ECONOMIC ANALYSIS BEFORE ADAM SMITH

Transcription

1 ECONOMIC ANALYSIS BEFORE ADAM SMITH

2 By the same author NON-RICARDIAN POLITICAL ECONOMY

3 ECONOMIC ANALYSIS BEFORE ADAM SMITH Hesiod to Lessius Barry Gordon University of Newcastle, New South Wales M

4 Barry Gordon 1975 Softcover reprint of the hardcover 1st edition 1975 All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission. First published 1975 by THE MACMILLAN PRESS LTD London and Basingstoke Associated companies in New York Dublin Melbourne Johannesburg and Madras ISBN SBN ISBN (ebook) DOI /

5 To my mother, Lillian May Gordon

6 Contents Preface XI 1 Before Plato 1 Hesiod and the economics of self-sufficiency 2 Solon and sixth-century Athens 7 Dramatists and Sophists in Periclean Athens 10 2 The Socratic Conception of Economics 21 Decline of the city-state 21 Plato and Aristotle 23 Foundations of Socratic economics 25 Specialisation and the rejection of growth 27 Economics as a science of ends 33 The acquisition of means 36 Xenophon and other Socratic contributions 39 3 Four Issues in Socratic Economic Analysis The nature and functions of money The payment of interest 49 Communal versus private ownership 52 The theory of value 53 types of justice 54 the utility strand 57 the labour-cost strand 60 the formula of proportionate reciprocity 62 households versus market 65 4 Biblical and Patristic Assessments of Economic Activity 70 The Old Testament 71 the Pentateuch 73 the prophets 76 Wisdom literature 78 Vll

7 Vlll Contents The New Testament 82 synoptic gospels 84 epistles 87 J ohannine literature 89 The Fathers of the East 91 The Fathers of the West 96 before Augustine 97 Augustine Three Legal Traditions: Rabbis, Romans ~nd Canonists 111 The Mishnah 111 exchange and price 113 guardianship, loans, and deposits 115 income and work 118 later development and impact 121 The Roman law tradition 122 sale and barter 126 price 128 value 131 money 133 interest 135 Canon law 139 before Gratian 140 Gratian and after Saint Thomas Aquinas 153 The place of economics 156 Money, interest, and banking 159 medium of exchange 160 common standard, or unit of account 162 money in balance 165 the status of banking 170 Value and price 174 Value, property, income, and work Scholastic Monetary Thought, The challenge of currency debasement 188 The acceptance of lucrum cessans 195 Money as a commodity: cambium and census 204

8 Contents IX 8 Price and Value in Scholastic Thought, Late thirteenth and the fourteenth century: Olivi, Scotus, Buridan, and Langenstein 221 The fifteenth century: Gerson, Nider, Bernardine, and Consobrinus 229 The sixteenth century: Cajetan, desoto, Navarrus, Molina, and Pedro de Valencia Venerable Leonard Lessius 244 Lucrum Cessans 248 Carent a Pecun ae 250 Loans and exchanges 254 Prices and markets 258 Wage determination 262 Monopoly 266 Later contrasts 271 Index 273

9 Preface The roots of modern economic analysis extend much further back in time than a good many contemporary students of economics are led to realise. Even some of the most widely-read, general treatments of the history of economic thought create an impression that meaningful starting points can be set in the era of European mercantilism, or with the advent of the Physiocratic school, or even later in the eighteenth century. One purpose of this book is to correct such false notions. More positively, the book aims at putting the modern student in a better position to appreciate the how and why of the scope and content of current economics. Ideas, personalities and events of antiquity, the middle ages and the Renaissance continue to reach out and condition that scope and content. Awareness of such conditioning is an important ingredient in the process by which a developing economist may graduate from subservience to, towards command of, his discipline as it is understood by his contemporaries. 'By History of Economic Analysis,' wrote Joseph Schumpeter, 'I mean the history of the intellectual efforts that men have made in. order to understand economic phenomena or, which comes to the same thing, the history of the analytical or scientific aspects of economic thought.' 1 The relevant efforts involve attempts at penetrating the meaning of economic phenomena taken together as one aspect of human existence in society, and attempts at explaining particular features of that group of phenomena. Hence, the present study focuses on shifting appreciations of the nature and significance of economic life, as well as on examinations of such issues as determination of commodity prices, the functions of money, or the bases of interest payment. 1 joseph A. Schumpeter, History of Economic Analysis (N.Y., Oxford University Press, 1959) p. 3. XI

