ODABULTUM

UNI
VERSITY

His
t o
ryofEc
ono
mic
ThoughtI
, Lec t
ure
Note
Hi
sto
ryo
fEc
ono
micTho
ughtI
Der
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ums
c

2
016E,
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[
Typ
ete
xt]
Page0
 Tabl
eofCo
ntent
s
Ta
bleo
fCo
nte
nts i
CHAPTER-1 1
1
.INTRODUCTI
ON 1
1
.1WHATI
SHI
STORYOFECONOMI
CTHOUGHT? 3
1
.2HI
STORYOFECONOMI
CSVSHI
STORYOFECONOMI
CTHOUGHT 5
1
.3NATUREOFECONOMI
CTHOUGHT 7
1
.4SI
GNI
FICANCEOFHI
STORYOFECONOMI
CTHOUGHT 9
CHAPTERTWO:
METHODOLOGI
CALI
SSUESOFECONOMI
CS 1
3
2.
1. Me
tho
d o
logi
cal
Cont
rov
ers
iesi
nEc
ono
mic
sandEv
olu
tio
nofVar
iou
sMe
tho
dol
ogi
es
14
2.
1.
1. Ec
ono
mic
sasanAr
tandasaSc
ienc
e 1
4
POSI
TIVEVSNORMATI
VEECONOMI
CS 1
7
2.
1.
4. Fal
si
fic
ati
oni
sm 2
5
2.
1.
5. Par
adi
gms 2
6
2.
1.
6. Re
centDe
vel
opme
ntsi
nMe
tho
d o
logyo
fEc
ono
mic
s 2
7
2.
2. Me
tho
dol
ogi
cal
Conc
lus
ions 2
9
CHAPTERTHREE:ANCI
ENTI
DEASOFECONOMI
CTHOUGHT 3
0
3.
1. THEHEBREWS 3
0
A. Pl
ato(
427
-34
7BC) 3
5
B. Ar
ist
otl
e(3
84-32
2BC) 3
9
C. Xe
nop
hon(
434
- 3
55BC) 4
2
a)Phi
lo
sop
her
s 4
4
b) Agr
icu
ltu
ral
Wri
ter
s 4
5
c
) TheJ
uri
sts 4
6
3.
4. MEDI
EVALECONOMI
CSANDFEUDALI
SM 4
6
SCHOLASTI
CISM 4
7
St
.Tho
masAqui
nas 4
7
3.
5. MERCANTI
LISM 5
0
3.
5.
2. Fac
tor
sre
spo
nsi
blefo
rther
iseo
fMe
rcant
il
is
m 5
1
3.
5.
5. I
mpo
rta
ntMe
rca
nti
l
istWr
ite
rs 5
7
3.
5.
6. Cr
iti
ci
smo
fMe
rcant
il
is
m 5
8
3.
6. PHYSI
OCRACY 5
9
3.
6.
1. Fac
tor
sRe
spo
nsi
blefo
rtheRi
seo
fPhys
ioc
rac
y 6
0
3.
6.
2. Ec
ono
micDo
ctr
ine
sofPhys
ioc
rat
s 6
2
3.
6.
3. Fr
anç
oisQu
esnay'
sTabl
eauÉc
ono
mique 6
5

i
3.
6.
4. Cr
iti
ci
smo
fPhys
ioc
ras
y 6
6
CHAPTERFOUR 6
7
4.
3. Maj
orTene
tso
fCl
ass
ica
lSc
hoo
lofTho
ught 7
0
2
.Tho
masRo
ber
tMal
thu
s 7
6
Say‟
slawo
fmar
ket 8
5

i
i
i
ii
 CHAPTER-1
1.I
NTRODUCTI
ON

I
nev
erys
oci
etyi
tisne
ces
sar
ythatt
her
ebeap
roc
esst
oor
gani
zeand
c
oor
dinat
echo
ice
sre
g ar
din
gthepr
oduc
tio
n,di
str
ibut
ionandc
ons
umpt
ion
o
fgo
odsands
erv
ice
s.
Thenee
dfo
rthi
spr
oces
sar
isesbec
aus
e:

 Ou
rre
sou
rce
sori
npu
tsar
efi
nit
eatan
ymo
menti
nti
me,
 Ou
rtec
hni
calk
n o
wledgec
ons
trai
nso
urabi
li
tyt
out
il
iz
ethe
ser
eso
urc
est
o
p
rodu
cego
odsands
erv
ice
s,
 I
ndi
vi
dual
s,
organi
zat
ions
,so
cial
,
ins
tit
uti
ons
,bu
sin
e
sse
sandGo
ver
nme
ntsma
yco
nst
rai
nou
tpu
t,
 I
nWes
ter
nso
cie
ties
,want
sorde
sir
eso
findi
vi
dual
sorgr
oup
sar
eshapedby
c
ult
uralo
rphys
icalfor
cesando
fte
nex
cee
dst
heav
ail
abi
li
tyo
fec
ono
micgo
ods
ands
erv
ice
s.
 I
deal
ly,t
hes
ere
lat
ive
lys
car
cer
eso
urc
ess
hou
ldbea
llo
cat
edt
oth
eir―hi
ghe
st
v
a l
uedu
se.
‖
 As
oli
tar
yindi
vi
dualwhok
nowshe
r/hi
spr
efer
enc
eswi
l
l t
ypi
cal
l
yus
ere
sou
rce
s
t
osat
isfyt
hos
epr
efer
enc
est
othegr
eat
este
xte
ntp
oss
ibl
ewi
thi
nco
nst
rai
nts
.
 Thi
sre
q u
ire
sinfo
rmat
ion
,kn
owl
edgeandc
hoi
cesa
b o
utwhi
chgo
odsa
n d
s
erv
ice
ssh
oul
dbep
rodu
cedandho
wtobes
tpr
odu
cet
hem.
 Whe
nindi
vi
dua
lsl
iv
eins
oci
algr
oup
sitbec
ome
sne
ces
sar
ytodi
str
ibu
tet
he
go
odsa
mongt
hei
ndi
vi
dual
saswe
llasc
hoo
sin
gwh
ichgo
odsands
erv
ice
stop
rodu
ce.
 I
nthej
argo
noft
hee
cono
mis
t,i
tisne
ces
sar
ytode
cide

 Whats
houl
dbepr
odu
ced?
 Whati
sthebes
twayt
opr
oduc
eit
?
 Whi
chi
ndi
vi
dual
ssho
uldgetwhi
chgo
odsands
erv
ices
?

Theme
tho
dthatas
oci
etyde
vis
est
oans
wert
hes
eque
sti
onss
hap
est
henat
ureo
f

i
v
s
oci
etyandi
nfl
uenc
est
heans
wer
stot
heque
sti
ons
.

 The
rear
emanyp
oss
ibl
eap
pro
ach
est
oor
gani
zi
nge
cono
micac
tiv
iti
eso
f
i
ndi
vi
dual
sli
vi
ngi
nso
cial
sys
tems
.
 What
eve
rme
tho
disc
hos
en,i
tisne
ces
sar
ytoc
oor
dinat
eori
nte
g r
atet
he
be
hav
ioro
findi
vi
dual
membe
rso
fthes
oci
ety.
 Thehi
sto
ryo
fec
ono
mict
houghti
sas
tudyo
fthemo
rei
mpo
rtantat
temp
ts
t
oanal
yze
,de
scr
ibeande
xpl
aint
her
elat
ions
hip
sinac
tua
lori
deal
i
zed
e
con
omi
csys
tems
.

2
Kno
wle
dgeo
fal
ter
nat
ivee
xpl
anat
ionso
fec
ono
micp
roc
ess
esp
rov
ide
sabas
isfo
r
e
val
uat
ingt
hep
erfo
rmanc
eofi
ndu
str
iale
con
omi
es.I
tal
sop
rov
ide
sabas
isfo
r
c
rit
ical
lye
val
uat
inge
cono
mict
heo
rie
sandmo
del
sthatp
urp
ortt
ode
scr
ibemo
der
n
i
ndu
str
iale
cono
mie
s.
1.
1WHATI
SHI
STORYOFECONOMI
CTHOUGHT?

?Whati
sec
ono
mics
cienc
e?
?Whatabo
ute
cono
mict
hought
?And
?whati
shi
sto
ryo
fec
ono
mict
hought
?
 Ec
ono
mics
cienc
eisar
esu
lto
fac
cumu
lat
iono
fhu
mank
nowl
edgeandi
t
i
ncl
ude
sdo
ctr
ine
sandgene
ral
iz
ati
onswhi
chde
alwi
the
cono
micp
heno
menai
n
s
oci
all
ife.
 Ec
ono
mict
hou
g htgene
ral
lyc
ove
rst
hes
eto
fthe
ori
es,
doc
tri
nes
,lawsand
gene
ral
i
zat
ionsap
pli
edt
othes
tudyands
olu
tio
nofe
cono
micp
heno
menaand
p
robl
ems
.

 Hi
sto
ryo
fEc
ono
mict
houghti
saque
ryi
ntot
heo
rigi
nandgr
owt
hof
e
con
omi
cide
as.
 Itde al
switht heori
g i
na nddevel
opme ntofeconomicidea
sa ndth ei
r
i
n t
e rrel
atio
ns.
 Itisah is
tori
c alac
countoft hedevelo
pme ntofeconomicdoctri
ne sasal
soof
theirimpacto neconomicins
titut
ionsandacti
vit
ies.
 Theh is
toryo feconomicthoughtconcernsthi
nkersandtheoriesinthefi
eldof
pol
iticaleconomya ndeconomicsfromth eanc
ientwo r
ldrightupt othepr
esent
day.
 As tudyo feconomicthoughtcoversstudyofdeve l
opmentofe conomics
cienc
e
i
ns taticands tagnantecono
mya swe l
la si
nady namiceconomy .

Agrou
po feconomi
sts,whos
ewo rkrefl
ect
sac ommo nint
ell
ect
ualor
ien
tati
on,
ar
ecall
edasa' Schoo
lofEc onomics
.'
 Prof.Haney(1949)definedstu
dyofeco no
mi ctho
ughtas
,'Acri
ti
cal
acco
un tofthedevel
o p
me ntofeco
nomicideas,s
earchi
ngi
ntothei
r
ori
gins,i
nte
rrelat
ionsandma ni
fes
tat
ions.
'

3
  Prof.Schumpterhol
dsthat―economicthoughtisthesumtotalo
fa l
l
theopini
onsanddesi
resconc
erni
n gecono
micsubjectsesp
eci
all
yp ubl
ic
pol
ici
esofd i
ffere
ntt i
mesandplace
s‖.
Hef ur
th e
rsta t
esthatthe
hi
storyofeconomi
cthoughttrac
estheh i
sto
ricalchangeofatt
itudes
.

4
  Ac
cor
dingt
oPr
of.Bel
l,―I
tist
hes
tudyo
fthehe
rit
agel
eftbyt
he
wr
ite
rso
nec
ono
mics
ubj
ect
s‖.

 Thehi
sto
ryo
fec
ono
mict
hou
g htde
alswi
thdi
ffer
entt
hink
ersandt
heo
rie
sin
t
hefi
el
dofp
oli
ti
cal
eco
nomyande
cono
mic
sfr
omt
hemi
ddl
eagesr
ightu
pto
t
hep
res
ent
.

 Chan
g e
sine
cono
mict
hou
g hthav
eal
waysac
comp
ani
edc
hangesi
nthe
e
con
omy,j
ustasc
hangesi
nec
ono
mict
hou
g hthav
epr
ope
ll
edc
hangei
n
e
con
omi
cpo
li
cy.
Ec
ono
mict
hou
g hthase
vol
vedt
hro
ughfeu
dal
is
mint
heMi
ddl
eAges
,thr
ough
mer
cant
il
is
ttheo
ryi
nther
enai
ssanc
e,t
hro
ughmo
der
npo
li
ti
cale
cono
mydu
ring
t
he‗i
ndu
str
ialr
evo
lut
ion,
‘tot
hefr
act
ure
dec
ono
mics
cho
olso
ftho
ughtt
hat
dr
aggedhu
mani
tyi
ntot
het
went
iet
hce
ntu
ryandan
ewgl
obal
iz
ede
rao
fth
e
t
wen
tyfi
rst
.

1.
2HI
STORYOFECONOMI
CSVSHI
STORYOFECONOMI
CTHOUGHT

 Li
kee
cono
michi
sto
ry,t
heh
ist
oryo
fec
ono
mict
hou
g ht(
HET)i
nve
sti
gat
es
e
con
omi
cis
sue
sinl
ong-r
unp
ers
pec
tiv
e.
 Bu
tHi
sto
ryo
fEc
ono
micTho
ughts
hou
ldno
tbec
onfus
edwi
thHi
sto
ryo
f
Ec
ono
mic
sand Ec
ono
micHi
sto
ry.Al
tho
ugh,t
heyar
eal
lst
udi
eso
fthe
c
ons
tit
uen
tso
fHi
sto
ryandEc
ono
mic
s,t
heya
res
epar
atebr
anc
heso
fst
udy
hav
ingdi
ffer
ents
ubj
ectmat
ter
san
dvar
yingi
nemp
has
iso
ndi
ffer
ent
as
pec
tso
fthes
ubj
ectmat
ter
.
 ECONOMI
CHI
STORY:i
sano
bje
cti
ves
tudyo
fthede
vel
opme
nto
fec
ono
mic
l
ifeo
fap
art
icu
lars
oci
ety
 I
tex
ami
nest
hee
vol
uti
ono
fthee
cono
myande
con
omi
cins
tit
uti
ons
,
u
singme
tho
dsandt
echni
que
soffr
omt
hefi
el
dso
fec
ono
mic
s,hi
sto
ry,

5
 geo
grap
hy,s
oci
ol
ogy,p
syc
hol
ogy,andp
oli
ti
cals
cie
nce
.Ex
amp
les
,
Gr
eatDepr
ess
iono
f1930
s,1997As
ianFi
nanc
ial
Cri
si
s,e
tc.
 Ec
ono
mic Hi
sto
rys
tudi
est
heo
rigi
nandgr
owt
hofc
omme
rce
,
man
ufac
tur
e,t
rade
,bank
ing,t
rans
por
tat
iona
ndo
the
rec
ono
mic
p
heno
menaandi
nst
itu
tio
ns.
 I
tde
alswi
tht
hei
deasme
nhav
eco
nce
rni
nge
cono
micfac
tsandfo
rce
s.
 HI
STORYOFECONOMI
CS:i
sthehi
sto
ryo
fthei
nte
ll
ect
ualeffo
rtst
hatme
n
hav
emadei
nor
dert
ounde
rst
ande
cono
micp
heno
mena.
 I
tisas
yst
emat
icr
eco
rdo
fthede
vel
opme
nto
fthes
cie
nceo
fec
ono
mic
s.

6
  HI
STORYOFECONOMI
CTHOUGHT:de
alswi
tht
heo
rigi
nandde
vel
opme
nto
f
e
cono
mici
dea
s.

 I
tpr
ovi
desa hi
sto
ric
alac
cou
nto
fho
wpe
opl
evi
ewe
dandu
nde
rst
and
e
cono
micp
heno
mena.
 I
nsho
rt,
Eco
nomi
cHi
sto
ryt
reat
soffac
ts.
 Hi
sto
ryo
fEc
ono
mic
sandHi
sto
ryo
fEc
ono
micTho
ugh
ttr
eato
fthet
heo
ryo
f
t
hes
efac
ts.
 I
twi
llt
husbeo
bse
rve
dthatHi
sto
ryo
fEc
ono
micTho
ugh
tha
samu
chwi
der
s
cope.

1.
3NATUREOFECONOMI
CTHOUGHT

Whati
sch
a r
act
eri
sti
cfeat
ureo
fec
ono
mict
hou
g ht
?
TheChar
act
eri
sti
cFeat
uresOfEc
ono
micTho
ught
:
. Ec
I ono
micthoughtisnota fi
xeds
eto
ftheo
rieso
rto
olsand
tec
hniqu
eso
fa nal
ysi
s:
Ane
cono
myi
sadyna
micp
heno
meno
nand,
the
refo
re,e
cono
mics
cie
ncei
sadynami
c
o
ne.Wi
ths
oci
alc
hangesne
wec
ono
micque
sti
onsp
res
entt
hems
elv
es.Ther
esu
lti
s
t
hate
cono
mics
cie
ncei
sal
waysu
nde
rgo
ingac
hange.
Ove
rsu
cce
ssi
vet
imei
nte
rva
ls,
s
pec
ifi
cse
tso
fec
ono
mici
deas
,the
ori
es,do
ctr
ine
sto
olsandt
echni
que
sac
qui
re
r
eco
gni
ti
onan
dac
cep
tanc
eimp
lyi
ngt
her
ebyt
hati
ndi
ffer
entc
ont
ext
sweh
a v
e
di
ffer
ents
yst
emso
fec
ono
mict
hou
g ht
.

Thes
tudyo
fthehi
sto
ryo
fec
ono
mict
hou
g ht
,the
refo
rea
uto
mat
ical
l
ybe
come
sa
s
tudyo
fthe
sev
ari
ouss
yst
emso
fec
ono
mict
hou
g h
t.

Hi
sto
ryo
fec
ono
mict
hou
g hti
sno
tbas
ical
lyahi
sto
ryo
fide
asbu
tthato
fec
ono
mic
p
rop
er.

7
I
tisabo
dyo
fec
ono
mici
deasandgene
ral
iz
ati
onswhi
chc
anbes
eent
obe
longt
o
e
acho
the
r.
Ec
ono
mici
deasc
oll
ect
ive
lybec
omee
cono
mict
hou
g h
t.
I
I.Ec
ono
mict
hou
g hti
scl
ose
lyr
elat
edt
oec
ono
micenv
iro
nme
n t
:
Ther
oleandgr
owt
hofe
achs
igni
fic
antt
heo
ry,t
hes
eto
fth
eor
iesandp
oli
cy
p
res
cri
pti
onsp
rov
ide
dbye
achs
cho
olande
vent
hes
igni
fic
antc
ont
ribu
tio
nby
i
ndi
vi
duale
cono
mis
tsmu
stbev
iewe
dint
hec
ont
exto
fthep
rev
ale
nte
cono
mic
e
nvi
ronme
nt.

The
refo
re,e
cono
micdo
ctr
ineo
rec
ono
mict
hou
g htr
efl
ect
sthec
ondi
ti
ono
fthe
s
oci
etyi
tre
lat
es.

Ec
ono
mict
houghti
sthepr
oduc
toft
ime.

8
I
II.I
deaso
nec
ono
mics
ubj
ect
sandp
robl
emshav
ebeenex
pres
sedatal
lti
mes
andi
nal
lages
.Thede
vel
opme
nto
fthes
yst
emat
icbo
dyo
fec
ono
micdo
ctr
ine
i
nthehi
sto
ryo
fhu
mant
hou
g htmayber
ece
ntbu
tre
f l
ect
ionandt
oac
ert
ain
e
xte
nts
pec
ula
tio
none
cono
micp
heno
mena
lmu
stbeaso
ldashu
mant
hou
g ht
i
tse
lf.I
nan
cie
ntt
ime
sec
ono
micdo
ctr
ine
swe
rer
efl
ect
edfr
omc
ust
oms
,laws
andi
nst
itu
tio
nsan
dlac
kss
cie
nti
ficp
rec
isi
ona
n dc
ohe
renc
e.
V.An
I ybo
dyo
fec
ono
micdo
ctr
ine/t
heo
ryhasl
imi
tedv
ali
dit
y:
Po
li
ti
cal
tho
ughtt
hro
ugho
utha
s be
eni
nlar
geme
asu
reana
tte
mptt
oex
pla
inho
wan
d
whatt
heo
ryc
ont
emp
ora
rys
oci
etyi
sop
era
tin
g .
Eco
nomi
cdo
ctr
ine
s/pr
inc
ipl
es/
t
heo
rie
sar
eun
d e
rco
nti
nuo
usi
mpr
ove
men
tan
dadv
anc
es.Bu
tits
hou
ldbe
r
eme
mber
edt
hatn
oabs
urdi
tyi
nth
ehi
sto
ryo
fec
ono
mict
hou
g htwa
sini
tst
ime
qui
tea
sabs
urd/un
reas
ona
b l
easi
tap
pear
skn
ow (t
heya
ren
ota
b s
urdwh
en
t
heya
rev
iewe
datt
het
imet
heyar
efo
rmu
lat
ed)
.
Henc
e,e
cono
mict
hought
ssho
uldbeev
aluat
edundert
hec
ont
exto
fthes
oci
o-
ec
ono
mics
tat
uswhent
heywer
edev
elo
ped.
Wes
hou
lda
lsono
tet
hatadv
anc
eme
nto
fthe
ori
es/do
ctr
ine
sdo
n‘tne
ces
sar
il
yme
an
c
ast
rat
iono
fol
done
s.Ol
ddo
ctr
ine
sne
verdi
e;t
heyo
nlyfadea
waywi
thas
tro
ng
p
owe
rofr
ecu
per
ati
on/r
eap
pear
anc
einanap
pro
pri
atee
nvi
ronme
nt.
1.
4SI
GNI
FICANCEOFHI
STORYOFECONOMI
CTHOUGHT

‗Whys
tudye
cono
mict
heo
ry?
Whys
tudyi
tshi
sto
ry?‘
whydowes
tudyh
ist
oryo
fideas
?
Manya
nswe
rsco
met
omi
nd“
.Ap
rimar
yre
a s
onfo
rst
udyi
ngt
hehi
sto
ryo
f
ec
ono
mict
houghti
stobec
omeabet
tere
cono
mis
t.”

Twoma
jorr
eas
ons
,ot
hert
hant
hep
ers
onaladv
ant
agest
hatmi
ghtbegai
ned,
j
ust
ifyt
hes
tudyo
fec
ono
mict
heo
ry.Fi
rst
,su
chs
tudyal
l
owsu
stogai
nan
u
nde
rst
andi
ngo
fho
wane
cono
mywo
rks
;tha
tis
,whatmak
esi
thangt
oget
herand
9
func
tio
n?

Se
con
d,e
cono
mict
heo
ryhe
lpss
oci
etyr
eac
hthee
cono
micgo
alst
hati
thass
ele
cte
d
fo
rit
sel
f..

So
cie
tyc
anp
rogr
essfas
teri
nac
hie
vinge
cono
micgo
alst
hro
ughk
nowl
edgeo
f
e
cono
mic
s.

Ec
ono
mict
heo
rymak
ese
cono
micanal
ysi
seas
yandu
nde
rst
andabl
e.

Ec
ono
micanal
ysi
s,o
ntheo
the
rhand,he
lpsu
sde
vis
esys
temst
hro
ughwhi
cht
he
c
ommo
ngo
odc
anbei
ndi
vi
dual
lyands
oci
all
yde
f i
nedandt
hro
ughwh
ichp
eop
lec
an
p
urs
uet
hei
rowni
nte
res
tswhi
les
imu
ltane
ous
lye
nhanc
ingt
hewe
ll
bei
ngo
fot
her
s.

1
0
 Thefol
lo
wingar
eso
meo
fthei
mpo
rtanc
eofs
tudyi
nghi
sto
ryo
fec
ono
mic
t
hought:

1. Thes
tudyo
fec
ono
mict
hou
g h
twi
llhe
lpu
stou
nde
rst
andt
heo
rigi
nof
e
con
omi
cs.Su
chas
tudye
nhanc
eso
ne'
sunde
rst
andi
ngo
fco
nte
mpo
rar
yec
ono
mic
t
hou
g ht
.

Mar
k Bl
aug (
198
0)s
aid t
hat ―c
ont
emp
ora
ry t
heo
ry we
arst
he s
car
sof
ye
ste
rday'
spr
obl
ems no
w r
eso
lved,ye
ste
rday'
sbl
unde
rsno
w c
orr
ect
ed,and
c
anno
tbe fu
ll
yun
d e
rst
oode
xce
ptasal
ega
cyhan
d e
ddo
wnfr
omt
hep
ast
.‖

2. Thes
tudyo
fthes
ubj
ecthe
lpsu
stoav
oidt
hemi
stak
esc
ommi
tte
dbye
arl
i
er
e
con
omi
cthi
nke
rs;t
hev
astamo
unt
sofa
n al
ysi
sande
vide
ncet
hate
cono
mis
tsh
a v
e
gene
rat
edo
vert
he de
cade
sca
npr
ovi
de a c
los
erc
hec
koni
rre
spo
nsi
ble
gene
ral
iz
ati
ons
.Thi
ssho
ulde
nabl
eust
omak
efewe
rer
ror
sth
a ni
nthep
astwhe
n
mak
ingp
ers
onalde
cis
ionsandwhe
nfo
rmu
lat
ingnat
ionalandl
ocale
cono
micp
oli
ci
es.
Ye
t,nu
mer
ousu
nso
lve
dpr
obl
emsandu
nans
wer
edque
sti
onsr
emai
nine
cono
mic
s.Ou
r
u
nde
rst
andi
ngo
fpas
tsu
cce
sse
s,e
rro
rs,
andde
ade
ndswi
l
lbeu
seful
ins
olv
ingt
hes
e
p
robl
emsanda
nswe
ringt
hes
eque
sti
ons
.
3. Thes
tudyo
fhi
sto
ryo
fec
ono
mict
hou
g htwi
lle
nabl
eust
okno
wtheper
son
r
espo
nsi
blefo
rthefor
mul
ati
ono
fce
rta
ini
mpo
rtantpr
inc
ipl
es.

4. Thr
ought
hes
tudyo
fec
ono
mict
hou
g hto
nec
anr
eal
iz
ethte
a c
ono
mic
sis
di
ffer
entfr
ome
cono
mis
ts.

1
1
5. Thes
tudy o
fhi
sto
ryo
fec
ono
mict
hou
g htp
rov
ide
sa br
oadbas
isfo
r
c
ompar
iso
nofdi
ffer
enti
deas
.Itwi
lle
nabl
eap
ers
ont
ohav
eawe
ll
-bal
anc
edand
r
eas
onabl
eju
dgme
nt.

6. Fi
nal
ly,a
n dabo
veal
l,t
hes
tudyo
fth
ehi
sto
ryo
fec
ono
mict
hou
ghtp
rov
ide
s
p
ers
pec
tiv
eandu
nder
standi
ngo
fourpas
t,o
fchangi
ngi
deasandpr
obl
ems
,ando
four
di
rec
tio
nofmo
vement
.

I
the
lpsu
sap
pre
ciat
ethatnogr
ouphasamo
nop
olyo
nthet
rut
handt
hatmany
gr
oup
sandi
ndi
vi
dual
shav
eco
ntr
ibu
tedt
other
ichne
ssa
n d di
ver
sit
yofo
ur
i
nte
ll
ect
ual
,cu
ltu
ral
,andmat
eri
ali
nhe
rit
anc
e.

As
tudyo
fthee
vol
uti
ono
fec
ono
mict
hou
g htandt
hec
hangi
ngs
oci
albac
kgr
ound
as
soc
iat
edwi
thi
tcanl
ightu
pchangesi
not
herar
easo
fco
nce
rnt
ous
,su
chasp
oli
ti
cs,
ar
t,l
it
era
tur
e,mu
sic
,phi
lo
sop
hy,ands
cie
nce
.

1
2
 CHAPTERTWO:
METHODOLOGI
CALI
SSUESOFECONOMI
CS

1
3
 2.
1.Met
hodol
ogi
cal
Cont
rov
ers
iesi
nEc
ono
mic
sandEv
olut
iono
fVar
ious
Met
hodol
ogi
es

Me
tho
dol
ogyo
fec
ono
mic
sist
hes
tudyo
fme
tho
ds,e
spe
cia
ll
yth
esc
ien
tifi
cme
tho
d,i
nre
lat
iont
o
e
cono
mic
s,i
ncl
udi
ngp
rin
cip
lesu
nde
rlyi
nge
con
omi
cre
aso
nin
g .
Iti
sabo
ut
―Whatdoe
con
omi
stsk
nowandh
owdot
heyk
nowt
hatt
heyk
n o
wit
?‖ Su
chqu
est
ion
sbe
lon
gbr
oadl
yto
e
pis
temo
logy,
thes
tudyo
fhu
mank
nowl
edge;i
nth
eph
il
oso
phyo
fsc
ienc
eth
eyar
ein
clu
dedi
nth
esu
bje
ct
―me
tho
dol
ogy‖be
cau
seme
tho
dol
ogys
ign
ifi
cant
lyi
nfl
uen
ceswh
ate
con
omi
stsdo
,iti
sbet
tert
obr
iefl
y
c
ons
ide
rthee
vol
uti
ono
fme
tho
dol
ogi
calt
hink
inga
ndi
tsi
nfl
uen
ceo
nec
ono
mict
hou
g h
t.Be
f o
reyo
uca
n
begi
ntos
tudye
cono
mici
ssu
es,yo
umu
stde
cidewh
atyo
uwi
l
lst
udyan
dwh
ata
ppr
oac
hyo
uwi
l
lta
keyo
u
mu
stma
keme
tho
dol
ogi
cal
dec
isi
ons
.
Thes
tudyo
fme
tho
dol
ogyi
saddi
cti
ve;i
tlu
ll
syo
uin
tot
hin
kin
gabo
utwh
atyo
uar
edo
ingr
ath
ert
han
do
ingi
t.
Be
f o
rei
ntr
odu
cin
gth
eMe
tho
dol
ogyo
fec
ono
mic
s(ho
wdoe
con
omi
stsk
nowt
hatt
heyk
nowi
t)i
two
uldbe
ne
ces
sar
ytos
pec
ifywh
a te
cono
mis
tsk
now.Thea
nswe
rtowh
ate
con
omi
stsk
nowh
asr
ema
ine
dasan
i
mpo
rtan
tpo
into
fdi
sti
nct
ioni
nme
tho
dol
ogi
caldi
ffer
enc
esa
monge
con
omi
sts
.
 The
rear
egene
ral
lyt
hre
edi
sti
nct
lyde
f i
neda
reaso
fec
ono
mic
sabo
utwh
ate
con
omi
stsk
now.
The
sear
e;

(
1) t
hear
tofe
cono
mic
s,

(
2) p
osi
ti
vee
con
omi
csand

(
3) no
rmat
ivee
cono
mic
s.

2.
1.
1. Ec
ono
mic
sasanAr
tandasaSc
ienc
e

a) Ec
ono
mic
sisas
cie
n c
e:Sc
ienc
eisas
yst
ema
tiz
edbo
dyo
fkn
owl
edget
hatt
rac
est
her
ela
tio
nshi
p
bet
wee
ncau
sea
nde
f fec
t.
 Ano
the
rat
tri
but
eofs
cie
ncei
sthati
tsp
hen
ome
nas
hou
ldbea
men
abl
etome
asu
reme
nt.
 Ap
plyi
ngt
hes
ech
a r
act
eri
sti
cs,wefi
ndt
hate
con
omi
csi
sabr
anc
hofk
nowl
edgewh
eret
he
v
ari
ousfac
tsr
ele
vantt
oithav
ebee
nsys
tema
tic
all
yco
ll
ect
ed,
cla
ssi
fie
dan
dan
alyz
ed.
 Ec
ono
mic
sin
ves
tigat
est
hep
oss
ibi
li
tyo
fde
duc
inggene
ral
i
zat
ion
sre
g a
rdi
ngt
hee
con
omi
cmo
tiv
es
o
fhu
manbei
ngs
.
 Themo
tiv
eso
fin
div
idu
alsandbu
sine
ssfi
rmsc
anbev
erye
asi
lyme
asu
redi
nte
rmso
fmo
ney.Thu
s,

1
4
e
cono
mic
sisas
cie
nce
.
 Economi
cs-ASo
cialSc
ienc
e:I
nor
dert
ounde
rst
andt
hes
oci
alas
pec
tofe
cono
mic
s,wes
hou
ldbe
ar
i
nmi
ndt
hatl
abo
rer
sar
ewo
rki
ngo
nmat
eri
alsdr
awnfr
om al
lov
ert
hewo
rldandp
rodu
cing
c
ommo
dit
iest
obes
oldal
lov
ert
hewo
rldi
nor
dert
oex
changego
odsfr
omal
lpar
tso
fthewo
rldt
o
s
ati
sfyt
hei
rwant
s.The
rei
s,t
hus
,ac
los
eint
er-de
pende
nceo
fmi
ll
io
nso
fpe
opl
eli
vi
ngi
ndi
stant
l
andsu
nkno
wnt
ooneano
the
r.I
nthi
sway,t
hep
roc
esso
fsat
isfyi
ngwant
sisno
tonl
yani
ndi
vi
dual
p
roc
ess
,bu
tal
soas
oci
alp
roc
ess
.Ine
cono
mic
s,o
nehas
,thu
s,t
ost
udys
oci
albe
hav
iori
.
e.,be
hav
ior
o
fme
nin-gr
oup
s.

1
5
 Economicsasascienceadoptstwomethodsforthediscoveryofitslawsandprinciples,viz.,
(
a)deduc
tiv
emet
hodand(
b)i
nduc
tiv
emet
hod.
A) Deduc
tiv
emet
hod:He
re,wede
sce
ndfr
omt
hegen
era
ltop
art
icu
lar
,i.
e.
,wes
tar
tfr
om
c
ert
ainp
rinc
ipl
est
hatar
ese
lf-ev
ide
nto
rbas
edo
nst
ric
tobs
erv
ati
ons
.
The
n,wec
arr
ythe
mdo
wnasap
roc
esso
fpu
rer
eas
oni
ngt
oth
eco
nse
q u
enc
est
hatt
heyi
mpl
ic
itl
y
c
ont
ain.
 Fo
rin
stanc
e,t
rader
sear
npr
ofi
tint
hei
rbus
ines
sesi
sagen
era
lst
ate
men
twh
ichi
s
ac
cep
tede
venwi
tho
utv
eri
fyi
ngi
twi
tht
het
rade
rs.
 Thede
duc
tiv
eme
tho
disu
seful
inanal
yzi
ngc
omp
lexe
cono
micp
hen
ome
nonwh
erec
aus
ean
d
e
f fec
tar
eine
xtr
icabl
ymi
xedu
p.
 Ho
wev
er,
thede
duc
tiv
eme
tho
disu
seful
onl
yifc
ert
aina
ssu
mpt
ion
sar
eva
li
d.(
Trade
rse
arn
p
rofi
t,i
fthede
mandfo
rthec
ommo
dit
yismo
re)
.

