The Online Library of Liberty

A project of Liberty Fund, Inc.

• Foreword
• Economic Liberalism the Beginnings
• 1: The Stoic Origins of Liberalism
• 1: The Consequences of Stoicism
• 2: Zeno and the Moral Sage
• 3: The Modifications In Stoicism
• 4: Epictetus
• 5: Cicero
• 6: The Stoic Legacy
• 2: The Mercantilists As Liberals
• 1: National Power and Full Employment
• 2: The Means to Full Employment
• 3: The Market
• 4: The Political Ideas
• 5: The Economic Setting of Mercantilist Policy
• 6: Comment On the Commentaries On Mercantilism
• 3: The Origins of American Liberalism
• 1: The Constitutional Convention
• 2: The Ideology of the Federalists
• 3: Economic Policy of the Federalist Party
• 4: Republican Economic Policy

6

The Stoic Legacy

Because of Cicero’s work, the influence of Stoic doctrine on later ages was considerably different—more extensive and more wordly—from what it would have been had it remained in its early form. As most commentaries state, Stoicism created a respect for the individual. It did so in several ways. In declaring that man was naturally reasonable and therefore capable of distinguishing good from evil, the Stoics centered their ethical doctrine on the individual. He, and he alone, was responsible for the conduct of his life. To him all credit must go for virtue and all blame for vice. This doctrine can be better appreciated when it is set against the more common view that the individual was moved by the gods and was helpless in their hands. In Greek drama, for example, the protagonist usually is fate, and the behavior of the individual is explained as an unfolding of his destiny. The Furies say of Orestes and Agamemnon, “Yea evil were they born for evil’s doom.” Reason meant something much different to Euripides, for example, from what it meant to the Stoics.

• Aye, but it hath a sting,
• To come to reason; yet the name
• Of madness is an awful thing—

Phaedra says in Hippolytus.

In later ages the Stoic influence was disclosed in the importance that came to be attached to the conscience of the individual. In the eighteenth century, philosophers wrote with great feeling of the satisfaction that comes of an act well done and of the anguish of an evil conscience. The writing is an echo of the Stoics. And the Stoic devotion to reason—though it was austere, even harsh—was important in the development of liberal ethics. Epictetus wrote of the Stoic who was tortured for his ideas and who scoffed at his persecutors for thinking they could destroy his philosophy by injuring his body. Thoreau mocked his jailers because they believed that by putting him into prison they could make him pay taxes to a government that tolerated slavery. In the centuries after Stoicism, men sought to apply the test of reason to their conduct and their institutions—at first hesitantly, then with growing power. As they did this they were following a course laid out by the Stoics. One may conjecture that the idea of intellectual integrity came from Stoicism. The idea is by no means confined to the countries where liberalism is supposed to have been most influential. The contemporary Soviet poet Yevtushenko has a short verse entitled, “Talk.” It is about his being called a brave man because he spoke out when other literary figures were “prudently” silent. He says he was not brave at all. He simply thought that to degrade himself as they did was unbecoming to him as a man. The verse concludes by saying the future will take vengeance on the present, “remembering how in so strange a time common integrity could look like courage.”

One may also conjecture that Stoicism was the origin of the idea that the main duty of the state is to respect the worth of the individual. This idea never has been well understood, and when it has it never has been completely accepted. It means that governments are responsible to the governed. The idea is familiar, almost a cliché, but is repeatedly challenged in practice—for example, by the requirement of loyalty oaths. They imply, if they mean anything at all, that the governed are responsible to the government. Nevertheless, the Stoic idea is a durable one. Although challenged repeatedly, it has been reasserted repeatedly, and one would like to believe the balance is tilting, if ever so little, in its favor. Whether or not that is so, the idea still is with us. It is one of the bequests of Stoicism.

2

THE MERCANTILISTS AS LIBERALS

English mercantilism had its period between about 1500 and 1750. Almost always it is thought of as the antithesis of the classical economic liberalism which followed it. Smith used some of his strongest language to condemn it, and John Stuart Mill, his customary eclecticism failing him, could see no merit in it at all. In this generation, however, there has been a softening of the manner toward it, the expression of some sympathy for the mercantilists, and a disinclination to accept the judgment of the classicists. The new manner however seems much more the consequence of a dissatisfaction with Ricardian economics than the result of a reexamination of mercantilism itself. It has reemerged as a doctrine to be taken seriously, but its strength has come from the unpopularity of liberal ideas much more than from an appreciation of its own merits. The new manner is an expression of the old mistake, that mercantilism and liberalism are antithetical. My purpose in this chapter is to show they are not—to show that mercantilism was one phase in the development of liberal doctrine and as such was in part a precursor of it and in part a complement of it.