10 Xll Preface Consideration of the general question of the status of economic activity as an aspect of existence seems particularly rdevant at present, given the myopia and narrowness of much economic enquiry in recent decades. These defects have worried a number of the members of the profession in latter years, among them Paul Samuelson, who states:.. it is possible to argue that American economists- and Western economists generally - far from being too divided among a number of competing schools, today present a united front that reflects too little basic disagreement on fundamentals. Today, surveying leading graduate schools in America, one finds them competing for the same men, teaching the same basic economic doctrines and methods. Although there are one, two, or three exceptions to this, even they are moving toward the common pattern - and one might have expected, in a great Nation, countless exceptions to any one pattern. ' 2 Since this book deals with conflicting assessments of economic life, and hence, divergent conceptions of the appropriate direction and scope of economics as a form of social enquiry, it may be of especial interest to those who, like Professor Samuelson, are disturbed by the fact of conformity. Throughout the text, leading ideas of some major figures in the history of economic thought are cited to provide perspective on the reasoning of earlier thinkers. Chief among those figures is Adam Smith. Among the reasons for employing Smith as the most prominent benchmark are: his widespread subsequent influence; the likelihood of the reader having some acquaintance with his thought; and, the key role he played in the emergence of economics in the modem sense. There is more than a grain of truth in Sir Alexander Gray's statement that, 'Before Adam Smith there had been much economic discussion; with him we reach the stage of discussing economics. ' 3 2 P. A. Samuelson, Collected Scientific Papf1rs, ed. Joseph E. Stiglitz, Vol. 2 (Cambridge, Mass., M.LT. Press, 1965) p Alexander Gray, The Development of Economic Doctrine (1931; London, Longmans, 1959), p. 123.

11 Preface Xlll The book does not attempt to encompass the entire range of analytical endeavour in economics before Adam Smith. Notable omissions are the contributions of the Reformers, the natural law theorists, mercantilists of many persuasions, and the Physiocrats. Given the current state of historical writing in the English language concerning economics, a student is able to gain an introduction to the thought of writers from these groups much more readily than he can begin to appreciate the economic reasoning of the authors dealt with in this volume. It seemed most useful, at this stage, to concentrate on areas of relative neglect. Considerable space is devoted in the text to translation of key passages from the works of prominent writers discussed. Location and translation of such passages, particularly in the case of the scholastics, has been no easy task, and it could not have been accomplished without reliance on the published research of a number of scholars. The work of certain American historians of ideas has been particularly valuable. Special mention is due original investigations by John W. Baldwin, Bernard W. Dempsey, John T. Noonan, and Raymond de Roover. The writer is also indebted directly to translations so generously undertaken by Michael Bailey, S. J., of St Ignatius College, Enfield, Middlesex. For permission to reproduce copyright material the publishers and I are grateful to the Clarendon Press (extracts from Herbert Danby's translation of The Mishna (1973) and from The Roman Law of Sale (1945) by F. De Zulueta) and the University of Pennsylvania Press (extracts from Robert Burke's translation of Treatise on the Power and Utility of Moneys (1930) by Gabriel Biel). Mr J. S. Poole, Associate Librarian, Heythrop College, University of London, was very helpful with assistance in obtaining works by scholastic authors. Mrs Elaine Sheehan, Graduate Assistant, University of Newcastle, typed the bulk of the manuscript with her customary despatch and efficiency. Throughout the entire project, my wife has sacrificed much of her own research time to act as an attentive and stimulating critic. University of Newcastle, New South Wales Barry Gordon

12 ... the master economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together. He must be mathematician, historian, statesman, philosopher - in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch the abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purpose of the future. No part of man's nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician. J. M. Keynes