B)I
nduc
tiv
emet
hod:Thi
sme
tho
dmo
unt
supfr
omp
art
icu
lart
ogen
era
l,i
.
e.,
webe
g i
nwi
tht
he
o
bse
rvat
iono
fpar
tic
ularfac
tsandt
henp
roc
eedwi
tht
heh
elpo
fre
aso
nin
gfo
unde
don
e
xpe
rie
nces
oast
ofo
rmu
lat
ela
wsandt
heo
remso
nth
ebas
iso
fobs
erv
edfac
ts.
E.
g.Dat
aonc
ons
ump
tio
nofp
oor
,mi
ddl
eandr
ichi
nco
megr
oup
sofp
eop
lea
rec
oll
ect
ed,
cla
ssi
fie
d,
anal
yze
dandi
mpo
rta
n tc
onc
lus
ionsar
edr
awno
utfr
omt
her
esu
lts
.
 I
ndeduc
tiv
eme
tho
d,wes
tar
tfr
omc
ert
ainp
rin
cip
lest
hata
ree
ith
eri
ndi
spu
tabl
eorbas
ed
o
nst
ric
tobs
erv
ati
onsanddr
awi
nfer
enc
esa
b o
uti
ndi
vi
dua
lca
ses
.
 I
ninduc
tiv
eme
tho
d,ap
art
icu
larc
asei
sex
ami
nedt
oes
tabl
is
hagen
era
l o
run
ive
rsa
l fac
t.
 Bo
thde
duc
tiv
eandi
ndu
cti
veme
tho
dsa
reu
sefuli
nec
ono
mican
alys
is.

1
6
B)Ec
ono
mic
sisal
soanar
t.Anar
tisas
yst
emo
fru
lesfo
rth
eat
tai
nme
nto
fagi
vene
nd.

 As
cie
ncet
eac
hesu
stok
now;
anar
tte
ache
sust
odo
.

 Ap
plyi
ngt
hisde
f i
nit
ion,
wefi
ndt
hate
con
omi
cso
ffer
susp
rac
tic
algui
dan
cei
nth
e
s
olu
tio
nofe
cono
micp
robl
ems
.

 Sc
ienc
eandar
tar
eco
mpl
eme
ntar
ytoe
acho
the
rande
con
omi
csi
sbo
thas
cie
nce
andana
rt.

Theartofeconomicsconcernsquestionsofpolicy.
Itrelatesthescienceofeconomicstonormativeeconomicsandasksquestionssuchas:If
t
hes
ear
eone
‘sno
rmat
ivego
als
,andi
fthi
sist
hewa
ythee
con
omywo
rks
,th
enh
owc
ano
ne
bes
tac
hie
vet
hes
ego
als
?

Themethodologyoftheartofeconomicsismorecomplexbecauseitconcernspolicyand
mu
staddr
essi
nte
rre
lat
ion
shi
psamo
ngp
oli
ti
cs,
soc
ial
for
ces
,an
dec
ono
micfo
rce
s.

Initonemustaddbackallthedimensionsofaproblemthatoneabstractedfrominpositive
e
cono
mic
s.

POSI
TIVEVSNORMATI
VEECONOMI
CS
 Po
sit
iveandn
orma
tiv
eec
ono
mict
hou
g h
tar
etwos
pec
ifi
cbr
anc
heso
fec
ono
mic
r
eas
oni
ng.

 Al
tho
ught
heya
reas
soc
iat
edwi
tho
nean
oth
er,p
osi
ti
vea
ndn
orma
tiv
eec
ono
mic
t
hou
g hthav
edi
ffer
entfo
cus
eswhe
nanal
yzi
nge
cono
mics
cen
ari
os.

 Po
sit
iveec
ono
mic
siso
bje
cti
veandfac
tbas
ed,

 No
rmat
iveec
ono
mic
siss
ubj
ect
ivean
dval
uebas
ed.

 Po
sit
ivee
cono
mic
sisu
til
i
zedasap
rac
tic
alt
oolfo
rac
hie
vin
gno
rmat
iveo
bje
cti
ves
.

 Theme
tho
dol
ogi
calbas
isfo
rap
osi
ti
ve/no
rma
tiv
edi
sti
nct
ionh
asi
tsr
oot
sint
he
fac
t-v
alu
edi
sti
nct
ioni
nph
il
oso
phy,t
hep
rin
cip
alp
rop
one
ntso
fsu
chdi
sti
nct
ions
bei
ngDav
idHu
meandG.
E.Mo
ore
.
1
7
 A.
POSI
TIVEEc
ono
mic
s

 Po
sit
iveec
ono
mic
sabr
anc
hofe
cono
mic
sbas
edo
nfac
tua
lan
alys
isa
ndc
aus
ean
deffec
t
t
hatav
oidsv
alu
eju
dgme
nts
,op
ini
onso
rmo
ral
ande
thi
cals
tat
eme
nts
.
 I
t(aso
ppo
sedt
ono
rmat
ivee
cono
mic
s)c
onc
ern
sth
ede
scr
ipt
iona
nde
xpl
ana
tio
nof
e
cono
micp
heno
menaaswe
llast
hei
rcas
ual
rel
ati
ons
hip
s.
 I
tfo
cus
eso
nfac
tsandc
aus
e-and-e
f fec
tbe
hav
ior
alr
ela
tio
nsh
ipsa
ndi
ncl
ude
sth
e
de
vel
opme
ntandt
est
ingo
fec
ono
mic
sthe
ori
es.
 Ane
arl
ie
rte
rmu
sedfo
rpo
sit
ivee
cono
mic
swasv
alu
e-fr
eee
con
omi
cs.
 Theme
tho
dol
ogyo
fpo
sit
ivee
cono
mic
sisfo
rmala
nda
b s
tra
ct;i
ttr
iest
ose
par
ate
e
cono
micfo
rce
sfr
omp
oli
ti
calands
oci
alfo
rce
s.

1
8
St
il
l,p
osi
ti
vee
cono
mic
sisc
ommo
nlyde
eme
dne
ces
sar
yfo
rther
ank
ingo
fec
ono
micp
oli
ci
eso
r
o
utc
ome
sast
oac
cep
tabi
li
ty,
whi
chi
sno
rma
tiv
eec
ono
mic
s.

Po
sit
ivee
cono
mic
siss
ome
time
sde
fin
eda
sthee
cono
mic
sof"
wha
tis
".

1
9
  Po
sit
ivee
cono
mic
sass
cie
ncec
onc
ernsana
lys
iso
fec
ono
micbe
hav
ior
.

 Po
sit
ivee
cono
mic
sass
uchav
oidse
con
omi
cval
uej
udgme
nts
.

 I
tco
nce
rnst
hefo
rce
sthatgo
ver
nec
ono
mica
cti
vi
ty.

 I
tas
kss
uchque
sti
onsas
:

 ―Whati
s”,

 ‘
Howdo
est
hee
cono
mywo
rk‘
?

 ‗Whatar
eth
efo
rce
sthatde
ter
minet
hedi
str
ibu
tio
nofi
nco
me‘
?

Fo
rex
amp
le,
apo
sit
ivee
cono
mict
heo
rymi
ghtde
scr
ibeh
owmo
neys
upp
lygr
owt
haffec
tsi
nfl
ati
on,
"
Theu
nemp
loyme
ntr
atei
nFr
anc
eishi
ghe
rth
a nt
hati
nth
eUn
ite
dSt
ate
s."

Thes
olep
urp
oseo
fthe
sei
nqui
ri
esi
stoo
btai
nunde
rst
andi
ngfo
rth
esak
eofu
nde
rst
andi
ng,bu
t
i
tdo
esno
tpr
ovi
deanyi
nst
ruc
tio
nonwhatp
oli
cyo
ughtt
obefo
ll
owe
d.Mo
ree
xamp
lesa
re:

• I
fthego
ver
nmentr
ais
est
het
axo
nbeer
,thi
swi
ll
leadt
oafal
li
npr
ofi
tso
fthebr
ewer
s.

• Ther
isi
ngpr
iceo
fcr
udeo
ilo
nwo
rldmar
ket
swi
ll
leadt
oani
ncr
eas
einc
ycl
ingt
owo
rk.

• Ar
edu
cti
oni
ninc
omet
axwi
l
limp
rov
ethei
nce
nti
veso
fth
eun
emp
loye
dtofi
ndwo
rk.

• Ar
isei
nav
eraget
emper
atur
eswi
ll
inc
reas
ethedemandfo
rsuns
creenpr
oduc
ts.

• Hi
gheri
nter
estr
ateswi
l
lreduc
eho
usepr
ices
.

• Cu
t-pr
iceal
coho
lhasi
ncr
eas
edt
hedemandfo
ral
coho
lamo
ngt
eenager
s.

• Al
lAfr
icannat
ionswi
l
lqual
ifyfo
rtheWo
rldCupnex
tti
me.

B.NormativeEconomics
No
rma
tiv
eec
ono
mic
s(a
sop
pos
edt
opo
sit
ivee
con
omi
cs)i
sap
arto
fec
ono
mic
sth
ate
xpr
ess
es
v
alu
eorno
rmat
ivej
udgme
ntsabo
ute
cono
micfai
rne
ss.

 I
tfo
cus
eso
nwhatt
heo
utc
omeo
fthee
con
omyo
rgo
also
fpu
bli
cpo
li
cyo
ughtt
o
be.

 Manyn
ormat
ivej
udgme
ntsa
rec
ondi
ti
onali
nth
att
heya
regi
venu
piffac
tso
r

2
0
 k
nowl
edgeo
ffac
tsc
hange.

Normativeeconomicstatementsareopinionbased,sotheycannotbeprovedor
di
spr
ove
d.

Itisonethatseekstoestablishorrelatetoastandard(norm)according
t
oso
mep
rinc
ipl
eob
rel
ie
f:

Ex
amp
le;
• Thepr
iceo
fmi
lks
houl
dbe$6agal
lo
ntogi
vedai
ryfar
mer
sahi
gherl
iv
ings
tandar
dandt
o
savethefamil
yfar m.Thi
sisano rmat
ivestat
ement
,becaus
eitr
eflectsvaluej
udgments.
This
speci
fics
tatementmak esthejudgmentthatfar
mersdeser
veahigherli
vingst
andardandthat
famil
yfarmso ughttobesaved.

• TheGDPo
fthi
sco
unt
rys
houl
dbe$10,
000perc
api
tafo
r2018.

• Whats
houl
dbet
hei
nfl
ati
onr
atefo
rthi
sco
unt
ry?

• Hi
gheri
nfl
ati
oni
sbad.

• Mo
bil
epho
ness
houl
dbebannedi
nal
lcl
ass
es.

• Al
lAfr
icannat
ionss
houl
dqual
i
fyfo
rtheWo
rldCupnex
tti
me.

• Go
ver
nments
houl
dpr
ovi
debas
icheal
thc
aret
oal
lci
ti
zens
.

2
1
 Normativeeconomicstatementsarepreferred bypoliticalleaderswho
p
urp
oses
olu
tio
nst
oec
ono
micp
robl
emso
rwh
owi
sht
oin
f l
uen
cee
con
omi
c
t
heo
ry.

Positiveandnormativeeconomicsareoftensynthesizedinthestyleof
p
rac
tic
ali
deal
i
sm.

 In thisdiscipline,sometimescalled the"artof economics,"positive

e
con
omi
csi
sut
il
iz
edasap
rac
tic
alt
oolfo
rac
hie
vin
gno
rma
tiv
eobj
ect
ive
s.

2.
1.
2. TheI
mpo
rtanc
eofEmp
iri
cal
Ver
ifi
cat
ion

Ho
wwegoabo
utans
wer
ingt
heque
sti
ons―Whatdowek
now?‖ and―Ho
wdowek
nowt
hat
whatwek
nowi
sri
ght
?‖dep
endso
ntheans
wert
oth
eque
sti
on―I
sth
erea
nul
ti
mat
etr
uth
t
hats
cie
nti
stsa
rei
nthep
roc
esso
fre
vea
li
ng(
ana
b s
olu
tis
tvi
ew)
,ori
sth
ereno
u
nde
rlyi
ngt
rut
h(ar
elati
vi
stp
osi
ti
on)
?‖ I
fth
erei
sul
ti
mat
etr
uth,
howdowefi
ndi
t?I
f
t
her
eisno
ne,
ares
omep
rop
osi
ti
onsmo
ret
rut
hfult
hano
the
rs?Me
tho
dol
ogi
stsp
asta
nd
p
res
enthav
efai
le
dtor
eac
hco
nse
nsu
sont
hes
epr
obl
emsbu
tha
vegen
era
tedan
e
nor
mou
samo
unto
fmat
eri
alo
nth
esu
b j
ect
.Be
li
evi
ngt
hata
nul
ti
mat
etr
uthe
xis
ts
l
eav
eso
newi
tht
hep
robl
emo
fde
cidi
ngwhe
noneha
sdi
sco
ver
edi
t.

2
2
Theme
ansbywhi
cht
hegr
owi
ngs
cie
nti
ficwo
rlds
tro
vet
odi
sco
vert
het
rut
hin
vol
ved
t
rai
nede
mpi
ri
calo
bse
rvat
ionase
xemp
li
fie
dint
hes
cie
nti
ficme
tho
d.Thi
sen
tai
l
edt
he
i
nte
g r
ati
ono
fre
aso
n wi
the
mpi
ri
calo
bse
rvat
ion
.Al
tho
ught
hiss
ubj
ecti
sfart
oo
c
omp
li
cat
edfo
rust
oel
abo
rat
e,v
eri
fic
ati
oni
sdi
scu
sse
dinde
tai
lint
hewr
iti
ngso
fKa
nt,
Hu
me,De
sca
rte
s,ando
the
rse
vent
een
th-ande
ight
een
th-c
ent
uryp
hil
oso
phe
rs.Wewi
l
l
s
imp
lyde
f i
net
hre
ete
rmst
hathav
epl
ayedani
mpo
rta
ntr
olei
nth
edi
scu
ssi
oni
,ndu
cti
ve,
de
duc
tiv
e,a
n da
b du
cti
ve.Th
efi
rstt
wot
ermsa
rewe
llk
nown.I
ndu
cti
ver
eas
oni
ngi
s
e
mpi
ri
cal
,pr
oce
edi
ngfr
oms
ens
oryp
erc
ept
ionst
ogen
era
l c
onc
ept
s;de
duc
tiv
ere
aso
nin
g
(
logi
c)a
ppl
ie
sce
rtai
ncl
earanddi
sti
nctgen
era
lide
ast
opa
rti
cul
ari
nst
anc
es.Be
cau
se
mo
stp
hil
oso
phe
rsbel
i
evet
hatk
nowl
edgede
riv
esfr
omami
xoft
hes
e,t
hede
bat
eus
ual
l
y
c
ent
erso
nthena
tur
eoft
heo
pti
mal
mix
.

―Abduc
tiv
e‖ i
sth
ename p
ragma
ticp
hil
oso
phr Ch
e ar
lesPe
irc
e gav
etoap
art
icu
lar
mi
xoft
hei
ndu
cti
veandde
duc
tiv
eap
pro
ach
es.Thea
b du
cti
vec
onc
epti
simp
ort
antfo
r
e
con
omi
csando
the
rst
udi
eso
fco
mpl
exs
yst
ems
.

Abductivereasoningusesbothdeductionandinductiontotellareasonablestory
o
fwhathap
pene
d.

 I
tco
mbi
neshi
sto
ry,i
nst
itu
tio
ns,a
nde
mpi
ri
cals
tudy t
ogai
nin
sight
;
ho
wev
er,

 i
tdo
esn
otc
lai
mtop
rov
ideade
f i
ni
ti
vet
heo
ry,be
cau
se,wh
enwea
re
de
ali
ngwi
thac
omp
lexs
yst
em,
defi
ni
ti
vet
heo
rie
sar
ebe
y o
ndo
urgr
asp
.

Me
tho
dol
ogi
cali
ssu
eshav
epl
ayedmaj
orr
ole
sint
hede
vel
opme
nto
fec
ono
mict
hin
kin
g ,bu
tth
ey
qui
ckl
ybec
omec
omp
li
cat
ed.

TheEv
olut
iono
fMet
hodo
logi
calTho
ught

Le
tusno
wco
nsi
dert
hee
vol
uti
ono
fme
tho
dol
ogi
calt
hin
kin
gan
dho
witi
nfl
uenc
ede
con
omi
cs.

2
3
 2.
1.
3.TheRi
seo
fLo
gic
alPo
sit
ivi
sm

Theme
tho
dol
ogyo
fsc
ienc
emo
vedi
ntot
het
wen
tie
thc
ent
urywi
tht
hede
vel
opme
nto
f
l
ogi
calp
osi
ti
vi
sm,
whi
chp
rov
ide
dthes
cie
nti
ficme
tho
dwi
thp
hil
oso
phi
calfo
unda
tio
ns.
 I
tes
tabl
is
hedawo
rki
ngme
tho
dol
ogye
xpr
ess
ingt
hee
mpi
ri
cala
ndn
one
mpi
ri
cal
as
pec
ts.

 Lo
gic
alp
osi
ti
vi
smi
sas
cho
olo
fphi
l
oso
phywh
ichar
osei
nAu
str
iaandGe
rmany
dur
ing1920S,
pri
mar
il
yco
nce
rne
dwi
tht
hel
ogi
cal
anal
ysi
sofs
cie
nti
fi
ckno
wle
dge.

 Li
nke
dwi
thdedu
cti
ver
eas
oni
ngal
ogi
calp
osi
ti
vi
stdes
ire
stol
ett
hefac
tss
peak
fo
rthe
mse
lve
s.

 I
tor
igi
nat
ed wi
thagr
oupk
nownast
heVi
ennaCi
rcl
e,whi
chat
temp
tedt
o
fo
rmal
iz
etheme
tho
dso
fsc
ient
ist
sbyde
scr
ibi
ngt
heme
tho
dss
cie
nti
stsa
ctu
all
y
fo
ll
owe
d.

 Thel
ogi
calp
osi
ti
vi
stsar
gue
dthats
cie
nti
stsde
vel
opade
duc
tiv
est
ruc
tur
e(a
l
ogi
cal
the
ory)t
hatl
eadst
oemp
iri
cal
l
yte
sta
b l
epr
opo
sit
ion
s.
 Ade
duc
tiv
ethe
oryi
sac
cep
tedast
rue
,ho
wev
er,
onl
yaft
eri
tha
sbe
ene
mpi
ri
cal
l
y
t
est
edan
dve
rifi
ed.
 Ther
oleo
fthes
cie
nti
st,
the
ysai
d,i
stode
vel
opt
hes
elo
gic
alt
heo
rie
san
dth
ent
o
t
estt
hem.

Al
tho
ught
her
ewasdebat
eamo
ngt
hel
ogi
calp
osi
tiv
ist
sast
owh
atc
ons
tit
ute
dtr
uth
,
a
llc
onc
urr
edt
hati
two
uldbedi
sco
ver
edt
hro
ughe
mpi
ri
calo
bse
rva
tio
n.

Lo
gic
alp
osi
ti
vi
smr
eignedi
nth
ephi
l
oso
phyo
fsc
ien
ceo
nlyfr
omt
he1920
sth
rou
g ht
he19
30s
,
bu
tit
sinfl
uenc
eine
con
omi
csc
ont
inu
edmu
chl
onge
r.

I
twasl
ogi
calp
osi
ti
vi
smt
hatfo
rma
li
zedt
hedi
sti
nct
ionbe
twe
enno
rma
tiv
eandp
osi
ti
ve
e
con
omi
cs,fi
rstmadebyNas
sauSe
nio
rin1836andl
ate
rbyJ.S.Mi
l
landJ
ohn Ne
vil
l
e
Ke
yne
s.Thi
s di
sti
nct
ion i
sst
il
lre
tai
ned i
n mo
sti
ntr
oduc
tor
yte
xtbo
oks
,wh
ich
des
cri
bee
con
omi
csa
sap
osi
tiv
esc
ien
cewho
sego
ali
stode
vis
eth
eor
iest
hatc
anbe
e
mpi
ri
cal
lyv
ali
dat
ed.No
rma
tiv
edi
scu
ssi
onswe
rep
urgedfr
ome
con
omi
csa
suns
cie
nti
fic
.
Ac
cor
dingt
olo
gic
alpo
sit
ivi
sm,t
her
eisn
oan
y
2
4
met
hodo
fdi
sco
ver
ingahypo
thes
ispr
iort
oit
stes
tbydeduc
ingempi
ri
calc
ons
equenc
es,and
t
her
efo
reas
cient
istc
anpr
opo
seanyhypo
thes
ishepr
efer
s;o
nlyl
ogi
calr
elat
ions
hips
bet
weent
hehypo
thes
isandt
hegi
venempi
ri
calev
idenc
ear
erel
evant
.

2.
1.
4. Fal
si
fic
ati
oni
sm

Lo
gic
alp
osi
ti
vi
smr
epr
ese
nte
dac
ulmi
nat
iono
fth
ebe
li
eft
hatt
hep
urp
oseo
fsc
ien
ce
i
stoe
stabl
is
h―t
rut
h.‖Theme
tho
dol
ogyo
fsc
ien
ceh
a ss
inc
epr
ogr
ess
ive
lyr
emo
vedi
tse
lf
fr
omt
hatv
iew.Thefi
rstdep
art
urer
esu
lte
dfr
om ac
onc
ernabo
utt
he―v
eri
fi
cat
ion‖
as
pec
tofl
ogi
calp
osi
ti
vi
stt
heo
ry.Thi
sco
nce
rni
sbe
ste
xpr
ess
edi
nthewr
iti
ngso
fKa
rl
Po
ppe
r,wh
oar
gue
dint
he19
30st
hate
mpi
ri
calt
est
sdono
tes
tabl
is
hth
etr
utho
fa
t
heo
ry, o
nly i
ts fal
si
ty—whi
ch i
s why Po
ppe
r‘s ap
pro
ach i
s s
ome
time
sca
ll
ed
fal
si
fic
ati
oni
sm.Kar
lPo
pperasfo
unde
roffal
si
fic
ati
oni
smi
nhi
scr
iti
calr
ati
onal
is
m,a
k
indo
fhi
sto
ricfal
li
bil
i
sm,
sta
tedt
hatt
her
eisno
thi
ngwec
anbe10
0%s
urea
b o
ut;t
her
eis
ALWAYSt
hec
han
ceo
fbe
ingwr
ong.

Ac
cor
din
gtoPo
ppe
r,i
tisne
verp
oss
ibl
eto―v
eri
fy‖at
heo
ry,
sin
ceo
nec
ann
otp
erfo
rma
ll
p
oss
ibl
ete
stso
fthet
heo
ry.
Fore
xamp
le,
ass
umet
hatat
heo
ryp
redi
ctst
hatwh
ent
hemo
ney
s
upp
lyi
ncr
eas
es,
pri
ceswi
l
linc
reas
ebyane
q u
alp
erc
ent
age.
The
nas
sumet
hati
nan
ap
pro
pri
atee
xpe
rime
ntt
hep
redi
cte
dre
sul
tdo
esi
nfac
toc
cur
.Ac
cor
din
gtoPo
ppe
r,t
his
i
ndi
cat
eso
nlyt
hatt
het
heo
ryhasno
tyetbee
npr
ove
dfal
se.
Thet
heo
ryma
yormayn
otbe
t
rue
,si
ncet
hen
exte
xpe
rime
ntma
ypr
odu
cear
esu
ltt
hati
sno
tco
nsi
ste
ntwi
tht
het
heo
ry‘
s
p
redi
cti
on.

Po
ppe
ras
ser
ts,t
her
efo
re,t
hatt
hego
alo
fsc
ienc
esh
oul
dbet
ode
vel
opt
heo
rie
swi
th
e
mpi
ri
cal
lyt
est
abl
ehypo
the
sesandt
hent
otr
ytofal
si
fyt
hem,di
sca
rdi
ngt
hos
eth
at
p
rov
efal
se.Thep
rogr
ess
iono
fsc
ienc
e,a
cco
rdi
ngt
oPo
ppe
r,de
pen
dsu
pont
he
c
ont
inu
ingfal
si
fic
ati
ono
fthe
ori
es.
T her
eigni
ngt
heo
rywi
l
lbet
heo
ne

2
5
t
hate
xpl
ainst
hewi
des
trangeo
femp
iri
calo
bse
rva
tio
nsa
ndt
hath
asn
otyetbe
en
fal
si
fie
d.

2.
1.
5. Par
adi
gms

I
two
uldben
icei
fme
tho
dol
ogi
calp
robl
emsc
oul
dber
eso
lve
dasn
eat
lya
sPo
ppe
r‘sa
ppr
oac
h
s
ugges
ts,
butme
tho
dol
ogi
calde
b at
esa
reanyt
hin
gbutne
at.

Mo
rer
ece
ntde
vel
opme
ntsh
avemo
vedme
tho
dol
ogyp
rogr
ess
ive
lya
way fr
oms
uchn
eat
di
sti
nct
ions
.Themo
der
nre
jec
tio
nofPo
ppe
r‘st
heo
ryi
sno
twi
tho
utgr
oun :fa
ds l
si
fic
ati
oni
sm
hass
eve
rals
eri
ousp
robl
ems
.

Fi
rst
,emp
iri
cal
pre
dic
tio
nso
fso
met
heo
rie
scann
otbet
est
edbe
cau
set
het
ech
nol
ogyt
ote
st
t
hemdo
esno
tex
ist
.Wh
a ts
hou
ldo
nedowi
ths
ucht
heo
rie
s?

Sec
ond,i
tisdi
ffi
cul
ttode
ter
minewhe
nat
heo
ryh
aso
rha
sno
tbe
enfal
si
fie
d.Fo
r
e
xamp
le,i
fane
mpi
ri
calt
estdo
esno
tpr
odu
cet
hee
xpe
cte
dre
sul
ts,t
her
ese
arc
herc
an
ando
fte
ndo
esat
tri
but
ethefai
l
uret
osho
rtc
omi
ngsi
nth
ete
sti
ngp
roc
edu
reo
rtos
ome
e
xogeno
usfac
tor
.The
refo
re,o
nen
egat
ivee
mpi
ri
calt
esto
fte
nwi
l
lno
tinv
ali
dat
eth
e
t
heo
ry.

At
hir
dpr
obl
ema
ris
esfr
omt
hemi
nds
eto
fre
sea
rch
ers
,wh
oma
yfai
ltot
estt
he
i
mpl
ic
ati
onso
fane
stabl
is
hedt
heo
ry,as
sumi
ngt
hemt
obet
rue
.Su
chami
nds
etc
an
bl
ockt
hep
atht
oac
cep
tanc
eofne
wandp
oss
ibl
ymo
ret
ena
b l
eth
eor
ies
.

Par
tlyi
nre
spo
nset
othe
sep
robl
ems
,Tho
masKu
h n nT
,i heSt
ruc
tur
eof Sc
ient
ifi
c
Rev
olu
tio
ns(
1962)
,mo
vedme
tho
dol
ogy a
wayfr
om fa
lsi
fic
ati
oni
smbyi
ntr
odu
cin
gth
e
c
onc
epto
ftep
h ar
adi
gmi
ntot
hedebat
e.
Apar
adi
gm,
asKuhnu
sest
hewo
rd,
isagi
venap
pro
acha
ndbo
dyo
fkn
owl
edgebu
il
tin
to
r
ese
arc
her
s‘anal
yse
sthatc
onfo
rms t
otheac
cep
tedt
ext
boo
kpr
ese
nta
tio
nof
mai
nst
reams
cie
nti
fict
hou
g htatanygi
vent
ime
.

Ku
hnar
gue
dtha
tmo
sts
cie
nti
ficwo
r sn
ki o
rmal
sci
enc
e,i
nwh
ichr
ese
arc
her
str
ytos
olv
e
p
uzz
lesp
ose
dwi
thi
nthefr
ame
wor
koft
hee
xis
tingp
ara
digm.
Thi
swo
rk

2
6
o
fte
nle
adst
othedi
sco
ver
yofano
mal
i
est
hatt
hep
ara
digmfai
l
stoa
cco
untfo
r,bu
tth
e
e
xis
ten
ceo
fsu
chano
mal
i
esi
sno
tsu
f fi
ci
entt
oov
ert
hro
wther
eigni
ngp
ara
digm—o
nly
anal
ter
nat
ivep
aradi
gmt
hati
sbet
terabl
etode
alwi
tht
hea
noma
li
esc
andos
o.Onc
e
s
uchas
upe
rio
rpar
adi
gmi
sde
vel
ope
d,as
cie
nti
ficr
evo
lut
ionbe
come
spo
ssi
ble
.In
r
evo
lut
ion
arys
cie
nce
,fi
rstt
hee
xis
tingp
aradi
gmi
sre
jec
tedbyp
arto
fthes
cie
nti
fic
c
ommu
nit
y,an
dthe
ntheo
ldandt
hene
wpar
adi
gmsbe
g i
ntoc
omp
etean
dco
mmu
nic
ati
on
bet
wee
nre
sear
che
rsi
ntheo
ppo
singc
amp
sbe
come
sdi
ffi
cul
t.Ul
ti
mat
ely,i
fth
e
r
evo
lut
ioni
ssu
cce
ssful
,ne
wque
sti
onswi
l
lbep
ose
dwi
thi
nth
ene
wfr
ame
wor
kan
dan
ew
no
rmal
sci
enc
ewi
llde
vel
op.

Whe
reasi
nPo
ppe
r‘sv
iew―t
rut
h‖(
ort
hec
los
estwec
angett
otr
uth
)wi
l
lwi
nou
t,i
nKu
hn‘
svi
ewa
s
upe
rio
rthe
orymi
ghte
xis
tbutno
tbeado
pte
dbec
aus
eoft
hei
ner
tiafav
ori
ngt
hee
xis
tin
gpa
radi
gm.
He
ncet
her
eigni
ngt
heo
ryi
sno
tne
ces
sar
il
ythebe
st.

Tho
sewh
odi
sagr
eedwi
thma
ins
tre
amt
heo
ryqui
ckl
yado
pte
dKu
h n‘
sanal
ysi
s,be
cau
sei
t
s
ugge
ste
dtha
tth
epar
adi
gm t
heyp
refer
redmi
ghtp
rov
etobes
upe
rio
rto
,andt
hus
a
b l
etos
upp
lan
t,t
hemai
nst
reamv
iew.Mo
reo
ver
,Ku
hn‘
swo
rks
ugge
ste
dth
atc
han
ges
o
ccu
rbyr
evo
lut
ions
;ito
ffe
redh
opet
hatc
hange
,whe
nitc
ame
,wo
uldc
omequi
ckl
y.
Al
tho
ughKu
hnfo
cus
edo
nth
enat
ura
lsc
ienc
es,
heh
a das
ign
ifi
can
tinfl
uen
ceo
nth
eso
cial
s
cie
nce
s,s
ucha
sec
ono
mic
s.Me
tho
dol
ogi
caldi
scu
ssi
onst
hro
ugho
utt
he 1970S and 1980
s
we
rep
epp
ere
d wi
tht
het
ermp
aradi
gm.

2.
1.
6. Rec
entDev
elo
pment
sinMet
hodo
logyo
fEc
ono
mic
s

I
noneway,t
hede
vel
opme
ntswehav
eju
sto
utl
i
nedmo
vep
rogr
ess
ive
lya
wayfr
oml
ogi
cal
p
osi
ti
vi
sm,
buti
nano
the
rwayt
heyar
ere
f i
neme
ntso
fitt
hatr
eco
gni
zet
hel
i
mit
ati
onso
f
e
mpi
ri
cal
tes
ting.
Amu
chmo
rer
adi
cal
dep
art
urefr
omp
rev
iou
sme
tho
dol
ogyc
anbefo
undi
nPau
l

2
7
Fe
yer
abe
n sAga
d‘ ins
tMe
tho
d:AnOu
tli
neo
fanAna
rchi
sti
cTheo
ryo
fKno
wledge(
1975)
.
Fe
yer
abe
n dar
gue
sth
att
hea
cce
ptan
ceo
fan
yme
tho
dli
mit
scr
eat
ivi
tyi
npr
obl
em
s
olv
ingandt
hatt
hebe
sts
cie
ncei
sth
ere
f o
ret
obec
onfi
nedt
onome
tho
d—i
n
o
the
rwo
rds
,an
yth
inggo
es.

Tho
ughhi
sra
dic
alar
gume
ntatfi
rsts
eemsc
raz
y,h
eha
spr
ovi
deds
omen
ewp
ers
pec
tiv
es
o
nkno
wle
dget
hatt
hro
wli
ghto
nther
het
ori
calands
oci
ol
ogi
cala
ppr
oac
hest
hath
ave
i
nfl
uenc
edr
ece
ntde
vel
opme
ntsi
ntheme
tho
dol
ogyo
fec
ono
mic
s.

Al
tho
ughe
arl
ie
rap
pro
ache
sac
kno
wle
dgedt
hedi
ffi
cul
tyo
fdi
sco
ver
ingt
rut
h,t
heydi
dno
t
que
sti
ont
hePl
ato
nicv
isi
ono
ftr
uthasabs
olu
te.

Ther
het
ori
calands
oci
ol
ogi
calap
pro
ache
sdoj
ustt
hat
.Si
ncet
heyr
efus
etoa
ssu
met
he
e
xis
ten
ceo
fanu
lti
mat
eandi
nvi
ol
abl
etr
uth
,th
eys
ear
cho
uto
the
rre
aso
nst
oex
plai
n
whyp
eop
lebe
li
evewhatt
heybel
ie
ve.

Ther
het
ori
calapp
roac
htome
tho
dol
ogye
mphas
ize
sth
epe
rsu
asi
ven
esso
fla
ngua
g e
,
c
ont
endi
ngt
hatat
heo
rymaybeac
cep
tedno
tbe
cau
sei
tisi
nhe
ren
tlyt
ruebutbe
cau
se
i
tsadv
ocat
ess
ucc
eedi
nco
nvi
nci
ngo
the
rso
fit
sval
uebyme
anso
fth
eirs
upe
rio
rrh
eto
ric
.

Thes
oci
ol
ogi
calappr
oac
hex
ami
nest
hes
oci
ala
ndi
nst
itu
tio
nalc
ons
tra
int
sin
f l
uen
cin
g
t
heac
cep
tabi
li
tyo
fat
heo
ry.Fu
ndi
ngj
obsan
dco
ntr
olo
fth
ejo
urna
lsma
yha
veasmu
ch
i
nfl
uen
ceo
nwh
icht
heo
ryi
sac
cep
tedast
het
heo
ry‘
sabi
li
tyt
oac
cur
ate
lye
xpl
ai
n
p
heno
mena.
T ho
sewhoadhe
ret
oth
eso
cio
logi
calap
pro
achc
ont
endt
hatmo
str
ese
arc
her
s
ar
eint
ere
ste
dle
ssi
nwhe
the
rthet
heo
rie
sthe
yadv
anc
ear
eco
rre
ctt
hani
nwh
eth
er
t
heya
rep
ubl
is
habl
e.Wh
a tt
hes
etwot
heo
rie
smo
stn
ota
b l
ysh
ar ss
ei k
ept
ici
smabo
ut
o
ne‘
sabi
li
tyt
odi
sco
vert
rut
h,o
rev
enwhe
the
rtr
uthe
xis
tsa
tal
l.Ac
cor
din
gtot
hes
e
ap
pro
ach
es,at
heo
ryh
a sno
t

2
8
ne
ces
sar
il
yev
olv
edbe
cau
sei
tist
hec
los
estt
othet
rut
h;i
tma
yha
vee
vol
vedfo
rav
ari
etyo
f
r
eas
ons
,ofwhi
cht
rut
h—i
fite
xis
ts—i
son
lyo
ne.

