The Economists of the Past

by JB Say

Air and water were only accurately analyzed less than 40 years ago.

doctrine is founded, –> are continually assailed even if they have been repeated a thousand times in different countries.

A similar lack of agreement exists in moral and political science.

Political economy, like the exact sciences, is composed of:

• a few fundamental principles
• many corollaries or conclusions drawn from these principles.

These principles should be strictly deduced from observation.

The number of conclusions to be drawn from them may afterwards be either multiplied or diminished according to the goal.

To enumerate all their consequences would be a work of stupendous magnitude. A treatise on political economy should be confined to a few general principles, not requiring even the support of proofs or illustrations.

It would, however, be idle to imagine that greater precision, or a more steady direction could be given to this study, by the application of mathematics to the solution of its problems.

The values with which political economy is concerned, admitting of the application to them of the terms plus and minus, are indeed within the range of mathematical inquiry; but being at the same time subject to the influence of the faculties, the wants and the desires of mankind, they are not susceptible of any rigorous appreciation, and cannot, therefore, furnish any data for absolute calculations.

In political and in the physical science, all that is essential is a knowledge of the connexion between causes and their consequences.

self in relation to the effect of savings and loans on interest, it is evident that he knew nothing of the nature and employment of capital. What can we expect from nations still less advanced in civilization than the Greeks? We may recollect that a ‘law of Egypt obliged the son to adopt the profession of his father. This, in certain cases, was to require the creation of a greater quantity of products than the particular state of society called for; to oblige an individual, in order to obey the law, to ruin himself, and to continue the exercise of his productive functions, whether in possession of capital or not; which is altogether absurd. 10 The Romans, in treating every branch of industry, except agriculture (and we know not why,) with contempt, betray the same ignorance. Their pecuniary transactions must be numbered amongst their most unskilful operations.

Neither the phenomena of the moral or material world are subject to strict arithmetical computation. 8 These considerations respecting the nature and object of political economy, and the best method of obtaining, a thorough knowledge of its principles, will supply us with the means of appreciating the efforts hitherto made towards the advance- ment of this science.

The moderns, even after having freed themselves from the barbarism of the middle ages, have not for a very long time been more advanced. We shall have occasion to notice the stupidity of a multitude of laws relating to the Jews, to the interest of money, and to money itself.

Henry 4th granted to his favourites and mistresses, as favours which cost him nothing, the permission to practise a thousand petty extortions, and to collect for their own benefit, from various branches of commerce, as many petty taxes.

He authorized the count of Soissons to levy a duty of 15 sous upon every bale of merchandise which should be exported from the kingdom. 11

The literature of the ancients, their legislation, their public treaties, and their administration of the conquered provinces, all proclaim their utter ignorance of the nature and origin of wealth, of the manner in which it is distributed, and of the effects of its consumption.

They knew, what has always been known wherever the right of property has been sanctioned by laws, that riches are increased by economy, and diminished by extravagance. Xenophon extols order, activity, and intelligence, as certain means of obtaining prosperity; but without deducing these maxims from any general law, or without being able to show the connexion between causes and their consequences.

He advises the Athenians to protect commerce, and to receive strangers with kindness; yet so little was he aware to what extent this advice would be proper, that, upon another occasion, he expresses doubts whether commerce be really profitable to the republic.

In every branch of knowledge, example has preceded precept. The fortunate enterprises of the Portuguese and Span- iards during the fifteenth century, the active industry of Venice, Genoa, Florence, Pisa, the provinces of Flanders, and the free cities of Germany at this same epoch, gradually directed the attention of some philosophers to the theory of wealth.

Plato and Aristotle, it is true, notice some invariable relations between the different modes of production, and the results obtained from them. Plato sketches with tolerable fidelity, 9 the effects of the separation of social employments; but it is simply with a view to illustrate man’s social character and the necessity he is in, from his multifarious wants, of uniting in extensive societies in which each individual may be exclusively occupied with one species of production. His view is entirely a political one; and he has deduced from it no other conclusion.

