Abstract
At the dawn of the modern era, the combination of political liberties and rational thinking was quickly undermining the dominance of religious doctrines and superstitions. Social order could not be any more imposed by ruthless repression, and political philosophers set out to propose a new balance between individuals and the state with various degrees of state empowerment and individual choice.
As deep conflicts of interest emerge among the protagonists of the new economic order, rival economic theories are formed to defend them: mercantilism supports the expansion of trade as the only means for a nation to accumulate wealth, while Physiocracy argues in favor of land owners and producers. The ceaseless quest for overseas investment opportunities and the increasing availability of credit lead to speculative bubbles and the outbreak of the first financial crises. Governments are puzzled on whether individual and collective interests can ever be compatible and new challenges open up for economists. On another ongoing crisis, however, authorities and thinkers were less eager to take up the challenge and, in sharp contrast to the progression of liberties in Europe and North America, the suppression of human labour in the form of slavery was often justified.
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Notes
- 1.
Hobbes, Leviathan (1982, First part, XI). Due to the endless quest for domination, according to Hobbes, the doctrine of right and wrong is perpetually disputed, both by the pen and the sword. He jokingly remarks that if Euclidean theorems could be challenged by those in power, then all books of geometry would be burned and suppressed.
- 2.
Taken from Locke, Second Treatise on Civil Government (1690, On property, 34).
- 3.
For an analysis of Locke’s contribution, see Kitromilides, Political thinkers of the Modern Era: Biographies and Interpretations (1998, p. 84).
- 4.
See, The Locke Reader (1977, p. 45).
- 5.
Taken from Monroe, Early Economic Thought: Selected Writings from Aristotle to Hume (2006, p. 261).
- 6.
Marx’s friend and coauthor, Friedrich Engels, was so impressed by the Tableau that he attempted to apply Quesnay’s pattern in studying the structure of society into three classes; namely those of producing, of appropriating the surplus, and the industrial-professional class that is sterile because it simply adds only as much value as it consumes in means of subsistence; see Engels, Anti-Dühring (1947, Part II, Political Economy).
- 7.
Rousseau, Reveries of the Solitary Walker, Ninth walk (1981).
- 8.
Saint-Simon also defended the rights of workers and is considered as the father of ‘utopian socialism’.
- 9.
For a detailed account of the Lisbon earthquake and reactions at the time, see Shrady, The Last Day: Wrath, Ruin, and Reason in the Great Lisbon Earthquake of 1755 (2009).
- 10.
Kant, Political Writings (1977, p. 27).
- 11.
If the current and expected income is (Y) annually and the discounting rate (r = 0.05), the present value of lifetime labor is obtained as V = Y + Y/(1 + r) + Y/(1 + r)2 + … = Y/r = 20Y.
- 12.
According to Garber’s classic analysis on famous first bubbles (1990).
- 13.
In 1637, the metal stock of the Bank of Amsterdam expanded by 52 % over the previous year. Expansion was halted and in 1638 the stock fell by −1 %; data taken from van Dillen (1964).
- 14.
The dispute between Child and Locke has many common features with the conflict between competing economic theories trying to explain the causes and evaluate the measures taken to deal with the Great Depression of the 1930s, as we will see in Chap. 9.
- 15.
Mackay, Extraordinary popular delusions (2003, pp. 60–63) lists 86 companies that were banned by the Court as bubbles.
- 16.
Newton himself lost a fortune after the collapse of the company, commenting on the recklessness of investors with his famous phrase: “I can calculate the motion of heavenly bodies, but not the madness of people”.
- 17.
Mackay (op. cit., p. 45) asserts that though “… the madness … infected the people of England at the same time and under very similar circumstances, […] thanks to the energies and good sense of a constitutional government, was attended with results far less disastrous than those which were seen in France”.
- 18.
Data are from the Bank of International Settlements (2008, Table 2A).
- 19.
Anderson, Passages from Antiquity to Feudalism (1974, p. 38).
- 20.
According to Herodotus, Histories, Book 9, 10.
- 21.
Smaller scale revolts had also taken place before in Etruria and Sicily. See Strauss, The Spartacus War (2009).
- 22.
“There is neither Jew nor Greek, slave nor free, male nor female”, New Testament, Galatians, 3: 28.
- 23.
“Art thou called being a servant? care not for it; but if thou mayest be made free, use it rather”, New Testament, Corinthians 7:21.
- 24.
“Let as many servants as are under the yoke count their own masters worthy of all honor”, New Testament, Timothy 6:2.
- 25.
Hegel, Philosophy of History, Introduction (1956).
- 26.
Marcuse, From Luther to Popper (1983, p. 110).
- 27.
In some activities, however, there was no clear-cut distinction, however, between masters and slaves. In the case of concubines, it was allowed to legitimize the offspring of the master, while the woman slave could not be resold.
- 28.
The slave trade continued in some areas of Africa even during late twentieth century; according to UN estimates in 1980, around 90,000 Mauritanians were enslaved to Berber chieftains. In Sudan civil war prisoners were massively sold to arms dealers even in early twentyfirst century, while the ongoing slave trade in Mauritania was denounced by the UN as recently as 2009; source Reuters, 3/11/2009.
- 29.
In his seminal book Capitalism and Slavery, Eric Williams (1996) mentions that slave trade profits were used to accumulate capital during the Industrial Revolution.
- 30.
Voltaire, Essay on the Manners and Spirit of Nations (1979, p. 551).
- 31.
Tocqueville, Democracy in America (2003, I, Chap. 18).
- 32.
In Haiti, the slaves revolted and finally succeeded in establishing an independent state in the late 18th century. Another state established by slaves was Liberia, when the US agreed in 1847 to release them under the condition that they depart and return to Africa. Today many Liberians have American names and the state’s capital Monrovia was named after James Monroe, President of the US at that time.
- 33.
See Marx, The Revolution of 1848 (1973, p. 297).
- 34.
For an account of these theoretical confrontations see Fogel, The Slavery Debates (2003, p. 28).
- 35.
Fogel and Engerman, Time on the Cross: The Economics of American Negro Slavery (1974).
- 36.
Fogel, The Fourth Great Awakening and the Future of Egalitarianism (2000).
- 37.
For example see Gutma, Slavery and the Numbers Game: A Critique of Time on the Cross (2003).
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Christodoulakis, N. (2015). Economics Before the Industrial Revolution. In: How Crises Shaped Economic Ideas and Policies. Springer, Cham. https://doi.org/10.1007/978-3-319-16871-5_6
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