INTRODUCTION The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. —JOHN MAYNARD KEYNES, THE GENERAL THEORY OF EMPLOYMENT, INTEREST AND MONEY (1936)
This is a story about the creation of a new way of thinking about the world. It revolves around the relationship between two spheres of life: the political and the commercial. As is fitting for a story about the creation of something new, it is less a clashing of titans and more a courtship. The seventeenth century witnessed the emergence of the nation-state and the rise of a newly powerful commercial class. These developments were mainly confined to Europe. In England, something even more uncommon happened. In an attempt to influence state economic policy, commercial actors began to write and publish large amounts of work on issues related to trade and finance. In doing so, the commercial world inadvertently shifted the trajectory of economic thought by developing a new kind of literature about economic matters. This new literature, which ultimately served as the foundation of classical economics, was the product of the courtship that played out between the state and commercial actors. Economics is a new discipline. In the medieval world, there were universities but not economics departments. Indeed, there is no evidence that a concept of “the economy” as a distinct and self-regulating system existed yet.1 In Europe, the scholars who addressed what we now think of as 1. Joyce Oldham Appleby, Economic Thought and Ideology in Seventeenth-Century England (Los Angeles: Figueroa Press, 1978).
2 INTRODUCTION
economic matters considered economics from the perspective of a JudeoChristian moral framework. They chastised usurers and expounded upon the principles of fair exchange and just price. They were concerned about greed and corruption. They were worried the rich and powerful might take advantage of the poor. And behind all these concerns lay the moral imperative of salvation. Money was considered a necessary evil, and medieval scholars most often were devising ways to circumscribe its corrupting effects on humanity. In the seventeenth century, people began to frame and conceptualize economic matters differently. In what is known as the mercantilist era, the old concerns for equity, justice, and salvation that used to drive scholarly activity in the area were replaced by a new moral framework grounded in the wealth and prosperity of the nation. Growth replaced fair exchange as the standard by which economic activity was judged. This book describes the change that took place in the economic literature and then attempts to explain why that change occurred. The century was tumultuous. Actors and institutions evolved and transformed in many ways during the two centuries covered in this book. In England, there was a civil war as well as a revolution. The rise of representative governance took place; new religions took root and flourished; colonial ventures were initiated; an incipient quest for empire began; bureaucracy and administration grew; state power was centralized; and the civil sphere expanded to incorporate new political participants and new modes of political participation. All of these changes formed important institutional backdrops to the emergence of the new literature on economics. The main actors, however, were merchants and state elites. As the century wore on, financiers, entrepreneurs, and manufacturers—others of the commercially active class—joined in the fray, but from the beginning merchants were a dominant voice. The merchant class in England was fractured. There were divisions between the more politically connected merchants of London and the outport merchants of the countryside. There were feuds between guilds, and there was a welldocumented division between the old, commercially minded merchants and the new, colonially minded merchants.2 One newer source of discord was 2. Robert Brenner, Merchants and Revolution: Commercial Change, Political Conflict, and London’s Overseas Traders, 1550–1653 (London: Verso, 2003).
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the English state’s adoption of the practice of offering commercial charters. These charters were granted by the state. The Crown issued charters in the first half of the century; after the civil war, charters came briefly from Oliver Cromwell; later, both the Crown and Parliament were able to issue them.3 Charters began to be used to create companies with exclusive privileges in different areas of trade. The rise of chartered companies was controversial. The company/noncompany divide mapped closely with other areas of contestation within the commercial world and proved to be a significant stimulus, on issues both new and old, in debate among merchants. Contesting the charters required making appeals to political actors. The charters were an attempt by the state to woo commercial actors, to guide them into actions and practices favorable to the state. When merchants published their arguments about the effect of charters on trade, they were pursuing state actors in an attempt to influence policy. And while the charters were a particularly important point of contention, other elements of the state were also involved in setting trade and commercial policies of interest to merchants and other commercial elites. Merchants addressed tracts to the Crown, the Privy Council, various councils and committees of trade, and Parliament. These mutual attempts at control—or, more favorably put, negotiation and cooperation—arose because of a context in which those who held power in the political and commercial spheres of influence were not already closely coordinated. Merchants in England were not well represented in the state. The limited nature of their direct influence led them to take their debates public. In other words, it was the distance between the commercial and political spheres that encouraged public debate. By publishing tracts, merchants hoped to indirectly influence state actors to enact policies favorable to their commercial interests. They used national wealth and prosperity as the moral framework for the arguments they constructed because that framework was most likely to persuade the state actors they hoped to influence. The consequence was the creation of a new kind of economic discourse— one that would shape the trajectory of economics for centuries to come. This argument does not have a single input/output structure, the type of which rarely captures the complexity, interdependence, and feedback of 3. Margaret Patterson and David Reiffen, “The Effect of the Bubble Act on the Market for Joint Stock Shares,” Journal of Economic History 50, no. 1 (March 1990): 163–71.
