dis!#ssin+ de&and as li&ited t" th

needs "f the &aterial "d$ / f""d' !l"thes' and shelter. Pr"d#!ti"n is re+arded as a &eans t" the end' !"ns#&,ti"n) and. !"ts salient !hara!teristi!. And the si+nifi!an!e "f !"st is that it &eas#res the de,enden!e "f &an #,"n the &aterial) %heref"r

-al#e is deter&ined $ !"st' and &an7s a!ti-i9 ties are deter&ined $ -al#es' "ne &#st !"n!l#de that the &aterial is d"&inanIt is all t"" !"&&"n f"r e!"n"&ists t" e in!"nsistent' and "ne need n"t e s#r,rised t" dis!"-er -i!i"#s &i2t#res "

dealis& and &aterialis&. Th#s %e shall find "ne s!h""l reas"nin+ as th"#+h &aterial +""ds ;#tilities>' as !a#ses "f sensati"deter&ine -al#es and at the sa&e ti&e ass#&in+ that %"rth *#d+&ents ;s#*e!ti-e -al#es> san!ti"n !"sts' f. Q.' the &inddeter&ines a!ti"n %ith"#t li&itati"n $ !"st. And' a+ain' %e shall find an"ther s!h""l ar+#in+ that &aterial f"r!es arene-ital$ dri-in+ #s t" a !ata!l$s& fr"& %hi!h %e %ill e res!#ed $ ad",tin+ a f"r& "f s"!ial "r+ani0ati"n n"%n t" the

!h""l IIt is e-en ,"ssile that' th"#+h s"&e "f the ,"ints taen as indi!es "f ,hil"s",hi!al tenden!$ are &"re !l"sel$

"nne!ted %ith the tenden!$ indi!ated than "thers' a +i-en thiner &i+ht h"ld -ie%s that "rdinaril$ !hara!teri0e ",,"sin+enden!ies %ith"#t in!"nsisten!$6 f"r e2a&,le' &i+ht n"t "ne e a ,essi&ist and als" elie-e in the nat#ral ine(#al5

it$ "f &en3 There is als" a sense in %hi!h 4e2tre&es &eet.4 1#t it is a fa!t that the t%" +r"#,s "f ideas heredistin+#ished ha-e een ass"!iated se,aratel$ and that' in their "rdinar$ &eanin+' and !"nsiderin+ their earin+ #,"n the

resent and f#t#re' the$ are l"+i!all$ s" ass"!iated.A+ain' "ne &a$ %ell (#esti"n %hether the ,arti!#lar tenden!ies t"%ard ",ti&is& and ,essi&is&' !"st "r #tilit$ the

f -al#e' and the lie' are after all !a#sed $ the the"rist7s elief in an$ &eta,h$si!al d"!trines. Certainl$ this (#esti"n %illften e ans%ered in the ne+ati-e if a !"ns!i"#s adheren!e t" the s!h""l' a!!"&,anied $ a reali0ati"n "f the f#ll si+nifi!anf its d"!trines' is &eant. 1#t that is n"t the ,"int. The &aterialisti! tenden!$ &a$ e #nre!"+ni0ed $ the %riter in (#esti"nnd e inferred $ the !riti! "nl$ as a res#lt "f sear!hin+ anal$sis. S#rel$ the tenden!ies a"-e distin+#ished &#st affe!t all

h"#+ht !"n!ernin+ h#&an a!ti-it$' f"r s#!h a!ti-it$ is a f#n!ti"n "f *#d+&ent and ,h$si!al fa!t' &ind and &atter' &an andn-ir"n&ent )9 and a &an7s th"#+ht &a$ e !lassed as %ell "n the asis "f his !"n!l#si"ns !"n!ernin+ e!"n"&i! -al#e as"n!ernin+ an$ -al#es.

It &#st n"t e th"#+ht that &aterialis& and idealis& are #nrelated and inde,endent "f "ne an"ther' n"r that either !e taen al"ne as !"ntainin+ the tr#th. These t%" ,hil"s",hi!al tenden!ies re,resent t%" sides "f h#&an s"!ial life' and the$"nstantl$ rea!t #,"n "ne an"ther. The$ are indi!ati-e "f %hat has al%a$s een the &"st f#nda&ental !"ntrast in e!"n"&i!h"#+ht' that et%een 4 &an'4 re+arded as an inde,endent ele&ent se,arate fr"& land' and 4 nat#re.4 And' lie &an and 4 la

&ind and &atter &a$ e tr#l$ re+arded as interrelated and rea!tin+ #,"n "ne an"ther. Th#s' %hen %e sa$ that idealis& is



elated t" the instit#ti"n' !"nsidered as e&"d$in+ a h#&an ideal' and is !"nser-ati-e' %e &#st re&e&er that reas"naledealists d" n"t #,h"ld the letter' #t the s,irit "f the instit#ti"n) and

9 This is tr#e e-en if tese d#alit"is e re+arded as #nreal' and the t%" &e&ers asiei?Iil9"iie.th#s' #nder !han+in+ !"nditi"ns' &aterial fa!t"rs enter / thr"#+h the d""r "f realis& / "r the instit#ti"n l"ses its

ffi!ien!$. The "#tside is let in. It &#st e let in t" ,reser-e the instit#ti"n. On the "ther hand' &aterialis&' in ",,"sin+nstit#ti"ns and den$in+ &an7s ,"%er t" di!tate ter&s t" nat#re' &#st n"t e th"#+ht "f as &erel$ ne+ati-e and #nrelated. Th

ne+ati-e is al%a$s related t" the ,"siti-e. Indi-id#alis& d"es n"t ne!essaril$ &ean n"n5"r+ani0ati"n. In their relati"n t" "nen"ther' the t%" ,hil"s",hies are anal"+"#s t" &an and 4 nat#re'4 heredit$ and en-ir"n&ent) and ea!h rea!ts #,"n the "ther si&ilar fashi"n.

In !riti!is& "f the t%" ,hil"s",hi!al tenden!ies' taen se,aratel$' it &a$ e said that neither s"l-es the ,r"le& "f elati"n et%een &ind and &atter' &an and ,h$si!al en-ir"n&ent) f"r t" den$ the inde,endent e2isten!e "f the "ne "r the "ths n" ans%er. M"re ,arti!#larl$' the &aterialist' as a res#lt "f his atte&,t t" red#!e e-er$thin+ t" ter&s "f &atter "r ,h$si!ala!t' tends t" tae t"" narr"% a -ie% "f &ental and &"ral f"r!es' and the initiati-e and ,"%er "f &an7s &ind) %hile idealists

#nderesti&ate the i&,"rtan!e "f ,h$si!al fa!ts as li&itin+ and dire!tin+ the a!ts "f the &ind. The f"r&er are ,r"ne t" "-er-aeas"n re+arded as a s"rt "f &e!hani!al !"&inati"n "f sensati"ns ased "n ,h$si!al fa!ts) %hile the latter are e(#all$ ,r"neet #, ideal ,"st#lates %hi!h r#n !"#nter t" e2,erien!e. Of s,e!ial interest t" st#dents "f s"!ial s!ien!e are the !riti!is&s an false n"ti"ns "f s"!iet$ and the relati"n et%een s"!iet$ and indi-id#als. On this s!"re !"nsistent &aterialists la$ the&se,en t" the !har+e "f #nder-al#in+ the f"r!e "f s"!iet$' an attit#de l"+i!all$ ass"!iated %ith a diselief in the ,"ten!$ "f s"!

nstit#ti"ns. C"nse(#entl$ their infl#en!e ",erates #nd#l$ t" restri!t the field "f !"lle!ti-e s"!ial a!ti"n. Idealists' "n the "thhand' +" t" the "ther e2tre&e. 1$ !"n!ei-in+ "f the indi-id#al ;his &ind> as s#"rdinate t" "ther indi-id#al and &ental and,irit#al f"r!es' the$ fre(#entl$ ar+#e as th"#+h the indi-id#al e2ists f"r the sae "f s"!iet$.

E-er$ thiner' e!"n"&ist "r n"t' &#st at s"&e ti&e "r "ther' ,#t (#esti"ns t" hi&self %hi!h a&"#nt t" asin+6 Are endin+ t"%ard idealis& "r t"%ard &aterialis& 3 8hat is the si+nifi!an!e "f $"#r ,"int "f -ie% as t" the relati"n' e2istin+ an"tential' et%een &ind and &atter' h#&an reas"n and ,h$si!al en-ir"n&ent3 Or' if the atte&,t is &ade t" attain the tr#est"int "f -ie% "f all $ rin+in+ t" a s$nthesis the ele&ents "f tr#th in idealis& and &aterialis&' the (#esti"n al%a$s re&ain

%here shall the line e dra%n3II. Meth"d. / 1r"adl$ s,eain+' the hist"r$ "f s!ien!e in +eneral re-eals t%" distin!t &eth"ds' t%" ,r"!esses $

%hi!h tr#th is s"#+ht. These are !"&&"nl$ !alled i nd#!t i-e and ded#!ti-e. There is a &eth"d %hi!h is neither ind#!ti-e n"ded#!ti-e in the te!hni!al sense "f the ter&s' and %hi!h &a$ e !alled the statisti!al &eth"d.9 This last' h"%e-er' is' in theinal anal$sis' a !"&inati"n "f the first t%". In fa!t' "ne !an s!ar!el$ f"ll"% either &eth"d t" the as"l#te e2!l#si"n "f the

ther' f"r the$ are !"&,le&entar$. Yet %ith s"&e e!"n"&ists' ded#!ti"n s" ,red"&inates that their &eth"d is !alled ded#!tnd -i!e -ersa. M"st thiners' thr"#+h s"&e nat#ral ent "f &ind' see& t" f"ll"% "ne &eth"d &"re readil$ than the "ther.

The ded#!ti-e' "r 4 is"latin+'4 &eth"d is that %hi!h %"rs fr"& the +eneral t" the ,arti!#lar $ &ental ,r"!esses "f@ S!liier+' Hand#! d. P"l. O.' 1and <' ,. <=' art. $ Rii&elin. Als"' On!en' Ges!te der Nati"nal

O"n"tnie' ,. ' distin+#ishes ;i> 4die e2a!te "der I9iil"s"i?iis!he' ;<> die hist"ris!he "der esser hist"ris!h5statistis!he' #ndndli!h ;> die hist"iis!h5,hil"s",his!he' 7%el!he einen s$nthetis!hen Chara!ter esit0t.74 J#!sna$' Ri!ard"' K"n Thiinen'e-"ns' et!.' ,#rs#ed the first) the Mer!antilists' M#Der' List' Hilderand' et!.' f"ll"%ed the se!"nd) Arist"tle' S&ith' Mar2'nd ant illi#tiate the last. Rii&elin in the ale dis!#sd"n "f this ,"int *#st referred t" ,i",eit$ distin+#ishes et%een thend#!ti-e and the statisti!al &eth"ds' "n the +r"#nd that the f"r&er deals %ith !lasses "r inds "f %hi!h "ne thin+ "r !ase !ae taen as t$,i!al and &ade the as f"r ind#!ti"n' %hereas in statisti!s as a &eth"d ,fanafities aire dealt %ith %hi!h ha-e"&e distin+#ishin+ !hara!ter in !"&&"n' #t &a$ differ &"re "r less as t" "ther feat#res. This &aes anal$sis ne!essar$. T

%e &a$ ",,"se the statisti!al &eth"d t" the ind#!ti-e "r t" the ded#!ti-e &eth"d taen aMie. It see&s h"%e-er' that the

differen!e lies in the fa!t that the statisti!al %:9:::9 !"&hines h"i' "ni$ th#s &ain+ a ,e!#liar &eth"d. Canal$sis. In its ,ra!ti!e' a n"%led+e "f the f"r!es "r !"nditi"ns affe!tin+ a ,r"le& is ass#&ed' and the res#lts are

nferred a!!"rdin+ t" !ertain l"+i!al ,rin!i,les) th"#+h' %hen &"st effe!ti-el$ #sed' "ser-ati"ns are &ade t" test the -aliditf the ass#&,ti"ns as t" f"r!es and !"nditi"ns and t" -erif$ the !"n!l#si"ns rea!hed. This &eth"d s"&eti&es leads a thiner"" %ithin hi&self f"r his ,re&ises and t" dra% #,"n the !"n!e,ts and *#d+&ents "f his &ind. S"&eti&es s#!h thiners

&aintain that s#ffi!ient ,re&ises !an e dra%n fr"& 4 !"&&"n e2,erien!e'4 "r 4 fa&iliar fa!ts'4 and then the$ are a,t t" de,#,"n astra!t' #n-erified 4nat#ral tenden!ies.4 Th#s Ri!hard 8hatel$' Ar!hish", "f D#lin' ar+#ed that P"liti!al E!"n"&$needed n" !"lle!ti"n "f f a!ts.9 And %hen' s"&e $ears a+"' an atte&,t %ai &ade t" "r+ani0e a s"!iet$ f"r the st#d$ "f!"n"&i! ,hen"&ena in an A&eri!an !it$' the "r+ani0er %as !"nstrained t" %rite' 4 The ",ini"n ,re-ails far t"" %idel$ that



"liti!al e!"n"&ists &#st e &ere d"!trinaires' and &#st !"ntend f"r s"&e set "f ",ini"ns and s"&e !"#rse "f ,"li!$. Criti!t#d$ "f ,hen"&ena is as #n,",#lar as free thinin+ reli+i"n.4 9

It is this e2tre&e t$,e "f ded#!ti-e &eth"d that +i-es rise t" %hat the Ger&an e!"n"&ist' nies' has !alled as"l#tif the"r$. G"d and the &ind are #n!han+eale' s"&eti&es r#ns the ar+#&ent' hen!e ded#!ti"ns dra%n fr"& the nat#re "f G"nd "f the &ind are "f the sa&e as"l#te !hara!ter. If dra%n $ !"rre!t ,r"!esses the$ are +""d f"r all ti&es ;,er,et#alis&> "r all ,la!es ;!"s&","litanis&>. 4P"liti!al e!"n"&$'4 said an En+lish e!"n"&ist "f a f"r&er +enerati"n'7 4el"n+s t" n" nat

t is "f n" !"#ntr$) it is f"#nded "n the attri#tes "f the h#&an &ind' and n" ,"%er !an !han+e it.4 And it %as@a si&ilar s,irhat led a &"re n"ted En+lish e!"n"&ist' T"rrens' t" state that the ,eri"d "f d"#t and !"ntr"-ers$ %as ,assin+ a%a$'

P"lUi!ai E!"n"&$' DC' ,,. 5B=. Pr"f. F"l%ell' ?"hns H",ins Uni-ersit$ St#dies' K"l. KI' ,. . :L"%e ;R"ert>' 4Re!ent Attad!s "n P"liti!al

E!"n"&$: Nineteenih CenH*i N"-e&er' .SO that %ithin a +enerati"n all &en &i+ht e e2,e!ted t" elie-e alie in e!"n"&i! the"r$.9Of !"#rse' s#!h !"n!l#si"ns are e2tre&e' and re,resent an a#se "f &eth"d' the tr"#le l$in+ in the "-er5astra!t

hara!ter "f the ,re&ises and the asen!e "f -erifi!ati"n "f res#lts) #t the$ ser-e t" ,"int.the less"n that ,#re ded#!ti"n is' !"n"&i!s at least' s" dan+er"#s that its e&,l"$&ent &a$ e re+arded %ith s"&ethin+ ain t" s#s,i!i"n. Striin+ instan!es ,,ear in the th"#+ht "f e!"n"&ists t" e treated in these ,a+es.

There ha-e een &an$ re-"lts a+ainst this &eth"d "f di"#+ht. S"!rates 9 and 1a!"n led s#!h re-"lts in their da$s.A"#t the &iddle "f the last !ent#r$' t""' there ar"se a -eritale ins#rre!ti"n led $ thiners "f the s"5!alled Hist"ri!al S!h"

These &en' &"st n#&er"#s in Ger&an$' st""d f"r the ind#!ti-e &eth"d' that is' the &eth"d that %"rs fr"& the ,arti!#lar t"he +eneral and leads a thiner t" l"" "#tside hi&self t" the e2ternal %"rld f"r fa!ts t" ser-e as the asis "f e&,iri!al la%s.

This &a$ e !alled the &eth"d "f "ser-ati"n. The Hist"ri!al S!h""l' as %ill e seen &"re in detail' denied that e!"n"&i!d"!trines' es,e!iall$ if l""in+ t"%ard a,,li!ati"n as ind#strial ,"li!ies' are +""d f"r all ti&es and all ,la!es. H#&an nat#retself' the$ #r+ed' is n"t #n!han+eale. The ass#&,ti"n "f ded#!ti-e e!"n"&ists 9that &en are +#ided in their e!"n"&i!!ti-ities $ self5interest' the$ ref#sed t" ad",t as a ,re&ise #ntil it had een estalished ind#!ti-el$ $ "ser-ati"n "f thehen"&ena "f a!t#al life and "f the &anifestati"ns "f h#&an &"ti-es. Als"' the$ insisted that s#!h !"n!l#si"ns as that

Essa$ "n Pr"d#!ti"n "f 8ealth' <.: T&e' S"!rates t"ld &an t" st#d$ hi&self. 1#t in his da$ that %as a ste, in the diie!tiaa "f the !"n!rete and ind#!ti

The a,,arat#s and &eth"d f"r the st#d$ "f nat#re %ere n"t de-el",ed' and the astra!t s,e!#lati"n "f his ti&e %as lar+el$"n!erned %ith the a!t#al ,h$si!al #ni-erse' et!. It %as in 1a!"n7s s,irit' then' that S"!rates #r+ed "ser-ati"n in st#d$ "f &nd#!ti"n %"rs "#t fr"& the "ser-atHi "i s,edai indi-id#al !ases t" the +eneral r#le "r 4 la%4 %hi!h e2fdains and %hidi

&a$ ser-e as a ads f"r ded#!ti"ns. S"!rates hi&self %as "th ded#!ti-e and ind#!ti-e. He "*e!ted &erel$ t" the e2!l#si-end astra!t #se "f ded#!5

free trade and di-isi"n "f la"r are ad-anta+e"#s "r that %a+es and interest tend t" e!"&e e(#ali0ed a&"n+ differend#stries' are (#esti"nale' and !an e estalished "nl$ $ the !"lle!ti"n "f &an$ ,arti!#lar !ases dra%n fr"& different ,land ti&es.

Here' t""' %e find e2tre&e t$,es'/t$,es %hi!h' instead "f e2!essi-e #se "f astra!ti"n' e!"&e l"st in !"n!rete !and e!"&e s" interested in -erifi!ati"n that the$ dis!"-er little "f ,rin!i,le. Th"#+h ser-in+ as a -al#ale !"rre!ti-e t" thestra!t d"+&atis& "f the Classi!al e!"n"&ists' the th"#+ht "f th"se e!"n"&ists %h" !"&e nearest t" #sin+ ,#re ind#!ti"n' ts arrenness "f +enerali0ati"n' sh"%s the dan+er "f a "ne5sided #se "f the &eth"d "f "ser-ati"n.

As %ill a,,ear f#rther "n' there has een &#!h deate' es,e!iall$ in Ger&an$' "-er the relati-e &erits "f the t%"&eth"ds) th"#+h fe%' if an$' n"% den$ that ea!h has its ,la!e. In fa!t' the dis,#tes see& +enerall$ t" ha-e een ased #,"ndifferen!es in *#d+&ent as t" the s!",e "r the !"&,leteness "f e!"n"&i!s. Th"se %riters %h" &ae e!"n"&i!s deal !hiefl$

%ith s#!h s#*e!ts as the"r$ "f -al#e and &"ne$ / es,e!iall$ if in!lined t" re+ard the s!ien!e as nearl$ !"&,lete / &aear+e #se "f ded#!ti"n. And ,r",erl$ s". In dealin+ %ith s#!h a (#esti"n as the in!iden!e "f ta2ati"n' f"r e2a&,le' "ser-ati"nd ind#!ti"n %"#ld' #ntil -er$ re!ent ti&es' at least' ha-e een relati-el$ ,"%erless ) and the sa&e &a$ e said "f the

deter&inati"n "f the 4 shares 4 in distri#ti"n. 8hen' h"%e-er' e!"n"&i!s has een re+arded as ha-in+ a -er$ r"ad field's,e!iall$ if in!l#din+ ,ra!ti!al ,"liti!al and ethi!al !"nsiderati"ns) "r %hen it is taen t" e an a,,lied s!ien!e' there is a,t e a feelin+ that astra!ti"n &#st lea-e "#t s" &#!h that it %ill e!"&e "-er5her"i!. It is (#ite tr#e' &"re"-er' that in dealin

%ith s#!h s#*e!ts as ,""r la%s and tariff ,r"te!ti"n "ser-ati"n and e-en e2,eri&entati"n are ,ra!ti!ale. Als"' there is lesielih""d that the s!ien!e s" !"nsidered !"#ld e re+arded as !"&,lete) !"nse(#entl$ the tenden!$ is t" de,end #,"n ind#!" estalish ne% ,re&ises "r t" -erif$



"ld "nes. M"re fa!ts are !alled f"r' and hist"r$ and statisti!s are the nat#ral re!"#rse.As "ne l""s a! "-er the !"#rse "f e!"n"&i! th"#+ht and e2a&ines its !han+in+ &eth"ds' "ne is re&inded "f

tte&,ts that ha-e een &ade t" distin+#ish !ertain sta+es in the e-"l#ti"n "f h#&an th"#+ht in +eneral' n"tal$ the three stf C"&te. These sta+es %ere !alled $ C"&te9 the the"l"+i!al' the &eta,h$si!al' and the ,"siti-e. In the first sta+e &en see!a#se 4 f"r ,hen"&ena' and find it t" lie in the i&&ediate a!ti"n "f s#,ernat#ral ein+s. In the se!"nd' "ne +reat entit$' 4

nat#re'4 is s#stit#ted as the !a#se' and the ,hen"&ena are said t" e d#e t" astra!t 4essen!es 4 "r f"r!es %ithin the "*e!ts'

#t se,arate fr"& the&6 slee, is !a#sed $ a 4 s","rifi! ,rin!i,le 4) %ater rises in the t#e e!a#se 4 nat#re ah"rs a -a!##&n the ,"siti-e sta+e' &en !lassif$ ,hen"&ena and estalish se(#en!es in the nat#re "f !a#se and effe!t) the$ dis!"-er

(#antitati-e relati"ns and see t" re,resent all ,hen"&ena as as,e!ts "f a sin+le +eneral fa!t. D#rin+ the the"l"+i!al and&eta,h$si!al sta+es' the ded#!ti-e &eth"d is ,red"&inant. Earl$ in-esti+at"rs &a$ e re+arded as "-er%hel&ed $ a&#lti,li!it$ "f fa!ts' t" +ather t"+ether and !lassif$ %hi!h re(#ired ti&e. Mean%hile it %as ne!essar$ t" re+ard ea!h fa!t as&"re "r less is"lated / %hi!h left the &ind7s desire f"r #nit$ #nsatisfied' / "r see an e2,lanati"n fr"& %ithin the thiner7s

%n !"ns!i"#sness. The res#lt %as the d"+&a that it is G"d7s %ill' "r s"&e &eta,h$si!al la% "f 4 nat#re.4 Th"se %h" th#sra!ed all ,hen"&ena t" a fe% easil$ +ras,ed 4 !a#ses 4 "re e-er$thin+ ef"re the&.9

The tri#&,h "f s#!h astra!t ded#!ti-e &eth"ds %as "nl$ te&,"rar$. 1e!"&in+ %ear$ "f e&,t$ s,e!#lati"ns' as thli+ht f"#ndati"ns %ere ,er!ei-ed' &en t#rned t" f"ll"% th"se %h" !"nfined their attenti"n t" the n"%ale and

9P"siti-e Phil"s",h$t Cha,. I) Martinea#7s translati"n' ,. <. : Cf. H"h"#se "n 4C"&te7s Three Sta+es4 in theS"!i"l"+i!al Re-ie% f"r ?#l$' =.

atte&,ted t" e2,lain that $ &"re rati"nal and !"n!rete &eth"ds. Th#s there !a&e a"#t a !"nditi"n si&ilar t" C"&"siti-e sta+e.

It is' h"%e-er' i&,r",er t" s,ea "f these &eth"ds as sta+es in the sense "f their f"ll"%in+ "ne an"ther inhr"n"l"+i!al "rder) f"r the$ "-erla,' and !ases &a$ e f"#nd "f the !"nte&,"rane"#s' e2isten!e "f all the sta+es' e-en in thield "f a sin+le s!ien!e. There are 4 the"l"+i!al 4 e!"n"&ists t"5da$' ,erha,s' and !ertainl$ there are e!"n"&ists %h"se &"df th"#+ht ,la!es the& in the &eta,h$si!al sta+e. An e2tre&e ill#strati"n %ill ser-e t" &ae the &eanin+ !lear. The A&eri!!"n"&ist' Henr$ C. Care$' in s,eain+ "f the Malth#sian the"r$ "f ,",#lati"n' ass h"% a +""d G"d !"#ld all"% s#!h thins it tea!hes. He de!lares the d"!trine in!"&,atile %ith Gr"d7s !hara!ter) theref"re it is #ntr#e. Of !"#rse he d"es n"t st", n his ar+#&entati"n' #t the ,"int is that he intr"d#!es this reas"nin+ as an essential s#,,"rt f"r his ideas. P"liti!al e!"n"&if the &eta,h$si!al t$,e' a t$,e ,ree&inentl$ En+lish' tend t" ded#!e all e!"n"&i! ,hen"&ena fr"& s"5!alled f#nda&entalrin!i,les "f h#&an nat#re' a2i"&s' and definiti"ns. Theit ear&ar is a !ertain #se "f the %"rd 4 nat#ral.4 Gli e2,lanati"nshat this "r that is a!!"rdin+ t" a la% "f nat#re "r that h#&an nat#re is th#s and s"' are the dan+er si+nals. The le+al th"#+ht

he ,ast +enerati"n is a n"tale lin+erin+ ,la!e "f this taint) and th"se e!"n"&ists %h" ar+#e a"#t 4nat#ral rates4 ;f"r %a+esail%a$ !har+es' et!.> &aintainin+ that !"&,etiti"n is nat#ral' f"r instan!e' sh"% a si&ilar tenden!$. As alread$ stated' the

&eth"d "f th"#+ht "f s#!h &en is ne!essaril$ ded#!ti-e.It re&ains t" e "ser-ed that !$!les in &eth"d see& t" ha-e e2isted. The ded#!ti-e "r ,hil"s",hi!al5astra!t &eth

re-ailed in all earl$ e!"n"&i! th"#+ht "f a f"r&al !hara!ter that has een re!"rded. Then the Mer!antilists and thea&eralists "f the si2teenth and se-enteenth !ent#ries sh"%ed s"&e tenden!$ t"%ard an ind#!ti-e' th"#+h rather e&,iri!al'&eth"d. 1#t the earl$ Fren!h e!"n"&ists and

THE NATURE OF ECONOMIC THOUGHT<Ada& S&ith %ere ,ri&aril$ ded#!ti-e' and the 4 E,i+"nes 4 %h" f"ll"%ed de+enerated int" d"+&atis&. The earl$

hist"ri!al e!"n"&ists then ar"se as an ind#!ti-e s!h""l' ,erha,s e-en +"in+ t" e2tre&es) and' after a +enerati"n +i-en t" the"lle!ti"n and !"&,aris"n "f fa!ts' the need f"r ded#!ti"n e!a&e effe!ti-e. The A#strian s!h""l "f e!"n"&ists and Pr"fess

Marshall' in En+land' then !a&e t" the fr"nt) #t their &eth"d is n"t that "f the "lder ded#!ti"nists' ein+ ased #,"n there!edin+ era "f ind#!ti"n and lar+el$ free fr"& the"l"+i!al "r &eta,h$si!al tenden!$. The !$!le has . n"t een a !ir!le' #t,iral' risin+ t" hi+her ,lanes. At the ,resent ti&e e!"n"&ists are lar+el$ en+a+ed in !"n!rete in5 9 -esti+ati"ns' hist"ri!al antatisti!al) #t n#&er"#s trea5 i tises are a,,earin+' indi!atin+ the !"n!"&itant and s!ientifi! #se "f "th &eth"ds. Ind#!ti"nnd ded#!ti"n' the !"n!rete an the astra!t' &#st +" hand in hand.

;$I9CHAPTER II



THE ORIGIN AND TARDY DEKELOPMENT OF ECONOMICTHOUGHTThe "ri+in "f e!"n"&i! th"#+ht is l"st in the ,ast. In its si&,lest f"r& it &#st ha-e al%a$s e2isted %here-er thinin

ein+s s"#+ht t" +ain a li-in+. E!"n"&i! ideas "f an$ definiteness find their earliest e2,ressi"n' h"%e-er' in r#les "f !"nd#!&"ral !"des f"r&#lated $ ,riests "r la%+i-ers. These &"ral !"des' lie the M"sai! la%' f"r e2a&,le' in dealin+ %ith &an7s

la!e in the %"rld' %ith life and death' and the ends "f e2isten!e'9 ne!essaril$ t"#!hed #,"n e!"n"&i! ideas. If it e said tha

#st"&s r#led the earl$ !i-ili0ati"ns and that these !"des %ere the e2,ressi"n "f !#st"&' the sa&e !"n!l#si"n h"lds. Thehil"s",h$ #nderl$in+ %as r"ad and si&,le' and e!"n"&i! !"n!e,ts %ere ,resented %ith ethi!s and reli+i"n as "ne %h"le.

#ntil +r"#, life e+an t" &"-e in the ne% and !"&,li!ated %a$s "f &"ne$ e!"n"&$ did e!"n"&i! ideas e+in t" e!"&ehar,l$ differentiated. It %as %hen ,r"le&s "f !"l"nies' internati"nal trade' &"ne$' ta2ati"n' et!.' ar"se' that the Grees e" dis!#ss e!"n"&i! (#esti"ns.

The reas"ns f"r the tard$ de-el",&ent "f i&,"rtant e!"n"&i! ideas a&"n+ the an!ients are si+nifi!ant' f"r the$ thri+ht #,"n the "ri+in "f the s!ien!e and the fa!t"rs essential t" its +r"%th. These reas"ns' ein+ ,artl$ s#*e!ti-e' ,artl$*e!ti-e' fall int" t%" +reat !lasses' / th"#+h the !l"se interrelati"n et%een the& is n"te%"rth$.

A&"n+ the s#*e!ti-e "r ,s$!h"l"+i!al !a#ses' ,erha,s the first t" e n"ted is the tenden!$ "f the an!ient thiners S!h&"Uer' Gr#ndriss der aU+e&einen K"ls%irths!haftslehre' S. ff.t" l"" d"%n #,"n ,h$si!al %ants. Material ,leas#res and the +ratifi!ati"n "f "dil$ desires %ere fre(#entl$ fr"%n

#,"n. S"!rates th"#+ht that t" ha-e fe% %ants %as +"dlie' and that %as the s,irit "f the Hind# ,e",le. 8here s#!h an attit#

re-ails' the de-el",&ent "f a s!ien!e %hi!h deals %ith the &eans "f +ratif$in+ %ants is diffi!#lt. It i&,lies a disre+ard f"r &aterial.

In ass"!iati"n %ith this disre+ard f"r &aterial !"nsiderati"ns it %as !hara!teristi! "f an!ient th"#+ht !"n!ernin+ s"!&atters that a d"&inant ,la!e %as +i-en t" the &"ral san!ti"n. Then' as n"%' ethi!al and e!"n"&i! ideas %ere !l"sel$nterrelated. T"5da$' h"%e-er' %e !"ns!i"#sl$ se,arate the t%"' and "ften re!"+ni0e e!"n"&i! !"nsiderati"ns as the !"ntr"la!t"r' !allin+ that ri+ht %hi!h is dee&ed t" e !"nd#!i-e t" &aterial ad-anta+e and the +ratifi!ati"n "f "#r e2,andin+ %ant

The an!ient thiners %ere less ,r"ne t" tae their %ants seri"#sl$' as #lti&ate !"nsiderati"ns' and s"#+ht ha,,iness thr"#+h +""d 4 life rather than the f#ll life.9 The$ th"#+ht ha,,iness !"#ld e rea!hed &"re dire!tl$' as it %ere' %ith"#t thela"rati"n "f that &ass "f &eans %hi!h %e !all %ealth. This fa!t %as n" d"#t ,artl$ d#e t" the ,re-alen!e "f as"l#te#th"rit$' either in the sha,e "f fa&il$' l"!al "r !entral heads' %h"se 4 th"# shalt4 %as la%' "r in the sha,e "f !#st"&. C#st"

%as a ,ara&"#nt f"r!e li&itin+ !h"i!e and !"&,etiti"n' and tendin+ t" !"n!eal the i&,"rtan!e "f e!"n"&i! &"ti-es. In sh"rhe re %as &"re s, err9999794 annt &nraU than a"#t e! "n"&i! li ffi. An!ient ,hil"s",h$ in its s"!ial as,e!ts %as si&,le

!"n"&i! and ethi!al -al#es ein+ little differentiated' and #nder the !ir!#&stan!es the %h"le %as ,er-aded $ a &"ral t"nePart and ,ar!el "f the s#*e!ti-e attit#de "f an!ient e!"n"&i! th"#+ht is the fa!t that s"&e "f the interests &"st

"nd#!i-e t" e!"n"&i! st#d$ %ere es,e!iall$ de,re!ated. One "f the &"st fr#itf#l s"#r!es "f e!"n"&i! s,e!#lati"n has eenarnest desire t" etter the !"nditi"n "f the

.+.' the 4 f#U dinner ,ail.4la"rin+ !lasses. 1#t' in +eneral' ,a+an ,hil"s",h$ tea!hes that ind#str$' e2!e,t' ,erha,s' in a+ri!#lt#re' is de+radin

" "d$ and intelle!t. Artisans el"n+ed t" the l"%est !aste' and d#rin+ the +reater ,art "f their hist"r$ the Grees and R"&ades,ised the la"rin+ and tradin+ !lasses. Arist"tle ar+#es that in the est +"-ern&ent' %here the !iti0ens are all -irt#"#s anha,,$' 4 n"ne "f the& sh"#ld e ,er&itted t" e2er!ise an$ l"% &e!hani!al e&,l"$&ent "r traffi!' as ein+ i+n"le anddestr#!ti-e t" -irt#e)4 9 and Plat"' in treatin+ "f the ideal state' dee&s it n"t %"rth %hile t" !"n!ern hi&self %ith the tradin+nd artisan !lasses. The a"-e (#"tati"n fr"& Arist"tle +"es "n t" sa$ that th"se destined f"r ,#li! "ffi!e sh"#ld n"t e-en

h#sand&en' f"r leis#re is ne!essar$ t" i&,r"-e in -irt#e and f#lfill "ne7s d#t$ t" the state. This s#++ests that his disa,,r"-a

a"r arises in ,art fr"& "ther +r"#nds than its inherent aseness' na&el$' fr"& his elief in the e2,edien!$ "f leis#re. This f the ,hil"s",hers7 attit#de t"%ard la"r has "ften een "-erl""ed. 8hen it is re&e&ered t" %hat an e2tent the de-el",&f ,"liti!al e!"n"&$ has +"ne hand in hand %ith a re!"+niti"n "f the i&,"rtan!e "f la"r' the si+nifi!an!e "f the ,re!edin+deas a,,ears. Ada& S&ith as!ries t" la"r s" &#!h' that the s"!ialists ,r"fess t" ha-e learned fr"& the 8ealth "f Nati"ns ttri#te all -al#e t" la"r' and t" de&and f"r la"r the entire ,r"d#!t "f ind#str$.

The sa&e +eneral ,"int !"n!ernin+ indifferen!e "r a-ersi"n t" e!"n"&i! ,hen"&ena &i+ht e &ade %ith re+ard t"inan!ial &atters' th"#+h %ith s"&e e2!e,ti"ns.

The "&ni,"ten!e "f the state in anti(#it$ and the as!enden!$ "f ,#rel$ ,"liti!al interests are "ther fa!t"rs retardin+de-el",&ent "f e!"n"&i! th"#+ht. 8here ,"liti!al s,e!#lati"n' as s#!h' as"rs the attenti"n "f thiners' e!"n"&i!s re&ain



s#"rdinate ,la!e. 8hile the &ere fa!t "f the d"&inan!e "f the state and asen!e "f indi-id#alis& d"es n"t see& ne!essar" ,re!l#de e!"n"&i!s'

P"HU!s' -n. i-.#t rather t" li&it the field f"r e!"n"&i! s,e!#lati"n9 t" &atters "f ,#li! interest' it d"es res#lt in a "ne5sided

-ie%,"int. . Certainl$ E!"n"&i!s did n"t !"&e int" e2isten!e as a s!ien!e #ntil the i&,"rtan!e "f the indi-id#al had eeneali0ed in a different %a$ than e-er it %as in anti(#it$.

S" far as it %as the idea "f the an!ients t" +ain %ealth $ !"n(#est and f"r!ed la"r' an"ther s#*e!ti-e f"r!e %"ri+ainst the e-"l#ti"n "f e!"n"&i! th"#+ht &a$ e distin+#ished. This idea / and it ,la$ed n" s&all ,art in an!ienti-ili0ati"ns / is n"t in har&"n$ %ith the ai& "f ,"liti!al e!"n"&$' %hi!h sees the la%s that in!rease %ealth $ then!"#ra+e&ent "f d"&esti! ,r"d#!ti"n and $ the ,ea!ef#l e2!han+e "f d"&esti! ,r"d#!ts f"r f"rei+n +""ds.

Finall$' a&"n+ s#*e!ti-e reas"ns' &#st e &enti"ned that tenden!$ in &en %hi!h leads the& first t" #s$ the&sel-%ith the re&"te. That 4 fa&iliarit$ reeds !"nte&,t'4 %hile 4 distan!e lends en!hant&ent'4 is tr#e in the e-"l#ti"n "f s!ien!eAs Sir Henr$ S#&ner Maine re&ars' in dis!#ssin+ fa&il$ t$,es in !ertain !"#ntries' 4 nat#ral fa&ilies ha-e n"t een asaref#ll$ e2a&ined as !"#ld e %ished) the$ ha-e n"t the stran+eness "f the h"#se !"&&#nit$ in the e$es "f the "ser-ers.4

8"nder and s#r,rise are effe!ti-e !a#ses f"r interest and st#d$.9 Re&"te and &$steri"#s thin+s ar"#se "#r !#ri"sit$' leadin+ha0ard"#s &"#ntain !li&in+ and (#ests f"r the n"rth ,"le. S" astr"n"&$ %as the first "f the nat#ral s!ien!es' and t" this da&an$ &en $ their +ifts f"r astr"n"&i!al resear!h ill#strate the sa&e attit#de. E!"n"&i! ,hen"&ena' es,e!iall$ in the da$s elati-el$ stati! and si&,le e!"n"&i! life' %ere sl"% in ar"#sin+ interest. 1e!a#se "f their nearness and the +eneral s#,erfi!

a&iliarit$ %ith the&' the$ %ere n"t sin+led "#t f"r s,e!ial st#d$.: The distin!ti"n et%een th"se fa!t"rs %hi!h ,re-ented "r retarded and th"se %hi!h &erel$ &"dified "r deter&ine

" e "ser-ed. The sa&e fa!t"r &a$ ha-e "th inds "f effe!t. The &"dif$in+' dire!ti-e as,e!ts "f these and "ther fa!t"rs %e dis!#ssed el"%.

