There is no point wasting time in fruitless speculation on whether or not Richard Cantillon was a ‘mercantilist’. Eighteenth century writers did not group themselves into such categories. While he inconsistently suggested, in accordance with state-building notions of the age, that the king should amass treasure from a favourable balance of trade, the entire thrust of Cantillon's work was in a free trade, laissez-faire direction. For it was clear that mercantilist measures would ultimately be self-defeating. More important, Cantillon was the first to show in detail that all parts of the market economy fit together in a ‘natural’, self-regulative, equilibrating pattern, with existing supply and demand determining prices and wages, and ultimately the pattern of production. Consumer values, furthermore, determined demand, with population adjusting to cultural and economic factors. The equilibrators of the economy were the entrepreneurs, who adjust to and cope with the all-pervasive uncertainty of the market. And if the market economy, despite the ‘chaos’ it might seem to superficial observers, is really harmoniously self-regulating, then government intervention as such is either counterproductive or unnecessary.
Particularly instructive is Cantillon's attitude towards usury laws, that vexed question which had at last brought unwarranted discredit on the entire economic analysis of the medieval renaissance Catholic scholastics. This shrewd merchant and banker saw that particular interest rates, on the market, are proportionate to the risks of default faced by the creditor. High interest is the result of high risk, not of exploitation or oppression. As Cantillon wrote: ‘All the Merchants in a State are in the habit of lending merchandise or produce for a time to Retailers, and proportion the rate of their profit or interest to that of their risk’. High rates of interest bring about only a small profit, because of the high proportion of default on risky loans. Cantillon observed too that the later Catholic scholastics had eventually if reluctantly agreed to allow high rates of interest for risky loans. Furthermore, there should be no imposed maximum on interest, since only the lenders and borrowers can determine their own fears and needs: ‘for they would be hard put to find any certain limit since the business depends in reality on the fears of the Lenders and the needs of the Borrowers’.
Finally, Cantillon saw that usury laws could only restrict credit and thereby drive up interest rates even further on the inevitable black markets. Hence, usury laws would not lower interest rates but rather raise them: ‘because the Contracting parties, obedient to the force of competition or the current price settled by the proportion of Lender or Borrowers, will make secret bargains, and this legal constraint will only embarrass trade and raise the rate of interest instead of settling it’.