The History of Economics

A Course for Students and Teachers

Roger E. Backhouse, Keith Tribe

• Publisher: Agenda Publishing
• Year: 2017
• Print ISBN: 9781911116707
• eBook ISBN: 9781788211314
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

As a broad introduction to the history of economic thought – based on courses the authors have taught for many years – this book provides a magisterial overview for students and teachers who have not had the opportunity to cover the development of the field of economics in its historical context.

The text is presented as a series of twenty-four lectures, which can be used as the basis for self-study or for the delivery of a course. Each lecture presents an outline of aims, a select bibliography, a chronology, an overview of between 3,000 and 4,000 words, and questions for further study or reflection.

Contemporary understanding of economic principles sheds little light on the manner in which past thinkers thought, so the reader is provided with the much-needed context behind the development of ideas, as well as being guided through the original writings of economists such as Smith, Jevons, Marshall, Robbins, Keynes and others. The emphasis is on the broad developing stream of economic argument from the seventeenth century to the present, seeking to emphasize a diversity that is sometimes suppressed in more conventional textbooks, which tend to organize their histories into sequences of schools of thought.

Backhouse and Tribe bring their considerable insight and knowledge to bear on the text, having honed their presentation to the needs of those with no previous background in the subject, without sacrificing analysis or rigour. The book will be warmly welcomed by students and teachers alike.

Lecture 1

Commerce, Wealth and Power: The Disputed Foundations of the Strength of a Nation

1. Aims of the lecture

1. To outline the early history of economic argument and its emergence as a language of “counsel and advice” for the courts and administrations of seventeenth-century Europe.

2. To highlight the way in which the arguments advanced identified varying sources of wealth and power: population, commerce, manufacture, agriculture, mines.

3. To show that well into the eighteenth century comparative assessments of the strength of a nation relied upon empirical, rather than analytical, arguments.

2. Bibliography

There is no reliable modern survey of seventeenth- and eighteenth-century European economic argument that brings together developments in Western, Central, Northern and Southern Europe in an even-handed manner, although there are a few older sources that provide a useful perspective on some aspects of the early development of political oeconomy. Terence Hutchison’s Before Adam Smith: The Emergence of Political Economy, 1662–1776 (Oxford: Blackwell, 1988) is the most generally useful older work; while it does have the usual Anglo-French bias, it is unusual in the space it gives to German-language and Italian writings. It also offers clear and helpful indexes for both authors and subjects, a chronology (pp. 441–55) and a section “References and Literature” (pp. 419–41) that is divided up by chapter, separately listing within each chapter original writing and commentary upon that writing.

Istvan Hont, “Jealousy of Trade: An Introduction”, in his Jealousy of Trade: International Competition and the Nation-State in Historical Perspective (Cambridge, MA: Harvard University Press, 2005), pp. 1–156, provides the best modern overview of European political economy through the seventeenth and eighteenth centuries.

Ryan Walter, A Critical History of the Economy (Abingdon: Routledge, 2011), provides a brief synthetic overview of the development of economic thinking in Britain from the later-seventeenth to the early-nineteenth century, making use of insights drawn from the history of political thought, where both historiography and range of analysis are far more sophisticated than usually encountered in the history of economic thought.

Jacob Viner, “Power Versus Plenty as Objectives of Foreign Policy in the Seventeenth and Eighteenth Centuries”, World Politics 1:1 (1948), 1–29. Viner was very knowledgeable about seventeenth- and eighteenth-century commercial writing and in this article he identifies the relationship between wealth and the political power of states that characterizes the seventeenth- and early-eighteenth-century literature.

Albert O. Hirschman, The Passions and the Interests: Political Arguments for Capitalism before its Triumph (Princeton, NJ: Princeton University Press, 1977). A landmark essay on the relationship between human passions and interests demonstrating how, during the eighteenth century, these disorderly forces came to be understood as the foundation of social and economic order.

Gustav Marchet, Studien über die Entwickelung der Verwaltungslehre in Deutschland von der zweiten Hälfte des 17. bis zum Ende des 18. Jahrhunderts (Munich: Oldenbourg, 1885). Still the best general account of the development of German ideas of economic and political order during the early modern period.

Keith Tribe, Governing Economy: The Reformation of German Economic Discourse 1750–1840, second edition (Newbury: Threshold Press, 2017). A monograph on the development of the eighteenth-century Kameralwissenschaften and their transformation around 1800 into Nationalökonomie, it includes a chapter on the German reception of physiocracy and also the impact of translations from French, English and Italian.