: Earl$ La% and C#st"&' KIII' ,. <.7Ada& S&ith dis!#sses this +eneral idea in his essa$ "n 4The Prin!i,les %hi!h lead and dire!t Phil"s",hi!al En(#ir

U#strated $ the Hist"r$ "f Astr"n"&$.77 ;8"rs' K' ,,. ss' .>Fr"& the "*e!ti-e ,"int "f -ie%' e!"n"&i! th"#+ht %as ha&,ered in t%" +eneral %a$s6 the ,hen"&ena %ere la!i

nd attenti"n %as !alled fr"& s#!h e!"n"&i! ,hen"&ena as there %ere t" "ther fields. T" ,#t it in an"ther %a$' e!"n"&i!hen"&ena %ere defi!ient in n#&er and in %ei+ht' that is' as"l#tel$ and relati-el$.

Earl$ !i-ili0ati"ns +enerall$ fl"#rished in %ar& and %ell5%atered re+i"ns %here it %as n"t diffi!#lt t" +et a li-in+. hiners "f s#!h !i-ili0ati"ns "rdinaril$ el"n+ed t" "r %ere de,endent #,"n a d"&inant !lass s#,,"rted $ a ser-ile

",#lati"n. Under s#!h !ir!#&stan!es' the ,r"le&s arisin+ "#t "f s!ar!it$ and la"r and astinen!e %ere +i-en s!ant attentE!"n"&i! -al#es re(#ired little st#d$.

The s#*e!t &atter "f E!"n"&i!s' as a s"!ial s!ien!e' is h#&an relati"ns. S" far as the ,r"d#!ti"n and distri#ti"n "%ealth are dire!tl$ in-"l-ed' it deals %ith relati"ns et%een indi-id#als' et%een h"#seh"lds' et%een states' and the re!i,relati"ns %hi!h in t#rn arise a&"n+ these -ari"#s #nits. N"% this +reat !"&,le2 "f relati"ns did n"t e2ist in the ,ast t" an$thie the sa&e e2tent that it n"% d"es. Es,e!iall$ si&,le %ere the relati"ns et%een states' and th"se et%een indi-id#al andtate.

M"re !"n!retel$' di-isi"n "f la"r %as n"t !arried -er$ far. An inde,endent d"&esti! e!"n"&$ &eans a lar+e de+ref e!"n"&i! is"lati"n' and this !hara!teri0es the states "f anti(#it$. Onl$ %ith the +r"%th "f di-isi"n "f la"r and e2!han+e"#ld e!"n"&i! relati"ns +r"% in n#&er and si+nifi!an!e.

Still &"re !"n!retel$' the ,r"le&s "f ,#li! finan!e %ere relati-el$ #ni&,"rtant. The re-en#es and e2,endit#res "he an!ient Gre!ian states' f"r e2a&,le' %ere !"&,arati-el$ insi+nifi!ant. 8hen the Pel","nnesian 8ar e+an' the entire

e-en#e "f Athens a&"#nted t" a"#t === talents' "r a little "-er '==='===.4 This %"#ld e #t a a+atelle in the #d+et "&"dern state. The Fren!h #d+et f"r =

1lan(#i' Hist"r$ "f P"liti!al E!"n"&$' ,. . Taen fr"& Gr"te' KI' ,. =.esti&ated the re-en#e "f the state at ''<B'= fran!s' sa$ ='==='===' and the e2,endit#re at ''=B'

ran!s. The t"tal esti&ated "rdinar$ re!ei,ts "f the United States %ere a"#t the sa&e. The finan!ial ",erati"ns "f R"&e %ef !"#rse' &#!h lar+er than th"se "f the Gre!ian states' #t the$ %ere far less !"&,li!ated than "#rs. 8ar %as in +eneral self#,,"rtin+' and e-en $ielded a re-en#e in the sha,e "f ""t$ and tri#te. P#li! dets lie th"se "f the &"dern nati"n %ere

#ndrea&ed "f' and s#!h ta2es as e2isted %ere 4 far&ed 4 "#t t" e !"lle!ted $ ,ri-ate !"ntra!t"rs. 8hen "ne re!alls the&,"rtant ,art ,#li! finan!e has ,la$ed in e!"n"&i! th"#+ht' as seen in the !areers "f S#ll$ and C"lert' f"r instan!e' and in



he United States after the Ci-il 8ar' "ne reali0es that a +reat sti&#l#s %as la!in+. Or tae f"rei+n trade. Internati"nal"&&er!e +i-es rise t" &an$ interestin+ (#esti"ns "f ,"liti!al e!"n"&$' #t it %as n"t en!"#ra+ed $ an!ient states' %h"sedeal %as nati"nal e2!l#si"n. S,arta %as s#!h a state) and Plat"7s ideal states' e-en the se!"nd est' li&ited inter!"#rse %ith"rei+ners' the arar"i.

The "*e!ti-e fa!t"rs' %hi!h' $ attra!tin+ &en7s attenti"n and ener+ies' thre% int" the a!+r"#nd the !"nsiderati"#!h e!"n"&i! ,hen"&ena as e2isted' als" e&ra!ed !ertain s"!ial instit#ti"ns and !#st"&s' i. e. s#*e!ti-e fa!t"rs that had

e!"&e !r$stalli0ed. Pra!ti!al ,"liti!s' %ar' reli+i"#s a!ti-ities' filled a lar+e ,art "f &en7s li-es. The relati-e la! "f se!#rit$"th f"r life and ,r",ert$ %hi!h !hara!teri0es an!ient ti&es %as als" an i&,"rtant fa!t"r in retardin+ e2!han+e and sa-in+' a!"n"&i! a!ti-ities in +eneral.

Th#s' the ,hen"&ena ein+ lar+el$ la!in+' and the s,irit "r &ental attit#de indifferent "r h"stile' it is little %"nderhat the ,e",les "f anti(#it$ n"t "nl$ did n"t e-"l-e a "d$ "f e!"n"&i! d"!trine' #t e-en sh"%ed a ,a#!it$ "f e!"n"&i!deas.

In %hat has +"ne ef"re' referen!e has een &ade t" the an!ients al"ne. M#!h that has een said' h"%e-er' is a,,li!ale t" ,e",les "f "ther ti&es. Alth"#+h it %as f"nnall$ (#ite different' d#rin+ the ,eri"d "f the Middle A+es' as %

,,ear in the !ha,ter dealin+ %ith that ti&e' the sit#ati"n %as n"t dissi&ilar' %hether re+arded s#*e!ti-el$ "r "*e!ti-el$. Ohe "ne hand' the tea!hin+s "f the Ch#r!h %ere h"stile t" trade) "n the "ther' di-isi"n "f la"r and e2!han+e %ere #nde-el",nd &an7s ener+ies %ere "!!#,ied in re!"nstr#!tin+ ,"liti!al instit#ti"ns and in de-el",in+ the arts.

Then !a&e the era "f Ref"r&ati"n and Renaissan!e. The attit#de "f &en t"%ard the %"rld and &aterial thin+s %as

han+ed' %hile e!"n"&i! relati"ns %ere &#lti,lied $ dis!"-eries and in-enti"ns and the e2tended #se "f &"ne$. M"re and&"re &en th"#+ht e!"n"&i! th"#+hts' and erel"n+ the s!ien!e "f P"liti!al E!"n"&$ %as "rn.

1. ECONOMIC THOUGHT 1EFORE THE SCIENCE OF ECONOMICSI. ECONOMIC THOUGHT OF THE ANCIENTSIn the !ha,ters %hi!h f"ll"% ne2t' it is n"t intended t" !"n-e$ the idea that a s!ien!e "f E!"n"&i!s e2isted ,ri"r t"

i+hteenth !ent#r$. J#ite the re-erse. These !ha,ters are t" deal %ith fra+&entar$ e!"n"&i! th"#+hts' "r %ith e!"n"&i!h"#+hts %hi!h are f"#nd i&edded in ethi!al and reli+i"#s s$ste&s. Yet these th"#+hts are the st#ff "f %hi!h the later!"n"&i! the"ries %ere ,artl$ &ade) and' alth"#+h fr"& the ,"int "f -ie% "f e!"n"&i!s the$ hail fr"& a ,r!5s!ientifi! ,eri"heir i&,"rtan!e as a fa!t"r in deter&inin+ the !"#rse "f the s!ien!e &a$ n"t safel$ e "-erl""ed. A!!"rdin+l$' the reader sed t" dire!t his attenti"n t" the f"ll"%in+ set!h and rief anal$sis "f the e!"n"&i! ideas %hi!h "tained in the an!ient an

&edie-al %"rlds.E-en if the ,resent %"r %ere li&ited t" the hist"r$ "f E!"n"&i!s as a s!ien!e' it !"#ld n"t %ell "&it s"&e dis!#ss

f the "ri+in "f the s!ien!e. T" s#++est a fe% ill#strati"ns 6 The ideas "f the an!ients !"n!ernin+ %ealth and %ants ha-e e-erti&#lated idealisti! th"#+hts a&"n+ e!"n"&ists li-in+ in ,eri"ds &"re +i-en t" &aterialis&6 s#!h ideas &a$ e tra!ed in th

hist"r$ "f S"!ialis&' and as 4 nat#re ,hil"s",h$'4 ha-e affe!ted all s"!ial th"#+ht. E-en t"5da$' "ne !an s!ar!el$ dis!#ssnterest in an$ e2tended %a$ %ith"#t +"in+ a! t" the 1ile and Gree n"ti"ns. H"% !"#ld the Classi!al ,"liti!al e!"n"&$

En+land e #nderst""d %ith"#t a n"%led+e "f the Mer!antilist ,eri"d' in!l#din+ s#!h &en as L"!e and Pett$3 And an#nderstandin+ "f these &en taes "ne a! t" the &edie-al ,eri"d' %hi!h ,eri"d' r"#+hl$ s,eain+' is half an!ient. a&erals& has een the &"ther "f &"de& Ger&an e!"n"&i! th"#+ht' and a&eralis& %as in lar+e ,art the "ffs,rin+ "f an!ient idnd n"tal$ th"se e&"died in the C"r,#s ?#ris Ci-ilis.

CHAPTER IIIORIENTAL ECONOMIC THOUGHT' ESPECIALLY THE CONCEPTS OF THE HE1RE8S AND HINDUS 9S"&e +eneral ,"ints "f !"ntrast &a$ d"#tless e f"#nd in !"&,arin+ the e!"n"&i! th"#+ht "f the Orient %ith that

he O!!ident. F"r e2a&,le' %ithin !ertain ra!ial "r nati"nal "#nds' nearl$ all Oriental ,e",les %ill e f"#nd t" ha-e had id

f a !l"ser r"therh""d than ha-e "tained in %estern !"#ntries. Eastern ,e",les' t""' ha-e +enerall$ tended t" a less&aterialisti! -ie% "f life' n"t stri-in+ ea+erl$ f"r ind#strial ,r"+ress6 &"ral "r reli+i"#s !"des ha-e #s#all$ ,la$ed a +reater n sha,in+ their th"#+ht.

M#!h "f the !"ntrast that has een dra%n' h"%e-er' %"#ld n"t ha-e held f"r the re&"te ,ast %hen the !i-ili0ati"n "he %est %as $"#n+' and "th Orient and O!!ident %ere in s"&ethin+ lie C"&te7s the"l"+i!al sta+e) %hile s" di-erse are th

n#&er"#s ,e",les %hi!h !"&e #nder the head "f Orientals that tr#l$ +eneral !"ntrasts are -er$ fe%' and are f"r the &"st ,arr"ad as t" la! f"r!e and ,re!isi"n. 1elie-in+' then' that it is (#ite i&,"ssile t" +enerali0e %ith an$ +reat si+nifi!an!e"n!ernin+ Oriental e!"n"&i! ideas as a %h"le' it is the ,#r,"se si&,l$ t" state %hat is n"%n a"#t s#!h ideas as the$ %er

held $ the Se&iti! and Ar$an ,e",les "f the %est and s"#th "f Asia. T" l#&, Chinese' Medes and Persians' ?e%s' ?a,anese



Aras' Hind#s' e-en E+$,tians' t;9ther in "ne t",i!' as is s"&eti&es d"ne'7 is &isleadin+' t" sa$ the least) #t th"se !"n!e,tshe Here%s and "f

9 Cf. C""e' 79Old TesU&ent E""n"&i!s'4 in E9!n"& Raie%' DC' n". ) ICa0i+n$' Eist"in de Ki!t&"&U P"Utdes An!iens Pe#,ies) Mi!had#9 C"&5&t&i & in & Ae Lt&s M9ses ;Ea+. tnns.' L"nd"n' S>) ?aris E#!$!i",eiia9

tidesJJa!ii!#VtiVre'ttiii' et!) and thef"D"%in+ f""tn"te 2!feren"es.:E7 C"ssa' inir9d#!i#& t" Se St&d$ 9 P"UH!9 E!"n"&$) In+ia&' Hisl"r$ "f PdU9 1""&&$'

the Hind#s %hi!h ha-e !lear e!"n"&i! si+nifi!an!e tna$ e riefl$ stated. Then' if there e an$ !"&&"n +r"#nd' s"re!ise +enerali0ati"n &a$ f"ll"%.

It &a$ e "ser-ed in ad-an!e that the s#*e!t &atter f#rnished $ the ideas "f these t%" ,e",les has this &#!h in"&&"n6 it is the e!"n"&i! th"#+ht "f t%" Asiati! ,e",les' "th "f an!ient !i-ili0ati"n' and ased #,"n an a+ri!#lt#ral!"n"&$) atid ,ra!ti!all$ all is dra%n fr"& the %ritin+s "f ,riestl$ la%5+i-ers.

It f"ll"%s fr"& this latter fa!t that an$ idealisti! tenden!ies %ill e e&,hasi0ed' ,erha,s t" s#!h an e2tent that d"#&a$ e felt as t" h"% tr#l$ the !"&&"n th"#+ht is e2,ressed. 1#t %hen "ne refle!ts that the li-es "f these ,e",le %ere lar+edeter&ined $ these %ritin+s' this d"#t l"ses s"&e i&,"rtan!e. And a"-e all' it is *#st these %ritin+s %hi!h ha-e !"&e d"%" #s' e2ertin+ a ,"%erf#l infl#en!e all thr"#+h the Middle A+es and e-en t" "#r "%n ti&e) s" that' fr"& the stand,"int "f th

hist"r$ "f e!"n"&i! th"#+ht' their si+nifi!an!e is n"t sli+ht.Se-eral &"re "r less ,ra!ti!al reas"ns &ae this ,arti!#lar in(#ir$ %"rth %hile. F"r "ne thin+' there is its -al#e as a

t#d$ "f "ri+ins. These ,e",les %ere' in a sense' in the !hildh""d "f !i-ili0ati"n) and' *#st as ,s$!h"l"+ists are interested in

hild ,s$!h"l"+$' e!"n"&ists &a$ learn less"ns fr"& !hild e!"n"&i!s. Or' if it e tr#e' as &an$ elie-e' that there is a lar+ede+ree "f !"nne!tedness in the de-el",&ent "f the e!"n"&i! th"#+ht "f the %"rld' / a de+ree n"t +enerall$ reali0ed t" the#ll' / the st#d$ "f earl$ s"#r!es +ains i&,"rtan!e) and' if it is f"#nd that at the s"#r!es reli+i"#s "r &"ral san!ti"ns d"&inahen the st#d$ "f the e!"n"&i! as,e!ts "f reli+i"#s "r &"ral !"n!e,ts and !"des e!"&es !l"sel$ in-"l-ed. 8hile there is n""+i!al ne!essit$ f"r treatin+ Oriental ideas as a %h"le' as d" s"&e %riters'9 it is essential t" anal$0e the th"#+ht "f the

Here%s in this res,e!t. N" "ne %ill den$ that &an$ "f "#r reli+i"#s and &"ral eliefs are tra!eale dire!tl$ t" Here%h"#+ht' and

E.+. a#t0' Ges!i!hUi!he Ent%i!d#n+ d. Nati"nal Oe"n"&ie.that these eliefs ha-e in the ,ast had' and %ill in the f#t#re ha-e' !"nsiderale infl#en!e "-er e!"n"&i! ideas. A la

art "f these ha-e !"&e d"%n t" #s thr"#+h Christianit$' %hi!h in its "ri+in is9 an essentiall$ Oriental reli+i"n.This st#d$' t""' %ill ill#strate and e&,hasi0e the i&,"rtan!e "f the relati"nshi, et%een e!"n"&i! th"#+ht and &"r

nd ethi!s' a relati"nshi, %hi!h' %ith"#t ein+ !"nf#sed' needs t" e "rne in &ind $ the e!"n"&ist.

And "f s"&e ,ra!ti!al si+nifi!an!e is the fa!t that li+ht &a$ e thr"%n #,"n e!"n"&i! !"n!e,ts %hi!h t" s"&e e2tetain in the Orient e-en t" this da$.

EJOA"a#! Th"#+ht e2,ressed in R#les "f C"nd#!t' La%s' et!. / As has een said &"re than "n!e' the !entral ideHere% +"-ern&ent and ed#!ati"n %as the f#lfill&ent "f the la%' the !"&&ands "f M"ses "r the ,r",hets f"r&in+ the standn all th"#+ht and a!ti"n'9 and the sit#ati"n %as (#ite si&ilar a&"n+ the Hind#s. N"% s#!h a sit#ati"n &eant a &in#tee+#lati"n "f e-er$da$ life'9 its e!"n"&i! as,e!ts in!l#ded' and it f"ll"%s that the &aterial f"r this st#d$ is &"stl$ dra%n fr"#les "f !"nd#!t "r la%s.7 A st#d$ "f th"se re+#lati"ns "f the Here%s and Hind#s %hi!h are si+nifi!ant as indi!atin+ thehara!ter "f their e!"n"&i! th"#+ht sh"%s that the f"ll"%in+ s#*e!ts %ere the &"st i&,"rtant6 "!!#,ati"ns' a+ri!#lt#re'nterest and #s#r$' la"r and %a+es' ,r",ert$ ri+hts' ta2ati"n' inheritan!e' %ei+hts and &eas#res' ad#lterati"n' &"n","l$' anhe ,""r. All "f these t",i!s !ann"t e treated here' #t "nl$ th"se a"#t %hi!h the re+#lati"n %as !"nsiderale and "f !learntent.

Us&$. / The M"sai! la% f"rade lendin+ 4 #,"n #s#r$'4 that is' at interest) it ,r"hiited 4 #s#r$ "f &"ne$' #s#r$ "

-i!t#als' #s#r$ "f an>rthin+ that is lent #,"n #s#r$.4 7 This a,,lied "nl$ t" fell"% Here%s' h"%e-er' l"ans "n #s#r$ t" stranein+ all"%ale. Mer!$ in !ase "f l"ans t" the

C"nder' ?#das Ma!!aa#s' ,. <.: A&"n+ the ?e%s the ,r",hets' h"%e-er' %ere +enerall$ ",,"sed t" s#!h a re+#lat"i$ s,irit' tendin+ t" i+n"re the

e+#lati"ns. See9 e9.' A&"s -ii' = ff.) H"sea -i' ) Isaiah i' =5.: De#t. 02iO' 0+9 =.,""r9 %as en*"ined. S"&e e-iden!e "f de-el",&ent in the la% "f #s#r$ e2ists' f"r' in the first ,r"n"#n!e&ent' inter

ain+ %as f"ridden in the !ase "f l"ans t" the ,""r al"ne ;E2. 22ii' <B> f #t later / ,erha,s e!a#se "f fra#d / ther"hiiti"n %as e2tended t" all Israelites. The e2!e,ti"n "f stran+ers &#st ha-e &ade l"ans at interest ,"ssile $ #sin+ s#!



ers"ns as inter&ediaries. 8hen' in ,"st5e2ili! da$s' trade in!reased and %ith it l"ans "f !a,ital' the Rais &ade f#rther&"difi!ati"ns.9

T%" inds "f l"ans %ere distin+#ished $ M"sai! la%6 4 Th"# shalt n"t +i-e hi& ;> th$ &"ne$ #,"n #s#r$' n"r lenhi& ;<> th$ -i!t#als f"r in!rease4: ;Le-. 22-' >. Neither is t" e th"#+ht "f as !"nn"tin+ all that the ter& 4 interest4 d"es' a#sed in e!"n"&i!s' f"r the$ in-"l-e n" !"n!e,t "f !a,ital' and #t an i&,erfe!t "ne "f -al#e. The M"sai! 4 #s#rer 4 %as &er

ne %h" lent thin+s f"r !"nsiderale ,eri"ds "f ti&e' re!ei-in+ three sheels %here he had +i-en t%"' "r three #shels f"r t%

In fa!t' the la% see&s t" ha-e desired that lendin+ sh"#ld e re+arded as a f"r& "f !harit$' "rdainin+ that the ,""r +i-en l"ans e-en th"#+h the se-enth $ear' %hen dets sh"#ld la,se' %ere at hand' "r th"#+h n" se!#rit$ %ere +i-en ;De#t. 2-

5) 22i-' >. It &#st e re&e&ered that s#!h re+#lati"n %ent hand in hand %ith le+islati"n %h"se ai& %as t" ,re-ent thelienati"n "f ,r",ert$' and that the se-enth and *#ilee $ears' if enf"r!ed' %"#ld ha-e ,#t lendin+ "n a -er$ different asis ths #s#al.

1#t the M"sai! la% %as n"t &aintained in f"r!e %ith"#t &"difi!ati"n. The *#ilee $ear %as n"t enf"r!ed' and"&&er!ial dealin+s +re%. S"l"&"n a,,ears t" ha-e een en+a+ed in &#!h tradin+' and after the ret#rn fr"& 1a$l"n'

: De#t. d-' =5. Cf. Dri-er' Intr"d#!U"n t" the Literat#re "f the Old Testa&ent' ,,. B f.: ?e%ish En!$!l",ediaf arti!le "n 4Us#r$.4: N" essential differen!e in treat&ent a,,ears in the la%) #t the %"rd 4in!rease'4 indi!atin+ that %hi!h %as f"ridd

n the se!"nd ind "f l"an' is different fr"& the "ne translated as 4#si#$'4 and this &i+ht indi!ate a different attit#de t"%ard

"r&er' as eis"+ &"re liale t" fl#!t#ati"ns in -al#e and #l.%here !"&&er!ial transa!ti"ns "f &an$ inds %ere hi+hl$ de-el",ed' in!l#din+ lendin+ at interest' the Here%s ,a

&"re fr"& the s,irit "f the "ld la%s. The %"rd &eanin+ 4 ,er !ent 4 d"es n"t see& t" ha-e een #sed #ntil after the !a,ti-it$he idea "f interest as a rate ein+ f"#nd in Nehe5&iah f"r the first ti&e) here the ,r",het e2h"rted the #s#rers t" rest"re 4 th

h#ndredth ,art "f the &"ne$' and "f the !"&' the %ine' and the "il' that $e e2a!t "f the&4 ;-' >. An atte&,t %as &ade t" he letter "f the la%' h"%e-er' and its i&,"rtan!e t" an #nderstandin+ "f &edie-al d"!trines is %ell n"%n.

The se!#rit$ f"r l"ans' a"-e referred t"' %as in the nat#re "f a 4 ,led+e'4 and there %as s"&e re+#lati"n !"n!ernin#!h ,led+es. One r#le &i+ht e f"r&#lated th#s6 Th"# shalt n"t de&and as a ,led+e an$ "f th$ r"ther7s ne!essities. F"r a

&an7s #,,er +ar&ent &#st e ret#rned ef"re ni+htfall' and 4 n" &an shall tae the nether "r the #,,er &illst"ne t" ,led+e6 fhe taeth a &an7s life t" ,led+e 4 ;De#t. 22i-' >. An"ther r#le %as that "ne &#st n"t +" int" the "rr"%er7s h"#se and tae h

led+e' #t &#st let hi& rin+ it "#t) and if the "rr"%er %ere a ,""r &an his ,led+e sh"#ld e ret#rned ef"re the ni+ht ;D22i-' =5>. I4 t99 "" "f ?" &en are #,raided f"r tain+ the %id"%7s "2 as a ,led+e' and f"r tain+ ,led+es %hen n"

"rres,"ndin+ l"ans had een &ade ;!ha,s' 22ii' 22i->.A&"n+ the &"st striin+ re+#lati"ns "f the 1rah&ani! la% %ere th"se !"n!ernin+ interest and #s#r$. M"ne$5lendin

$ the hi+her !astes %as !l"sel$ restri!ted. 1rah&anas and shatri$as !"#ld n"t lend an$thin+ at interest' a!tin+ lie #s#rers2!e,t t" e2!eedin+l$ %i!ed ,ers"ns %h" ne+le!ted their sa!red d#ties.9 4 N"% the$ (#"te als" ;the f"ll"%in+ -erses> 6 7 H

%h" a!(#irin+ ,r",ert$ !hea,' +i-es it f"r a hi+h ,ri!e' is !alled a #s#rer and la&ed a&"n+ th"se %h" re!ite the Keda.7 4 9 ase "f l"ans &ade %ith"#t se!#rit$ the f"ll"%in+ ter&s %ere le+al6 f"r +"ld' d"#le -al#e Wi.e.

Kasishtha' II' = ff.== ,er !ent> ) f"r +rain' trele the "ri+inal ,ri!e) an$thin+ s"ld $ %ei+ht &i+ht e lent at ei+ht ti&es the "ri+inal

-al#e.9 On se!#rit$' the f"ll"%in+ la% "tained6 4 7 Hear the interest f"r a &"ne$ lender de!lared $ the %"rds "f Kasishtha'&ashas f"r t%ent$ ;arsha5,anas &a$ e taen e-er$ &"nth> 6 th#s the la% is n"t -i"lated 4 This &eant a"#t B ,er !ent ,nn#&. 1$ an"ther ,r"-isi"n' <' ' ' and S ,er !ent &i+ht e taen fr"& the f"#r !astes res,e!ti-el$. There %as differen!e ,ini"n as t" a li&it f"r a++re+ate interest ,a$&ents' s"&e h"ldin+ that' in s"&e !ases at least' interest sh"#ld "nl$ e ,aid f

ne $ear' "thers that interest sh"#ld !ease after the ,rin!i,al had een d"#led. In an$ !ase' 4 the in+7s death shall st", thenterest "n &"ne$ ;lent>) and after the !"r"nati"n "f ;a ne%> in+ the !a,ital +r"%s a+ain'4 / ill#stratin+ the d"&inan!e "f"liti!al !"nsiderati"ns.

Kari"#s inds "f interest ,a$&ent %ere distin+#ished6 there &i+ht e !"&,"#nd' ,eri"di!al' sti,#lated' !"r,"ral' dand #se "f ,led+e'9 / !"r,"ral interest ein+ that ,aid in la"r' #se "f ,led+e referrin+ t" !ases in %hi!h the lender &ade #sf s"&e se!#rit$' lie a east "f #rden' f"r e2a&,le.

Th#s the fa!t is a,,arent that a&"n+ the an!ient Hind#s interest %as !l"sel$ !"nne!ted %ith s"&e !"n!e,t "f a *#stri!e) that the rate -aried %ith the !aste' and that a %i!ed &an &i+ht e led %here an"ther &i+ht n"t e) that the rate -arie



%ith the thin+ lent' l"ans "f &"ne$ and sta,le !"&&"dities lie +rain earin+ a l"%er rate than "thers) and that there %as s"&&a2i&#& li&it f"r a++re+ate interest ,a$&ent.

One striin+ si&ilarit$ et%een the ideas "f Here% and Hind# "n the f"re+"in+ s#*e!t &#st ha-e een n"ti!ed'na&el$' the n"ti"n that there sh"#ld e s"&e &a2i&#& f"r interest ,a$&ent. At the death "f the in+ "r the *#ilee

Kasishtha' II' 59Sa!nd 1""hs = ihe Eas' Ma2 M#ller' edit"r' K"l. H' ,. <) Ga#ta&a' II' =5B.

$ear "r the d"#lin+ "f the ,rin!i,al' interest sh"#ld !ease. 1"th ,e",les drea&ed "f the estalish&ent "f a ta#la r%hen' t" a +reater "r less e2tent' det"r and !redit"r sh"#ld e e(#ali0ed. It %ill e "ser-ed' t""' that "th ,e",les dre%distin!ti"ns et%een "rr"%ers6 &"ne$ "r "ther thin+s &i+ht e lent at #s#r$' here t" the 4 stran+er'4 there t" the 4 e2!eedin+%i!ed ,ers"n 4 "r t" the l"%er !aste.

C"&&er!ial Re+#lati"ns and ?#st Pri!e. / That s"&e ,r"+ress %as &ade in reas"nin+ a"#t !"&&er!ial &atters is-iden!ed $ a set "f &eas#res dire!ted t"%ard se!#rin+ *#sti!e in #$in+ and sellin+. 1"th Here%s and Hind#s had !aref#le+#lati"ns a+ainst false %ei+hts and &eas#res'9 and a+ainst ad#lterati"n. Pr"-isi"ns a+ainst s,e!#lati"n' &"n","l$' and theie %ere e-en &"re si+nifi!ant. Raisin+ &aret ,ri!es $ s,e!#lati-e &eans %as disa,,r"-ed "f $ Raini!al la%' ein+lassed %ith #s#r$ and false %ei+hts' and &iddle&en %ere n"t t"lerated. The e2,"rt "f ne!essar$ arti!les "f f""d %as"ridden' and in ti&e "f fa&ine n" st"rin+ %as all"%ale / all &#st e ,#t #,"n the &aret. Hand in hand %ith these ideas

%ent a li&itati"n "f retail st"reee,ers7 ,r"fits t" f ,er !ent.9The 1rah&ani! la% e2hiits si&ilar !"n!e,ti"ns. It laid a ,enalt$ #,"n an$ !"&,an$ "f &er!hants %h" ,re-ented t

ale "f a !"&&"dit$ $ sellin+ it #nder its ,ri!e' and a lie "ne #,"n th"se &e&ers "f s#!h a !"&,an$ %h" s"ld an arti!leel"n+in+ t" the %h"le !"&,an$ f"r &"re than it %as 4 %"rth'4 t" their "%n ,r"fit. S#++esti-e "f &"de& !"&&er!ial #sa+ehe f"ll"%in+ ,r"-isi"n6 He %h" #$s #na%ares in ",en &aret the ,r",ert$ "f an"ther &an fr"& "ne n"t a#th"ri0ed t" sell

n"t t" la&e) #t the "%ner shall re!"-er his ,r",ert$. If' h"%e-er' he has "#+ht it in se!ret and #nder its ,ri!e' the ,#r!hasnd the -end"r shall e ,#nished as thie-es.

See Kisn#' K' <<5<) A&"s -iii' 5) De#t. 22-' 5B) ?e%ish En!$!l",edia' arti!le "n 4P"li!e La%s.4: ?e%ish En!$!l",edia' ef"re dted. S#!h re+#lati"ns %ere' "f !"#rse' ,"st5e2ili!.These re+#lati"ns all ,"int t"%ard an #nderl$in+ !"n!e,ti"n "f a *#st ,ri!e. The thin+s f"ridden are false %ei+hts'

alse 4 &"ne$ -al#es ;#s#r$>' 4 false 4 !"&&"dit$ -al#es ;&"n","l$' #ndersellin+' enhan!in+' et!.>' 4false4 ,r"fits' and theie. This' indeed' see&s t" e the n"r&al ,"int "f -ie% "f a ,e",le %h"se +""ds and ser-i!es are n"t e-al#ated in &arets ihe e!"n"&i! sense' and it %ill e f"#nd d"%n thr"#+h the Middle A+es' %ith a re!r#des!en!e %ith re+ard t" &"n","li0ed"&&"dities t"5da$. C"&,etiti-e &arets ein+ ,ra!ti!all$ i&,"ssile in "ld Oriental ind#str$' / t" this da$ there is n" "n

ri!e in the Oriental sh",' / the !"ns#&er %as -er$ liel$ t" e e2,l"ited'9 and hen!e these re+#lati"ns.The ,"siti"n "f the state %ith re+ard t" &ines and "ther e!"n"&i! a+en!ies is si+nifi!ant. A!!"rdin+ t" the Instit#te

Kishn#' the in+ %as t" ee, the %h"le ,r"d#!e "f &ines f and let the in+' s" r#ns the ,r"n"#n!e&ent' a,,"int ale "ffi!ia"r the %"rin+ "f his &ines' f"r the le-$in+ "f ta2es and "f fares t" e ,aid at ferries' and f"r his ele,hants and f"rests.9

La"r and Caste. / 8ith s#!h a s"!ial and ind#strial "r+ani0ati"n as %as ,"ssessed $ the "ld Oriental !i-ili0ati"nhere !"#ld ha-e een n" la"r ,r"le& in the &"dern sense. There %ere %a+e %"rers' h"%e-er' and in re+#latin+ theelati"ns et%een e&,l"$er and e&,l"$ee s"&e r#di&ents "f la"r la% %ere ,r"-ided. 1$ 1rah&ani! la%' a hired %"r&an

%h" aand"ned his %"r ef"re the ter& had e2,ired %as t" ,a$ the %h"le a&"#nt "f sti,#lated %a+es t" his e&,l"$er and ine t" the in+.: 8hat had een destr"$ed thr"#+h his ne+li+en!e &#st e &ade +""d t" his e&,l"$er. On the "ther hand' i&,l"$er dis&issed a %"r&an %h"& he had hired ef"re the e2,irati"n "f the ter& a+reed #,"n' he &#st ,a$ the f#ll a&"#f %a+es sti,#lated and a fine t" the in+' #nless the %"r&an %ere t" la&e. Fr"& the M"sai! la%s little !an e +athered.

: Char+ed 4#nreas"nale rates'4 %e %"#ld sa$. HI' B. III' . Yishn#' K' B.

As %a+es are &enti"ned' there %ere %a+e earners' #t their ,a$&ent %as ,r"al$ lar+el$ in ind. The !hiefe+#lati"ns !"n!erned &er!$ and *#sti!e t" the la"rer' !"&&andin+ the dail$ ,a$&ent "f %a+es 9 and %arnin+ th"se %h",,ressed the hirelin+.:

La"r %as re+arded as h"n"rale $ the Here%s) #t n" s,e!ial en!"#ra+e&ent a,,ears t" ha-e een +i-en t" it'2!e,t in a+ri!#lt#re. It %as n"t l#itil trade %as later de-el",ed that attenti"n %as ,aid t" the artisan %a+e %"rer' the M"saa% sh"%in+ al&"st n" re+#lati"n "f trade.

Perha,s here is the ,la!e t" &enti"n riefl$ the e!"n"&i! si+nifi!an!e "f the !aste s$ste& as f"#nd a&"n+ the Hindt %as' as C"ssa sa$s' di-isi"n "f la"r +"ne t" seed. It st""d f"r ri+idit$ "f s"!iet$ and f"r ,er&anent ine(#alit$ a&"n+ s"!ilasses' an attit#de %hi!h &eans a ,"int "f -ie% in e!"n"&i! th"#+ht. The f"#r !astes' e+innin+ at the t",' %ere6 1rah&an



shatri$as' Kais$as' and S#dras. The f i&!ti"ns %hi!h the d"&inant ele&ents !"n!ei-ed t" el"n+ t" these !astes %ere as"ll"%s 6: 1rah&anas e2isted t" st#d$ and tea!h the Keda' t" &ae sa!rifi!es f"r "thers' and t" +i-e and a!!e,t al&s)

shatri$as %ere !"nstantl$ t" ,ra!ti!e ar&s and ,r"te!t the %"rld' re!ei-in+ d#e re%ard in ta2es) Kais$as %ere theh#sand&en' tendin+ !attle and tilla+e ein+ their !hief f#n!ti"ns' %ith traffi! and &"ne$5lendin+ all"%ale) finall$' the S#%as the artist and artisan' ha-in+ as his +eneral d#t$ the ser-i!e "f the s#,eri"r !astes. One "f the +reat d#ties "f the in+ %aee, the f"#r !astes in the ,ra!ti!e "f their se-eral d#ties.

That s"&e elasti!it$ %as ,"ssile in this s$ste& a,,ears fr"& the fa!t that in ti&e "f distress ea!h !aste &i+ht f"ll"he "!!#,ati"n "f the "ne el"% it. In +eneral' h"%e-er' the &"st se-ere se,arateness %as t" e &aintained' and an$ &an

ha-in+ !"nne!ti"n %ith a %"&an "f "ne "f the l"%er !astes %as t" e ,#t t" death.:D!#t. 2ri-' IS) Le-. 2i2' . Mai. ffi' B.: Sa!red 1""s "f the East' K"ls. II and IK' translati"hs edited $ Ma2 MiiUer 6 Kishn#' in' <5<' B5<) Kasish

I' 5<=.: Kishn#' K' .iA+ri!#lt#re Fa-"red. / 4 Alth"#+h tradin+ +i-es +reater ,r"fits' these &a$ all e l"st in a &"&ent) theref"re' ne-e

hesitate t" #$ land'4 r#ns an "ld Raini!al &a2i& )9 and the sa+e a#th"r "f the "" "f Pr"-ers' in a lie -ein' sa$s' 4Hehat tilleth the s"il shall ha-e ,lent$ "f read.49 In fa!t' alth"#+h an earlier !"nditi"n in %hi!h the she,herd %as fa-"red "-ehe tiller "f the s"il &a$ e indi!ated $ tist"r$ "f Ael and Cain' it has een %ell said that a+ri!#lt#re' %as the asis "f the

nati"nal life "f the Israelites' state and !h#r!h "th ein+ f"#nded #,"n it.7 The d"&inant ,la!e +i-en t" a+ri!#lt#re &a$ e!!"#nted f"r in ,art "n the +r"#nd that the !"des' h$&ns' and &a2i&s "f these Oriental !i-ili0ati"ns %ere lar+el$ dra%n fr"ti&e %hen ,ast"ral ,e",les %ere *#st settlin+ d"%n t" an a+ri!#lt#ral life' and it see&s liel$ that a &"re "r less !"ns!i"#s#r,"se "f the la%+i-ers %as t" fi2 their ,e",le in s#!h a life.:

On the "ther hand' there %as a tenden!$ t" re+ard trade and the !rafts %ith disfa-"r. The Kais$a h#sand&an st""d"-e and al""f fr"& the S#dra artisan. The ?e% !a&e t" re+ard the trader %ith a !"nsiderale de+ree "f !"nte&,t' !allin+ hCanaanite.4 9 T" %hat e2tent it %as !a#se' "r t" %hat e2tent effe!t' &a$ e i&,"ssile t" sa$' #t !"#,led %ith this attit#d

he Here%s is the fa!t that the$ did n"t enter int" !"&&er!e "r &an#fa!t#res t" an$ !"nsiderale e2tent. In the 1""s "fMa!!aees h#sandr$ is &enti"ned' #t trade is n"t. ?"se,h#s states that e-en in his ti&e the ?e%s %ere n"t addi!ted t" tradeThere see&s t" e n" e-iden!e that free5"& Israelites %ere artisans ,ri"r t" the e2ile' and the !rafts %ere a!!"#nted i+n"lnd left t" sla-es.: It is tr#e that S"l"&"n !arried "n !"&&er!e' #t e-en in this !ase it %as d"ne thr"#+h the Ph"eni!ians' a$ the +"-ern&ent rather than the ,e",le.

: Feft. a. : Pr"-. 2ii' ;Re-ised Kersi"n>. Fle&ish En!$d"feHa' art. 4A+ri!#lt#re.4: Cf. a#ts' Gesehdi!he Ent&!ei#n+ dr Nati"nal Oe"n"&ie' ,. .: E.+. H"sea 2ii' ' .: Mi!aeliS La%s "f M"ses' K"l. I' art. 022-iii. 1#t f"r !ases "f d"&esti! &an#5!t&esee Claaii. hr' <' ) Pr

22i' =5<.This relati-el$ hi+h estee& f"r a+ri!#lt#re is' ,erha,s' n"t s" si+nifi!ant as it %"#ld e in a ,e",le %hi!h had

r"+ressed f#rther ind#striall$' #t still it re&ains a n"te%"rth$ !hara!teristi! "f &an$ Orientals in their attit#de t"%ardnd#str$. And this affe!ted their re+#lati"ns "th ,"siti-el$ and ne+ati-el$) it &eant that &#!h re+#lati"n "f later ti&es' %ithhe ideas !"rres,"ndin+' %as #n!alled f"r) %hile their la%s %ere h"stile t" the +r"%th "f &an#fa!t#res and !"&&er!e.