2.
2. Me
tho
d o
logi
cal
Conc
lus
ions

Me
tho
dol
ogi
calar
gume
ntsi
nec
ono
mic
shav
egen
era
ll
yla
g gedfarbe
hin
dtho
sei
n
e
pis
temo
logya
n dt
hep
hil
oso
phyo
fsc
ienc
e.Ac
cor
din
gtomo
ste
con
omi
cst
ext
boo
ks,
the
r
eigni
ngme
tho
dol
ogyi
nec
ono
mic
siss
til
llo
gic
alpo
sit
ivi
sm,
whi
chwa
slo
ngagode
cla
red
de
adi
not
herfi
el
ds,aswe
llasi
ntheme
tho
dol
ogi
cal
l
yor
ien
tede
con
omi
csj
our
nal
s.Bu
t
o
cca
sio
nal
lyt
hee
con
omi
csp
rofes
sio
ngo
est
hro
ughame
tho
dol
ogi
cals
pas
m,l
ook
ing
i
nwa
rdanda
ski
ng,―I
sthi
swhatwes
hou
ldbedo
ing?‖I
tne
verfu
ll
yans
wer
sth
isque
sti
on
butgo
eso
nasbe
for
e,t
hou
g he
q u
ipp
edwi
ths
li
ght
lyu
pda
tedme
tho
dol
ogi
calv
iews
.Ev
en
t
hou
g hme
tho
dol
ogyi
sse
ldo
mdi
scu
sse
d,ul
ti
mat
elyi
tisme
tho
dol
ogyt
hata
cco
unt
sfo
r
manyo
fthedi
ffer
enc
esamo
nge
cono
mis
ts.Fo
rma
li
stsa
remo
rel
i
kel
ytou
seal
ogi
cal
p
osi
ti
vi
sto
rfal
si
fic
ati
oni
stme
tho
dol
ogyan
dbe
li
evei
nana
b s
olu
tis
tap
pro
ach;n
on-
fo
rmal
is
tsar
emo
rel
ik
elyt
ous
eas
oci
ol
ogi
calo
rrh
eto
ric
ala
ppr
oac
han
dbel
i
evei
na
r
elat
ivi
sta
ppr
oac
h.

2
9
 CHAPTERTHREE:ANCI
ENTI
DEASOFECONOMI
CTHOUGHT

3.
INTRODUCTI
ON

Theo
rigi
nofe
cono
mict
hou
g hti
slo
sti
nthep
ast
.Ini
tss
imp
les
tfo
rmi
tmu
sthav
e
al
wayse
xis
tedwhe
rev
erhu
manbei
ngss
oughtt
ogai
nal
i
ving.Ec
ono
mici
dea
sofan
y
de
f i
nit
ene
ssfi
ndt
hei
rear
li
este
xpr
ess
ions
,ho
wev
er,i
nru
leso
fco
ndu
cto
rmo
ral
c
ode
sfo
rmu
lat
edbyp
rie
stso
rla
wgi
ver
s.The
semo
ral
code
s,l
i
ket
heMo
sai
cLaw,
for
e
xamp
le,
inde
ali
ngwi
thman‘
spl
acei
nth
ewo
rld,
wit
hli
feandde
ath,
andt
hee
ndo
f
e
xis
tenc
e,ne
ces
sar
il
yto
uche
dup
one
cono
micma
tte
rs.Thu
s,o
ure
cono
miche
rit
ages
aso
btai
nedfr
omt
hes
esi
mpl
eco
mmu
nit
iesar
eru
dime
ntar
yide
asabo
ute
cono
mic
r
ela
tio
nshi
pswi
thi
nthe
mse
lve
s.Al
so,mo
sto
fthe
seanc
iente
cono
mici
deasar
e
t
rans
mit
tedt
ousasane
mbo
dime
nto
fre
li
gio
ust
eac
hings
,co
deso
flaw,
andmo
ral
e
xho
rtat
ion
s.Thefo
ll
owi
ngar
eamo
nganc
ienti
deaso
fec
ono
mict
hou
g ht
.

3.
1.THEHEBREWS

TheHe
b r
ewwasanat
iono
fanc
ientc
ivi
l
izat
ionwh
oseh
ist
orydat
esbac
kto2
500BC.

Themai
nso
urc
eoft
hei
rhi
sto
ryandi
deasi
sthewr
iti
ngso
ftheHebr
ewp
rophet
s.
The
iri
dea
sar
eco
nta
ine
dint
he'
Rul
eso
fco
ndu
ct'.Th
ema
int
hemeo
fth
eir
e
duc
ati
onandt
hec
hie
fco
nce
rno
fgo
ver
nme
ntwast
heo
bse
rvanc
eoft
hes
elaws
andc
ommands
.The'
OldTe
stame
n t
'ist
hemo
sti
mpo
rtantando
rigi
nals
our
ceo
f

3
0
i
nfo
rmat
ionr
egar
d i
ngt
hei
rec
ono
mict
hou
g ht
.

3
1
Thee
con
omi
cide
aso
ftheHe
bre
wpr
ophe
tsase
xpr
ess
edi
nthe
irc
ommandsa
n dl
aws
c
anbes
ummar
ize
dasfo
ll
ows
:

1. Us
uryo
rInt
ere
st:Al
tho
ught
hep
rop
het
sdi
dno
tus
ethet
erm„
int
ere
st‟
t
heyp
roh
ibi
tedu
sur
yoranyt
hingt
hati
sle
ntu
pon‗u
sur
y‘.
Ift
het
hinga
cce
pte
din
r
etu
rnwasmo
rei
nval
uet
hanwhatwa
sgi
vent
othebo
rro
wer
,itwasc
ons
ide
redt
obe
ana
cto
fus
ury.

2. Co
mmer
ceandJ
ustPr
ice
:The
rewashar
dlyanyp
lac
efo
rmi
ddl
eme
n.The
e
xpo
rto
ffo
odwasp
rohi
bit
edanda
tti
meso
fsc
arc
ityandfami
ne,
hoar
dingo
ffo
od
gr
ainswasno
tpe
rmi
tte
d.
Al
lthe
sepro
vis
ionsai
meda tsafeguar
dingtheint
eres
to fthepoor
.
Thu
s,theHebr
ewsde ve
lop
e dtheb as
icconc
e p
tso f‗ju
s tp
r i
ce‘i
nit
sru
dime
ntar
y
fo
rm.

3. Agr
icul
tur
eandI
ndus
try:He
b r
ewsgav
epr
efer
enc
etoa
g r
icu
ltu
re.A
He
b r
ewma
ximr
unsasfo
ll
ows
,“Al
tho
ught
radi
nggi
vesgr
eat
erpr
ofi
t,t
her
emay
bel
ossi
namo
ment
.Ther
efo
renev
erhes
itat
etobuyl
and”
.Thi
ssho
wst
hatho
w
agr
icu
ltu
rehadbe
comet
hes
upr
emeo
ccu
pat
ion.Att
hatt
imet
hep
urp
oseo
f
l
awgi
ver
swast
ofi
xth
epe
opl
einagr
icu
ltu
rall
ifewhi
chwasas
ett
ledo
ne.The
rewa
s
at
ende
ncyo
ntheo
the
rha
n dt
odi
sre
g ar
dtr
adeandt
heme
rcant
il
eco
mmu
nit
y.
Per
hap
siti
sfo
rthi
sre
aso
nthatHe
bre
wsdi
dno
tent
eri
ntoc
omme
rceand
manu
f ac
tur
etoanygr
eate
xte
nt.He
bre
wshe
ldagr
icu
ltu
reandt
il
li
ngo
flandi
n
hi
ghe
ste
emwhi
let
heyl
ook
eddo
wnu
pont
rade
.Thes
ayi
nggo
est
hat―het
hat
t
il
led t
he s
oils
hal
lhav
e p
lent
y o
f br
ead.
‖ The
y di
d no
tenc
our
age
manu
f ac
tur
ingo
fgo
odsandc
omme
rcet
oanyc
ons
ide
rabl
eex
ten
t.I
tis
,th
us,c
lea
r
t
hatt
hei
rlawswe
rec
ondu
civ
etot
hegr
owt
hofagr
icu
ltu
rewhi
l
ethe
ydi
sco
ura
g e
d
i
ndu
str
yandt
rade
.

4. Labo
randWages
:TheHe
bre
wsr
egar
dedal
lki
ndso
flabo
rdi
gni
fie
d,bu
tthe
p
rideo
fpl
acewasgi
vent
otheagr
icu
ltu
ral
labo
r.The
rewasnol
abo
urp
robl
emaswe
3
2
hav
ethe
sedays
.Wagewo
rke
rswe
rec
ommo
n.The
ydi
dno
tlaydo
wnr
ule
sfo
r
r
egul
ati
ngt
he

3
3
r
ela
tio
nshi
pbet
wee
nthee
mpl
oyerande
mpl
oyee
.Thec
hie
fre
g u
lat
ionswe
re
c
onc
erni
ngme
rcyandj
ust
icet
othe
m.Payme
ntswe
remadei
nki
nd.

5. Sev
ent
handJ
ubi
leeYear
s:The
rewa
sav
eryp
ecu
li
ari
nst
itu
tio
nofSe
vent
h
andJ
ubi
le
eyea
ramo
ngt
heHe
b r
ews
.TheHe
bre
wpr
ophe
tse
vol
vedap
art
icu
lar
me
tho
dofr
egul
ati
ngandr
est
ric
tingt
heal
i
enat
iono
fla
n dbyi
nst
itu
tingt
he
s
eve
nthandt
heJ
ubi
le
eyear
s.

i
. TheSev
ent
hYe
a r
:waso
nei
nwhi
chl
andl
ayfal
l
ow,i
.
e.aft
ert
il
li
ngi
tfo
rsi
x
c
ont
inu
ousyear
s,t
hel
andwasno
ttobec
ult
ivat
edfo
roneyear
.The
yev
enat
tac
hed
s
omer
eli
gio
uss
anc
tit
ytot
hisme
asu
rebuti
twa
smai
nl
yde
signe
dtoc
ons
erv
ethe
fer
til
it
yoft
hes
oil
.Thes
lav
ess
erv
ingfo
rsi
xyear
swe
refr
eedi
nthes
eve
nthyear
.
I
nthi
syeara
llde
b t
ssho
uldbec
anc
ell
ed.

i
. TheJ
ubi
leeYear
:me
antt
he5
0thyea
r.Ac
cor
dingt
othi
spr
ovi
si
on,t
hel
and
t
rans
fer
redt
oso
meo
nest
ore
ver
ttoi
tsfi
rsto
wne
rint
hefi
fti
ethyear
.Thu
s,s
ale
o
flandr
eal
l
yamo
unt
snomo
ret
hanl
eas
e.I
ntho
sedaysl
andwa
sthemai
nfo
rmo
f
we
alt
h.
The
ytr
iedt
opr
eve
ntc
onc
ent
rat
iono
fwe
alt
handal
sot
heac
qui
si
ti
ono
flando
f
s
mal
lho
lde
rsbyo
wne
rso
flar
gee
stat
es.

Byt
hei
nst
itu
tio
nofSe
vent
handJ
ubi
le
eyeart
heHe
bre
wsde
sir
edt
opr
eve
nt
i
nequal
it
yinwe
alt
h.

6. Val
ueandEx
change:Thev
alu
eofac
ommo
dit
yde
pendsu
poni
ts
u
seful
nes
sand/o
rin
tens
ityo
fwant
s.Thegr
eat
ert
hei
nte
nsi
tyo
fwant
s
fo
rac
ommo
dit
y,t
hemo
rewi
llbep
aidfo
rit
.

7. I
nter
estandMo
ney:TheHe
bre
wss
eeme
dtoh
a v
eunde
rst
oodt
he
func
tio
nso
fmo
ney.Mo
neywasu
sedmai
nlyi
nthefo
rmo
fbu
ll
io
n.The
rewas
noque
sti
ono
fst
amp
edmo
ney.Whi
lemo
neys
erv
esasame
diu
mofe
xch
a n
g e

3
4
i
tcanno
tber
egar
dedasp
rodu
cti
ve.

3
5
8. Sabbat
h:TheSabbat
hwast
hec
orn
ers
toneo
f He
bre
w Ec
ono
mic
t
hou
g ht
.Itwast
hei
rwe
ekl
ydayo
fre
st,r
elax
ati
onandgo
odl
i
ving.I
twa
s
e
njo
yedbyt
hema
ste
rso
ftheho
useandhi
sfami
l
yaswe
llast
hes
lav
esand
t
hes
erv
ant
s.Ac
cor
dingt
oSp
iegel
,―t
hei
nst
itu
tio
noft
hewe
eke
ndwasa
s
oci
ali
nve
nti
ont
hath
a sn
opa
ral
le
l i
nthec
ivi
l
iza
tio
nofGr
eek
,Ro
meo
rot
her
a
nci
entc
ult
ure
‖.

9. Pr
oper
ty:Landwast
hemai
nfo
rmo
fpr
ope
rty.We
alt
hwasme
asu
red
i
nlands
,sl
ave
s,t
ale
nts
,si
lv
er,
ando
the
rpr
eci
ousme
tal
s.Theo
wne
rofap
lot
o
flandwast
heo
wne
rofal
lre
sou
rce
sabo
veandbel
owt
hes
urfac
eofl
and.

Ac
cor
dingt
otheLawo
fInher
itanc
eth
efi
rstc
lai
monp
rop
ert
ywe
ntt
oth
e
el
des
tso
n.I
fth
erewa
snos
oni
twe
ntt
oth
edau
g ht
era
ndi
nthea
b s
enc
e
o
fadau
g ht
eri
tmi
ghtgot
oth
ecl
oser
elat
ive
sli
kebr
other
s,u
n c
lese
tc.

10. Tr
ade
:Int
hos
edayso
nlys
urpl
usc
ornwass
oldi
nthemar
ket
.The
He
b r
ewwi
veswe
reCr
aft–Wo
menwhou
sedt
osp
inwo
olandfl
ax.
Comme
rce
fl
our
ishe
dint
her
eigno
fKi
ngSo
lomo
n.Hemades
ucc
ess
fulv
oyagest
o
di
stantl
ands
,inc
ludi
ngI
ndi
a.

11. Tax
es:Tax
esdi
dno
tex
isti
ntheHe
b r
ewe
con
omy.Labo
urs
erv
icewas
u
til
i
sedfo
rthec
ons
tru
cti
ono
fbr
idges
,ro
adsando
the
rpu
bli
cut
il
it
y
s
erv
ice
s.Cu
sto
msandt
ollt
axwe
real
soc
oll
ect
ed.Thet
ollt
axwask
nownas
at
ribut
ere
ali
zedfr
ome
ver
ymal
efo
rthema
int
enanc
eoft
emp
les
.

3.
2.GREEKS

Whi
chc
oun
tryo
fou
rpl
ane
tisc
ons
ide
redast
hes
our
ceo
fkno
wle
dge?Andwh
a ti
s
t
hec
ont
ribut
iono
fth
isnat
iont
othede
vel
opme
nto
fec
ono
mict
hou
g ht
?

3
6
Gr
eek
sar
ethep
ione
ersi
nmanybr
anc
heso
fkno
wle
dge.
Int
hisr
egar
diti
sno
t
s
urp
ris
ingi
fth
eyar
ethebe
g i
nne
rso
fec
ono
mict
heo
ry.Ec
ono
micl
i
ter
atu
re
r
eco
gni
zedt
hati
tisi
n

3
7
t
heGr
eekwr
ite
rst
hatt
heo
riz
ingo
nec
ono
micma
tte
rsfi
rste
xpl
i
cit
lye
mer
ged.
But
t
heydi
dno
tco
ntr
ibut
emu
cht
othegr
owt
hofe
cono
mici
deas
.The
rewasno
de
mar
cat
ionbet
wee
npo
li
ti
cs,e
cono
mic
sande
thi
cs.Ec
ono
mic
swasv
iewe
dasa
mi
nors
ubs
ect
iono
fet
hic
sandp
oli
ti
csande
cono
mici
dea
swe
refo
undi
nis
ola
ted
fr
agme
ntsa
nd mangl
edr
emai
ns.The Gr
eekp
hil
oso
phe
rwhor
eal
l
ylai
dthe
fou
n dat
iono
fec
ono
mic
sasas
cie
ncewa
sAr
ist
otl
e.Ac
cor
dingt
oEr
icRo
ll
,―Pl
ato
wast
hefi
rsto
fal
ongl
ineo
frefor
mer
sandhi
sst
ude
n tAr
ist
otl
ewast
hefi
rst
anal
yti
cal
eco
nomi
st”
.

Amo
ngt
heGr
eekwr
ite
rswhomades
omec
ont
ribu
tio
nst
oec
ono
mict
heo
rywe
re
Pl
ato
,Ar
ist
otl
eandXe
nop
hon
.Le
tuss
eet
hec
ont
ribu
tio
noft
hes
esc
hol
arst
othe
de
vel
opme
nto
fec
ono
mict
hou
g ht
.

A.Pl
ato(
427-34
7BC)

Pl
atowasaGr
eekp
hil
oso
phe
r.Hewasbo
rni
nAt
hensi
nanar
ist
ocr
ati
cfami
l
y .He
wa
sap
upi
lofSo
crat
es.Het
aughtmat
hema
tic
sandp
hil
oso
phyi
nthefi
rstgr
eat
s
cho
olo
fphi
lo
sop
her
s–t
he

Ac
ade
my,
fou
nde
dbyhi
m.Hi
sfamo
uswr
iti
ngs
,‗TheRepubl
ic
‟and„
TheLaws
‟ar
eth
e
mo
sti
mpo
rtants
our
ceso
fhi
sec
ono
mict
hou
g ht
.Tho
ughe
sse
nti
al
lyanar
ist
ocr
at,
Pl
atodi
dno
tsu
ppo
rthi
scl
ass
.Mo
reo
ver
,hedi
sl
ik
edAt
heni
ande
moc
rac
y,be
cau
seh
e
abho
rre
dthee
xce
sse
sofc
omme
rci
ali
sm wi
thi
tse
ntai
l
ingc
orr
upt
ion,mi
ser
yand
gene
ralde
g r
adat
ion
.Hel
ook
eddo
wn,
asdi
dhi
sfel
l
owar
ist
ocr
ats
,up
onbo
thmanu
al
l
abo
randt
hep
urs
uito
fwe
alt
h,bute
xal
tedt
hewar
rio
r,t
hes
tat
esmanandt
hos
e
r
esp
ons
ibl
efo
ragr
icu
ltu
re.

Hi
svi
ewsar
eex
pre
sse
dint
hefo
rmo
fdi
alo
gue
s.Hi
smai
npo
li
ti
calande
cono
mic
i
deasar
efo
undi
ntheRepubl
icwr
itt
enabo
ut4
00B.
C.andLaws
.Hi
sec
ono
mic
t
eac
hingsar
einc
ide
ntalt
othet
heo
rie
sofp
oli
ti
csande
thi
cs.
I
nteRe
h publ
icPl
atop
rop
ose
dthee
stabl
is
hme
nto
fani
dealc
itys
tat
e,whi
chwo
uld
3
8
i
nau
g u
rat
eane
wso
cialo
rde
r:c
ommu
nis
m.I
nsu
chani
deals
tat
ethe
res
hou
ldbe
t
wo

3
9
c
las
ses
:ther
ule
rsandt
her
ule
d.Thefo
rme
rwo
uldbedi
vi
dedi
ntoguar
diansa
n d
au
xil
iar
ies
;thel
att
erwo
uldc
ons
isto
fpe
asant
sandar
tis
anso
rcr
aft
sme
nwhoo
ught
t
obee
xcl
ude
dfr
omp
oli
ti
cal
right
s.

Thee
xcl
usi
onfr
omp
oli
ti
calr
ight
soft
her
ule
dmas
seswasbas
edo
nPl
ato
‘sbe
li
ef
t
hatnome
mbero
fthe
semas
ses
,de
vot
eda
sthe
ywe
ret
ome
nialwo
rkandt
he
manu
alo
ccu
pat
iono
fpr
odu
cti
onande
xch
a n
g eo
fwe
alt
h,c
oul
dhav
etheabi
li
tyt
o
managet
hehi
ghdu
tie
sofc
iti
zens
hipandt
hec
apac
ityt
oru
nago
ver
nme
nt.

Bo
tht
hegua
rdi
ansa
n dt
heau
xil
iar
ieswe
reno
ttop
oss
essanyp
rop
ert
yno
rhav
ean
i
nco
mebeyo
ndt
hatwhi
chwo
uldbene
ces
sar
yfo
rthe
irmai
nte
nanc
e.

Pl
atobe
li
eve
dthatt
hep
rop
ose
dsys
tem wo
uldp
rodu
cei
dealr
ule
rs-c
apabl
eand
ho
nes
tru
ler
s.Pl
atoar
gue
dthatt
hes
eru
ler
s,t
hro
ughawe
ll
-de
vis
ede
duc
ati
onal
s
yst
emwe
refr
eefr
omt
hede
g r
adi
ngp
urs
uito
fwe
alt
h.

I
ntheLaws
,whi
ch,
waswr
itt
enbyPl
atowh
enh
ewa
sol
der
,hec
ons
ider
edt
hatt
he
fal
loft
hei
dea
l s
tat
ewo
uldi
nvar
iabl
yber
elat
edt
otheac
cumul
ati
ono
fwe
a l
th
andt
othei
nequal
it
iesa
ndc
lea
vagesc
rea
tedt
her
eby.

Thee
li
minat
iono
fpr
ivat
epr
oper
tyfr
omt
her
uli
ngc
las
sist
hust
hec
orn
ers
ton
eof
Pl
ato
‘ss
yst
em.

Thee
sse
nceo
fPl
ato
‘st
hou
g hti
ssh
ort
lys
ummar
ize
dasfo
ll
ows
:

1.Stat
e:Pl
atot
rac
edt
heo
rigi
nofs
tat
etoe
cono
micc
ons
ide
rat
ion.Ac
cor
dingt
o
Pl
ato,
―As
tat
ear
ise
sou
toft
hene
edo
fmank
ind,
noo
nei
sse
lf-s
uffi
ci
ngbu
tal
lofu
s
hav
emanywa
nts
‖.Thes
tat
eino
rdert
osu
ppl
yth
ene
ces
sar
yco
mmo
d i
ti
est
o
s
ati
sfyhu
manwan
tsgat
her
edt
oget
her
.

4
0
Theme
mber
soft
her
uli
ngc
las
smu
stbes
ele
cte
dfr
omamo
ngt
een-ager
sands
et
ap
artfr
ome
arl
ychi
ldho
od,p
rop
erl
yedu
cat
edno
ton
lyi
nphi
l
oso
phybu
tal
soi
nthe
ar
tso
fwar
,si
ncei
two
uldbet
hei
rdu
tyt
opr
ote
ctt
hes
tat
efr
ome
xte
rnalat
tac
ks
andi
nte
rnal
dis
orde
rs.Att
heageo
fthi
rty,t
heywo
uldhav
etop
assane
xami
nat
ion
andt
hes
ucc
ess
fulc
andi
dat
eswo
uldbet
heguar
dianso
rthep
hil
oso
phe
r-k
ings
.
Tho
sewhoc
oul
dno
tpas
sthee
xami
nat
ionswo
uldr
emai
nau
xil
i
ari
esc
onc
erne
dwi
th
gen
eral
admi
nis
trat
ivedu
tie
s.

Pl
atodi
sti
ngui
shedfi
vet
ypeso
fgov
ernme
n t
:
1.Ar
ist
ocr
acy–r
ulebyt
hefewandbes
t.

2.Ti
moc
rac
y–r
ulebyt
hes
oldi
ers
.

3.Ol
igar
chy–r
ulebyweal
thymen.

4.Tyr
anny–noo
nehasdi
sci
pl
ineands
oci
etyex
ist
sinc
hao
s,

5.Demo
crac
y-r
ulebymaj
ori
ty.

2.Di
vi
si
ono
fLabo
r:Att
hefi
rstt
ime
,iti
sPl
atowhos
tat
est
hedi
vi
si
ono
flabo
r.
Heat
tri
but
eddi
vi
si
ono
ftr
adet
othedi
ffer
enc
esi
nnat
ureanda
pti
tudeo
f
hu
manbei
ngs
.

Eac
hmans
pec
ial
i
zesi
nagi
venfi
el
dinwh
ichh
esho
wss
pec
ialp
roc
li
vi
tywhi
ch
amo
unt
stos
ayi
ngt
hats
pec
ial
iz
ati
onc
aus
esme
ntobenol
ongers
elf-s
uffi
ci
entbu
t
i
nte
r-de
pende
nto
neo
nano
the
r.Hi
side
aofdi
vi
si
ono
flabo
remanat
es(
ori
ginat
es)
fr
omhi
sbel
ie
ftha
t
‗t
her
eisdi
ver
sit
yofnat
ureamo
ngme
nande
achs
hou
lddowhati
snat
uralt
o
hi
m.‘I
tme
anst
hate
ver
ybo
dys
hou
lddowhati
snat
uralt
ohi
mandl
eav
etheo
the
rs.

3.Co
mmuni
sm:I
tisPl
atowhos
tat
eco
mmu
nis
mfo
rthefi
rstt
ime
. Pl
atowasno
ta
s
upp
ort
ero
fpr
ivat
epr
ope
rty.I
nhi
sea
rli
erwo
rks
,Pl
atoe
spo
use
dco
mmu
nis
mand
hasp
rop
ose
das
tat
ebas
edo
nco
mmu
nis
m.Pl
ato
‘si
deasr
egar
dingc
ommu
nis
m
4
1
ar
eex
tre
mel
yre
mar
kabl
e.

4
2
Pl
ato
‘sc
ommu
nis
mist
hemo
stt
alk
edabo
utandmi
sunde
rst
oodp
arto
fhi
sphi
l
oso
phy.
Bu
tlat
er,
heabando
nedt
hei
deat
oamo
rer
eal
i
sti
cap
pro
acht
oec
ono
micl
i
f e
.

Co
mmuni
smi
sas
oci
alandec
ono
mics
yst
em i
nwhi
cht
hes
tat
eownsand
c
ont
rol
sthemeanso
fpr
oduc
tio
nonbehal
foft
hepeo
ple.I
tisai
medt
o
c
reat
eas
oci
etyi
nwhi
chev
eryo
nei
spai
d& wo
rkac
cor
dingt
othei
rneeds
andabi
li
ti
es.
4.Si
zeo
fPo
pul
ati
on:Thep
robl
emo
fpo
pul
ati
onwasal
soanal
yze
dbyPl
ato
.Thes
ize
o
fpo
pul
ati
oni
nhi
sst
atewasas
sume
dont
hebas
iso
fthebes
tre
sul
tso
fdi
vi
si
ono
f
l
abo
ur.

Hep
rov
ide
dac
are
f u
l r
egul
ati
ono
fpo
pul
ati
ont
omai
ntai
nst
abi
li
tyi
nthee
cono
my.
Ther
ightnu
mbe
rofp
opu
lat
ions
ugges
tedbyPl
atofo
ras
tat
ewas5040
. Onl
ysu
ch
anu
mberp
rov
ide
dop
por
tuni
tyfo
rev
eryo
net
obefami
li
arwi
thal
ltheo
the
r
p
ers
onsandhe
lpt
hee
cono
myt
oac
hie
ves
elf-s
uffi
ci
enc
y.I
tal
sohe
lpst
ore
ap
max
imu
mpr
odu
cti
vee
f fi
ci
enc
y.I
fthenu
mbe
rsh
owe
dade
cre
asi
ngt
ende
ncy,t
he
s
tat
esho
uldo
fferp
riz
est
oenc
our
aget
hegr
owt
hofp
opu
lat
ion.Bu
tift
henu
mbe
r
e
xce
eds5
040newc
olo
niesmu
stbee
sta
b l
is
hed.

5.Val
ue:Hec
ons
ide
redv
alu
easi
nher
entqual
it
yoft
hep
rodu
ct.
Acc
ordi
ngt
ohi
ma
mans
hou
ldn
ota
tte
mptt
orai
set
hep
ric
e,bu
tsi
mpl
yas
kthev
alu
e.

6.Mo
neyandI
nter
est
:Pl
ator
eco
gni
zedt
hev
alu
eofmo
neyasme
diu
mofe
xchange.
Hedi
dno
tfav
ort
hei
deao
fal
lo
winggo
ldands
il
vert
obeu
sedbyt
hec
ommo
n
me
n.I
nst
eadhes
ugges
tedt
heu
seo
fdo
mes
ticc
oinsfo
rpayme
nto
fwagesand
o
the
rtr
ans
act
ions
.Asr
egar
dtoi
nte
res
t,h
etho
ughtt
hatne
ithe
rint
ere
sts
hou
ld
begi
venno
rth
epr
inc
ipalo
ral
oanr
epai
d.

7.Weal
th:Heo
ppo
sedac
cumu
lat
iono
fwe
alt
hone
thi
calgr
ounds
.Ac
cor
dingt
ohi
m,

4
3
‗Gr
eatr
iche
san
dhap
pine
ssar
einc
omp
ati
ble
‘.Tohi
mgr
eatr
iche
sandhap
pine
ss
c
anno
tex
istt
oget
herbec
aus
ether
ichp
eop
les
pendap
arto
fthe
irwe
alt
h
wi
tho
utanyj
ust
ice
.Pl
atohads
ugges
tedani
dealp
rop
ert
yar
rangeme
nt.On
ly
far
mer
sandar
tis
answe
re

4
4
 al
lo
wedt
ogetp
rop
ert
ywhi
let
her
ule
rsandt
headmi
ni
str
ato
rswe
reno
tal
lo
wedt
o
e
njo
ythep
rop
ert
yri
ght
s.

8.Educat
ion:Pl
atos
tat
edt
hatbo
thbo
ysandgi
rl
ssh
oul
dre
cei
vet
hes
amek
indo
f
edu
catio
n.
Hi
side
aone
duc
ati
oni
smo
rei
mpo
rtanti
nthemo
der
ndays
.

B.Ar
ist
otl
e(384-32
2 BC)

Ar
ist
otl
ewa
sbo
rna
tSt
agar
iaandwasap
upi
lofPl
ato
.Hewe
ntfur
the
rthano
the
r
t
hink
ersi
nan
tiqui
tyi
nthedi
rec
tio
nofde
tac
hingas
epar
ates
cie
nceo
fEc
ono
mic
s.

Ar
ist
otl
ewa
stef
h i
rstanal
yti
calec
ono
mis
twhol
aidt
hefo
undat
iono
fthes
cienc
e
o
fEc
ono
mic
s.Al
tho
ughhedi
dno
twr
iteanys
epar
atet
reat
ieso
nec
ono
mic
s,many
o
fhi
sdi
scu
ssi
onswe
rec
ent
ere
done
cono
micp
robl
ems
.

Thefo
ll
owi
ngar
ethet
hemeo
fAr
ist
otl
e‘se
cono
mict
hou
ght
s.

1. I
deao
fst
ate:Ac
cor
dingt
oAr
ist
otl
ethes
tat
eor
igi
nat
eso
uto
fthene
eds
o
fmank
ind.
Hee
xpl
ainst
heo
rigi
noft
hes
tat
eint
ermso
fho
use
hol
d.Theho
use
hol
d
i
sanas
soc
iat
ionfo
rme
dtos
ati
sfyt
hewant
soft
hefami
l
yme
mbe
rs.Thev
il
lage
gr
owso
uto
fanu
mbero
fho
use
hol
dsandfi
nal
l
ythes
tat
eco
mesi
ntoe
xis
tenc
e.

Mani
sbynat
ureas
oci
alani
mal
,sot
hes
tat
eisp
oss
ibl
ebec
aus
eal
lme
nli
vet
oget
her
i
nas
oci
ety.
Theai
moft
hes
tat
eisp
romo
tio
nofgo
odl
i
f e
.Thu
s,Ar
ist
otl
eat
tri
but
es
t
heo
rigi
noft
hes
tat
etoe
cono
micandp
oli
ti
cal
cau
ses
.

2. Pr
ivat
epr
oper
ty:Whi
lePl
atoa
dvo
cat
edp
ubl
icp
rop
ert
yAr
ist
otl
esu
ppo
rte
d
t
hei
nst
itu
tio
nofp
riv
atep
rop
ert
y.Ar
ist
otl
ear
gue
dthatp
ubl
icp
rop
ert
ywo
uldno
t
bel
ook
edaft
erasc
are
f u
ll
yasp
riv
atep
rop
ert
y.Ac
cor
dingt
ohi
m,as
yst
emo
f
c
ommu
nis
m wo
uldn
otwo
rkandt
hati
tvi
ol
ate
snat
uralhu
mani
nst
inc
ts.Pr
ivat
e
p
rop
ert
yismo
rep
rodu
cti
vet
hanp
ubl
icp
rop
ert
y.He
nce
,Ar
ist
otl
esai
dthat
p
rop
ert
ysh
oul
dbep
riv
ate
.Whe
nthe
rei
s
4
5
p
riv
atep
rop
ert
ythe
ywi
llmak
emu
chp
rogr
essbec
aus
eev
eryo
newi
l
lbeat
tendi
ng
t
ohi
sownbus
ine
ss.I
twashi
sbel
i
eft
hatp
eop
lep
aymo
stat
tent
iont
oth
eiro
wn
p
riv
atep
rop
ert
y.

Hear
gue
dthatu
nit
ybui
lto
nco
mmu
nis
misi
nfac
tade
lus
ion/i
ll
usi
on.Thec
ommo
n
p
urs
ele
adst
oquar
rel
sar
isi
ngo
uto
ftr
ivi
alc
aus
es(
bec
aus
ehu
manbe
ingst
akec
are
fo
rthe
iro
wnp
rop
ert
ythant
heydofo
rco
mmo
npr
ope
rty)
.Inc
ont
ras
ttoPl
ato
,he
wa
sfo
rpr
ivat
epr
ope
rty.