Marten Seppel and Keith Tribe (eds), Cameralism in Practice: State Administration and Economy in Early Modern Europe (Woodbridge: Boydell & Brewer, 2017) brings together a number of essays that emphasize the diversity of European economic argument during the eighteenth century, including discussion of Sweden, Russia, the German states, Austria, Spain, Portugal and Brazil.

Fritz Karl Mann, Der Marschall Vauban und die Volkswirtschaftslehre des Absolutismus (Munich: Duncker & Humblot, 1914). An invaluable account of late-seventeenth-century France and the interlocking worlds of politics and economic administration by a leading German fiscal theorist and historian.

Charles Woolsey Cole, Colbert and a Century of French Mercantilism, two volumes (New York: Columbia University Press, 1939). Still the leading account of Colbert’s work as minister to Louis XIV and his efforts to rationalize and centralize French economic administration.

Gilbert Faccarello, The Foundations of Laissez-faire: The Economics of Pierre de Boisguilbert (London: Routledge, 1999). A key monograph, originally published in 1986, on the writer whose assessment of the condition of France following the reign of Louis XIV was linked to early ideas of free trade and economic equilibrium.

Pamela H. Smith, The Business of Alchemy: Science and Culture in the Holy Roman Empire (Princeton, NJ: Princeton University Press, 1994). A landmark study of Johann Joachim Becher (1635–82), who was a projector, a counsellor to the Austrian court, an alchemist and an author linked in the last years of his life to Prince Rupert and the Royal Society. The best single account to date of politics and economics in the later seventeenth century.

William Letwin, The Origins of Scientific Economics: English Economic Thought 1660–1776 (London: Methuen, 1963). Although now dated by its allegiance to an older, positivist tradition in the history of science, Letwin’s account of early modern economic writing in Britain is detailed and insightful.

Political oeconomy in the seventeenth and early eighteenth centuries has been a relatively neglected field in the past three or four decades, but this is not because of a shortage of source material, rather the opposite. The scale of research effort required is daunting but can be very worthwhile, as highlighted by Carlos Eduardo Suprinyak, “Trade, Money and the Grievances of the Commonwealth: Economic Debates in England During the Commercial Crisis of the Early 1620’s”, History of Economic Ideas 24 (2016), 27–55. Other recent work that can be highly recommended is listed below.

Anne L. Murphy, “The Financial Revolution and Its Consequences”, in The Cambridge Economic History of Modern Britain Volume I: 1700–1870, Roderick Floud, Jane Humphries and Paul Johnson (eds) (Cambridge: Cambridge University Press, 2014), 321–43. A reliable and detailed account of the early development of money and banking in Britain that provides helpful context to early economic writing.

Ryan Walter, “Slingsby Bethel’s Analysis of State Interests”, History of European Ideas 41 (2015), 489–506. An account of one late-seventeenth-century British writer on England’s commercial competition with France.

Julian Hoppit, “The Contexts and Contours of British Economic Literature 1660–1750”, Historical Journal 49 (2006), 79–110. A survey of the development of economic writing in Britain that lays emphasis on the ebb and flow of controversy that underlies it.

Julian Hoppit (ed.), Nehemiah Grew and England’s Economic Development: The Means of a Most Ample Increase of the Wealth and Strength of England 1706–7 (Oxford: Oxford University Press, 2012). Reprints a treatise by Grew and provides a modern commentary on it, comparable to the work of Walter on Bethel.

Paul Slack, The Invention of Improvement: Information and Material Progress in Seventeenth-Century England (Oxford: Oxford University Press, 2015). A study of the (English) notion of “improvement” as a preoccupation with the work of constant and incremental economic change. Slack makes links with the Hartlib Circle and continental writing that move beyond Letwin’s positivist approach to the development of economic analysis.