Se-enth and ?#ilee Years. / J#ite ,e!#liar t" the Here% la% %as the instit#ti"n "f the se-enth and *#ilee $earsThis instit#ti"n %as ased #,"n the !"n!e,t "f G"d as a in+ "%nin+ all the land "f Israel6 4 The land shall n"t e s"ld f"r e"r the land is &ine4 ;Le-. 22-' <>. Th#s' t" a la%+i-er %h" desired t" ,re-ent ine(#alit$ in %ealth' t" ,reser-e fa&il$ and

rial ,r",ert$' and t" ee, his ,e",le atta!hed t" their !"#ntr$' it %as eas$ t" ,r"hiit the ,er&anent alienati"n "f lands fr"&he "ri+inal ,"ssess"r. This M"ses did $ ena!tin+ that e-er$ fiftieth $ear the Here%s sh"#ld 4 ret#rn e-er$ &an #nt" his"ssessi"n 4 ;Le-. 22-' >. It f"ll"%s that a sale "f land reall$ a&"#nted t" n" &"re than a lease' and the ,ri!e ne!essaril$

-aried %ith the re&"teness "f the *#ilee $ear. This %as !learl$ f"reseen6 4 A!!"rdin+ t" the n#&er "f $ears after the *#ileh"# shalt #$ "f th$ nei+h"r . . . f"r a!!"rdin+ t" the n#&er "f the fr#its d"th he sell #nt" thee4 ;Le-. 22-' B' >.

E-er$ se-enth $ear %as t" e "ne in %hi!h the land la$ fall"%6 4 1#t in the se-enth $ear shall e a saath "f rest #he land.4 The Rais e&,hasi0ed the reli+i"#s intent "f the &eas#re) #t it see&s n"t i&,r"ale that the e!"n"&i!

desirailit$ "f restin+ the land %as re!"+ni0ed. This ,r"-isi"n' %hi!h at first referred t" land al"ne' s""n %as +i-en a r"ade



i+nifi!an!e) f"r' t" the end that there sh"#ld e n" ,""r' !redit"rs %ere !"&&anded t" release their det"rs "n the se-enth $De#t. 2-' >. Perha,s the &"st l"+i!al inter,retati"n t" ,#t #,"n this !"&&and %"#ld e

that d#rin+ the se-enth $ear interest %as t" e s#s,ended / 4 he shall n"t e2a!t it'4 / and then it &i+ht e !"nne!t%ith the fa!t that a +eneral fall"% %"#ld tae a%a$ the &eans "f interest ,a$&ent.9 The Tal&#d' h"%e-er' inter,reted thee-enth5$ear ,r"-isi"n as "rdainin+ that dets sh"#ld !ease' th#s &ain+ a -irt#al stat#te "f li&itati"ns. 8hen ind#str$ andrade in!reased' it e!a&e ne!essar$ t" +et ar"#nd s#!h a ha&,erin+ &eas#re $ n#&er"#s s#terf#+es "r le+al fi!ti"ns6 th#

%a+es' l"ans "n ,led+es' n"tes +#aranteed $ &"rt+a+e' and n"tes %ai-in+ the ri+ht f"r the "ne ,arti!#lar !ase' !a&e t" r#nhr"#+h "ne "r &"re 4 se-enth $ears.4

There see&s t" e n" +""d e-iden!e that the *#ilee $ear' as s#!h' %as e-er literall$ e,t) the se-enth $ear a,,arent%as.:

S#&&ar$ Generali0ati"ns. / Lar+el$' th"#+h n"t entirel$' #,"n the asis "f the ,re!edin+ fa!ts' s"&e r"ad+enerali0ati"ns &a$ n"% e &ade a"#t the e!"n"&i! ideas "f these ,e",les and the #nderl$in+ ,hil"s",h$ "f life #,"n %hiheir e!"n"&i! !"n!e,ts rested.

. A&"n+ the &"st salient !hara!teristi!s "f their s"!ial ,hil"s",h$ &a$ e &enti"ned its si&,li!it$. 1ein+ in thehildh""d "f !i-ili0ati"n' it is n"t stran+e that the$ !"n!ei-ed "f life as .a %h"le. Their s"!ial life %as in a sense #nde-el",edr' etter' #ndifferentiated' and the s"!ial s!ien!es %ere in a lie !"nditi"n. Reli+i"n' ethi!s' la%' e!"n"&i!s' ,hil"s",h$' %ene2tri!al$ "#nd t"+ether.

<. In this a++re+ate "f s"!ial !"n!e,ts the d"&inant &e&er %as reli+i"#s "r &"ral. In fa!t' it is r"#+hl$ tr#e that th

Oriental !i-ili0ati"ns %ere in the the"l"+i!al sta+e' ,assin+ in s"&e !ases t" the &eta,h$si!al. There %as a d"&inant ,riestllass' and it %as this !lass %hi!h ,reser-ed' f"r&#lated' and handed d"%n the traditi"ns that "th e2,ressed and li&ited!"n"&i! th"#+ht. The r#les "f the

9 See Mi!haelis' La%s "f M"ses' K"l. II' arts. B'B.7 Neh. 05 .9a : T"se,h#s' AnH(#Uies "f the ?e%s' 1. III' Cha,' -iii' X i) IK. ' ' 0) in' 0U' 1rah&ani! "r M"sai! !"des %hi!h "re #,"n e!"n"&i! &atters had a reli+i"#s si+nifi!an!e6 $ f"ll"%in+ the& "ne

+ained ,ri&aril$' n"t e!"n"&i! %ell5ein+' #t a ri+ht life' a !lear !"ns!ien!e' "r s,irit#al ,erfe!ti"n. 8itness the ,r"hiiti"f !ertain f""ds' and "!!#,ati"ns. And the sa&e idea is &anifest in the r#les "f !aste. E-en %hen !harit$ %as "rdained it %aie s,irit' leadin+ t" an e&,hasis "f the s,irit#al e2!ellen!e "f the +i-er a"-e the enefit re!ei-ed $ the ,""r. Or' %hen th

1rah&ans th"#+ht a"#t ,"-ert$ and #ne(#al distri#ti"n "f %ealth' the$ si&,l$ attri#ted s#!h e-ils t" the sins "f a ,re-i"#2isten!e and re!"&&ended that the$ e "rne in ,atien!e. The idea "f fatalis& %as a,,lied t" %ealth. N" d"#t' h"%e-er' tr"n+ tenden!$ a,,ears' at least a&"n+ the ?e%s' t" ,#t the se!"ndar$ !"nsiderati"n "f l"n+ life and ,r"s,erit$ in the

"re+r"#nd.. A !hara!teristi! "f the sit#ati"n %as the &in#te re+#lati"n "f e-er$da$ life. The sa!red la%s "f the 1rah&ani!

i-ili0ati"n re+#lated e-er$thin+' fr"& the !leanin+ "f "ne7s teeth t" "ne7s f#neral "lati"ns) and the M"sai! !"de %ith its2,ress dire!ti"ns !"n!ernin+ the s"%in+ "f -ine$ards' eatin+' and tri&&in+ hair and eard sh"%s the sa&e tenden!$. As ha,,eared a"-e' &an$ instit#ti"ns %hi!h %ere ,ri&aril$ e!"n"&i! %ere th#s re+#lated.

. One "f the &"st striin+ !hara!teristi!s "f "th Here% and Hind# e!"n"&i! th"#+ht' as it %as e2,ressed $hil"s",hers and la%+i-ers at least' %as the !"nfli!t it sh"%s et%een e!"n"&i! sti&#li and ethi!"5reli+i"#s ideas. Th"sea!t"rs' s#*e!ti-e and "*e!ti-e' %hi!h tended t" de-el", e!"n"&i! ,r"+ress %ere n"t in har&"n$ %ith these ,e",les7hil"s",h$ "f life. A&"n+ "ther thin+s' that ,hil"s",h$ %as !hara!teri0ed $ s#!h a la! "f indi-id#alis& and "f &aterialis&#!h a disa,,r"ati"n "f ind#str$ "ther than a+ri!#lt#re and relati-e indifferen!e t"%ard %ealth'9 s#!h a de+ree "f ,assi-it$ atalis&' that its d"&inan!e &ade an$ +reat ind#strial !i-ili0ati"n i&,"ssile.

9 This %as far less tr#e "f the Here%s than "f the Hind#s' the f"r&er "ften indi!atin+ a een a,,re!iati"n "f the +"

hin+s "f the earth.;a> 1ein+ e2tre&el$ idealisti!' there %as an e2altati"n "f the instit#ti"n and a s#"rdinati"n "f the indi-id#al' ,lain

een in the ,"liti!al s$ste&. The state "r the !h#r!h !a&e first' and %as e-er$thin+. 4A"-e all'4 sa$s a#t0' 4as a !"ntr"llin#nda&ental "f the entire s"!ial and e!"n"&i! the"r$ "f India !an e ,la!ed the estheti! self5denial and ren#n!iati"n' the

#nreser-ed re!"+niti"n and +l"rifi!ati"n "f as"l#te ,"liti!al des,"tis&' the denial "f the ,ers"nal %"rth "f &an 4 %hi!h it"ssessed.9 N"% a !ertain de+ree "f indi-id#alis& see&s t" ha-e een ne!essar$ t" the de-el",&ent "f e!"n"&i! th"#+ht.

8ith"#t it ind#str$ %as li&ited $ la! "f &"ti-e' e!"n"&i! relati"ns %ere si&,le' and e!"n"&i! th"#+ht lar+el$ restri!ted r"&#l+atin+ the interests "f the r#lin+ "d$.



Cl"sel$ related t" this !"nditi"n %as the la! "f a !ertain hard5headed &aterialis& %hi!h has led the O!!ident t"+l"rif$ the &aterial asis f"r !i-ili0ati"n' %ealth. Instead "f first deif$in+ and then e2t"llin+ dis!"ntent' /4 di-ine dis!"nten/ and !"ntin#all$ stri-in+ t" raise their standards "f li-in+. Orientals tended t" li&it and !r$stalli0e their standards' a"lishdis!"ntent. Their ,hil"s",h$ did n"t lead the& t" anal$0e ha,,iness int" different +rades "r ,lanes "f satisfa!ti"n) ha,,ines%ith the& %as +enerall$ re+arded as attained $ de!reasin+ %ants. This +eneral attit#de is "ne %hi!h is n"t in har&"n$ %ithd"&inant n"te "f "#r !i-ili0ati"n' and it is ,r"ale that fe% A&eri!ans reall$ elie-e that it is easier f"r a !a&el t" ,ass

hr"#+h the e$e "f a needle than f"r a ri!h &an t" enter the in+d"& "f hea-en' #nless the$ e the ,""r. 1et%een these ideals the$ find e2,ressi"n in Christianit$' and O!!idental !i-ili0ati"n there has al%a$s een !"nfli!t' and the$ ha-e e!"&en!reasin+l$ i+n"red in "#r ,ra!ti!e.

;> A!!"rdin+ t" the Kedas' seein+ after %ealth leads t" sin. E-en lar+e5s!ale !"&&er!e %as fr"%ned #,"n' and"&eti&es a+ri!#lt#re itself. The Here%s' %hile s"&eti&es de!r$in+' s"&eti&es als" ,raise %ealth' and "n the

9 Ges!. EfU%i!eh&+ d. Nat. Oe.' ,. . &STORY OF ECONOMIC THOUGHT%h"le $ n" &eans sh"% the as!eti! s,irit "f the Hind#s) #t as a +eneralit$ the state&ent h"lds that !"&,ared %ith

he O!!ident %ealth and n"n5a+ri!#lt#ral ind#str$ %ere re+arded %ith relati-e disfa-"r "r indifferen!e. The$ sa% that ri!hes%as n"t the end) #t %ent f#rther and "-erl""ed its #tilit$ as a &eans.

;!> The ele&ent "f ,assi-it$' "r e!"n"&i! indifferen!e' alread$ referred t"' is n"t in itself ,e!#liar t" Orietital th"#+t is' h"%e-er' #n#s#all$ str"n+ there' and its !"nne!ti"n %ith a rather ri+id "d$ "f ,hil"s",h$ / !r$stalli0ed' as it %ere /

f n"t #ni(#e' ,e!#liar. There it f"#nd e2,ressi"n in %ritten !"des) there it %as ,art "f an effe!ti-e' l"n+5!"ntin#ed reli+i"#s$ste&) there it %as a!t#all$ a,,lied t" e!"n"&i! th"#+ht and ,ra!ti!e. T" %hat e2tent this is t" e attri#ted t" !li&ate andr",i!al en-ir"n&ent need n"t e said. There %as the tenden!$ t" a!!e,t %ealth "r ,"-ert$ %ith"#t a str#++le6 it %as G"d7s r the re%ard f"r the a!ts "f a ,re-i"#s life' et!. This &i+ht e ter&ed e!"n"&i! fatalis&.

B. T%" f#rther !hara!teristi!s "f Oriental th"#+ht' %hi!h %ere lar+el$ the res#lt "f ,"ints alread$ t"#!hed #,"n' &ae n"ted ne2t. In the first ,la!e' there is its fi2it$ and !"nser-atis&. The +eneral ai& "f s"!ial re+#lati"n %as t" &aintain the"!ial e(#iliri#&' and here' as else%here a&"n+ an!ient ,e",les' stati! ideals d"&inated. This finds e2,ressi"n in the !aste$ste&' and in the is"lated nati"nal life. It is seen in the l"n+5stati"nar$ !"nditi"n "f their !i-ili0ati"n.9

. T" sa$ that the !"n!e,t "f s"!iet$ and s"!ial %elfare %as ,r"&inent &a$ see& stran+e' $et the state&ent a,,earsr#e. This !"n!e,t' h"%e-er' %as #t little lie "#r "%n' f"r it %ent hand in hand %ith a la! "f indi-id#al ri+hts %hi!h shar,

differentiates it fr"& ,resent5da$ ideas. N"r is this ,"int &ade %ith the idea "f dra%in+ a distin!ti"n9 ?a,an n"t l"n+ sin!e' China e-en t"5da$' has *#st a%aened fr"& this i>"int "f -ie%. These ,e",les' fr"& 1$0anti

" ?a,an' ha-e li-ed an is"lated nati"nal life and sh"%n a lar+e &eas#re "f nati"nal !"n!eit' tra!in+ their "ri+in t" the s#n' etet%een Oriental th"#+ht and all O!!idental th"#+ht. The Hind#s7 la%s !"n!ernin+ %ei+hts and &eas#res' ad#lterat

2!han+e' sanitar$ ,ra!ti!e' and "ther &atters sh"% this !"n!e,t. A&"n+ the Here%s there %ere la%s ,r"-idin+ that r"en+lass sh"#ld e #ried' that %ater sh"#ld n"t e thr"%n in the streets d#rin+ the s#&&er' and that there sh"#ld e n" !hi!en

r d#n+hills %ithin the !it$ ;?er#sale&>.9 Streets %ere n"t t" e l"!ed $ deris "r ,r"*e!tin+ h"#ses. F"r en!"#ra+in+ frenter!"#rse' the %idth "f r"ads %as ,res!ried' the %idth ein+ +reater in the !ase "f hi+h%a$s et%een !"&&er!ial !enters

And there %ere re+#lati"ns !"n!ernin+ %ei+hts and &eas#res si&ilar in s,irit t" th"se "f the Hind#s. Th#s "ne &a$ !"n!l#dhat' th"#+h the ,"int "f -ie% %as (#ite different' there %as a sense "f s"!ial s"lidarit$ e2,ressin+ itself in re+#lat"r$ &eas#

%hi!h rese&le in a %a$ the le+islati"n "f re!ent ti&es.This fa!t &a$ e re+arded as a !"n!"&itant "f their idealisti! ,hil"s",h$.One %riter "n the hist"r$ "f the Here%s has &#!h e&,hasi0ed %hat he !alls the first a,,earan!e "f S"!ialis&.9

S"!ialis&' h"%e-er' is n"t the %"rd t" #se. 8hat %e find in the 1ile is' first' a !aref#l ,r"-isi"n f"r the ,""r' ,r"te!tin+ the

r"& e2,l"itati"n' fr"& ,er&anent det' and en*"inin+ free l"ans and !harit$) and then n#&er"#s atta!s $ the ,r",hets #,he in*#sti!e and ",,ressi"n "f the ri!h. It &a$ e a+reed that the ai& "f all this %as a nati"nal s"lidarit$ %hi!h al&"st i+n"rhe indi-id#al' and it see&s that M"ses had the ,re-enti"n "f ine(#alit$ "f %ealth in &ind in &ain+ his la%s) #t that d"es

&ae S"!ialis&' and is !ertainl$ -er$ far fr"& s"!ial de&"!ra!$. Had the M"sai! la% een !arried "#t' the res#lt %"#ld rathha-e

: See ?e%ish En!$!l",edia' arti!le "n 4P"li!e La%s.4 The str"n+ fa&il$ sense "f the &"de& ?e% and his re&aralersistent ra!e s"!ialit$ are n"te%"rth$' th"#+h s#,erfi!iall$ he "ften see&s a rather selfish indi-id#alist. The effe!t "fent#ries "f a#se &#st e re&e&ered.

Renan' Hisfr$ "f ;he Pe",le "f Israel Cha,. KI. S



een' ,erha,s' lie a s"rt "f ,eri"di!all$ enf"r!ed !"&&#nis&.It re&ained f"r Christianit$ t" ,#t the Old Testa&ent ideals "n a r"ader and &"re de&"!rati! asis. M"ses' $

i&itin+ l""d re-en+e and le+islatin+ &er!$ and !harit$' t"" a ste, in ad-an!e) #t he "nl$ ,re,ared the %a$ f"r the G"ldeR#le. Si&ilarl$ the Old5Testa&ent ste,s t"%ard e(#alit$ "f ,r",ert$ la$ a! "f the &"re h#&ane and de&"!rati! ideals "f"&&#nit$ held #, $ Christ and his dis!i,les.

En"#+h has een said t" +i-e a &"re ,"siti-e and !"&,rehensi-e idea "f the e!"n"&i! th"#+ht "f the Here%s and

Hind#s than is +enerall$ had) and in an$ !ase C"ssa7s di!t#& that Oriental e!"n"&i! th"#+ht 4 !an all e red#!ed t" a fe%&"ral ,re!e,ts a"#t the -irt#e "f ind#str$' te&,eran!e' and e!"n"&$' and a"#t the d#t$ "f "nl$ desirin+ %ealth f"r the

#r,"se "f %"rshi, and !harit$'4 is !learl$ t"" narr"%. It !an "nl$ e s" red#!ed at the e2,ense "f tr#th.CHAPTER IKTHE ECONOMIC THOUGHT OF THE ATHENIANPHILOSOPHERSIt is nat#ral t" ,ass fr"& the Orient t" Gree!e. 1"th $ +e"+ra,h$ and $ the !hara!ter "f her ,e",le' Gree!e %as

l"sel$ related t" Asiati! !i-ili0ati"n. H"%e-er &#!h s!h"lars differ as t" the e2tent "f the !"ntri#ti"ns &ade $ Asia andAfri!a t" Gree !#lt#re' it &a$ safel$ e said that s#!h !"ntri#ti"ns %ere !"nsiderale. 1#t' %hile !ertain si&ilarities e2ist'here are i&,"rtant differen!es) and s" dire!tl$ essential has een the ,art ,la$ed $ Gree ideas in the de-el",&ent "f &"dh"#+ht that the$ de&and n" s&all share "f attenti"n.

Ori+in "f the State) First E!"n"&i! Inter,retati"n "f Hist"r$. / One "f the striin+ fa!ts a"#t the ,hil"s",h$ "f

ertain Gree thiners is that it rests #,"n %hat &a$ e tr#l$ !alled an e!"n"&i! inter,retati"n "f hist"r$. T" e s#re' theAthenian ,hil"s",her7s !"n!e,ti"n "f hist"r$ %as i&,erfe!t' and $ an e!"n"&i! inter,retati"n is n"t &eant a &aterialisti! "

#t %ith these &"difi!ati"ns' the state:5&ent is r"adl$ tr#e. 8itness the f"ll"%in+ fr"& Plat"6 4 A State' . . . arises' as I"n!ei-e' "#t "f the needs "f &anind) n" "ne is self5s#ffi!in+' #t all "f #s ha-e &an$

9 S"&e "f the &"st #sef#l s,e!ial referen!es are6 1"e!h' A.' The P#li! E!"n"&$ "f the Athenians) L""s' I. A.'St#dies in the P"liti!s "f Arist"tle and the Re,#li! "f Plat" ;1#i. "f the Uni-ersit$ "f I"%a' >) Tre-er' A. A.' A Hist"r$Greeh E!"n"%ti! Th"#+ht ;>) Ashle$' 4Arist"tle7s D"!trine "f 1arter'4 J#arterl$ ?"#rnal "f E!"n"&i!s' N"-e&er' Si&e$' 4E!"n"&i! The"r$ a&"n+ the Grees and R"&ans'4 E!"n. Re-.' ==) On!en' Die Staatslehre des Arist"teles'

B) Mari+n$' Hist"ire de I7E!"n"&ie P"liti(#e des An!iens Pe#,Us) D#"is' Pri!is de KHist"ire des D"!t. E!"n.' Cha,. Ind ili"+ra,h$ there ,resented. The !hief s"#r!es are the P"liti!s and Ethi!s "f Arist"tle' and Plat"7s Re,#li! and La%s) hese %"rs are a-ailale in the e2!ellent translati"ns $ ?"%ett and $ 8elld"n.

SI

%ants. . . . Then' as %e ha-e &an$ %ants' and &an$ ,ers"ns are needed t" s#,,l$ the&' "ne taes a hel,er f"r "ne#r,"se and an"ther f"r an"ther) and %hen these ,artners and hel,ers are +athered t"+ether in "ne haitati"n the "d$ "fnhaitants is ter&ed a State. . . . And the$ e2!han+e %ith "ne an"ther' and "ne +i-es' and an"ther re!ei-es' #nder the idea thhe e2!han+e %ill e f"r their +""d.4 9 The "ri+in "f the state' then' is tra!ed t" the la! "f indi-id#al self5s#ffi!ien!$ in theatisfa!ti"n "f %ants' and t" the ad-anta+e "f s,e!iali0ati"n and e2!han+e. S#!h reas"nin+ indi!ates an i&,"rtant ste, t"%arhe de-el",&ent "f e!"n"&i! anal$sis.

On this ,"int' Arist"tle7s d"!trine is less ,#rel$ rati"nal. He ass#&es that an i&,#lse t" ,"liti!al ass"!iati"n is innatll &en6 4 Man is nat#rall$ a ,"liti!al ani&al.4 The +enesis "f the state is f"#nd in the h"#seh"ld' %hi!h' in its t#rn' rests #,"he inailit$ "f &ale and fe&ale t" e2ist inde,endentl$' and #,"n the ine(#alit$ a&"n+ &en %hi!h leads t" sla-er$. The

h"#seh"ld is 4 the ass"!iati"n nat#rall$ f"r&ed f"r the s#,,l$ "f e-er$da$ %ants.4 9 Then !"&es the -illa+e' and finall$ thetate6 4 Lastl$' the ass"!iati"n !"&,"sed "f se-eral -illa+es in its !"&,lete f"r& is the State' in %hi!h the +"al "f f#llnde,enden!e &a$ e said t" e first attained.4 The state is f"r&ed t" &ae life ,"ssile.

Di-isi"n "f La"r. / Plat"7s dis!#ssi"n "f s,e!iali0ati"n and e2!han+e !learl$ s#++ests the idea "f 4 di-isi"n "fa"r.4 Indeed' the Gree ,hil"s",hers7 !"n!e,t "f di-isi"n "f la"r' %hile !r#de' is the #lti&ate father "f the later dis!#ssi"nf H#t!hes"n' H#&e' and Ada& S&ith. 8hen' h"%e-er' Plat" sa$s6 4. . . %e &#st infer that all thin+s are ,r"d#!ed &"relentif#ll$ and easil$ and "f a etter (#alit$ %hen "ne &an d"es "ne thin+ %hi!h is nat#ral t" hi& and d"es it at the ri+ht ti&nd lea-es "ther thin+s'4 :

Re,#li!' 1. II' ,,. ff.' Ed. Ste,h.) La%s' 1. IH' ,,. ff. : P"liti!s' 1. I' Cha,' # ;8elld"n' ,. >. sRe,#li!' 1. II' ,. =.

ECONOMIC THOUGHT OF ATHENIAN PHILOSOPHERS S



he d"es n"t ha-e in &ind the !"&,le2 &"dern (#esti"ns !"nne!ted %ith di-isi"n "f la"r. The Gree ,hil"s",hersefer rather t" a si&,le se,arati"n "f e&,l"$&ents' and their treat&ent la!s the si+nifi!an!e that !"&es fr"& the !"nne!ti"nhe s#*e!t %ith a s$ste& "f e!"n"&i!s.

Their ideas !"n!ernin+ di-isi"n "f la"r rested #lti&atel$ #,"n an anal$sis "f h#&an %ants. The three ,ri&ar$ %anf &an' said the$' are f"r f""d' !l"thin+' and shelter. Theref"re' there are at least h#sand&en' %ea-ers and sh"e&aers' and

h"#se #ilders) %hile s&iths and !ar,enters !"&e int" e2isten!e t" relie-e the h#sand&en. E2!han+e a&"n+ these &aes a

&er!hant !lass ne!essar$. Fe% ,la!es' &"re"-er' are self5s#ffi!ient' hen!e f"rei+n traders and sail"rs find e&,l"$&ent.Mean%hile' an"ther +r"#,' !"nsistin+ "f hirelin+s and sla-es' arises. The f#n!ti"n "f the retail trades is -alidated "n the +r"hat %ith"#t the& the seller &i+ht e !"&,elled t" %ait "r t" de,art %ith his +""ds #ndis,"sed "f.

A S"!ial P"int "f Kie% Taen. / In e&,hasi0in+ the ad-anta+e "f di-isi"n "f la"r' the state %as th"#+ht "f ,ri&aather than the indi-id#al' and the !"n!l#si"n &a$ e dra%n that' in +eneral' Athenian thiners stressed the ,"liti!al s"lidarif s"!iet$. The$ $ n" &eans "-erl""ed the interests "f the indi-id#al' #t al%a$s the indi-id#al %as ,ri&aril$ the !iti0en' iti0en %h"' "n the "ne hand' de,ended #,"n the state f"r his hi+hest de-el",&ent' and %h"' "n the "ther hand' $ his

de-el",&ent ,r"&"ted the hi+hest +""d "f the %h"le. The$ e2alted the state a"-e the &an) !i-ili0ed &an' the$ reas"ned' in"t t" e th"#+ht "f "#tside the state) %ith"#t the state "ne is either &"re "r less than a &an. Arist"tle7s reas"nin+ is in ,"intTh#s the state is $ nat#re !learl$ ,ri"r t" the fa&il$ and t" the indi-id#al' sin!e the %h"le is "f ne!essit$ ,ri"r t" the ,art) 2a&,le' if the %h"le "d$ e destr"$ed' there %ill e n" f""t "r hand' e2!e,t in an e(#i-"!al sense' as %e &i+ht s,ea "f at"ne hand. . . . The ,r""f that the state is a !reati"n "f nat#re and ,ri"r t" the indi-id#al is that the

indi-id#al' %hen is"lated' is n"t self5s#ffi!in+) and theref"re he is lie a ,art in relati"n t" the %h"le.4 9Plat"' in a!!"rd %ith his hi+hl$ idealisti! and !"&&#nisti! eliefs' ,#ts the !ase &"re f"r!ef#ll$6 Y"# are t" re+ard

$"#rself and ,"ssessi"ns 4 n"t as el"n+in+ t" $"#rsel-es' #t as el"n+in+ t" $"#r %h"le fa&il$' "th ,ast and f#t#re' and $&"re d" I re+ard "th fa&il$ and ,"ssessi"ns as el"n+in+ t" the state) %heref"re ... I %ill le+islate %ith a -ie% t" the %h"le"nsiderin+ %hat is est "th f"r the state and f"r the fa&il$' estee&in+ as I "#+ht the feelin+s "f an indi-id#al at a l"%er ra.4 9

Indeed' re+#lati"ns si&ilar t" th"se f"#nd a&"n+ &"re eastern ,e",les %ere n"t la!in+ in Athens. F"r e2a&,le' th%ere ins,e!t"rs "f %ei+hts and &eas#res' ins,e!t"rs "f +""ds ,la!ed "n sale' har"r "-erseers' et!. The ,ri!e "f salt %ase+#lated) the e2,"rtati"n "f %heat %as f"ridden) and the sla#+hter "f shee, and +"ats d#rin+ la&in+ ti&e %as n"t all"%e

The state als" ,ensi"ned th"se !ri,,led in %ar' and in s"&e !ases +a-e al&s t" the destit#te.After all has een said' h"%e-er' it &#st e "ser-ed that little e-iden!e "f a !"n!e,t "f s"!iet$ as distin!t fr"& the

tate is t" e f"#nd in Gree %ritin+s. The r"ad and dee, i"l"+i!al and ,s$!h"l"+i!al ases "f s"!ial life %ere n"t #nderst

r e&,hasi0ed' #t rather the Gree state %as a s"rt "f &e!hani!al !"&inati"n "f indi-id#als "r fa&ilies.Inheritan!e. / As f#rther e-iden!e "f this !"n!e,ti"n "f s"!iet$' and as an indi!ati"n "f the stati! !hara!ter "f the

deal' Plat"7s ,lan f"r re+#latin+ inheritan!e 9 and ,",#lati"n : is "f interest. In his ideal state ea!h %as t" ha-e an inalienalll"t&ent "f land. Ea!h %as t" !h""se a sin+le heir' ad",tin+ a s"n if he had n" !hildren' "r !h""sin+ a h#sand f"r his

da#+hter' if &ale iss#e %ere la!in+. Other ,r",ert$ &i+ht e distri#ted a&"n+ his re&ainin+ !hil5 P"liti!s' 1. I' Ch. ii.< ?"%ett7s Plat"' K"l. K' ,. =. La%s' 1. K' ,. =) 1. I' ,,. <' <. ;Ed. Ste,h.>: Re,#li!' 1. K' ,,. =' . ;Ed. St(*h.>ECONOMIC THOUGHT OF ATHENIAN PHILOSOPHERS BBdren.: Clearl$ "ne "*e!t %as t" ee, the fa&il$ inta!t and t" ,reser-e its ,r",ert$ t" it) and these &eas#res re&ind

ne "f th"se ad",ted $ the Here% la%+i-ers.

Plat" !har+es an!ient le+islat"rs %ith ein+ t"" +""d5nat#red in all"%in+ a &an t" dis,"se "f his ,r",ert$ $ %ill6 he$ %ere afraid "f the testat"r7s re,r"a!hes' and s" the$ ,assed a la% t" the effe!t that a &an sh"#ld e all"%ed t" dis,"se "

his ,r",ert$ in all res,e!ts as he lied) #t $"# and I' if I a& n"t &istaen' %ill ha-e s"&ethin+ etter t" sa$ t" "#r de,artin+iti0ens'4 9 and he +"es "n t" e2,ress his elief that the interest "f the state sh"#ld ,red"&inate.

All this is s#rel$ s#++esti-e as t" ,resent5da$ (#esti"ns "f re+#latin+ inheritan!es.P",#lati"n. / 1#t the (#esti"n arises' %hat %as t" e!"&e "f !hildren "ther than th"se %h" %ere heirs t" the fathe

"t3 In ans%er' Plat" ,r"-ided f"r a !aref#l re+#lati"n "f ,",#lati"n. This %as ne!essar$ t" ,reser-e the s"!ial e(#iliri#&. tate %as t" !"nsist "f a li&ited n#&er "f !iti0ens ;B==>. If the n#&er e+an t" de!rease' ,ri0es &i+ht e "ffered t"



n!"#ra+e a +r"%th "f 5,",#lati"n) if there %ere an e2!ess' !"l"nies %"#ld e 99 estalished. @@ In this %a$ that ,re!isee+#lati"n "f life :$9 !"nte&,lated $ the ,hil"s",her &i+ht e rendered ,"ssile.

Th#s the th"#+ht "f the leadin+ Athenian ,hil"s",hers %as hardl$ indi-id#alisti!' th"#+h the$ %ent f#rther than theOrientals in anal$0in+ the state ;s"!iet$> int" its !"&,"nent ,arts) f"r' lie their +"-ern&ent' the s,irit "f their ,hil"s",h$ %"&e%hat &"re de&"!rati!' and the$ sa% that the %elfare "f the state de,ended #,"n that "f the indi-id#al.

C"&&#nis&. / Pr"al$ the &"st dis!#ssed ,hase "f that ,art "f Gree ,hil"s",h$ %hi!h has distin!t e!"n"&i!

earin+ is !"&&#nis&. As this s#*e!t has a !l"se relati"n59 This %as in Plat"7s se!"nd5est state' %here !"&&#nis& "f %i-es and !hildren d n"t "tain. ?"%!tt7s Phi"' K"l

,. =' .S HISTORY OF ECONOMIC THOUGHTVshi, t" the (#esti"n "f s"!ial s"lidarit$ and indi-id#alis&' it is nat#rall$ &enti"ned in this !"nne!ti"n.Plat" and Arist"tle differed +reatl$ in their ideas as t" the s!",e t" e +i-en !"&&#nis&. Plat" desires a !"&,lete

"&&#nis&' e&ra!in+ n"t "nl$ ,r",ert$' #t als" %i-es and !hildren. He d"es n"t +i-e the details "f his s!he&e f"r"&&#nis& in ,r",ert$. He &aes it !lear' h"%e-er' that his "*e!t %as t" ,r"&"te har&"n$ $ re&"-in+ the +r"#nd f"r !i-#its and #nitin+ all !iti0ens $ !"&&"n interests. His ideal state is !hara!teri0ed $ a !"&&#nit$ "f %i-es and !hildren' ,ar

%ith the ai& "f di&inishin+ dis!"rd and *eal"#s$' ,artl$ %ith the idea "f e#+eni!s and !"ntr"l "f ,",#lati"n. 4 The !hildren he inferi"r' "r "f the etter %hen the$ !han!e t" e def"r&ed' %ill e ,#t a%a$ in s"&e &$steri"#s' #nn"%n ,la!e' as the$h"#ld e. . . . This &#st e d"ne if the reed "f +#ardians is t" e e,t ,#re.4

Arist"tle %as entirel$ ",,"sed t" Plat"7s !"&&#nis& "f %i-es' and did n"t +" an$ +reat %a$ %ith hi& as t" ,r",ertHis ar+#&ents a+ainst !"&&#nis& are !lassi!s.

4 Ne2t let #s !"nsider %hat sh"#ld e "#r arran+e&ents a"#t ,r",ert$6 sh"#ld the !iti0ens "f the ,erfe!t state ha-eheir ,"ssessi"ns in !"&&"n "r n"t3 This (#esti"n &a$ e dis!#ssed se,aratel$ fr"& the ena!t&ents a"#t %"&en andhildren. E-en s#,,"sin+ that the %"&en and !hildren el"n+ t" indi-id#als' a!!"rdin+ t" the !#st"& %hi!h is at ,resent

#ni-ersal' &a$ there n"t e an ad-anta+e in ha-in+ and #sin+ ,"ssessi"ns in !"&&"n3 Three !ases are ,"ssile6 ;> The s"il&a$ e a,,r",riated' #t the ,r"d#!e &a$ e thr"%n f"r !"ns#&,ti"n int" the !"&&"n st"!) and this is the ,ra!ti!e "f s"&nati"ns. Or ;<> the s"il &a$ e !"&&"n' and &a$ e !#lti-ated in !"&&"n' #t the ,r"d#!e di-ided a&"n+ indi-id#als f"r t

ri-ate #se) this is a f"r& "f !"&&"n ,r",ert$ %hi!h is said t" e2ist a&"n+ !ertain ararians. Or ;> the s"il and the ,r"d#&a$ e alie !"&&"n.

4 8hen the h#sand&en are n"t the "%ners' the !ase %ill e different and easier t" deal %ith) iit %hen the$ till the+r"#nd the&sel-es the (#esti"n "f "%nershi, %ill +i-e a %"rld "f tr"#le. If the$ d" n"t share e(#all$ in en*"$&ents and t"i

h"se %h" la"#r &#!h and +et little %ill ne!essaril$ !"&,lain "f th"se %h" la"#r little and re!ei-e "r !"ns#&e &#!h. Thes al%a$s a diffi!#lt$ in &en li-in+

?ECONOMIC THOUGHT OF ATHENIAN PHILOSOPHERS B

t"+ether and ha-in+ thin+s in !"&&"n' #t es,e!iall$ in their ha-in+!"&&"n ,r",ert$. The ,artnershi,s "f fell"%5tra-ellers are ane2a&,le t" the ,"int) f"r the$ +enerall$ fall "#t $ the %a$ and(#arrel a"#t an$ trifle %hi!h t#rns #,. S" %ith ser-ants6 %e are49 9:::79797 :4:>&"st liale t" tae "ffen!e at th"se %ith %h"& %e &"st fre(#entl$!"&e int" !"nta!t in dail$ life.4 These are "nl$ s"&e "f the disad-anta+es %hi!h attend the !"&&#nit$ "f ,r",ert$) the ,resent arran+e&ent' if

&,r"-ed' as it &i+ht e $ +""d !#st"&s and la%s' %"#ld e far etter' and %"#ld ha-e the ad-anta+es "f "th s$ste&s.Pr",ert$ sh"#ld e in a !ertain sense !"&&"n' #t' as a +eneral r#le' ,ri-ate) f"r' %hen e-er$ "ne has a distin!t interest' &en%ill n"t !"&,lain "f "ne an"ther' and the$ %ill &ae &"re ,r"+ress' e!a#se e-er$' "ne %ill e attendin+ t" his "%n #sinesnd $et a&"n+ the +""d' and in res,e!t "f #se' : Friends'7 as the ,r"-er sa$s' : %ill ha-e all thin+s !"&&"n.: E-en n"% thre tra!es "f s#!h a ,rin!i,le' sh"%in+ that it is n"t i&,ra!ti!ale' #t' in %ell5"rdered states' e2ists alread$ t" a !ertain e2tend &a$ e !arried f#rther. F"r' alth"#+h e-er$ &an has his "%n ,r",ert$' s"&e thin+s he %ill ,la!e at the dis,"sal "f hisriends' %hile "f "thers he shares the #se %ith the&. The La!edae&"nians' f"r e2a&,le' #se "ne an"ther7s sla-es' and h"rsesnd d"+s' as if the$ %ere their "%n) and %hen the$ ha,,en t" e in the !"#ntr$' the$ a,,r",riate in the fields %hate-err"-isi"ns the$ %ant. It is !learl$ etter that ,r",ert$ sh"#ld e ,ri-ate' #t the #se "f it !"&&"n) and the s,e!ial #siness "



he le+islat"r is t" !reate in &en this ene-"lent dis,"siti"n. A+ain' h"% i&&eas#ral$ +reater is the ,leas#re' %hen a &aneels a thin+ t" e his "%n) f"r the l"-e "f self is a feelin+ i&,lanted $ nat#re and n"t +i-en in -ain' alth"#+h selfishness isi+htl$ !ens#red) this' h"%e-er' is n"t the &ere l"-e "f self' #t the l"-e "f self in e2!ess' lie the &iser7s l"-e "f &"ne$) f"rll' "r al&"st all' &en l"-e &"ne$' and "ther s#!h "*e!ts in a &eas#re. And f#rther' there is the +reatest ,leas#re in d"in+ a

indness "r ser-i!e t" friends "r +#ests "r !"&,ani"ns' %hi!h !an "nl$ e rendered %hen a &an has ,ri-ate ,r",ert$. Thed-anta+e is l"st $ the e2!essi-e #nifi!ati"n "f the state. T%" -irt#es are annihilated in s#!h a state) first' te&,eran!e t"%a

%"&en ;f"r it is an h"n"#rale a!ti"n t" astain fr"& an"ther7s %ife f"r te&,eran!e7 sae> ) se!"ndl$' lieralit$ in the &atter",ert$.4 9

Arist"tle' it %ill e "ser-ed' alth"#+h ",,"sin+ Plat"7s ideas' did n"t r#sh t" the ",,"site e2tre&es. S"&e thin+sh"#ld e ,ri-ate) s"&e sh"#ld e held in !"&&"n. He desired that &"re thin+s sh"#ld e !"&&"n than there then

P"liti!s' 1. n' Cha,. -.%ere' and ,r"tested a+ainst the e2!essi-e indi-id#alis& "f the Grees. He ad-"!ated !"&&"n &eals' and es,e!iall$

n"te%"rth$ is his %ish f"r a !ertain !"&&#nit$ in the #se "f ,r",ert$ al"n+ %ith its ,ri-ate "%nershi,.Arist"tle did n"t !"nf#se the end' ha,,iness' %ith the &eans' as radi!al ref"r&ers are s" a,t t" d". Th#s he did n"t

tand f"r an e(#alit$ in +""ds' #t f"r e(#alit$ in %ant5satisfa!ti"ns' a ,"siti"n %hi!h is in a!!"rd %ith idealis& in that ite!"+ni0es the i&,"rtan!e "f differen!es in the %ants "f different indi-id#als.

