History of Economic Analysis part 19 docx

as much the consequence of habit-forming conditions as it was a causal factor in subsequent developments. Nevertheless we shall, for convenience, go on speaking of the National State. [(b) Why the National States Were Aggressive.] It must be left to the reader to develop the implications of all this. But it should be clear that it was the persistence of aristocratic rule, the access of ideally disposable wealth, and the breakdown of the supernational power of the Middle Ages—rather than anything derivable from the capitalist process itself—that explain not only the emergence but also the political physiognomy of the modern state. In particular, those facts explain why the modern state was ‘national’ from the first, and refractory to any supernational consideration; why it insisted and was compelled to insist on absolute sovereignty; why it fostered national churches even in Catholic countries—as instanced by Gallicanism in France; and above all why it was so aggressive. The new sovereign powers were warlike by virtue of their social structures. They had emerged in a haphazard way. None of them had all it wanted; each of them had what others wanted. And they were soon surrounded by new worlds inviting competitive conquest. Because both of this situation and the social structure of the epoch, aggression—or, what is the same thing, ‘defense’—became the pivot of policy. In this fermenting world, peace was but armistice, war the normal remedy for political disequilibrium, the foreigner ipso facto the enemy—as he had been in primitive times. All this made for strong governments; and strong governments, chronically suffering from political ambitions that went beyond their economic means, were driven to increasingly successful attempts to make themselves still stronger by developing the resources of their territories and harnessing them into their service. This in turn explains, among other things, why taxation assumed not only a much greater but a new significance (see sec. 6 of this chapter). These facts, though fundamentally the same all over Western and Central Europe, produced somewhat different results according to the circumstances of different nations. Neglecting smaller countries, we find the main difference was between England and the Continent. In Germany, economic and political trends were broken by the course of events centering in the Thirty Years’ War (1618–48), which created an entirely new situation and changed the political and cultural pattern of Germany for good. On the ravaged soil and in a population that had in places been reduced to less than 10 per cent, the princes, their soldiers, and their bureaucracies were, in the greater part of the national territory, practically all that was left of the political forces of the past. In Italy, alien rule and also devastation were responsible for a situation that differed from the German one only in degree. France and Spain did not have to go through experiences like these, but religious troubles and unending war efforts produced similar impoverishment in Spain and similar political and administrative conditions in both France and Spain. In most of these countries—one exception is instanced by Switzerland and another by Hungary—the prince came to personify the state and the nation from the sixteenth century on. He succeeded in subjecting all classes to his authority—the nobility and the clergy not less than the bourgeoisie and peasantry, though the two former on the understanding that they should continue to hold a position of social and economic privilege. The wealth and power of this state was the unquestioned object of policy: History of economic analysis 142 maximum public revenue—for the court and the army to consume—was the purpose of economic policy, conquest the purpose of foreign policy. There should be no need for showing how concern for the welfare of the classes on which that social system fed entered into that policy: this welfare was not looked upon simply as a means to an end; it was an end in itself for many a great monarch or administrator, exactly as the welfare of his workmen was and is an end in itself for many a great industrialist; but it had to fit in with the given political pattern and with the given social system. All this—precisely where concern for the welfare of manufacturers, farmers, and laborers was most real— meant management of everything which in turn meant the rise of modern bureaucracy, a fact that is no less important than is the rise of the business class. The resulting economy was a Planned Economy; and it was planned, primarily, with a view to war. 5 In England we observe the same tendencies. But there they were weaker and resistance to them was stronger because she was saved from the experiences that elsewhere broke the backbone of aristocracies and bourgeoisies alike. This was perhaps not merely a matter of a few miles of channel; but we may for brevity’s sake adopt a theory which is only inadequate not untrue, namely, that it was the absence of actual foreign invasions and the rarity of serious threats of invasion that reduced the necessity for a military establishment—a navy of course carries much less political weight—and, in consequence of this, the power and prestige of the crown and of all the administrative agencies dependent upon the crown. The most obvious symptom of the difference this made, the survival in England alone of the old semifeudal constitution, is not in itself important for us. But all the more so is the fact that, throughout, the English state did not succeed in taking hold of national life as did the states elsewhere and that in particular the economic sector of national life, colonial venture included, remained relatively autonomous. Planning, if not absent, was more limited in scope—concerned principally with the relations of the English economy to Ireland and the colonies, and with foreign 5 This might be illustrated by the careers and policies of many great administrators of international and historical reputation. Comparative study of these men and their measures also brings out interesting differences and, above all, the fact that precisely the greatest of them cannot be said to have followed any consistent system of principles at all. One aspect of this will be mentioned presently in our text. We must confine ourselves to a brief comment upon Colbert, who has been and still is considered by many historians as the typical representative of that imaginary entity, the ‘mercantilist system’—so much so that Colbertism is often used, especially in Italian, as a synonym of mercantilism. Jean Baptiste Colbert (1619–83), of bourgeois origin, was a civil servant who rose to be minister of finance (this, although various other offices were added from time to time, is the best way in which to describe his main function, which must, however, be understood to cover the affairs of industry, commerce, and agriculture as well) in the first period of Louis XIV’s reign. He was an honest, able, and energetic administrator who knew how to raise money, intimidate creditors, improve administrative and accounting methods, stimulate