These inquiries, like almost every other in the arts and sciences, after the revival of letters, originated in Italy. As far back as the sixteenth century, Botero was engaged in investigating the real sources of public prosperity. In the year 1613, Antonio Serra composed a treatise, in which he particularly noticed the productive power of industry; but the title of his work sufficiently indicates its errors. Wealth, according to his hypothesis, consisted only of gold and silver. 12

Davanzati wrote about money and exchange. At the beginning of the 18th century, 50 years before Quesnay, Bandini of Sienna had shown, both from reasoning and experience, explained that there never had been a famine except in those countries where the government had itself interfered to supply the people.

Belloni, a banker at Rome, in 1750 published a dissertation on commerce, evincing his intimate acquaintance with the nature of money and exchanges, although at the same time infected with the theory of the balance of trade. His labours were rewarded by the

In his treatise on Politics, Aristotle goes farther. He distinguishes natural from artificial production. He styles natural, whatever creates those objects of consumption required by a family, or, at most, whatever is obtained by exchanges in kind.

No other advantage, according to him, is derived from real production; artificial gain he condemns. Besides, he does not support these opinions by any reasoning founded upon accurate observation. From the manner in which he expresses him-

Pope with the title of marquess. Carli, before Dr. Smith, demonstrated that the balance of trade neither taught nor proved any thing.

Algarotti, whose writings on other subjects Voltaire has made known, wrote also upon the science of political economy; and the little he has left exhibits the accuracy and extent of his knowledge, as well as his acuteness. He confines himself so strictly to facts, and so uniformly founds his speculations on the nature of things, that although he did not get possession of the proof of his principles, and of their relation to each other, he has, nevertheless, guarded himself against every thing like hypothesis and system. In 1764, Genovesi commenced a course of public lectures on political economy, in the chair founded at Naples by the care of the highly esteemed and learned Intieri. In consequence of this example, other professorships of political economy were afterwards established at Milan, and more recently in most of the universities in Germany and Russia.

Moncada, Navarette, Ustaritz, Ward, and Ulloa, have written on the same subject. These esteemed authors, like those of Italy, entertained many sound views, verified various important facts, and supplied a number of laborious calculations;

but from their inability to establish them upon fundamental principles of the science, which were not then known, they have often been mistaken both as to the end as well as the means of prosecuting this study; amidst a variety of useless disquisitions, have only cast an uncertain and deceptive light. 15

In France, political economy was initially only considered in public finance. Sully remarks correctly enough, that agriculture and commerce are the two teats of the state; but from a vague and indistinct conception of the truth.

The same observation may be applied to Vauban, a man of a sound practical mind, and although in the army, a philosopher and friend of peace, who, deeply afflicted with the misery into which his country had been plunged by the vain-glory of Louis 14th, proposed a more equitable assessment of the taxes, as a means of alleviating the public burdens.

In 1750, the abbé Galiani in his Dialogues on the Corn Trade, although at that time a very young man, published a Treatise on Money, which discovered such uncommon talents and information, as to induce a belief that he had been assisted in the composition of his work by the abbé Intieri and the Marquess of Rinuccini.

Under the influence of the regent, opinions became unsettled. Bank-notes, supposed to be an inexhaustible source of wealth, were only the means of swallowing up capital, of expending what had never been earned, and of making a bankruptcy of all debts. Moderation and economy were turned into ridicule.

The courtiers of the prince, either by persuasion or corruption, encouraged him in every species of extravagance. At this period, the maxim that a state is enriched by luxury was reduced to system. All the talents and wit of the day were exerted in gravely maintaining such a paradox in prose, or in embellishing it with the more attractive charms of poetry. The dissipation of the national treasures was really supposed to merit the public gratitude. The ignorance of first principles, with the debauchery and licentiousness of the duke of Orleans, conspired to effect the ruin of the kingdom. During the long peace maintained by cardinal Fleury, France recovered a little; the insignificant administration of this weak minister at least proving, that the ruler of a nation may achieve much good by abstaining from the commission of evil.

