---
title: "History of economic thought"
chunk: 5/18
source: "https://en.wikipedia.org/wiki/History_of_economic_thought"
category: "reference"
tags: "science, encyclopedia"
date_saved: "2026-05-05T03:59:30.681827+00:00"
instance: "kb-cron"
---

"God hath given the world to men in common... Yet every man has a property in his own person. The labour of his body and the work of his hands we may say are properly his. Whatsoever, then, he removes out of the state that nature hath provided and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property."
Locke argued that not only should the government cease interference with people's property (or their "lives, liberties and estates"), but also that it should positively work to ensure their protection. His views on price and money were laid out in a letter to a Member of Parliament in 1691 entitled Some Considerations on the Consequences of the Lowering of Interest and the Raising of the Value of Money (1691), arguing that the "price of any commodity rises or falls, by the proportion of the number of buyers and sellers", a rule which "holds universally in all things that are to be bought and sold."

==== Dudley North ====

Dudley North (1641–1691) was a wealthy merchant and landowner who worked for Her Majesty's Treasury and opposed most mercantile policy. His Discourses upon trade (1691), published anonymously, argued against assuming a need for a favorable balance of trade. Trade, he argued, benefits both sides, promotes specialization, division of labor and wealth for everyone. Regulation of trade interferes with these benefits, he said.

==== David Hume ====

David Hume (1711–1776) agreed with North's philosophy and denounced mercantilist assumptions. His contributions were set down in Political Discourses (1752), and later consolidated in his Essays, Moral, Political, Literary (1777). Adding to the argument that it was undesirable to strive for a favourable balance of trade, Hume argued that it is, in any case, impossible.
Hume held that any surplus of exports would be paid for by imports of gold and silver. This would increase the money supply, causing prices to rise. That in turn would cause a decline in exports until the balance with imports is restored.

==== Bernard Mandeville ====
Bernard Mandeville (1670–1733) was an Anglo-Dutch philosopher, political economist and satirist. His main thesis is that the actions of men cannot be divided into lower and higher. The higher life of man is a mere fiction introduced by philosophers and rulers to simplify government and the relations of society. In fact, virtue (which he defined as "every performance by which man, contrary to the impulse of nature, should endeavour the benefit of others, or the conquest of his own passions, out of a rational ambition of being good") is actually detrimental to the state in its commercial and intellectual progress. This is because it is the vices (i.e., the self-regarding actions of men) which alone, by means of inventions and the circulation of capital (economics) in connection with luxurious living, stimulate society into action and progress.

==== Francis Hutcheson ====
Francis Hutcheson (1694–1746), the teacher of Adam Smith from 1737 to 1740
is considered the end of a long tradition of thought on economics as "household or family (οἶκος) management",
stemming from Xenophon's work Oeconomicus.

=== The Physiocrats and the circular flow ===

Similarly disenchanted with regulation on trade inspired by mercantilism, the Frenchman Vincent de Gournay (1712–1759) reputedly asked why it was so hard to laissez faire ("let it be"), laissez passer ("let it pass"), advocating free enterprise and free trade. He was one of the early physiocrats, who regarded agriculture as the source of wealth. As historian David B. Danbom wrote, the Physiocrats "damned cities for their artificiality and praised more natural styles of living. They celebrated farmers."
Over the end of the seventeenth and beginning of the eighteenth century major advances in natural science and anatomy included the discovery of blood circulation through the human body – documented by William Harvey in 1628. This concept was mirrored in the physiocrats' economic theory, with the notion of a circular flow of income throughout an economy.

François Quesnay (1694–1774) served as the court physician to King Louis XV of France. He believed that trade and industry were not sources of wealth, and instead in his book Tableau économique (1758, Economic Table) argued that agricultural surpluses, by flowing through the economy in the form of rent, wages, and purchases, were the real economic movers. Firstly, wrote Quesnay, regulation impedes the flow of income throughout all social classes and therefore economic development. Secondly, taxes on the productive classes, such as farmers, should be reduced in favour of rises for unproductive classes, such as landowners, since their luxurious way of life distorts the income flow. (Later, in the early 19th century, David Ricardo showed that taxes on land are non-transferable to tenants according to his Law of Rent.)
Jacques Turgot (1727–1781) was born in Paris to an old Norman family. His best-known work, Réflexions sur la formation et la distribution des richesses (Reflections on the Formation and Distribution of Wealth) (1766) developed Quesnay's theory that land is the only source of wealth. Turgot viewed society in terms of three classes: the productive agricultural class, the salaried artisan class (classe stipendice) and the landowning class (classe disponible). He argued that only the net product of land should be taxed and advocated complete freedom of commerce and industry.
In August 1774 King Louis XVI appointed Turgot as minister of finance, and in the space of two years he introduced many anti-mercantile and anti-feudal measures, supported by the king. His guiding principles, as given to the king, were "no bankruptcy, no tax increases, no borrowing". Turgot's ultimate wish was to have a single tax on land and to abolish all other indirect taxes, but measures he introduced before that met with overwhelming opposition from landed interests. Two edicts in particular, one suppressing corvées (forced-labour obligations due by peasants to landlords) and another renouncing privileges given to guilds, inflamed influential opinion. He was forced from office in 1776.

== Classical (18th and 19th century) ==