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lived history. While it may be cliché to say that history is a rich tapestry, the metaphor captures the idea of intertwining processes of considerable duration. In this case, the overarching process is the courtship, dance, or mutual attempts at control between the political and commercial worlds. This courtship is not a uniquely English phenomenon (nor is it uniquely European). The elements of the process that were unique to England, and therefore take on greater significance in the argument, are, first, the chartering process, which magnified old fractures within the merchant class while also creating new ones, and, second, the marginal status of merchants in the political sphere. The chartering and related contention created both reason and substance for debate. The slow development of representative government in England made the public sphere a site of influence. The marginality of merchants drove them to take advantage of the new space of civic engagement in their quest to air grievances, voice concerns, and lobby for hugely profitable privileges and concessions. Once the merchants were engaged in this new civic space, another process magnified the impact of their contributions. The public sphere imposed its own discipline. Authors suspected of merely cloaking their own self-interest in the language of the common good sought to make their argument more compelling by introducing their knowledge of trade and commerce. Over time, many turned to data, logic, and even the scientific method. Self-interested or not, the authors ended up producing valuable information about commercial and financial processes and theoretical models that advanced economic knowledge. Ultimately, their debates and arguments provided an empirical and theoretical foundation for Adam Smith’s great work, The Wealth of Nations, and contributed significantly to our knowledge of the world. A SUDDEN SHIFT
Because of his uniquely significant role in the development of modern economic thought, Adam Smith is an important marker of the influence of the works under consideration though he falls outside the period of analysis. The major shift in economic thought that made his work possible occurred in the seventeenth century, more than a century before the publication of The Wealth of Nations. I focus on the years between 1580 and 1720, but stray occasionally outside of these bounds. Beginning in 1580 allows for some investigation of what economic thought was like in England prior to the shift and makes it possible to understand what changed. It also predates the
5 INTRODUCTION
wave of incorporation that served as one of the central mechanisms regulating the relationship between the state and merchants. This important stimulus was legally redefined in 1720 with the passage of the Bubble Act, which limited incorporation possibilities.4 The year 1720 also lies after the main contours of economic thought had already been changed. In the years between 1580 and 1720, after centuries of incremental additions to economic thought, the number of published works on economic matters went from a drip to a flood. In the 1580s, three or four economic pamphlets might have been published in an exceptionally productive year. By the 1690s, one hundred to two hundred works were being produced annually. The transformation was not just quantitative. The landslide of works contained a fundamentally different perspective on the problems of economics and commercial exchange. Predating the seventeenth century, there were two major traditions in early economic thought of the medieval period. Xenophon’s Oeconomicus, dating from the early fourth century BCE, was the wellspring of the first: care of the household. Husbandry, which belonged to this category, was a popular topic. These books consisted of lists of ideas and tips for increasing individual wealth through improved farming and livestock techniques. While useful, such a body of knowledge is quite distinct from the discipline of economics we are familiar with today. Closer in substance was the second major tradition, which was kept alive in the church and developed by the scholastics. The scholastic discourse revolved around the determination of a just price and the rules of fair exchange. Many of the relevant works were simply denunciations of usury and exhortations against the corrupting influence of money and commercial exchange, but more sophisticated treatments were also produced. The question of a just price generated sophisticated theoretical work because theories of value were constructed in order to evaluate price levels of goods. One had to understand the source of value in order to establish whether a price was fair. In particular, in order to understand when usury was unfair, one had to understand the source of the value of money itself. Scholastics advanced metalist theories of value, arguing that the value of money derived from the physical properties of gold and silver, and quantity theories of money, linking the value of money to the availability and supply of bullion. Many of the most sophisticated work on these topics 4. Ron Harris, “The Bubble Act: Its Passage and Its Effects on Business Organization,” Journal of Economic History 54, no. 3 (1994): 610–27.