3. Sl
aver
y:Ar
ist
otl
ewast
hes
upp
ort
ero
fsl
aveandhede
f e
nde
dsl
ave
ry.
Ac
cor
dingt
ohi
m,―t
hep
rin
cip
leo
fru
lea
n ds
ubj
ugat
ioni
sin
evi
tabl
ean
dbe
nefi
ci
al.
‖

Heme
antt
hat‗Sl
ave
sar
eno
tonl
yine
vit
abl
ebu
tal
sobe
nefi
ci
al.
‘

Ac
cor
dingt
ohi
m,t
her
ewe
renat
urals
lav
esandt
her
ewe
real
sol
egals
lav
es.By
nat
urals
lav
esh
eme
antt
hatt
hos
ethatar
ere
g ar
dedbyt
hes
oci
etyasnat
ural
l
y
i
nfer
ior
.Hi
sle
g als
lav
esi
ncl
udet
hos
ethata
rei
mpr
iso
nedo
rcap
tiv
es.Bu
t,he
c
onc
ent
rat
esu
ponnat
urals
lav
es.

4. Fi
nanc
e:Hi
sdi
scu
ssi
ono
nfi
nanc
ewasr
elat
edt
otheac
qui
si
ti
ono
fwe
alt
h
(
met
hodo
fwe
alt
hac
qui
si
ti
on)
.Ar
ist
otl
edi
sti
ngui
she
dthr
eek
indso
ffi
nanc
e:
Nat
ural
(he
alt
hy)fi
nanc
e,Unnat
uralfi
nanc
e,I
nte
rme
diat
efi
nanc
e.
i
. Nat
uralfi
nanc
e:r
efer
stot
heac
qui
si
ti
ono
fwe
alt
hthr
oughnat
uralways
.
Ac
cor
dingt
ohi
m,t
hewe
alt
hthr
oughnat
ura
l fi
nanc
eisagen
uinewe
alt
handhasa
l
imi
t.Thi
sli
miti
spr
ovi
dedbyt
heme
anso
fsu
bsi
ste
nce
,byt
hene
edso
fthe
ho
use
hol
d,an
dthes
tat
e.Hi
snat
uralfi
nanc
einc
lude
sac
tiv
iti
esl
i
kefar
min
g ,
hu
sbandr
yandbe
eke
epi
ng.

i
i
. Unnat
uralfi
nanc
e:r
efer
stot
hea
cqui
si
ti
ono
f we
alt
hthr
ought
hos
e
me
tho
dst
hatdono
thav
enat
urale
xis
ten
ce.Unnat
ura
lfi
nanc
edo
esn‘
tbe
longt
o
do
mes
tice
cono
mybutnat
uralfi
nanc
ebe
longs
.
4
6
Ac
cor
dingt
oAr
ist
otl
eunnat
uralfi
nanc
eisme
rel
ymo
neymak
ing.I
tbe
longst
o
t
radean
dthi
str
adec
omp
ris
esc
omme
rce
,us
uryandhi
redl
abo
r.We
alt
hac
qui
red
t
hro
ughu
nnat
uralfi
nanc
edo
esn‘
thav
eal
imi
t.

Fo
rAr
ist
otl
e,us
uryi
sthewo
rstfo
rmo
ffi
nanc
e.Hes
aidt
hefunc
tio
nofmo
neyi
s
me
rel
yfo
rthee
xchangeandno
thi
ngmo
re.Fo
rhi
m,mo
neyi
sst
eri
l
e,u
npr
odu
cti
ve
andbar
ren(
notp
rodu
cinganyt
hingwi
tho
uts
ucc
esso
rus
efulr
esu
lt)
.Us
uryi
s
c
onde
mne
dbe
cau
sei
tdo
esn‘
thav
eanynat
ural
fin
a nc
e.

i
i
i. I
nte
rme
diat
efi
nanc
e:c
omp
ris
ess
ome
thi
ngc
ommo
ntoe
acho
ftheo
the
rs.
Thi
sfi
nan
cei
sco
nce
rne
dwi
tht
hep
rodu
cto
fth
eear
ths
uchaswo
odc
utt
ing,and
mi
ni
ng(
ext
rac
tiv
eindu
str
ies
).

5. I
nter
est
:Ac
cor
dingt
oAr
ist
otl
eint
ere
stt
aki
ngwast
hemo
stu
n nat
uralo
f
al
ltheme
tho
dso
fget
tingwe
alt
h.Mo
neys
erv
edo
nlyasame
diu
mofe
xchange,i
t
c
anno
tber
egar
dedasp
rodu
cti
ve.
Aso
nep
iec
eofmo
neyc
oul
dno
tpr
odu
ceano
the
r,
i
nte
res
twasu
nju
st.

Mo
neyhadn
obu
sine
sst
oinc
reas
efr
omhandt
ohand.I
ntho
sedaysmo
neywas
bo
rro
wedbyt
hep
oorp
ers
onsfo
rco
nsu
mpt
ionp
urp
ose
sandt
her
efo
rei
nte
res
ttak
ing
wa
sco
nsi
der
edu
nju
st.

6. Mo
nopo
ly:Ar
ist
otl
ede
f i
nedmo
nop
olyasap
osi
ti
oni
namar
keto
fas
ingl
e
s
ell
er.
Hec
onde
mne
ditasu
nju
st.

4
7
 C.Xeno
pho
n(434-355BC)

Xe
nop
honwa
sth
eth
irdi
nthec
hai
noft
hegr
eatwr
ite
rs.Xe
nop
honbe
comeap
upi
l
o
fSo
crat
esbutp
refer
redami
li
tar
yli
fet
othequi
etl
i
f eo
fsc
hol
arl
ypu
rsu
it.I
n
s
pit
eofhi
sac
tiv
emi
li
tar
yli
fe,
hec
oul
dfi
ndt
imefo
rco
mpo
sin
gli
ter
arywo
rks
.

Thema
inp
oint
sra
ise
dbyhi
mthatmayber
egar
dedase
cono
mict
hou
g htar
e
s
ummar
ize
dasfo
ll
ows
:

1. Weal
th:Xe
nop
honhe
ldt
hatwe
alt
hli
keanyo
the
rco
mmo
dit
yhadv
alu
efo
r
t
hos
ewhomak
eade
q u
ateu
seo
fit
.Ac
cor
dingt
oXe
nop
hon,
weal
thi
sint
erp
ret
edi
n
r
ela
tio
ntone
eds
.Tohi
m,amano
fsi
mpl
etas
tesandl
i
ttl
esu
bst
anc
eiswe
alt
hyi
n
c
omp
ari
sonwi
tht
hemano
fgr
eat
erp
roc
ess
ion
sonwhoe
xce
ssi
vec
lai
msr
est
.

Thei
mpl
ic
ati
ono
fXe
nop
hon‘
sar
gume
nti
stha
tev
eni
fama
npo
sse
sse
smu
chwe
alt
h
whe
nco
mpar
edt
othes
oci
ety,i
fhi
sne
edsar
egr
eat
ert
hanh
ismo
ney,h
eisn
omo
re
r
ich.

2. Agr
icul
tur
e:Xe
nop
hon wr
otei
npr
ais
eof Agr
icu
ltu
re.He c
ons
ide
red
agr
icu
ltu
ret
obet
hes
imp
les
tar
ttol
ear
n,t
hes
our
ceo
fal
lthi
ngsandt
hequi
cke
st
t
oyi
el
dre
tur
ns.

Emp
has
izi
ngt
hei
mpo
rtanc
eofagr
icu
ltu
re,hede
clar
edt
hat―Whe
nhu
sbandr
y
fl
our
ishe
s,al
ltheo
the
rar
tsar
eingo
ods
hap
e,bu
twh
ene
vert
hel
andi
sco
mpe
ll
ed
t
olaywas
te,
theo
the
rpar
tso
flands
mena
ndma
rine
rsp
eri
sh.
‖

Thi
sist
osayt
hatt
hebas
eofane
cono
myi
sagr
icu
ltu
re.

3. Fac
tor
sofPr
oduc
tio
n:Ac
cor
dingt
oXe
nop
hon,t
her
ewe
reo
nlyt
wofac
tor
s
o
fpr
odu
cti
on,
labo
randl
and.
Hes
aidt
hatagr
icu
ltu
res
upp
li
esgo
odt
hingsi
npl
ent
y,
but‗i
tsu
f fer
sthe
mno
ttobewo
nwi
tho
utwo
rkhar
d‘.

4. Lawo
fRe
tur
ns:Xe
nop
hons
howe
danu
nde
rst
andi
ngo
ftheo
per
ati
ono
fthe

4
8
l
awo
fre
tur
ns.Hehe
ldt
hatagr
icu
ltu
rewasani
ndu
str
ysu
b j
ectt
odi
mini
shi
ng
r
etu
rnswhi
les
il
vermi
ningyi
el
dedi
ncr
eas
ingr
etu
rns
.

4
9
Re
gar
dingt
hedi
mini
shi
ngr
etu
rno
fagr
icu
ltu
re,h
esa
idt
hatt
hel
ando
wner
sco
uldt
ell
yo
uho
wmanyt
eam andho
wmanyl
abo
rsar
erequi
redfo
rthei
res
tat
e.I
fanyo
ne
empl
oyshandsi
nex
ces
sofr
equi
rement
s,i
tisr
eck
onedasal
oss
.Regar
dingt
he
i
ncr
eas
ingr
etu
rno
fsi
l
vermi
ne,hes
aidt
hatt
hegr
eat
ert
henumbero
fpeo
ple
empl
oyed,
themo
repr
oli
ficbec
omest
heo
re.

Al
tho
ughhei
sno
tthefi
rstmant
oex
plai
nthel
awo
fdi
mini
shi
ngr
etu
rns
,he
ap
pro
ache
sors
eemst
oiti
nafumbl
ingway.

5. J
ointSt
ock
:Ino
rde
rtoo
ver
comet
her
isk
sinhe
renti
nop
eni
ngne
wsi
l
ver
mi
nes
,hes
ugges
teds
ome
thi
ngap
pro
achi
ngt
oaj
oints
toc
kme
tho
dofo
per
ati
on.

Het
hou
g htt
hatj
oin
tst
ockc
omp
ani
esar
esafert
hant
hei
ndi
vi
duale
nte
rpr
ise
s.I
n
hi
sop
ini
ont
her
esho
uldbeahap
pyc
ombi
nat
iono
fpu
bli
candp
riv
atee
nte
rpr
ise
s
r
unni
ngwi
thmu
tualc
oop
erat
ionandgo
odwi
ll
.

6. Publ
icFi
nanc
e:Hes
awfo
rei
gnr
esi
dent
sasas
our
ceo
fre
venu
e.Hes
aidi
n
p
eac
eti
me,
wea
lth(
rev
enu
e)i
sac
cumu
lat
edandi
nwart
imei
tisl
os.
t

7. Di
vi
si
ono
fLabo
r:Xeno
pho
nsho
wedade
fin
itea
dva
nceo
verPl
ato
‘si
deat
hat
di
vi
si
ono
flabo
rar
osefr
om di
ffe
renc
esi
nthei
nnat
eabi
l
iti
eso
fme
n.Onec
ane
ven
di
sco
vert
her
oot
soft
hemo
der
nthe
oryo
fdi
vi
si
ono
fla
b o
rinXe
nop
hon
.

Thi
swi
ll
b ee
vide
ntfr
omt
hefo
ll
owi
ngl
i
nesi
nhi
swo
rks
:

Andi
tiso
fco
urs
e,i
mpo
ssi
blefo
ramano
fmanyt
radest
obepr
ofi
ci
enti
nal
loft
hem.
Oneman,fo
rins
tanc
e,mak
ess
hoesfo
rmenandt
heo
therfo
rwo
men;andt
her
ear
e
pl
acesev
enwher
eonemanear
nsal
i
vingbyo
nlys
tit
chi
ngs
hoes
,ano
therbyc
utt
ing
t
hemo
ut,ano
therbys
ewi
ngt
heupper
sto
get
her
,whi
l
ether
eisano
therwhoper
for
ms
no
neo
fthes
eoper
ati
onsbuto
nlyas
sembl
est
hepar
ts.

5
0
I
tfo
ll
ows
,ther
efo
re,asamat
tero
fco
urs
e,t
hathewhodev
oteshi
msel
ftoav
ery
s
pec
ial
iz
edl
ineo
fwo
rki
sbo
undt
odoi
tint
hebes
tpo
ssi
blemanner
.

3.
3.ROMANS

Thec
ont
ribu
tio
nofRo
manst
othede
vel
opme
nto
fec
ono
mict
hou
g hti
sve
ryl
i
ttl
e.
What
eve
rco
ntr
ibut
ionsRo
memadet
othe
ori
esi
sane
choo
fGr
eec
e.
Thati
swhyt
heRo
manwr
ite
rswe
reno
tco
nsi
der
edast
heo
rigi
nalt
hink
ers
.
Bu
tthe
yar
epr
act
icalme
n.Fo
rins
tanc
e,whi
l
etheGr
eek
spr
odu
ceda
p
hil
oso
phywhi
chs
tre
ngt
hene
dthemo
ral
ande
cono
micfi
bero
fso
cie
tie
s,t
he
Ro
manss
hap
edl
egalandp
oli
ti
cali
nst
itu
tio
nswi
thgr
eatfi
nes
se.He
nce
,
Ro
mansar
ekno
wnno
tfo
rthe
irt
heo
rybutfo
rthe
irp
rac
tic
e.The
yhad
s
omebuts
til
lthec
ont
ribu
tio
nso
fthe
sewr
ite
rswe
rev
erys
mal
landmo
sto
f
i
tist
her
epe
tit
iono
fwhati
ssai
dbyGr
eek
s.
Thec
ont
ribut
iono
fRo
met
othedi
scu
ssi
ono
fec
ono
mict
opi
csfal
l
sunde
rthr
ee
gr
oup
s.The
sear
e:
-Thep
hil
oso
pher
s:Ci
cer
o,Se
nec
aandPl
i
ny
-Theagr
icul
tur
alwr
iter
s:Cat
o,Var
roandCo
lume
ll
a.
-Thej
uri
sts
:the
rea
reaho
sto
fpe
opl
ewho
sei
dea
sha
vee
con
omi
csi
gni
fic
anc
e

a)Phi
lo
sopher
s
Ci
cer
o(106-43BC)
- Ci
cer
oat
tac
hedgr
eati
mpo
rtanc
etoagr
icu
ltu
reasano
ccu
pat
ionbu
t
c
onc
ede
dthev
alu
eofwho
les
alet
rade
.
- Hes
tro
ngl
yco
nde
mne
dus
uryandmo
neyl
endi
ng.
Usu
rywasc
onde
mne
dno
t
o
nanye
thi
cal
ore
cono
micgr
oundsbutbe
cau
sei
tinc
urr
edi
l
l-wi
l
l.
5
1
Senec
a(c
4BC-c
65AD)
- Se
nec
avi
ewsmo
neyasr
oot
/so
urc
eofal
lev
il
s.Hede
spi
sedmo
ney
l
endi
nga
n dadv
ocat
eds
imp
li
ci
tyo
fli
fe.Fo
rhi
m,e
nvyandgr
eedar
ethe
s
our
ceo
fal
lin
jus
tic
e.-Hear
gue
dthats
omet
hingshav
egr
eat
erv
alu
ethan
t
hei
rpr
iceandh
enc
eut
il
it
ysho
uldbet
hec
rit
eri
onfo
rde
ter
mini
nge
xchange
v
alu
e.
- Her
eco
mme
nde
dgeo
gra
phi
caldi
vi
si
ono
flabo
ront
hegr
oundt
hat
v
ari
ousquar
ter
soft
hee
art
har
eendo
weddi
ffer
ent
lywi
thnat
ural
res
our
ces
.

Pl
iny(
23–
79CE)
Pl
inyi
sal
soar
ichs
our
ceo
fagr
icu
ltu
reandho
rti
cul
tur
e.Gr
ape
san
dwi
near
e
di
scu
sse
dinr
ichde
tai
lwi
thr
efer
enc
eto91Var
iet
ieso
fgr
ape
s,50k
indso
flo
cal
wi
nes
;38fo
rei
gnwi
nes
,an
d18s
wee
twi
nes
.

b)Agr
icul
tur
alWr
iter
s

Theagr
icu
ltu
ralwr
ite
rs(
Cat
o,Var
roandCo
lume
ll
a)h
a dt
hehi
ghe
str
egar
d
fo
ragr
icu
ltu
re.Bu
tthe
y we
rec
onc
erne
dabo
utal
lthet
ech
n i
queo
f
agr
icu
ltu
reandl
esswi
tht
hee
cono
mic
sofagr
icu
ltu
re.
Mar
cusPo
rci
usCat
o(234–
149BCE)
:Cat
othee
arl
i
esto
ftheLa
tinwr
ite
rs
i
skno
wnasCat
otheCe
nso
rbas
edo
nhi
spo
sit
ionasaRo
manMagi
str
ate
.
Ca
tohadwr
itt
enmo
reo
nthet
echni
calas
pec
tso
fagr
icu
ltu
re.Cat
owasa
p
rol
ifi
cau
tho
randi
sre
g ar
dedast
hefat
hero
fLat
inp
ros
e.Ho
wev
er,
theo
nly
c
omp
let
ewo
rkso
fhi
stos
urv
ivear
eal
oos
eco
ll
ect
iono
fagr
icu
ltu
ral
i
nst
ruc
tio
nsa
nda
dvi
se,i
nes
senc
eafar
mer
‘sno
tebo
ok,abo
utt
hec
areo
f
far
mes
tat
es
Mar
cusTer
ent
iusVar
ro(
116
–27BCE)
:Var
roadv
isdc
e r
opgr
owi
ngandl
iv
est
ock
br
eedi
ng.Agr
icu
ltu
rewasv
iewe
dno
tasani
ndu
str
yru
nfo
rpr
ofi
t,bu
tasa

5
2
p
robl
em o
f do
mes
tice
cono
my.Al
tho
ughhehasno
tus
edt
het
erm
‗de
mand,
‘Var
rohas

5
3
r
eco
gni
zedi
tsi
mpo
rtanc
eint
hede
ter
minat
iono
ftheamo
unto
fgo
odst
o
bep
rodu
ced.

Luc
iusJ
uni
usMo
der
atusCo
lumel
la(
1stc
ent
uryCE)
:Thewo
rkso
fCo
lume
ll
a
ar
eco
nsi
der
edt
obet
hemo
stc
omp
rehe
nsi
veands
yst
emat
ico
fal
lRo
man
agr
icu
ltu
ral
tre
ati
seso
fRo
man.

c
)TheJ
uri
sts

TheRo
manj
uri
stswe
ret
hemo
sto
rigi
nalRo
mant
hink
ersandc
hie
f l
y
c
onc
erne
dwi
tht
hefr
ami
ngo
flawsande
vol
vi
ngdo
ctr
ine
stor
egul
atet
he
c
omme
rci
alme
chani
smo
fRo
me.
Int
hisr
egar
d,t
heyp
rodu
cedal
awwhi
chi
s
p
opu
lar
lyk
nowna
stheRo
manl
aw.
I
nre
lat
iont
otheRo
manl
aw;wec
ant
alkabo
utt
wop
oint
s.
Ro
manj
uri
stsr
eco
gni
zedv
erywe
llt
hei
mpo
rta
n c
eofmo
neyasme
diu
mof
e
xchange.The
ytr
eat
edmo
neyl
ik
eac
ommo
dit
ywho
sev
alu
ewasmo
reo
rle
ss
c
hangeabl
eande
sse
nti
alt
oit
sfunc
tio
n.I
ngene
ralt
hey we
reo
ppo
sedt
o
i
nte
res
ttak
ing,e
spe
cial
lyt
ous
ury.
Butnol
egi
sl
ati
onc
oul
dundot
hise
vil
.
Tos
ummar
ize
,itc
anbec
onc
lude
dthatt
heRo
mansadde
dli
ttl
etot
he
s
tre
amo
fec
ono
mict
heo
ry.Bu
titmi
ghtbeadmi
tte
dthatt
hei
rimp
ort
anc
e
asame
diu
mfo
rsu
cht
hou
g hti
sgr
eat
.
Ov
eral
l,t
hen,e
cono
mice
nqui
rydu
ringant
iqui
tydi
dno
tgr
owfas
tasc
omp
are
dto
i
tsde
vel
opme
nti
nth
ere
cente
ra.

3.
4. MEDI
EVALECONOMI
CSANDFEUDALI
SM

Thep
eri
odbe
twe
en4
70ADt
o1453AD,c
ove
rin
gabo
utt
enc
ent
uri
esi
sge
n e
ral
lyk
n o
wn
ast
heme
die
val
p e
rio
dort
heMi
ddl
eAge
s.
TheMi
ddl
eAgesc
amet
oac
los
eto
war
dswhe
nEu
rop
ewi
tne
sse
dth
eadv
ento
fthe
Re
for
mat
ionandt
hedi
sco
ver
yoft
heNe
wWo
rld.Thee
ndo
fth
eMi
ddl
eAgesal
so
mar
kst
hebegi
nni
n fMo
go der
nTi
mes
.

5
4
Thedo
wnfal
loft
heRo
manEmp
ireandt
hedi
si
nte
g r
ati
ono
fit
svas
tte
rri
tor
ial
p
oss
ess
ionswe
refo
ll
owe
dbyt
hee
mer
genc
eoft
heFe
udalSys
temt
hro
ugho
ut
We
ste
rnEu
rop
e.
Me
die
vals
oci
ety,whe
ret
hedo
minantfo
rmo
fec
ono
mico
rgani
zat
ioni
sfeu
dal
i
sm,
hasi
tse
sse
ncei
nthec
las
sdi
vi
si
onbet
wee
ntheLo
rdsandt
heSe
rfswh
ichi
sa
de
riv
ati
onfr
omt
hes
tru
ctu
reo
flat
ter
-dayRo
me.
Thefeu
dal
soc
iet
yofMe
die
val
Eur
opewaso
nei
nwhi
chal
lau
tho
rit
ywasde
riv
edfr
om
Go
dbyt
hec
hur
ch,whi
chwashe
ade
dbyt
hePo
pe.Thek
ingo
fal
ando
rre
g i
on
de
legat
edp
owe
r,r
esp
ons
ibi
li
ty,andl
andgr
ant
stohi
sro
yals
ubo
rdi
nat
es(
nobl
es,
bar
ons
,lo
rds
,et
c.)
.

SCHOLASTI
CISM

Sc
hol
ast
ici
sm(
TheSc
hoo
lmen)r
efer
stot
hes
cho
olo
fec
ono
mict
hou
g htt
hat
dev
elo
pedi
nEu
rop
edur
ingt
heme
die
valp
eri
od(
500
- 150
0).Sc
hol
ast
ict
hink
ersa
re
k
n o
wnfo
rth
eirmo
ralandp
hil
oso
phi
calap
pro
acht
oth
est
udyo
fex
chan
ge,v
a l
ue,
ando
wne
rshi
p wi
thi
nth
eco
nte
xto
fth
eti
me p
eri
od.Unt
ilt
hear
riv
alo
f
Me
rcan
til
is
mint
he14t
hce
ntu
ryt
heSc
hol
ast
ics(
orSc
hoo
lme
nast
heyar
eco
mmo
nly
r
efer
redt
oto
day)we
rea
tth
efo
refr
onto
fth
efo
undat
ionso
fes
tabl
i
shi
ng
e
con
omi
cthe
orywi
thi
nthefr
ame
wor
kofp
hil
oso
phy.

Pr
obabl
ythemo
sti
nfl
uent
iale
cono
mict
hink
ero
ftheSc
hol
ast
icp
eri
odwa
saSi
ci
li
an-
bo
rnRo
manCat
hol
i
cbyt
henameo
fTho
masAqu
inas
.
Theau
tho
rit
ati
vev
ers
iono
ftheme
die
vale
cono
mici
deasi
sfo
undi
nthewo
rkso
fSt
.
Tho
masAqui
nasan
dNi
col
eOr
esme
.Bu
tthemo
stk
nowno
neo
fsc
hol
ast
icp
eri
odi
s
St
.Tho
masAqui
nas
.

St
.Tho
masAqui
nas

Sai
ntTho
masAqui
nas(
1225–
1274
)wa
sanI
tal
i
a nCath
oli
cPr
ies
tando
neo
fth
e
mo
sti
mpo
rta
n t me
die
valp
hil
oso
phe
rs an
d t
heo
logi
ans
. He was i
mme
nse
ly
5
5
i
nfl
uen
ced bys
cho
las
tic
ism a
n d Ar
ist
otl
e.Al
tho
ughh
e wr
ote man
y wo
rkso
f
p
hil
oso
phyan
dth
eol
ogyt
hro
ugho
uth
isl
i
fe,hi
smo
sti
nfl
uent
ialwo
rki
steSu
h mma
The
olo
gic
a.

5
6
St
.Tho
mas
‘sv
iewso
nal
lec
ono
micmat
ter
swe
rehi
ghl
yin
f l
uen
cedbyAr
ist
otl
e&
Chr
ist
iani
ty.
T hei
nfl
uenc
eofChr
ist
iani
ty:Ani
mpo
rtanti
mpl
i
cat
iono
fChr
ist
iani
ty
i
sthep
rinc
ipl
ethatme
nar
eequal
int
hes
ighto
fGo
d;(
thati
s,al
lme
nar
echi
l
dre
n
o
fac
ommo
nfat
her
,andhe
ncebr
othe
rswi
thi
mmo
rtals
oulando
fequalv
alu
ein
e
ter
nit
y.)Ch
ris
tiani
ty‘
sbel
ie
fthatt
hiswo
rldi
sthep
rep
arat
iont
oano
the
rwo
rldl
ed
St
.Tho
mast
ost
atet
hat―e
venas
lav
emaye
nte
rthek
ingdo
mofHe
ave
n”.
Thev
iewso
fSt
.Tho
maswe
re,
the
refo
re,
theadmi
xtu
reo
fthet
eac
hingso
ftheBi
ble
andt
hep
hil
oso
phyo
fAr
ist
otl
e.
Hi
svi
ewsinp
art
icu
lara
n dt
hes
cho
las
ticwr
ite
rsi
ngene
ral
,canbebr
iefl
yst
ate
das
fo
ll
ows:
1
. Ro
leo
fthes
tat
e:Ac
cor
dingt
oSt
.Tho
masAqui
nas
,theSt
atewasfo
rthe
mai
nte
nanc
eofp
opu
lat
ion
,pr
ovi
si
ono
fthep
oor
,es
tabl
is
hme
nto
fsafeandfr
ee
r
oads
,andr
egul
ati
ono
fcu
rre
ncy.
Ther
egul
ati
ono
fcu
rre
ncywast
hou
g htne
ces
sar
y
bec
aus
eas
li
ghtc
hangei
nit
squant
itymi
ghtaffec
tit
spr
ice(
whi
chwasl
ate
r/i
nthe
mo
der
ner
ade
vel
ope
dast
hequant
ityt
heo
ryo
fmo
ney)
.
2
. Ex
changeandVal
ue:ToAqui
nast
hei
ssu
eofe
xchangewaso
fsi
gni
fic
ant
i
mpo
rtanc
einbar
ters
itu
ati
ons
.Itwashi
sbe
li
eft
hatt
heme
asu
reo
fex
change
bet
wee
nhe
ter
ogen
eou
sgo
odsi
ndi
cat
edt
hats
omev
alu
emu
stbep
lac
edo
neac
h
go
odandt
hatane
thi
caldi
le
mmawo
ulda
ris
e.Theo
nlyj
uste
xchangewo
uldbet
hat
o
ftwoi
den
tic
algo
odsfo
rthes
amequant
ity,bu
tthi
swo
uldber
edu
ndant
;
t
her
efo
re,s
omev
alu
ewo
uldhav
etobee
stabl
is
hedfo
rthego
odsi
nor
derfo
rth
e
e
xchanget
obej
ustt
obo
thbu
y e
rands
ell
er(
ori
nhi
scas
etr
ade
rs,
bei
ngt
hatl
i
ttl
e
t
onomar
kete
xis
tedfo
rsu
rpl
usc
ommo
dit
ies
).Thi
spo
sed,
forh
im,
t hee
thi
cal
a s
pec
t
o
fpr
ice
s,r
ais
ingi
ssu
eso
fequi
tyan
dju
sti
ce‖.
3
. Pr
ohi
bit
iono
fus
ury:Ofc
our
set
hisc
onc
eptwase
xpl
i
cit
lys
tar
tedi
nthe
Ar
ist
otl
e‘
spe
rio
dbuthasal
sobo
rro
wedi
dea
sfr
omt
het
eac
hingso
fChr
ist
iani
ty.
Thebi
blet
eac
hest
hataChr
ist
ians
hou
ldl
endho
pingfo
rno
thi
ngagai
n.
Whe
ntheque
sti
onfi
rste
mer
ged,
usu
rywa
sfo
rbi
dde
non
lyt
ocl
eri
cso
rcl
ergy;a
n d
5
7
l
ate
rpr
ohi
bit
ionwasmadegene
ral
.

5
8
I
nthehandso
fSt
.Tho
masAqui
nasu
sur
yinv
olv
esano
ffenc
eagai
nstj
ust
ice
.Hi
s
ar
gume
ntr
est
sont
he di
sti
nct
ionbe
twe
ent
hos
eit
ems fo
r whi
chu
sea
n d
c
ons
ump
tio
ncanno
tbes
epar
ate
dandt
hos
efo
rwhi
cht
heyc
anbes
epar
ate
d.
 Wi
ne&Br
ead:u
seandc
ons
ump
tio
nar
eide
nti
cal
.
 Car&Ho
use
:Us
eandCo
nsu
mpt
ionar
edi
ffe
ren
t.
 Mo
ney:u
seandc
ons
ump
tio
ncanno
tbes
epar
ate
d.I
n mo
neybo
rro
wed,
o
wne
rshi
pist
rans
fer
red.
Iti
spai
dfo
rtheho
lde
r.
I
nthec
aseo
fmo
ney,hear
gue
d,us
eandc
ons
ump
tio
nar
eins
epar
abl
e.St
.Tho
mas
fur
the
rar
gue
sthatal
oano
fmo
neyi
sinfac
tbo
undt
obeas
ale(
achangeo
f
o
wne
rshi
p);
y o
ucan‘
tsal
etheu
seo
fmo
ney.
Asi
tisi
nadmi
ssi
blet
osel
lbr
eadt
oamanands
imul
taneo
usl
ychar
gehi
mfo
rtheus
eof
i
t,s
oiti
sinadmi
ssi
blet
osel
lmo
neyandc
har
geal
sofo
rit
sus
e.Thepr
operpr
icei
sthe
r
etur
noft
hes
amemo
ney;t
headdi
ti
onalc
har
gefo
rit
sus
eiso
fthenat
ureo
f
s
windl
e/fr
aud.
4
. Go
odandJ
ust
ice:Ce
ntr
alt
othet
heo
rie
soft
heSc
hol
ast
icsi
stheno
tio
nthat
mani
sdi
rec
tedt
hro
ughhi
sint
erac
tio
nswi
thh
iss
oci
etybyfr
eewi
l
l,andau
tono
my.
Thi
smo
ralp
hil
oso
phyhasbee
nint
rodu
cedi
ntoe
cono
mic
sbyAqui
nas
,AdamSmi
th,
J
.S.Mi
ll
,andKar
lMar
xtonameafew.―I
tisamat
tero
fco
mmo
nex
per
ienc
ethat
o
urc
ondu
cti
smo
tiv
a t
edbydi
ffe
ren
tai
ms:r
iche
s,h
ono
r,mat
eri
alp
leas
ure
,so
cia
l
p
osi
ti
ons
,et
c.‖
5
. Pr
ivat
epr
oper
ty:Heh
oldst
hat―p
oss
ess
ioni
snat
ura
ltoman‖.Pr
ivat
e
p
rop
ert
yisno
tco
ntr
aryt
othenat
urall
aw;r
athe
riti
sadde
dtonat
urall
awbya
fur
the
rcr
eat
iono
fhu
manr
eas
on.
St
.Aqui
nasdi
sti
ngui
she
dthet
wok
indso
fri
ght
swh
ichme
nmayh
a v
ein
t
hings
:i.
T her
ightt
oac
qui
reandadmi
nis
terp
rop
ert
y–p
riv
atei
i.
T he
r
ightt
ous
e–c
ommu
nal
6
. J
ustp
ric
e:TheSc
hol
ast
icsp
reac
hedt
hec
onc
epto
f'j
ustp
ric
e'.Thet
wo

5
9
c
ardi
nalec
ono
micdo
ctr
ine
soft
hemi
ddl
eagesar
efo
undi
ntheno
tio
nofj
ustp
ric
e
andt
hep
rohi
bit
iono
fus
ury.A j
ustp
ric
eist
hep
ric
eequi
val
entt
othatt
he
p
rodu
cerne
edst
oli
ve

6
0
ac
cor
dingt
ohi
sra
nk;t
hati
sap
ric
ethats
uit
abl
ysu
ppo
rtst
hep
rodu
cera
cco
rdi
ng
t
ohi
srank
.
Thei
deao
fju
stp
ric
eemanat
esfr
omt
heu
nde
rst
andi
ngt
hatwear
ebr
othe
rsand
s
hou
ldbehav
easbr
othe
rs,r
esp
ect
inge
acho
the
r‗sr
ightandp
osi
ti
onso
fli
fe;
he
ncee
achs
hou
ldr
ece
ivet
hatt
o whi
chhei
sent
itl
ed.No o
ne,u
nde
rany
c
irc
ums
tanc
es,
sho
uldt
akeadv
ant
ageo
fhi
sne
ighbo
rs.

3.
5.MERCANTI
LISM

3.
5.
1. I
ntr
oduc
tio
n

Merc
anti
li
smisec
ono
micna
tio
nal
is
mfo
rthep
urp
oseo
fbu
il
dingawe
alt
hyand
po
werfuls
tat
e.
Adam Smi
thc
oin
edt
het
erm ―me
rcan
til
esys
tem‖ t
odes
cri
bet
hes
yst
emo
f
p
oli
tic
ale
con
omyt
hats
oughtt
oenr
icht
hec
oun
trybyr
est
rai
nin
gimp
ort
sand
e
nco
ura
g i
nge
xpo
rts
.Thi
ssys
temdo
mina
tedWe
ste
rnEu
rop
eane
cono
mict
hou
g ht
fr
omt
he16t
htot
hel
ate18Thc
ent
uri
es.

Thego
alo
fMe
rcan
til
is
tpo
li
ci
eswas
,su
ppo
sedl
y,t
oac
hie
vea―fav
ora
b l
e‖bal
anc
eof
t
radet
hatwo
uldbr
inggo
ldands
il
veri
ntot
hec
ount
ryanda
lsot
omai
ntai
n
do
mes
tice
mpl
oyme
nt.
Theme
rcant
il
esys
tems
erv
edt
hei
nte
res
tso
fme
rchant
san
d
p
rodu
cer
ssu
cha
sth
eBr
iti
shEas
tIndi
aCo
mpany,who
seac
tiv
iti
eswe
rep
rot
ect
ed
o
renc
our
agedbyt
hes
tat
e.