It &#st n"t f"r a &"&ent e fan!ied that these an!ient ,hil"s",hers th"#+ht "f !"&&#nis& as i&,l$in+ an$ +enerade&"!ra!$. J#ite the re-erse. There %ere three !lasses "f &en fashi"ned in the "%els "f the earth' "ne "f +"ld' an"ther "f

il-er' the third "f ir"n "r !",,er. These %ere' res,e!ti-el$' the ,hil"s",hers "r +#ardians' the %arri"rs "r a#2iliaries' and thrtisans and trades&en. C"&&#nis& %as t" e a,,lied t" the first t%" al"ne. It %as an arist"!rati! !"&&#nis&.

S!",e and Classifi!ati"n "f Arist"tle7s E!"n"&i! Th"#+ht. / The nearest a,,r"a!h &ade $ Gree ,hil"s",h$ t"de-el",in+ a distin!t the"r$ "f e!"n"&i!s !a&e in dis!#ssin+ the ele&ents "f h"#seh"ld &ana+e&ent. Here a distin!ti"n %adra%n et%een e!"n"&i!s ;"i"n"&i> and !hre&atisti!s ;!hre&atisti> ) the f"r&er e&ra!es !hiefl$ %ealth !"ns#&,ti"n he satisfa!ti"n "f %ants' and the ,r"-isi"n "f th"se ne!essar$ and #sef#l !"&&"dities %hi!h !an e st"red t" &eet th"se %ahe latter deals %ith %ealth5+ettin+' in!l#din+ &"ne$5&ain+ and e2!han+e. C"n!ernin+ the latter' Arist"tle sa$s' 4 And thern"ther ele&ent "f a h"#seh"ld' the s"5!alled art "f &"ne$5&ain+ ;"r finan!e> %hi!h' a!!"rdin+ t" s"&e' is identi!al %ith

h"#seh"ld &ana+e&ent' a!!"rdin+ t" "thers' a ,rin!i,al ,art "f it.4 9There are t%" inds "f !hre&atisti!s6 the nat#ral and the #nnat#ral. Th#s the first si&,le arter $ %hi!h thin+s are

+i-en in e2!han+e f"r %hat "ne %ants 4 is n"t !"ntrar$ Arist"tle' P"liti!s' 1. I' Cha,. iii.

ECONOMIC THOUGHT OF ATHENIAN PHILOSOPHERS Bt" nat#re' #t is needed f"r the satisfa!ti"n "f &en7s nat#ral %ants 4) 9 #t 4 retail trade is n"t a nat#ral ,art "f the ar

&"ne$5&ain+.4 9 Or' a+ain' h#sandr$ and st"!5raisin+ &ae the 4 tr#e "r ,r",er art "f &"ne$5&ain+'4 %hile the "ther"nsists in e2!han+e.: It is the 4 nat#ral 4 "r 4 ,r",er 4 ran!h "f !hre&atisti!s al"ne %hi!h sh"#ld e in!l#ded in e!"n"&i!

h"#seh"ld &ana+e&ent ;8irt5s!haft$'9 Th#s Arist"tle7s !lassifi!ati"n &i+ht e re,resented $ the a!!"&,an$in+ dia+ra&.Cl"sel$ !"nne!ted %ith

the ,re!edin+ anal$sis is the distin!ti"n et%een the nat#ral "r ,r",er and the #nnat#ral "r i&,r",er #ses "f a thin+Of e-errthin+ %hi!h %e ,"ssess there are t%" #ses6 "th el"n+ t" the thin+ as s#!h' #t n"t in the sa&e &anner' f"r "ne is

r",er' the "ther the i&,r",er "r se!"ndar$ #se "f it. F"r e2a&,le' a sh"e is #sed f"r %ear' and is #sed f"r e2!han+e ) "th a#ses "f the sh"e.4 9 This dis5

;NATURAU ECONOMICS;H"#seh"ld Ma*ia+e&""O

1arter 999a<rf'"f?i<<S@ ;8ealth5Gettin+>CHRETKIATISTTCS;ARTTFICTAL>E2!han+etin!ti"n rests #,"n Arist"tle7s n"ti"n "f e2!han+e' %hi!h' in its t#rn' is f"#nded "n the idea that there is a !ertain

"ns#&,ti"n %hi!h is s#ffi!ient f"r a ,r",er life) f"r' %hen he sa$s that retail trade is n"t a 4 nat#ral 4 ,art "f &"ne$5&ain+he adds that 4 had it een s"' &en %"#ld ha-e !eased t" e2!han+e %hen the$ had

Arist"tle' P"liti!s' 1. I' Cha,. i2. Iid.



:Iid.' 1. I' Cha,. id. : Iid.' 1. I' Cha,. -iii.@ Iid.' 1. I' Cha,. i0.en"#+h7 In "ther %"rds' nat#ral !hre&atisti!s !"n!erns the satisfa!ti"n "f nat#ral "r ,r",er %ants $ 4 nat#ral4 "r 4

r",er 4 "r 4 ,ri&ar$ 4 #ses. This idea !learl$ s#++ests later distin!ti"ns et%een -al#e in #se and -al#e in e2!han+e. Its"ns!i"#sl$ ethi!al !"ntent' h"%e-er' is asent fr"& &#!h "f the later #sa+e. In the sa&e idea' a tra!e "f the n"ti"n held $"&e later e!"n"&ists ;the Ph$si"!rats> &a$ e distin+#ished' na&el$' the n"ti"n that e2tra!ti-e ind#stries are the "nl$ "nes

%hi!h are ,r"d#!ti-e. One !"#ld easil$ +et the idea fr"& Arist"tle that the +r"%in+' "r di++in+ #,' "r !at!hin+ "f thin+s %hiatisf$ the &"re ele&ental %ants in the si&,lest %a$' is &"re ,r"d#!ti-e than the ela"rati"n "f these thin+s $ artisans "r t2!han+e $ &er!hants' / that the latter "!!#,ati"ns d" n"t add t" the real %ealth "f the state.

Kal#e. / The idea "f -al#e re!ei-ed little attenti"n' and that little %as fr"& the ,"int "f -ie% "f ethi!s "r *#sti!e. Pa$s that a!!"rdin+ t" la% a &an 4 sh"#ld n"t atte&,t t" raise the ,ri!e' #t si&,l$ as the -al#e'4 9 i&,l$in+ that -al#e is as"l#te (#alit$ inherent in the thin+. This' h"%e-er' is #t a r#di&entar$ dis!#ssi"n "f the s#*e!t. ' Arist"tle +"es f#rther.

n"ti"n "f -al#e is !learl$ s#*e!ti-e' and is ased #,"n the #sef#lness "f the !"&&"dit$ !"n!erned.9 All thin+s %hi!h are2!han+ed &#st e !"&,arale thr"#+h s"&e standard "f &eas#re' and this standard he finds in &an7s %ants6 4 In the tr#est

&"st real sense' this standard lies in %ants' %hi!h is the asis "f all ass"!iati"n a&"n+ &en.4 An e2!han+e is *#st' %hen ea!h+ets e2a!tl$ as &#!h as he +i-es the "ther) $et this e(#alit$ d"es n"t &ean e(#al !"sts' #t e(#al %ants. If &en %ant the"ler7s ,r"d#!t &"re than the h#sand&an7s' &"re +rain &#st e +i-en f"r sh"es. M"ne$ is the &edi#& %hi!h &aes %an"&&ens#rale.

M"ne$ and Interest. / As re+ards that ,arti!#lar f"r& "f %ealth n"%n as &"ne$' the tea!hin+ "f the Grees has La%s' 1. I' ,. (<i ;Ed. Ste,h.>.See P"liti!s' 1. I' Cha,' i2) Ethi!s' K' .ECONOMIC THOUGHT OF ATHENIAN PHILOSOPHERS l"f si+nal i&,"rtan!e in the hist"r$ "f e!"n"&i! th"#+ht. In +eneral' the$ sa% and e2,lained the ne!essit$ f"r &"ne$

nd re!"+ni0ed a ,art "f its e!"n"&i! f#n!ti"n. Arist"tle is es,e!iall$ e2,li!it. He re&ars that 4as the enefits "f !"&&er!e%ere &"re %idel$ e2tended . . .' the #se "f a !#rren!$ %as an indis,ensale de-i!e. As the ne!essaries "f nat#re %ere n"t allasil$ ,"rtale' ,e",le a+reed f"r ,#r,"ses "f arter &#t#all$ t" +i-e and re!ei-e s"&e arti!le' -9 %hi!h' %hile it %as itself "&&"dit$' %as ,ra!ti!all$ eas$ t" handle in the #siness "f life' s"&e s#!h arti!le as ir"n "r sil-er' %hi!h %as at first defini&,l$ $ si0e and %ei+ht) alth"#+h finall$ the$ %ent f#rther and set a sta&, #,"n e-er$ !"in t" relie-e the& fr"& the tr"#f %ei+hin+ it. . .. .4 9 And he +"es "n t" distin+#ish et%een &"ne$ and %ealth' referrin+ t" the fale "f in+ Midas.

en",h"n is e(#all$ !lear in distin+#ishin+ et%een &"ne$ and %ealth.9

Plat" %"#ld ha-e had n" +"ld n"r sil-er f"r the ,ri-ate &an' #t "nl$ d"&esti! !"ins t" e #sed in ,a$&ent "f hirelnd the lie) 9 #t he th"#+ht that the state sh"#ld ha$e a !"&&"n Helleni! !#rren!$ f"r the #se "f e&assies' e2,editi"ns' a"#rne$s.

8ith all this' h"%e-er' the th"#+ht "f these &en %as tainted %ith err"r. The$ -irt#all$ re+arded &"ne$ as 9. n"thin#t a &edi#& "f e2!han+e' and' as s#!h' the$ denied the ,r"d#!ti-it$ "f l"ans "f it. A ,ie!e "f &"ne$ !ann"t e+et an"therie!e' %as the d"!trine "f Arist"tle' and n" e!"n"&i! idea "f his had &"re lastin+ effe!ts. The "-i"#s !"n!l#si"n %as thatnterest is #n*#st.: Plat"' t""' see&s t" ha-e th"#+ht that n" interest sh"#ld e +i-en n"r e-en the ,rin!i,al "f a det ee,aid.::

It &#st n"t e s#,,"sed' h"%e-er' that this -ie% "f inter5 P"liti!s' 1. I' Cha,' i2 ;8elld"n>.: Re-en#es "f Athens. :La%s' 1. K' ,. < ;?"%ett' The Dial"+#es "f Plat"' K"l. K' ,. <>.: P"liti!s' 1. I' Cha,. 2. :'La%s' 1. K' ,. <. This &a$ e !"&,ared %ith the Here% idea "f a l"an /

tee a"f-e' ,,. f.

est %hi!h see&s s" stran+e t" #s "%ed its e2isten!e entirel$ t" the inferi"r insi+ht "f the an!ients. It is t" e e2,lainar+el$ $ e!"n"&i! !"nditi"ns. In Athens the !ir!#lati"n7 "f !a,ital %as in!"nsiderale' and &"ne$ %as n"t lent f"r ,r"d#!#r,"ses s" "ften as f"r the ,#r,"se "f relie-in+ distress. If t"5da$ l"ans %ere !hiefl$ &ade t" e&arrassed friends "r nei+h" e #sed in alle-iatin+ distress in &atters "f !"ns#&,ti"n' %e t"" %"#ld #nd"#tedl$ re+ard interest in a different li+ht. Th

&"de& the"r$ "f interest is ased #,"n l"ans f"r ,r"d#!ti-e in-est&ent.9



An"ther err"ne"#s &"netar$ idea' %hi!h %as held $ en",h"n at least' %as that the -al#e "f sil-er is as"l#tel$ fe+ardless "f s#,,l$. Arist"tle' h"%e-er' re!"+ni0ed that &"ne$ is s#*e!t t" the sa&e la% as "ther thin+s and that its -al#e iiale t" !han+e' alth"#+h it tends t" e &"re !"nstant.:

Ind#str$ and the Kari"#s O!!#,ati"ns. / Lie the Oriental la%+i-ers' Athenian ,hil"s",hers fa-"red s"&e ran!hf ind#str$ and re+arded "thers %ith disa,,r"ati"n. A+ri!#lt#re %as !"nsidered &"st desirale. 77 1#t stri!tl$ s,eain+'4 %

Arist"tle' ::. . . the &eans "f life &#st e ,r"-ided ef"rehand $ nat#re) f"r the #siness "f nat#re is t" i#&ish f""d t" that

%hi!h is "&' and the f""d "f the "ffs,rin+ al%a$s re&ains "-er in the ,arent. 8heref"re' the art "f &ain+ &"ne$ "#t "f fnd ani&als is al%a$s nat#ral.4 H#sandr$ and st"!5raisin+ %ere the nat#ral "r ,r",er arts. E2!han+e' in!l#din+ !"&&er!e

#s#r$' and ser-i!es f"r hire' %ere n"t nat#ral. Minin+ and l#&erin+ la$ &id%a$ et%een.9Plat" th"#+ht that the ,re!i"#s &etals "#+ht n"t t" e all"%ed in his state' 4 n"r &#!h "f the -#l+ar s"rt "f trade %h

s !arried "n $ lendin+ &"ne$' "r rearin+ the &eaner inds "f li-est"!) #t "nl$ the ,r"d#!e "f a+ri!#lt#re' and "nl$ s" &#f this as %ill n"t !"&,el #s in ,#rs#in+ it t"

Cf. S!hdnei+7s Handh#!h der ,"Uis!hen Oe"n"&ie ;T#in+en' <>' 1d. I' S. =. Eihs' 1. K' Cha,. .: Arist"tle' P"liti!s' 1. I' Cha,s' 2 and 2i.

ECONOMIC THOUGHT OF ATHENIAN PHH5OSOPHERS ne+le!t that f"r the sae "f %hi!h ri!hes e2ist' / I &ean' s"#l and "d$.4 9

Ri!hes. / In their attit#de t"%ard ri!hes these Gree thiners are n"tale f"r their ,"ise. Great st"res "f %ealth %ede!ried $ the&) as %as als" ,"-ert$. Clearl$ re!"+ni0in+ the #sef#lness "f an a#ndan!e "f &aterial thin+s as a &eans' the$et s"#+ht the ha,,$ &edi#&. Ri!hes in e2!ess %ere disfa-"red "n t%" +r"#nds. As a &atter "f e!"n"&$' it %as ar+#ed thathe$ de!reased effi!ien!$ in ,r"d#!ti"n. In a !elerated it "f dial"+#e Plat" de-el",s the idea th#s6 /

4 There see& t" e t%" !a#ses "f the deteri"rati"n "f the arts.8hat are the$ 38ealth' I said' and ,"-ert$. 4 H"% d" the$ a!t 34 The ,r"!ess is as f"ll"%s6 8hen a ,"tter e!"&es ri!h' %ill he' thin $"#' an$ l"n+er tae the sa&e ,ains %ith his

rt3Certainl$ n"t.He %ill +r"% &"re and &"re ind"lent and !areless3Ker$ tr#e.

And the res#lt %ill e that he e!"&es a %"rse ,"tter3Yes) he +reatl$ deteri"rates.1#t' "n the "ther hand' if he has n" &"ne$' and !ann,t ,r"-ide hi&self %ith 7t""ls "r instr#&ents' he %ill n"t %"r

(#all$ %ell hi&self' n"r %ill he tea!h his s"ns "r a,,renti!es t" %"r e(#all$ %ell.4 9A se!"nd reas"n f"r ",,"sin+ e2tre&e ri!hes %as ethi!al. Plat" ar+#es that +reat ri!hes and ha,,iness are in!"&,at

f"r a ri!h &an !ann"t e a ,erfe!tl$ +""d &an' as ,art "f his %ealth &#st ne!aesaril$ e a!(#ired and e2,ended #n*#stl$.9 eas"nin+ is "f &#!h interest in !"nne!ti"n %ith ,resent5da$ ethi!s "f %ealth' and &#st e (#"ted t" e a,,re!iated.

Plat"' La%s' 1. K' ;?"%ett' The Dial"+#es "f Plat"' K"l. K' ,. <>. Re,#li!' 1. IK' ,. < ;?"%ett7s PlaK"l. Ill' ,,. =5=' ii+5<>. :Iid.' 1. K' <5 ;?"%ett' K"l. K' ,,. <B' <>.

it &STORY OF ECONOMIC THOUGHT

77The !iti0en &#st indeed e ha,,$ and +""d' and the le+islat"r %ill see t" &ae hi& s") #t -er$ ri!h and -er$ +"t the sa&e ti&e he !ann"t e' n"t' at least' in the sense in %hi!h the &an$ s,ea "f ri!hes. F"r the$ &ean $ : the ri!h7 the f

%h" ha-e the &"st -al#ale ,"ssessi"ns' alth"#+h the "%ner "f the& &a$ (#ite %ell e a r"+#e. And if this is tr#e' I !an ne-ssent t" the d"!trine that the ri!h &an %ill e ha,,$ / he &#st e +""d as %ell as ri!h. And +""d in a hi+h de+ree' and ri!hi+h de+ree at the sa&e ti&e' he !ann"t e. S"&e "ne %ill as' %h$ n"t3 And %e shall ans%er / 1e!a#se a!(#isiti"ns %h

"&e fr"& s"#r!es %hi!h are *#st and #n*#st indifferentl$ are &"re than d"#le th"se %hi!h !"&e fr"& *#st s"#r!es "nl$) anhe s#&s %hi!h are e2,ended neither h"n"#ral$ n"r dis+ra!ef#ll$' are "nl$ half as +reat as th"se %hi!h are e2,ended

h"n"#ral$ and "n h"n"#rale ,#r,"ses. Th#s' if the "ne a!(#ires d"#le and s,ends half' the "ther %h" is in the ",,"site !nd is a +""d &an !ann"t ,"ssil$ e %ealthier than he. The first / I a& s,eain+ "f the sa-er and n"t "f the s,ender / is



l%a$s ad) he &a$ indeed in s"&e !ases e #tterl$ ad' #t' as I %as sa$in+' a +""d &an he ne-er is. F"r he %h" re!ei-es&"ne$ #n*#stl$ as %ell as *#stl$' and s,ends neither *#stl$ n"r #n*#stl$' %ill e a ri!h &an if he e als" thrift$. On the "therhand' the #tterl$ ad is in +eneral ,r"fli+ate' and theref"re' -er$ ,""r) %hile he %h" s,ends "n n"le "*e!ts' and a!(#ires%ealth $ *#st &eans "nl$' !an hardl$ e re&arale f"r ri!hes' an$ &"re than he !an e -er$ ,""r. O#r state&ent' then' is that the -er$ ri!h are n"t +""d' and' if the$ are n"t +""d' the$ are n"t ha,,$.4

Arist"tle als" ",,"sed e2tre&es' th"#+h' (#ite !"nsistentl$ %ith his -ie%s as t" !"&&#nis&' he %as n"t ",,"sed t"

eas"nale ine(#alities. He dreaded &"re the en!r"a!h&ents "f the ri!h than th"se "f the ,e",le. 4 Man$ . . . &ae a &istahe sa$s' 4 n"t "nl$ in +i-in+ t"" &#!h ,"%er t" the ri!h' #t in atte&,tin+ t" "-errea!h the ,e",le. There !"&es a ti&e %hen

#t "f a false +""d there arises a tr#e e-il' sin!e the en!r"a!h&ents "f the ri!h are &"re destr#!ti-e t" the State than th"se "fe",le.4 9 On the "ther hand he re&ars' 4 P"-ert$ is the ,arent "f re-"l#ti"n and !ri&e.4 9

Ethi!s D"&inant. / It is t" e e&,hasi0ed that the ideal ?"%ett' The P"liti!s "f Arist"tle' ,. WP"liti!s' 1. IK' <' >. See als" iid.' ,. B ;II' ' >.8i' ,. =;'' >.ECONOMIC THOUGHT OF ATHENIAN PHILOSOPHERS B"f the Gree thiners %as hi+hl$ ethi!al. T" e ha,,$ "ne &#st e +""d' %as a d"&inant n"te' and the interests "f t

"#l %ere ,la!ed f"re&"st. 4 F"r there are in all three thin+s'4 Plat" sa$s'9 4 a"#t %hi!h e-er$ &an has an interest) and thenterest a"#t &"ne$' %hen ri+htl$ re+arded' is the third and l"%est "f the&6 &id%a$ !"&es the interest "f the "d$) and' firf all' that "f the s"#l) and the state %hi!h %e are des!riin+ %ill ha-e een ri+htl$ !"nstit#ted if it "rdains h"n"#rs a!!"rdin

" this s!ale.4 And Arist"tle7s di!t#& is6 4 1#t a state e2ists f"r the sae "f a +""d life and n"t f"r the sae "f life "nl$.4 9If "ne !"#ld !"n!ei-e "f Plat" &ain+ a definiti"n "f e!"n"&i!s' "ne &i+ht i&a+ine it %"#ld r#n s"&e%hat as f"ll"

E!"n"&i!s is the s!ien!e %hi!h deals %ith the satisfa!ti"n "f h#&an %ants thr"#+h e2!han+e' seein+ s" t" re+#late thend#stries "f the state as t" &ae its !iti0ens +""d and ha,,$ and s" ,r"&"te the hi+hest %ell5ein+ "f the %h"le.4 That %"#

&ae it an a,,lied s!ien!e' in %hi!h ethi!al ai&s %"#ld ,la$ a +reat ,art.



C"ntrast %ith Here%s and Hind#s. / As alread$ "ser-ed' there are i&,"rtant differen!es et%een the e!"n"&i!deas "f the Here%s' Hind#s' and "ther Oriental ,e",les' and th"se "f the Athenian ,hil"s",hers. The$ %ere si&ilar in&,hasi0in+ the state' and the ethi!al ,"int "f -ie%. Neither differentiated e!"n"&i!s fr"& ,"liti!s "r &"rals. 1"th %ere"nser-ati-e and #nde&"!rati!. M"re"-er' %ith "th' a+ri!#lt#re %as the "nl$ ind#str$ in -er$ +""d re,#te. 1#t the Grees

%ere &"re !"n!erned %ith the indi-id#al' +"in+ f#rther in the anal$sis "f the state int" its !iti0ens. The$' t""' %ere ,"ssesse"&e s&all de+ree "f hist"ri!al &eth"d' th"#+h it %as (#ite astra!t. The$ anal$0ed e!"n"&i! %ants' and ased the "i"n"&

nd !hre&atisti "f their ,hil"s",h$ #,"n this anal$sis. The Athenian ,hil"s",hers %ere &"re a,,re!iati-e "f &aterial %eals an a+en!$ in f#rtherin+ h#&an ha,,iness than %ere the sa!red

4 La%s' 1. K' J"%ett' The Dial"+#es "* FU"' K"l. K' ,. <>. s P"lUi!s' 1. Ill' Cha,. i0.F%riters "f the Hind#s' at least. The %ell5n"%n !are f"r the "d$ $ the Grees had its e!"n"&i! si+nifi!an!e.M"st i&,"rtant "f all' the Grees %ere &"re rati"nal. Instead "f f"riddin+ interest in ,#rs#an!e "f s"&e di-ine ed

he$ ar+#ed a"#t it and rea!hed the !"n!l#si"n that it %as #n*#st. Th#s the %ritin+s "f Plat" and Arist"tle &ar a +reat ste,d-an!e in e!"n"&i! &eth"d' as %ell as in s!",e and de,th "f anal$sis.

CHAPTER KTH ECONOMIC THOUGHT OF THE ROMANS9Fr"& Gree!e the s!e,ter ,assed t" Ital$' and the +l"r$ "f Gree th"#+ht e!a&e &er+ed in the +rande#r that %as

R"&e7s. N" ,a#se need e &ade t" retail the -er$ s!ant$ inf"r&ati"n %e ha-e a"#t earl$ R"&an th"#+ht' ef"re the sti&#l

f Gree ideas had een re!ei-ed. S#ffi!e it t" sa$ that' aside fr"& *#ris,r#den!e' the !hief %ritin+s "f the R"&ans %erer"d#!ed #nder the infl#en!e "f Gree th"#+ht' and' as in the !ase "f their art' a n"tale la! "f freshness and "ri+inalit$ is,,arent.

The Athenians %ere thiners' een and anal$ti!. The R"&ans %ere &en "f a!ti"n' %arri"rs and states&en. The f"r&eft a ,hil"s",h$ %hi!h ,r"f"#ndl$ affe!ted the ethi!s and e!"n"&i!s "f later thiners) the latter #ilt instit#ti"ns %hi!h asr"f"#ndl$ affe!ted la% and ,"liti!s. The herita+e "f the "ne has een a dire!t and s#*e!ti-e f"r!e) the "ther' !hiefl$ indirend "*e!ti-e' !"nditi"nin+ the th"#+ht "f the indi-id#al. As %ill a,,ear in a &"&ent' h"%e-er' R"&an th"#+ht has had &"r

dire!t infl#en!e than its intrinsi! de,th %"#ld a!!"#nt f"r.Of es,e!ial interest is the fa!t that the de!a$ "f R"&e %as %ell #nder %a$ %hen her !hief %riters %ere en+a+ed "n

heir %"rs. This fa!t !"l"red their %ritin+s and !"nditi"ned their e!"n"&i! ideas. The state "f de!a$ %as at least halfer!ei-ed $ the&' and re&edies %ere ,"inted "#t f"r the e-ils dis!erned. The !a#ses and re&edies as the$ ,re5

: Oert&ann' Die K"ls%irls!haftslehre des C"r,#s ?#ris Ci-ilis ;1erlin' >) H"lf&eister' Die 8irtsehafUiiie

Ent%i!el#n+ R"&s ;Kienna' =>) On!en' Ges!i!hU der Nati"nal"e"n"&ie ;Lei,0i+' =<>) Pal+ra-e7s Di!ti"nar$ "fP"tiH5!ai E!"n"&$' aiti!ie "n 4Ci-il La%4) f""tn"te referen!es in this !ha,ter.

sented the&sel-es / sa$ in the ti&e "f Caesar / %ere "nl$ in ,art e!"n"&i!) #t the e!"n"&i! ideas "f the R"&ahil"s",hers %ere lar+el$ ,alliati-es f"r a de!linin+ state.

R"&an e!"n"&i! ideas &a$ e +athered fr"& t%" &ain s"#r!es6 ;> the *#rists and %riters "n le+al &atters) ;<> thehil"s",hers.9 Of less i&,"rtan!e are ;> a fe% %riters "n a+ri!#lt#re ;de re r#sti! a> ) their ideas %ere ,#rel$ te!hni!al "r fa

#nder the ,hil"s",hi!al +r"#,.E!"n"&i! Th"#+ht "f the ?#rists. /A&"n+ the *#rists are f"#nd the &"st "ri+inal R"&an thiners' and the la%s

2,ress the est R"&an th"#+ht. N" s$ste& "f e!"n"&i!s is e2,ressed "r i&,lied' and ethi!al "r ,"liti!al !"nsiderati"ns#t%ei+h th"se e!"n"&i!) #t the f"ll"%in+ rief +enerali0ati"ns are "f e!"n"&i! si+nifi!an!e.

. Nat#ral La%' / The R"&an *#rists &ade a distin!ti"n et%een h#&an la% and nat#ral la% %hi!h had &#!hnfl#en!e #,"n' &edie-al and later th"#+ht. Th#s their *#s !i-ile %as a nati"nal la% a,,li!ale t" R"&an !iti0ens. On the "th

hand' a "d$ "f la% n"%n as *#s +enti#& %as de-el",ed f"r f"rei+ners "f %hate-er nati"nalit$. The latter %as r"ader andess +#ided $ aritrar$ l"!al !#st"&s. It %as &"re rati"nal. Yet' at the sa&e ti&e' ein+ s" f"#nded "n +eneral ,rin!i,les' i"ntained %ithin itself the !a,a!it$ f"r astra!t as"l#tis& in th"#+ht. Later it %as #nited %ith the Gree !"n!e,t "f the nat#nd as a *#s nat#rale !"l"red s#!!eedin+ th"#+ht.9

<. Pri-ate Pr",ert$ and C"ntra!t. / In their ideas a"#t t%" le+al instit#ti"ns' the *#rists ha-e had +reat effe!t in an*e!ti-e %a$ #,"n the de-el",&ent "f e!"n"&i! th"#+ht) these are the instit#ti"ns "f ,r",ert$ and "f !"ntra!t. Theirs %as a"&e%hat narr"%l$ indi-id#alisti! idea "f ,r",ert$. Under the5sti&#l#s "f St"i! ,hil"s",h$ and the ideal "f a *#s nat#rale' t#rists &"-ed a%a$ fr"& the !lan "r fa&il$ as a s"!ial #nit' and !learl$5defined indi-id#al 9

9 Others' as reli+i"#s "r the"l"+i!al %riters' n" d"#t infl#en!ed e!"n"&i! th"#+ht and instit#ti"ns indire!tl$.



Of. Maine' An!ient La%' ,,. B' ) Carl$le ;R. 8.' and A. ?.>' A Hist"r$ 5i Medie-al P"PUi!al The"r$'THE ECONOMIC THOUGHT OF THE ROMANS ri+hts re,la!ed %hate-er !"&&#nit$ "f ,r",ert$ there had$ een.9 And a !"r"llar$ "f this &"-e&ent %as the

de-el",&ent "f freed"& "f !"ntra!t' in!l#din+ the ri+ht "f the indi-id#al t" dis,"se "f his ,r",ert$. The i&,"rtan!e "f thesenstit#ti"ns as a asis f"r all e!"n"&i! ,r"!esses' and their liailit$ t" a#se' are a,,arent. As a +reat En+lish e!"n"&ist hasaid' 4 t" R"&an . . . infl#en!e %e &a$ tra!e indire!tl$ &#!h "f the +""d and e-il "f "#r ,resent e!"n"&i! s$ste&) "n the "n

hand &#!h "f the #ntra&&elled -i+"#r "f the indi-id#al in &ana+in+ his "%n affairs' and "n the "ther n"t a little harsh %r"nd"ne #nder the !"-er "f ri+hts' estalished $ a s$ste& "f la% %hi!h has held its +r"#nd e!a#se its &ain ,rin!i,les are %isend *#st.4 9

An i&,"rtant !hara!teristi! "f R"&an e!"n"&i! th"#+ht is the se,arati"n "f the n"n5,ers"nal ele&ents in la% fr"&ers"nal' and the e&,hasis ,la!ed #,"n the f"r&er. In this it stands in !"ntrast %ith the St"i! ,hil"s",h$ and %ith reli+i"#senden!ies. In fa!t' "ne "f the ser-i!es' "f R"&an th"#+ht %as t" di-"r!e la% fr"& reli+i"n. This ,la!in+ "f the la% #,"n a

&"re i&,ers"nal asis d"#tless fa!ilitated the de-el",&ent "f the R"&an le+al s$ste& in a.s!ientifi! %a$. As a res#lt'h"%e-er' R"&an *#risti! ,hil"s",h$ see&s "ne5sided t" #s' in that it d"es n"t a,,ear t" atta!h s#ffi!ient i&,"rtan!e t" theh#&an ,ers"nalit$ and t" ,ers"nal ri+hts. This !hara!teristi! &a$ e seen in the tenden!$ t" ase ri+ht #,"n &i+ht' the la%' arlier sta+es "f R"&e7s de-el",&ent' re+ardin+ !"n(#est as +i-in+ the est title t" ,r",ert$' and !"nsiderin+ the ensla-e&ef det"rs as a *#st ,"%er "f !redit"rs. In ,ri-ate life the ,ater fa&ilias al"ne had f#ll ri+hts as a ,ers"n ) and the indi-id#alisf the R"&ans' lie freed"& "f !"ntra!t a&"n+ the&' a,,lied "nl$ t" !ertain fa-"red !lasses "f &en.

It is e-ident that' in s" far as it has affe!ted e!"n"&i! The nat#re and s!",e "f ,r",ert$ ri+hts !han+ed at the sa&e ti&e' "f !"#rse. At first ,r",ert$ el"n+ed t" the fa&

+r"#, and %as alienated $ the ,aief fat& iias "nl$ %ith diffi!#lt$.s Marshall' Prin!i,les "* E!"n"&i!s9 ,. <' th ed.th"#+ht' / and %ith the de-el",&ent "f !"&&er!e after the Cr#sades it !a&e t" ha-e an in!reasin+ infl#en!e'/

R"&an la% lent itself t" the tenden!$ t" &ae e!"n"&i!s a s!ien!e "f e2!han+es deter&ined $ the %"rin+ "f i&,ers"nala%s.

. M"ne$ and Interest' / 8"rth$ "f &enti"n is the fa!t that R"&an *#rists had a +""d a,,re!iati"n "f &"ne$.91esides ha-in+ a !lear idea "f its ad-anta+es f"r e2!han+e ,#r,"ses' the$ sa% that it %as' in a sense' &erel$ a !"&&"dit$ "f&"re "r less !han+eale -al#e' / a -al#e %hi!h is essential t" its f#n!ti"n and %hi!h !ann"t e estalished $ la%.

In the earlier ,eri"ds "f R"&an hist"r$' the la% a,,ears "n the %h"le t" ha-e ",,"sed interest5tain+. The La%s "fT%el-e Tales fi2ed the interest rate' #t !"nde&ned #s#r$' th#s re!"+ni0in+ a distin!ti"n et%een the t%". In B 1. !. the

ate %as !han+ed t" ten ,er !ent) in it %as !#t t" fi-e ,er !ent) and fi-e $ears later interest %as f"ridden entirel$ $ theGen#!ian La%s. 1#t %ith !"n(#est and the +r"%th "f %ealth thin+s !han+ed. 1"rr"%in+ and lendin+ %ere +reat in a&"#nt a%ides,read' lar+e +ains ein+ &ade $ "rr"%in+ at fr"& f"#r t" ei+ht ,er !ent in R"&e and lendin+ in the ,r"-in!es at s#!hn"r&"#s rates as' f"r e2a&,le' f"rt$5ei+ht ,er !ent. Finall$' the Instit#tes "f ?#stinian fi2ed rates "f fr"& f"#r t" ei+ht ,erent'

@ The f"ll"%in+ state&ent "f the "ri+in and #se "f &"ne$ $ the *#rist Pa#l#s has e!"&e fa&"#s6 4 P#r!hase and r"se fr"& e2!han+es) f"r f"r&erl$ there %as n"t &"ne$ as n"%' n"r %as "ne thin+ !alled %are and an"ther ,ri!e' #t ea!h!!"rdin+ t" his ne!essities #sed t" e2!han+e thin+s la!in+ #tilit$ f"r th"se %hi!h had it' sin!e it "ften ha,,ens that %hat "n

has an a#ndan!e "f an"ther la!s. 1#t e!a#se it d"es n"t al%a$s n"r readil$ ha,,en that %hen $"# ha-e %hat I desire' I in#rn ha-e %hat $"# are %illin+ t" re!ei-e' a &aterial is !h"sen %h"se -al#ati"n ein+ ,er&anent and fi2ed $ the state ;,#l! ,er,et#a aesU&aii"> sh"#ld re&ed$ the diffi!#lties "f e2!han+es $ e(#alit$ "f -al#e in +i-en (#antities) and this &ateriein+ str#! %ith a ,#li! f"r& Wi.e. !"ined> re,resents #sef#lness and effe!ti-eness n"t s" &#!h fr"& intrinsi! -al#e as fr"

-al#e in a +i-en> (#antit$. 1"th ein+ !alled %ares n" l"n+er' #t the "ne !alled ,ri!e.4 Cf. Arist"tle7s %"rds' a"-e' ,. i.Di+. de !"nlfah. e&,i. 2-iii' i) (#"ted $ a#t0' Ges!i!. EtU%i!di&i i: Nat. Oe.' ,. . See M"$le' C"ntra!t

Sale in Ci-il La%' ,,. ' <. a#ta7a !itati"n see&s fa#lt$ in +ra&&ar and ,#n!t#ati"n.THE ECONOMIC THOUGHT OF THE ROMANS a!!"rdin+ t" the !hara!ter "f the l"an. S#!h le+islati"n9 h"%e-er' see&s t" ha-e een ,ra!ti!all$ a dead letter' the

!t#al rate -ar$in+ %ith &aret !"nditi"ns.E!"n"&i! Th"#+ht "f the Phil"s",hers. / 8hile the *#rist said' th"# shalt' the ,hil"s",her %as sa$in+' th"# sh"#l

Th"#+h the +eni#s "f the R"&ans %as !ertainl$ 9 far less ethi!al than that "f the &"re s,e!#lati-e Athenians' $et R"&anhil"s",hers +enerall$ let ethi!al n"ti"ns tae the ,la!e "f s!ientifi! ,rin!i,les) as' f"r e2a&,le' Ci!er" said that the #ni-ers



,ini"n "#+ht t" e 4 r"#+ht "-er t" the h",e that &en &a$ learn t" e2,e!t the attain&ent "f %hat the$ desire $ ri+ht#r,"ses and h"nest deeds' n"t $ fra#d and r"+#er$'4 9 and a+ain' 4 Let it e settled then' that %hat> is %r"n+ is ne-er2,edient.4 9

The !hief %riters "f this !lass %ere Ci!er"' Sene!a' and Plin$ the Elder) and the $"#n+er Plin$' Mar!#s A#reli#s' anE,i!tet#s &a$ e &enti"ned. Of all' it !an e said that the$ de!ried the l#2#r$ and -i!es "f their ti&e' !"nte&nin+ the thirst i!hes / es,e!iall$ &"ne$ / and ,rea!hin+ &"derati"n. L""in+ a! at the +""d "ld da$s' the$ ,raised a si&,ler

+ri!#lt#ral e!"n"&$. O te&,"ral O &"res S#!h %as R"&e7s state that her ,hil"s",hers drea&ed "f the si&,le life and !alla! t" nat#re 4

8hile there is &"re insisten!e "n a !"&,eten!$ "f %"rldl$ +""ds than a&"n+ the idealisti! Grees and the reli+i"#Here%s' there is n"t "ne "f these ,hil"s",hers #t %"#ld ha-e e!h"ed the %"rds' 4 The l"-e "f &"ne$ is the r""t "f e-il.4 TGree ,hil"s",hers7 -ie% "f interest als" ,re-ailed. Ci!er" tells #s that Cat" th"#+ht #s#r$' i.e' interest' as ad as &#rder'a$in+' 4 8"#ld $"# tae interest 3 %"#ld $"# ill a &an 34 Sene!a !"nde&ned interest5tain+ "n the sa&e +r"#nd as

Arist"tle.9 Indeed it &#st e said "f these %riters' as "f the Grees' that the$ did n"t f#ll$ a,,re!iate the nat#re and f#n!ti"n&"ne$' n"t t" &enti"n !a,ital as a %h"le.