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were produced in sixteenth-century Spain in the school of Salamanca.5 We now associate scholasticism with rigid, dogmatic traditionalism. These works were heavily text-based, weighted down by their reliance on Aristotle and Scripture for evidentiary support. A central, foundational concern of these works was the moral conduct of Christians and the threat of the worldly temptations posed by money and commerce to the salvation of the human soul. The English works of the seventeenth century broke with the scholastic tradition. Few were written by men or women of the church. The works were empirical rather than textual. Frequently written by merchants, the books presented trade data rather than biblical passages to support their arguments. William Petty and his political arithmetic introduced statistics into the literature. Worldly matters replaced moral concerns, and the pursuit of power and plenty became valued as a good in itself. The English authors cared little about the idea of a just price or fair exchange. Treatises on the balance of trade replaced sermons railing against predatory lending practices. Their goal was not to achieve equitable exchange or alleviate the plight of the poor. They put the needs of the Crown, the state, and the commonwealth at the center of their arguments. It was a sea change in economic thinking with long-lasting consequences for its trajectory.6 Central questions were established, and the problem space was redefined from one of equity to one of national development. 5. José Larraz, La época del mercantilismo en Castilla (1500–1700) (Madrid: Ediciones Atlas, 1945); and Marjorie Grice-Hutchinson, The School of Salamanca: Readings in Spanish Monetary Theory, 1544–1605 (Oxford: Clarendon Press, 1952). 6. Terence Hutchison, for example, wrote that the work of the era established “most of what were to become, and have so long remained, the central perennial issues and questions of political economy, together with most of the persisting, conflicting viewpoints regarding these issues and questions, of method, theory and policy.” Terence Wilmot Hutchison, Before Adam Smith: The Emergence of Political Economy, 1662–1776 (Oxford: B. Blackwell, 1988), 11. Karl Přibram wrote it was a “new approach to economic analysis.” Karl Přibram, A History of Economic Reasoning (Baltimore, MD: Johns Hopkins University Press, 1983), 37. Paul Slack describes it as “the deliberate creation of political economy.” Paul Slack, The Invention of Improvement: Information and Material Progress in Seventeenth-Century England (Oxford: Oxford University Press, 2015), 3. The authors were “first in the field.” Joseph A. Schumpeter, Economic Doctrine and Method: An Historical Sketch (New York: Oxford University Press, 1954), 40. Joyce Appleby, Lars Magnusson, E. A. J. Johnson, Paul McNulty, and Andrea Finkelstein have all contributed important volumes documenting the importance of this moment in thought and its continuing influence in shaping economic discourse. Joyce Appleby, Economic Thought and Ideology; Andrea Lynne Finkelstein, Harmony and the Balance: An Intellectual History of Seventeenth-Century English Economic Thought (Ann Arbor: University of Michigan Press, 2009); E. A. J. Johnson, Predecessors of Adam Smith: The Growth of British Economic Thought (New York: Prentice-Hall, 1937); Lars Magnusson, Mercantilism: The Shaping of an Economic Language (London: Routledge, 1994); Lars Magnusson, ed., Mercantilist Economics (New York: Springer, 2012); and Paul J. McNulty, The Origins and Development of Labor Economics: A Chapter in the History of Social Thought (Cambridge, MA: MIT Press, 1980).