One of the most striking peculiarities of this work, is its containing some of the rudiments of the doctrine of Adam Smith; among others, that labour is the sole creator of the value of things or’ of wealth; 13 a principle although not rigorously true, as will be made manifest in the course of this work, but which, pushed to its ultimate consequences, would have put Galiani in the way of discovering and completely unfolding the phenomena of production. Dr. Smith, who was about the same time a professor in the university of Glasgow, and then taught this doctrine, which has since acquired so much celebrity, in all probability had no knowledge of a work in the Italian language, published at Naples by a young man then hardly known, and whom he has never quoted. But even had he known it, a truth cannot with so much propriety be said to belong to its fortunate discoverer, as to the inquirer who first proves that it must be so, and demonstrates its consequences.

Although the existence of universal gravitation had been previously conjectured by Kepler and Pascal, the discovery does not the less belong to Newton. 14

The steadily increasing progress of different branches of industry, the advancement of the sciences, whose influence upon wealth we shall have occasion hereafter to notice, and the direction of public opinion, at length estimating national prosperity as being of some importance, caused the science of political economy to enter into the contemplation of a great number of writers. Its true principles were not then known; but since, according to the observation of Fontenelle, our condition is such, that we are not permitted at once to arrive at the truth, but must previously pass through various species of errors and various grades of follies, ought these false steps

In Spain, Alvarez Osorio, and Martinez-de-mata, have delivered discourses on political economy, the publication of which we owe to the enlightened patriotism of Campomanes.

to be considered as altogether useless, which have taught us to advance with more steadiness and certainty?

folding the nature of production, caused the further examination of this important phenomenon, which conducted their successors to its entire development. On the other hand, the labours of the economists have been attended with serious evils; the many useful maxims they decried, their sectarian spirit, the dogmatical and abstract language of the greater part of their writings, and the tone of inspiration pervading them, gave currency to the opinion, that all who were en- gaged in such studies were but idle dreamers, whose theories, at best only gratifying literary curiosity, were wholly in- applicable in practice. 18

Montesquieu, inquired into the influence of laws on national wealth.

The nature and origin of wealth he should first have ascertained; of which, however, he did not form any opinion. We are, nevertheless, indebted to this distinguished author for the first philosophical examination of the principles of legis- lation; and, in this point of view, he, perhaps, may be considered as the master of the English writers, who are so gener- ally esteemed as being ours; just in the same manner as Voltaire has been the master of their best historians, who now furnish us with models worthy of imitation.

No one, however, has ever denied that the writings of the economists have uniformly been favourable to the strictest morality, and to the liberty which every human being ought to possess, of disposing of his person, fortune, and talents, according to the bent of his inclination; without which, indeed, individual happiness and national prosperity are but empty and unmeaning sounds. These opinions alone entitle their authors to universal gratitude and esteem. I do not, more- over, believe that a dishonest man or bad citizen can be found among their number.

Around the middle of the 18th century, certain principles in relation to. the origin of wealth, advanced by Doctor Quesnay, made a great number of proselytes. The enthusiastic admiration manifested by these persons for the founder of their doctrines, the scrupulous exactness with which they have uniformly since followed the same dogmas, and the energy and zeal they displayed in maintaining them, have caused them to be considered as a sect, which has received the name of economists.

Instead of first observing the nature of things, or the manner in which they take place, of classifying these ob- servations, and deducing from them general propositions, they commenced by laying down certain abstract general propositions, which they styled axioms, from supposing them to contain inherent evidence of their own truth. They then endeavoured to accommodate the particular facts to them, and to infer from them their laws; thus involving themselves in the defence of maxims evidently at variance with common sense and universal experience, 16 as will appear hereafter in various parts of this work.

Their opponents had not themselves formed any more correct views of the subjects in controversy.

