Richard Cantillon: Pioneer of Economic Theory

Richard Cantillon: Pioneer of Economic Theory

Richard Cantillon: Pioneer of Economic Theory

Richard Cantillon: Pioneer of Economic Theory

Synopsis

Richard Cantillon, writing fifty years before Adam Smith, was the first to see the economy as an interrelated whole, and the first to give a coherent account of how it works. This is the first comprehensive study of his economic theory and of his place in the history of the subject.

Excerpt

I first read Cantillon’s Essai sur la nature du commerce en général out of duty—I was trying to cover some of the background to classical economics, and Cantillon was on the list of ‘predecessors of Adam Smith’. Within a few pages I recognized a real theorist, of a really quite modern kind. Cantillon used simplifying assumptions to get to the heart of a problem, as modern theorists do. He explicitly refused to discuss what the aims of policy should be, and confined himself to analysing how any given aims should be secured; in other words, he was doing what would now be called positive economics, without using the term. Above all, he had a clear vision of the economy as an interrelated system and a strikingly consistent analysis of how the system worked. I thought then, and I still think now, that Cantillon has been seriously underrated by the majority of historians of economics. In the eighteenth century, only Turgot was his equal as a theorist. (Adam Smith had more influence, of course, but that is a different issue.)

This book is a study of Cantillon as an economic theorist. It would, of course, be possible to write about him from various different angles—to say more about the context, or about policy issues, and so on. In my view, it is his achievement as a theorist that marks him out as a significant figure in the history of economics, so I shall concentrate on his theory. To understand his work, however, it is necessary to know just a little about the world he was writing about, just as it helps to know a little about (say) the GATT or the IMF when reading modern work on international economics. I will therefore try to provide a bare minimum of background. What I will not do is to patronize Cantillon by judging him by some imaginary eighteenth century standards. He deserves to be judged by the same standards of rigour and coherence as any modern writer.

A study of Cantillon’s economics is necessarily a study of his only surviving work, the Essai sur la nature du commerce en général. For brevity, I refer to it as the Essai throughout. It is not clear whether it was originally written in French or English, but the surviving text is in French. The standard translation, by Higgs, is based on an eighteenth century version of parts of the Essai published by one Malachi

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