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Monday, June 3, 2013


Richard Cantillon's pioneering Essai was widely read and highly influential throughout the eighteenth century. It was widely read as was the custom of the day, in ‘underground’ manuscript form, by literary, scientific and intellectual people interested in the advance of thought and in the practical problems of the day. The wide reliance on such manuscripts resulted from the severe French censorship of that period.

The Essai, then, was widely read from its writing in the early 1730s, and still more so after its publication in 1755. It was read eagerly and thoroughly by the first school of economists, the physiocrats, and by their great associate, or fellow-traveller, A.R.J. Turgot. In that cosmopolitan eighteenth century society where British and French intellectuals intermingled, the Essai was certainly read and echoed by the eminent Scottish philosopher, David Hume. And it has the honour of being one of the very few books cited by Hume's close friend Adam Smith – a man whose hyperdeveloped sense of his own originality prevented him from citing or recognizing many predecessors. Cantillon was thus highly influential among Continental and British economists until the publication of the Wealth of Nations in 1776. After the publication of that work, however, the knowledge and influence of Cantillon fell prey to the general post-Smithian custom of ignoring any and every economist preceding Adam Smith. The general nineteenth century habit of obliterating knowledge of economists before Adam Smith committed grave injustice against earlier economists and gave rise to the erroneous – and still widely held – illusion that economic science sprang full-blown out of the head of one Great Man, much as Athena was supposed to have sprung, fully grown and fully armed, from the brow of Zeus. But the most malignant aspect of this Smith-worship is that the lost economists were in many respects far sounder than Adam Smith, and in forgetting them, much of sound economics was lost for at least a century. In many ways, as we shall see, Adam Smith deflected economics, the economics of the Continental tradition beginning with the medieval and later scholastics and continuing through French and Italian writers of the eighteenth century, from a correct path, and on to a very different and fallacious one. Smithian ‘classical economics’, as we have come to call it, was mired in aggregative analysis, cost-of-production theory of value, static equilibrium states, artificial division into ‘micro’ and ‘macro’, and an entire baggage of holistic and static analysis.

The unfortunate erasure of pre-Smithian economics enabled Smithian classical economics to take hold and dominate economic thought for 100 years. The ‘marginal revolution’ of the 1870s, especially the Austrian theory beginning in that decade, in many ways returned economics to the proper individualistic, micro and subjective value pre-Smithian path on the European continent. It is no accident that Cantillon himself was rediscovered in 1881 by the quasi-‘Austrian’ English marginal revolutionist W. Stanley Jevons, who was commendably eager to rediscover lost economists buried by the dominant Smith–Ricardo orthodoxy.

But economics has unfortunately far from rid itself of the Smith–Ricardo baggage. The current revival of Austrian theory, and the increasing search for a way out of contemporary orthodoxy by many mainstream economists, is an attempt to complete the promise of the badly named ‘marginal revolution’ (really an individualist–subjectivist revolution), and to complete the casting out of the classical British paradigm.

Austrian Perspective on the History of Economic Thought (2 volume set)

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