De Offi!Hs' 1. H' Cha,. . Iid.' 1. HI' Cha,. =.: De 1ene*i!#s' KH' = ;a#t0' ,. B>.< &STORY OF ECONOMIC THOUGHTJ#ietis& and Nat#re Phil"s",h$. / It %as the ,hil"s",h$ "f the St"i!s %hi!h n"t "nl$ infl#en!ed R"&an le+al

"n!e,ti"ns #t e2erted an i&,"rtant dire!t infl#en!e #,"n later e!"n"&i! th"#+ht. This ,hil"s",h$ %as tin+ed %ith a s,irit (#ietis& %hi!h ind#!ed in &an$ that e!"n"&i! fatalis& s" !hara!teristi! "f Oriental th"#+ht.9 F"r e2a&,le' Mar!#s A#reli#&editated as f"ll"%s6 4 1e satisfied %ith $"#r #siness' and learn t" l"-e %hat $"# %ere red t" d") and as t" the re&ainder $"#r life' e entirel$ resi+ned' and let the +"ds d" their ,leas#re %ith $"#r "d$ and s"#l.4 9 Ha,,iness' the St"i!s elie-ed'ies n"t in "#t%ard thin+s' #t in !"n(#est "f desires and ,assi"ns) hen!e their th"#+ht %as nat#rall$ n"t dire!ted t"%ardn!reasin+ the ,r"d#!ti"n "r i&,r"-in+ the distri#ti"n "f %ealth. This elief %"#ld tend t" ,re-ent "r re&"-e a sense "fndi-id#al res,"nsiilit$ f"r s"!ial ills' and t" e+et a s"rt "f inertia in dealin+ %ith s"!ial ,r"le&s.

The St"i!s7 nat#re ,hil"s",h$ had a si&ilar tenden!$' in that' a!!"rdin+ t" it' the ,art "f the %ise &an is t" 4 f"ll"%nat#re.4 Nat#re f"ll"%s la%' the$ reas"ned' / the #ni-erse is s$ste&ati! and rati"nal' / theref"re it is the ,art "f %isd"& t"#&it !al&l$ t" the all5,er-adin+ la% "f nat#re.

This !"n!e,t "f a la% "f nat#re held an i&,"rtant ,la!e in R"&an th"#+ht.9 Its !"nne!ti"n %ith the *#s nat#rale "f t#rists is es,e!iall$ n"te%"rth$6 "f "th it &a$ e said that the idea %as "ne "f a #ni-ersal !"s&","litan and eternal la%' %h

"rres,"nds t" &an7s innate !"n-i!ti"ns "f ri+ht. 1"th as a ,art "f St"i! ,hil"s",h$ and as a d"!trine "f R"&an la%' this"n!e,t' as %ill a,,ear' ,la$ed a !"nsiderale ,art at the irth "f e!"n"&i! s!ien!e in the ei+hteenth !ent#r$.

At first +lan!e' St"i!is& %"#ld a,,ear t" e idealisti! in tenden!$) #t as a &atter "f fa!t its infl#en!e has +enerall$ A"-e' ,. .: Meditati"ns "f Mar!#s A#reli#s' TK' .: E-en Ci!er"' th"#+h an adherent "f the Ne% A!ade&$' %ith its Peri,ateti! tenden!ies' %r"te his ethi!al %"rs %i

d"&inant St"i! strain.THE ECONOMIC THOUGHT OF THE ROMANS %"red %ith &aterialis& in e!"n"&i! th"#+ht. The !"n!e,t "f a la% "f nat#re %h"se ,rin!i,les are innate in &an' t

deas that a &an is a la% #nt" hi&self and that ha,,iness d"es n"t lie in "#t%ard thin+s' sa-"r "f the ideal. 1#t' the St"i!se+arded sensati"ns as the s"#r!e "f n"%led+e and e2alted reas"n. The$ held that a &an &#st s#&it t" the all5,er-adin+'ati"nal la% "f nat#re' %hi!h led t" a s,e!ies "f fatalis&. In sh"rt' %hile the$ elie-ed that &an &a$ +ain ha,,iness' the$ als

elie-ed that he !an "nl$ d" s" $ !"nf"r&in+ t" nat#ral la%. The infl#en!e "f s#!h ,hil"s",h$ #,"n e!"n"&i!s &a$ e seehe th"#+ht "f the Ph$si"!rats and Ada& S&ith.9

A+ri!#lt#re the Onl$ H"n"rale Ind#str$. / A li&itati"n #,"n R"&an e!"n"&i! th"#+ht' "ne !"&&"n t" R"&ansGrees' %as the ,re-ailin+ idea that the "nl$ h"n"rale in5 d#str$ %as a+ri!#lt#re. Ci!er" &a$ e re+arded as t$,i!al in thises,e!t' and he %r"te6 4 N"% as t" the trades and &"des "f +ettin+ +ain that are t" e re+arded as res,e!tale' and th"se tha" e dee&ed &ean and -#l+ar' the +eneral ",ini"n is as f"ll"%s6 In the first ,la!e' th"se !allin+s are held in disestee& that"&e int" !"llisi"n %ith the ill %ill "f &en' as that "f ta2+atherers' as that "f #s#rers. The !allin+s "f hired la"rers' and "f a

%h" are ,aid f"r their &ere %"r and n"t f"r sill' are #n+enteel and -#l+ar) f"r their %a+es are +i-en f"r &enial ser-i!e. Th%h" #$ t" sell a+ain as s""n as the$ !an are t" e a!!"#nted as -#l+ar) f"r the$ !an &ae n" ,r"fit e2!e,t $ a !ertain a&"



f falseh""d' and n"thin+ is &eaner than falseh""d. All &e!hani!s are en+a+ed in -#l+ar #siness) f"r a %"rsh", !an ha-en"thin+ res,e!tale a"#t it. Least "f all !an %e s,ea %ell "f the trades that &inister t" sens#al ,leas#res' /

7 Fish&"n+ers' #t!hers' !""s' ,"#lterers' and fisher&en'7as Teren!e sa$s. Add' if $"# ,lease' t" this list ,erf#&ers' allet5dan!ers' and the %h"le trie "f di!e5,la$ers. The See el"%' ,,. ff.' < f.Z,ar fflSTORY OF ECONOMIC THOUGHT

,r"fessi"ns %hi!h re(#ire +reater sill and are "f n" s&all enefit t" the !"&&#nit$' s#!h as &edi!ine' ar!hite!t#rend the instr#!ti"n "f $"#th in lieral st#dies' are res,e!tale f"r th"se %h"se ran the$ s#it. C"&&er!e' if "n a s&all s!ale' " e re+arded as -#l+ar) #t if lar+e and ri!h' i&,"rtin+ &#!h fr"& all (#arters' and &ain+ e2tensi-e sales %ith"#t fra#d' i

n"t s" -er$ dis!reditale. . . . 1#t "f all &eans "f a!(#irin+ +ain' n"thin+ is etter than a+ri!#lt#re' n"thin+ &"re ,r"d#!ti-e'n"thin+ &"re ,leasant' n"thin+ &"re %"rth$ "f a &an "f lieral &ind.4 9

Pra!ti!al Tenden!ies. / Th"#+h there %as a feelin+ "f disfa-"r a&"n+ the #,,er !lasses' at least' t"%ard the !raftsnd s&all5s!ale !"&&er!e' and the (#ietis& in th"#+ht *#st n"ted' still the R"&ans %ere n"tal$ !aref#l in #siness relati"nnd &atters "f a!!"#nt. Man$ instan!es &i+ht e !ited "f their a!!#rate and !a#ti"#s &anner "f re!"rdin+ "th ,#li! andri-ate transa!ti"ns.: M"re"-er' there is e-iden!e that !redit instit#ti"ns si&ilar t" the !he! and ,r"&iss"r$ n"te %ere n"nd #sed' %hile Ci!er" re(#ested C#ri#s t" h"n"r Tir"7s draft f"r an$ a&"#nt and ased Atti!#s t" as!ertain if he !"#ld +et2!han+e in Athens.7 8hile "f little dire!t si+nifi!an!e as t" e!"n"&i! th"#+ht' these fa!ts %"#ld indi!ate that' alth"#+h la!n the"reti!al anal$sis' the R"&ans &#st ha-e had &an$ !"n!rete ideas a"#t e!"n"&i! relati"nshi,s.

8riters "n A+ri!#lt#re. / Chief a&"n+ the s!ri,t"res de 9 re r#sti!a' "r %riters "n a+ri!#lt#re' %ere Cat"' Karrd[9nd C"l#&ella. These %riters ,r"d#!ed se&i5te!hni!al s treatises "n r#ral e!"n"&$'Hiealin+ %ith the ,r"d#!ti"n "f %ine' "it!.' the raisin+ "f different +rain !r",s' and +ra0in+. Then' in the intr"d#!ti"n "r s"&e !"n!l#din+ ""' +eneral ,rin!i,les ri-ate e!"n"&$ %ere added. The$ a+ree in de!r$in+ the latif#ndia' "r lar+e estates' asenteeis&' and the s,read "f sla-er$'n ,raisin+ s&all5

De "ffi!iis' 1 I.: See' e.+.' Oli-er' R"&an E!"n"&i! C"ndUi"ns t" the Cl"se "f the Re,nhU! ;Uni-ersit$ "f T"r"nt"' J=>' ,,.

.:E,' ad Pa&5' KI' i-' a * I' i' a * H' 2ri-' *.THE ECONOMIC THOUGHT OF THE ROMANS s!ale far&in+. Their ,rett$ +eneral !"nde&nati"n "f' sla-er$ "n e!"n"&i! +r"#nds is es,e!iall$ n"te%"rth$. Karr"

tate&ent is t$,i!al6 4 T" this %h"le !lass "f free &en \%h" till fieldsV the state&ent is a,,li!ale that it ,a$s t" #se hired he

ather than sla-e la"r at all ti&es in dis5ease5laden distri!ts' and e-en in the healthf#l re+i"ns as %ell f"r the &"re diffi!#ltass "f h#sandr$ lie the har-estin+ "f the -inta+e and the !r",s.4 9

Ori+inall$' the R"&ans %ere a stern and %arlie f"l' "f si&,le tastes. As a ,e",le' the$ al%a$s dreaded the sea' an%ere sl"% t" en+a+e in f"rei+n trade.9 It %as "nl$ after &ilitar$ !"n(#est had enri!hed the& %ith ""t$' theref"re' that the$!(#ired l#2#ries and l#2#ri"#s tastes %hi!h ne!essitated !"&&er!e. At the sa&e ti&e the #se "f sla-es in!reased t" +reatr","rti"ns' %hile there %as a !"n!"&itant destr#!ti"n "f the inde,endent $e"&an !lass. Land %as !#lti-ated in the f"r& "f

+reat estates' latif#ndia' f"r asentee landl"rds' %hile an in!reasin+ &ass "f free #t 9 i&,"-erished !iti0ens %as &aintainedhe !ities at the ,#li! e2,ense. This &eant a +r"%in+ se,arati"n "f !lasses. It is little %"nder then that the %riters "f the

de+enerate ,eri"d t#rned l"n+in+ e$es #,"n the si&,le r#rat life' "f $+"ne da$s.The si&ilarit$ et%een R"&e7s later da$s and the !"nditi"n "f Fran!e in the ei+hteenth !ent#r$ has een n"ti!ed $

"&e hist"rians'9 and it is an interestin+ refle!ti"n that in "th !ases a de!linin+ state !a#sed &en t" l"n+ f"r asi&,ler and &nat#ral 4 life.

R"&an Ideas "n Kal#e. / In a!!"rd %ith the ,ra!ti!al' n"n5s,e!#lati-e +eni#s "f the R"&ans %as their th"#+ht"n!ernin+ -al#e. Passin+ fr"& a re+i&e "f !#st"&ar$ ,ri!e' the$ had' as earl$ as B= 1.C.' %hen the la%s "f the T%el-e

Tales %ere f"r&#lated' left the deter&inati"n "f 7 ,ri!e t" the fl#!t#ati"ns "f the &aret. The #$er %as@ De Re R#sti!a' ' 0-ii' <) !ited $ Oli-er' R"ntan E!"n"&i! C"ndiU"ns' ,. <. :1#t see Oli-er' R"&an E!"n"&

C"nditi"ni ;Uni-erat$ "f T"r"nt"' =>' ,,. < ff.@.. a#t0' a"-e dted' ,. i2.Z,ar HISTORY OF ECONOMIC THOUGHT+i-en n" re!"#rse a+ainst the seller e2!e,t in !ase "f &isre,resentati"n' and Pa#l#s (#"tes Pedi#s t" the effe!t that

he ,ri!es "f thin+s are t" e deter&ined neither %ith referen!e t" affe!ti"n n"r t" their #tilit$ t" sin+le indi-id#als' #t ,ri!e



ha-e a !"&&"n -alidit$.4 9 It %as the d"!trine "f the *#rists that ea!h &i+ht see t" "-errea!h the "ther in the &atter "f ,ri!1#t as f"r an$ anal$sis "f the f"r!es %hi!h deter&ined %hat "-errea!hin+ %as' "r an$ e2a!t definiti"n "f it' there %as n"ne.

As ti&e %ent "n and e2!hanee +re%' the !"n!e,t "f a *#st "r real ,ri!e' -er#& ,reti#&'79TOse. Th#s "ne "f theE&,er"r Di"!letian7s res!ri,ts all"%ed the seller a ri+ht "f

re!"-er$ in !ase "f a sale f"r #nder half the tr#e ,ri!e ;-er#& ,reti#&>.9 In an edi!t De ,retiis rer#& -enali#& ;a.=> the sa&e e&,er"r atte&,ted t" fi2 a *#st ,ri!e "n ithe asis "f !#st"&ar$ !"st "f ,r"d#!ti"n.9 Th"#+h these r#les !"#ld

n"t e enf"r!ed' the$ !ertainl$ sh"% s"&e tenden!$ t"%ard intr"d#!in+ ethi!al !"nsiderati"ns': and t"%ard a li&itati"n "f treed"& "f !"ntra!t d#rin+ R"&e7s later $ears99

It is t" e "ser-ed that the i&,"rtan!e "f %ants and #tilit$ did n"t es!a,e re!"+niti"n' th"#+h n"t as a !hief *99O-Th#s Ci!er" sa$s' 4 The "nl$ li&it t" the -al#ati"n "f s#!h thin+s ;r"n0e stat#es> is the desire %hi!h an$ "ne has f"r the&"r it is diffi!#lt t" set "#nds t" the ,ri!e #nless $"# first set "#nds t" the %ish 4) 9 and Sene!a re&ars that s"&e thin+s af +reater -al#e than the ,ri!e %hi!h %e ,a$ f"r theni> S#!h a re!"+niti"n !"#ld s!ar!el$ ha-e failed t" "tain %here there %n"%led+e "f Gree ,hil"s",h$. It see&s t"" &#!h' h"%e-er' t" sa$ that' after

49 the de-el",&ent "f !"&&er!e and !redit9 #tilit$ e!a&e the Ad le+e& a(#iUa&' Di+.' 1. I' tit. ii' X ) Se%all' The"r$ "f Kal#e ef"re Ada& S&ith' ,. . Se! Ashle$' En+lish E!"n"&i! Hist"r$' K"l. ' ,. <=' n"te .: M"&&sen' Der Ma2i&altarif des Di"letian ;1erlin' >.: Of. Ende&ann' 8.' St#dien in der R"&anis!h5an"nisHs!hen 8ifts!aftS75 #' Re!hlsUhre' H' =.

De 1en9Os' 1"" IK' Cha,. K ;Se%aU' a"-e !ited>.THE ECONOMIC THOUGHT OF THE ROMANS 99asis f"r e2!han+e -al#e' the *#d+&ent "f #tilit$ de,endin+ "n the %ants "f the a-era+e n"r&al &an.9Ind#strial and C"&&er!ial Re+#lati"ns. / It is n"t t" e inferred that' e!a#se the R"&an la% st""d f"r ,ri-ate

r",ert$ and freed"& "f !"ntra!t' the R"&an state did n"t interfere in e!"n"&i! &atters. In ti&es "f finan!ial !risis the statestalished a ,#li! an t" s#,,le&ent the a!ti-ities "f the ,r"fessi"nal aners "f the F"r#&'9 and n"t a fe% &eas#res f"rr"te!ti"n "f det"rs %ere ,assed. Ci!er" ind#!ed !ertain Grees and R"&ans' %h" had !"rnered the f""d s#,,l$ in Cili!ia'r"&ise st"res t" the ,e",le) and fines %ere le-ied "n +rain &er!hants %h" $ h"ardin+ had raised ,ri!es. An aedile ins,e!t

+""ds ,la!ed "n sale in R"&an &arets' !"nfis!atin+ th"se in %hi!h fra#d %as f"#nd) and at -ari"#s ti&es the +"-ern&ent &eas#res t" ,re-ent f"rei+n !"&,etiti"n %ith Italian ,r"d#!ers' t" re+#late ,ri!es "f "il' and t" ,re-ent the e2,"rtati"n "f

re!i"#s &etals. An interestin+ !ase' t""' is the re+#lati"n "f traffi! in R"&e' l"aded %a+"ns ein+ f"ridden the #se "f thetreets' e2!e,t d#rin+ the e-enin+ "r ni+ht' and "nl$ th"se en+a+ed in ,#li! #ildin+ ",erati"ns !"#ld e #sed et%een s#nr

nd the tenth h"#r.9 All this %as ef"re the !l"se "f the Re,#li!' and indi!ates the re!"+niti"n in a ,ra!ti!al %a$ "f thene!essit$ f"r state ,arti!i,ati"n in ind#strial &atters.

Infl#en!e "f R"&an Th"#+ht. / 8hile it &#st e ad&itted that' their le+al !"ntri#ti"ns e2!e,ted' the R"&ans addittle t" the strea& "f e!"n"&i! th"#+ht' their i&,"rtan!e as a &edi#& f"r s#!h th"#+ht is +reat. The &$ster$ "f anti(#it$' th"n"r"#s t"n+#e' the ,resti+e "f &ilitar$ and ,"liti!al ,ree&inen!e all !"&ined t" s,read the %ritin+s "f R"&an "rat"rs'ssa$ists' and ,hil"s",hers) and %ith the& %ere disse&inated the St"i! ,hil"s",h$ and the ideas "f the Grees. 8ith the&'

%ent the ,ra!ti!al R"st' Die 8ert5 #nd Preisthe"rie ;Lei,0i+' =>' taes this -ie%' ,. <' n"te i. U-$' Kn' 22i' ) H' I2. )

22i' .74Le0 ?#lia M#nid,alis'4 C"r,#s Ins!ri,ti"r#& LaUnar#Mt K"l. I' <=) II' B5' 5) !ited $ Oli-er' Ra&an

E!"n"&i! C"ndiH"ns' ,. 2**:&a2ns "f the ,e",le' and in!identall$ the ad-i!e "f the father "r the &editati"n "f the states&an !"n-e$ed ideas "

!"n"&i! si+nifi!an!e.These %ritin+s %ere read' na$' st#died' $ &en "f a later da$' in Ger&an$' Fran!e' and En+land' %h"se -enerati"n

he& +a-e the& a %ei+ht %hi!h %e !an hardl$ reali0e. M"re"-er' the relati-e de-el",&ent in e!"n"&i! th"#+ht "f the earl$&"de&s %as n"t +reat' and their e!"n"&i!s and ethi!s %ere n"t #ntan+led. Th#s it is that this see&in+ !"&&"n,la!e "fCi!er"7s "r that "f Sene!a7s had &#!h +reater infl#en!e than %as %arranted $ its intrinsi! e!"n"&i! %"rth' and +reater than"#ld ha-e %ith "#rsel-es. Th"#+h the R"&ans did n"t dire!tl$ de-el", e!"n"&i! the"r$' a n"%led+e "f their %ritin+s isssential t" an #nderstandin+ "f the !"ntin#it$ "f the hist"r$ "f e!"n"&i! th"#+ht.



Di-isi"n "f La"r' / T" tae #t a sin+le e2a&,le' !"nsider the s#*e!t "f di-isi"n "f la"r. Ada& S&ith first f#ll$de-el",ed its e!"n"&i! as,e!t) #t he rested #,"n H#&e and H#t!hes"n. 1#t H#&e7s f""tn"tes are f#ll "f all#si"n t" R"&an%riters' and H#t!hes"n e2,ressl$ a!n"%led+es his det t" Ci!er" !& this -er$ s#*e!t.9 Frrnn

9 S$ste& tf M"ral Phii"s",$' K"l. I' ,. a+". Ci"ei"7s %"rds are as f"U"%s6 / 4Indeed' the -er$ thin+s that I ha-ealled inani&ate are ,r"d#!ed f"r the &"st ,art $ the la"r "f &en' n"r !"#ld %e ha-e the& #nless handi!raft and sill had

+i$!n their aid' n"r !"#ld %e #tilise the& e2!e,t #nder the &ana+e&ent "f &en. N"r %ith"#t the la"r "f &an !"#ld there e

n$ !are "f health' "r !#hi-ati"a "f the "il' "r har-estin+ and ,reser-ati"n "f +rain and "ther ,r"d#!ts "f the +r"#nd. N"r ""here e the e2,"rtati"n "f "#r s#,erfl#"#s !"&&"dities' n"r the i&,"rtati"n "f th"rn in %hi!h %e ar! la!in+' #nless &enerf"r&ed these "ffi!es . . . %hen!e' indeed' !"#l h"#ses . . . ha-e een f#rnished . . . #nless s"!iet$ had learned t" see aidhese thin+s fr"& &en3 . . . 8h$ sh"#ld I en#&erate the &#ltit#de "f arts %ith"#t %faidi life !"#M n"t ha-e een at all3 H"%"#M the si! e !#red' %hat %"#l e the en*"$&ent "f the health$' %hat %"#ld e "ar f""d "r "#r &"de "f li-in+' did n"t

&an$ arts +i-e #s their &inistiies3 It is $ these thin+s that the d-ili0ed life "f &en is s" far re&"-ed fr"& the s#sisten!e an&"de "f li-in+ "f the easts. Cities' t""' %"#ld n"t ha-e een #ilt. . . . These thin+s ha-e een f"ll"%ed $ &ildness "fdis,"siti"n and $ &"dest$i and the ""nse(#en"e is that h#&an life is etter f#rnished %ith %hat it needs' and that $ +i-in+e"ei-in+' and inter !h a n+in + !"&&"dities and ""n-!nie"!es %e &a$ ha-e aM "ar %ants s#,,lied.4 ;De Jfi!#s' H' 5B.>

THE ECONOMIC THOUGHT OF THE ROMANS this it IS n"t t" e inferred that #t f"r Ci!er" and his Gree ,rede!ess"rs there %"#ld ha-e een n" di-isi"n5"f5la

d"!trine' n"r that Ci!er" #nderst""d the f#ll si+nifi!an!e "f s#!h a d"!trine. 8hen' h"%e-er' an idea e!"&es ,art "f a s$st

f th"#+ht' it +ains a si+nifi!an!e and ri!hness "f !"ntent that &aes a !ase lie the ,re!edin+ "f s"&e interest.In rief s#&&ar$' it &a$ e re&ared that the +reat ser-i!e "f the R"&ans t" e!"n"&i! th"#+ht %as the de-el",&e

f *#ris,r#den!e as a s!ien!e' a *#ris,r#den!e %h"se: ,ra!ti!al s,irit s#,,"rted a +reat de+ree "f indi-id#alis& thr"#+h itsd"!trines !"n!ernin+ ,r",ert$' !"ntra!t' interest' and the lie.

As In+ra& sa$s' 4 Their hist"ri! &issi"n %as &ilitar$ and ,"liti!al' and the nati"nal ener+ies %ere &ainl$ de-"ted he ,#li! ser-i!e at h"&e and in the field. ... As &i+ht e e2,e!ted fr"& the %ant "f s,e!#lati-e "ri+inalit$ a&"n+ the

R"&ans' there is little e-iden!e "f seri"#s the"reti! in(#ir$ "n e!"n"&i! s#*e!ts.4 9It is essential t" e&,hasi0e their infl#en!e in an "*e!ti-e %a$ thr"#+h instit#ti"ns' *#risti! "r ,"liti!al' and f#rther

"int "#t that their ,resti+e as !lassi!s +i-es the& an ad-entiti"#s i&,"rtan!e.APPENDI TO CHAPTER K J#"tati"ns fr"& 8riters "n A+ri!#lt#re4 After the ,aterfa&ilias has !"&e t" the -illa and ,erf"r&ed his de-"ti"ns t" his d"&esti! deit$' he "#+ht that sa&

da$' if ,"ssile' t" &ae a t"#r "f his far&) if n"t that da$' at least the ne2t. 8hen he has !"nsidered h"% his fields sh"#ld

#lti-ated' %hat tass sh"#ld e !"&,leted' %hat n"t' then "n the ne2t da$ he "#+ht t" s#&&"n the -ili!#s' and in(#ire %hat%"r has een a!!"&,lished' %hat still re&ains) %hether the %"r is far en"#+h ad-an!ed f"r the seas"n' %hether %hat stille&ains !an e !"&,leted' %hat has een d"ne a"#t the %ine' !"rn' and "ther ,r"d#!ts. 8hen he has as!ertained this' he "#" ins,e!t the a!!"#nt "f the -ari"#s %"r&en' and "f the %"rin+ da$s. . . . 8hen there ha-e een st"r&s' !"nsider the %"rhat !"#ld ha-e een ,erf"r&ed %hile it rained) *ars "#+ht t" ha-e een %ashed and ,it!hed' the -illa !leaned' !"& !arried%a$' d#n+ re&"-ed' d#n+hills &ade' seed !leaned' "ld r",es re,aired' ne% "nes &ade' and the sla-es "#+ht t" ha-e ,at!he"+ether their ra+5+ar&ents and !a,s f"r the&sel-es. On h"l$ da$s "ld tren!hes !"#ld ha-e een !leaned' the hi+h%a$s ,a-ehe ra&les !#t' the +arden d#+' the &ead"% !leared' t%i+s "#nd' th"rns r""ted #,' the s,elt ,"#nded' e-er$thin+ ,#t inrder. 8hen the sla-es ha-e een si!' the "rdinar$ s#,,l$ "f ,r"-isi"ns "#+ht n"t t" ha-e een +i-en t" the&. 8hen he is

(#ite satisfied %ith his e2a&inati"n' he sh"#ld +i-e "rders f"r the !"&,leti"n "f the %"r that re&ains. He sh"#ld then ins,ehe a!!"#nts "f the -ili!#s' &"ne$5a!!"#nt and ,r"-isi"n5a!!"#nt' the s#,,l$ "f f""d ,re,ared' the %ine5a!!"#nt' the "il5!!"#nt' %hat has een s"ld' %hat #sed' %hat re&ains' %hat "f this is f"r sale. Let there e +""d se!#rit$ f"r %hat is "%in+.

" %hat re&ains' he sh"#ld see that it tallies. He sh"#ld #$ %hat is %antin+ f"r the $ear' ha-e the s#r,l#ses s"ld' let "#t thene!essar$ !"ntra!ts. He sh"#ld +i-e "rders !"n!ernin+ the %"rs he %"#ld ha-e !"&,leted' and the thin+s he is in!lined t" lnd lea-e his "rder in %ritin+. He sh"#ld !aref#ll$ ins,e!t his fl"!s' &ae his sales' sell the s#,erfl#"#s "il' %ine' and !"rnhe$ are +i-in+ a +""d ,ri!e' sell the "ld "2en' the ref#se "f the !attle and shee,' %""l' hides' the "ld !arts' "ld ir"n t""ls' anld and diseased sla-es. 8hate-er is s#,erfl#"#s he "#+ht t" sell6 : A far&er sh"#ld sell' n"t #$.74 ;Cat"' De Re R#sti!a'

JUOTATIONS FROM 8RITERS ON AGRICULTURE lOf the -ili!#s Cat" sa$s6 4 He sh"#ld &aintain +""d dis!i,line' attend t" the "ser-an!e "f h"l$ da$s' ee, his hand

ff the ,r",ert$ "f "thers' faithf#ll$ ,r"te!t his "%n' ,reside "-er dis,#tes a&"n+ the sla-es' ,#nish %ith dis!reti"n th"se +#f a delin(#en!$' ,r"-ide a+ainst ill efallin+ the h"#seh"ld' a+ainst si!ness' a+ainst h#n+er. If he ee,s the sla-es #s$ %



%"r it %ill e easier f"r hi& t" ee, the& "#t "f &is!hief and "#t "f "ther ,e",le7s affairs. . . . He &#st e2tend l"ans t" n"n%ith"#t his &aster7s "rders' and &#st e2a!t ,a$&ent fr"& his &aster7s det"rs. He &#st lend n" "ne seed f"r s"%in+ "r

r"-isi"ns "r s,elt "r %ine "r "il. Let hi& ha-e t%" "r three h"#seh"lds fr"& %hi!h he &a$ "rr"%' "r t" %h"& he &a$ lenrti!les / let this e the li&it. He &#st "ften re!"n his a!!"#nts %ith his &aster. He &#st n"t #se the sa&e la"#rer' hireder-ant' "r !#lti-at"r l"n+er than a da$. He &#st n"t desire t" sell an$thin+ %ith"#t his &aster7s n"%led+e' "r t" !"n!ealn$thin+ fr"& his &aster.4 ;Cat"' De Re R#sti!a' K' 5B.>

4As f"r th"se arti!les %hi!h !an e raised "n the far& "r &an#fa!t#red $ the ser-ants n"ne "f these sh"#ld e "#Of s#!h a nat#re are nearl$ all th"se #tensils in the &an#fa!t#re "f %hi!h $"# #se "siers and "ther &aterials at hand in the"#ntr$) f"r e2a&,le' asets' r""&5asets' threshin+5sled+es' %inn"%in+5-anes' h"es) s" t"" th"se in the &ain+ "f %hire e&,l"$ed he&,' linen' r#shes' ,al&s' #lr#shes' as r",es' !"rds' !"-erin+s. 1#t in the !ase "f thin+s %hi!h $"# !ann"tr"d#!e "n the far& &ae $"#r ,#r!hases %ith a -ie% t" their #sef#lness rather than "rna&ent' and then their !"st %ill n"t e

#, their ,r"fit. This %ill e es,e!iall$ the !ase if $"# +et the& %here the$ !an e "tained +""d in (#alit$' !l"se at hand' anhea, in ,ri!e.4 ;Karr"' De Re R#sti!a' I' II' ' <.>

CHAPTER KITHE MIDDLE AGESThe Peri"d Defined. / There is a !ertain rather ill5defined ,eri"d in the %"rld7s hist"r$ %hi!h is !"&&"nl$ n"%n

he Middle A+es. M"st %riters a+ree in ,la!in+ the e+innin+ "f this ,eri"d at the fall "f the R"&an E&,ire in ' #t itsndin+ is n"t s" !lear. Dr. In+ra& 9 and "thers %"#ld rin+ it t" a !l"se %ith the $ear ==' and it &a$ e a+reed that the

Middle A+es rea!hed a !li&a2 at a"#t that ti&e. 1#t it $ n" &eans f"ll"%s that the $ears "f de!line and rea5#, "f &edinstit#ti"ns %hi!h ens#ed' !"nstit#ted the e+innin+ "f thin+s &"dern. In+ra& hi&self sa$s that the &"-e&ents "f his first

&"dern ,hase ;==5B==> 4!an s!ar!el$ e said t" find an e!h" in an$ !"nte&,"rar$ e!"n"&i! literat#re.4 It see&s &"renearl$ tr#e t" re+ard the $ears a"#t B== as &arin+ the end "f &edie-al ti&es. 1$ == the transiti"n %as n"t !"&,lete. Nill t"%ard the !l"se "f the fifteenth !ent#r$ did H#&anis& &ar the rise "f ne% tenden!ies in th"#+ht. At the sa&e ti&e theeli+i"#s %"rld %as "n the e-e "f its +reat Ref"r&ati"n) %hile in the &i2ed field "f ,"liti!s and e!"n"&i!s the e+innin+ "f

&"dern nati"n5#ildin+ &a$ e dis!erned. M"re "*e!ti-el$' there %ere s#!h +e"+ra,hi!al dis!"-eries as that "f A&eri!a anhe %ater r"#te t" India ;> ) and the e2tended #se "f s#!h a+ents "f !i-ili0ati"n as the &ariners7 !"&,ass and +#n,"%dere+an d#rin+ the sa&e ,eri"d. The si+nifi!an!e "f the infl#2 "f sil-er %hi!h f"ll"%ed the dis!"-er$ "f A&eri!a has "ften e

n"ted and its i&,"rtan!e in rin+in+ a"#t the e2!han+e e!"ne&$ "f 9 F"ll"%in+ C"&te. s&"dern ti&es !"&&ented #,"n) #t A&eri!an &ines %ere n"t ",ened #ntil the si2teenth !ent#r$.

In a %"rd' the Middle5A+e ,eri"d d"es n"t !l"se %ith Ni!"las Ores&e' #t %ith Gariel 1iel' his dis!i,*9e' %h" is"&eti&es !alled 4 the last "f the s!h""l&en.4

If f#rther ,r""f %ere needed' it &i+ht e "ser-ed that Fe#dalis&' a ,ree&inentl$ &edie-al instit#ti"n' did n"t+enerall$ e+in t" l"se its ,"%er #ntil after B==' the ,eri"d d#rin+ %hi!h it reall$ re,resented the ,"liti!al "r+ani0ati"n "fFren!h s"!iet$' f"r e2a&,le' ein+ that l$in+ et%een the $ears n#&ered == and B==.9 It %as in the earl$ si2teenthent#r$' t""' that the En+lish +"-ern&ent +a-e the death l"% t" !raft +ilds' an"ther &edie-al instit#ti"n. .

On lar+e lines' and fr"& the ,"int "f -ie% "f s$ste&s "f th"#+ht rather than s$ste&s "f ind#str$' the Middle A+es&a$ %ith ,r"fit e di-ided int" t%" ,eri"ds. Fr"& == d"%n t" <==' "r sh"rtl$ thereafter' !"nstit#tes the first. D#rin+ these$ears Christian the"l"+$ ",,"sed R"&an instit#ti"ns' and Ger&ani! !#st"&s %ere s#,er,"sed' #ntil' thr"#+h a!ti"n andea!ti"n' all %ere lended. This %as the re!"nstr#!ti"n) it %as the 4 st"r&$ str#++le 4 t" f"#nd a ne% e!!lesiasti!al and !i-il$ste&. .?r"& <== "n.talSDJ. the %"rld "f th"#+ht settled t" its le-el.e#dalis& and s!h"lasti!is&' the !"rnerst"nes "f

&edie-alis&' e&er+ed and %ere d"&inant. The latter' s,rin+in+ fr"& the f#si"n "f Arist"tle7s ,hil"s",h$ %ith Christian

he"l"+$' %as f"r&#lated $ Th"&as A(#inas' %h" &a$ e said t" &ar the t#rnin+ ,"int et%een the s#5,eri"ds.9Earl$ Ger&ani! C"ntri#ti"ns t" E!"n"&i! Th"#+ht. /. Relati-el$ little is t" e said a"#t the e!"n"&i! ideas "f

arl$ Ger&ani! tries. Their !"ntri#ti"n %as rather a: Es&ein' C"#rs ElS&entaire d9ist"ire d# dr"it fran(ais.: The ,eri"ds s#++ested !"rres,"nd rather !l"sel$ t" th"se in ind#strial hist"i$. S"&eti&e d#rin+ the t%elfth "r

hirteenth !ent#ries in En+land' and t" a less e2tent in Fran!e and Ger&an$' a t"%n e!"n"&$ %ith di-isi"n "f "!!#,ati"ns'nter5&#ni!i,al trade' and &"ne$' lar+el$ re,la!ed an inde,endent d"&esti! e!"n"&$ in %hi!h th"se !hara!teristi!s %ere &r less la!in+' and land %as the !hief as "f s"dal and e!"n"&i! life.



ne% ,"int "f -ie%' +i-en e2,ressi"n in ,arti!#lar !#st"&s. This is n"t the ,la!e t" dis!#ss the &ar' the three5field$ste&' and all the interestin+ ,hen"&ena "f their ind#strial life. It %ill s#ffi!e t" re!all the fa!t that "ri+inall$ the s"!ial and!"n"&i! #nit %as the -illa+e !"&&#nit$ ;Gen"s5lens!haft>' a -irt#all$ self5s#ffi!ient +r"#, "f h"#seh"lds' de&"!rati! andi&ilar in %ealth. The !"&&#nit$ !a&e ef"re the indi-id#al' and %ithin it the idea "f r"therh""d %as str"n+. It f"ll"%ed t2!han+e f"r +ain %as hardl$ t"lerated %ithin the !"&&#nit$' #t a !"&&"n -al#e %as ,la!ed #,"n s#!h thin+s as %ere2!han+ed' and e-en e2!han+es %ith "ther +r"#,s %ere re+#lated. There %as n" &"ne$ e!"n"&$.

The ideas an.d !#st"&s "f the Ger&ani! tries shar,l$ differentiate the& fr"& the R"&ans. The latter ased their la#,"n indi-id#al ri+hts) the f"r&er e&,hasi0ed the !"&&#nit$'/ th"#+h a lar+e de+ree "f de&"!ra!$ +a-e r""& f"r a r"adndi-id#alis&. A!!"rdin+l$' %ith the R"&ans there %as a shar, distin!ti"n et%een ,ri-ate and ,#li! ri+hts' %hereas thesei+hts %ere &#t#all$ deter&inin+ and faded int" "ne an"ther in the !ase "f the Te#t"ns. M"re s,e!ifi!all$' R"&an la% &ader",ert$ ri+hts rather as"l#te and ri+id' %hile $ Ger&ani! !#st"& these ri+hts %ere relati-e and !han+in+. F"r e2a&,le' th

Gen"ssens!haften had se-eral different inds "f landed ,r",ert$' ,erha,s these f"#r6 d%ellin+ ,la!es' +ardens' arale lands'%aste lands. In the first t%"' a lar+e de+ree "f ,ri-ate ,r",ert$ %as re!"+ni0ed) #t the fields' %ith their !han+in+ stri,s' %er#*e!t t" the ,lans "f the !"&&#nit$' and the %aste land' "r 4 !"&&"ns'4 as its na&e i&,lies' %as the ,r",ert$ "f n"ndi-id#al. Th#s ,r",ert$ ri+hts had a different e2tent a!!"rdin+ t" the nat#re "f the "*e!t in-"l-ed.

A n"te%"rth$ !hara!teristi! %as the e&,hasis ,#t $ these ,e",les #,"n ,ers"nal ri+hts. Their la%s see& t" indi!athat the$ %ere &"re !"n!erned a"#t s#!h than a"#t ,r",ert$ ri+hts. On the "ther hand' and al&"st ,arad"2i!all$' ,ers"nali+hts de,ended lar+el$ #,"n landed ,r",ert$' land ein+ the asis "f thin+s in their ind#strial sta+e.

The Infl#en!e "f Christianit$ and the Ch#r!h. / If the R"&an fa!t"r e taen f"r +ranted' Christianit$ and the Ch#&a$ e !"nsidered ne2t as ,erha,s the !hief fa!t"rs in deter&inin+ &edie-al th"#+ht. It is ne!essar$ t" ee, these t%" idease,arate' f"r fe% %ill den$ that Christianit$ as a reli+i"n is (#ite distin!t fr"& the -ari"#s instit#ti"ns "r !h#r!hes %hi!hr"fess it. Th"se ,rin!i,les "f Christian d"!trine %hi!h ha-e an$ dire!t e!"n"&i! si+nifi!an!e f"ll"%.