Themo
sti
mpo
rtante
con
omi
cra
tio
nal
efo
rme
rca
nti
l
ismi
nth
e16t
hce
ntu
rywa
s
t
hec
ons
oli
dat
iono
fth
ere
gio
nalp
owe
rce
ntr
eso
fth
efeu
dale
rabyl
arge
.Ot
her
c
ont
ribu
tin
gfac
tor
s we
ret
hee
stabl
i
shme
nto
fco
loni
eso
uts
ide Eu
rop
e;t
he
gr
owt
hof Eu
rop
eanc
omme
rceandi
ndus
tryr
elat
ivet
oagr
icu
ltu
re;t
hei
ncr
eas
ein
t
hev
olu
meandbr
eadt
hoft
rade
;andt
hei
ncr
eas
eint
heu
seo
fme
tal
l
icmo
net
ary
s
yst
ems
,par
tic
ula
rlygo
ldands
il
ver
,re
lat
ivet
obar
tert
rans
act
ions
.

6
1
Du
ringt
heme
rca
nti
l
istp
eri
od,mi
li
tar
yco
nfl
ic
tbe
twe
ennat
ion-s
tat
eswasbo
th
mo
refr
eque
ntandmo
ree
xte
nsi
vet
hanatanyo
the
rti
mei
nhi
sto
ry.
Ine
xchangefo
r
p
ayi
ngl
evi
esandt
axe
stos
upp
ortt
hear
mie
soft
henat
ion-s
tat
es,t
heme
rcant
il
e
c
las
sesi
ndu
cedgo
ver
nme
ntst
oenac
tpo
li
ci
est
hatwo
uldp
rot
ectt
hei
rbus
ine
ss
i
nte
res
tsagai
nstfo
rei
gnc
omp
eti
ti
on.
Thu
s,me
rcant
il
is
twr
ite
rswe
ree
sse
nti
all
ypr
act
icalbus
ine
ssme
n,me
rchan
tsand
admi
nis
trat
orsi
nvar
iou
sEu
rop
eanc
ount
rie
sli
keEngl
and,Fr
anc
e,I
tal
y,Ge
rmany,
Sc
otl
and,
andSp
aine
tc.

Thei
deasandp
oli
ci
eswhi
chdo
minat
edt
hee
cono
mics
ceneo
fEngl
and'
andap
art
o
fEu
rop
ebe
twe
ent
hec
los
eoft
he1
6thc
ent
uryandt
hemi
ddl
eoft
he1
8 t
h
c
ent
uryc
anr
ight
lybec
all
edasmer
cant
il
is
m.Me
rcant
il
is
twr
ite
rsp
ute
mphas
iso
n
fo
rei
gnt
radea
same
anso
fac
cumu
lat
ingt
reas
ureandbu
il
dingas
tro
ngnat
ion.

3.
5.
2. Fac
tor
sre
spo
nsi
blefort
her
iseo
fMe
rcant
il
is
m

Thegr
owt
hofMe
rcant
il
is
mwast
her
esu
lto
fco
mbi
nat
iono
ffac
tor
sli
kec
ult
ural
,
r
eli
gio
us,p
oli
ti
calande
cono
micfac
tor
s.I
nthebe
g i
nni
ngo
fth
e16t
hcent
ury
Eu
rop
ewi
tne
sse
dgr
eatr
eli
gio
usandi
nte
ll
ect
ual
awa
keni
ngdu
etoRefo
rmat
ionand
Pr
otes
tant
ism.The
set
womo
veme
ntsas
soc
iat
edwi
tht
hename
sofEr
asmusand
Mar
tinLut
herr
esp
ect
ive
lywhi
chgav
eagr
eats
timu
lust
othei
deaso
findi
vi
dual
i
sm
andp
ers
ona
l fr
eedo
mandwe
ntal
ongwayi
nde
vel
opi
ngt
hec
onc
ept
sofp
rop
ert
y
andc
ont
rac
tri
ght
swhi
chi
ntu
rnl
edt
othegr
owt
hofc
omme
rceandfr
eee
xchange.

Re
n ai
ssanc
epl
ayede
venmo
res
igni
fic
antr
oleandhi
ghl
i
g ht
edt
hee
leme
nto
f
hu
mani
sm.I
tcha
lle
ngedt
heme
die
valt
heo
logi
anc
onc
eptt
hath
a p
pine
ssi
nhe
ave
n
s
hou
ldbep
refer
redo
verwo
rldl
yhap
pine
ss,a
n das
ser
tedt
hathap
pine
sso
nthi
s
e
art
hwast
obep
refer
redo
vert
hep
romi
sedp
leas
ure
soft
heo
the
rwo
rld.

Thei
mpo
rtantfac
tor
sar
egi
veni
nde
tai
lbe
low:

6
2
(
1) Ec
ono
micFac
tor
:To
war
dst
hee
ndo
fth
e15
Thc
ent
ury,e
con
omi
c
c
hange
swe
ret
aki
ngp
lac
einEu
rop
eanc
ount
rie
s.Thei
mpo
rta
nte
con
omi
c
c
hange wast
he de
cli
neo
f fe
udal
i
sm andi
ts gr
adu
alr
epl
ace
men
tby
Co
mmer
cialCapi
tal
is
m.Themar
kete
cono
mywass
lowl
yeme
rgi
ng,r
epl
aci
ng
t
hefe
udal
is
tics
elf-s
uffi
ci
entl
ocale
cono
my.
Agr
icu
ltu
rewasbei
ngr
epl
ace
dbyt
radeandc
omme
rce
.
Mo
net
aryt
rans
act
ionswe
rer
api
dlye
xpandi
ng.Thefeu
dals
oci
ety was
r
api
dlybr
eak
ingu
pandc
omme
rci
als
yst
em wasgr
adu
all
yev
olv
ing.Thi
s
p
ave
dth
ewayfo
rther
iseo
fac
omme
rci
als
yst
emu
singmo
ney.
(
2) Po
li
ti
calFac
tor
s:Themaj
orp
oli
ti
calc
hangewast
het
rans
iti
onfr
om
feu
dal
is
mtona
tio
nal
i
sm.

Bu
il
dingu
pas
tro
ngnat
ions
tat
ewasi
nthefo
refr
ont
.InmanyEu
rop
eanc
ount
rie
s
feu
dal
is
mwass
upe
rse
dedbyt
hefo
rmat
iono
fnat
ions
tat
es.
The
sec
ount
rie
sre
q u
ire
das
tro
ngGo
ver
nme
nt.Theme
rchant
sandt
radi
ng
c
ommu
nit
ywe
rel
ook
ingfo
rwar
dfo
ras
tro
ngc
ent
ret
opr
ote
ctt
hemfr
om
r
ival
sandt
ono
uri
sht
hei
rtr
adi
ngi
nte
res
ts.
(
3) Rel
igi
ousFac
tor
s:Thei
deaso
f Re
f o
rma
tio
nan
dPr
ote
stant
ism
s
pre
adi
ndi
vi
dual
is
mandp
ers
onalfr
eedo
m.TheRe
f o
rmat
ionmo
veme
nt
r
evo
lte
dagai
nstt
hes
upr
emac
yof Ro
man Cat
hol
i
c Chu
rchandt
he
au
tho
rit
yoft
hePo
pe.The
ser
eli
gio
usc
hangesh
elp
edal
oti
nde
vel
opi
ng
p
rop
ert
yri
ght
san
dco
ntr
actr
ight
swhi
chwe
ree
sse
nti
alfo
rthegr
owt
hof
c
omme
rce
.
(
4) Cul
tur
alFac
tor
s:Me
die
val
the
olo
gyl
aide
mphas
iso
nhe
ave
nlyhap
pin
ess
.
I
tpr
eac
hedt
hep
eop
let
ode
tac
hfr
om mat
eri
alwe
alt
h.Agai
nstt
hist
wo
i
mpo
rtantc
ult
uralc
hangesar
osei
nthes
oci
ety.The
yar
ere
nai
ssa
n c
eand
hu
mani
sm.
The
sec
ult
ural
chan
g e
sgav
eemp
has
ist
ocr
eat
ivehu
manac
tiv
iti
es,

6
3
ac
qui
si
ti
ono
fwe
alt
h,andt
radeandc
omme
rce
.Thi
sne
wide
olo
gywasabl
e
t
oup
hol
dthes
pir
ito
fthet
rade
rsandme
rchant
stoac
cumu
lat
ewe
alt
h.

6
4
(
5) Di
sco
ver
iesandI
nvent
ions
:Va
rio
usdi
sco
ver
iesandi
nve
nti
onsp
layed
ani
mpo
rtantr
olei
nthep
romo
tio
noft
radeandc
omme
rceandhe
lpe
dthe
de
vel
opme
nto
fme
rcant
il
is
ttho
ught
.Eg.i
nve
nti
ono
fMar
ine
r'sc
omp
ass
,
Co
lumbusDi
sco
ver
yofAme
ric
a,Di
sco
ver
yofGo
lda
n ds
il
vermi
nesi
nthe
ne
wwo
rld,
thei
nve
nti
ono
fpr
int
ingp
res
s,ne
wse
aro
utet
oIndi
aet
c.h
elp
ed
al
otfo
rthee
xpa
nsi
ono
ffo
rei
gnt
radeandde
vel
opme
nto
ffo
rei
gnmar
ket
s.
Al
ltheabo
vefac
tor
she
lpe
dthegr
owt
hofme
rcant
il
is
m whi
chwasan
ew
adv
ent
urei
nth
edi
rec
tio
noft
hec
omme
rci
alme
rchantc
api
tal
i
smi
nthe
Eu
rop
eanc
ount
rie
s.

3.
5.
3.Theanal
yti
cal
cont
ribut
ionso
fme
rcant
il
is
tst
otheec
ono
mict
heo
ry

(
1) Co
ncepto
f Nat
ional
is
m:The me
rcant
il
is
temp
has
ize
donnat
ional
s
tre
ngt
handp
ros
per
ity.Thebui
ldi
ngu
pofanat
ions
tat
ewasp
uti
nthe
fo
refr
ont
.St
atei
nte
rve
nti
onwasane
sse
nti
alp
arto
fme
rcant
il
is
tdo
ctr
ine
.
Ec
ono
mic
all
yex
pans
iono
fco
mme
rceandt
radeandp
oli
ti
cal
l
ysu
cce
ssi
nwar
we
ret
hei
rnat
ural
g o
als
.
Thi
sca
nbeac
hie
vedo
nlybyas
tro
ngNat
ionbu
il
tup
ont
hes
pir
ito
fnat
ional
i
ty.
Thu
stheme
rca
nti
li
stsde
mande
das
tat
etobes
tro
nge
nou
g ht
opr
ote
ctt
he
t
radi
ngi
nte
res
ts.
(
2) I
mpo
rtanc
eofTr
eas
ure
:Tot
he me
rca
n t
il
is
tst
he mo
sti
mpo
rtant
c
onc
ernwast
hes
tre
ngt
hoft
hec
ount
ry.Tot
heme
rcant
il
is
tst
hes
tre
ngt
hof
hi
sco
unt
ryde
pendsu
pont
hes
toc
kofwe
alt
hwhi
cht
henat
ionp
oss
ess
es.By
we
alt
hth
eyme
ant
hes
toc
kofp
rec
iou
sme
tal
s.Ac
cor
dingt
oth
eme
rcant
il
is
ts
t
hegr
eatandu
lti
mat
eeffec
toft
radei
sno
twe
alt
hatl
argebu
tpar
tic
ular
ly
abundanc
eofs
il
ver
,go
ldandj
ewe
ls,whi
char
eno
tpe
ris
habl
e.He
ncet
he
6
5
me
rcant
il
is
tat
tac
hedgr
eati
mpo
rtanc
etot
reas
urea
n dbu
ll
io
nast
hemo
st
u
sefula
ndgene
ral
lyac
cep
tedfo
rmo
fwe
alt
h.Thei
mpo
rtants
logansr
ais
edat
t
het
imewe
re“
gol
dmo
rego
ld,
weal
thmo
reweal
th”
.

6
6
(
3) Fo
rei
gn Tr
ade and Bal
anc
eofTr
ade:The me
rcant
il
is
tco
nsi
der
ed
t
reas
ure(
Gol
d,Si
lv
er,
prec
iousmet
als
)aswe
alt
hpare
xce
ll
enc
e.
Theme
rca
n t
il
is
tco
nsi
der
edfo
rei
gnt
radea
stheo
nlys
our
cefo
rac
qui
ri
ng
go
ldan
dsi
l
ver
.Inr
esp
ecto
fit
sex
por
tsac
ount
rymu
str
ece
ivep
ayme
ntsi
n
t
hefo
rmo
fsi
lv
ero
rgo
ld.I
nor
dert
oinc
reas
ethes
upp
lyo
fBu
ll
io
nina
c
ount
ry,i
tisne
ces
sar
yth
att
her
ebea―fa
vou
rabl
ebal
anc
eoft
rade‖
r
epr
ese
nte
dbye
xce
sso
fex
por
t,o
veri
mpo
rt.
Soi
tise
asyt
oco
ncl
udet
hatal
l
e
xpo
rtsi
nthenat
ureo
fgo
odsar
ego
odandde
sir
abl
ewhe
reasal
limp
ort
s
ar
eev
ilanddamn
a bl
e.
(
4) I
ndus
tri
alandCo
mmer
cialRegul
ati
ons
:Theme
rcant
il
is
tsfo
ll
owe
da
nu
mbero
fpo
li
ci
esi
nor
dert
omax
imi
zet
hene
tgai
nfr
omfo
rei
gnt
rade
.
Themai
nst
rat
egyi
stoi
ncr
eas
ethep
rodu
cti
ono
fex
por
tabl
eco
mmo
dit
ies
i
nthedo
mes
tice
con
omyandt
ore
duc
ethei
mpo
rto
far
tic
lesfr
omfo
rei
gn
c
ount
rie
s.I
nor
dert
omax
imi
zeo
utp
uti
nthe do
mes
tice
con
omy,t
he
me
rcant
il
is
tsu
g ges
tedt
hefo
ll
owi
ngme
tho
ds/pr
oce
dur
es.
(
a) Landr
eso
urc
esmaybeful
l
yut
il
iz
edandfal
l
owl
andsmaybebr
oughtunder
c
ult
ivat
ion.
(
b) Empl
oymento
ppo
rtuni
ti
ess
houl
dbei
ncr
eas
ed,s
othatunempl
oyedhuman
r
eso
urc
esc
anbeut
il
iz
edfo
rinc
reas
ingpr
oduc
tio
nofgo
odsmeantfo
rex
por
t.(
c)
Bet
termet
hodandt
echni
queo
fpr
oduc
tio
nsho
uldbei
ntr
oduc
edi
nthepr
oduc
tio
n
pr
oces
s.
(
d) I
nor
der t
oinc
reas
e pr
oduc
tio
n and empl
oyment
,'t
he mer
cant
il
is
ts
adv
ocat
edas
yst
emo
flo
wwagel
evel
.
(
e) Co
lon
iesc
anbeu
til
iz
edass
our
ceo
frawmat
eri
al
stot
hemo
the
rco
unt
ry.
Al
ongwi
tht
hisas
eri
eso
ftr
ader
egu
lat
ionsandp
oli
ci
eswe
refr
ame
dbyt
he
me
rcant
il
is
ts.The
sep
oli
ci
eswe
reai
medate
xpo
rtpr
omo
tio
nandi
mpo
rt
r
est
ric
tio
n.Thei
mpo
rtantamo
ngt
hemwe
re:

6
7
(
a)Res
trai
ntso
nthei
mpo
rtat
iono
ffo
rei
gngo
odses
pec
ial
l
ymanufac
tur
edgo
ods
(
b)Enc
our
age
mentt
othee
xpo
rto
fmanu
fac
tur
edp
rodu
cts
(
c)Res
tri
cti
ono
ntheex
por
tofr
awmat
eri
al
s

6
8
(
d)Res
tri
cti
ono
nthei
ndus
tri
eswhi
chi
nter
fer
ewi
tho
theri
ndus
tri
eso
rtr
adeso
f
gr
eat
ernat
ional
impo
rtanc
e.
(
e)Bano
ntheex
por
tofbul
l
ion
(
f)Es
tabl
is
hmento
fbank
sandt
hepr
omo
tio
nofus
eofc
redi
tins
trument
s.
(
5)Ro
leo
fGo
ver
nment
I
nor
dert
oex
ecu
teal
lthe
irs
che
mesandp
rogr
ams
,theme
rcant
il
is
tsl
ook
ed
t
oaben
evo
lent
lyp
ate
rnalgo
ver
nme
ntwhi
chc
ani
nte
rfer
eev
erywhe
re.
The
rewasno
thi
ngt
hego
ver
nme
nto
ughtno
ttodo
,ifi
tsac
tiv
iti
eshe
lpt
o
p
romo
tet
hegen
eralwe
ll
bei
ng.Thec
ont
rolandr
egul
ati
ono
fthe
go
ver
nme
ntar
ees
sent
ialfo
rtheat
tai
nme
nto
ffav
our
abl
ebal
anc
eof
t
rade
.Al
mos
tal
lki
ndo
fpr
ote
cti
oni
star
gume
ntsar
eav
ail
abl
eint
he
me
rcant
il
is
twr
iti
ng.
Themer
cant
il
is
tpr
ote
cti
onar
gumentc
anbes
umme
dupasfo
ll
ows
;
(
a)Pr
ote
cti
onma
ybegr
ant
e os
dt t
rat
egi
cindu
str
ies
.The
sei
ndu
str
ieswh
ichar
e
s
trat
egi
cfo
rthenat
ionbo
thi
nte
rmso
fthe
ire
xpo
rtc
ont
ribu
tio
nandal
soi
n
t
ermso
fthe
irc
ont
ribut
iont
oec
ono
micde
vel
opme
ntc
anbee
armar
kedbyt
he
go
ver
nme
nto
fthec
ount
ry.
(
b)Pr
ote
cti
onmayal
sobegr
ant
edt
othewe
a kbtp
u r
omi
si
ngi
ndu
str
ieswhi
chwe
re
a
tth-i
e nfants
tageo
fgr
owt
h.
(
c)Pr
ote
cti
onma
yal
sobegr
ant
edt
othede
fens
eindu
str
ies
(
d)Pr
otect
ionmaybegi
venfo
rindu
str
ieswhi
chhe
lpfo
rtheat
tai
nme
nto
f
s
elfs
uffici
enc
y
ands
elf-r
eli
anc
efo
rthec
ount
ry.
(
e)Pr
ote
cti
onmayal
sobegi
vent
oindu
str
ieswhi
char
eengagedi
npr
odu
cingi
mpo
rt
s
ubs
tit
utabl
eandex
por
tpr
omo
tinggo
ods
.
(
6) I
deaso
nMo
ney:I
nme
rcant
il
is
twr
iti
ngani
mpo
rtantr
olewasas
signe
d
t
omo
ney.Mo
neywasde
sir
edt
obeu
sedasamedi
umo
fex
change.J
ustas
ani
ndi
vi
duals
ave
sou
tofhi
sinc
ome
,ac
ount
rymu
sts
pendl
esst
hani
ts

6
9
i
nco
me,
ifi
twa
ntst
oinc
reas
eit
swe
alt
h.Tot
heme
rcant
il
is
twe
alt
hofa
nat
ionl
ayi
nit
s

7
0
p
rodu
cti
vec
apac
ity.Me
rcant
il
is
tsdi
sfav
ore
dth
eide
aofac
cumu
lat
ingmo
neyas
t
reas
ure
.Thu
s,me
rcant
il
is
tmai
ntai
nedt
hedo
ctr
inet
hatmo
neys
timu
lat
est
rade
.

3.
5.
4.Par
tic
ularEc
ono
micTheo
ries

(
1) Val
ue:Val
uewasi
nhe
renti
nco
mmo
dit
iesandde
pen
dsu
ponhu
manne
eds
.
Va
luewasr
egar
dedasa mar
ketp
heno
meno
n,whi
ch de
pen
dsu
pone
xchange.
Me
rcant
il
is
tsdi
sti
ngui
she
dbet
wee
ntwot
ype
sofv
alu
e.Tha si
ti n
tri
nsi
cval
ueand
e
xtr
ins
icv
alu
e.I
ntr
ins
icv
alu
eist
hep
owe
roft
hec
ommo
dit
ytos
ati
sfyhu
manwa
n t
s.
Bye
xtr
ins
icv
alu
e,t
heme
rcant
il
is
tsme
ano
nlyt
hec
osto
fpr
odu
cti
on.
Wil
l
iamPet
ty
c
lear
lyme
nti
one
dth
atv
alu
ede
pendsu
pone
xpe
nse
sofp
rodu
cti
on.Ac
cor
dingt
o
hi
mmar
ketv
alu
ewast
hee
xtr
ins
icv
alu
eofc
ommo
dit
ywhi
chfl
uct
uat
edac
cor
ding
t
oar
iseo
rfal
li
nthes
upp
lyandde
mand.

(
2) Pr
oduc
tio
n:Ac
cor
dingt
ome
rca
nti
li
sts
,pr
odu
cti
onwasap
roc
esso
fap
pli
cat
ion
o
fhu
manl
abo
urt
ore
sou
rce
sandhe
ncet
heyadv
ocat
edani
ncr
eas
eofl
abo
urand
r
eso
urc
es.Me
rcant
il
is
tsr
egar
dedagr
icu
ltu
reasi
nsi
gni
fic
ant
.The
ybe
li
eve
dthat
fo
rei
gnt
radeal
onewast
he,r
oos
tpr
odu
cti
ve.The
ymadeadi
sti
nct
ionbet
wee
n
p
rodu
cti
veandu
npr
odu
cti
vel
abo
ur.
Thel
abo
uro
fame
rchant
,amanu
f ac
tur
eranda
far
merwasc
ons
ide
redp
rodu
cti
ve.Labo
uro
fpr
ofes
sio
nal
per
sonsl
i
kedo
cto
rs,
sto
ck
br
oke
rsands
hopk
eep
erswasc
ons
ide
redu
npr
odu
cti
ve.

(
3) Tax
ati
on:Thev
iewso
f me
rcant
il
is
tont
axat
ion we
requi
tei
nte
res
ting.
Me
rcant
il
is
tsfav
our
edamul
ti
plet
axs
yst
embas
edo
nthebas
icp
rinc
ipl
eofe
ach
s
hou
ldp
aya
cco
rdi
ngt
othebene
f i
tsr
ece
ive
dfr
omt
hes
tat
e.The
yhe
ldt
hatman
s
hou
ldbet
axe
dac
cor
dingt
othee
xpe
ndi
tur
einc
urr
edbyh
im,
inhi
sop
ini
on;at
axo
n
e
xpe
ndi
tur
eist
hemo
ste
q u
itabl
e.
Ge
ner
all
ysp
eak
ingt
heme
rcant
il
is
tsfav
our
edl
awc
ust
oms
,ex
cis
edu
tie
s,at
axo
n
i
nte
res
tet
c.The
irc
hie
fcanno
noft
axat
ionwast
ha fe
to qui
ty.

7
1
(
4) Po
pul
ati
on:Me
rcant
il
is
tfav
our
edi
ncr
eas
ingp
opu
lat
ionfo
r mai
ntai
ni
ng
mi
li
tar
yst
rengt
h.I
twasal
soadv
ocat
edfo
rinc
reas
einp
rodu
cti
vec
apac
ityo
fthe
e
con
omy.The
ybe
li
eve
dthatc
hea
pandabu
ndants
upp
lyo
flabo
urwo
uldhe
lpi
n
k
eep
ingt
hec
osto
fpr
odu
cti
onatl
owe
rle
vel
s.The
yenc
our
agedfami
l
yli
fea
n d
p
are
ntho
od.

(
5) I
nter
est
:The
rewasnou
nifo
rmi
tyo
fop
ini
onr
egar
dingt
hei
nte
res
tco
nce
pt.
Tho
masMu
n,Lo
ckea
n dNo
rthfav
our
edi
nte
res
ttak
ingi
nmo
neyl
endi
ng.Ac
cor
din
g
t
othe
m mo
neyl
endi
ngp
rov
ide
dthene
ces
sar
ycap
italt
othep
oorme
rchant
s.
Fu
rth
eri
tal
sol
edt
ogai
nfule
mpl
oyme
nto
fthes
avi
ngo
fwi
dows
,or
phansand
o
the
rs.
Butt
heme
rcant
il
is
tswe
reo
ppo
sedt
ohi
ghr
ateo
fint
ere
st.

3.
5.
5. I
mpo
rtantMer
cant
il
is
tWr
iter
s

Si
rWi
ll
iamPet
ty(
1623
- 1685
)

Pet
tyi
sre
g a
rdedast
hefo
unde
rofp
oli
tic
ale
con
omy.He i
sre
membe
red
fo
rhi
sco
ntr
ibu
tio
nint
hefi
el
dofs
tat
ist
ica
lme
tho
d sa
n de
con
omi
cth
eor
y.He
wast
hefi
rstt
odev
elo
pafac
t fi
ndi
nga
ppr
oac
hone
con
omi
cenqui
ry.As a
s
tat
ist
ic
ianPet
tyc
onfi
nedh
ims
elfo
nlyt
oth
eemp
loyme
nto
fqua
nti
tat
ivedat
a
andu
seds
imp
lea
ver
ageast
hes
tat
is
tic
alt
echno
logy.
Hismo
stfa
mou
swo
rkwa
sth
e
Tr
e at
iseo
ftax
esandc
ont
ribut
ions(
166
2).

Tho
masMun(
1571-1641)

Hewasbo
rni
nEn
glandi
n1571.Hewasame
rchan
tbyp
rofe
ssi
on.Hi
sfa
mou
sbo
ok
sEn
i gl
and'
sTr
eas
ureo
fFo
rei
gnTr
ade.Mu
nwa
sre
spo
nsi
bl
efo
rsh
api
ngt
het
rade
p
oli
ci
eso
f En
gla
n ddur
ingh
ist
ime
.He adv
ocat
edt
hefunda
men
talr
uleo
f
I
nte
rnat
ion
alTr
ade
.Tohi
mth
eru
leo
fin
ter
nat
ion
alt
rades
hou
ldbe―t
osel
lmo
re
t
ost
ranger
syear
lyt
hanwec
ons
umeo
fth
emi
nvo
lume.
‖

7
2
Hewasanar
dentbel
ie
vero
fnat
ional
is
man
das
tro
nggo
vt.Thi
sac
cor
dingt
ohi
m
wo
uldber
eal
iz
edo
nlybyac
cumu
lat
iono
ftr
eas
ure
.

7
3
Hes
ugges
tedi
mpo
sit
iono
fhe
avyi
mpo
rtdu
tie
songo
odsme
antfo
rdo
mes
tic
c
ons
ump
tio
nandmo
der
atedu
tie
sone
xpo
rt.Heal
sor
eco
gni
zedt
hei
mpo
rtanc
eof
t
axa
tio
n.

Dav
idHume(
1711-1776
)

Hu
mewasac
los
epe
rso
nalfr
iendo
fAdam Smi
th.Hu
mec
oul
dbec
all
edal
iber
al
mer
cant
il
is
t;hehado
nefo
oti
nme
rcant
il
is
m,bu
twi
tht
heo
the
rst
epp
edfo
rwar
d
i
ntoc
las
sic
alp
oli
ti
cal
eco
nomy.
Ini
nte
rnat
iona
ltr
adet
heo
ryHu
me‘
sco
ntr
ibu
tio
nhas
bec
omek
nowna
step
h r
ices
pec
ie-fl
owmec
hani
sm.Hu
mep
oint
edo
utt
hati
two
uld
bei
mpo
ssi
blefo
rane
cono
myt
omai
ntai
nafav
orabl
ebal
anc
eoft
radec
ont
inu
ous
ly,
asmanyme
rcant
il
is
tsadv
ocat
ed.I
fonec
ount
ryhasafav
orabl
ebal
anc
eoft
rade
,
s
omeo
the
rco
unt
ryo
rco
unt
rie
smu
stbehav
inganu
nfav
orabl
ebal
anc
e.

Ri
char
dCant
il
lo
n(1680-1734
)

Ca
nti
ll
on wasp
artme
rcant
il
is
t(mo
stl
yinh
isv
iewso
nfo
rei
gnt
rade
),p
art
p
hys
ioc
rat(
inhi
semp
has
iso
nthep
rimar
yro
leo
fagr
icu
ltu
rei
nthee
cono
my)
,and
p
artp
hys
ioc
rat
-cl
ass
ical(
inhi
svi
si
ono
fthei
nte
rre
lat
edne
sso
fthev
ari
ous
s
ect
orso
fthee
cono
my)
.Cant
il
lo
n de
f i
ned we
alt
hase
ver
ythi
ngt
hatgi
ves
s
ati
sfac
tio
nandl
abo
urandc
api
tala
sthet
rues
our
ceo
fwe
alt
h.Cap
italwas
r
egar
deda
sade
pende
ntfac
torp
rodu
cedj
oint
lybyl
andandr
eve
nue
.Inh
is
di
scu
ssi
ono
nval
ue,
Cant
il
li
onde
f i
nedno
rmal
pri
ceo
fac
ommo
dit
yas'
ame
asu
reo
f
t
hequant
itya
ndqual
it
yofl
andandl
abo
ure
nte
rin
gint
oit
spr
odu
cti
on.Cant
il
lo
n's
mo
sts
igni
fic
antc
ont
ribu
tio
n wasi
nthefi
el
dof mo
ney.He anal
yse
dth
e
r
ela
tio
nshi
pbet
wenmo
e neys
uppl
yandpr
icel
evel
.

3.
5.
6. Cr
iti
ci
smo
fMer
cant
il
is
m

Me
rcan
til
is
m wass
eve
rel
ycr
iti
ci
zed.To
war
ds t
hee
ndo
f 17t
hce
ntu
ry,t
he
me
rcan
til
is
tth
eor
iesandp
rac
tic
eswe
res
tro
ngl
yop
pos
edbyma
nywr
ite
rswho

7
4
c
hamp
ion
edt
hec
aus
eofi
ndi
vi
dua
lli
ber
tyanda
gri
cul
tur
alp
roduc
tio
ns.Se
ver
e
c
rit
ici
smswe
rel
eve
ledbyt
he

7
5
p
hys
ioc
rat
sand Adam Smi
th.Thefo
ll
owi
ngc
rit
ici
sms we
rel
eve
ledagai
nst
me
rcant
il
is
mbyt
heo
ppo
nent
s:

1.Theme
rca
nti
li
stse
xagge
rat
edt
hei
mpo
rtanc
eofCo
mme
rcet
othee
xte
nto
f
de
pre
ssi
ngagr
icu
ltu
reando
the
rbr
anc
heso
fhu
mani
ndu
str
y.

2.Unduei
mpo
rtanc
ewasat
tac
he ogo
dt ldands
il
ver
.

3.The
ywe
reu
n re
de r
roneo
usbel
ie
fthatafav
orabl
ebal
anc
eoft
radeal
onewo
uld
br
ingp
ros
per
ityt
othec
ount
ry.

4.The
iri
deaa
b o
utv
alue
,ut
il
it
ycapi
tal
andi
nter
estwe
rev
agu
eandi
mpe
rfe
ct.

5.The
yarenar
rowmindednat
ional
is
tsandnotco
smopo
li
tans
.The
yco
uldno
t
c
oncei
vet
heidea
sofmu t
uall
yadvant
ag e
oust
rade
.

Me
rcant
il
is
mle
adst
oTI
TFORTATPOLI
CIES–h
ight
ari
ffso
nimp
ort
sle
adst
o
r
etal
iat
ion(
tak
ere
vengefo
rawr
ongac
tio
n).

Thegr
owt
hofgl
obal
iz
ati
onandfr
eet
radedu
rin
gth
epo
st-warp
eri
ods
howe
d
p
oss
ibi
li
ti
esfr
omo
pen
ingmar
ket
sandr
esp
ect
ingo
the
rco
unt
rie
sase
q u
alp
layer
s.
Ec
ono
mieso
fsc
alefr
oms
pec
ial
iz
ati
onp
oss
ibl
eun
derfr
eet
rade
.

Ho
wev
erwec
anno
tdi
smi
sst
hei
ride
asasu
sel
esso
rimp
rac
tic
al.Thei
deao
f
nat
ional
i
sm,s
elfs
uffi
ci
enc
yande
cono
mics
tre
ngt
hwe
ret
heo
utc
omeo
fthe
ir
p
oli
ci
es.Theme
rcant
il
is
tpo
li
cyp
rov
eds
ucc
ess
fuli
nFr
anc
e,Engl
and,Ho
ll
andand
Ge
rmanywhowe
rec
omp
eti
ngfo
rco
loni
als
upr
emac
y.

3.
6. PHYSI
OCRACY

ThePhys
ioc
rat
swe
reagr
oupo
fec
ono
mis
tswhobe
li
eve
dth
att
hewe
alt
hofn
ati
ons
wasder
iveds
ole
lyfr
omagr
icu
ltu
reo
rlandde
vel
opme
nt.The
irt
heo
rie
sor
igi
nat
edi
n
Fr
anc
eandwe
remo
stp
opu
lardur
ingt
hes
eco
ndha
lfo
fth
e18
thc
ent
ury.
7
6
Phys
ioc
rac
ywasp
erhap
sthefi
rstwe
llde
vel
ope
dthe
oryo
fec
ono
mic
s.Phys
ioc
rati
s
de
riv
edfr
omt
heGr
eekfo
r―Go
ver
nmento
fNat
ure‖.
Thep
rin
cip
leso
fPhys
ioc
rac
ywe
refi
rstp
utfo
rwar
dbyRi
cha
rdCa
n t
il
lo
n,a
nIr
ish
bank
erl
i
vin
ginFr
anc
e,i
nhi
s1756p
ubl
i
cat
ionEs
sais
url
anat
ureduc
omme
rcee
n
gé
ner
al(
Ess
ayo
ntheNat
ureo
fCo
mmer
cei
nGe
n e
ral
).
Thei
dea
swe
rel
ate
rde
vel
ope
dbyFr
anç
oisQu
esnayi
ntoamo
res
yst
emat
icbo
dyo
f
t
hou
g hthe
ldbyau
nit
edgr
oupo
fthi
nke
rs.
ThePhys
ioc
rat
ssawt
het
ruewe
alt
hofana
tio
nasde
ter
mine
dbyt
hes
urpl
uso
f
agr
icul
tur
alp
rodu
cti
ono
vera
n dabo
vet
hatne
ede
dtos
upp
ortagr
icu
ltu
re(
by
fee
din
gfar
mlabo
ure
rsands
ofo
rth
).Ot
herfo
rmso
fec
ono
micac
tiv
ity,s
uchas
manu
f ac
tur
ing,
ando
the
rno
n-agr
icu
ltu
rala
cti
vi
ti
eswe
res
eenas'
ster
il
e'i
nthat
t
hei
rinc
omede
riv
esu
lti
mat
elyno
tfr
omt
hei
rownwo
rk,bu
tfr
omt
hes
urp
lus
p
rodu
cti
ono
fth
eagr
icu
ltu
rals
ect
or.
ThePhys
ioc
rat
sst
rongl
yop
pos
edme
rcant
il
is
m,whi
che
mphas
ize
dtr
adeo
fgo
ods
bet
wee
nco
unt
rie
s,ast
heyp
ict
ure
dthep
eas
ants
oci
etya
sthee
con
omi
cfo
undat
ion
o
fanat
ion'
swe
alt
h.

