Toward Classical Political Economy.ppt

1、Toward Classical Political Economy,History of Economic Thought Boise State University Fall 2015 Prof. D. Allen Dalton,Background to French Political Economy of the 18th Century,Descartes deductive natural law rationalism Colbert systematic regulation of the economy Cantillon the economy as a natural

2、ly regulated interdependent system French Enlightenment Voltaire, Diderot, dAlembert,French Political Economy,Physiocrats (les conomistes) Franois Quesnay (1694-1774) Victor de Riqueti, Marquis de Mirabeau (1715-1789) Paul Pierre le Mercier de la Rivire (1720-1793) Pierre Samuel DuPont de Nemours (1

3、739-1817) “Liberals” Vincent de Gournay (1712-1759) Abb (Andr) Morellet (1727-1819) Anne Robert Jacques Turgot (1727-1781) Marquis de Condorcet (1743-1794),The Master of the Physiocrats,Franois Quesnay (1694-1774) born into rural laborer family surgeon (1716) physician to Madame Pompadour, mistress

4、to Louis XV (1749) contributes articles on farming to Diderots Encyclopdie (1756) reads Vauban, Boisguilbert, Cantillon; “invents” Tableau conomique converts Mirabeau, Mercier de la Rivire, DuPont,The Physiocratic Literature,Mirabeau, Lami des hommes (1756) Quesnay, Le Tableau conomique (1758) Mirab

5、eau, La philosophie rurale (1763) Quesnay, Analyse de la formule arithmtique du Tableau conomique de la distribution des dpenses annuelles dune Nation agricole (1766) de la Rivire, Lordre naturel et essentiel des societes politiques (1767) DuPont de Nemours, La Physiocratie (1767),The Physiocratic S

6、ystem,fundamental axioms agriculture is the only source of produit net -net product (surplus of output over cost) manufacturing and commerce are sterile (value of ouput equals value of inputs) nations wealth equals value of net product stylized presentation of the interdependent economy - Le Tableau

7、 conomique,Le Tableau conomique,“graphical” portrayal of the interdependence of an economic system used to analyze mercantilist policies - concluded all reduced net product - superiority of natural order over regulated economy - laissez faire,Ferdinando Galiani (1728-1787),Della Moneta (1751) subjec

8、tive utility theorist Neapolitan ambassador to Paris 1759-1769 critique of Physiocracy Dialogues sur le commerce des bleds (Dialogues on the Grain Trade) (1769) Critique of free trade policy in corn enacted in 1764,Marquis de Condorcet (1743-1794),disciple of Turgot Monopole et Monopoleur (1775) Ess

9、ay on the Application of Analysis to the Probability of Majority Decisions (1785) “Condorcets Paradox” intransitivity of majority preference Condorcet Method pairwise elections Life of M. Turgot (1786),Etienne Bonnot de Condillac (1714-1780),An Essay on the Origin of Human Knowledge (1746) French em

10、piricist, tradition of Locke and Hume Commerce and Government (1776) subjective value theorist, notion of declining value as quantity expands exchange arises as consequence of reverse inequality of values,Background to British Political Economy in the 18th Century,Act of Settlement 1701 parliamentar

11、y supremacy; establishes House of Hanover Act of Union 1707 join Scotland and England; Scottish parliament dissolved; free Church of Scotland (Presbyterian) The Jacobite Uprisings of 1715 and 1745 James VIII and Bonnie Prince Charlie attempt to restore House of Stuart to thrones of Scotland/England,

12、Background to British Political Economy in the 18th Century,The Scottish Enlightenment Gershom Carmichael (1672-1729) Francis Hutcheson (1694-1746) Adam Ferguson (1723-1816) The Rise of Methodism (1738) brothers John and Charles Wesley denied absolute predestination; denied that the grace of God is

13、irresistible; and affirmed that a believer may fall from grace Problems in the American Colonies,Bernard Mandeville (1670?-1733),Dutch, settled in England in 1699 The Grumbling Hive: or KnavesTurnd Honest (1705) The Fable of the Bees: or Private Vices,Public Benefits (1714) Argues that “vices” anima

14、te the economy and that if people were virtuous the economy would stagnate Shock to moral philosophy of the Scottish Enlightenment Problematic nature of his economics If people dont spend on vices wont they spend on virtues? Commits broken-window fallacy and also confuses saving with hoarding,The Sc

15、ottish Enlightenment,Remarkable flourishing of intellectual activity at time such activity is moribund in England Gershom Carmichael (1672-1729) first Professor of Moral Philosophy, University of Glasgow brought natural law views of Pufendorf, Grotius, and Locke to Scotland Natural Rights: Observati

16、ons upon Pufendorfs On the Duty of Man and Citizen (1724),The Scottish Enlightenment,Francis Hutcheson (1694-1746) Professor of Moral Philosophy, University of Glasgow Essay on the Nature and Conduct of the Passions and Affections (1728) opposed hedonism of Hobbes and Hume with notion of moral benev

17、olence; opposed Mandevilles argument that private vices lead to public benefits; arrived at “greatest happiness” principle as moral commandment Adam Smiths teacher (“the incomparable Hutcheson”),The Scottish Enlightenment,Adam Ferguson (1723-1816) Professor of Moral Philosophy, University of Edinbur

18、gh An Essay on the History of Civil Society (1767) Principles of Moral and Political Science (1792),The Scottish Enlightenment,Features of the Scottish Enlightenment secular scientific objectivity clear social and historical focus constancy of human nature within changing environments and institutio

19、nal settings social order as the consequence of human action, but not of human design belief in progress belief in historical relativism,David Hume (1711-1776),“Hume is our Politics, Hume is our Trade, Hume is our Philosophy,Hume is our Religion.“ -19th century British idealist philosopher James Sti

20、rling,David Hume (1711-1776),historian, philosopher, essayist tutor, traveling secretary, Edinburgh University librarian, diplomat A Treatise of Human Nature (1739-40) Essays Moral and Political (1741-42) Political Discourses (1752) multi-volume History of England (1754-1762),Humes Economics,Politic

21、al Discourses (1752) Three essays: “Of Money,” “Of Interest,” and “Of the Balance of Trade” Contributions mutual gains of international trade (not zero-sum) price-specie flow mechanism (first publication) long-run neutrality of money (first explicit statement); crude simplification of quantity theor

22、y short-run non-neutrality of money due to price inertia; relationship to booms and depressions interest rate function of demand for and supply of real capital (savings),James Steuart (1712-1780),An Inquiry into the Principles of Political conomy: Being an Essay in the Science of Domestic Policy in

23、Free Nations, in which are Particularly Considered Population, Agriculture, Trade, Industry, Money, Coin, Interest, Circulation, Banks, Exchange, Public Credit and Taxes (1767) perhaps the longest book title in the history of economics (39 words),James Steuart,Principles of Political conomy English

24、introduction of term “political economy” first to specifically use phrase “supply and demand” superior analysis of competition “double competition”- competition on both sides of market moderate mercantilist concentration on employment and public works rejects quantity theory demand determines prices (real-bills doctrine?),