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The works were to have a substantial impact on Adam Smith. In The Wealth of Nations, Smith introduced the phrase the “mercantile system,” in order to attack nationalistic economic policies. In order to do so, he mobilized mercantilist economic insights. While Smith critiqued government policy, he built upon the conceptual and theoretical work of his precursors, drawing heavily from the insights, approaches, and abstractions developed by the mercantilists.7 He quoted at length Thomas Mun’s work, in particular, describing it as “a considerable step in the progress to sounder opinions.”8 While Smith is often credited as originator of modern economic thought, the first coherent defenses of free trade were written nearly a century earlier. The earliest analyses based on principles evoking the idea we have come to know as comparative advantage were constructed in the seventeenth century.9 Smith drew liberally from their work. The influence of these works stretch in an unbroken line through the work of Adam Smith, a key inflection point, to contemporary economic theory.10 The theories 7. Gary M. Anderson and Robert D. Tollison, “Sir James Steuart as the Apotheosis of Mercantilism and His Relation to Adam Smith,” Southern Economic Journal 51, no. 2 (October 1984): 456–68, https://doi.org/10.2307/1057824; Mark Blaug, Economic Theory in Retrospect (Cambridge: Cambridge University Press, 1962), 31; Raymond de Roover, “Monopoly Theory Prior to Adam Smith: A Revision,” Quarterly Journal of Economics 65, no. 4 (November 1951): 492–524, https:// doi.org/10.2307/1882577; William D. Grampp, “The Liberal Elements in English Mercantilism,” Quarterly Journal of Economics 66, no. 4 (November 1952), 499, https://doi.org/10.2307/1882100; Alexander Gray, The Development of Economic Doctrine: An Introductory Survey (London: Longmans, Green, 1933), https://mises.org/library/development-economic-doctrine-introductorysurvey; Hutchison, Before Adam Smith; John A. La Nauze, “The Substance of Adam Smith’s Attack on Mercantilism,” in Adam Smith: Critical Assessments, ed. John Cunningham Wood, vol. 4, Specialised Topics, 55–57 (London: Routledge, 2004); Magnusson, Mercantilism, 2; Salim Rashid, The Myth of Adam Smith (Cheltenham, UK: Edward Elgar, 1998); Salim Rashid, “Smith, Steuart, and Mercantilism: Comment,” Southern Economic Journal 52, no. 3 (January 1986): 843–52, https://doi .org/10.2307/1059280; and Schumpeter, Economic Doctrine and Method, 184. 8. Adam Smith, The Wealth of Nations (New York: Bantam Classics, 2003; first published 1776), xxi. 9. Joseph A. Schumpeter, History of Economic Analysis: With a New Introduction, rev. ed. (New York: Oxford University Press, 1954), 41, 365–74; and Douglas Irwin, Against the Tide: An Intellectual History of Free Trade (Princeton, NJ: Princeton University Press, 1996), 54–55. 10. Appleby, Economic Thought and Ideology; Finkelstein, Harmony and the Balance; John Maynard Keynes, The General Theory of Employment, Interest and Money (1936; repr., New Delhi: Atlantic, 2008); Magnusson, Mercantilism; Wilhelm Roscher, Principles of Political Economy: With Additional Chapters Furnished by the Author [. . .] on Paper Money, International Trade, and the Protective System, trans. John J. Lalor (New York: Henry Holt, 1878); Gustav von Schmoller, The Mercantile System and Its Historical Significance: Illustrated Chiefly from Prussian History; Being a Chapter from the Studien ueber die wirthschaftliche politik Friedrichs des Grossen, ed. and trans. William James Ashley (New York: Macmillan, 1897), Making of the Modern World; Schumpeter, Economic Doctrine and Method; and Philip J. Stern and Carl Wennerlind, Mercantilism Reimagined: Political Economy in Early Modern Britain and Its Empire (New York: Oxford University Press, 2013).