3.
6.
1.Fac
tor
sRe
spo
nsi
blefort
heRi
seo
fPhys
ioc
rac
y

Phys
ioc
rac
ywa
sar
evo
ltagai
nstme
rcant
il
is
minFr
anc
e.Thi
swasdu
etot
he
de
ter
ior
ati
nge
cono
micands
oci
alc
ondi
ti
onsatt
hatt
imewhi
chwe
rec
hie
f l
ydu
eto
me
rcant
il
is
tpo
li
ci
es.Thev
ari
ousfac
tor
sre
spo
nsi
blefo
rthegr
owt
hofp
hys
ioc
rac
y
i
nFr
anc
ear
een
ume
rat
edbel
ow.
1.Tyr
annyandEx
trav
agantCo
urtLi
fe
Fr
anc
ewase
xpe
rie
nci
nganabs
olu
temo
nar
chybu
twi
tho
uti
tsp
ote
nti
albe
nev
ole
nce
.
Thel
ifeo
fth
epo
li
ti
caladmi
nis
trat
ors
,fr
omt
hek
ingdo
wnwar
ds,
wasv
eryl
uxu
rio
us
andc
orr
upt
.
Publ
ice
xpe
ndi
tur
ewasv
erye
xtr
avaganta
n dwas
teful
.

7
7
2.Regr
ess
iveTax
ati
on
I
nFr
anc
e,du
ringt
her
eignso
fLo
uis14
,tax
ati
onwasu
ndu
lyhe
avy,u
nju
stand
i
nequi
tabl
e.Theno
bil
it
yandc
ler
gyo
wne
dabo
utt
wo-t
hir
dso
fth
eco
unt
ry'
sland,
butt
heywe
reh
a r
dlyp
ayi
nganyt
axe
swhi
let
hep
oorp
eas
ant
swe
rebei
ngc
rus
hed
u
nde
ral
lso
rtso
fle
vie
sinaddi
ti
ont
othee
xto
rti
oni
stl
andr
ent
s.Themanne
roft
ax
c
oll
ect
ionwa
sal
soh
ighl
yde
plo
rabl
e.Obv
iou
slyt
hefar
mer
swe
rehar
dlyl
eftwi
th
anys
urp
luswhi
cht
heyc
oul
dus
efo
rimp
rov
eme
nto
flando
rfo
rimp
rov
ingt
hei
rown
c
ons
ump
tio
nst
anda
rds
.Thep
eas
ant
sal
soh
adt
obe
art
hebu
rde
nofp
rov
idi
ng
s
erv
ice
stot
hefeu
dal
lor
ds.3.
Reac
tio
nagai
nstMer
cant
il
is
tPo
li
ci
es
Me
rcant
il
is
tpo
li
ci
esgav
eundu
eemp
has
ist
otr
ade
.InEngl
andanagr
icu
ltu
ral
r
evo
lut
ionwast
aki
ngp
lac
edu
etol
arges
cal
efar
ming.Thewo
rkso
fse
ver
alEngl
is
h
wr
ite
rswe
ret
rans
lat
edi
ntoFr
enc
h.Thi
spr
ovi
deda
nop
por
tuni
tyt
otheFr
enc
h
t
hink
ers
'tou
nde
rst
andt
hep
rogr
esso
fGr
eatBr
itai
n,whi
chde
pen
dedt
oagr
eat
e
xte
ntu
ponagr
icu
ltu
ralac
tiv
iti
es.Thep
eop
lewe
rei
nse
arc
hfo
ranal
ter
nat
ive
s
yst
em whi
chc
oul
dsu
bst
itu
te me
rcant
il
is
m.Thi
ssys
tem wasp
rov
ide
dby
p
hys
ioc
rac
y.
4
. Negl
ecto
fAgr
icul
tur
e:
Agr
icu
ltu
rei
nFr
anc
ewasi
nas
tat
eofs
tagnat
ionc
omp
are
dwi
thi
tsi
ncr
eas
ing
u
seful
nes
sandp
rofi
tabi
li
tyi
nEngl
and.I
ndu
str
ialde
vel
opme
ntwa
stak
ingp
lac
ein
Fr
anc
eatt
hec
osto
fagr
icu
ltu
re.I
nve
stme
ntswe
redi
ver
tedfr
omagr
icu
ltu
ret
o
manu
f ac
tur
e.
Thev
alu
eofagr
icu
ltu
ralp
rodu
cefel
lona
cco
unto
fre
str
ict
edmar
ket
s.Lo
wer
p
ric
eso
fagr
icu
ltu
ralp
rodu
ctsp
rev
ent
edc
api
tal
acc
umu
lat
ioni
nagr
icu
ltu
re.

5
.Emer
genc
eofaGr
oupo
fAmbi
ti
ousAgr
icul
tur
ist
s
I
nFr
anc
eagr
oupo
fambi
ti
ousagr
icu
ltu
ris
tsandl
andl
ordss
tar
teds
eri
ous
lyt
hink
ing
o
fthede
vel
opme
nto
fagr
icu
ltu
rei
nFr
anc
e.The
ydi
dno
tto
ler
atet
hes
upp
res
sio
n
o
fFr
enc
hagr
icu
ltu
rebyk
ing.
7
8
6
.Su
b j
ect
iveFac
tor
s
The
rewe
regr
eats
ubj
ect
ivefac
tor
satwo
rkfo
rchangeandp
rogr
essdi
scar
ding
me
rcant
il
epo
li
ci
es.
Dur
ingt
hep
eri
odo
fLo
uisXI
V,t
hep
eop
lec
oul
dno
tcr
iti
ci
zehi
s
p
oli
ci
es.
Aft
erhi
sde
atht
hep
eop
leo
fFr
anc
ego
tsu
f fi
ci
entl
i
b e
rtyt
oex
pre
sst
hei
rop
ini
on.
Thi
swa
sthebegi
nni
ngo
fbr
eak
ingawayfr
omt
hee
sta
b l
i
she
dpo
li
ci
es,po
li
ti
csa
n d
r
eli
gio
n.
7
.Ex
ist
enc
eofSo
cio
-ec
ono
micI
nequal
it
y
Fr
anc
ewi
tne
sse
dane
xtr
emefo
rmo
fine
q u
ali
tybe
twe
endi
ffer
entc
las
seso
f
p
eop
lean
dbet
wee
ndi
ffer
ents
ect
orso
fthee
cono
my.The
rewe
rebo
thp
riv
il
eged
andu
npr
ivi
le
g e
dcl
ass
es.Thec
ommo
npe
opl
ewe
reu
nde
rpr
ivi
l
egedwhowant
edan
e
scap
efr
omt
hisu
nwa
n t
eds
itu
ati
on.
8
.Infl
uenc
eoft
heWr
iter
s
Thi
nke
rsc
onc
erne
dwi
tht
hei
ll
soft
hes
oci
etywe
ret
ryi
ngt
ofi
gur
eou
tandc
onv
ey
s
ugges
tio
nsfo
rther
efo
rmat
iono
fthes
yst
em.The
rewe
reanal
yti
caldi
scu
ssi
ons
ande
xpl
orat
ionsr
egar
dingt
hei
ll
effec
tso
fthee
xis
tings
yst
emandt
het
ypeo
fthe
i
deals
yst
em whi
chs
hou
ldr
epl
ace
.The
ywe
real
lagr
eedt
hatt
hei
deals
yst
emi
s
p
hys
ioc
rac
y.

3.
6.
2.Ec
ono
micDo
ctr
ineso
fPhys
ioc
rat
s

TheEc
ono
micDo
ctr
ine
soft
hep
hys
ioc
rat
sinde
tai
lar
edi
scu
sse
dasfo
ll
ows
.
(1)Nat
uralo
rdero
rNat
ural
phi
lo
sophy
Nat
uralo
rde
rist
hes
ymbo
lofp
hys
ioc
rat
ics
yst
em.Du
pon
tde
-Ne
mou
rsde
f i
ned
p
hys
ioc
rac
yas―t
hes
cie
nceo
fna
tur
alo
rder
‖.

Ac
cor
dingt
ophys
ioc
rat
s,nat
uralo
rde
rwasani
dea
l o
rde
roft
hingsc
reat
edbygo
d
fo
rthe max
imi
zat
iono
fhu
manhap
pine
ss.The man made s
oci
alo
rde
rswe
re
ar
tifi
ci
ali
nnat
ure
.Sot
hep
hys
ioc
rat
swant
edt
hep
eop
let
odoawaywi
thar
tifi
ci
al
manmader
ule
s.
7
9
Phys
ioc
rat
sbe
li
eve
dthatp
eop
les
ufferfr
oms
oci
ale
vil
sbe
cau
set
hes
oci
alo
rde
r
di
dno
tco
nfi
rmt
othenat
uralo
rde
r.I
nthe
iro
pin
ion,t
hep
res
ento
rgani
zat
iono
f
s
tat
esho
uldbes
uit
abl
ymo
difi
edt
obr
ingt
hel
i
f e
,be
hav
iou
randi
dea
soft
hep
eop
le
wi
thi
nth
eor
bito
fthenat
ural
orde
r.

8
0
(2) TheNetPr
odu
ct
Tot
hep
hys
ioc
rat
stheo
nlyp
rodu
cti
vewe
alt
hwasagr
icu
ltu
re.Tot
hemt
heo
the
r
o
ccu
pat
ion
s,o
the
rth
anagr
icu
ltu
rewe
reu
npr
odu
cti
veands
ter
il
e.Byt
hegi
fto
f
nat
ure(
fer
til
it
y)agr
icu
ltu
rep
rodu
cesmo
ret
hanwhatt
hefar
mer
sco
nsu
me.Thi
s
s
urp
lusp
rodu
cti
oni
ntheagr
icu
ltu
res
ect
ori
scal
l
edas“
Netpr
oduc
t”.
I
tme
anst
hata
g r
icu
ltu
reno
tonl
ysat
isfi
edt
hene
edso
ftho
see
ngagedi
nit
,bu
t
al
soo
fot
her
sengagedi
ntr
ade
,manu
f ac
tur
e,ando
the
rpr
ofes
sio
ns.I
nIndu
str
y
me
rel
yraw mat
eri
al
sar
etr
ans
fer
redi
ntofi
nis
hedp
rodu
cts
.Inc
omme
rceand
t
radeame
ret
rans
fero
fwe
alt
hist
aki
ngp
lac
e.I
nagr
icu
ltu
real
oneas
urp
lusi
s
gene
rat
ed.Sol
abo
urwhi
chwasap
pli
edanywhe
ree
xce
ptt
olandwass
ter
il
ebe
cau
se
mani
sno
tac
reat
or.
(3) Thec
irc
ulat
iono
fweal
th
Bas
edu
pont
hec
onc
epto
fNe
tPr
odu
ct,t
hep
hys
ioc
rat
sadv
anc
edt
het
heo
ryo
f
c
irc
ulat
iono
fwe
alt
h.Thati
sdi
str
ibu
tio
nofne
tpr
odu
ct.
P h
y s
ioc
rat
swe
ret
hefi
rst
t
oat
temp
ttoanal
yset
hep
robl
emo
fdi
str
ibut
ion.
Thec
redi
tfo
rpu
tti
ngt
hei
deai
n
as
yst
emat
icman
nergo
est
oFr
anc
isQu
esnay.Hes
kil
l
f u
ll
yandgr
aph
ica
ll
yanal
yze
d
t
hec
onc
epto
fci
rcu
lat
iono
fwe
alt
h,dr
awi
ng'
anal
ogi
esfr
omt
hec
irc
ulat
iono
fbl
ood
i
nthe
'bo
dy.
Bei
ngado
cto
r;hewasabl
etode
scr
ibei
tve
rye
loque
ntl
y.
(4) I
ndi
vi
dual
is
mandLai
ssezFai
re
ThePhys
ioc
rat
s,e
spe
cial
lyTur
got
,bel
ie
vedt
hats
elf-i
nte
res
twast
hemo
tiv
ati
ng
r
eas
onfo
rea
chs
egme
nto
fthee
cono
myt
opl
ayi
tsr
ole
.Eac
hindi
vi
dualwi
llwo
rk
har
derfo
rtheben
efi
tofhi
mse
lf.Thes
yst
em wo
rksbe
stwhe
nthe
rei
sa
c
omp
leme
ntar
yre
lat
ions
hipbet
wee
nonep
ers
on‘
sne
edsandano
the
rpe
rso
n‘s
de
sir
es,
andt
rader
est
ric
tio
nsp
lac
eanunnat
uralbar
riert
oac
hie
vingo
ne‘
sgo
als
.

8
1
(5) Pr
ivat
ePr
ope
rty
No
neo
fthet
heo
rie
sco
nce
rni
ngt
hev
alu
eofl
andc
oul
dwo
rkwi
tho
uts
tro
ngl
egal
s
upp
orto
fown
ers
hipp
riv
atep
rop
ert
y.Co
mbi
ned wi
tht
hes
tro
ngs
ens
eof
i
ndi
vi
dual
is
m,pr
ivat
epr
ope
rtybec
ome
sac
rit
icalc
omp
one
nto
fthewo
rki
ngso
fthe
Tabl
eau
.
(6) Di
mini
shi
ngRe
tur
ns
Tur
gotwaso
neo
fth
efi
rstt
ore
cogni
zet
hat―s
ucc
ess
iveap
pli
cat
ionso
fthev
ari
abl
e
i
npu
twi
ll
cau
set
hep
rodu
ctt
ogr
ow,
fir
stata
ninc
reas
ingr
ate
,lat
eratadi
min
ish
ing
r
ateu
nti
litr
eac
hes ma
ximu
m‖.Th
iswasr
eco
gni
tio
nth
att
hep
roduc
tiv
itygai
ns
r
equi
redt
oin
cre
asenat
ion
a lwe
alt
hhadanu
lti
mat
eli
mit
,and,t
her
efo
re,we
alt
h
wa
sno
tinfi
ni
te.
(7) I
nve
stme
n tCapi
tal
The
yre
cogni
zedt
hatc
api
tal
wasne
ede
dbyfar
mer
stos
tar
tthep
rodu
cti
onp
roc
ess
.
Ca
pit
alwasal
sone
ede
dtos
ust
aint
hel
abo
rer
swh
il
ethe
ypr
odu
cedt
hei
rpr
odu
ct.
Tur
gotr
eco
gni
zest
hatt
her
eiso
ppo
rtu
nit
yco
standr
iski
nvo
lve
dinu
singc
api
tal
fo
rso
met
hin
got
hert
hanl
ando
wne
rshi
p,andhep
romo
tesi
nte
res
tass
erv
inga
―s
trat
egi
cfun
cti
oni
nthee
con
omy.
‖
(8) Tax
ati
on
Phys
ioc
rat
spu
tfo
rwa
rdas
imp
les
yst
emo
ftax
ati
on.The
yadv
ocat
edas
ingl
etax
s
yst
em,name
lyt
hel
andt
ax,
whi
chs
hou
ldbep
aidbyt
hep
rop
rie
tar
ycl
assdi
rec
tlyt
o
t
hego
vt.
Thet
heo
ryo
ftax
ati
onwasc
los
elyl
i
n k
edwi
tht
hec
onc
epto
fne
tpr
odu
ct.
So
me t
axe
swe
rer
equi
redfo
r me
eti
ngt
hee
xpe
nseo
fthes
tat
e'fo
rthe
mai
nte
nanc
eofs
ecu
rit
y,s
pre
ado
fedu
cat
ionande
sta
b l
i
shme
nto
fpu
bli
cwo
rks
.The
o
nlys
our
cewh
ichc
oul
dbet
app
edwast
hen
etp
rodu
ctandt
heo
nlyc
las
swh
oco
uld
p
ayt
axwe
ret
hel
ande
dpr
opr
iet
ors
.Sot
heyadv
oca
tedas
ingl
etaxo
nland.Thi
s
s
ingl
etaxwasdi
rec
tandhe
ncec
anno
tbee
vade
d.I
twass
imp
let
oas
ses
s.
(9) Val
ue

8
2
Phys
ioc
rat
shadt
ake
nli
ttl
eint
ere
sti
nthet
heo
ryo
fval
ue.
Butt
heydi
dno
tre
g ar
d
v
alu
einhe
renti
nco
mmo
dit
ies
;the
yal
sodi
ffer
ent
iat
edv
alu
einu
seandv
alu
ein
e
xchange.Bu
tthe
ytr
eat
edp
ric
eandv
alu
easo
nean
dthes
amet
hing.Val
ue
ac
cor
din
gtop
hys
ioc
rat
swas

8
3
no
tfi
xedbutc
hangedfr
omt
imet
oti
mede
pen
dingu
ponde
mand:Anyho
w,t
he
t
heo
ryo
fval
uewa
sno
tmu
chi
mpo
rtantp
arto
fthep
hys
ioc
rat
ics
cho
ol.

(10) Tr
ade
As c
ommo
dit
ieso
fequalv
alu
e we
ree
xch
a nged,t
rade andc
omme
rce we
re
c
ons
ide
redasu
npr
odu
cti
ve.Ac
cor
dingt
othe
mtr
adedi
dno
tpr
odu
ceanyr
eal
we
alt
h.He
nceal
lco
mmo
dit
ytr
ans
iti
onwass
hee
rwas
teo
fti
meande
ner
gy.

Thu
s,t
heyho
ldt
ha Al
t“ lt
hati
sbo
ughti
sso
ldandal
lthati
sso
ldi
sbo
ught
”The
y
wa
n t
edt
oco
unt
erac
tthee
vil
sofc
omme
rcebya
dvo
cat
ingc
omp
let
efr
eedo
mint
he
fi
el
dofc
omme
rce
.
(11)Func
tio
nso
fthes
tat
e
Thep
hys
ioc
rat
swe
reno
tanar
chi
st.The
ysu
g ges
tedas
tat
ewi
thmi
ni
mumo
fci
vi
l
l
awswhi
chp
lac
enohu
rdl
esi
nthewayo
fth
ere
ali
zat
iono
fthenat
uralo
rde
r.The
func
tio
nso
fth
ephys
ioc
rat
ics
ove
rei
gnwe
re;t
opr
ese
rvenat
uralo
rde
r,t
ode
fend
p
riv
atep
rop
ert
y,t
osp
readu
niv
ers
ale
duc
ati
on,t
oun
der
tak
eap
rogr
amo
fpu
bli
c
wo
rk.

3.
6.
3.Fr
anç
oisQues
nay'
sTabl
eauÉc
ono
mique

Thefo
unde
randl
eade
rofp
hys
ioc
rac
y wasDr
.Fr
anç
oisQues
nay(
1694–1774
).
Qu
esnays
erv
edast
hec
ons
ult
ingp
hys
ici
ant
oKi
ngLo
uisXVa
tVe
rsa
il
le
s.Lat
einl
i
fe
hedev
elo
peda
nin
ter
esti
nec
ono
mic
s,p
ubl
i
shi
nghi
sfi
rstbo
oko
nth
esu
bje
cti
n
h
is6
0s.Qu
esnay‘
ssys
tem o
f p
oli
ti
cale
con
omy wass
umme
d u
pinTabl
eau
é
cono
miqu
e (
1758
). Qu
esnay wan
tedLo
uisXI
V,t
hek
ing fr
om 1715 t
o1774
,to
de
regul
atet
radeandt
osl
asht
axe
ssot
hatFr
anc
eco
ulds
tar
ttoe
mul
atewe
alt
hie
r

Br
itai
n.Hewas
,in
d e
ed,o
neo
fth
eor
igi
nat
orso
fte19th c
h ent
urydo
ctr
ineo
fth
e
har
mon
yofc
las
sint
ere
stsando
fth
ere
lat
eddo
ctr
inet
hatma
ximu
mso
cia
l

8
4
s
ati
sfac
tio
noc
cur
sun
d e
rfr
eec
omp
eti
ti
on.

8
5
Thefo
undat
iono
fth
ePhys
ioc
rat
s‘e
con
omi
cth
eor
ieswasfi
rstdes
cri
bedi
n
Fr
anç
oisQu
esnaysT
' abl
eauÉco
nomi
que,
whi
chwa
spu
b l
i
she
din1759
.
Themo
delo
fQu
esnayc
ons
ist
edo
fthr
eee
con
omi
cmo
ver
s:
Pr
opr
iet
aryc
las
sco
nsi
ste
dofo
nlyl
ando
wne
rs.
Pr
odu
cti
vec
las
sco
nsi
ste
dofal
lagr
icu
ltu
ral
l
abo
rer
s.St
eri
lec
las
sismadeu
pofar
tis
ansand
me
rch
ant
s.

3.
6.
4. Cr
iti
ci
smo
fPhys
ioc
ras
y

Thec
hie
fwe
akne
ssi
nthep
hys
ioc
rat
ict
eac
hingl
ayi
nit
sthe
oryo
fval
ue.Wh
il
e
agr
icu
ltu
rebr
ingsfo
rtht
her
aw ma
ter
ialo
f p
rodu
cti
on,c
omme
rceand
manu
f ac
tur
esar
eequal
lyp
rodu
cti
veo
fwe
alt
h.
Thei
mpo
rtan
tcr
iti
ci
smsl
eve
ledagai
nstp
hys
ioc
rac
yar
easfo
ll
ows
:
1.Thep
hys
ioc
rat
sfai
le
dtoc
ons
ide
rthel
abo
uri
ngCl
assasap
rodu
cti
vec
las
s.
Mo
reo
vert
hei
rco
nte
nti
ont
hatmanu
f ac
tur
ingc
las
siss
ter
il
eisa
lsos
ubj
ectt
o
s
eve
rec
rit
ici
sm.
2.Thep
hys
ioc
rat
sdono
thav
eac
learc
utc
onc
epto
fval
ue.
The
yhav
eco
nfus
edv
alu
e
wi
thu
til
it
y.The
yhe
ldt
hev
iewt
hatv
alu
ede
pendo
nut
il
it
y.
3.The
irconc
epti
onofl
andl
ordasp
art
lyp
rodu
cti
vec
las
sismo
rebas
edu
pon
p
oli
tic
almoti
ve..
4.Phys
ioc
rat
spl
ace
dto
omu
che
mphas
iso
nagr
icu
ltu
reandhav
ene
g l
ect
edt
heno
n-
agr
icu
ltu
ral
sec
tor
.
Anyho
wphys
ioc
rac
yoc
cup
iedani
mpo
rtantp
lac
eint
hehi
sto
ryo
fec
ono
mic
t
hou
g ht
s.The
yar
eno
tabl
eint
hehi
sto
ryo
fEc
ono
mict
hou
g htbe
cau
seo
fth
eir
c
ons
tru
cti
vea
n dp
osi
ti
vec
ont
ribut
ionfo
rthede
vel
opme
nto
fth
esc
ienc
eof
Ec
ono
mic
s.
8
6
 CHAPTERFOUR
THECLASSI
CALSCHOOL
4.
1.Ov
erv
iewo
fthec
las
sic
als
cho
ol
Cl
ass
ica
lec
ono
mic
sre
fer
stowo
rkdo
nebyagr
oupo
fec
ono
mis
tsi
nth
eei
ght
een
th
andni
net
eent
hce
n t
uri
es.The
ydev
elo
pedt
heo
rie
sabo
utt
he way mar
ket
s
and ma
rke
tec
ono
mie
s wo
rk.Thes
tudy wasp
rima
ril
y c
onc
ern
ed wi
tht
he
dyn
ami
cso
fec
ono
micgr
owt
h.I
tst
res
sede
cono
micfr
eedo
mandp
romo
tedi
dea
s
s
uchasl
ais
sez
-fai
reandfr
e ec
omp
eti
ti
on.
Eco
nomi
cth
oughtu
nti
lthel
ate18
00‘
s.
AdamSmi
th‘
sWe
alt
hofNa
tio
ns,
p u
b l
i
she
din1776c
anbeu
seda
sthefo
rma
lbe
gin
nin
g
o
f Cl
ass
icalEc
ono
mic
sbuti
tac
tua
ll
yev
olv
edo
vera p
eri
odo
fti
me and wa
s
i
nfl
uen
cedby Me
rca
nti
l
istdo
ctr
ine
s,Phys
ioc
rac
y,t
hee
nli
ght
enme
n t
,cl
ass
ical
l
i
b e
ral
i
sma
n dt
hee
arl
yst
age
soft
hei
ndus
tri
alr
evo
lut
ion
.
8
7
Cl
assi
cale
con
omi
csast
hep
redo
minants
cho
olo
fmai
nst
reame
con
omi
cse
ndswi
th
the

‗Mar
ginal
i
stRe
vol
uti
on‘an
dth
eri
seo
fNe
ocl
ass
icalEc
ono
mic
sint
hel
ate19thc
ent
ury.
In

8
8
t
he1870‘
sWi
l
li
am St
anl
eyJ
evo
ns‘andCar
lMe
nge
r‘sc
onc
epto
fma
rgi
nalu
til
ityand
Le
onWa
lras
‘ge
n e
rale
q u
il
ibr
iumt
heo
ryp
rov
ide
dthefo
undat
ion
s.Vi
lfr
edoPa
ret
o
andAl
fre
dMa
rsh
a l
lpr
ovi
dedt
het
ool
s fo
rne
ocl
ass
icale
con
omi
cs.Ne
ocl
ass
ica
l
e
con
omi
csi
sane
xte
nsi
ono
f
Cl
ass
icale
cono
mic
sbut
,thefo
cuso
fthequ
est
ion
sch
ange
daswe
lla
sth
eto
olso
f
a
nal
ysi
s.
‘Thebel
i
efi
nthee
ffi
cac
yofa‗fr
eema
rke
t‘i
sce
ntr
alt
obo
thc
las
sic
ala
nd
n
eoc
las
sic
ali
deo
logy.

4.
2. Fac
tor
sGi
vi
ngRi
set
oCl
ass
ici
sm

The
rewe
ret
womai
nfac
tor
sfo
rthee
mer
genc
eofc
las
sic
als
cho
olo
ftho
ught
.
The
sear
e;

th
i
. TheSc
ient
ifi
cRev
olut
ion:i
nth
elas
tquar
tero
f17 c,I
saacNe
wto
n(1
642
-
1
727
)gr
eat
lyadv
anc
edKe
ple
r‘se
arl
ie
rsc
ient
ifi
clawso
fpl
ane
tar
ymo
tio
nand
Gal
il
eo‘
smat
hemat
icall
awso
fthemo
veme
nto
fbo
die
sone
art
h.Thi
sre
vol
uti
oni
n
s
cie
nce
,as
soc
iat
edp
art
icu
lar
lyt
oNe
wto
n,p
opu
lar
ize
dthea
lre
adye
xis
tingi
dea
t
hatt
heu
niv
ers
eisgo
ver
nedbynat
urall
aws
.Thi
shadi
tso
wni
mpac
tont
hei
dea
s
o
fthec
las
sic
als
cho
ol.Ac
cor
dingt
othec
las
sic
ist
s,t
hel
i
nger
ingfeu
dali
nst
itu
tio
ns
andt
her
est
ric
tiv
eco
ntr
olso
fme
rcant
il
is
mwe
renol
ongerne
ces
sar
y.
Fo
rthe
mNe
wto
nians
cie
ncefur
nis
hedanat
ureful
l
yase
f fec
tiv
east
hee
arl
i
erwi
l
l
o
fGo
d.I
ftheDi
vi
nehadc
reat
edame
chani
smt
hatwo
rke
dhar
moni
ous
lyand
au
tomat
ica
llywi
tho
uti
nte
rfer
enc
e,t
henLai
ssez
-fai
rewa
sthehi
ghe
stfo
rmo
f
wi
sdo
mins
oci
ala
f fai
rs.Nat
urall
awswo
uldgui
det
hee
con
omi
csys
tema
n dt
he
ac
tio
nofp
eop
le.
i
. TheI
ndus
tri
alRev
olut
ion:I
nthes
amequar
ter
,indu
str
ialr
evo
lut
ionwasj
ust
begi
nni
ng,buti
tint
ens
ifi
edo
vert
hep
eri
odi
nwh
icht
hel
att
erc
las
sic
alec
ono
mis
ts
wr
ote
.Bo
tht
hei
ndu
str
ialr
evo
lut
ionandc
las
sic
alpo
li
ti
calec
ono
myde
vel
ope
dfi
rst
th
i
nEngl
and.I
n17 c,
Engl
andt
rai
le
dHo
ll
andi
nco
mme
rcebu
tlaggedbe
hin
dFr
anc
ein

8
9
 th
manu
f ac
tur
ing.Bu
t,byt
hemi
ddl
eof1
8 c
,Engl
andgai
neds
upr
emac
yinbo
th
c
omme
rcea
ndi
ndu
str
y.Engl
ands
too
dtobe
nefi
tfr
omi
nte
rnat
ionalt
rade
.As
Engl
is
hent
rep
rene
ursbec
ame

9
0
s
tro
nger
,th
eynol
ongerhadt
ore
lyo
ngo
ver
nme
nts
ubs
idi
es,mo
nop
olyp
riv
il
eges
,
andt
ari
ffp
rot
ect
ions
.
Asar
esu
lt,manyme
rcant
il
is
tpr
act
ice
swe
rebr
eak
ingdo
wnu
nde
rtheu
psu
rgeo
f
bus
ine
ssac
tiv
iti
est
hatwe
res
pre
adi
ngi
nev
erydi
rec
tio
n.Thi
sgr
owt
hofi
ndu
str
y
l
edt
oinc
reas
ede
mphas
iso
nthei
ndu
str
ialas
pec
tofe
cono
micl
i
f eo
ncu
rre
nt
t
hink
ing.

4.
3. Maj
orTenet
sofCl
ass
ical
Scho
olo
fTho
ught

Cl
ass
ica
ldo
ctr
inei
sfr
eque
ntl
ycal
le
dec
ono
micl
iber
ali
sm.I
tsbas
esar
epe
rso
nal
l
iber
ty,p
riv
atep
rop
ert
y,i
ndi
vi
duali
nit
iat
ive
,pr
ivat
eent
erp
ris
e,and mi
ni
mal
go
ver
nme
nti
nte
rfer
enc
e.

Themaj
orfeat
ure
soft
hisbo
dyo
ftho
ughtc
anbes
ummar
ize
dasfo
ll
ows
.

1
. Mi
nimalgo
ver
nmenti
nvo
lvement
:Thefi
rstp
rinc
ipl
eoft
hec
las
sic
als
cho
ol
wa
sthat“
thebes
tgo
ver
nmentgo
ver
nst
hel
eas
t”.Thefo
rce
soft
hefr
ee,
c
omp
eti
ti
ve mar
ket wo
uldgui
de p
rodu
cti
on,e
xchange,and di
str
ibu
tio
n.The
e
con
omywash
eldt
obes
elf-adj
ust
ingandt
endi
ngt
owar
dful
lemp
loyme
nt
wi
tho
utgo
ver
nme
nti
nte
rve
nti
on.Go
ver
nme
ntac
tiv
itys
hou
ldbec
onfi
nedt
o
e
nfo
rci
ngp
rop
ert
yri
ght
s,pr
ovi
dingfo
rthenat
ion
a lde
f e
nse
, andp
rov
idi
ngp
ubl
ic
e
duc
ati
on.

2
. Sel
f-i
nter
est
edec
ono
micbehav
ior
:Thec
las
sic
ale
cono
mis
tsas
sume
dthat
s
elf-i
nte
res
tedbehav
iori
sbas
ict
ohu
mann
a t
ure
.Pr
odu
cer
sand me
rchant
s
p
rov
ide
dgo
odsan
dse
rvi
ceso
uto
fade
sir
etoma
kep
rofi
ts;wo
rke
rso
ffer
edt
hei
r
l
abo
rse
rvi
cest
oobt
ainwages
,andc
ons
ume
rsp
urc
has
edp
rodu
ctsa
sawayt
o
s
ati
sfyt
hei
rwant
s.
3
. Har
monyo
fint
eres
ts:Wi
tht
hei
mpo
rtante
xce
pti
ono
f Ri
car
do,t
he
c
las
sic
ist
semp
has
ize
dthena
tur
alhar
monyo
fint
ere
sti
namar
kete
cono
my.By
p
urs
uingt
hei
rowni
ndi
vi
dual
int
ere
sts
,pe
opl
ese
rve
dthebe
sti
nte
res
tso
fso
cie
ty.

9
1
4
. I
mpo
rtanc
eofal
lec
ono
micr
eso
urc
esandac
tiv
iti
es:Thec
las
sic
ist
spo
int
ed
o
utt
hata
lle
cono
micr
eso
urc
es(
suc
hasl
and,l
abo
r,c
api
tal
,ande
ntr
epr
ene
uri
al
abi
li
ty)aswe
llasal
lec
ono
micac
tiv
iti
es(
suc
hasagr
icu
ltu
re,c
omme
rce
, p
rodu
cti
on,
andi
nte
rnat
ional

9
2
e
xchange)c
ont
ribut
etoanat
ion'
swe
alt
h.Theme
rcant
il
is
tsh
a ds
aidt
hatwe
alt
h
wa
sde
riv
edfr
omc
omme
rce
; t
hep
hys
ioc
rat
shadv
iewe
dla
n dandagr
icu
ltu
reast
he
s
our
ceo
fal
lwe
alt
h.

5
. Ec
ono
micl
aws
:Thec
las
sic
als
cho
olmade t
reme
ndo
usc
ont
ribu
tio
nst
o
e
con
omi
csbyfo
cus
ingi
tsanal
ysi
sup
one
xpl
i
cite
cono
mict
heo
rie
sor"
laws
."
Ex
amp
lesi
ncl
udet
hel
awo
fco
mpar
ati
veadv
ant
age,t
heMal
thu
siant
heo
ryo
f
p
opu
lat
ion,t
hel
awo
fmar
ket
s(Say'
slaw)
,andt
heRi
car
diant
heo
ryo
fre
nt.The
c
las
sic
ist
sbel
ie
vedt
hatt
hel
awso
fec
ono
mic
sar
euni
ver
salandi
mmu
tabl
e.