. The Ch#r!h' in a!!"rdan!e %ith the s,irit "f Christianit$' ta#+ht the nat#ral e(#alit$ "f &en. The an!ients' aslread$ seen' elie-ed that &en %ere different $ nat#re6 sla-er$' lie !astes' Le-ites' and 4 +#ardians'4 %as nat#ral' and"rres,"nded t" s"&e inherent aseness. Christianit$ ta#+ht a r"therh""d %hi!h e2tended e$"nd' !"&&#nit$ "r nati"n'&ra!in+ all !lasses and ra!es.9

<. A!!"rdin+l$' sla-er$ %as !"nde&ned' %h"ll$ "r in ,art' the least radi!al tea!hin+ ein+ that the sla-es "f the laith"#ld e freed %hen Christiani0ed.

. And !l"sel$ !"nne!ted %ith the d"!trine "f e(#alit$ %as the idea "f a nat#ral !"&&#nit$ "f ,r",ert$.9 Ori+inall$nd a!!"rdin+ t" the la% "f nat#re' &en "%ned all +""ds in !"&&"n.

. One "f Christianit$7s tea!hin+s' %hi!h %as n"tal$ at "dds %ith the ideas "f anti(#it$' %as that !"n!ernin+ thedi+nit$ "f la"r. This it #,held' th"#+h n"t %ith"#t s"&e e!!lesiasti!al ad#lterati"n' and the ideal e!a&e a f"r!e %"rin+ f+reater re!"+niti"n "f th"se %h" ate their read in the s%eat "f their fa!es.7 The -ari"#s ili!al &a2i&s !"n!ernin+ the &ernd#str$ %ere "f n" s&all %ei+ht t" the &en "f this !red#l"#s ti&e.

B. Charit$ and al&s+i-in+' t""' %ere a&"n+ the !ardinal -irt#es. N"t "nl$ the %ritin+s "f the Old Testa&ent' #t th%"rds and s,irit "f Christianit$' ta#+ht the d#t$ "f

@ 4And if a ,""r &an ha-e a (#arrel %ith a ri!h &an' s#stain the ,""r rather than the ri!h' #ntil the tr#th is &ade !lend %hen $"# n"% the tr#th' d" *#sti!e t" the&.4 ;Ad-i!e "f St. L"#is t" his s"n.>

s See arti!le $ H. H. S%ain in 1iU"te!a Sa!ra' O!t"er' ' "n this ,"int.t Gen. iii' .+i-in+ aid t" the ,""r. St. L"#is ad-ises his s"n th#s6 4 Dear s"n' ha-e a tender and ,itif#l heart f"r the ,""r' and f"

ll th"se %h"& $"# elie-e t" e in &iser$ "f heart "r "d$' and a!!"rdin+ t" $"#r ailit$ !"&f"rt and aid the& %ith s"&e

l&s.4 This (#"tati"n' h"%e-er' s#++ests t%" li&itati"ns #,"n the !harit$ "f &edie-al !h#r!h&en6 their al&s %ere in the"r$e +i-en "nl$ t" th"se re!"+ni0ed as ein+ in real need' and then %ere t" e in ,r","rti"n t" the d"n"r7s &eans.

. Finall$' Christianit$ %as a f"r!e f"r ,#rif$in+ and ,er,et#atin+ the fa&il$ and fa&il$ life.Th#s the Christian reli+i"n tended t" intr"d#!e ele&ents %hi!h %ere defi!ient in the ,hil"s",h$ "f R"&an

#ris,r#den!e. The ,ers"nalit$ "f &an %as e&,hasi0ed. 8ith the in!reased re!"+niti"n "f h#&an %"rth !a&e the intr"d#!ti"f &"ral and h#&anitarian ideas %hi!h added ne% li&itati"ns #,"n indi-id#alis& %hile in!reasin+ the ri+hts "f &an$ndi-id#als. In fa!t' "ne !ann"t #t e i&,ressed %ith the idea that' "n the %h"le' Christianit$ and Ger&ani! !#st"&s %"re

hand in hand. Their fidelit$' their relati-e freed"&' their +reater e(#alit$' their e&,hasis "f the ,ers"nal ele&ent' all &ade thTe#t"ni! f"ls a read$ &edi#& f"r the lea-en "f the ne% reli+i"n.



As alread$ s#++ested' the f"re+"in+ ,rin!i,les "f Christianit$ %ere !"nsideral$ &"dified "r +i-en a s,e!ial &eanin their ,ra!ti!al a,,li!ati"n $ the Ch#r!h. T" &enti"n #t an instan!e "r t%"6 the 4 nat#ral la% 4 "f e(#alit$ %as ad&itted te &"dified "n +r"#nds "f e2,edien!$ s" as t" ,er&it ine(#alit$ "th in ,r",ert$ and in stat#s. A+ain' !harit$ %as t"""&&"nl$ re+arded as an end' as a ,i"#s thin+' rather than as a &eans f"r enefitin+ s"!iet$ "r the ,""r. S"' t""' %ith &an#a"r6 it %as re+arded rather as a f"r& "f dis!i,line f"r the attain&ent "f sal-ati"n than as a &eans f"r ,r"d#!in+ %ealth. Pri

%as n"t t" e taen in the !raft' and the &ain interest %as n"t t" e in the ,r"d#!t. The +eneral e!"n"&i! de-el",&ent %as n

a-"rale t" the !"&,lete ad-an!e&ent fr"& sla-er$'+" &STORY OF ECONOMIC THOUGHTand the Ch#r!h &ade r""& f"r it "n +r"#nds "f e2,edien!$. Serfd"& !an s!ar!el$ ha-e disa,,eared in t"%ns $ the

$ear ===' %hile a+ri!#lt#ral serfd"& lin+ered "n int" the nineteenth !ent#r$. Still there %as the tenden!$ t"%ard freed"&.Pri"r t" the thirteenth !ent#r$ the Ch#r!h fathers !"n!erned the&sel-es #t little a"#t e!"n"&i! &atters.9 F"r "ne

hin+ a -er$ si&,le inde,endent d"&esti! e!"n"&$ ,re-ailed) and' "n the "ther hand' ,#rel$ reli+i"#s ideas %ere in !"ntr"lC"nse(#entl$' "ne finds little #t &"ral dissertati"n !"n!ernin+ the e-ils "f l#2#r$' and the lie. A&"n+ the &"st n"te%"rth!"n"&i! ideas %ere th"se !"n!ernin+ the desirailit$ "f %ealth' -al#e' and the relati-e &erits "f different f"r&s "f ind#str$hese there is little ne%. A+ri!#lt#re %as ,raised) &an#fa!t#re did n"t dis,lease G"d) #t trade !"#ld n"t e ,leasin+ t" the

Deit$. Material %ealth %as dan+er"#s t" s,irit#al %elfare' th"#+h it %as ,er&issile t" the lait$ if #sed f"r the +""d "f theirell"% &en. As t" -al#e' the re!"+niti"n "f la"r %as ,re,arin+ the %a$ f"r a !"st the"r$ ased "n the la"r ele&ent. The

+eneral n"ti"n a,,ears t" ha-e een that -al#e is as"l#te and "*e!ti-e and inde,endent "f ,ri!e. A!!"rdin+l$' e2!han+es %

""ed #,"n as *#st "r #n*#st in ,r","rti"n t" the e(#alit$ "f the as"l#te -al#es) and #s#r$ %as f"ridden t" !h#r!h&en "n +r"#nd that in the tain+ "f interest a +reater -al#e %"#ld e e2a!ted than that +i-en' %hi!h %"#ld5res#lt in in*#sti!e t" the

"rr"%er.1#t as earl$ as the ele-enth !ent#r$ ,r"+ress e+an. 8ith the +r"%th "f &"nasteries' t"%ns' handi!raft' and !"&&e

nd the in!reasin+ #se "f &"ne$' ne% ,hen"&ena %ere ,resented) %hile in the t%elfth !ent#r$ the first Latin translati"n "fArist"tle7s P"liti!s f"#nd its %a$ int" %estern E#r",e. The latter fa!t &ars an e,"!h in &edie-al th"#+ht.

S!h"lasti!is& and Can"n La%. / Neither Christianit$ n"r the Ch#r!h' #t ,art "f ea!h' %ith an ad&i2t#re "f the9 Cf. a"-e' ,. =.THE MIDDLE AGES JI,hil"s",h$ "f Arist"tle' %as s!h"lasti!is&. It %as the s$ste& "f th"#+ht %hi!h !a&e t" d"&inate e!!lesiasti!s d#rin

&edie-al ti&es) it %as the s!h"larshi, "f the Middle A+es. In it the the"l"+i!al ele&ent %as d"&inant' and n" ad-an!e inn"%led+e %as !"nsidered estalished #ntil the ne% idea %as fitted int" its ni!he in the str#!t#re %h"se f"#ndati"n %as

eli+i"#s. It !ann"t e !alled a s!ien!e' f"r it did n"t see t" e2,lain ,hen"&ena s" &#!h as t" a,,l$ !ertain as"l#te r#les ""nd#!t t" e2istin+ !"nditi"ns. The last %"rd %as said after a !itati"n fr"& the 1ile' "ne fr"& the Ch#r!h fathers' and n"%hen "ne fr"& ,r"fane hist"r$.

It is n"t i&,r"ale that the ,r"+ress &ade $ &edie-al s!h"lars in e!"n"&i! th"#+ht has "ften een #nderesti&atear+el$' n" d"#t' e!a#se their &eth"ds and !"n!l#si"ns %ere s" different fr"& th"se n"% d"&inant. It %as R"s!her7s ",inhat the s!h"lasti!s' and a"-e all S!"t#s' &ade &"re ,r"+ress than is !"&&"nl$ elie-ed' th"#+h "nl$ in !ertain s,e!ial f"r

M"st -al#ale is that ,art "f their %"r de-"ted t" the sa!ra&ent' es,e!iall$ the sa!ra&ent "f !"nfessi"n. Here %eren-esti+ated the !"nditi"ns %hi!h &#st ,re!ede the as"l#ti"n "f the ,enitent sinner and h"% far he &#st &ae +""d his %rnd that led' in the !ase "f sins %hi!h in-"l-ed e!"n"&$' t" an in(#ir$ int" the nat#re "f e!"n"&i! instit#ti"ns. The"n!l#si"ns rea!hed %ill e dis!#ssed in a &"&ent. The diffi!#lt$ %as that e!"n"&i!s %as n"t &ade a distin!t line "f th"#+h

The &"ns ne% little "#tside "f Arist"tle7s %ritin+s' and Arist"tle %r"te n" ""s "n ,"liti!al e!"n"&$.9Th"&as A(#inas has een !alled the ,rin!e "f s!h"lasti!s. He it %as %h" %ith infinite ,ains and in+en#it$ str"-e t"

%eld the tea!hin+s "f the 1ile and "f Arist"tle int" a har&"ni"#s "d$ "f th"#+ht. And' in the #n!riti!al *#d+&ent "f his"nte&,"raries' he s#!!eeded. One

7 This e2,lanati"n is +i-en $ Gasser' Intr"d#!thn t" the E!"n"&i!' P"liti!al and a&eralisti! S!ien!es ;Halle' <s a reas"n %h$ e;@n"&i! s#*e!ts had n"t een ta#+ht in the Ger&an #ni-ersities. A %"r #nder that title is s"&eti&esttri#ted t" Arist"tle' #t e-en if he %r"te it' it d"es n"t deal %ith e!"n"&i!s ,r",er in an$ distin!t %a$.

res#lt "f his atte&,t %as the !elerated !lassifi!ati"n "f la%s int" eternal' nat#ral' h#&an' and di-ine. The first is th"ntr"llin+ ,lan "f the #ni-erse as !"n!ei-ed $ G"d) that ,art "f it %hi!h !an e +ras,ed $ &an and %hi!h enales hi& t"

distin+#ish +""d and e-il is nat#ral la%) %hile h#&an "r !#st"&ar$ la% !"nsists "f the ena!t&ents "f earthl$ ,"%ers. Di-inea% is that ,art "f the eternal la% re-ealed in the h"l$ %ritin+s. H#&an la% sh"#ld e ased #,"n nat#ral la%. It fell int" t%"



arts6 !i-il la% ;R"&an> and !an"n la% ;Ch#r!h>. Can"n la%' "r the C"r,#s ?#ris Can"ni!i' %as !""rdinated and +i-en a$ste&ati! f"r& a"#t the &iddle "f the t%elfth !ent#r$ $ the &"n Gratian "f 1"l"+na. It %as dra%n fr"& a &ass "f!!lesiasti!al le+islati"n and de!isi"ns' th#s !"ntainin+ ele&ents "f Christian d"!trine' Arist"telian ,hil"s",h$' and R"&ana%. It e2,ressed the *#d+&ent "f "rth"d"2 !h#r!h&en !"n!ernin+ h#&an relati"ns' and s" !"ntained e!"n"&i! ideas.

Kal#e and ?#st Pri!e. / Passin+ "-er ideas !"n!ernin+ %ealth and ind#str$' %hi!h %ere s#stantiall$ th"se &enti"n"-e' "ne rea!hes the heart "f their e!"n"&i! th"#+ht in the d"!trine "f *#st#& ,reti#&. This d"!trine rested #,"n their n"t

f -al#e. 1riefl$ stated' it %as that e-er$ !"&&"dit$ had s"&e "ne tr#e -al#e %hi!h %as "*e!ti-e and as"l#te' and %as t" deter&ined in the last anal$sis $ the !"&&"n esti&ati"n "f the !"st "f ,r"d#!ti"n. The %"rds 4 %as t" e deter&ined 4 are#sed delieratel$' f"r the d"!trines "f the s!h"lasti!s are "nl$ t" e #nderst""d %hen !"nsidered as ethi!al' / as la$in+ d"%%hat sh"#ld e' rather than s!ientifi! !"n!l#si"ns as t" %hat is.

As f"r&#lated $ Alert#s Ma+n#s ;5<=> and Th"&as A(#inas ;<< "r <<B5<>' the the"r$ %as that -ah"#ld e(#al the e2,endit#re "f la"r and "ther !"sts. Th#s' a!!"rdin+ t" A(#inas' a &an &i+ht la%f#ll$ !har+e &"re than h

had ,aid 4either e!a#se he has i&,r"-ed the arti!le in s"&e res,e!t' "r e!a#se the ,ri!e "f the arti!lehas een !han+ed "n a!!"#nt "f differen!e "f ,la!e "r ti&e' "r "n a!!"#nt "f the dan+er t" %hi!h he e2,"ses hi&se

ransferrin+ the arti!le fr"& ,la!e t" ,la!e' "r in !a#sin+ it t" e transferred.4 9 This +enerali0ati"n' h"%e-er' %as (#alified he e2tent that "nl$ th"se !"sts %hi!h %ere in!#rred in ,r"d#!in+ thin+s %hi!h satisfied n"r&al "r nat#ral %ants %ere

deter&inin+' and the la"r ele&ent %as %ei+hted a!!"rdin+ t" the s"!ial ran "f the la"rer.: This -al#e %as n"t ne!essaril$2,ressed in ,ri!e' and %as inde,endent "f the esti&ate "f #$er "r seller. It %as a (#esti"n "f *#sti!e'9 and it %as the d#t$ "

he la% t" ste, in and fi2 the ,ri!e a!!"rdin+ t" the a"-e ,rin!i,les. It %as (#ite in har&"n$ %ith this !"n!e,ti"n thatCharle&a+ne' at an earlier ti&e' "rdained 4 that n" &an' %hether e!!lesiasti! "r la$&an' shall' either in ti&e "f a#ndan!e' "n ti&e "f s!ar!it$' sell ,r"-isi"ns hi+her than the ,ri!e re!entl$ fi2ed ,er #shel.:

8ith the rise "f t"%ns and &"ne$ e!"n"&$' this n"ti"n "f -al#e e+an t" e &"dified' th"#+h it d"&inated the %h"eri"d and e$"nd. A(#inas +a-e s"&e !"nsiderati"n t" #tilit$ and t" the a&"#nt "ffered f"r sale' "r s#,,l$. 1#ri5dan ;==B> %ent farther and stated that the &eas#re "f -al#e is t" e f"#nd in the satisfa!ti"n "f %ants6 the +reater the need' the

hi+her the -al#e. And 1id ;died B>' %hile standin+ f"r a ne!essar$ e(#alit$ in -al#e "f +""ds e2!han+ed' ases it #,"n th#tilit$ f"r h#&an ends.:9 1#t %hen all has een said' the !"n!l#si"n is that it is r"adl$ tr#e that an "*e!ti-e !"st !"n!e,ti"

f -al#e ,re-ailed d#rin+ the Middle A+es.Kal#e "f M"ne$) Us#r$. / H"% did s#!h an idea "f -al#e %"r %hen a,,lied t" &"ne$ 3 The ans%er t" this (#est9 J#aesti" I22-ii' art. i-' O,era' I' ,. ii. J#"ted $ Se%all' The"r$ "f Kal#e h9"re Ada& S&ith' ,. i.: Cf. Arist"tle7s tea!hin+' a"-e' ,. i.

: 4. . . if either the ,ri!e e2!eeds the -al#e' "r' !"n-ersel$' the -al#e e2!eeds the ,ri!e "f the thin+' the alan!e "f#sti!e is destr"$ed'4 %r"te Th"&as A(#inas.

: 1lan(#i' Hist"r$ "f P"liti!al E!"n"&$' ,. <.: C"nt0en' Ges!i!hte der -"lsi"irths!hafUi!hen Lirat#f i& MitteiaUer'rin+s #, the %ell5n"%n d"!trine "f #s#r$. The ter& %as #sed t" !"-er %hat %e desi+nate as interest' and' in a

r"ader sense' t" in!l#de an$ ,ri!e in e2!ess "f the *#st#& ,reti#&6 (#i ,l#s (#a& dederit a!!i,it' #s#ras e2,etit. ;He %h"e!ei-es &"re than he +i-es de&ands #s#r$.> At first ;<B A.D.> #s#r$ %as f"ridden the !ler+$ "nl$' #t ef"re the !l"se "fhe t%elfth !ent#r$ the ,r"hiiti"n %as e2tended t" the lait$. As late as it %as de!lared as"l#tel$ ille+al. The r"adi&,le +r"#nd f"r this a!ti"n %as the elief that t" tae interest f"r a l"an "f &"ne$ %as' lie !har+in+ &"re than the *#st ,ri

#n*#st. A s!h"lasti! rief a+ainst #s#r$ &i+ht e dra%n as f"ll"%s6 / . The h"l$ %rit f"rids it6 The M"sai! la% ,r"hiits #s#r$5tain+ fr"& a r"ther) Christ said' 4 Lend' h",in+ f"r

n"thin+ a+ain.4 ;L#e -i' B.>

<. Arist"tle sa$s &"ne$ is arren and !ann"t reed &"ne$' theref"re' t" de&and #s#r$ f"r its #se is #n*#st.. It f"ll"%s fr"& the a"-e ,"int that t" ,a$ f"r &"ne$ is t" ,a$ f"r ti&e) #t ti&e is !"&&"n ,r",ert$ and el"n+

G"d.. M"ne$ is a Res F#n+iilis' "r 4 !"ns#&,tile'4 a!!"rdin+ t" the !i-il la%. As s#!h it has n" #se distin!t fr"& itse

ts #se !ann"t e se,arated fr"& the "%nershi, "f it. Theref"re' t" lend &"ne$ is t" +i-e #, "%nershi, "f it' and t" as aa$&ent f"r the #se "f that %hi!h is s"ld is #n*#st.:

@ The reas"nin+ "f A(#inas "n this ,"int a,,ears in the f"ll"%in+ (#"tati"n6 4T" tae #s#r$ f"r a l"an "f &"ne$ is tself #n*#st) f"r it is t" sell %hat d"es n"t e2ist' %hi!h is an ine(#alit$' and' theref"re' an in*#sti!e. T" #nderstand this it &#se n"%n that there are s"&e thin+s %h"se #se !"nsists in the !"ns#&in+ "f the&' as %hen %e !"ns#&e %ine. ... In arti!les



his ind \!"ns#&,tilesV' theref"re' the #se "f the thin+ &#st n"t e re!"ned se,aratel$ fr"& the thin+ itself) he %h" is +i-he #se is there$ +i-en the thin+. And a!!"rdin+l$ in lendin+ a thin+ "f this ind' all the ri+hts "f "%nershi, are handed "-ef theref"re a &an %anted t" sell %ine and the #se "f the %ine a,art fr"& "ne an"ther' he %"#ld e either sellin+ the sa&e th%i!e ;&eanin+ that the #se is the %ine>' "r %"#ld e sellin+ %hat did n"t e2ist. 8heref"re he %"#ld e &anifestl$ !"&&ittin*#sti!e and sinnin+. F"r the sa&e reas"n' he %"#ld !"&&it in*#sti!e %h" lent %ine "r !"&' seein+ f"r hi&self t%" re%ardhe restit#ti"n "f an e(#al a&"#nt "f the arti!le and als" a ,a$&ent f"r its #se' !alled #s#r$.4

41#t &"ne$' as Arist"tle sa$s' . . . has een de-ised f"r the &ain+ "f e25As in the !ase "f the +eneral !"n!e,t "f -al#e' the de-el",&ent "f ind#str$ and e2!han+e %r"#+ht a +rad#al

&"difi!ati"n "f the d"!trine "f #s#r$ "r -al#e "f &"ne$. A(#inas and his r"ther s!h"lasti!s re!"+ni0ed e2!e,ti"ns6 f"r2a&,le' %here a l"ss %as in!#rred $ a l"an ;da&n#& e&er+ens> "r a ,r"fit %as &issed Wl#!r#& !essans> a !"rres,"ndin+#& &i+ht e de&anded "f the "rr"%er. Then "ther ",enin+s %ere &ade. A #$er "n !redit %as n"t ,r"hiited fr"& ,a$in+

&"re than the !ash ,ri!e) dis!"#nts %ere all"%ed "n ills "f e2!han+e) &"ne$ !"&ined %ith la"r' as in ,artnershi,s' %asalled ,r"d#!ti-e) ?e%s and L"&ards' ein+ da&ned an$h"%' %ere ,er&itted t" tae #s#r$) and' in the fifteenth !ent#r$' th

&"nies ,ietatis %ere all"%ed t" re!ei-e interest.9The &edie-al idea "f #s#r$ !"#ld n"t ha-e l"n+ e2isted in a 4 &"ne$ e!"n"&$.4 The s"!ial "r+ani0ati"ns %ith %hi!

ili!al %riters' Arist"tle' and the s!h""l&en alie %ere ass"!iated' %ere n"n5!a,italisti!' and lar+el$ self5s#ffi!ient. The$ %n"t e2!han+e e!"n"&ies. The ,"liti!al !"#nter,art "f this ind#strial !"nditi"n %as a ,red"&inan!e "f !lan "r fa&il$ feelin+eelin+ %hi!h a,,ears in the +ild' and e-en in the &edie-al &#ni!i,alit$. This e2,lains t" a lar+e e2tent the +eneral

"nde&nati"n "f interest tain+. L"ans at interest +enerall$ in-"l-e a rather astra!t "r i&,ers"nal relati"n et%een the ,ar#!h as e!a&e !"&&"n %ith the estalish&ent "f &"ne$ e!"n"&$. E-en t"5da$ the ,#rel$ #siness relati"n is a,t t" e!"&

#nsatisfa!t"r$ %hen e2istin+ a&"n+ relati-es "r ,ers"ns el"n+in+!han+es. S" the first and !hief #se "f &"ne$ is its !"ns#&,ti"n "r s,endin+. 8heref"re it is in itself %r"n+ t" re!ei

esides the ret#rn "f the &"ne$ itself> a ,ri!e f"r the #se "f the &"ne$.4 ;J#"ted $ Ashle$' Intr"d#!ti"n t" En+lish E!":n"&i! Hist"r$ and The"r$' K"l. I' ,. B.>

9 Gariel 1iel' Pr"fess"r "f The"l"+$ at T#in+en' B' held that in deeds "f ,artnershi, an$ rate "f interest %asll"%ale a!!"rdin+ t" the +ains "f the !a,ital as in-ested $ the det"r' "nl$ the !redit"r &#st share an$ l"ss. Als"' if "neartner ,#t in &"ne$ and an"ther !"ntri#ted la"r' the la"r &i+ht e e-al#ated in ter&s "f &"ne$' and the ,r"fits "f the#siness e shared ,r" rat!. See C"nt0en' Ges!hi!h. d. -"ls%irths. Lit. i& Mittelalter' inde2 #nder Gariel 1iel) and R"s!

Ges!hiehU der Nat' Oe. in De#!hland' ,,. << fif.t" the sa&e s"!ial "r+ani0ati"n' and the !"nde&nati"n "f #s#r$ %as nat#ral %hen &"st "f a &an7s dealin+s %ere %i

#!h ,ers"ns.E!"n"&i! F"n!titas "f the State. / An"ther +r"#, "f ideas held $ the s!h"lasti!s !"n!erned the e!"n"&i! f#n!ti"

f the state. In +eneral the inde,endent d"&esti! e!"n"&$ idea %as a,,lied t" a lar+e +r"#,' "r' in "ther %"rds' the state %ae+arded as a s"rt "f +reat ,ri-ate "r d"&anial e!"n"&$. The ,"siti"n "f ta2ati"n ill#strates the sit#ati"n. In the t%elfth andhirteenth !ent#ries' at least' the "ffi!e "f the r#ler see&s t" ha-e een re+arded as ,ri-ate ,r",ert$. His re-en#es !a&e fr"&states and !ertain ,rer"+ati-es'9 and there %as n" s$ste& "f ta2ati"n in the &"de& sense' f"r that re,resents &"re &"de&!"n"&i! th"#+ht.

The ,arti!#lar f#n!ti"ns ,r",er t" +"-ern&ent %ere the &aintenan!e "f ,",#lati"n and ,r"-isi"n f"r the ,""r' thestalish&ent "f safe and free r"ads / a R"&an !"n!e,ti"n a!ed $ !itati"ns fr"& the 1ile' a s$ste& "f %ei+hts and

&eas#res' and a s,e!ial !"ina+e. The ar+#&ent f"r the &aintenan!e "f %ei+hts and &eas#res %as that it %"#ld de!rease(#arrels and liti+ati"n' and that the 1ile sa$s' 4 G"d has "rdered all thin+s $ n#&er' %ei+ht and &eas#re.4 :

The d#t$ "f the &edie-al r#ler t" ,r"-ide an e2a!t and #n!han+in+ !"ina+e %as !"nstantl$ e&,hasi0ed. Kirt#all$

%ith"#t e2!e,ti"n this ri+ht %as ,"ssessed $ hi&' and la%s %ere ,assed t" ,re-ent !"#nterfeitin+ and !li,,in+. The2,"rtati"n "f !"in' as als" the !ir!#lati"n "f f"rei+n !"ins' %as fre(#entl$ f"ridden. This re+#lati"n "f &"ne$ %as a l"+i!a"n!"&itant "f the d"!trine "f *#st ,ri!e6 the s#,,l$ "f &"ne$ ein+ s&all' relati-el$ sli+ht !han+es in its (#antit$ %"#ld affri!es' and the diffi!#lties "f trans,"rtati"n &ade read*#st&ents sl"%.: One reas"n ad-an!ed $ A(#i5

See el"%' ,. .7 1"" "f 8isd"&' i0.: See Ashle$' En+. E!"n. Hist.' K"l. I' ,. .nas %h$ a ,rin!e sh"#ld ,r"-ide &"ne$ %as that he !"#ld th#s +et f""d f"r his s#*e!ts in ti&e "f %ar.



M"nasteries. / M"nasteries &i+ht e treated as a distin!t fa!t"r in the life and th"#+ht "f the &edie-al ,eri"d. The%ere Christian ind#strial !"l"nies infl#en!in+ &en in &an$ %a$s' "th $ ,re!e,t and e2a&,le.9 O*e!ti-el$' the &an#al!ti-ities "f the &"ns i&,r"-ed a+ri!#lt#re' disse&inated ind#strial arts' and sti&#lated !"&&er!e. 8hen a s#r,l#s %asr"d#!ed "r a ne% s#,,l$ "f ra% &aterial %as needed' e2!han+e ar"se' and the ,rin!i,les %hi!h sh"#ld +"-ern the 77 ne+"!i!!lesi!e 4 in e!"n"&i! relati"ns %ith the "#tside %"rld %ere !aref#ll$ f"r&#lated. Their !hief ser-i!e %as t" 4 diff#se a et,,re!iati"n "f the d#t$ and di+nit$ "f la"r'4 th"#+h after the tenth !ent#r$ this ser-i!e %aned.

The E!"n"&i! Th"#+ht "f Medie-al T"%ns&en.9 / . Tain+ it f"r +ranted that the reader is fa&iliar %ith thei!t#res(#e ,hen"&ena "f &edie-al t"%ns' %ith7their +ilds and &aret ,la!es' it re&ains t" ,"int "#t the earin+ "f -ari"#s"%n and +ild re+#lati"ns #,"n e!"n"&i! th"#+ht. There %as al%a$s a lar+e ele&ent "f &"n","l$ ,resent and !"&,etiti"n a

%e n"% it %as #nth"#+ht "f. F"rei+ners %ere ad&itted t" the trade "f the t"%n' #t "nl$ #nder !"ntr"llin+ restri!ti"ns. Th#he$ %ere s#*e!ted t" t"lls' %ere #nder s#r-eillan!e' !"#ld n"t sell at retail sa-e #nder +reat restri!ti"n' and !"#ld n"t deal ther f"rei+ners #nless at fairs "r "n !ertain da$s. In these re+#lati"ns' als"' a,,ears the !"&&"n h"stilit$ t" stran+ers.

1#t this &"n","l$ %as a ,#li! "ne and desi+ned t" e in the interest "f the !"&&#nit$) trade %as re+arded as a#li! ",,"rt#nit$. The idea "f e(#alit$ and "f ,#li! enefit a,,ears in s#!h !"&&"n re+#lati"ns as that sales %ere n"t t"e+in ef"re a !ertain h"#r' that #ns"ld +""ds !"#ld n"t e %ithdra%n #ntil a !ertain ti&e' and that ra% &aterials / as tall""r e2a&,le / &#st n"t e s"ld t" "#tsiders.

See C#nnin+ha&' 8estern Ci-ili0ati"n in its E!"n"&i! As,e!ts' ,,. B5=. 4 : (@edaVl$ in En+land. HThe #ni-ersal ,r"hiiti"n "f f"restallin+' re+ratin+' and en+r"ssin+ ill#strate the a"-e ,"int' and are als" !"nne!ted

%ith the idea "f a *#st ,ri!e. Indeed' the ,ri!e "f the t"%n7s &an#fa!t#res %as re+#lated) and that "f the trader7s &er!handise%as fi2ed %ithin !ertain li&its' th"#+h it !a&e t" e all"%ed a &a2i&#& and &ini&#& %ithin %hi!h it &i+ht ,la$.

And this s#++ests the &in#te re+#lati"n "f trade and ind#str$' lar+el$ thr"#+h the a+en!$ "f +ilds' a re+#lati"n %hi!hara!teri0ed the %h"le e!"n"&$' and %hi!h' a+ain' %as !"&&"nl$ in the interest "f the !"ns#&er' ein+ n"tal$ s" in thease "f f""dst#ffs.

An interestin+ feat#re "f t"%n e!"n"&$ %as its !"&&#nal ,r",ert$ and #ndertain+s. Th#s a !"&&"n t"%n ,ast#r%as fre(#ent) &an$ t"%ns +"t !"ntr"l "f the sei+n5i"ral &ill ;and the #r+hers %ere re(#ired t" ,atr"ni0e s#!h &ills' the

r"!eeds "ften +"in+ t" de!rease ta2es>. 1aeries' "-ens' &aret ,la!es' and stalls &i+ht e added t" the list. Then' t""' ini&es "f s!ar!it$ it %as !"nsidered the d#t$ "f the t"%n +"-ern&ent t" f#rnish +rain. It s"&eti&es &ade !"&&"n ar+ains %"rei+n &er!hants f"r the &aterials needed $ its artisans. P#li! %"rs %ere !arried "n $ the !"&,#ls"r$ la"r "f the"&&#nit$.

The +ilds' %hi!h %ere &"re "r less !l"sel$ ass"!iated %ith t"%n +"-ern&ent' ser-e t" e&,hasi0e &#!h the sa&e lin

f th"#+ht. The$ %ere ass"!iati"ns "f &er!hants "r !rafts&en f"r the &#t#al enefit "f their &e&ers' ha-in+ as their endsr"te!ti"n' &"n","l$ "f the trade "r !raft' +""d %"r&anshi,' and fraternal and reli+i"#s enefits. These ass"!iati"ns ser-erain &en in #siness ethi!s' t" de-el", ,ers"nal relati"nshi,s' and t" har&"ni0e the interests "f ,r"d#!er and !"ns#&er. Anhe !raft +ilds de-el",ed sill' ,r"te!ted the artisan' and in!reased the di+nit$ and %"rth "f la"r. The ideas "f *#st ,ri!e' "fe+#lati"n "f (#alit$ and (#antit$ "f "#t,#t' and "f %a+es and !"nditi"ns "f e&,l"$&ent !hara!teri0e their dealin+s.

In -ie% "f the e2a++erati"n in the "ld idea !"n!ernin+ thefreed"& and e(#alit$ in t"%ns' it re&ains t" e said that this idea is "nl$ relati-el$ tr#e. De,endin+ #,"n the "ri+in

he t"%n al&"st fr"& the e+innin+ there %ere three "r f"#r distin!t !lasses %hi!h s#!!essi-el$ d"&inated. A !"nsideralen#&er "f inhaitants did n"t ha-e the fran!hise' and the !raft +ilds' e-en' %ere in ,art &"n","lies "f the &asters ;alder&en%ardens' !"&&"nalt$> a+ainst the ser-in+ &en.

As !"&,ared %ith r#ral life' h"%e-er' there %as a nearer a,,r"a!h t" freed"& %hi!h %as (#ite &ared in the earliei&es in En+land.

General Si+nifi!an!e "f the Peri"d. / The +eneral si+nifi!an!e "f the Middle A+es as a ,eri"d in the e-"l#ti"n "f!"n"&i! th"#+ht is rather diffi!#lt t" state $ reas"n "f its !"&,le2it$. In a sense' its ne+ati-e as,e!t is lar+e. 8hile the !heft $ the d"%nfall "f R"&e &a$ ha-e een e2a++erated' $et !i-ili0ati"n' as it had een' %as in r#ins. As t" its ,"siti-ehara!teristi!s' the Middle A+es !"nstit#te' first' a ,eri"d "f ad*#st&ent and f#sin+) se!"ndl$' "ne "f transiti"ns. D#rin+ itsent#ries' R"&an instit#ti"ns' standin+ f"r a narr"% indi-id#alis& and' "n the %h"le' f"r a &aterialisti! ,hil"s",h$) Christiaeli+i"n' tea!hin+ the r"therh""d "f &an and idealis&) earl$ Ger&ani! !#st"&s' sh"%in+ a r"ad and de&"!rati!ndi-id#alis& and leanin+ t"%ard idealis&) Arist"tle7s ,hil"s",h$' e&,hasi0in+ the !"&&"n +""d and ar+#in+ f"r s"&e de+f !"&&"n #se "f ,r",ert$' %ith a !"rres,"ndin+l$ li&ited indi-id#alis&'9 / all these %ere t" e !"&ined and f#sed. This

%as &"re "r less !"ns!i"#sl$ the %"r "f the s!h"lasti!s. Th#s Th"&as A(#inas la"red t" ada,t Arist"tle %hile he assailed



R"&e) and "ne Ni!h"las -"n C#sa' %hile dee,l$ -ersed in the !"nte&,"rar$ learnin+ "f the O!!ident' t#rned his attenti"n t"he East) he s"#+ht t" re#nite the Gree and Latin !h#r!hes' and st#died the h"l$ "" "f the M"ha&&edans.:

7 In t"%ns %hi!h +re% #, #nder the ,r"te!ti"n "f s"&e !leri!al n"le' f"r e2a&,le' all the aids' et!.' e2a!ted "n a&an"r &i+ht e rendered $ the t"%ns&en.

: See a"-e' ,,. BB f. Arist"tle7s ar+#&ent a+ainst !"&&#nis& in the "%nershi, "f ,r",ert$ is deser-edl$ a !lassi!has alread$ een stated.

: St#&,f' The P"liti!al Ideas "f N. -. C#sa ;B>' (#"ted $ C"nt0en' Ges!hi!h' d' -;ds%irts. LU. i& MiUelalte. B.

?OO HISTORK OF ECONOMIC THOUGHTAs a transiti"nal ,eri"d it %as d#rin+ the Middle A+es that' "*e!ti-el$' nati"nal e!"n"&$ re,la!ed inde,endent

d"&esti! e!"n"&$) that !"&&er!e and &an#fa!t#res en!r"a!hed #,"n the s"le r#le "f a+ri!#lt#re) and that sla-er$ %as+rad#all$ aand"ned f"r serfd"& and free la"r. 1#t it is the %"rld "f th"#+ht %hi!h is "f interest here. In it "ne finds aransiti"n fr"& the &aterialis& "f later ,a+anis& t" the &"dified idealis& "f Christianit$. At the sa&e ti&e the indi-id#alis&f the R"&ans %as s#!!eeded $ the idea "f a s"!iet$ r"ader e-en than the !it$ state "f the Grees' th"#+h n"t s" r"ad as

drea& %"rld5e&,ire "f the Ch#r!h. 8e ,ass fr"& s$ste&s "f th"#+ht %hi!h ,"st#late a nat#ral ine(#alit$ a&"n+ &en' andla-er$' t" ideals "f r"therh""d and freed"&. The Ch#r!h' t""' e!a&e &"re diss"!iated' f"r&all$ at least' first fr"& ,"litihen fr"& ind#str$' th#s &ain+ f"r that se,arati"n "f &"rals fr"& e!"n"&i!s %hi!h has een a!hie-ed in &"de& ti&es. An!"n"&$ in %hi!h land %as re+arded as the asis e+an the +reat transiti"n t" "ne in %hi!h ,ers"nal relati"ns d"&inated. In

ne' ind#str$ in &an#fa!t#res and tradin+ %as des,ised) in the "ther' it %as f"stered) in the "ne' &"ne$ %as i&,erfe!tl$#nderst""d and &en +enerall$ !"nde&ned its a!!#&#lati"n) in the "ther' it %as etter i&derst""d' and ,r"al$ !a&e t" e

-er5a,,re!iated. 1et%een these rather ",,"site -ie%s la$ the Middle A+es.D#rin+ this +reat transiti"n it %as %ell that the idea "f ,r"te!ti"n %as str"n+5 It a,,ears in the Ch#r!h and Christian

n the t"%ns and +ilds) !#st"&' re+idati"n' &"n","l$' are &et e-er$%here. The %h"le e!"n"&i! ,hil"s",h$ "f the MiddleA+es &i+ht e s#&&ed #, in the d"!trine "f *#st ,ri!e. In a ,eri"d "f t#r&"il a&"n+ s#!h +reat ",,"sin+ s$ste&s "f th"#+hnd !lasses and ra!es "f &en' ef"re the rise "f nati"ns' it %as %ell that the idea "f ,r"te!ti"n %as str"n+.