With considerable learning and talents on both sides, they were either wrong or right by chance. Points were contested that should have been conceded, and opinions, unquestionably false, acquiesced in; in short, they combated in the clouds. Voltaire, who so well knew how to detect the ridiculous, wherever it was to be found, in his Homme aux quarante ecus, satirised the system of the economists; yet, in exposing the tiresome trash of Miercer de la Riviere, and the absurdities contained in Mirabeau’s L’ami des Hommes, he was himself unable to point out the errors of either.

This doubtless is the reason why, since the year 1760, almost all the French writers of any celebrity on subjects connected with political economy, without absolutely being enrolled under the banners of the economists, have, nevertheless, been influenced by their opinions.

Raynal, Condorcet, and many others, will be found among this number. Condillac may also be enumerated among them, notwithstanding his endeavours to found a system of his own in relation to a subject which he did not understand. Many useful hints may be collected from amidst the ingenious trifling of his work; 19 but, like the economists, he almost invariably founds a principle upon some gratuitous assumption. Now, an hypothesis may indeed be re- sorted to, in order to exemplify and elucidate the correctness of an author’s general reasoning, but never can be sufficient to establish a fundamental truth. Political economy has only become a science since it has been confined to the results of inductive investigation.

Turgot was himself too good a citizen, not sincerely to esteem as good citizens as the economists; and accordingly, when in power, he deemed it advantageous to countenance them. The economists, in their turn, found their account in passing off so enlightened an individual and minister of state as one of their adepts; the opinions of Turgot, however, were not borrowed from their school, but derived from the nature of things; and although on many important points of doctrine he may have been deceived, the measures of his administration, either planned or executed, are amongst the most brilliant ever conceived by any statesman.

There cannot, therefore, be a stronger proof of the incapacity of his sovereign, The economists, by promulgating some important truths, directing a more general attention to objects of public utility, and by exciting discussions, which, although at that time of no advantage, subsequently led to more accurate investigations, have unquestionably done much good. 17 In representing agricultural industry as productive of wealth, they were not deceived; and, perhaps, the necessity they were in of unfortunate premises to the immediate con sequences which confirm them, at the same time that they exhibit their application and utility.

than his inability to appreciate such exertions, or if capable of appreciating them, in not knowing how to afford them support.

ciple, or of such perverted understandings as to be wholly incapable of seizing the connexion or relation between any two ideas. Whenever the Inquiry into the Wealth of Nations is perused with the attention it so well merits, it will be perceived that until the epoch of its publication, the science of political economy did not exist.

The economists exercised a sway over French writers and a remarkable influence over many Italian authors, who even went beyond them.

Beccaria at Milan, 20 first analysed the true functions of productive capital. The Count de Verri, the countryman and friend of Beccaria, was both a man of business and an accomplished scholar, in his Meditazione sull’ Economia politica, published in 1771, approached nearer than any other writer, before Dr. Smith, to the real laws which regulate the production and consumption of wealth.

Filangieri, whose treatise on political and economical laws was not given to the public until the year 1780, was not to have been acquainted with the work of Dr. Smith, published four years before.

The principles de Verri laid down are followed by Filangieri, and even received from him a more complete development; but although guided by the torch of analysis and deduction, he did not proceed from the most

From this period, gold and silver coins were considered as only constituting a portion, and but a small portion, of national wealth; a portion the less important, because less susceptible of increase, and because their uses can be more easily supplied than those of many other articles equally valuable; and hence it results that a community, as well as its individual members, are in no way interested in obtaining metallic money beyond the extent of this limited demand.

These views first enabled Adam Smith to ascertain the true functions of money which he made to bank-notes and paper money which are of the utmost importance in practice.

They afforded him the means of demonstrating, that productive Capital does not consist of a sum of money, but in the value of the objects made use of in production. He arranged and analyzed the elements of which productive capital is composed, and pointed out their true functions. 22

But none of these inquiries could lead to any important result.