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developed in the English texts of the seventeenth century expanded collective knowledge and spurred on later development. A SINGULAR DEVELOPMENT
One of the remarkable features of this literature was that almost all of the work was produced in the then small, peripheral country of England. A rising tide of literature swept over Europe after the adoption of the printing press, but this particular river ran through only one nation. The Dutch were the economic powerhouse of Europe at the time, but they produced very little economic thought. France’s great contributions to economic theory came a century later with the work of the physiocrats. German cameralism, a policy-heavy state-driven mode of economic thought, did not really pick up until the eighteenth century.11 Spain’s and Italy’s great contributions were earlier and belonged to the scholastic mode of inquiry.12 The lack of parallel developments in other parts of Europe casts doubt on many existing theories as to what caused the shift in economic theory.13 One of the primary theories attributes advances in economic knowledge to rapid economic growth.14 Others have suggested that the particularly difficult logistical complexities of overseas trade were an important trigger for more complex economic thinking.15 England was experiencing a notable expansion in overseas trade, but the size and speed of expansion paled in comparison to the global trade of the Dutch. Using these explanations, it
11. Schumpeter, Economic Doctrine and Method, 32; Keith Tribe, Governing Economy: The Reformation of German Economic Discourse, 1750–1840 (Cambridge: Cambridge University Press, 1988); and Přibram, History of Economic Reasoning. 12. Barry Gordon, Economic Analysis Before Adam Smith: Hesiod to Lessius (London: Macmillan, 1975); Larraz, La época del mercantilismo; Grice-Hutchinson, The School of Salamanca; Marjorie Grice-Hutchinson, Economic Thought in Spain: Selected Essays of Marjorie Grice-Hutchinson, ed. Laurence S. Moss and Christopher K. Ryan (Aldershot, UK: E. Elgar, 1993). 13. As noted further in the conclusion, many of these works do not take the development of economic theory as their primary explanandum but are instead more interested in describing the contents of economic thought. 14. Appleby, Economic Thought and Ideology, 3–5; and Guy Routh, The Origin of Economic Ideas (Basingstoke, UK: Macmillan, 1975), 32. 15. Parakunnel Joseph Thomas, Mercantilism and the East India Trade: An Early Phase of the Protection v. Free Trade Controversy (1926; repr., Mansfield Center, CT: Martino Publishing, 2009); William J. Barber, British Economic Thought and India, 1600–1858: A Study in the History of Development Economics (Oxford: Clarendon Press, 1975); and Lynn Zastopuil, John Stuart Mill and India (Stanford, CA: Stanford University Press, 1994).
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is difficult to reconcile why similar advances did not occur in other areas of Europe. Erik Reinert, Sophus Reinert, and Pernille Røge have argued that it was the example of the Dutch, envied by the English, that spurred further public reflection, emphasizing in particular the role of international competition between nations in stimulating early modern economic discourse.16 But this argument does little to explain why the other nations of Europe would not have experienced similar changes in how they conceived and wrote about economic matters. Another type of theory has emphasized the role of depression and economic turmoil, which numerous scholars have considered primary engines of economic theory in general and as crucial to the developments in seventeenth-century English economic theory in particular.17 In these explanations, the doubt and confusion raised by specific episodes of crisis sow the seeds of thought and intellectual advancement. The insight is compelling, but does not explain why only seventeenth-century English economic downturns would have had such a special impact. Other scholars have argued that these factors of growth and disruption generated new economic thought because they took place within the unique context of the rise of the nation-state. The seventeenth century falls
16. Erik S. Reinert and Sophus A. Reinert, “Mercantilism and Economic Development: Schumpeterian Dynamics, Institution-Building and International Benchmarking,” in The Origins of Development Economics: How Schools of Economics Thought Have Addressed Development, ed. Jomo K. S. and Erik S. Reinert, 1–23 (New Delhi: Tulika Books; London: Zed Books, 2005); and Sophus A. Reinert and Pernille Røge, eds., The Political Economy of Empire in the Early Modern World (Basingstoke, UK: Palgrave Macmillan, 2013). 17. For those who consider them primary engines of economic theory, see Robert Eagly, Events, Ideology, and Economic Theory: The Determinants of Progress in the Development of Economic Analysis (Detroit, MI: Wayne State University Press, 1968); Mary O. Furner and Barry Supple, eds., The State and Economic Knowledge: The American and British Experiences (Cambridge: Cambridge University Press, 2002); Johnson, Predecessors of Adam Smith; J. D. Gould, “The Trade Crisis of the Early 1620’s and English Economic Thought,” Journal of Economic History 15, no. 2 (June 1955): 121–33; Jonathan Israel, “England’s Mercantilist Response to Dutch World Trade Primacy, 1647–1674,” in State and Trade: Government and the Economy in Britain and the Netherlands Since the Middle Ages, ed. Simon Groenveld and Michael Joseph Wintle, 50–61 (Zutphen: Walburg Pers, 1992); Magnusson, Mercantilism, 60–62; Barry E. Supple, “Currency and Commerce in the Early Seventeenth Century,” Economic History Review 10, no. 2 (1957): 239–55, https://doi. org/10.2307/2590860; and Barry E. Supple, Commercial Crisis and Change in England, 1600–1642: A Study in the Instability of a Mercantile Economy (Cambridge: Cambridge University Press, 1959). For those who see them specifically as crucial to developments in seventeenth-century English economic theory, see Slack, The Invention of Improvement; and Carl Wennerlind, Casualties of Credit: The English Financial Revolution, 1620–1720 (Cambridge, MA: Harvard University Press, 2011).