1#t f"r f#rther ideas let the reader' if interested' !"&,are the !ha,ter %hi!h ,re!edes this %ith the t%" %hi!h f"ll"%III. THE DA8N OF MODERN ECONOMIC THOUGHT6 MERCANTILISM ANDAMERALISMCHAPTER KIIMERCANTILISM

That ,eri"d %hi!h &a$ e !alled the Middle A+es %as s#!!eeded $ t%" "r three !ent#ries %hi!h l""ed t"%ard&"de& s$ste&s "f ind#str$ and th"#+ht. The "ld +ar&ents "f 4 nat#ral4 e!"n"&$' fe#dalis&' and s!h"lasti!is& %ere n"tntirel$ !ast "ff) #t +reat !han+es %ere ein+ %"red "#t. The th"#+ht "f the ,eri"d n"% t" e !"nsidered stands in a relati"" #s different fr"& that "f the the"ries "f the an!ient %"rld and "f the Middle A+es' inas&#!h as it %as the i&&ediaterede!ess"r "f a real s!h""l "f ,"liti!al e!"n"&$' the Ph$si"!rati! s$ste&. Thr"#+h Ada& S&ith and his i&&ediaterede!ess"rs' f"r e2a&,le' it has e2er!ised an a,,re!iale infl#en!e #,"n the e!"n"&i! s,e!#lati"n and ,"li!$ "f En+lish5,eain+ ,e",les d"%n t" the ,resent da$.

Preli&inar$ Definiti"ns "f Peri"d and D"!trines. / The e!"n"&i! ideas' and the !"rres,"ndin+ ,"li!ies' !hara!terif &en "f this first ,"st5&edie-al ,eri"d' ha-e een -ari"#sl$ st$led Mer!antile S$ste&' C"lertis&' Restri!ti-e S$ste&'

C"&&er!ial S$ste&' and Mer!antilis&. As the$ d" n"t ,r",erl$ f"r& a s$ste& and d" n"t el"n+ t" an$ "ne &an "r fall #ndne !entral e!"n"&i! idea. Mer!antilis& is ,referale. Perha,s the nearest a,,r"a!h t" a definiti"n %hi!h &i+ht e safel$tte&,ted here' %"#ld e t" sa$ that *ffl Mer!antilis& !"&,rises the e!"n"&i! -ie%s %hi!h ,re-ailed f I a&"n+ E#r",ean

tates&en fr"& the si2teenth t" the latter ,art "f the ei+hteenth !ent#r$. As %ill a,,ear' s#!h -ie%s7 lar+el$ !"n!erned"&&er!e and in-"l-ed &#!h restri!ti"n) #t these as,e!ts tell "nl$ ,art "f the st"r$.

4 P"liti!al Arith&eti! 4 %as a ,hrase &#!h #sed $ theMer!antilists %ith referen!e t" their atte&,ts at the &"re e2a!t s"l#ti"n "f the e!"n"&i! ,r"le&s %ith %hi!h the$

dealt. This ind "f arith&eti! the$ defined as 4 the art "f reas"nin+ $ fi+#res' #,"n thin+s relatin+ t" the +"-ern&ent.4 9 Thhe ,"liti!al as,e!t is t" e +i-en +reat %ei+ht. And' "n the "ther hand' the %"r "f these &en as statisti!ians is t" ee&e&ered.

It is diffi!#lt t" tell *#st %hen Mer!antilis& !a&e t" e the +#idin+ ,rin!i,le "f state ,"li!$' "r %hen its s%a$ endedThe tr#th is that the ideas %hi!h are &"st !hara!teristi! "f the Mer!antilists ha-e al%a$s e2isted t" a +reater "r less e2tent.



Tra-ers T%iss' h"%e-er' dates the ,ra!ti!e "f Mer!antilis& fr"& the a!!essi"n "f Charles K t" the thr"ne "f S,ain in B) fhat &"nar!h at "n!e initiated retaliat"r$ &eas#res a+ainst the !"&&er!ial &"n","l$ "f Keni!e. 1e that as it &a$' the date"rres,"nds %ell en"#+h %ith the +r"%th "f &"ne$ e!"n"&$ and the rise "f nati"ns' / the t%" ,hen"&ena %hi!h f"r&ed thasis "f Mer!antilis&.

Mer!antilis&' as a d"!trine' %as first s$ste&ati!all$ de-el",ed in $ an Italian %riter' Serra. In that $ear his""' A 1rief Treatise "n the Ca#ses %hi!h &ae G"ld and Sil-er a"#nd in in+d"&s %here there are n" Mines' %as

#lished. It &a$ e said tr#l$ that the se-enteenth !ent#r$ is the "ne in %hi!h the &"st n#&er"#s and !hara!teristi!Mer!antilist %ritin+s are f"#nd.

Then' %ith the Ind#strial Re-"l#ti"n and the +r"%th "f ,"liti!al freed"&' +"-ern&ents e+an t" aand"n Mer!antilrin!i,les in the se!"nd half "f the ei+hteenth !ent#r$.

S" &#!h f"r a ,reli&inar$ definiti"n "f Mer!antilis& and the Mer!antilist ,eri"d. 8hat' then' %ere the ,hen"&enahe ,r"le&s that +a-e rise t" the&3 8hat ends did the Mer!antilists ha-e in -ie%3

Fa!t"rs Ca#sin+ and Sha,in+ Mer!antilis&. / There 9 %ere se-eral &"re "r less re&"te !a#ses leadin+ t"de-el",&ents in the field "f ,"liti!al e!"n"&$ a"#t the e+innin+ "f the si2teenth !ent#r$' s#!h as the reli+i"#s andntelle!t#al

Da-enant' Use "f P"liti!al ArUh&eti!.a%aenin+ "f the ti&e. The &"st i&&ediate and i&,"rtant fa!t"rs' h"%e-er' %ere the ,"liti!al and e!"n"&i!

de-el",&ents %hi!h e+an t"%ard the !l"se "f the fifteenth !ent#r$. All "f these f"#nd e2,ressi"n in the rise "f nati"ns.

The !entral fa!t !"n!ernin+ the e!"n"&i! fa!t"rs %as thel transiti"n t" an e2!han+e e!"n"&$. A !hara!teristi! fea@#re "f an!ient and &edie-al ti&es %as the ,re-alen!e "f 4 inde,endent d"&esti! e!"n"&$ 4 %ith ideals "f l"!al self5#ffi!ien!$ and little e2!han+e. Nat#rall$' t""' &an#fa!t#res %ere li&ited and a+ri!#lt#re had a +reater relati-e i&,"rtan!e s n"% the !ase. 8ith"#t atte&,tin+ a !"&,lete state&ent' it %ill e re&e&ered that all this %as !han+in+ at a"#t the ti&e

#nder !"nsiderati"n. De-el",in+ ,ari ,ass#' there !a&e the e+innin+ "f a &an#fa!t#rin+ e!"n"&$ n"%n as the 4 d"&esti!$ste&'4 a9 +reat +r"%th "f !"&&er!e' "th internal / a&"n+ !ities "f the sa&e !"#ntr$ / and f"rei+n' and the e2tended #f &"ne$. 1$ J#een Eli0aeth7s ti&e En+land %as e2,"rtin+ %""lens instead "f %""l. The "ld &an"rial s$ste& "f a+ri!#lt#

%as ra,idl$ -anishin+ and at the sa&e ti&e the artifi!ers7 +ilds %ere de!linin+ in ,"%er. The a!!"&,an$in+ !"nditi"ns %erer"f"#ndl$ si+nifi!ant6 4 en!l"s#res'4 the rise "f a 4 free 4 la"r !lass and the la"r ,r"le&' !"&,etiti"n. The seed "f ther"le& "f distri#ti"n %as ,lanted) and the f"r!e #,"n the %"rin+ "f %hi!h the $"#n+ s!ien!e "f e!"n"&i!s %as t" e as

%as r"#+ht int" ,la$. C#st"& and stat#s had r#led the Middle A+es. In the Mer!antile ,eri"d %e find stat#tes ein+ ena!tehe -ain atte&,t t" ,reser-e the !#st"&ar$ li&itati"n "f !ertain ind#stries t" !ertain t"%ns' and %ides,read "*e!ti"n e+an

,,ear t" the e2isten!e "f &an$ &"n","lies. F"r +""d "r ill' !"&,etiti"n e+an t" tae its ,la!e as a fa!t"r in !"ntr"llin+nd#str$.

E2tensi-e e2!han+e and f"rei+n !"&&er!e %"#ld hardl$ ha-e een ,"ssile %ith"#t &"ne$' and this the ne% sil-e&ines in A&eri!a &ade a-ailale in a#ndan!e ;B=5==>. T"%ard the end "f the ,eri"d' anin+ rea!hed s#!h a sta+e

I" &STORY OF ECONOMIC THOUGHT"f de-el",&ent in En+land that the 1an "f En+land !"#ld e estalished. The infl#2 "f ,re!i"#s &etals' t"+ether %

dease&ent "f !"ina+e' !a#sed a +reat rise in ,ri!es' and ,r"-"ed &#!h e!"n"&i! s,e!#lati"n. In the dis!#ssi"n intr"d#!t"" this ""' the finan!ial diffi!#lties "f +"-ern&ents and the dissatisfa!ti"n "f la"rin+ !lasses %ith their !"nditi"n a,,eares t%" "f the &"st fr#itf#l !a#ses "f e!"n"&i! s,e!#lati"n. It is the first "f these fa!t"rs that !hiefl$ $ sti&#lated Mer!antilih"#+ht. En"r&"#s e2tra-a+an!e "ften e2isted at !"#rt' #t' aside fr"& %aste' the in!reased needs "f +"-ern&ent &ade thee-en#e t" e "tained fr"& r"$al estates and ,rer"+ati-es less ade(#ate. The res#lt %as a +reatl$ in!reased #se "f ta2ati"n.

The asis f"r ta2ati"n %as' "f !"#rse' ein+ laid in the de-el",&ent "f ind#str$ and !"&&er!e' %hi!h &ade a-ailale lar+e

#&s "f the in!reasin+l$ ne!essar$ &"ne$. Greater se!#rit$ sti&#lated sa-in+ and anin+.Ta2ati"n ein+ "stensil$ f"r the &aintenan!e "f +"-ern&ent' the ,"liti!al as,e!t "f Mer!antilis& is s#++ested. It %

e!"&e a,,arent that the "*e!t "f Mer!antilis& %as n"t s" &#!h t" in!rease the %ealth "f the nati"n as t" add 9t" its ,"%e" far as %ealth and ,"%er +" t"+ether' the distin!ti"n has little si+nifi!an!e) #t the t%" are n"t al%a$s identi!al' and ,"%er

%as #,,er&"st in the th"#+ht "f the t$,i!al Mer!antilist / the ,"%er "f his nati"n. Th#s the fishin+ ind#str$ %as t" er"te!ted and hi+h shi,,in+ rates "rne' "n the !hief +r"#nd that shi,,in+ is that 4 in %hi!h !"nsists the +reatest h"n"#r andafet$ "f the in+d"&.4

In the f"r&ati"n "f nati"ns and states t%" +reat relati"nshi,s and t%" sets "f ,r"le&s ar"se' "ne e2ternal and 9 "nnternal. 8ith"#t' there %as the str#++le %ith "ther +r"%in+ states) a str#++le %ith the e!"n"&ies "f the l"!al #nits and the



entral +"-ern&ent %as tain+ ,la!e %ithin. In +"-ern&ent' t$,i!al Mer!antilists st""d f"r as"l#tis&' f"r as"l#tis& %as aid t" that ,"liti!al #nit$ %hi!h %as in ,r"!ess "f a!hie-e&ent. A de+ree "f e!"n"&i!

#nit$ had t" e a!hie-ed at the sa&e ti&e' as the e2isten!e "f t"%ns "r ,r"-in!es %ith &"n","lies and ,r"te!tednterests &ade ,"Uti!al #nit$ i&,"ssile. Des,"tis& ;a str"n+ in+> %as the re&ed$ at that ti&e f"r !"nf#si"n and !"nfli!tn"les' t"%ns' and +ilds>. The !elerated 48ars "f the R"ses 4 ;BB5> hel,ed t" la$ the n"les l"%' and nat#ral ind#s-"l#ti"n %as a ,"%erf#l all$ in dealin+ %ith +ilds and &#ni!i,alities. In H"es7 Le-iathan ;B> "ne +ets a +""d idea "f

re-alent !"n!e,ti"n "f the state6 it %as a"-e the indi-id#al %ill) its ri+ht %as t" re+#late the dis,"sal "f ,r",ert$) its d#t$ " en!"#ra+e ind#str$.

It is n"t t" e "-erl""ed that %ith the e+innin+ "f a free la"r !lass and the d"%nfall "f Fe#dalis& a ste, %as . ta%hi!h fa!ilitated if it did n"t lead t" de&"!ra!$. Ind#strial de&"!ra!$' h"%e-er' %as far fr"& e2istin+. The &"st si+nifi!ant&&ediate res#lt' fr"& the stand,"int "f a hist"r$ "f e!"n"&i! th"#+ht' is' ,erha,s' the -"i!e that %as +i-en t" the &er!hanhe re,resentati-e "f 4 i+ #siness 4 in th"se da$s. Harris"n in his Des!ri,ti"n "f En+land ;Ed. B> %r"te that 4 The$ "ftehan+e estate %ith +entle&en' as +entle&en d" %ith the&' $ a &#t#al !"n-ersi"n "f "ne int" the "ther.4 It is n"tale thatnstead "f ,riests' ,hil"s",hers and *#rists' %ith a fe% n"le ,r",riet"rs "f lar+e a+ri!#lt#ral estates' it %as the &er!hant ,rin

%h" did a lar+e ,art "f the e!"n"&i! %ritin+ "f the Mer!antilist ,eri"d.Th"#+h n" in!"nsiderale &is#nderstandin+ "f Mer!antilis& has res#lted fr"& "-erl""in+ its d"&esti! si+nifi!an

till it is tr#e that f"rei+n relati"ns f#rnished the i&&ediate t",i! f"r the &"st t$,i!al Mer!antilist d"!trines. 8hile it &#st ne f"r+"tten that the interests "f the nati"n and state !"nstit#ted the #lti&ate end' it %as in inter599 nati"nal relati"ns that 4th

+"-ern&ents %hi!h #nderst""d h"% t" ,#t the &i+ht "f their fleets and ad&iralties' the a,,arat#s "f !#st"&s la%s andna-i+ati"n la%s' %ith ra,idit$' "ldness' and !lear ,#r,"se' at the ser-i!e "f the

e!"n"&i! interests "f the nati"n and state'4 9 +ained their s#,re&a!$. Fr"& the e!"n"&i! ,"int "f -ie%' the essen!Mer!antilis&' %hi!h is state5&ain+' !an e a,,re!iated est thr"#+h the !hief the"ries and ,"li!ies %hi!h s,ran+ fr"& it an%hi!h &ae #, Mer!antilis& ,r",er.

The in!reased %ants "f the ne% states %ere "!!asi"ned !hiefl$ $ the +r"%th "f standin+ ar&ies' !"#,led %ith risinri!es. 1$ the se-enteenth !ent#r$' %arfare %as -astl$ !han+ed. F"r&erl$ there had een an hast$ e2,editi"n' a ,it!hed attnd the iss#e %as settled $ !"#ra+e) #t at the ti&e "f %hi!h %e %rite' as an e&inent Mer!antilist states' the %h"le art "f %ee&ed' in a &anner' red#!ed t" &"ne$' and that ,rin!e %h" !"#ld est find &"ne$ t" feed' !l"the' and ,a$ his ar&$' n"t he

%h" had the &"st -aliant tr"",s' %as s#rest "f s#!!ess and !"n(#est.9Th#s' 4 sin!e %ar is +r"%n s" e2,ensi-e' and trade is \e!"&e s" e2tended) and sin!e l#2#r$ has s" &#!h "tained

he %"rld' n" nati"n !an s#sist "f itself %ith"#t hel,s iand aid fr"& "ther ,la!es) s" that the %ealth "f a !"#ntr$ in"% is the

alan!e' %hi!h arises fr"& the e2!han+e %ith Other ,la!es' "f its nat#ral "r artifi!ial ,r"d#!t.4 :T" Sir ?"siah Child' the &"st #sef#l and ne!essar$ in(#ir$ %as. 8hat is t" e d"ne t" i&,r"-e the nati"n7s trade 4 t

#!h a de+ree as t" e(#ali0e "r "-eralan!e "#r nei+h"rs in "#r nati"nal ,r"fit $ "#r f"rei+n trade3 4 :These thin+s are &enti"ned' n"t f"r the sae "f rin+in+ "#t the alan!e "f trade idea' as s#!h' #t t" sh"% the

&,"rtan!e atta!hed t" internati"nal relati"ns. The h"stilit$ "f the En+lish t"%ard the D#t!h et%een = and B &i+ht aha-e een &enti"ned. R"ert Cla-ell ,#lished a ,a&,hlet ;B> %hi!h %as "ne "f se-eral atta!in+ the H"llanders andlai&in+ En+land7s "%nershi, "f ad*a!ent seas. After the D#t!h %ere !r#shed' h"stile a!ti-it$ %as !entered "n the Fren!h'&,"rts ein+ restri!ted in '

S!h&"ller' The Mer!antile S$ste& ;Ashle$7s E!"n"&i! Classi!s series>' ,. <.: Da-enant' An Essa$ #,"n 8a$s and Means ;B>' ,. .: Iid.' ,. .: Dis!"#rse "f Trade' ,. B.

and a !"nte&,"rar$ ,a&,hlet ,r"!lai&ed that 4 The Fren!h +r"% t"" fatt.4 9The P"li!ies and The"ries "f the Mer!antilists. / Th"#+h it is rather diffi!#lt t" +enerali0e !"n!ernin+ the the"ries

nd ,"li!ies "f Mer!antilis&' this &#!h &a$ safel$ e said6 "ne +reat ,#r,"se d"&inated it' na&el$' the desire t" &ae thetate str"n+) the e!"n"&i! asis f"r stren+th' %ealth' %as +i-en +reat %ei+ht) the &"st i&,"rtant f"r& "f %ealth %as !"nsid" e the ,re!i"#s &etals "r 4 treas#re 4) f"rei+n trade %as +enerall$ ,referred a"-e "ther f"r&s "f ind#str$' as est f#rnishs#,,l$ "f the desired ind "f %ealth) and' in &eas#rin+ the s#!!ess "f this ,"li!$ and "f f"rei+n trade' +reat i&,"rtan!e %a

tta!hed t" the s"5!alled 4 alan!e "f trade.4 The d"&inan!e "f a ,"liti!al tele"l"+$ has een &ade s#ffi!ientl$ ,lain in %hahas +"ne ef"re' and the e&,hasis "f %ealth %ill need n" s,e!ial !"&&ent. It re&ains' then' t" dis!#ss the last three+enerali0ati"ns.



. The I&,"rtan!e "f 97 Treas#re7 / It is n" l"n+er held that the Mer!antilists elie-ed the ,re!i"#s &etals and %e" e identi!al' "r that the$ th"#+ht &"ne$ the "nl$ f"r& "f %ealth. There !an e n" d"#t' h"%e-er' that the t$,i!al

Mer!antilist s"&eti&es !"nf#sed the t%" thin+s) and !ertainl$ he !"nsidered &"ne$ the &"st desirale f"r& "f %ealth'9dra%in+ a distin!ti"n that %e d" n"t &ae et%een treas#re and "ther f"r&s "f %ealth. One "r t%" #tteran!es fr"& Mer!ant%riters &a$ ser-e t" let the reader f"r& his "%n ",ini"n "n this ,"int. In his Essa$s in P"liti!al Arith&eti! ;BB> Sir 8illPett$ &aes the f"ll"%in+ state&ent6 4 The +reat and #lti&ate effe!t "f trade is n"t %ealth at lar+e' #t ,arti!#larl$ a#ndan

f sil-er' +"ld' and *e%els' %hi!h are n"t ,erishale' n"r s" &#tale as "ther !"&&"dities' #t are %ealth at all ti&es': See Hert0' En+lish P#li! O,ini"n after the Ref"r&ati"n' ,,. ' .:E.+. 4The +eneral &eas#res "f the trade "f E#r",e' at ,resent are +"ld and sil-er' %hi!h' th"#+h the$ are s"&eti&e

"&&"dities' $et are the #lti&ate "*e!ts "f trade) and the &"re "r less "f th"se &etals a nati"n retains it is den"&inated ri!""r.4 8illia& Ri!hards"n' Essa$ "n the Ca#ses "f the De!line "f the F"rei+n Trade' .

n" fflSTORY OF ECONOMIC THOUGHTand all ,la!es) ... s" as the raisin+ "f s#!h' and the f"ll"%in+ "f s#!h trade' %hi!h d"es st"re the !"#ntr$ %ith +"ld'

il-er' *e%els' et!.' is ,r"fitale ef"re "thers.4 9 8ith a si&ilar idea M#n %r"te6 4 All nati"ns %h" ha-e n" &ines "f their "%re enri!hed %ith +"ld and sil-er $ "ne and the sa&e &eans46 $ e2,"rtin+ +""ds t" the -al#e "f t%ent$5t%" th"#sand ,"#nnd i&,"rtin+ t%ent$ th"#sand ,"#nds7 %"rth' 4 %e &a$ rest ass#red that the in+d"& shall e enri!hed $earl$ t%" h#ndredh"#sand ,"#nds' %hi!h &#st e r"#+ht t" #s in s" &#!h treas#re.4 : Child th"#+ht it a +eneral and %ell5+r"#nded ",ini"nhat +"ld and sil-er %ere t" e taen 4 f"r the &eas#re and standard "f ri!hes'4 and #r+ed that $ trade En+land %as ale t"

2,"rt +""ds %hi!h r"#+ht a! 4 si2 ti&es the treas#re in s,e!ie.4This e&,hasis "f &"ne$ as the &"st desirale f"r& "f %ealth %as a nat#ral and n"t #nreas"nale res#lt "f !"nditi"n

Th"#+h Mer!antilis& is n"t t" e attri#ted dire!tl$ K t" the rise "f a &"ne$ e!"n"&$' still' the +r"%th "f !"&&er!e' thehan+es in &eth"ds "f %arfare' and the intr"d#!ti"n "f the %a+es s$ste& +a-e &"ne$ a ne% i&,"rtan!e. The reader &#ste&e&er' t""' that it &a$ e that s"&e &"dern e!"n"&ists ha-e tended t" "-erl"" the #ni(#e !hara!teristi!s "f &"ne$ as "r& "f %ealth' its relati-el$ stale -al#e and read$ e2!han+eailit$ differentiatin+ it t" s"&e e2tent fr"& "ther -al#ale +""

A+ain' there %as n"t the ",,"rt#nit$ f"r in-est&ent ",en t" &en that e2ists t"5da$. Ind#strial st"!s and "nds %er-irt#all$ #nn"%n' and &"ne$ t"" their ,la!e. S"' t""' %ith -ari"#s !redit a+en!ies. T"5da$ the$ a"#nd and &ae an&,"rtant ,art "f "#r &edi#& f"r e2!han+es as %ell as f"r& a &eans "f in-est&ent. In a %"rd' the relati-e i&,"rtan!e "f there!i"#s &etals %as n"r&all$ +reater then than n"%.

It has een s#++ested that the !hara!ter "f the f"rei+nP. .

: En+land:s Tfe"s#re $ Frrai+n Trade ;L"nd"n>' ' ,. . 1#t it %"til e &a$ t" &is#nderstand M#n $&ain+ 7: treas#re4 e(#i-alent t" "#r idea "f the

%"rd 4%ealth.4trade "f th"se da$s tended t" in!rease the Mer!antilists7 e&,hasis "f #lli"n. 8hen s,i!es' sils' %ines' and the lie

la$ed s" i&,"rtant a ,art in e2!han+es' it %as n"t s" stran+e that %riters 4 i&a+ined that the !hief #se "f f"rei+n trade t"En+land %as t" intr"d#!e +"ld and sil-er rather than n#t&e+.4 9

<. F"rei+n Trade' / As t" the &eans t" e ad",ted f"r se!#rin+ the desired treas#re' that ,rin!e "f Mer!antilists'Th"&as M#n' %r"te6 /

4 The "rdinar$ &eans ... t" en!rease "#r %ealth and treas#re is $ F"rrai+n Trade. . . . This "#+ht t" e en!"#ra+ed'#,"n it han+s the +reat re-en#e "f the in+' the h"n"r "f the in+d"&' the n"le ,r"fessi"n "f the &er!hant' the s!h""l "f "#rts' the s#,,l$ "f "#r ,""r' the i&,r"-e&ent "f "#r lands' the n#rser$ "f "#r &ariners' the %alls "f the in+d"&' the &eans #r treas#re' the sine%s "f "#r %ars' the terr"r "f "#r ene&ies.4

And M#n elie-ed that "nl$ the treas#re s" +ained /4 $ the allan!e "f "#r frrai+n Trade4 / re&ained in thein+d"&.9

8illia& Pett$ in a si&ilar strain +a-e it as his ",ini"n that' 4 There is &#!h &"re t" e +ained $ Man#fa!t#res' thaH#sandr$' and $ Mer!handise than Man#fa!t#res.4 9 And Sir ?"siah Child held that th"se trades deser-e &"stn!"#ra+e&ent %hi!h e&,l"$ &"st shi,,in+) 4 f"r esides the +ain a!!r#in+ $ the +""ds' the frei+ht' %hi!h is in s#!h tradeften &"re than the -al#e "f the +""ds' is all ,r"fit t" the nati"n.4 :

In a si&ilar -ein it %as ar+#ed that the sail"r %as at "n!e an artisan' a s"ldier' and a ,"tential &er!hant) that fleets%ere -al#ale f"r defense) and that "nl$ thr"#+h f"rei+n !"&&er!e !"#ld !"#ntries ha-in+ n" &ines "tain the !"-eted trean +"ld and sil-er.



iCti&an' Pr"d#!ti"n and Distfi#ti"n' ,. . The f"r!e "f this "s"-ati"ii' h"%e-er' is %eaened $ the fa!t that f"rerade %as ,raised and #r+ed at a &eans f"r "tainin+ these thin+s.

: En+land7s Treas#re $ F"rrai+n Trade ;,#lished >' ,. ) E!"n"&i! Classi!s S!ries' ,,. <5<. First editi"n.

: Essa$s in P"liti!al Arith&eti! ;>' ,. ==.: Dis!"#rse "f Trade' Prefa!e ;=>.

Of !"#rse' sin!e a nati"n !"#ld n"t e2,"rt %ith"#t ,r"d#!in+' !"&&er!e ne!essitated &an#fa!t#res. Arti!les "f hi+,e!ifi! -al#e al"ne !"#ld ear the e2,ense "f trans,"rtati"n' theref"re &an#fa!t#res %ere fa-"red ne2t t" trade and a"-e+ri!#lt#re.

That e-en this !ardinal Mer!antilist idea did n"t ,ass #n!hallen+ed' h"%e-er' a,,ears fr"& the fa!t that in hisDis!"#rses #,"n Trade' Sir D#dle$ N"rth ar+#ed that f"rei+n trade !"#ld n"t s#sist %ith"#t h"&e trade.9

. The 1alan!e "f Trade Idea' / 1#t h"%s"e-er +reat a nati"n7s f"rei+n trade &i+ht e' it %as n"t s#ffi!ient #nlesshere %as a ,r","rti"nate e2!ess in -al#e "f e2,"rts "-er i&,"rts. This %as the alan!e "f trade n"ti"n.

C"ssa sa$s that %e &#st distin+#ish three ,hases "f Mer!antilis&6 ;> Pr"hiiti"n "f the e2,"rt "f s,e!ie' in!l#din+dease&ent "f !"ina+e and re+#lati"n "f e2!han+e) ;<> 4 1alan!e "f ar+ains':7 indi!ated $ la%s re+#latin+ !"ntra!ts &adendi-id#al trades s#!h as the 4 re+#lated !"&,anies 4) ;> 1alan!e "f trade' in-"l-in+ the t"tal trade "f the nati"n. These

distin!ti"ns' h"%e-er' see& rather s#,erfi!ial' f"r the ,hases all !enter in the alan!e "f trade idea' and ,r"hiiti"n "f s,e!iend re+#lati"n "f !"ntra!t %ere #t &eans "f +ainin+ the +reat end' / fa-"rale alan!e "f trade. M"re"-er' these 4 ,hases4

n"t !"rres,"nd t" an$ !learl$ defined hist"ri!al ,eri"ds' either in ind#str$ "r in th"#+ht a"#t ind#str$.Child states the alan!e "f trade d"!trine as f"ll"%s6 / 4 It is the &"st +eneral re!ei-ed ",ini"n' and that n"t ill +r"#nded' that this alan!e is t" e taen $ a stri!t s!r#tin

%hat ,r","rti"n the -al#e "f the !"&&"dities e2,"rted "#t "f this in+d"& ear t" th"se i&,"rted) and if the e2,"rts e2!eedhe i&,"rts' it is !"n!l#ded the nati"n +ets $ the +eneral !"#rse "f its trade' it ein+ s#,,"sed that the "-er,l#s is i&,"rted #lli"n' and s" adds t" the treas#re "f the in+d"&) +"ld and sil-er ein+ taen f"r the &eas#re and standard "f ri!hes49

: N"rth' Dis!"#rses #,"n Trade ;i+i>' ,. i.: Dis!"#rse "f Trade' ,. B..iChild hi&self !"nsiders the alan!e "f trade t" e si&,l$ the nati"nal +ain "r l"ss $ f"rei+n !"&&er!e' and thins

est %a$ "f as!ertainin+ it t" e $ "ser-in+ the +eneral state "f trade and shi,,in+. He als" &enti"ns the rate "f e2!han+e

Lie M#n and Da-enant' he enlar+es "n the diffi!#lties "f as!ertainin+ the alan!e %ith an$ de+ree "f a!!#ra!$.1#t %ith"#t f#rther ill#strati"n it &a$ e "ser-ed that at least f"#r s"&e%hat different attit#des t"%ard the alan!e

rade &a$ e f"#nd a&"n+ Mer!antilist %riters. ;> It %as the "ri+inal "r -#l+ar idea that a fa-"rale alan!e %as a &eans "rnstr#&ent $ %hi!h the st"! "f ,re!i"#s &etals in a +i-en nati"n &i+ht e in!reased. This n"ti"n %as a,t t" e ass"!iated

%ith an "-er5erti,hasis "f treas#re. F#rther&"re' it tended t" !"nf#se the &eans %ith the end6 the alan!e "f trade &#st#lti&atel$ de,end #,"n ind#strial effi!ien!$' and is th#s the res#lt rather than the &eans "f se!#rin+ treas#re. ;<> Or' a relati"n!e,ti"n ein+ added' it &i+ht e re+arded as an a+en!$ f"r "#tstri,,in+ "ther nati"ns' th#s in-"l-in+ the falla!i"#s n"ti"nhat %hat "ne nati"n +ained an"ther l"st. ;> S"&e l""ed #,"n the alan!e as ein+ the +eneral 4 net ,r"fit4 "f the nati"n "nn#al tradin+' e&ra!in+ s,e!ie' !redit' and !"&&"dities.: ;> 8hile still "thers sa% in it si&,l$ an inde2 t" the state "f th

nati"n7s trade' t" e #sed lie the rate "f e2!han+e' the a&"#nt "f shi,,in+' et!.9 Of these -ie%s the third' %ith its s,e!ie "rreas#re ele&ent &ade $ far the &"st ,r"&inent' %as the &"st %idel$ ,re-alent.

S#!h %riters as 1ar"n ;Dis!"#rse "f Trade' =>' %h" atta!ed the alan!e "f trade idea' !an hardl$ e !lassed a

Mer!antilists. Da-enant' %h" t"" this -ie%' #ses the ,hrase' 4(#i! st"!4 ;"f the ,e",le "f a nati"n>' as e(#i-alent t" the ala

f trade. Essa$ "n 8a$s and Means' ,. .7 These different #ses "f the ,hrase'4 alan!e "f trade'4 are n"t !""rdinate e2!e,t in the r"ad %a$ "f ha-in+ a eari

dire!tl$ "r indire!tl$ #,"n the +ain "f the state $ f"rri+n trade. The f"#rth #se "f the ,hrase &i+ht e s#di-ided' it ein+e+arded ;a> as an inde2 t" trade in +eneral' Wh> as an inde2 t" trade %ith s"&e ,arti!#lar nati"n. I

. Ind#strial and C"&&er!ial Re+#lati"ns. / T" ,#t int" e2e!#ti"n the f"re+"in+ the"ries and ,"li!ies in-"l-ed &a"ntri#t"r$ "r s#,,"rtin+ ,"li!ies' and r"#+ht a"#t a h"st "f +"-ern&ent re+#lati"ns' d#ties'9 and "#nties. An interestin



tte&,t at !lassif$in+ the -ari"#s &eas#res !al!#lated t" enale a nati"n t" "-eralan!e its nei+h"rs in ,r"fits $ f"rei+n tr%as ,resented $ "ne "f the %riters alread$ &enti"ned. The !lassifi!ati"n e&ra!es f"#r +eneral heads69 /

I. In!rease the n#&er "f hands. This &i+ht e a!!"&,lished thr"#+h nat#rali0ati"n la%s' reli+i"#s t"lerati"n' freed" hire as &an$ ser-ants' l""&s' et!.' as desired' ,""r relief' and ed#!ati"n.

II. In!rease the a&"#nt "f st"!. In additi"n t" s"&e "f the a"-e &eas#res' la%s f"r the transferen!e "f ills "f dehe enf"r!e&ent "f the na-i+ati"n a!ts' -ari"#s ,r"te!ti-e &eas#res' and fe%er h"lida$s %ere ad-"!ated.

III. Mae trade eas$ and ne!essar$. This desirale !"ns#&&ati"n %as t" e attained $ the ,re!edin+ a+en!ies and he estalish&ent "f a !"#rt &er!hant' aate&ent "f interest' ade(#ate !"n-"$s at sea' et!.

IK. Mae it the interest "f "ther nati"ns t" trade %ith #s. 1$ +ainin+ their res,e!t thr"#+h a str"n+ na-$ and ar&$) #ndersellin+' h"nest dealin+' %ise treaties' and restri!tin+ i&,"rts "f &an#fa!t#res' this end &i+ht e attained.

A s!r#tin$ "f the %ritin+s "f the !hief En+lish Mer!antilists sh"%s that the +"-ern&ent ,"li!ies ad-"!ated' / andhese &ae the !hief feat#re "f Mer!antilis&' / &a$ all e s#&&ed #, as !"n!ernin+ ,",#lati"n' its si0e and !hara!ter) the

de-el",&ent "f nat#ral res"#r!es) and -ari"#s !"&&er!ial de-i!es.9 Under the first +r"#, "f ,"li!ies %"#ld !"&e the ad-"!f t"lerati"n and freed"& "f !"ns!ien!e' lar+el$ t" attra!t ind#stri"#s f"rei+ners) !aref#l ,r"-isi"n f"r the

C"&,are M#n' En+land7s Treas#re' Cha,. Ill) and Child' Dis!"#rse' Cha,. I.: These ,"li!ies %ere lar+el$ dra%n fr"& H"lland' f"r %h"se !"&&er!ial &eth"ds and instit#ti"ns the se-enteenth

ent#r$ En+lish&an had +reat res,e!t. F"r H"lland7s th"#+ht see .Las,en6e' Ges!i!hie der -"ls%irts!. Ans!ha##n+en dNiederldnder.

,""r and re&edies f"r #ne&,l"$&ent &ade a ,r"&inent ,"int in -ari"#s ,r"+ra&s. Others stressed ed#!ati"n's,e!iall$ in arith&eti! and a!!"#nts) %hile all a+reed that 4 ,arsi&"ni"#s 4 and thrift$ li-in+ %as i&,erati-e' as this %"#lded#!e the i&,"rtati"n "f f"rei+n %ares and' as in the !ase "f !l"thes' lea-e a lar+er s#r,l#s f"r e2,"rt. Mer!antilists %ere a"n-in!ed that e-er$ &an "%eth t" %"r' t" #se the lan+#a+e "f an "ld stat#te' and !"&,ellale ind#str$ %as a !"&&"n idea

As t" nat#ral res"#r!es' it %as ,"inted "#t that $ a etter #tili0ati"n "f %aste lands thin+s then i&,"rted &i+ht er"d#!ed at h"&e) and the de-el",&ent "f the fisheries %as an i&,"rtant ,"li!$. 1$ 4 !"& la%s'4 %hi!h ,r"hiited the ?4&,"rtati"n "f +rain %hen the d"&esti! ,ri!e fell el"% a !ertain le-el. Mer!antilists str"-e t" sti&#late and ,r"te!t a+ri!#lt" the end that the nati"n &i+ht e self5s#ffi!ient a*id s#,,"rt an a#ndant ,",#lati"n.

There is s,a!e t" &enti"n #t a fe% "f the &an$ ,lans f"r fa!ilitatin+ and in!reasin+ !"&&er!e. F"r e2a&,le' there%as the ,#li! re+istr$ "f &"rt+a+es and sales' the estalish&ent "f ans' the +reater #se "f ills "f e2!han+e t" all"% &"rea,id settle&ents and t#rn"-ers' free i&,"rtati"n "f ra% &aterials' e2,"rtati"n in 1ritish -essels' et!. O,ini"n %as di-ided ahe effi!a!$ "f l"%erin+ the interest rate $ la%) #t n"t a fe% dee&ed s#!h a &eas#re "f the #t&"st i&,"rtan!e.

Perha,s this is the ,la!e t" refer t" the !"l"nial ,"li!$ !"&&"n t" Mer!antilists. Re!ent dis!"-er$ and !"n(#est had&ade !"l"nies "f +reat &"&ent) and' in a!!"rdan!e %ith the f"re+"in+ ideas' the a!!e,ted treat&ent "f the& %as t" !"nfineheir ind#str$ as lar+el$ as ,"ssile t" the ,r"d#!ti"n "f ra% &aterials' %ith the idea that the &"ther !"#ntr$ sh"#ld %"r the

#, and sell the finished ,r"d#!t t" the !"l"nists. The net ,r"fit "f the nati"n %"#ld th#s e in!reased.The Mer!antilist ideas !"n!ernin+ &"ne$ easil$ led #, t" the -ari"#s land5an s!he&es %hi!h &ared the !l"se "se-enteenth !ent#r$. Men %h" elie-ed that an in!rease in the (#antit$ "f the !ir!#latin+ &edi#& %"#ld

"rres,"ndin+l$ in!rease &an#fa!t#res and trade' es,e!iall$ if' as %as "ften the !ase' the$ als" elie-ed that 4 &"n$ is a -al&ade $ a la%'4 readil$ fell in %ith ,r","siti"ns t" s%ell the &"netar$ s#,,l$. S#!h &en a,,ear t" ha-e een Cha&er5len'1ris!"e' 1ar"n' and As+ill' in En+land' and La%' in Fran!e. ?"hn La% ;5<>' a S!"t!h&an $ irth' a"#t #!!eeded in estalishin+ a +reat land an in Fran!e' #t after a ,$r"te!hni!al !areer %as finan!iall$ r#ined in <=. Hisa&,hlet. M"ne$ and Trade !"nsidered' %ith a ,r","sal f"r s#,,l$in+ the nati"n %ith &"ne$ ;=B>' had a !"nsideralenfl#en!e. In it' he ar+#ed5that 4 %ealth de,ends #,"n !"&&er!e' and !"&&er!e de,ends #,"n !ir!#lati"n)4 and he ad-"!ate

a,er !#rren!$ ased #,"n land. This %h"le &"-e&ent' h"%e-er' is est !"nsidered as a $5,r"d#!t "r side5iss#e "fMer!antilis&6 it is n"t !hara!teristi! "f the &"re t$,i!al ,eri"d "r re,resentati-es "f Mer!antilis&. It %ill als" e "ser-ed tts e&,hasis #,"n land is n"t s" easil$ e2,lainale in ter&s "f Mer!antilis& as are its ,#rel$ &"netar$ as,e!ts.

