On the Origins of Classical Economics: Distribution and Value from William Petty to Adam Smith (Routledge Studies in the History of Economics, 4)

237 Pages·1995·0.88 MB·English

by  Tony Aspromourgos

ON THE ORIGINS OF CLASSICAL
ECONOMICS

Where and how did classical economics originate?

It is often assumed that modern economics began with Adam Smith and the
publication of The Wealth of Nations. Here, Tony Aspromourgos takes issue
with this assumption and shows that the origins of classical economic theory
have much deeper roots. The book:

• deals with the origin and early development of the classical theory of
distribution up to 1767;
(cid:127) stresses the concept of economic ‘surplus’ as a key determinant of
economic phenomena, especially income distribution and commodity
exchange rates;
(cid:127) finds the source of this concept in the work of Sir William Petty and shows
the transmission of ideas from Petty to the Classical School through such
writers as Cantillon, Quesnay and Steuart;
(cid:127) relates the formative history to mature classical economics and modern
developments, with particular reference to Keynes and Sraffa, thus
showing how the classical tradition presents a viable alternative to the
modern marginalist approach.

The work is designed to meet the need for an understanding of the central
elements of the early history of the classical tradition. In so doing, it presents
a thorough examination of Petty’s economics and his influence on later
economic thought.
Tony Aspromourgos is currently Senior Lecturer in Economics at the
University of Sydney. He has research experience in Australia, the USA and
Europe. He has published widely on aspects of the history of economic
thought.
ROUTLEDGE STUDIES IN THE HISTORY OF ECONOMICS
1 Economics as Literature
Willie Henderson
2 Socialism and Marginalism in Economics: 1870–1930
Edited by Ian Steedman
3 Hayek’s Political Economy:
The Socio-economics of Order
Steve Fleetwood
4 On the Origins of Classical Economics:
Distribution and Value from William Petty to Adam Smith
Tony Aspromourgos
5 The Economics of Joan Robinson
Edited by Maria Cristina Marcuzzo, Luigi L.Pasinetti and
Alessandro Roncaglia
6 The Evolutionist Economics of Léon Walras
Albert Jolink
ON THE ORIGINS OF
CLASSICAL ECONOMICS
Distribution and Value from William Petty to
Adam Smith

Tony Aspromourgos

London and New York
First published 1996
by Routledge
11 New Fetter Lane, London EC4P 4EE
Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
Routledge is an imprint of the Taylor & Francis Group
This edition published in the Taylor & Francis e-Library, 2003.
© 1996 Tony Aspromourgos
All rights reserved. No part of this book may be reprinted or
reproduced or utilized in any form or by any electronic,
mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloguing in Publication Data
Aspromourgos, Tony, 1957–
On the origins of classical economics: distribution and value
from William Petty to Adam Smith/Tony Aspromourgos.
p. cm.
Includes bibliographical references and index.
ISBN 0-415-12878-1
1. Classical school of economics. 2. Economics—History.
3. Petty, William, Sir, 1623–1687. 4. Cantillon, Richard, d. 1734.
5. Smith, Adam, 1723–1790. 6. Distribution (Economic theory)
7. Value. I. Title.
HB94.A85 1995
330. 15´3–dc20 95–21628
CIP
ISBN 0-203-43422-6 Master e-book ISBN
ISBN 0-203-74246-X (Adobe eReader Format)
ISBN 0-415-12878-1 (Print Edition)
ISSN 1349–7906
To the memory of my Father
and
for my Mother

CONTENTS

Preface xi
Acknowledgements xii
Note on citation practice xiii
1 INTRODUCTION 1
1.1 What is classical economics? 1
1.2 The formation of the surplus approach 5
2 THE LIFE OF PETTY IN RELATION TO HIS
ECONOMICS 9
2.1 Early life 9
2.2 Ireland and the Down Survey 11
2.3 Activities, 1659–87 13
2.4 Temperament, activities and intellectual work 14
2.5 Why economics? 16
3 ECONOMIC SURPLUS AND THE SOCIAL
DIVISION OF LABOUR: THE ECONOMICS OF
PETTY 20
3.1 Fundamental ideas: three models of production 22
3.2 Economic and social reform 30
3.3 Foreign trade and money 34
3.4 Material progress 36
3.5 Political arithmetic 41
3.6 Value and distribution 49
3.7 The founding of the classical surplus approach 52
vii
CONTENTS
4 METHODOLOGICAL AND POLITICAL BASES
OF PETTY’S ECONOMICS 54
4.1 Intellectual background 54
4.2 Petty’s methodological intentions: mathematical method and ‘sensible’
concepts 57
4.3 Political intention: the purpose of politico-economic analysis 60
4.4 The debt to Hobbes 64
4.5 The utility of science 70
5 THE THEORY OF PRODUCTION AND
DISTRIBUTION IN CANTILLON’S ESSAI 73
5.1 Production and allocation of surplus 74
5.2 Distribution, intrinsic value and market price 80
5.3 Money and interest 85
5.4 Conclusion 87
6 THE SIGNIFICANCE OF VALUE PARITY IN
PETTY AND CANTILLON 89
6.1 Petty’s ‘Natural Par between Land and Labour’ 89
6.2 Cantillon’s ‘Equation de la Terre & du travail’ 95
6.3 The relation between value parity in Petty and Cantillon 99
6.4 The significance of value parity 101
7 PETTY-CANTILLON-QUESNAY: THE
FORMATION OF THE SURPLUS APPROACH 103
7.1 Concepts of surplus 104
7.2 Monetary circulation 114
7.3 Capital and profits 116
7.4 The formation of the surplus approach 123
8 WAGES, PRICES AND ECONOMIC SURPLUS IN
STEUART’S PRINCIPLES 126
8.1 Competition and prices 127
8.2 Wages and subsistence 130
8.3 Real values, profits and equilibrium prices 135
8.4 Incomes and surplus outputs 142
8.5 A summing up 144
viii
CONTENTS
9 DEVELOPMENTS IN THE THEORY OF
DISTRIBUTION AND VALUE, 1662–1767 147
9.1 The Petty-Cantillon heritage 149
9.2 Three concepts of profit 153
9.3 Value and competition 157
9.4 The fate of political arithmetic 162
10 ADAM SMITH AND AFTER 165
10.1 Mature classical economics 165
10.2 Classical versus marginalist theory 167
10.3 A generalization of the classical surplus approach 171
10.4 Developments from Sraffa and Keynes 176
APPENDIX A: Petty’s writings 179
APPENDIX B: Contents of the ‘Supplement’ to Cantillon’s Essai 187
Notes 189
References 210
Index 219
ix