A simple distinction is helpful at the start—the distinction between the economic practices of the period and its economic writings. The word “mercantilism” has always been used to describe both, which is unfortunate, because they were not consistent. In what has been written about mercantilism and the mercantilists rather than what has been written by them, the author often will explain, say, the restriction of imports by referring both to the trade policy of the English government and to the concurrent doctrine of a favorable balance of trade. He will move indiscriminately among expressions of public officials, laws, economic tracts, and discourses. The obvious inference is that what was written was a justification of what was done, and that what was done must have found an apologetic in something or other that was written. No one would write this way of recent economic policy. It would be unthinkable to explain the stabilization policy of the Republican administration of the 1950s by a random reference to the economic reports of the President, the actions of the Federal Reserve Board, the 1950 policy statement of the American Economic Association, and other quite discrete events. When studies of mercantilism employ such a method, they present a view that is quite mistaken.

It must lead one to think that because the mercantilist states did not believe in the market as the mechanism for discharging the economic functions of society, the economists of the age held the same belief and were in favor of the intricate kind of regulation which was practiced. More than this indeed is implied. If the practitioners of mercantilism did not understand prices, money, foreign trade, and other matters, the economists also must not have understood these matters. There is a particular implication that the economists did not understand the usual mechanism by which the economic problem is solved in a free society and that this knowledge was the signal discovery of classical economics. From this one must conclude that the mercantilist writers were particularly lacking because they did not understand how the price system directs resources into particular employments and causes output to be distributed in a particular way.

None of these impressions about mercantilist doctrine, as distinct from mercantilist practice, is correct. (About the practices, one finds generalizations nearly impossible to make because there were fundamental disagreements among those who made state policy. An example is the opposition of Parliament to Elizabeth’s granting of monopoly rights.) Yet the impressions are unavoidable if the doctrine and practice are thought to be parts of a unified system, which in fact they were not. My view of mercantilism begins with a distinction between doctrine and practice and is about the doctrine alone. Briefly put, the view is that the mercantilist writers anticipated many of the ideas of classical economics, including the classical conception of self-interest, of the price mechanism, of the mutual advantage in exchange, and of the place of the state in the economic order.

Although the English mercantilist writers have never before been interpreted as they are here, there nevertheless have been many suggestions that their doctrine was not as altogether wrong as one has been led to believe and that in some ways it was a necessary preliminary to classical economics. Marshall thought of it in this way. T. E. Gregory noted that the purpose of mercantilist policy was to increase the demand and the supply of labor in order ultimately to increase national power. But he believed the methods were inconsistent with economic liberalism. Viner was charitable to the writings of later mercantilism, because he found traces of free trade doctrine in them. E.A.J. Johnson suggested that the objective of all of the mercantilists was an efficient use of resources, thereby implying the importance of employment in their doctrine. Keynes noted that their monetary theory was a valid effort to connect the money supply with the rate of interest. Heckscher noticed that some mercantilists declared they were in favor of a free market, even though he thought the declarations were not really meant. Lipson suggested the mercantilists are not to be dismissed in the cavalier fashion with which they usually have been treated. Edmund Whittaker found evidence of individualism in some of their writings. None of these men came to my conclusion and cannot be cited to substantiate it. But I wish to mention their work in order that my views shall not be thought to claim more novelty than they actually have. Shortly after they were first published, there appeared an interesting study of Berkeley made by T. W. Hutchison who independently arrived at many of the same conclusions.1

In what follows, the words “mercantilism” and “mercantilist” refer always to English doctrine and to the Englishmen who expressed it, and, except when explicitly stated, never refer to economic institutions, practices, historical circumstances, or the rulers and administrators of the age.

[1] Alfred Marshall, Principles of Economics (8th. ed., London, 1938), p. 755.

T. E. Gregory, “The Economics of Employment in England, 1660-1713,” Economica, I (1921), 1.

Jacob Viner, Studies in the Theory of International Trade (New York, 1937), pp. 74 et seq.

E. A. J. Johnson, “The Mercantilist Concept of ‘Art’ and ‘Ingenious Labour,’ ” Economic History, II (1931), 240.

J. M. Keynes, The General Theory of Employment Interest and Money (New York, 1936), p. 341.

Eli F. Heckscher, Mercantilism (London, 1935), II, 323.

E. Lipson, A Planned Economy or Free Enterprise (London, 1944), ch. 2.

Edmund Whittaker, A History of Economic Ideas (New York, 1943), pp. 141-142, 145-147.

T. W. Hutchison, “Berkeley’s The Querist and Its Place in the Economic Thought of the 18th Century,” British Journal for the Philosophy of Science, 4 (1953-54).