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squarely within the era of mercantilism, which can be broadly characterized by the twin pursuits of power and plenty in early European nations—and in particular the attempt to amass increased political power through commercial expansion.18 The term “mercantilism” refers to both state policy and economic thought produced across Europe from the end of the medieval period until publication of The Wealth of Nations (1776) and the onset of the Industrial Revolution.19 Classic works on mercantilism are focused not on why new economic ideas emerged and multiplied in this particular era, but instead on how these ideas can or cannot explain shifts in state policy.20 The implication, however, is that economic thought is a by-product of the state policy formation process. A version of this view argues that in their need for greater financial resources, early nation-states encouraged and commissioned actors to produce new ideas and information useful for increasing its revenue base. This position is the one that Joseph Schumpeter takes, for example, in the introduction to his History of Economic Analysis (1954). Another similar interpretation emphasizes the role of state rivalries in the international setting as a motivating factor behind the production and publication of the many texts. Paul McNulty, for example, argues that a central force behind these texts was “the desire to enhance the wealth, power, and prestige of the national state, and in the process weaken the positions of the other states.”21 Lars Magnusson has made a similar argument.22 And the position is similar to the one held by Reinert and Røge, with a subtle shift in emphasis from international competition to
18. Many controversies plague the use of the term “mercantilism.” While it is perhaps best used to refer only to a specific era rather than to a dogma because of all the controversies and contrary positions included in mercantilist works, the broad contours generally agreed upon are present in the main works. An additional emphasis would be on the importance and value of bullion. Overviews are available in Steve Pincus, “Rethinking Mercantilism: Political Economy, the British Empire, and the Atlantic World in the Seventeenth and Eighteenth Centuries,” William and Mary Quarterly 69, no. 1 (January 2012): 3–34, https://doi.org/10.5309/willmaryquar.69.1.0003; Stern and Wennerlind, Mercantilism Reimagined; and Roscher, Principles of Political Economy. 19. Smith, Wealth of Nations. 20. Eli Heckscher, Mercantilism (London: George Allen & Unwin, 1935); Schmoller, The Mercantile System; William Cunningham, The Growth of English Industry and Commerce (Cambridge: At the University Press, 1882); and W[illiam] J. Ashley, An Introduction to English Economic History and Theory (New York: Kelley, 1966). 21. McNulty, Origins and Development, 26. 22. Magnusson, Mercantilism, 96.
11 INTRODUCTION
state power.23 The problem with this explanation is, again, there were many rising nation-states experiencing international competition and only one real site in which new economic thought was taking root. And in that site, the evidence does not indicate that state actors were producing most of these texts. Instead, merchants authored a much higher proportion. Recognizing the importance of merchant authorship to the growth of the English economic literature, Perry Gauci has argued that the new literature was driven by the status aspirations of the merchant class. Merchants were becoming more prosperous as avenues into overseas trade increased, but for most of the century they still lagged behind in terms of political representation, and their social status remained low. Gauci contends that they wrote so many texts about economic matters in an attempt to prove the value of their profession to the rest of society and thereby raise their social position. He sees the central underlying theme of political economy in the seventeenth century as the moral status of merchants.24 This argument is compelling in the context of England, but again the low status of merchants was not a singularly English phenomenon. These arguments all make extremely valuable contributions in exploring the problem space. Trade depressions, economic dislocation, growth and development, the rise of the nation-state, and the rise of merchants all were important to the emergence of this new literature. In light of the comparative context, however, they appear to have been insufficient to have brought about the change by themselves. My approach in this book has been to take an analytical and methodologically diverse approach to evaluating the causes motivating merchant authorship of the new economic discourse. I first describe what changed in chapters 1 and 2. These chapters do not break entirely new substantive ground. The rise of a new mode of “mercantilist” economic thought in the seventeenth century has already been documented and discussed extensively. However, I apply new methods of computationally assisted text analysis—topic modeling—to conduct a more comprehensive analysis of the corpus than has been previously undertaken. In chapter 3, I propose
23. Sophus A. Reinert and Røge, Political Economy of Empire. 24. Perry Gauci, The Politics of Trade: The Overseas Merchant in State and Society, 1660–1720 (Oxford: Oxford University Press, 2001), 171.