3. Chronology

1618–48	Thirty Years’ War
1642–51	English Civil Wars
1643–1715	Reign of Louis XIV of France
1660	Charles II resumes English and Scottish thrones
1652–54	First Anglo-Dutch War
1665–77	Second Anglo-Dutch War
1672–74	Third Anglo-Dutch War
1688	The “Glorious Revolution”: Dutch takeover of British monarchy
1694	Foundation of Bank of England
1696	Creation of Board of Trade (Lords of Trade)
1701–15	War of Spanish Succession
1706	Union of Scotland with England

4. Lecture summary

The idea that “economic activity” is human activity directed to the maintenance and development of human life runs back to the ancient Greeks, where a sharp distinction was made between the agricultural activity of the countryside and the commercial occupations of the city. Only the essential activities of the rural household, governed by the annual agricultural cycle and overseen by its patriarchal head, provided a moral basis for human conduct. This gave us the term oikonomia, the government of a self-sufficient oikos (household economy), hence household management. By contrast, the activities associated with the city were trade and money-getting, chrematismos, useful enough in themselves but serving the interests of the individuals concerned and unconnected with the broader activities of the polis. Domestic agrarian and pastoral production remained the predominant economic activity across the globe right up until the nineteenth century and in many places beyond, carrying with it the connotation that in agriculture and pastoral pursuits human beings worked as much for others as for themselves, whereas the gains made in trade and finance were of a lesser moral worth. Gains from financial transactions were generally regarded as usurious, and distinct in kind from the products of human labour won in field and workshop.

Coupled with this basic distinction between economy and commerce was the early modern idea that the relation of monarch to his subjects could be conceived on the model of the Greek rural household, whereas commercial activity provided no such exemplar. By the seventeenth century, however, the force of this contrast between economy and commerce was beginning to fade, with arguments now being advanced that these two spheres of economic activity were complementary within the overall framework of state administration. The ruler of a principality could now be represented as the head of a giant household, his subjects its members; but the options for a flourishing state now included, besides agriculture, activity related to the development of mines, manufactures and trade, each of these being advanced as a means for the strengthening of the state. The organization of the household, its oeconomy, could now be represented as a “political oeconomy”: the prudent organization of the principality or state.

During the later sixteenth century a literature began to develop promoting particular activities or sectors, assessing what the best form of organization might be. The system of printing based on movable type was developed by Gutenberg and others in the mid-fifteenth century, and by the early sixteenth century the products of the printing press were moving into wider markets, with cheaper products for an increasingly literate public. This was the medium through which the Protestant Reformation was first initiated, and then propagated. Martin Luther famously nailed his 95 theses to the door of the Wittenberg Castle church in 1517, but they were quickly printed and disseminated throughout Germany. By the 1640s in Britain newsheets, tracts and pamphlets were appearing in ever larger numbers, and arguments about power and policy circulated more widely. It was in Max Weber’s exploration in 1904/1905 of the relationship between an emergent “spirit” of capitalism and the ethos of Protestantism that our modern understanding of “capitalism” originated, as a pervasive and anonymous economic force shaping all aspects of our lives; Weber’s historical focus was primarily on theological arguments, though, rather than the economic literature with which we are here concerned. Nonetheless, there is at the very least a clear coincidence between the Reformation and the emergence of arguments over commerce and power seeking to persuade new audiences through the medium of tracts and pamphlets. Here we are primarily concerned not with the religious controversies and conflicts of the early seventeenth century, but rather with a burgeoning literature from mid-c...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Contents
• Introduction
• Lecture 1. Commerce, Wealth and Power: The Disputed Foundations of the Strength of a Nation
• Lecture 2. Natural Order, Physiocracy and Reform
• Lecture 3. Adam Smith I: Outline of a Project
• Lecture 4. Adam Smith II: The Two Texts
• Lecture 5. The Political Economy of Malthus and Ricardo
• Lecture 6. Political Economy in Continental Europe and the United States
• Lecture 7. Political Economy, Philosophic Radicalism and John Stuart Mill
• Lecture 8. Popular Political Economy: List, Carey, Bastiat and George
• Lecture 9. Radical Political Economy: Marx and His Sources
• Lecture 10. Marginalism and Subjectivism: Jevons and Edgeworth
• Lecture 11. From Political Economy to Economics
• Lecture 12. Alfred Marshall’s Project
• Lecture 13. Markets and Welfare after Marshall
• Lecture 14. Monetary Economics
• Lecture 15. The Rise of Mathematical Economics
• Lecture 16. Robbins’s Essay and the Definition of Economics
• Lecture 17. John Maynard Keynes
• Lecture 18. Quantitative Economics
• Lecture 19. The Keynesian Revolution
• Lecture 20. Modern Macroeconomics
• Lecture 21. Inflation and the Phillips Curve
• Lecture 22. Popular Economics
• Lecture 23. Economics and Policy
• Lecture 24. Ideology and Place