4.
4. Maj
orRepr
ese
n t
ati
ves
/Fo
under
soft
heCl
ass
ical
Scho
ol

The
rewe
redo
zenso
fgr
eatp
hil
oso
phe
rst
hatc
ont
ribu
tedt
othede
vel
opme
nto
f
t
hec
las
sic
als
cho
ol.Bu
tar
emar
kabl
eco
ntr
ibu
tio
nismadebyt
hefo
ll
owi
ngt
hre
e
gr
eatt
hink
erso
fthet
ime
.

A.
AdamSmi
th(
1723
- 1790)

AdamSmi
th,t
hek
indl
y,br
il
li
antfo
unde
roft
hec
las
sic
als
cho
ol,wa
sbo
rni
nth
ese
a
p
orta
n d ma
nufac
tur
ingt
own o
f Ki
rkc
aldy,Sc
otl
and.Smi
tha
tte
nded Gl
asgo
w
Co
ll
ege atfo
urt
eenye
arso
fage
;hel
ate
rst
udi
edmo
ralandp
oli
ti
cals
cie
nceand
l
angu
age
satBal
li
olCo
ll
ege
,Ox
for
d .Het
henr
etu
rne
dtohi
smo
the
r'sho
met
o
c
ont
inu
einde
pendents
tudyfo
rtwoye
ars
.Aft
ert
hatSmi
thmo
vedt
oEdi
nbu
rgh,
wh
erehegav
ele
ctu
reso
nrh
eto
ricandl
i
ter
atu
re.Hewa
sel
ect
edp
rofe
sso
rofl
ogi
c
atGl
asgo
wCo
ll
egei
n1751,andi
nth
efo
ll
owi
ngye
arh
ewa
sgi
vent
hec
hai
rofmo
ral
p
hil
oso
phy,whi
chhehe
ldfo
rne
arl
ytwe
lveye
ars
.In1759hep
ubl
i
shdT
e heTheo
ryo
f
Mo
ralSent
iment
s,aft
erwhi
chhi
sle
ctu
resc
onc
ent
rat
edl
esso
net
hic
aldo
ctr
ine
s
an
dmo
reo
nJu
ris
pru
d e
ncean
dpo
li
ti
cal
eco
nomy.
I
n1776Smi
thp
ubl
i
shdAnI
e nqu
iryi
ntot
heNat
ureandCau
seso
fth
eWeal
tho
fNat
ions
.
I
tsfamewasi
mme
dia
te,
andi
tes
tabl
i
she
dSmi
th'
sre
put
ati
onfo
rev
er.

9
3
 Ec
ono
micI
deaso
fAdamSmi
th

Di
vi
si
ono
fLabo
r:Thefi
rstc
hap
te fWe
ro alt
hofNat
ion
sist
itl
ed‗Oft
heDi
vi
si
ono
f
La
b o
r‘Thefi
rsts
ent
enc
ere
adsasfo
ll
ows
:‗Thegr
eat
esti
mpr
ove
menti
nthe
p
rodu
cti
vep
owe
rso
flabo
r,andt
hegr
eat
erp
arto
fthes
kil
l,
dex
ter
ity,
andj
udgme
nt
wi
thwhi
chi
tisanywhe
redi
rec
tedo
rap
pli
ed,s
eemt
ohav
ebe
ent
hee
f fec
tso
fthe
di
vi
si
ono
flabo
r.‘

Thedi
vi
si
onofla
b o
r,s
aidSmi
th,i
ncr
eas
est
hequant
ityo
fou
tpu
tpr
odu
cedfo
r
t
hreereas
ons
.
Fi
rst
,eac
h wo
rke
r de
vel
opsi
ncr
eas
ed de
xte
rit
yinp
erfo
rmi
ngas
ingl
eta
sk
r
epe
ate
dly.
Se
cond,
timei
ssa
vedi
fthewo
rke
rne
edno
tgofr
omo
nek
indo
fwo
rkt
oano
the
r.
Thi
rd,mac
hine
ryc
anbei
nve
nte
dtoi
ncr
eas
epr
odu
cti
vi
tyo
ncet
ask
shav
ebe
en
s
imp
li
fie
dandma
der
out
inet
hro
ught
hedi
vi
si
ono
flabo
r.

I
nvi
si
bleHand:Smi
thp
oint
edo
utt
hatp
art
ici
pant
sint
hee
con
omyt
endt
opu
rsu
e
t
hei
rownp
ers
onal
int
ere
sts
.Thep
ers
ono
fbu
sine
ssp
urs
uesp
rofi
t:‘
Iti
sno
tfr
omt
he
ben
evo
lenc
eoft
hebut
che
r,t
hebr
ewe
r,o
rthebak
er,
thatwee
xpe
cto
urdi
nne
r,bu
t
fr
omt
hei
rre
gar
dtot
hei
rowni
nte
res
t.’

Thek
eyt
ounde
rst
andSmi
th'
sinv
isi
blehandi
sth
eco
nce
pto
fco
mpe
tit
ion.The
ac
tio
nofe
achp
rodu
cero
rme
rchantwh
oisa
tte
mpt
ingt
oear
npr
ofi
tisr
est
rai
ned
byt
heo
the
rpr
odu
cer
sorme
rchant
swhoar
eli
kewi
seat
temp
tingt
oma
kemo
ney.
Co
mpe
tit
iondr
ive
sdo
wnt
hep
ric
eso
fgo
odsandi
nsodo
ingr
edu
cest
hep
rofi
t
r
ece
ive
dbye
achs
ell
er.I
nsi
tuat
ionsi
nwhi
cht
her
eisi
ni
ti
al
lyo
nlyas
ingl
ese
ll
er,
e
xtr
aor
dinar
ypr
ofi
tat
trac
tsne
wco
mpe
tit
orswh
oinc
reas
esu
ppl
yande
ras
ethe
e
xce
ssi
vep
rofi
t.I
nananal
ogo
usway,emp
loyer
sco
mpe
tewi
tho
neano
the
rfo
rthe
bes
two
rke
rs,wo
rke
rsc
omp
etewi
the
acho
the
rfo
rthebes
tjo
bs,andc
ons
ume
rs
c
omp
ete wi
tho
neano
the
rfo
rth
eri
ghtt
oco
nsu
me p
rodu
cts
.St
ate
din
c
ont
emp
orar
yec
ono
mict
erms
,ther
esu
lti
sthatr
eso
urc
esgetal
l
ocat
edt
oth
eir

9
4
hi
ghe
st v
alu
ed u
ses
;ec
ono
mic e
f fi
ci
enc
y p
rev
ail
s. Fu
rthe
rmo
re,be
cau
se
bus
ine
ssp
ers
onss
aveand i
nve
st-agai
n o
uto
f t
hei
rse
lf-i
nte
res
t,c
api
tal
ac
cumu
lat
esand

9
5
t
hee
con
omygr
ows
.Thep
urs
uito
fse
lf-i
nte
res
t,r
est
rai
nedbyc
omp
eti
ti
on,t
hus
t
endst
opr
odu
ceSmi
th'
sso
cial
g o
od(
max
imu
mou
tpu
tande
cono
micgr
owt
h).

Ro
leo
fGo
ver
nment
:thei
nte
rfer
enc
ebygo
ver
nme
nti
ntot
hee
cono
myi
sno
tne
ede
d
and u
nde
sir
abl
e.Ac
cor
ding t
o Smi
th,go
ver
nme
ntsar
e was
teful
,co
rru
pt,
i
neffi
ci
ent
,andt
hegr
ant
orso
fmo
nop
olyp
riv
il
egest
othede
tri
mento
fthes
oci
ety
asawh
ole
.Smi
the
xte
nde
dhi
sbel
ie
fint
hehar
monyo
fint
ere
standl
ai
sse
z-fai
ret
o
i
nte
rnat
ion
a l
trade
:

I
tist
emp
tin
gtol
abelSmi
thasanadv
oca
teo
flai
sse
z-fai
re;wehav
ese
enh
is
di
sl
ik
efo
rgo
ver
nme
nti
nvo
lve
menti
nth
eec
ono
my.Bu
tunl
i
kes
omeo
fthemo
re
e
xtr
emeadv
oca
teso
fthatv
iew,Smi
thdi
dse
eas
igni
fic
ant
,al
bei
tli
mit
ed,r
olefo
r
t
hes
tat
e.Sp
eci
fic
all
y,hes
awt
hre
emaj
orfunc
tio
nso
fgo
ver
nme
nt:
(
1)Top
rot
ects
oci
etyfr
omfo
rei
gnat
tac
k,
(
2)Toe
stabl
is
hth
eadmi
nis
trat
iono
fJu
sti
ce,
and
(
3)Toe
rec
tandmai
ntai
nthep
ubl
icwo
rksandi
nst
itu
tio
nst
hatp
riv
ate
e
ntr
epr
ene
ursc
anno
tunde
rtak
epr
ofi
tabl
y.

Tax
ati
on:Tofi
nanc
etheafo
reme
nti
one
dgo
ver
nme
ntac
tiv
iti
es,
Smi
thr
eco
mme
nde
d
t
axati
on.

Hi
sfo
urmax
imsfo
rgo
odt
axe
sar
easfo
ll
ows
:
i
. Tax
ess
houl
dbepr
opo
rti
onalt
other
evenueenj
oyedundert
hepr
otec
tio
n
o
fthes
tat
e.Thi
swasadr
ast
icdepar
tur
efr
omt
her
egr
ess
ivet
axespr
eval
ent
att
het
ime.
i
i
. Tax
ess
houl
dbepr
edi
ctabl
eanduni
for
mast
othet
imeo
fpayment
,the
mannero
fpayment
,andt
heamo
untt
obepai
d. i
i
i.Tax
ess
houl
dbel
evi
edat
t
het
imeandi
nthemannermo
stc
onv
eni
entt
othec
ont
ribut
or.
I
v.Tax
ess
houl
dbec
oll
ect
edatmi
ni
mumc
ostt
othego
ver
nment
.
I
nter
nat
ionalTr
ade
:Smi
thp
oint
edo
utho
wfo
rei
gnt
radec
anp
romo
tegr
eat
er

9
6
di
vi
si
ono
flabo
rbyo
ver
comi
ngt
henar
rown
esso
fth
eho
memar
ket
.Ex
por
tsal
so
r
emo
ves
urp
lus

9
7
p
rodu
ctsfo
rwh
icht
her
eisnode
mandatho
meandbr
ingbac
kpr
odu
ctsfo
rwh
ich
t
her
eisdo
mes
ticde
mand.
Smi
thal
soc
onde
mne
dbo
unt
ies(
subs
idi
es)o
nex
por
t.
I
nadi
rec
tat
tac
konme
rcant
il
is
m,Smi
thar
gue
dthatgo
ver
nme
nts
hou
ldno
t
i
nte
rfer
eini
nte
rnat
ionalt
rade
.Na
tio
nsl
i
kei
ndi
vi
dual
sandp
riv
atefi
rms
,sho
uld
s
pec
ial
iz
einp
rodu
cinggo
odsfo
rwhi
cht
heyh
a v
eanadv
ant
ageandt
radefo
rgo
ods
fo
rwhi
cho
the
rnat
ionshav
eanadv
ant
age.
Fo
rAda
mSmi
th,t
radebet
wee
ntwoc
ount
rie
swi
l
l o
ccu
ron
lyi
feac
hco
unt
ryha
san
abs
olu
tec
osta
dvant
ageo
vert
heo
the
rinatl
eas
tonec
ommo
dit
y.
Val
ue:I
nas
tat
eme
nti
nwhi
chhep
ose
sth wa
e" t
er-di
amo
ndpar
ado
x,"Smi
th
o
bse
rve
dthatt
her
ear
etwok
indso
fva
lue
:theo
nemaybec
all
e v
d"al
uei
nus
e,"t
he
o
the
r,v
"al
uei
nex
change
."Hes
aid:
Thet
hingswhi
chhav
ethegr
eat
estv
aluei
nus
ehav
efr
equent
lyl
i
ttl
eornov
aluei
n
ex
change;t
hos
ewhi
chhav
ethegr
eat
estv
aluei
nex
changehav
efr
equent
lyl
i
ttl
eorno
us
eval
ue.
Not
hingi
smo
reus
eful
thanwat
er:buti
twi
l
lpur
chas
esc
arc
eanyt
hing;s
car
ce
anyt
hingc
anbehadi
nex
changefo
rit
.Adi
amo
nd,
ont
hec
ont
rar
y,hass
car
ceanyv
alue
i
nus
e;butav
erygr
eatquant
ityo
fot
hergo
odsmayfr
equent
lybehadi
nex
changefo
r
i
t.
Pr
ofi
t:Ac
cor
din
gtoSmi
th,bec
aus
eev
eryi
nve
stme
nti
sex
pos
edt
other
isko
flo
ss,
t
hel
owe
str
ateo
fpr
ofi
tmu
stbehi
ghe
nou
g ht
oco
mpe
nsat
efo
rsu
chl
oss
esand
s
til
lle
aveas
urp
lusfo
rthee
ntr
epr
ene
ur.Thegr
ossp
rofi
tinc
lude
sco
mpe
nsat
ion
fo
ranyl
ossandt
hes
urp
lus
.Ne
torc
learp
rofi
tist
hes
urp
lusal
oneo
rthene
t
r
eve
nueo
fthebus
ine
ss.
Re
n t
:Ins
omep
art
sofhi
sbo
ok,Smi
thadhe
redt
hatp
ric
eso
fagr
icu
ltu
ralp
rodu
ce
de
ter
minet
her
entt
hatt
hel
andl
ordc
anc
har
ge.
Rent
,sai
dSmi
th,
"ist
hep
ric
epai
d
fo
rtheu
seo
fland.
"Iti
sthehi
ghe
stp
ric
ethet
enantc
anaffo
rdt
opaya
f t
er
de
duc
tingwages
,thewe
arandt
earo
fca
pit
al,av
eragep
rofi
ts,ando
the
rex
pen
ses
o
fpr
odu
cti
on.

9
8
Re
nt,t
her
efo
re,i
sas
urp
luso
rar
esi
dual
.Hi
ghp
ric
eso
fpr
odu
ceyi
el
dhi
ghr
ent
s
andl
owp
ric
esyi
el
dlo
wre
nts
.

9
9
Di
str
ibut
iono
fEmpl
oyment
:Smi
ths
pok
eofo
neaddi
ti
onalfac
tort
hatmi
ghtgi
ve
r
iset
oinc
reas
edp
rodu
cti
vi
tyandgr
owt
h.Thatwas‗amo
repr
operdi
str
ibut
iono
f
empl
oyment
.‘He
re Smi
th made a di
sti
nct
ionbe
twe
enp
rodu
cti
vel
abo
r,and
u
npr
odu
cti
vel
abo
r.

Pr
oduc
tiv
eLabo
rist
hatl
abo
rinv
est
edi
nat
angi
blec
ommo
dit
ythathasmar
ket
v
alu
e.Thep
rodu
cti
vewo
rke
rsae‗a
r rti
sans
,ma
n u
fac
tur
ersandme
rchant
s’e
tc.

Unpr
oduc
tiv
elabo
rist
hati
nve
ste
dino
ffer
ings
erv
ice
s;i
tdo
esno
tre
sul
tint
angi
ble
go
odsa
vai
l
a bl
eint
hemar
ketp
lac
e.Theu
npr
odu
cti
vel
abo
rer
sinc
lude k
ings
,
s
oldi
ers
,chu
rchme
n,l
awye
rs,do
cto
rs,wr
ite
rs,p
laye
rs,mu
sic
ians
,op
eras
inge
rs,
da
n c
ers
,ands
ofo
rth
.
Fo
rhi
m,ma
ter
ialgo
odsc
anbeac
cumu
lat
edand,t
her
efo
re,ar
eap
ote
nti
alme
ans
o
finc
reas
ingwe
alt
h.Ev
enc
ons
ume
rgo
odsp
rodu
cedt
odayc
anbeu
sedt
osu
ppo
rt
wo
rke
rsi
nthefut
ure
,the
rebye
nabl
ingt
hemt
owo
rkandp
rodu
cego
ods
.Bu
t
s
erv
ice
sar
eoft
hemo
mento
nly;t
heyv
ani
shi
nthes
imu
lta
n e
ousac
tso
fpr
odu
cti
on
andc
ons
ump
tio
n,andt
heyc
anno
tbeac
cumu
lat
ed.Fr
omt
hisp
ointo
fvi
ewt
heyar
e
u
npr
odu
cti
ve,
alt
hou
g ht
heyi
nde
edar
eus
eful
.

Lai
ssez
-fai
re:La
iss
ez-fai
rei
sthet
ermc
oin
edbyAdam Smi
tht
ode
scr
ibean
e
cono
mics
yst
emi
nwhi
cht
her
eismi
nimali
nte
rve
nti
onfr
omgo
ver
nme
ntsand
r
egul
ati
ons
.(Thet
ermme
ans‗l
eav
eital
one
‘inFr
enc
h).

Adv
ocat
eso
flai
sse
z-fa
ireas
ser
tth
att
rans
act
ionsbe
twe
enp
riv
a t
epar
tie
ssho
uld
be fr
eefr
omr
egul
ati
ons
,ta
xes
,ta
riffs
,andmo
nop
oli
es,andt
hatt
her
oleo
f
go
ver
nme
nts
hou
ldbel
i
mit
edt
opo
li
ci
ngagai
nstfr
auda
nde
nfo
rci
ngc
ont
rac
ts.
Adam Smi
th,ar
gue
dth
ati
ndi
vi
dua
lswh
opu
rsu
eth
eiro
wndes
ire
sar
eabl
etobe
st
c
ont
ribu
tet
oso
cie
tyasawho
le,a
n dt
hisv
iewwaswi
del
yac
cep
teda
nddo
minant
e
con
omi
cth
ink
ingi
nWe
ste
rnwo
rldi
nth
e19
thc
ent
ury.

La
iss
ez-fai
rewa
nedi
npo
pul
ari
tyi
nthe2
0thc
ent
ury,whe
nitp
rov
edi
nade
q u
atet
o

1
00
de
alwi
ths
oci
alp
robl
emsc
aus
edbyi
ndu
str
ial
i
zat
ion

1
01
 2.
T ho
masRo
ber
tMal
thus

TheMal
thus
ianPo
pul
ati
onDo
ctr
ine

Mal
thu
sisbes
tkno
wnfo
rhi
shu
g e
lyi
nfl
uen
tialt
heo
rie
sonp
opu
lat
iongr
owt
h.
Mal
thu
swast
hefi
rste
cono
mis
ttop
rop
oseas
yst
emat
ict
heo
ryo
fpo
pul
ati
on.He
ar
tic
ulat
edhi
svi
ewsr
egar
dingp
opu
lat
ioni
nhi
sfamo
usbo
ok,
Ess
ayo
nthePr
inc
ipl
e
o
fPo
pul
ati
on(
1798)
,fo
rwhi
chhec
oll
ect
ede
mpi
ri
caldat
atos
upp
orthi
sth
esi
s.

Thep
rinc
ipa
lthe
siso
fMal
thu
s,t
hatp
opu
lat
iont
endst
oinc
reas
efas
tert
hant
he
fo
ods
upp
ly,wasno
tor
igi
nalwi
thh
im:i
tcanbefo
undi
nth
ewr
iti
ngso
fot
her
s,
i
ncl
udi
ngAdamSmi
thand
Be
njami
nFr
ank
li
n.I
twasMal
thu
s‘sp
res
ent
ati
ono
fthep
opu
lat
ionp
robl
em,
howe
ver
,
t
hats
igni
fic
ant
lyi
nfl
uenc
ede
xis
tingands
ubs
eque
nte
cono
mict
hink
ing.
As
sumpt
ions
Mal
thu
sto
oki
ntoac
cou
ntt
womai
nas
sump
tio
ns:
i
.Fo
odi
sane
sse
nti
alc
omp
one
ntfo
rhu
man
e
xis
tenc
e. i
i.
Humanshav
ethebas
icu
rget
o
mu
lti
pl
y.
Mal
thu
s‘t
heo
rywasbas
edo
ntheas
sump
tio
nthatt
hep
owe
rofp
opu
lat
iont
o
mu
lti
pl
yismu
chgr
eat
ert
hant
hep
owe
roft
hee
art
htop
rov
ides
ubs
ist
enc
efo
r
man.
I
nhi
sownwo
rds‗p
ass
ionbet
wee
nthes
exe
sisani
nev
itabl
ephe
nome
non‘
,he
nce
,
whe
nunc
hec
ked,
pop
ulat
ionwo
uldgr
owats
uchah
ighr
atet
hati
two
uldo
uts
tri
p
fo
ods
upp
ly.Ac
cor
din
gtohi
m,di
seas
e,fo
ods
hor
tageandde
athdu
etos
tar
vat
ion,
we
renat
ure
‘swayt
oco
ntr
olp
opu
lat
ion
.Hep
rop
ose
dthathu
manbe
ingsado
pt
me
asu
resl
i
kei
nfant
ici
de,
abo
rti
on,
del
ayi
nmar
riageands
tri
ctfo
ll
owi
ngo
fce
li
bac
y
t
och
eckp
opu
lat
iongr
owt
h.

Mal
thu
spr
ese
nte
dhi
sfamo
usl
awo
fpo
pul
ati
ona
sfo
ll
ows
:
1
02
Po
pul
ati
oni
ncr
eas
esbygeo
met
ricpr
ogr
ess
ion(
1,2,4,16,32,64,128,256,et
c.)
.
Fo
ods
uppl
y,atmo
st,
cano
nlyi
ncr
eas
ear
ithmet
ical
l
y(1,
2,3,
4,5,
6,7,
8,et
c.)
.The
refo
re,
s
inc
efo
odi
sane
sse
nti
alc
omp
one
ntt
ohu
manl
ife
,po
pul
ati
ongr
owt
hina
nyar
eao
ron

1
03
t
hep
lane
t,i
func
hec
ked,wo
uldl
eadt
ost
arv
ati
on.Ont
hebas
iso
fahypo
the
tic
al
wo
rldp
opu
lat
iono
fonebi
ll
io
nint
hee
arl
yni
net
eent
hce
ntu
rya
n da
nade
q u
ate
me
anso
fsu
b s
ist
enc
eatt
hatt
ime
,Mal
thu
ssu
g ges
tedt
hatt
her
ewasap
ote
nti
al
fo
rap
opu
lat
ioni
ncr
eas
eto2
56bi
ll
io
nwi
thi
n20
0year
sbu
tthatt
heme
anso
f
s
ubs
ist
enc
ewe
reo
nlyc
apabl
eofbe
ingi
ncr
eas
ede
nou
g hfo
rni
nebi
ll
i
ont
obefedat
t
hel
eve
lpr
evai
l
inga
tthebegi
nni
ngo
fthep
eri
od.
The
refo
re,
itmaybes
afel
yas
ser
tedt
hat
,Mal
thu
ssai
d,p
opu
lat
ion,
whe
nunc
hec
ked,
i
ncr
eas
esi
nageo
met
ric
alp
rogr
ess
iono
fsu
chanat
ureast
odo
ubl
eit
sel
fev
ery
t
wen
ty-fi
veyear
s.

Mal
thu
side
nti
fie
dtwot
ype
sofc
hec
kst
opo
pul
ati
ongr
owt
h:t
hos
ehec
all
ed
"
pre
vent
ivec
hec
ks"a
n dt
hos
ehec
all
ed"
pos
iti
vec
hec
ks.
"

Pr
event
iveChec
ks:t
hes
ear
etho
set
hatr
edu
cet
hebi
rthr
ate
.Thep
rev
ent
ive
c
hec
kofwhi
chMal
thu
sap
pro
vedwast
erme
dmo
ralr
est
rai
nt.Peo
plewhoc
oul
dno
t
affo
rdc
hil
dre
nsh
oul
dei
the
rpo
stp
onema
rri
ageo
rne
vermar
ry.Thi
sinc
lude
d
abo
rti
on,pr
ost
itut
ion,po
stpo
nemento
fmar
riage
,bi
rthc
ont
rolandc
eli
bac
yar
e
fewme
asu
rest
hatwe
readv
ise
dtobes
tri
ctl
yfo
ll
owe
dino
rde
rtohe
lps
olv
ethe
p
robl
em.

Po
sit
iveChec
ks:t
hes
ear
etho
set
hati
ncr
eas
ethede
athr
ate
. The
sewe
refami
ne,
mi
ser
y,pl
ague,and war
.Mal
thu
sel
evat
edt
hes
etot
hep
osi
ti
ono
fnat
ural
p
heno
menao
rlaws
;the
ywe
reu
nfo
rtu
nat
eev
il
sre
q u
ire
dtol
i
mitt
hep
opu
lat
ion.
The
sep
osi
ti
vec
hec
ksr
epr
ese
nte
dpu
nis
hme
ntsfo
rpe
opl
ewhohadno
tpr
act
ice
d
mo
ral
res
trai
nt.
I
fthep
osi
ti
vec
hec
ksc
oul
dso
meho
wbeo
ver
come
,pe
opl
ewo
uldfac
est
arv
ati
on
bec
aus
ear
api
dlygr
owi
ngp
opu
lat
ionwo
uldp
res
sup
onafo
ods
upp
lyt
hatatbe
stwo
uld
gr
ows
lowl
y.

1
04
Ac
cor
dingt
oMal
thu
s,t
hen
, p
ove
rtyandmi
ser
yar
ethenat
uralpu
nis
hme
ntfo
rthe
fai
lu
rebyt
he‗l
owe
rcl
ass
es‘t
ore
str
aint
hei
rre
pro
duc
tio
n.Fr
omt
hisv
iew
fo
ll
owe
dahi
ghl
ysi
gni
fic
antp
oli
cyc
onc
lus
ion
:The
remu
stbenogo
ver
nme
ntr
eli
ef
fo
rthep
oor
.Togi
ve

1
05
t
hemai
dwo
uldc
aus
emo
rec
hil
dre
ntos
urv
ive
,the
rebyu
lti
mat
elywo
rse
ningt
he
p
robl
emo
fhu
nger
.

Hi
sTheo
ryo
fMar
ketGl
uts

I
nhi
spr
inc
ipl
eofp
rinc
ipl
eofp
oli
ti
cal
eco
nomy,
Mal
thu
sde
vel
ope
dhi
sth
eor
ygene
ral
o
verp
rodu
cti
on.He
reMal
thu
sex
plai
nedt
hatt
her
ewo
uldbeap
oss
ibi
li
tyo
f
i
nade
q u
atee
f fec
tiv
ede
mandt
oma
int
ainful
lemp
loyme
nt.
Asar
esu
lt,
the
rewi
l
l be
agene
ralgl
uto
fco
mmo
dit
iesi
nthemar
ket
.Thi
shasbe
enk
nownas„
Mal
thus
t
heo
ryo
fGl
ut‟
s.

Fo
rMal
thu
seffec
tiv
ede
mandi
sthatwhi
che
stabl
is
hesap
ric
ehi
ghe
nou
g hn
oto
nly
t
oco
verc
ost
sbutal
soyi
el
dap
rofi
tatt
hec
urr
entr
ate
.Pr
odu
cti
oni
ssu
stai
ned
o
nlyi
fiti
spr
ofi
tabl
eandt
hatp
rofi
tabi
li
tyde
pendso
neffec
tiv
ede
mand.
Ov
erp
rodu
cti
oni
s,t
her
efo
re,t
her
esu
lto
feffec
tiv
ede
mand.Thewo
rke
rs,hes
aid,
ar
eunabl
etop
urc
has
eal
lthec
ommo
dit
iesi
nthemar
ket
;cap
ital
i
st,o
ntheo
the
r
hand,
pre
f e
rtos
aver
athe
rthant
osp
end.
Sowhowi
l
lpu
rchas
ethee
xtr
aou
tpu
t?

Asas
olu
tio
ntot
hisp
robl
em,
Mal
thu
sfav
ore
dunp
rodu
cti
vec
ons
ump
tio
nbyl
andl
ords
.

Fo
rti
meso
fac
utee
cono
micdi
str
ess
,Mal
thu
sre
comme
nde
dgo
ver
nme
nts
pendi
ng
o
npu
b l
icwo
rks
.Hehadal
sot
hev
iewt
hatwa
roffer
edano
the
rst
imu
lust
hatc
oul
d
e
li
minat
egl
uts
.

3.Dav
idRi
car
do

Dav
idRi
car
dowasbo
rno
n19Ap
ril1772i
nLo
ndo
n.Hewa
sth
eth
irds
ono
faDu
tch
J
ewwh
ohadmadeafo
rtu
neo
nth
eLo
ndo
nSt
ockEx
chan
ge.Whe
nhewas14,Ri
car
do
j
oin
edh
isfat
her
‘sbu
sin
essands
howe
dago
odgr
aspo
fec
ono
micaffa
irs
.In179
3he
mar
rie
d a Qu
ake
rca
lle
d Pr
isc
il
la Ann
e Wi
l
kins
on; Ri
car
d ot
henc
onv
e r
tedt
o
Chr
ist
iani
ty,be
comi
ngaUni
tar
ian.Thi
sca
use
dabr
eac
hwi
thhi
sfat
hera
n dme
ant
t
hatRi
car
dohadt
oes
tabl
is
hhi
sownbus
ine
ss.

1
06
Hec
ont
inu
edasame
mbero
fthes
toc
kex
change,whe
rehi
sabi
li
tywo
nhi
mthe
s
upp
orto
fane
mine
ntbank
ingho
use
.Hedi
dsowe
llt
hati
nafewyear
sheac
qui
reda
fo
rtu
ne.Thi
senabl
edhi
m t
opu
rsu
ehi
sint
ere
stsi
nli
ter
atu
reands
cie
nce
,
p
art
icu
lar
lyi
nmat
hemat
ics
,che
mis
try,
andgeo
logy.
Ri
car
doa
cce
pte
dMa
lthu
s‘i
dea
sonp
opu
lat
iongr
owt
h.I
n1815ano
the
rco
ntr
over
sy
ar
oseo
vert
heCo
rnLa
ws,wh
ent
hego
ver
nme
n tp
ass
edne
wle
gis
lat
iont
hatwa
s
i
nte
ndedt
ora
iset
hedut
ieso
nimp
ort
edwhe
at.I
n1815Ri
car
dor
esp
ondedt
oth
e
Co
rnLawsbyp
ubl
i
shi
ngh
isEs
sayo
nth
eInfl
uen
ceo
faLo
wPr
iceo
fCo
rno
nth
ePr
ofi
ts
o
fSt
ock,i
nwhi
chhea
rgu
edt
hatr
ais
ingt
hedut
ieso
nimp
ort
edgr
ainh
a dt
he
e
ffe
cto
fin
cre
asi
ngt
hep
ric
eofc
ornandhe
nce i
ncr
eas
ing t
he i
nco
meso
f
l
ando
wne
rsandt
hear
ist
ocr
acyatt
hee
xpe
nseo
fth
ewo
rki
ngc
las
sesandt
he
r
isi
ngi
ndus
tri
alc
las
s.Hes
aidt
hatt
heabo
li
tio
noft
heCo
rnLa
wswo
uldhe
lpt
o
di
str
ibut
eth
ena
tio
nali
nco
met
owar
d st
hemo
rep
roduc
tiv
egr
oup
sins
oci
ety.
I
n1817,Ri
car
dop
ubl
is
hed Pr
inc
ipl
eso
fPo
li
ti
calEco
nomyandTax
ati
oni
nwhi
chhe
anal
yse
dth
edi
str
ibu
tio
nofmo
neya
mon
gth
elan
d l
ords
,wo
rke
rs,a
ndo
wne
rso
f
c
api
tal
.Hefo
undt
her
ela
tiv
edo
mes
ticv
a l
ueso
fco
mmo
dit
ieswe
redo
minat
edby
t
hequa
nti
ti
eso
flabo
urr
equi
redi
nth
eirp
roduc
tio
n;r
entbe
inge
li
min
ate
dfr
om
t
hec
ost
sofp
roduc
tio
n.Hec
onc
lude
dth
atp
rofi
tsv
aryi
nve
rse
lywi
thwage
s,whi
ch
mo
vewi
tht
hec
osto
fne
ces
sar
ies
,andt
hatr
entt
endst
oinc
rea
sea
spo
pul
ati
on
gr
ows
,ri
si
ngast
hec
ost
sofc
ult
ivat
ionr
ise
.Hewasc
onc
ern
edabo
utt
hep
opu
lat
ion
gr
owi
ngt
oor
api
dly,i
nca
sei
tde
pre
sse
dwa
gest
oth
esu
bsi
ste
ncel
eve
l,r
edu
ce
p
rofi
tsandc
hec
kedc
api
talfo
rmat
ion
.Il
ln
essfo
rce
d Ri
car
dot
ore
tir
e fr
om
Pa
rli
ame
nti
n1823an
dhedi
edo
n11Se
pte
mbera
ttheageo
f51.

Dav
idRi
car
do‟
sWo
rks
I
n1809Ri
car
dobe
gant
owr
itedo
wnh
iso
wni
deasi
nec
ono
mic
sfo
rne
wsp
ape
rar
tic
les
.
Heo
utl
i
n e
dth
eCl
ass
icals
yst
em mo
rec
lea
rlya
ndc
ons
ist
ent
lyt
hananyo
nebe
for
e
haddo
ne.Hi
side
asbe
camek
n o
wnast
he‗Cl
ass
ica
l‘o
r‗Ri
car
dia
n ‘Sc
hoo
l.Ri
car
dowas

1
07
r
eck
one
dast
he

‗Theo
ris
tsTheo
ris
t’.

1
08
Theo
ryo
fval
ue
Mo
der
ndi
scu
ssi
ono
fthev
ali
dit
yoft
hee
cono
mics
yst
emo
fDav
idRi
car
doh
as
c
ent
redabo
utt
het
heo
ryo
fval
ue.Thel
abo
urt
heo
ryo
fva
lues
tat
est
hatt
he
r
ela
tiv
epr
iceo
ftwogo
odsi
sde
ter
min
edbyt
her
ati
ooft
hequant
iti
eso
flabo
ur
r
equi
redi
nthe
irp
rodu
cti
on.

