RH351 Rhetoric of Economic Thought Transparencies Set 2

1. RH351 Rhetoric of Economic Thought Transparencies Set 2

2. Toward the birth of Modern Economics 1200 1400 1600 1800 Michelangelo 1475 - 1564 Industrial Revolution In England Aquinas 1225 - 1274 Niccol Machiavelli 1469 - 1527 Francis Bacon 1561 - 1626 Galileo 1564 - 1642 Machiavelli Descartes 1596 - 1650 Locke Thomas Hobbes 1588 - 1679 Dante 1265 – 1321 Chaucer 1343 – 1400(?) John Locke 1632 - 1704 François Quesnay 1694 - 1774 Hobbes Frances Hutcheson 1694 - 1746 Italian Renaissance Protestant Reformation Scholasticism Mercantilism Adam Smith 1723 - 1790 Smith

3. How Can or Should Society be Organized? Thomas Hobbes 1588 – 1679 Leviathan (1651) David Hume 1711 – 1776 An Enquiry Concerning Human Understanding (1748) An Enquiry Concerning the Principles of Morals (1751) Political Discourses (1752) Niccolò Machiavelli 1469 – 1527 The Prince (1531) Discourses on Livy (1531) John Locke 1632 – 1704 Two Treatises of Government (1689) Essay Concerning Human Understanding (1690)

4. How Can or Should Society be Organized? But since I intend to write something useful to an understanding reader, it seemed better to go after the real truth of the matter than to repeat what people have imagined. A great many men have imagined states and princedoms such as nobody ever saw or knew in the real world, and there’s such a difference between the way we really live and the way we ought to live that the man who neglects the real to study the ideal will learn how to accomplish his ruin, not his salvation. Any man who tries to be good all the time is bound to come to ruin among the great number who are not good. Hence a prince who wants to keep his authority must learn how not to be good, and use that knowledge, or refrain from using it, as necessity The Prince, Chapter XV Niccolò Machiavelli 1469 – 1527 The Prince (1531) Discourses on Livy (1531)

5. Hereby it is manifest that during the time men live without a common power to keep them all in awe, they are in that condition which is called war; and such a war as is of every man against every man … Whatsoever therefore is consequent to a time of war, where every man is enemy to every man, the same consequent to the time wherein men live without other security than what their own strength and their own invention shall furnish them withal. In such condition there is no place for industry, because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving and removing such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short. Leviathan, Chapter XIII How Can or Should Society be Organized? Thomas Hobbes 1588 – 1679 Leviathan (1651)

6. Private Vices, Public Virtues? From: The Grumbling Hive, or Knaves Turn'd Honest (1705) A Spacious Hive well stock’d with Bees, That lived in Luxury and Ease … Millions endeavoring to supply Each other’s Lust and Vanity … Thus every Part was full of Vice, Yet the whole Mass a Paradise … [At last] Jove, with Indignation moved, … In Anger swore, he’d rid The bawling Hive of Fraud, and did. The very Moment it departs, And Honestry fills all their Hearts … Oh, ye Gods! What Consternation, How vast and sudden was th’ Alteration! Without great Vices, is a vain Eutopia seated in the Brain. 1 2 33 34 155 156 229 230 231 232 233 242 243 413 414 Bernard de Mandeville 1670 – 1733 The Fable of the Bees 1714

7. Adam Smith responds to Mandeville The Theory of Moral Sentiments (1759) There is, however, another system which seems to take away altogether, the distinction between vice virtue, and of which the tendency is, upon that account, wholly pernicious; I mean the system of Dr. Mandeville … It is the great fallacy of Dr. Mandeville’s book to represent every passion as wholly vicious, which is so in any degree and in any direction. It is thus that he treats every thing as vanity which has any reference either to what are, or to what ought to be, the sentiments of others; and it is by means of this sophistry that he establishes his favourite conclusion, that private vices are public benefits. Wealth of Nations (1776) Virtue is more to be feared than vice, because its excesses are not subject to the regulation of conscience.

8. Mercantilism Our ancestors took it for granted, almost throughout English history, until the mid-nineteenth century, that government should give a certain direction to national industry and commerce… Our earlier statesmen saw real merit in the old “mercantile system.” According to this system an excess in the value of exports over that of imports, and the consequent attraction, as it was assumed, of a balance in coin or bullion into the country, was a test of successful policy … Adam Smith first shook the principle by lucid reasonings intended to show that the “wealth of nations,” so far as that was the object in view, was best secured not by control and restrictions, but by perfect freedom of industry and commerce. Thomas Mun 1571 – 1641 Jean Baptiste Colbert 1619 – 1683 William Petty 1623 – 1687 Bernard Holland, The Fall of Protection, 1840 - 1850

9. Colbert and Mercantilism Sire, it pleases Your Majesty to give some hours of his attention to the establishment, or rather the re-establishment of trade in his kingdom … As for internal trade and trade between [French] ports: The manufacture of cloths and serges and other textiles of this kind, paper goods, ironware, silks, linens, soaps, and generally all other manufactures were and are almost entirely ruined. Jean Baptiste Colbert 1619 - 1683 The Dutch have inhibited them all and bring us these same manufactures, drawing from us in exchange the commodities they want for their own consumption and re-export. If these manufactures were well re-established, not only would we have enough for our own needs, so that the Dutch would have to pay us in cash for the commodities they desire, but we would even have enough to send abroad, which would also bring us returns in money-and that, in one word, is the only aim of trade and the sole means of increasing the greatness and power of this State. Having summarized the condition of domestic and foreign trade, it will perhaps not be inappropriate to say a few words about the advantages of trade … I believe everyone will easily agree to this principle, that only the abundance of money in a State makes the difference in its greatness and power.

10. Quesnay’s Tableau Economique François Quesnay 1694 - 1774