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a new explanation for why this economic literature changed so dramatically in England. In chapters 4 through 6, I identify and rigorously assess this theory. I apply a range of methods to explore whether my explanation is correct and consider alternative hypotheses through statistical and comparative analyses. Such an approach has not been taken in the past within this subject area. The evidence uncovered in these chapters strongly suggests that merchant-state relations—and, in particular, two aspects of those relations—were central to the emergence of the new economic literature. In the next two sections, I describe these two elements: the chartering process and the marginalization of merchants in the state. I then turn to their qualitative impacts—how these factors not only stimulated debate but also shaped its contents. Merchant marginalization not only pushed debate into the public sphere, but it also promoted the reframing of economic thought in an attempt to appeal to political elites. The public sphere imposed its own discipline and encouraged a more rigorously logical and empirical approach to explanation, which was ultimately to the benefit of all. THE INITIAL OVERTURE: CHARTERING
English society of the early modern era was becoming increasingly organized. Not only was the state expanding and beginning to adopt administrative structures, but formal commercial organizations also began to dot the economic landscape. In the medieval period, most commerce was conducted via guilds, partnerships, and independent merchants. In the sixteenth century, chartered companies began to take control over key areas of English overseas trade. In 1555, the Muscovy Company was granted a Crown charter that gave them exclusive rights to trade with the principality of Moscow and tsardom of Russia. The chartering process formalized the company’s relationship to the state, specified features of internal organization such as a governing body and rules for pooling capital, and established formal conditions of membership. It brought a certain order to a part of English overseas trade by assigning it to a relatively small group of traders who had agreed to abide by the company’s regulations and procedures. Achieving order in an otherwise chaotic market and in trade with a potentially threatening rival power was one of the Crown’s goals in granting the charter and thereby sponsoring the formation of the
In the seventeenth century, English economic theorists lost interest in the moral status of exchange and became increasingly concerned with the roots of national prosperity. This shift marked the origins of classical political economy and provided the foundation for the contemporary discipline of economics. Emily Erikson brings together historical, comparative, and computational methods to explain the institutional forces that brought about this transformation. She highlights the role of company merchants, who took their case to the public—and ultimately produced texts that popularized a new and influential framework for evaluating economic behavior. Trade and Nation provides both a compelling new answer to an old historical puzzle and a model for how computational methods can introduce novel insights and evidence into the study of the sources of social and cultural change. “In Trade and Nation, Emily Erikson traces the rise of economic nationalism to efforts by seventeenth-century British merchants to sway the Crown with tracts on the nation and prosperity. An outstanding historical sociologist as well as a computational scientist, Erikson presents a fresh, compelling perspective on mercantilism and the foundations of modern economic thought.” —Frank Dobbin, author of Inventing Equal Opportunity “This remarkable study brings to light the invention of a radical new economic doctrine by corporate merchants in sixteenth- through eighteenth-century England. Mixing sophisticated computational methods with deep historical archival research, Erikson demonstrates how a mutually advantageous ‘courtship’ between commerce and the Crown, one marked by an explosion of literary discourse in the newly emerging public sphere, triggered a novel justificatory framework focused on the exigencies of national prosperity over and against the long-prevailing ‘moral economy’ of economic justice. Trade and Nation is a book of uncommon brilliance as well as an utterly necessary one for understanding the entrenched roots of today’s uncommon meanness.” —Margaret R. Somers, author of Genealogies of Citizenship: Markets, Statelessness, and the Right to Have Rights Emily Erikson is associate professor of sociology, professor in the School of Management by courtesy, and Joseph C. Fox Academic Director of the Fox International Fellowship at Yale University. She is the author of Between Monopoly and Free Trade: The English East India Company, 1600–1757 (2014). The Middle Range Series Cover design: Julia Kushnirsky Cover painting: Jan Gossaert, Portrait of a Merchant (c. 1530). Ailsa Mellon Bruce Fund. Courtesy of the National Gallery of Art, Washington, D.C.
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