The Pra!ti!al A,,li!ati"n "f Mer!antilist P"li!ies. / In a!!"rdan!e %ith s#!h ideas' %e find &an$ a!ts f"r then!"#ra+e&ent "f tilla+e' !"& la%s' na-i+ati"n la%s' and la%s !reatin+ and re+#latin+ the sta,le' s#&,t#ar$ la%s' assi0es "fread and ale. Pr"al$ it %as in Fran!e #nder C"lert that the restri!ti-e ,"li!$ %as !arried farthest. 8e are t"ld that 4 thetate e2er!ised "-er &an#fa!t#rin+ ind#str$ the &"st #nli&ited and aritrar$ *#risdi!ti"n. It dis,"sed %ith"#t s!r#,le "f thees"#r!es "f &an#fa!t#rers) it de!ided %h" sh"#ld e all"%ed t" %"r' %hat thin+s the$ sh"#ld e ,er&itted t" &ae' %hat

&aterials sh"#ld e e&,l"$ed' %hat ,r"!esses f"ll"%ed. . . . N"t the taste "f the !"ns#&ers' #t the !"&&ands "f the la% &#



e attended t". . . . Ma!hines %ere r"en' ,r"d#!ts %ere #rned' %hen n"t !"nf"r&ale t" the r#les. . . . An artisan !"#ldneither !h""se the ,la!e in %hi!h t" estalish

hi&self n"r %"r at all seas"ns' n"r %"r f"r all !#st"&ers. There e2ists a de!ree "f Mar!h =' ==' %hi!h li&its ti+hteen t"%ns the n#&er "f ,la!es %here st"!in+s &i+ht e %"-en. A de!ree "f ?#ne ' <' en*"ins the &an#fa!t#rers

R"#en t" s#s,end their %"rs fr"& the st "f ?#l$ t" the Bth "f Se,te&er' in "rder t" fa!ilitate the har-est L"#is IK' %hehe intended t" !"nstr#!t the !"l"nnade "f the L"#-re' f"rade all ,ri-ate ,ers"ns t" e&,l"$ %"r&en %ith"#t his ,er&issi"n

#nder ,enalt$ "f ='=== li-res' and f"rade %"r&en t" %"r f"r ,ri-ate ,ers"ns' "n ,ain f"r the first "ffense "f i&,ris"n&nd f"r the se!"nd "f the +alle$s.4 9

In Pr#ssia &an$ &eas#res %ere ad",ted t" f"ster ind#str$. These %ere ,artl$ ne+ati-e' as the a"liti"n "f !ertain +iestri!ti"ns) and ,artl$ ,"siti-e' as en!"#ra+e&ents t" i&&i+rate and t" &arr$' the estalish&ent "f &ills and &an#fa!t"rieshe &aintenan!e "f lists "f #siness ",,"rt#nities' et!. There %ere als" the #s#al li&itati"ns "n e2,"rtati"n and i&,"rtati"n.

The ,"li!ies see& t" ha-e een -er$ %isel$ a,,lied.9Parti!#lar E!"n"&i! The"ries. / . Kal#e. / Clear e-iden!e "f the de-el",&ent %hi!h %as +"in+ "n d#rin+ the

i2teenth and se-enteenth !ent#ries in ind#str$ and ,hil"s",h$ a,,ears in that ,art "f e!"n"&i! th"#+ht %hi!h %as de-"ted -aliie. Pri"r t" this ti&e' s#!h thiners as %r"te "n -al#e +enerall$ !"n!ei-ed "f it as inherent in thin+s / as an intrinsi!(#alit$. S"&e sa% &"re "r less !learl$ its de,enden!e #,"n h#&an needs' #t e-en these th"#+ht "f it as el"n+in+ t" the thTh#s Arist"tle had s,"en "f t%" #ses "f sh"es' "ne t" %ear and the "ther t" e2!han+e. The &edie-al 4 *#st5,ri!e4 %as anthi!"5reli+i"#s !"n!e,ti"n "f a +i-en -al#e inherin+ in a thin+ and (#ite different fr"& its ,ri!e. This !"n!e,ti"n "f -al#e is

eall$ &"re nearl$ ain t" that "f 4 #tilit$ 4 as n"% held. It %as di&l$ ,er!ei-ed that the ,"%er "f a thin+ t" +ratif$ %ants /side

D#n"$er' De la LierU d# Tra-ail' (#"ted $ Mill' P"liti!al E!"n"&$' K' 2i' . : See a,,endi2 t" this !ha,ter.fr"& e2!han+e !"nsiderati"ns' and ass#&in+ the %ant / de,ended #,"n the (#alit$ "f the thin+.The rise "f e2!han+e and &"ne$ e!"n"&$ ne!essaril$ !han+ed all this. It e!a&e i&,"ssile t" !"nsider -al#e as a

ntrinsi! (#alit$ "f +""ds %hen -al#e !a&e t" e ,red"&inantl$ the !han+in+ ,ri!es "f the &aret. The ,r"le& "f the -al#e&"ne$ !a&e t" e seen in a tr#er li+ht' als"' and &"ne$ is n"t +enerall$ %anted f"r itself. M"re and &"re !learl$ the *#st5,ri"n!e,t e!a&e se-ered fr"& a!t#al &aret -al#e and &"re re!"+niti"n and -alidit$ %ere +i-en t" the latter. The res#lt %ashat $ the end "f the Mer!antilist ,eri"d -al#e had !"&e t" &ean +enerall$ an e2trinsi! &aret ,hen"&en"n de,endent #,"2!han+e.

Al"n+ %ith the ind#strial !han+es there !a&e a de-el",&ent in reli+i"#s and intelle!t#al th"#+ht %hi!h tended t" &he "lder idea "f -al#e #nsatisfa!t"r$. Th#s astra!t &"ral and *#risti! d"+&as l"st infl#en!e and a l"n+ ste, %as taen t"%a

he de-el",&ent "f e!"n"&i! s!ien!e $ the +r"%in+ se,arati"n et%een ethi!al and e!"n"&i! !"nsiderati"ns. E!"n"&i!%ritin+ !eased t" e !"nfined t" ,hil"s",hers' ,riests' and *#rists. A +reater re+ard %as sh"%n f"r &aterial thin+s) f"r t" ann!reasin+ e2tent &en +a-e their &inds t" a !"n!rete st#d$ "f ,"liti!al "r e!"n"&i! e-ils and the re&edies f"r the&. Si+nifi!f the ti&e %as the rise "f a +r"#, "f traders and states&en %h"se e&,iri!al %ritin+s sh"% this tenden!$.

The fr#its "f a etter a,,re!iati"n "f h#&an ,ers"nalit$ and its %"rth a,,ear in the %"rs "f a +r"#, "f ,#li!ists a#risti! ,hil"s",hers %h" e&,hasi0ed h#&an reas"n' fa!#lties' and desires' +i-in+ d#e %ei+ht in their 4 la% "f nat#re 4 t" th

nat#re "f &an. A!!"rdin+l$' s#*e!ti-e fa!t"rs +ained in i&,"rtan!e' and the !"n!l#si"n !a&e t" e dra%n that %hen the #nd the seller %ere satisfied' the ,ri!e %as *#st.

S"&e "f the f"re+"in+ de-el",&ents %ere n"t !"&,letel$ !arried "#t' and nat#rall$ did n"t affe!t all %riters t" an(#al de+ree. The *#risti! ,hil"s",hers sh"%ed &"re "f

the ethi!al &"ti-e in their th"#+ht) and the traders and states&en +enerall$ %ere n"t !"n!erned %ith the s#*e!ti-es,e!ts "f -al#e. It sh"#ld e n"ted' t""' that &#!h "f their %ritin+ %as that "f the ,a&,hleteer and la!ed the alan!e and

readth "f the s!ientifi! treatise' *#st as the f#+iti-e ,a&,hlets "f t"5da$ are a,t t" d".In the %ritin+s "f the Mer!antilists the transiti"n n"ted in the ,re!edin+ ,ara+ra,hs !an e ,rett$ !learl$ tra!ed.

Passin+ "-er a +r"#, "f Italian %riters %h" sa,,ed the &edie-al idea "f *#st ,ri!e'9 the hist"rian &#st &enti"n the t%" *#rist%riters' Gr"ti#s : and P#fend"rf.9 The D#t!h s!h"lar' H#+" Gr"ti#s ;B5B>' dre% #,"n Arist"tle' Christian the"l"+$' aR"&an la%' #t in his the"r$ "f -al#e / %hi!h he dis!#ssed in !"nne!ti"n %ith !"ntra!t / he a,,ears t" ha-e een !hiefl$nfl#en!ed $ the Gree ,hil"s",her. The Ger&an *#rist and hist"rian' Sa&#el P#fend"rf ;<5>' %as lar+el$ indeted

Gr"ti#s and t" the En+lish ,hil"s",her' H"es. 1"th &ade needs and desires / in the in!l#si"n "f the latter +"in+ e$"ndArist"tle / an i&,"rtant ele&ent in -al#e) and the$ i&,lied a distin!ti"n et%een -al#e in e2!han+e and #tilit$. H"es' inLe-iathan ;B>' e&,hasi0ed indi-id#al esti&ati"n in dis!#ssin+ -al#e. He referred t" the 4 -al#e "r %"rth 4 "f a &an as e



his 4 ,ri!e 4 / that is' %hat5 %"#ld e +i-en f"r his ser-i!es / and as ein+ de,endent #,"n the 4need and *#d+&ent4 "fthers. The #$er' he ar+#ed' rather than the seller deter&ines ,ri!es6 4 The -al#e "f all thin+s !"ntra!ted f"r is &eas#rale he a,,etite "f the !"ntra!t"rs' and theref"re the *#st -al#e is that %hi!h the$ e !"ntented t" +i-e.4: F"ll"%in+ H"es'

P#fend"rf stressed 4 &"ral esti&ati"n'4 and said 4 The f"#ndati"n "f the ,ri!e "r -al#e "f an$ a!ti"n "r thin+ is' fitness t"r"!#re' either &ediatel$ "r i&&ediatel$' the ne!essaries "r !"n5

: E.+. 1#"ninse+ni ;B>) S!a!!ia ;>.

:De*#re elli et ,a!ts ;<>' 1. II' Cha,. II. See Las,e$res' E.' Gesh. d. t"ls%. Ans!ha##n+en der NiederlUnd. .

:De*#re nat#rae et +enti#& ;<>' 1. K' Cha,. I.: H"es: En+Ush 8"rs' K"l. Ill' Cha,s. and K.I<= HISTORY OF ECONOMIC THOUGHT-enien!es' "r ,leas#res "f h#&an life.4 The de+ree "f s!ar!it$' h"%e-er' %as all"%ed s"&e %ei+ht.1"th the !"ntinental %riters atta!hed a !"nsiderale de+ree "f -alidit$ t" the ,ri!es deter&ined $ !"&,etiti"n' and

H"es7 state&ent !"n!ernin+ 4 *#st -al#e'4 (#"ted in the ,re!edin+ ,ara+ra,h' is n"tale.In the th"#+ht "f at least t%" "f these &en' h"%e-er' a,,ears the n"ti"n "f a s"rt "f asal -al#e' ain t" the 4 n"r&a

-al#e 4 "f ,resent5da$ e!"n"&ists' restin+ "n !"st "f ,r"d#!ti"n. F"r ill#strati"n' Gr"ti#s said that 4 a!!"#nt is !"&&"nl$ taf the la"r and e2,ense "f the sellers and P#fend"rf held that in re+#latin+ 4 nat#ral ,ri!e' re+ard is t" e had t" the 4 la"r 2,ense "f the &er!hant 4 and his ris.

8ithin the +r"#, "f traders and states&en' less attenti"n %as ,aid t" s#*e!ti-e ideas "f -al#e' and -al#e %as th"#+f as deter&ined $ "*e!ti-e f"r!es "#tside "f the indi-id#al esti&ati"n. T%" re,resentati-es "f this +r"#, %ill s#ffi!e'

na&el$. Pett$ and L"!e. Sir 8illia& Pett$ &aes -al#e rest "n e2,enses "f ,r"d#!ti"n' red#!in+ the& t" la"r and land. 4La"#r is the father and a!ti-e ,rin!i,le "f 8ealth' as Lands are the &"ther.4 1#t he sees t" red#!e these t%" e2,enses t" ain+le #nit' 4 s" as t" e2,ress the -al#e L "f an$thin+ $ either al"ne.4 9 Maret "r 4e2trinsi!4

-al#es rise "r fall a!!"rdin+ t" s#,,l$ and de&and. A!!"rdin+ t" L"!e' la"r is the al&"st e2!l#si-e s"#r!e "f -al"r he sa$s' 4 it is la"#r indeed that ,#ts the differen!e "f -al#e "n e-er$thin+.4 9 4 Na$' if %e %ill ri+htl$ esti&ate thin+s ahe$ !"&e t" "#r #se' and !ast #, the se-eral e2,enses a"#t the&' %hat in the& is ,#rel$ "%in+ t" nat#re' and %hat t" la"

%e shall find' that in &"st "f the& ninet$5nine ,arts "#t "f a h#ndred are %h"ll$ t" e ,#t "n the a!!"#nt "f la"r.4These t%" %riters' then' are t" e taen as f"rer#nners: Pett$7s E!"n"&i! 8ritin+s ;Ca&rid+e' >' K"l. I' ,. . See R"st' 8ert5 #. Preis5Therie' ,,. < ff.) Se%al

The"r$ "f Kal#e ef"re A. S&ith' ,,. = flf.

: Essa$ "n Ci-il G"-ern&ent ;=>' L"nd"n' <' ,. <=."f the later la"r the"ries "f -al#e. The$ re,resent the &a*"rit$ "f En+lish Mer!antilists ,r",er.T" s#& #,' it &a$ e said that in the %ritin+s "f the Mer!antilists !an e f"#nd s#++esti"ns "f &"st -al#e the"ries

in!e de-el",ed' and the ideas "f Ada& S&ith and the En+lish Classi!al s!h""l &a$ e tra!ed dire!tl$ t" the&. ;H#t!h5es"n#sed P#fend"rf as a te2t' and S&ith %as a st#dent "f H#t!hes"n7s.> These s#++esti"ns %ere n"t f#ll$ %"red "#t' h"%e-er' at is diffi!#lt t" !lassif$ the& !learl$. The distin!ti"n %as dra%n et%een 4 intrinsi! 4 and 4 e2trinsi! 4 -al#es) the f"r&er

de,endin+ "n needs and desires and the inherent fitness "f thin+s t" +ratif$ the&' the latter #,"n s#,,l$ and de&and "r !"st.The earlier %riters a,,ear t" ha-e +i-en &"st attenti"n t" intrinsi! -al#e' &eanin+ %hat is n"% +enerall$ !alled #tilit$. This%as s"&eti&es !alled 4 nat#ral -al#e'4 and $ P#f end"rf 4 ,reti#& -#l+are 4 ;-al#e in #se>. As e2!han+e and &"ne$ e!a&&"re i&,"rtant' e2trinsi! -al#e !a&e in f"r &"re attenti"n. It %as !alled artifi!ial "r a!!idental "r &aret -al#e. P#fend"rf"ntrasted 4 ,reti#& e&inens4 ;,#r!hasin+5,"%er -al#e> %ith -al#e in #se' and it is si+nifi!ant that he see&s t" ha-e th"#+ht in !"nne!ti"n %ith &"ne$ "nl$. This %as e2!han+e -al#e. C#ttin+ a!r"ss the e2trinsi! "r e2!han+e -al#e !lass' %as the

distin!ti"n f"#nd in a fe% !ases ;e. +'' L"!e' F"rtre$> et%een nat#ral ;n"r&al> -al#e ased "n !"st' and &aret -al#edeter&ined $ 4 -ent4 ;de&and> and s!ar!it$ ;s#,,l$>. The idea "f 4nat#ral4 -al#e' in %hi!h the ,la$ "f !"&,etiti-e f"r!es %e!"+ni0ed' %as s#stit#ted f"r *#st ,ri!e' / an i&,"rtant ste, in the de-el",&ent "f the s!ien!e.

It re&ains t" t"#!h #,"n a fe% n"tale e2!e,ti"ns. The Italians' Da-an0ati 9 and M"ntanari'9 and the En+lish&an'Ni!h"las 1ar"n'9 %ill s#ffi!e. These &en laid the +reater e&,hasis #,"n #tilit$ and held s#*e!ti-e the"ries "f -al#e.

Le0i"ne deUa M"neta' B.: DeUa M"neta' = !ir!a.:A Dis!"#rse "f Trade' =' Cha,. IH.HISTORY OF ECONOMIC THOUGHT



Th#s 1ar"n %r"te6 4 The -al#e "f all %ares arises fr"& their #se) thin+s "f n" #se' ha-e n" -al#e' as the En+lishhrase is' the$ are +""d f"r n"thin+4 And a+ain' 4 f"r the -al#e "f thin+s de,endin+ "n the #se "f the&' the "-er5,l#ss ....e!"&e %"rth n"thin+) s" that ,lent$' in res,e!t "f the "!!asi"n' &aes thin+s !hea,) and s!ar!it$' dear.4 These &en' t"+eth

%ith s"&e "f the "thers alread$ &enti"ned' hel,ed t" ee, ali-e a re!"+niti"n "f the s#*e!ti-e ele&ent in -al#e.<. Interest' / N" #nani&it$ e2ists a&"n+ Mer!antilist %riters "n the s#*e!t "f #s#r$ "r interest. Th"&as M#n' a"

he &iddle "f the se-enteenth !ent#r$' ar+#ed in fa-"r "f interest5tain+ "n the +r"#nd that &"ne$5lendin+ enaled ,""r $"#

&er!hants t" rise and &ae ,"ssile the ad-anta+e"#s e&,l"$&ent in trade "f the f#nds "f %id"%s' "r,hans' and +entle&enAs t" the nat#re "f interest' his !"n!l#si"n %as 4 !"ntrar$ t" th"se %h" affir& that trade de!reaseth as &"ne$ in!reaseth' f"rhe$ rise and fall t"+ether'4 9 / that is' he !"nsidered the interest rate as a res#lt rather than a !a#se "f ind#strial !"nditi"ns.

A"#t ' a !"ntr"-ers$ "-er #s#r$ la%s s,ran+ #,. In !"nfli!t %ith M#n7s -ie%s' Sir Th"&as C#l,e,er had %ritt%" tra!ts in fa-"r "f estalishin+ l"%er interest rates) 9 and his s"n ,#lished a 4Dis!"#rse4 atta!in+ #s#r$. 1#t ,erha,s th

&"st e&inent s,"ns"r f"r this n"ti"n %as Sir ?"siah Child. He &aintained that a l"% interest rate %as the nat#ral &"ther "fr#+alit$ and ind#str$' that it %"#ld attra!t traders $ &ain+ !a,ital !hea,' and !"&,el fr#+alit$ $ &ain+ s&aller 4 ,r"fit

ne!essar$ A hi+h rate "f interest &ade &"ne$ s!ar!e e!a#se e-er$ &an as s""n as he had sa-ed a little' sent it t" the+"lds&ith. The %h"le #rden "f s#!h ar+#&ents %as' 4 8e shall ne-er

9En+land7s Treas#re $ F"rrai+n Trade' ,. <) E!"n"&i! Classi!s Series' ,,.5.: A Tra!t a+ainst the hi+h rate "f Us#rie' <) iftti.' =. In the first he fa-"red red#!ti"n fr"& = t" ,er !ent) i

he latter / this red#!ti"n ha-in+ een &ade / he desired a ,er !ent le+al rate.Stand "n e-en +r"#nd %ith the D#t!h in trade till interest e the sa&e %ith #s as %ith the&.7: 9 Lie%ise' Da-enant

"" a flin+ at th"se %h" re!ei-ed interest6 4 The #s#rers' %h" are the tr#e dr"nes "f a !"&&"n%ealth' li-in+ #,"n the h"ne$%ith"#t the la"r'4 sh"#ld e ta2ed.9

M"st "f these &en th"#+ht that a la% red#!in+ the interest rate %"#ld e effe!ti-e and &ae &"ne$ !hea,. E-identhe$ +"t the !art ef"re the h"rse and &ade the effe!t the !a#se' all "f %hi!h indi!ates a la! "f #nderstandin+ "f the f#n!ti"nf !a,ital and &"ne$.9

On the "ther hand' there %ere s"&e %h" t"" M#n7s side in the #s#r$ !"ntr"-ers$. One' Th"&as Manle$' e2,lainedhat 4 as it is the s!ar!it$ "f &"ne$ ;and &an$ "rr"%ers> that &aeth the hi+h rates "f interest' ... s" the ,lent$ "f &"ne$ ane% "rr"%ers %ill &ae the rates l"%.4 ?"hn L"!e' t""' %hile n"t #nderstandin+ the !a#ses "f the -al#e "f &"ne$' ar+#ed"% interest rates %ere the res#lt "f a ,lentif#l s#,,l$ "f &"ne$. And Sir D#dle$ N"rth #,held this end "f the !"ntr"-ers$'2,lainin+ that an a#ndant 4 st"!4 and se!#rit$ &ade rates l"% in H"lland.

Of the ,re!edin+ %riters' e2!e,tin+ N"rth' it &a$ e said that if the$ had an$ !"n!e,ti"n "f the relati"n et%een ther"d#!ti-it$ "f !a,ital and interest it %as #t a faint "ne. Their n"ti"n "f 4 ,r"fits4 %as nai-e and #nanal$0ed) 4 #s#r$ 4 %asi&,le ,a$&ent f"r the #se "f &"ne$.

Ni!h"las 1ar"n' h"%e-er' %hile ar+#in+ f"r a de!reased rate "f interest' sa% this relati"n) f"r he %r"te6 4 Interest "&&"nl$ re!"ned f"r &"n$) . . . #t this is a &is\ tae) f"r the interest is ,aid f"r st"!. . . . N" &an taes #, &"n$ atnterest' t" la$ it $ hi&' and l"se the

9Dis!"#rse "f Trade' ,,. <' <' ' and Prefa!e) f"r the:sit#ati"n in H"lland see Las,e$res' Ans!ha##n+en detNiederldnder' ,. <B.

Essa$ "n 8a$s and Means.: C"ssa' in his Intr"d#!ti"n t" the Sttid$ "f P"liti!al E!"n"&$' !ertainl$ s,eas t"" str"n+l$ in !allin+ Child

e&arale f"r his s"#nd #nderstandin+ "f &"ne$ %ith"#t n"tin+ this li&itati"n. 1$ Child7s ti&e &"ne$ %as lar+el$ in-ester"fitale %a$s.

interest "f it.4 9 And N"rth in his Dis!"#rses #,"n Trade ;> is ,erha,s an"ther e2!e,ti"n.9. P",#lati"n) 8a+es) Rent. / It %"#ld e %r"n+ t" &ae the desire f"r a dense ,",#lati"n' as s#!h' "ne "f the

ardinal feat#res "f Mer!antilis&) #t' ,artl$ f"r ,#r,"se "f %ar and ,artl$ f"r in!rease in ,r"d#!ti"n. Mer!antilists desired n#&er"#s ,e",le. 1$ e&,l"$in+ &an$ ,e",le the in+7s re-en#e %"#ld e in!reased. Chea, and a#ndant la"r %as ne!ess" enale h"&e ,r"d#!ts t" !"&,ete s#!!essf#ll$ %ith th"se "f f"rei+n !"#ntries) hen!e the la%s and re+#lati"ns en!"#ra+in

&atri&"n$ and ,arenth""d. Sa&#el F"rtre$ ann"#n!es that 4 Pe",le and ,lent$ are !"&&"nl$ the e+etters the "ne "f thether' if ri+htl$ "rdered 4) 9 Da-enant sa$s' 4 Pe",le are the real stren+th "f a !"#ntr$ 4) : and Child' that 4 it is in &#ltit#de

Pe",le' and +""d La%s' s#!h as !a#se an En!rease "f Pe",le' %hi!h ,rin!i,all$ Enri!h an$ C,#ntr$.49 F"rtre$ %as n"tal$2,li!it in his %ritin+ "n this s#*e!t. T%" thin+s' said he' &ae a nati"n +reat and ,"%erf#l6 ri!hes and ,",#lati"n. T" in!r



he latter he fa-"red freed"& "f i&&i+rati"n and the +rantin+ "f e(#al ri+hts t" i&&i+rants' / this "n the +r"#nd that the$%"#ld rin+ ri!hes %ith the& and i&,r"-e trade and ind#str$. In ans%erin+ "*e!ti"ns / f"r there %ere ",,"nents / he&aintained that i&,r"-ed ind#str$ %"#ld enefit all !iti0ens' and he e-en %ent s" far as t" ar+#e that it %"#ld e an ad-anta" &ae land dearer' assertin+ that 4it &i+ht e %ished' n"thin+ %ere !hea, a&"n+ #s #t "nl$ &"ne$ 4

: Dis!"#rse "f Trade' ,,. ' <.@ 41#t as the Landed Man letts his land' s" these still lett their st"!) this latter is !all7d Interest' #t is "nl$ Rent f"

St"!' as the "ther is f"r land7 4... if there e &"re Lenders than 1"rr"%ers' Interest %ill als" fall) %heref"re it is n"t l"%nterest &aes Trade' #t Trade in!reasin+' the St"! "f the Nati"n &aes Interest l"%.4 ;,. .>

7 En+land7s Interest and I&,r"-e&ent ;>' ,. .: Essa$ "n 8a$s and Means. A dense ,",#lati"n &aes in-enti"n' fr#+alit$ and ind#str$ ne!essar$' %hi!h rin+ a

nati"n ri!hes.: Dis!"#rse "f Trade' Prefa!e. ;See als" Pett$' P"liti!al Arit&eti!' ,,. =' <) 1ar"n' Dis!"#rse "f Trade' ,. It %as the idea "f the ,hil"s",her' H"es' that %hen the &#ltit#de "f ,""r' str"n+ ,e",le in!reased' the "-er,l#s

h"#ld +" t" the !"l"nies) and he &ade this striin+ state&ent 6 4 %hen all the %"rld is "-er!har+ed %ith inhaitants' then thast re&ed$ "f all is %ar) %hi!h ,r"-ideth f"r e-er$ &an' $ -i!t"r$ "r death.4

The Mer!antilists a,,ear t" ha-e had n" the"r$ "f %a+es "r rent. As alread$ s#++ested' the$ %ere &"re "r less#ns$ste&ati! ,a&,hleteers) and their ends !"n!erned ,r"d#!ti"n rather than distri#ti"n. It is tr#e that Pett$ sa% that the -a

f la"r is deri-ed fr"& its ,r"d#!t' that Child stated that %a+e re+#lati"n is #n%ise' et!.) and the latter %riter "ser-ed that

ent had fallen in En+land as the res#lt "f i&,r"-e&ent in Ireland and hi+h land ta2es.9 1#t these ideas %ere n"t de-el",ed.. Fa!t"rs "f Pr"d#!ti"n' / Of &"re si+nifi!an!e are their #tteran!es !"n!ernin+ the fa!t"rs "f ,r"d#!ti"n6 these ha

nterest in !"nne!ti"n %ith their ,r"ale infl#en!e #,"n "th the Ph$si"!rats and Ada& S&ith. F"r e2a&,le' Pett$7s fa&"#di!t#& 4 La"#r is the father and a!ti-e ,rin!i,le "f 8ealth' as Lands are the &"ther'4 is &"st si+nifi!ant in "th relati"ns.Child refers t" 4 the inse,arale affinit$ that is in all nati"ns and at all ti&es et%een land and trade' %hi!h are t%ins' and e-%ill %a2 and %ane t"+ether.4 Da-enant ee,s the f"rei+n trade idea t" the fr"nt' re&arin+ that 4 the ,ri!e "f land' -al#e "fents . . . rise and fall' as it +"es %ell "r ill %ith 4 !"&&er!e) #t deli-ers hi&self "f the f"ll"%in+ +enerali0ati"n6 4 The %eaf all nati"ns arises fr"& the la"#r and ind#str$ "f the ,e",le'4 9 a state&ent %hi!h re&inds "ne "f Ada& S&ith.

1ar"n' %h" %as hardl$ a Mer!antilist' said that 4 land is the f#nd that &#st s#,,"rt and ,reser-e the +"-ern&ent'4nd %as hi&self interested in a land an.

Dis!"#rse "f Trade' Prefa!e. ;See als" Pett$' P"liti!al Arit&eti!' ,,. ='<) 1ar"n' Dis!"#rse "f Trade' ,. 4Of the Use "f P"liti!al Arith&eti!'4 8"rS$ K"l. I' ,. . ;L"nd"n' >

B. Pr"d#!ti-it$ "f Different O!!#,ati"ns. / In +eneral' as alread$ re&ared' Mer!antilists elie-ed that the &er!ha%as 4 the est and &"st ,r"fitale &e&er "f the !"&&"n%ealth'4 and that after hi& !a&e the artisan. One "f their n#&er&aes a s#&&ar$ state&ent %hi!h !"-ers the %h"le &atter "f ,r"d#!ti-e and #n,r"d#!ti-e la"r. He %rites6 :: It is ;I thin+reed "n $ all that Mer!hants' Artifi!ers' Far&ers "f Land9 and s#!h as de,end "n the& . . . are the three s"rts "f ,e",le

%hi!h $ their st#d$ and la"#r d" ,rin!i,all$' if n"t "nl$' rin+ in %ealth t" a nati"n fr"& ar"ad) "ther inds "f ,e",le' -iN"ilit$' Gentr$' La%$ers' Ph$si!ians' s!h"lars "f all s"rts' and sh",ee,ers' d" "nl$ hand it fr"& "ne t" an"ther at h"&e.4These ideas are "f si+nifi!an!e in the hist"r$ "f e!"n"&i! th"#+ht in t%" %a$s6 the$ indi!ate a +reat !han+e fr"& the ti&es'&edie-al and an!ient' in %hi!h a+ri!#lt#re %as ,la!ed first) and the$ are t" e ass"!iated %ith the n"ti"ns "f Ada& S&ith anhe Ph$si"!rats !"n!ernin+ the n"n5,r"d#!ti-it$ "f !ertain !lasses. It is "f n" little interest' and i&,"rtan!e' t""' t" "ser-e h!"n"&ists ha-e denied ,r"d#!ti-it$ n"% t" this !lass' n"% t" the "ther.

The elief that !ertain "!!#,ati"ns are n"t s" ,r"d#!ti-e as "thers' all thin+s !"nsidered' has een a l"n+5!"ntin#edne. The inter&in+lin+ "f ethi!al ideas &aes it diffi!#lt t" !"&,are these eliefs) #t it &a$ e said that the$ are deter&ine

ar+el$ $ the d"&inant !lass. Th#s' in the Middle A+es' a+ri!#lt#ral interests d"&inated) $ the se-enteenth !ent#r$'"&&er!e %as in the as!enden!$) in the &iddle "f the ei+hteenth !ent#r$' as %ill a,,ear later' there %as a rene%al "f intere+ri!#lt#re) %hile the Ind#strial Re-"l#ti"n ,#t &an#fa!t#rin+ interests t" the fr"nt. A!!"rdin+l$' the Mer!antilists th"#+ht s +entr$' ,r"fessi"nal &en' and retailers had little !"nne!ti"n %ith rin+in+ in treas#re' the$ %ere in that sense n"n5r"d#!ti-e) %hile in Ada& S&ith !"nsidered that si&ilar !lasses %ere n"t

N"te the "rder. Child' Dis!"#rse "f Trade' ,. <B.,r"d#!ti-e in the sense that the$ did n"t ,#t -endile +""ds "n the &aret.



. Ta2ati"n' / 8"rth$ "f n"ti!e' als"' is the th"#+ht "f . the Mer!antilists "n ta2ati"n. In +eneral their idea %as tha&en sh"#ld e ta2ed a!!"rdin+ t" the enefits re!ei-ed fr"& the state.9 This idea %as in a!!"rd %ith the ,re-alent n"ti"n "f "!ial !"ntra!t.4 A!!"rdin+ t" H"es' the test f"r enefit sh"#ld e e2,endit#re. The &an %h" sa-es sh"#ld n"t e ,enali%hen the i&,"siti"ns are laid #,"n th"se thin+s %hi!h &en !"ns#&e' e-er$ &an ,a$eth e(#all$ f"r %hat he #seth' n"r is th"&&"n%ealth defra#ded $ the l#2#ri"#s %aste "f ,ri-ate &en.4 9 Gr"ti#s and P#fend"rf held that #rdens &#st !"rres,"n" enefits re!ei-ed in the sha,e "f ,r"te!ti"n.

Sir 8illia& Pett$ has een !alled the first En+lish s!ientifi! %riter "n ta2ati"n. His %"rds are6 4 It is +enerall$ all"%$ all that &en sh"#ld !"ntri#te t" the P#li! !har+e' #t a!!"rdin+ t" the share and interest the$ ha-e in the P#li! Pla!ehat is a!!"rdin+ t" their Estate and Ri!hes.4 9 He fa-"red the e2,ense inde2' that is' ta2ati"n in ,r","rti"n t" e2,endit#re.

Other Mer!antilist e&,iri!ists dealt %ith this i&,"rtant s#*e!t at s"&e len+th' and f"r&#lated se-eral ,ra!ti!ald"!trines. In +eneral' l"% !#st"&s and an in!reased #se "f e2!ise ta2es %ere fa-"red. E(#alit$ in ta2ati"n %as #r+ed' and t"his end a ta2 "n &"ne$ at interest' / %hile the i&,ra!ti!ailit$ "f ta2es "n easil$ !"n!ealed %ealth %as seen.:

?a&es Ste#art6 the last "f the 4 Mer!antilists.4 / Sir ?a&es Ste#art9 ;<5=> %as the !hief En+lish Mer!antilis%riter "f the ei+hteenth !ent#r$. Indeed he has

: See Seli+&an' Pr"+ressi-e Ta2ati"n in The"r$ and Pra!ti!e9 ,,. B' <. ;P#li!ati"ns "f the A&eri!an E!"n"&Ass"!iati"n' =.>

: Le-iathan' ,. <. ;Re,rint "f .> :A Treatise "f Ta2es and C"ntri#ti"ns ;>' P5 .: See Da-enant7s Essa$ "n 8a$s and Means. :FeU"+en' 4?a&es Ste#art #. A. S&ith'4 in ]eits!hr.f. d. +es.

Staats%issens!ha*l;>) Hasa!h' Unters#!h#n+en Uher A. S&ith' ,,. 0 ff. ;>.een !alled the last "f the Mer!antilists. F"ll"%in+ the St#arts int" e2ile in B' he li-ed in Fran!e' Ger&an$'

H"lland' and Ital$) and his "" ;> is lar+el$ a !"lle!ti"n "f "ser-ati"ns &ade d#rin+ this ti&e. Its title is An In(#ir$ inhe Prin!i,les "f P"liti!al E!"n"&$' ein+ an essa$ "n the S!ien!e "f D"&esti! P"li!$ in Free Nati"ns' in %hi!h arearti!#larl$ !"nsidered P",#lati"n' A+ri!#lt#re5' Trade' Ind#str$' M"ne$' C"in' Interest' Cir!#lati"n' 1ans' E2!han+e' P#

Credit and Ta2es' This see&s t" e the first #se "f the ter& P"liti!al E!"n"&$ in an En+lish "". His idea "f the s!ien!e haMer!antilisti! ear&ars6 4CE!"n5"&$ in +eneral is the art "f ,r"-idin+ f"r all the %ants "f a fa&il$' %ith ,r#den!$ andr#+alit$. 8hat "e!"n"&$ is in a fa&il$' ,"liti!al "e!"n"&$ is in a state. . . . The ,rin!i,al "*e!t "f this s!ien!e is t" se!#reertain f#nd "f s#sisten!e f"r all the inhaitants4 and t" render it se!#re. E!"n"&i!s is an art. Mer!antilist ideas !"n!ernin+",#lati"n als" a,,ear.

M"ne$ and anin+ are treated at !"nsiderale len+th. Ste#art *#stifies interest' #t has n" !lear #nderstandin+ "f

a,ital / as %as !"&&"nl$ the !ase ef"re the Ind#strial Re-"l#ti"n. Als"' lie Child' he feels that a l"% rate "f interest%"#ld e enefi!ial' "nl$ +"-ern&ental &eas#res t" se!#re it sh"#ld e +rad#al.

He has s"&e s"#nd ideas "n ,ri!e' re+ardin+ it as deter&ined $ de&and and s#,,l$' and distin+#ishin+ 4effe!t#al de&and) and Ada& S&ith has een !riti!i0ed n"t #n*#stl$ f"r n"t referrin+ t" Ste#art "n this ,"int' as Ste#art7s %"r %as %en"%n t" hi&.

It is interestin+ t" "ser-e the infl#en!e "f Fren!h th"#+ht #,"n Ste#art. In Fran!e the Ph$si"!rati! d"!trines' t" edes!ried sh"rtl$' %ere tain+ sha,e. A!!"rdin+l$ %e find stress laid #,"n the a+ri!#lt#ral s#r,l#s as !"nditi"nin+ the +r"%

f ,",#lati"n and ind#str$' and his &"del state %as ,er-aded %ith a !hara!teristi! #nit$ and har&"n$.The "" is diff#se and %"ef#ll$ la!in+ in !lear definiti"n and a!!#rate state&ent. This fa!t' t"+ether %ith the!han+es %r"#+ht $ the Ind#strial Re-"l#ti"n and the a,,earan!e "f S&ith7s 8ealth "f Nati"ns' de,ri-ed Ste#art7s

%"r "f an$ !"nsiderale re!"+niti"n "r effe!t' th"#+h it a,,ears t" ha-e had s"&e infl#en!e in Ger&an$.The Phil"s",h$ "f the Mer!antilists. / Se-eral "f the leadin+ Mer!antilist %riters %ere ,hil"s",hers' and' "f !"#rs

ll ,r"!eeded #,"n !ertain f#nda&ental ass#&,ti"ns !"n!ernin+ &an7s ,la!e in the %"rld and the &eanin+ "f ind#strial and"!ial life' th"#+h the$ &a$ n"t ha-e een !"ns!i"#s "f this fa!t. Theirs %as the ,hil"s",h$ "f &aterialis&' as defined in thentr"d#!t"r$ !ha,ter "f this Hist"r$. H"es' in his Le-iathan' %r"te that 4nat#re hath &ade &en s" e(#al' in the fa!#lties "he "d$' and &ind4 that n" +reat differen!e e2ists a&"n+ the&' and n" "ne !an !lai& an$ enefit therefr"& t" %hi!h an"the

&a$ n"t ,retend. L"!e' th"#+h s"&e%hat in!"nsistent' "n the %h"le &a$ e said t" ha-e &ade en-ir"n&ental infl#en!esri&ar$ and t" ha-e re+arded the &ind as ,assi-e.

Self5interest %as the f"r!e &"re "r less !"ns!i"#sl$ fass#&ed $ all t" &"ti-ate &en' and the ,rin!i,le "f leasta!rifi!e %as s#,,"sed t" +#ide the&. Th#s H"es stated that 4 e-er$ &an is ,res#&ed t" d" all thin+s in "rder t" his "%n



enefit'4 and F"rtre$ that 4 Interest &"re than reas"n !"&&"nl$ s%a$s &"st &en7s affe!ti"ns . . . and Hie h",e "f +ain"&&"nl$ ears s" +reat a s%a$ a&"n+st &en' that it al"ne is s#ffi!ient t" ,re-ail %ith &"st.4

The Mer!antilists' f#rther&"re' re+arded self5interest as leadin+ t" !lashes "f interest et%een indi-id#al sel-es andhe state. H"es th"#+ht that &en differ fr"& ants in that a&"n+ these !reat#res the !"&&"n and the ,ri-ate +""d are hea&e' %hile a&"n+ &en there is !"ntin#al !"&,etiti"n f"r h"n"r and di+nit$.9 F"rtre$ %r"te l#ntl$6 4 1#t ,ri-ate ad-anta+re "ften i&,edi&ents "f ,#li! ,r"fit . . .4) 9 and Child #r+ed his readers t" 4 %aril$ distin+#ish et%een

: Le-iathan ;En+lish 8"rs>' K"l. HI' ,. B.: En+lish Interest and I&,r"-e&ent' ,. .I= &STORY

beco history

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