Hi
slabo
urt
heo
ryo
fval
uehast
hefo
ll
owi
ngas
sump
tio
ns:
 Bo
ths
ect
orsha
vet
hes
amewa
g er
atea
n dt
hes
amep
rofi
trat
e;
 Thec
api
tale
mpl
oyedi
npr
odu
cti
oni
smadeu
pofwa
g e
son
ly;
T
hep
eri
odo
fpr
odu
cti
onhast
hes
amel
engt
hfo
rbo
thgo
ods
.
Ri
car
do hi
mse
lfr
eal
iz
edt
hatt
hes
eco
ndandt
hir
das
sump
tio
nswe
requi
te
u
nre
ali
sti
candh
enc
eadmi
tte
dtwoe
xce
pti
onst
ohi
slabo
urt
heo
ryo
fva
lue
:
1.Pr
odu
cti
onp
eri
odsmaydi
ffer
;
2.Thet
wop
rodu
cti
onp
roc
ess
esmaye
mpl
oyi
nst
rume
ntsa
nde
q u
ipme
ntasc
api
tal
andn
otj
ustwages
,andi
nve
rydi
ffer
entp
rop
ort
ions
.
Ri
car
dowr
otet
hatfo
rac
ommo
dit
ytohav
eex
changev
alu
e,i
tmu
sthav
eus
eval
ue.
Ut
il
it
y(s
ubj
ect
ivewants
ati
sfyi
ngp
owe
r)i
sno
ttheme
asu
reo
fex
changeabl
eval
ue,
al
tho
ughi
tise
sse
nti
alt
oit
.
Po
sses
singu
til
it
y,o
rus
eval
ue,c
ommo
dit
iesde
riv
ethe
ire
xch
a ngev
alu
efr
omt
wo
s
ourc
es:
(
1)The
irs
car
cit
yand
(
2)Thequan
tit
yofl
abo
rre
q u
ire
dtoo
bta
int
hem.
Thev
alu
eofno
n-r
epr
oduc
ibl
eco
mmo
dit
ies
,su
chasr
arewo
rkso
far
t,c
las
sicbo
oks
,
ando
ldc
oin
s,i
sde
ter
mine
dbyt
hei
rsc
arc
ityal
one
.Fo
rthe
sei
tems
,su
ppl
yisfi
xed,
and,t
her
efo
re,de
mandwi
llbet
hep
rimar
yfac
tori
nde
ter
mini
nge
xchangev
alu
e.
Bu
tmo
stc
ommo
dit
iesaer
r epr
oduc
ibl
e,a
nd Ri
car
doas
sume
dthatt
heyar
e
p
rodu
cedwi
tho
utr
est
rai
ntu
nde
rco
ndi
ti
onso
fco
mpe
tit
ion.I
twast
hes
ego
odst
o
wh
ichRi
car
doap
pli
edhi
slabo
rthe
oryo
fva
lue
.

1
09
Re
cal
lthatSmi
ths
tat
edal
abo
rthe
oryo
fval
uefo
rap
rimi
ti
ves
oci
etyand
de
vel
ope
d a"
labo
rco
mmande
d"t
heo
ryfo
radv
anc
ede
cono
mie
s.Ac
cor
dingt
o
Ri
car
do,
thee
xcha
nge

1
10
v
alu
eofac
ommo
dit
yde
pendso
nthel
abo
rti
mene
ces
sar
ytop
rodu
cei
t.Thel
abo
r
t
imei
ncl
ude
sno
ton
lyt
hewo
rkdo
nei
nmak
ingt
hec
ommo
dit
yit
sel
fbu
tal
sot
he
wo
rke
mbo
die
dint
her
awmat
eri
alsandc
api
talgo
odsu
sedu
pint
hep
roc
esso
f
p
rodu
cti
on.

Co
mpar
ati
veAdv
ant
age

Thet
reme
ndo
uss
ubt
let
yofRi
car
do‘
smi
ndi
sev
ide
nti
nhi
sdo
ctr
in fc
eo o
mpar
ati
ve
adv
ant
ageasap
pli
edt
oint
ernat
ionalt
rade
.Wi
tht
hisar
gume
nthes
tre
ngt
hene
d
t
hec
asefo
rfr
eet
radebye
xte
ndi
ngAdam Smi
th‘
sanal
ysi
soft
hegai
nst
obe
ac
hie
vedbyt
hefr
eemo
veme
nto
fgo
odsac
ros
sint
ern
a t
ional
bou
ndar
ies
.
I
fnat
ionAc
oul
dpr
odu
ceago
odatal
owe
rco
stt
hannat
ionB,andnat
ionBc
oul
d
p
rodu
ceano
the
rgo
odatal
owe
rco
stt
hannat
ionA,bo
thnat
ionswo
uldgai
nby
p
rac
tic
ingt
err
ito
rials
pec
ial
iz
ati
onandt
radi
ng.I
nthet
ermi
nol
ogyo
fint
ernat
ional
t
radet
heo
ry,i
fonenat
ionhasanabs
olu
teadv
ant
agei
nthep
rodu
cti
ono
fone
c
ommo
dit
yanda
not
hernat
ionhasanabs
olu
teadv
ant
agei
nthep
rodu
cti
ono
f
ano
the
rco
mmo
dit
y,e
achc
angai
nbys
pec
ial
iz
ingi
nthec
ommo
dit
ythatc
ost
sitt
he
l
eas
ttop
rodu
ce.

Ri
car
diandi
str
ibut
iont
heo
ry

Thei
mpo
rtan
ceo
fDav
idRi
car
do‘
smo
deli
stha
titwa
son
eoft
hefi
rstmo
del
sus
edi
n
Ec
ono
mic
s,ai
medate
xpl
ai
ni
ngho
winc
omei
sdi
str
ibut
edi
nso
cie
ty.
St
art
ingas
sump
tio
ns:
t
her
eiso
nlyo
nei
ndu
str
y,agr
icu
ltu
re;o
nlyo
nego
od,
gr
ain;t
her
ear
ethr
eek
indso
fpe
opl
e:
i
.Cap
ital
is
ts:t
heys
tar
tthee
cono
micgr
owt
hpr
oce
ssbys
avi
ngandi
nve
sti
ng.I
n
r
etu
rn,t
heyr
ece
ivep
rofi
ts,whi
chi
swhati
sle
f to
ncewagesandr
ent
shav
ebe
en
s
ubt
rac
tedfr
omt
hegr
ossr
eve
nue
.
Ca
pit
alc
anbedi
vi
dedi
ntofi
xedc
api
tal(
mac
hine
s)andwo
rki
ngc
api
tal

1
11
(
wagefund,
).i
i
.Wo
rke
rs:t
heyr
epr
ese
ntt
hel
abo
urfo
rce
,inr
etu
rnfo
r
wa
g e
s.
i
i
i.Landl
ords
:th
eya
llo
wpr
odu
cti
ont
otak
epl
acei
nthe
irl
andsi
nre
tur
nfo
rre
nt.

1
12
  l
awo
fdi
mini
shi
ngr
etu
rns
:affec
tsl
abo
ur(
var
iabl
efac
toro
fpr
odu
cti
on)
andl
and(
fix
edfac
tor
).
 p
rinc
ipl
eofmar
ginalp
rodu
ct:mar
gin
a l
pro
duc
tofl
abo
ur,
whi
ch,
alo
ngwi
th
t
hea
ver
agep
rodu
cto
fland,
isde
cre
asi
ng.
 p
rinc
ipl
eofe
cono
mics
urp
lus
:pr
ofi
tsa
rede
ter
mine
dasas
urp
luso
f
p
rodu
cti
on.
Wages
:Labo
r,s
aidRi
car
do,
li
keal
lot
hert
hingst
hatar
ebo
ughtand
s
old,
hasi
tsnat
uralp
ric
eandi
tsmar
ketp
ric
e.Thenat
ural
pri
ceo
flabo
rist
hatp
ric
e
t
hat
,gi
vent
hehabi
tsandc
ust
omso
fthep
eop
le,
enabl
eswo
rke
rst
osu
bsi
standt
o
p
erp
etu
atet
hems
elv
eswi
tho
utac
hangei
nthe
irnu
mbe
rs.
Thenat
ura
lpr
iceo
flabo
r
de
pendso
nthep
ric
eoft
hene
ces
sit
ieso
fli
fer
equi
redbyt
hel
abo
rer
sandt
hei
r
fami
li
es.
T hema
rke
tpr
iceo
flabo
rde
pen
dso
nsu
ppl
y&de
mandandfl
uct
uat
es
ar
oundt
henat
ural
pri
ce.

I
nthel
ongr
un,bo
tht
henat
uralpr
iceo
flabo
randno
minalwagest
endt
ori
se,s
aid
Ri
car
do,bec
aus
eoft
hei
ncr
eas
ed di
ffi
cul
tyandc
osto
fpr
odu
cin
gfo
odfo
r
gr
owi
ngn
umbero
fpe
opl
e.
Ri
car
do‘
side
athati
nthel
ongr
unt
hewo
rke
rget
sonl
yami
ni
mumwagec
amet
obe
k
nownas‗t
hei
ronl
awo
fwages
‘.Whe
nthema
rke
tpr
iceo
flabo
rri
sesabo
vet
he
nat
uralpr
ice
,awo
rke
rcanr
earal
argeandh
eal
thyfami
l
y .
Asp
opu
lat
ioni
ncr
eas
es,
wa
g e
sfal
ltot
hei
rnat
uralp
ric
eore
venbel
ow.Whe
nthemar
ketp
ric
eofl
abo
ris
bel
owt
henat
uralp
ric
e,mi
ser
yre
duc
est
hewo
rki
ngp
opu
lat
ionandwagesr
ise
.
The
refo
re,
thel
ong-r
unt
ende
ncyi
sfo
rwo
rke
rst
ore
cei
vet
hes
ubs
ist
enc
emi
ni
mum.
Pr
ofi
ts:Ri
car
dofel
tthatt
her
ate
sofp
rofi
tindi
ffer
entfi
el
dso
fent
erp
ris
ewi
thi
n
ac
ount
ryt
endt
oequal
iz
e.I
fther
ateo
fpr
ofi
tishi
ghe
rini
ndu
str
ythani
nthe
far
mingo
fmar
ginall
and,c
api
talwi
llfl
owfr
omagr
icu
ltu
ret
oindu
str
y,anda
bet
tergr
adeo
fla
ndwi
llbec
omet
hene
wmar
ginall
and.I
fagr
icu
ltu
rei
smo
re
p
rofi
tabl
ethani
ndu
str
y,c
api
talwi
llfl
owt
owa
rdsagr
icu
ltu
re,andt
hene
xtwo
rse
gr
adeo
fla
n dwi
ll
b e
comet
hemar
ginal
landc
ult
ivat
ed.
1
13
Re
cal
lthatRi
car
doe
mphas
ize
dthatp
rofi
tsandwagesv
aryi
nve
rse
ly;o
nei
ncr
eas
es
att
hee
xpe
nseo
ftheo
the
r.I
fwagesfal
l,
pri
ceswi
l
lno
tfal
l.
Ift
heydo
,go
ldwi
l
l
fl
owi
ntot
hec
ount
ry,
andp
ric
eswi
ll
ris
eagai
n.The
refo
re,
afal
li
nwageswi
l
lre
sul
tin
ar
isei
npr
ofi
ts.
Ric
ardot
hou
g htt
hatt
her
ateo
fpr
ofi
two
uldfal
lbe
cau
seo
fthe
i
ncr
eas
ingdi
ffi
cul
tyo
fgr
owi
ngfo
odfo
rane
xpandi
ngp
opu
lat
ion.
T heo
ryo
f
Di
mini
shi
ngRet
urnandRentRi
car
do‘
slawo
fdi
min
ishi
ngr
etu
rnsandt
heo
ryo
fre
nt
de
vel
ope
dinr
esp
ons
etot
hede
b at
eov
ert
heCo
rnLaws
.Re
cal
lthatt
hec
onc
epto
f
di
mini
shi
ngr
etu
rni
nagr
icu
ltu
redat
esbac
ktoTur
got
,thep
hys
ioc
rat
.Bu
titwa
s
Ri
car
dowhode
vel
ope
dtheno
tio
nmo
stc
learandc
omp
let
e.I
nus
ingt
hisc
onc
eptt
o
de
vel
ophi
sthe
oryo
fre
nt,
Ric
ardobe
camet
hefi
rste
con
omi
stt
ofo
rmu
lat
ea
mar
gin
a l
pri
nci
pl
eine
cono
micanal
ysi
s.
Re
nt,
sai
dRi
car
do,
ist
hep
rop
ort
iono
fth
epr
odu
ceo
fthee
art
hwhi
chi
spai
dtot
he
l
andl
ordfo
rth
eus
eoft
heo
rigi
nalandi
nde
str
uct
ibl
epo
wer
soft
hes
oil
.Iti
ncl
ude
s
t
her
etu
rno
nthel
ongr
unc
api
tali
nve
stme
ntst
hatar
eamal
gamat
edwi
tht
hel
and
andi
ncr
eas
eit
spr
odu
cti
vi
ty.
Ri
car
do‘
sthe
oryo
fre
ntas
sume
stheo
per
ati
ono
ftwop
rinc
ipl
es:t
hedi
ffe
rent
ial
p
rin
cip
leandt
hemar
ginalp
rinc
ipl
e.Thefi
rste
xpl
ai
nst
hedi
ffer
ent
ialnat
ureo
f
r
entwh
ilet
hel
ate
rgi
vest
heme
asu
reo
fre
nt.
1. TheDi
ffer
ent
ialpr
inc
ipl
e:i
mpl
ie
sthatane
q u
alamo
unto
flabo
randc
api
tal
mayp
rodu
cedi
ffer
entamo
unt
sofo
utp
ut.I
nagr
icu
ltu
re,e
q u
alquant
iti
eso
f
c
api
talandl
abo
rpr
odu
cedi
ffer
entquant
iti
eso
fou
tpu
tint
woways
:
 Un re
de x
tens
ivec
ult
ivat
ion,t
heo
utp
utdi
ffer
swhe
nequalquant
iti
eso
f
l
abo
randc
api
tal
aree
mpl
oyedo
nla
n dswi
thdi
ffer
entqual
i
tie
s.Mo
refer
til
e
l
andyi
el
dsmo
reo
utp
utandhe
ncemo
rer
entandv
icev
ers
a.
 Un ri
de nt
ens
ivec
ult
ivat
ion
,theo
utp
utdi
ffer
swhe
nequalquant
iti
eso
fla
b o
r
andc
api
tala
ree
mpl
oyeds
ucc
ess
ive
lyo
nthes
amel
anddu
etot
hel
awo
f
di
mini
shi
ngr
etu
rn.

1
14
2. The Mar
ginalpr
inc
ipl
e:t
hisi
mpl
ie
sthatt
hep
ric
eoft
hep
rodu
cti
s
de
ter
mine
dbyt
hec
osto
fpr
odu
cti
ono
fthe mar
gin
a lp
rodu
cer
.Mar
ginal
p
rodu
ceri
stheo
newho

1
15
p
rodu
cesu
nde
rthemo
stu
nfav
orabl
eci
rcu
mst
anc
es.Whe
nweap
plyt
hemar
gin
al
p
rin
cip
let
oagr
icu
ltu
re,
equal
q u
ant
iti
eso
fcap
ital
andl
abo
rpr
odu
cedi
ffer
entr
ent
i
ntwoways
:
u
n re
de x
tens
ivec
ult
ivat
ion
, t
hep
ric
eofo
utp
utwi
l
l c
ove
rco
sto
fpr
odu
cti
ono
nth
e
mar
ginall
and.
u
n ri
de n
tens
ivec
ult
ivat
ion,t
hep
ric
eofo
utp
utwi
l
lco
vert
hec
osto
fthema
rgi
nal
do
zeo
fin
put
sre
q u
ire
d.
Thei
mpl
ic
ati
ono
ftheabo
veanal
ysi
sist
hatt
hemar
gina
llandandt
hemar
gin
al
do
zeo
fca
pit
ala
ndl
abo
rdono
tgene
rat
eanyr
entbe
cau
ser
eve
nue
sju
stc
ove
r
t
hei
rco
sto
fpr
odu
cti
on.Al
lthei
ntr
a-mar
ginall
andandi
ntr
a-mar
ginalu
nit
sof
c
api
talandl
abo
rget
sre
ntbe
cau
set
heyo
per
ateu
nde
rmo
refav
orabl
eco
st
c
ondi
ti
onst
hant
hos
eatt
hemar
ginso
fpr
odu
cti
on.

4
. J
eanBapt
istSay

J
ean
- Bap
tis
teSay(
176
7–1832)wa
saFr
enc
hec
ono
mis
tandbu
sin
ess
man.Heha
d
c
las
sic
all
yli
ber
alv
iewsanda
rgue
din fav
ouro
fco
mpe
tit
ion
,fr
eet
rade
,and
l
i
f t
ingr
est
rai
ntso
nbu
sin
ess
.

Hei
sbe
stk
n o
wnduet
oSay‘
sLa
w,whi
chi
sname
daft
erhi
manda
tti
mesc
redi
tedt
o
hi
m.Say‘
sfi
rstl
ite
rar
yat
temp
twa
sap
amp
hle
tont
hel
i
b e
rtyo
fth
epr
ess
,pu
b l
i
she
d
i
n178
9.I
n1804,hav
ings
hownh
isu
nwi
l
lin
gne
sst
osac
rifi
cehi
sco
nvi
cti
onsfo
rth
e
p
urp
oseo
ffur
the
rin
gth
edes
ign
sofNapo
leo
n,hewa
sre
mov
edfr
omt
heo
ffi
ceo
f
t
ribu
ne.Hedev
ote
dhi
sle
isu
ret
oth
eimp
rov
e me
nto
fhi
sec
ono
mict
rea
tis
e,whi
ch
hadfo
rso
met
imebe
eno
uto
fpr
int
,butwhi
cht
hec
ens
ors
hipdi
dno
tpe
rmi
thi
mto
r
epu
b l
is
h.

Say‟
sme
tho
dol
ogy

Say‘
sap
pro
acht
oec
ono
mic
sis
,inp
hil
oso
phi
calt
erms
,thato
far
eal
i
standan
e
sse
nti
al
is
t.He c
ombi
nedahe
alt
hys
kep
tic
ism r
egar
dingt
heu
seful
nes
sof

1
16
s
tat
ist
ica
linv
est
igat
ionswi
thane
mphas
iso
nobs
erv
ingt
hefac
tso
fre
ali
ty.Hes
ees
e
cono
mic
sasagenu
ines
cie
nce

1
17
c
apa
b l
eofe
sta
b l
is
hin
g‗abs
olu
tet
rut
hs,
‘bu
tin
sis
tst
hati
t‗h
aso
nlybec
omeas
cie
nce
s
inc
eithasbee
nco
nfi
nedt
other
esu
ltso
fin
duc
tiv
ein
ves
tiga
tio
n.‘I
nfa
ct,Sa
y
de
clar
est
hatp
oli
ti
cale
cono
my
‗fo
rmsap
arto
fex
per
ime
ntals
cie
nce
‘ andi
s,t
hus
,rat
hers
imi
l
a rt
oche
mis
tryand
nat
uralp
hil
oso
phy.
Fo
rSay,asfo
rmo
stmo
der
nAu
str
ians
,ec
ono
mic
sisno
tas
hado
wyr
eal
mtobe
p
ene
trat
edo
nlybyt
hee
xpe
rt,butas
ubj
ecto
feno
rmo
usp
rac
tic
ali
mpo
rtanc
e
ac
ces
sibl
etoal
l.

Say‟
slawo
fmar
ket
Say‘
sla
wisc
ommo
nlys
ummar
ize
das„
suppl
ycr
eat
esi
tso
wndemand.
‟Thi
slaw,
al
sor
efer
redt
oasSay‟
s„t
heo
ryo
fmar
ket
s‟o
r„l
awo
fmar
ket
s,‟i
ndi
cat
est
hatt
he
ac
tofp
rodu
cinga
g gr
egat
eou
tpu
tgene
rat
esas
uffi
ci
entamo
unto
faggr
egat
e
i
nco
met
opu
rch
a s
eal
loft
heo
utp
utp
rodu
ced.Thi
spr
inc
ipl
eindi
cat
edt
hate
xce
ss
p
rodu
cti
ono
rin
suffi
ci
entde
mandfo
rpr
odu
cti
onwasu
nli
kel
ytoo
ccu
r,atl
eas
tfo
r
anye
xte
nde
dpe
rio
d.Whe
nco
mbi
nedwi
thfl
exi
blep
ric
esands
avi
ngi
nve
stme
nt
e
q u
ali
ty,
Say‘
slawfur
the
rimp
li
edt
hatane
cono
mywo
uldac
hie
veandma
int
ainful
l
e
mpl
oyme
nto
fre
sou
rce
s.Thi
slawwa
ssi
ngl
edo
utbyJ
ohnMaynar
dKe
y ne
sinh
is
c
rit
iqueo
fcl
ass
icale
cono
mic
s,bu
tre
mai
nsr
ele
vanti
ncu
rre
ntmac
roe
cono
mic
anal
ysi
s,r
efl
ect
edi
nthec
irc
ularfl
owmo
del
.
Say‘
sla
wthat‗s
uppl
ycr
eat
esi
tso
wn demand‘i
soneo
fthefundame
ntal
p
rin
cip
leso
fcl
ass
icalec
ono
mic
s.Thi
spr
inc
ipl
etho
ughi
sat
tri
but
edt
oJ.B.Say,was
s
imu
ltane
ous
lyadv
ocat
edbys
eve
rale
cono
mis
tso
ftheday.Thel
awi
soft
en
mi
si
nte
rpr
ete
dtome
ananyfi
rmt
hatp
rodu
cesago
odi
sgua
rant
eedp
rofi
tabl
e
s
ale
s.I
tmo
rec
orr
ect
lyme
anst
hatt
heac
tofp
rodu
cti
ongene
rat
ese
nou
g hi
nco
me
fo
rane
q u
iva
lentamo
unto
fde
mandfo
rot
herp
rodu
cti
on.Wh
enap
pli
edt
othe
mac
roe
cono
my,Sa
y ‘
slawi
ndi
cat
est
hate
cono
micdo
wnt
urnsc
anno
tbec
aus
edby
t
hel
acko
fde
mand,t
hati
s,o
ver
pro
duc
tio
n.Theaggr
egat
epr
odu
cti
ono
fou
tpu
t

1
18
gene
rat
esj
uste
nou
g hi
nco
met
oequa
teaggr
egat
ede
mandwi
thaggr
egat
esu
ppl
y.

1
19
Sayi
dent
ifi
est
wome
ansbywhi
cht
hec
orr
ect
ivep
roc
esso
per
ate
s.Pr
inc
ipal
l
y ,he
ar
gue
sth
at,
tho
ughi
ndi
vi
dual
sdos
avep
arto
fthei
nco
mede
riv
edfr
omp
rodu
cti
on,
asl
ongast
hos
esa
vingsar
ere
inv
est
e n‗p
di rodu
cti
vee
mpl
oyme
nt,
‘i
ntheaggr
egat
e
t
her
ene
edbenode
cre
ase
sinp
rodu
cti
on,i
nco
me,o
rco
nsu
mpt
ion.Thi
spr
oce
sso
f
r
ein
ves
tme
nti
sfue
ll
edbydi
ffer
enc
esi
nthep
rofi
tse
arne
dbye
ntr
epr
ene
urs
.
Tho
sego
odst
hatar
ere
lat
ive
lymo
res
car
ce,andt
husr
isi
ngi
npr
ice
,at
trac
t
addi
ti
onali
nve
stme
nt,
whi
let
hos
ethatar
ere
lat
ive
lyl
esss
car
ce,
andt
husfal
l
ingi
n
p
ric
e,di
sco
uragei
nve
stme
nt.
Ande
veni
foneho
ardsmo
neyo
rbu
rie
sit
,‗t
heu
lti
mat
e
o
bje
cti
sal
wayst
oemp
loyi
tinap
urc
has
eofs
omek
ind,
‘sot
her
est
il
lcanno
tbe
de
f i
ci
entde
mandasl
ongasr
eale
cono
micv
alu
esar
ebei
ngp
rodu
ced.I
nor
derfo
r
c
ons
ume
rst
oex
ist
,the
remu
stfi
rstbep
rodu
cer
s.
Thr
ougho
uthi
sdi
scu
ssi
ono
fpr
odu
cti
onandc
ons
ump
tio
n,Sayc
ons
ist
ent
lymai
ntai
ns
t
hatmo
neyi
sme
rel
yane
utr
alc
ondu
itt
hro
ugh whi
chaggr
egat
esu
ppl
yis
t
rans
lat
edi
ntoaggr
egat
ede
man r‗mo
d,o neyi
stheage
nto
fthet
rans
fero
f
v
alu
es’
.The
res
eemst
obenor
eco
gni
ti
ono
fthet
rans
mis
sio
nme
chani
smbywhi
ch
c
hangesi
nth
esu
ppl
yofmo
neyal
tert
her
ela
tiv
epr
ice
sofgo
odsand,t
her
eby,
r
edi
rec
tthee
nti
rei
nte
rre
lat
eds
tru
ctu
reo
fpr
odu
cti
on.
Ont
heo
the
rhand,Saye
loque
ntl
yex
pre
sse
sac
learu
nde
rst
andi
ngt
hati
tiswh
oll
y
ben
efi
ci
alfo
ras
oci
etyt
oex
per
ienc
egene
ral
lyfal
li
ngp
ric
eswhe
nev
ers
uchde
cli
ning
p
ric
esar
eth
ere
sul
tofp
rodu
cti
vi
tygai
ns.
Noto
nlydo
est
hisc
irc
ums
tanc
eindi
cat
e,
c
ont
rar
ytop
opu
larbel
ie
f ,‗t
hatac
ount
ryi
sri
chandp
lent
iful
,
‘bu
tal
sot
hat
‗p
rodu
ctsfo
rme
rlywi
thi
nre
acho
fther
ichal
onehav
ebe
enmadeac
ces
sibl
eto
al
mos
tev
eryc
las
sofs
oci
ety.
‘Mo
reo
ver
,Sayc
orr
ect
lyp
erc
eiv
est
ha:(
t a)t
he
p
ric
eso
fgo
odsr
efl
ectt
hei
rut
il
it
ytot
hebu
yer
,
(b) t
hepr
iceso
fthefac
tor
sofpr
oduc
tio
nar
eder
ivedo
r‘i
mput
ed’fr
omt
hepr
ices
o
fthego
odspr
oduc
ed,
and
(c) c
ost
sofp
rodu
cti
onr
epr
ese
ntani
nte
rfac
ebe
twe
ent
heu
til
i
tyo
fthego
od

1
20
andt
hep
rodu
cti
vi
tyo
fthefac
tor
sofp
rodu
cti
on.

1
21
5
.Jo
hnSt
uar
tMi
ll

J
ohnSt
uar
tMi
l
lwasbo
rni
nLo
ndo
nonMay20
,1806anddi
edMay8
,1873i
nAv
ign
on,
Fr
anc
e.
He wasa p
hil
oso
phe
r,e
cono
mis
tandp
oli
ti
calt
heo
ris
t.He wast
hefi
rst
par
li
ament
aryde
put
ytos
upp
ortawo
man‘
sri
ghtt
ovo
teandwasac
o-fo
unde
rof
t
hefi
rstwo
men‟
ssuffr
ageo
rgani
zat
ion
.
I
n1848,Mi
l
lpu
bli
shdPr
e inc
ipl
eso
fPo
lit
icalEc
ono
my,whi
chs
oonbe
camet
hemo
st
i
mpo
rtantt
exto
fhi
sti
me.Thebo
oke
xami
nest
hec
ondi
tio
nso
fpr
oduc
tio
n,n
ame
ly
l
abo
urandn
a t
ure
.Fo
ll
owi
ngRi
car
doandMa
lthu
s,h
eemp
has
ize
dth
epo
ssi
bi
li
tyo
f
c
han
geands
oci
ali
mpr
ove
men
tande
xami
nese
nvi
ronme
ntalp
rot
ect
ionn
eeds
.
Fu
rthe
rmo
re, Mi
llar
gue
dinfav
ouro
fwo
rke
r-o
wne
dco
ope
rat
ives
,wh
ichc
lear
ly
r
efl
ecth
isv
iews
.
Wr
itt
enandde
vel
ope
dinc
los
eco
ll
abo
rat
ionwi
thhi
swi
fe,Har
rie
tTayl
or,Mi
l
l
e
xami
nest
henat
ureo
fpo
werandar
gue
sfo
ranabs
olu
tefr
eedo
moft
hou
g htand
s
pee
ch.

Fo
rMilli
tiso
nlyt
hro
ughs
uch‗fr
eedo
m‘t
hath
umanp
rogr
essc
anbeat
tai
nedand
pr
ese
rved.

Ashes
tat
es:‗Thes
ubj
ecto
fthi
sEs
sayi
sno
tthes
o-c
all
edLi
ber
tyo
ftheWi
l
l,but

1
22
Ci
vi
l,
orSo
cialLi
ber
ty:t
henat
ureandl
imi
tso
fthep
owe
rwhi
chc
anbel
egi
ti
mat
ely
e
xer
cis
edbys
oci
etyo
vert
hei
ndi
vi
dual
.
‘Theo
nlyp
arto
fthec
ondu
cto
fanyo
ne,
fo
rwhi
chh
eisame
nabl
etos
oci
ety,i
sthatwhi
chc
onc
ernso
the
rs.
Int
hep
artwh
ich
me
rel
yco
nce
rnshi
m,hi
sinde
pende
ncei
s,o
fri
ght
,abs
olu
te.Ov
erhi
mse
lf,o
verhi
s
o
wnbo
dyan
dmi
nd,t
he

1
23
i
ndi
vi
duali
sso
ver
eign.
‘Oneo
fhi
smai
ntr
aje
cto
rie
sist
hati
nthec
our
seo
f
de
moc
rat
izat
iont
her
eisal
wayst
hedangero
ftyr
annyo
fthemaj
ori
ty.Thi
sisa
da
n gero
nec
ann
otbep
rot
ect
edfr
om,
eve
ntho
ught
hemaj
ori
tymi
ghtbewr
ong.I
n
gene
ral
,fo
rMi
ll
suc
hli
ber
tyi
sonl
yap
pli
cabl
eandp
oss
ibl
efo
rpe
opl
ewhoa
reabl
eto
de
cidefo
rth
ems
elv
es,
the
refo
res
uchno
tio
nex
clu
desc
hil
dre
nandt
hos
ehec
all
s

‗Bar
bar
ians
.‘
J
ohnSt
uar
tMi
l
lde
vel
ope
d au
til
it
ari
ane
thi
calt
heo
r n Ut
yi il
itar
iani
sm(
1861)
.
Thefo
undat
iono
fal
lut
il
ita
riane
thi
calp
rinc
ipl
esi
ste‘
h great
est happi
nes
s
pr
inc
ipl
e’.Th
eul
ti
mat
ego
alo
fut
il
itar
iani
sm,Mi
l
lar
gue
s,i
stoac
hie
ves
uchhap
pine
ss
fo
rthema
jor
ityo
fpeo
ple:‗Todoaso
newo
uldbedo
neby,an
dtol
oveo
ne‘
sne
ighbo
r
aso
nes
elf,c
ons
tit
utet
hei
deal
per
fec
tio
nofu
til
i
tar
ianmo
ral
it
y.‘
J
ohnSt
uar
tMi
l
l‘
swo
rkshav
ene
vers
hie
dawayfr
omc
ont
rov
ers
y.Mi
l
l‘
sEx
ami
nat
iono
f
Si
rWi
l
li
am Hami
lt
on‘s Phi
l
oso
phy(
1865) i
ssa
idt
oco
ntai
nth
e fi
rsts
ecu
lar
ap
pea
ran
ceo
fPhe
nome
nal
i
sm.
I
twaso
nlya
f t
ert
hiswo
rkt
hatt
hisdo
ctr
inebe
came t
hes
tan
d ar
damo
ng
s
cie
nti
ficp
hil
oso
phe
rsdur
ingt
hist
ime
.Co
-wr
itt
enwi
thhi
swi
fe,TheSu
b j
ect
iono
f
Wo
men(
1869)
,wasqui
ter
adi
calfo
rit
sti
me,
a ndc
aus
edyetano
the
rco
ntr
ove
rsy.The
e
ssayar
gue
dinfav
oro
fequa
li
tyo
fth
ese
xese
mpl
oyi
ngu
til
itar
ianar
gume
nts
.Mi
l
l
wasc
onv
inc
edt
hatt
hei
nequa
li
tyo
fwo
menwo
uldi
mpe
dehu
manp
rogr
essi
nge
n e
ral
.
Fo
rMi
llt
heo
nlywayt
ofi
ndo
utwhe
the
rth
erea
reac
tual
l
ydi
ffer
enc
esbe
twe
en
me
nandwo
men,
hear
gue
s,i
sbye
xpe
rime
nt.
Mi
l
lch
oset
opu
bli
sht
hise
ssayr
ela
tiv
elyl
atei
nhi
sli
fe,p
oss
ibl
ytoav
oidc
ont
rov
ers
y.
Fo
rsi
mil
arr
eas
onshedi
dno
twa
ntt
ohav
ehi
sThr
eeEs
sayso
nRe
li
gio
npu
b l
i
she
d
dur
ingh
isl
i
fet
ime(
the
yonl
yap
pea
redi
n1874
),tho
ught
hes
ewe
reno
tasr
adi
cala
s
hi
sfo
ll
owe
rsh
adh
ope
d.Co
nvi
nce
dth
att
hey wo
uldi
mpe
de p
rogr
ess
,Mi
l
lhe
re
ar
gue
saga
ins
tan al
l-p
owe
rfulgo
dandt
radi
ti
onalr
eli
gio
usv
iewsi
nge
n e
ral
.
I
nst
ead,
hep
rop
ose
sa‗r
eli
gio
nofhu
man
ity,
‘whe
rei
nhu
mani
tyi
tse
lfi
sre
ver
enc
ed.

1
24
Du
rin
ghi
sli
fet
ime
,Mi
l
lwa
squi
tep
rol
i
ficandp
roduc
edagr
eatnu
mbe
rofwo
rksi
n
v
a r
iou
sfi
el
dss
uchase
con
omi
cs,s
oci
alp
hil
oso
phy,l
ogi
c,butal
sor
eli
gio
nandet
hic
s.
Amo
nghi
smo
sti
mpo
rta
nto
nesa
reEs
sayso
nSo
meUns
ett
ledQu
est
ionso
fPo
li
tic
al
Ec
ono
my (
184
4),Tho
ught
son Par
li
ame
ntar
y Re
for
m (
1859
),Co
nsi
der
ati
onso
n
Re
pre
sen
tat
iveGo
ver
nme
n t(
1861)
,Au
g u
steCo
mteandPo
sit
ivi
sm(
1865)
,En
glandand
I
rel
and(
1869)
.Hi
sfr
agme
nte
dAu
tobi
ogr
aphywasp
ost
humo
usl
ypu
b l
i
she
dint
he
s
ameye
aro
fhi
sdea
th;hedi
edo
nMa
y8,
1873i
nAv
ign
on,
Franc
e.

1
25