David Hume on how the prosperity of one’s neighbors increases one’s own prosperity (1777)

Found in: Essays Moral, Political, Literary (LF ed.)

The Scottish philosopher David Hume (1711-1776) argued that one should not be jealous of the prosperity of one’s neighbors as this provides them with the means to trade with you to mutual benefit:

Free Trade

Having endeavoured to remove one species of ill-founded jealousy, which is so prevalent among commercial nations, it may not be amiss to mention another, which seems equally groundless. Nothing is more usual, among states which have made some advances in commerce, than to look on the progress of their neighbours with a suspicious eye, to consider all trading states as their rivals, and to suppose that it is impossible for any of them to flourish, but at their expence. In opposition to this narrow and malignant opinion, I will venture to assert, that the encrease of riches and commerce in any one nation, instead of hurting, commonly promotes the riches and commerce of all its neighbours; and that a state can scarcely carry its trade and industry very far, where all the surrounding states are buried in ignorance, sloth, and barbarism.

Thoughts

The 16th century French philosopher Michel de Montaigne had propounded the commonly held view that “the gain of one was the loss of another” and this lay at the base of mercantilist economic policy - that if France profited from trade with England, then it must have been at the expense of the English. David Hume was a strong supporter of free trade and he took great pains to show how the mercantilism of his day was a “narrow and malignant opinion” which did not understand both the social and economic benefits of trading with one’s neighbours. In this essay “On the Jealousie of Trade” Hume argues that the home nation benefits from being able to buy and sell goods with its neighbours, and all the more if they are becoming prosperous and more able to buy foreign goods. With increasing wealth, trade becomes both deeper and broader as more regions are able to buy more goods and more kinds of goods. Another benefit was that inventions and improvements made by one nation become available to other nations which are in “open communication” with each other. In his mind, free trade should be applied not just to goods but also to ideas, so that all nations may “advance”.

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