industry, build palaces and harbors, develop the navy, and so on, though he was distinctly unlucky in the execution of his larger plans, e.g. colonial enterprise, the history of which shows that the wastes of public planning may easily surpass anything that, on the score of wastefulness, can be charged to private enterprise. There is no reason to extol his achievement, especially to see in him the oversized champion of some great principle, as did some of his admirers. See on Colbert and his immediate successors, C.W.Cole, Colbert and a Century of French Mercantilism (1939), and French Mercantilism, 1683– 1700 (1943). In his review of the former book, in Economic History (February 1940), Sir John The consultant administrators 143 Clapham voiced a reaction against unintelligent admiration that is almost amusing in its vehemence: according to him, Colbert had ‘no single original idea’ (which is true but beside the point in the appraisal of an administrator) and was a ‘big stupid man,’ tyrannical, brutal, fussy. For the period preceding his administration, see J.U.Nef, Industry and Government in France and England, 1540–1640 (1940). trade—and, what is still more to the point, was less strictly enforced than it was in most continental countries. But for the writers on economic topics this made less difference than we might expect. Some of them nevertheless reveled in visions of planning. And while some voiced the businessman’s views, others voiced those of the bureaucrat. Also, we must never forget, if we wish to understand them, that practically all of these writers, in spite of what has just been said, consistently wrote with war and conquest in their minds. After all, notwithstanding her own relatively sheltered position, England was then going through the buccaneering stage of her imperialism. [(c) Influence of Special Circumstances on the Contemporary Literature.] Unfortunately, the literature to be surveyed cannot be understood from the facts referred to alone. Much of it is conditioned by individual situations in individual countries that writers took for granted, and by individual issues that arose from these situations. Even books and pamphlets that do not deal with questions raised by an individual bill or practice can hardly be appreciated without full knowledge of the particular national patterns as seen by their authors. A lengthy list of mistakes in interpretation and appraisal that were committed, especially by nineteenth-century ‘liberal’ critics of that literature but also by later ones, could be compiled to illustrate this truth. But there is nothing we can do about it here 6 beyond offering the following generalities. A few other facts will be added where necessary as we go along. I. All the economics of those times—with the possible exception of the Dutch branch of it—was written in and for countries that were poor. This holds without exception if ‘poor’ is equated with ‘undeveloped.’ All European countries stood at the beginning of their industrial and even of their agricultural careers and everybody realized this. With us, economic expansion is primarily linked with new wants and methods; that age, however, had practically inexhaustible possibilities before it with existing wants and technologies, in addition to what it was coming to expect from technological progress and from conquest. But our proposition applies in a different sense and with added force to the great continental countries that in the second half of the seventeenth century were faced also with an immense reconstruction problem. They were poor even relatively to what they had been in the sixteenth century. It should be clear that in such conditions policies and reasonings may have had meaning that seemed mere nonsense to observers who viewed them from the standpoint of nineteenth-century conditions. 6 It is impossible, even, to give an annotated reading list, for it would fill a volume. Going to the other extreme, therefore, I shall mention but two well-known standard works which in any case are, or ought to be, in every student’s hands: E.F.Heckscher’s Mercantilism (1931, English trans. by M.Shapiro, 1935) and P.Mantoux’s The Industrial Revolution in the Eighteenth Century (rev. ed., History of economic analysis 144 1927, English trans. by M. Vernon). These works contain the bulk of what the reader ought to know. II. Throughout, all countries—even England—were predominantly agrarian. Their economic problems were primarily agrarian problems, the masses of their people were agrarian masses—peasants, farmers, agrarian laborers. In the sixteenth, seventeenth, and eighteenth centuries, this agrarian world underwent changes that revolutionized it completely: economic historians rightly speak of an agrarian revolution, or rather of several agrarian revolutions. This phrase indicates two distinct, though of course related, types of change that reinforced each other and would have broken down the framework of medieval society even if nothing had happened in the industrial sector. On the one hand, there was a long series of changes in the technologies of all branches of agrarian production—this process gained momentum in the eighteenth century but started at the beginning of the sixteenth. On the other hand, there was, in sympathy with the technological revolutions, a process of organizational change that turned medieval manors into grain, wool, and meat factories and destroyed the old relations between lords and peasants or farmers. It must suffice to mention the chief English form of this type of change, Enclosures. Governments and, accordingly, writers took two characteristically different attitudes to this change. On the Continent, and especially in Germany, governments made a determined and largely successful effort to save the peasants and to turn them eventually into a class of small landowners. In England, the land-owning and land-tilling yeomanry was allowed to disappear and, deserted-village emotionality notwithstanding, the large estate prevailed, not however as a producing unit but as a unit of administration that left production to the workman-capitalist, the farmer. III. But it is by no means surprising that manufacturing and international trade, comparatively insignificant though they were, attracted more literary attention than did agriculture. They were the young children and, moreover, the children on whom the future of the family was mainly felt to depend. Also, they had more motive and opportunity than had the landowners and farmers to spill ink on their own behalf. For economics this simply meant that there were more ‘industrial and commercial’ than ‘agricultural’ economists. But the existence of these two groups of writers was primarily a phenomenon of division of labor as it is now: their very natural antagonisms should not be sublimated into antagonisms between philosophies either of life or of economics except in cases—the only important one is that of the physiocrats (see below, ch. 4)— where there is some provable warrant for it. Large-scale enterprise—large relatively to environmental standards—emerged, to a significant extent, in the fourteenth century in Italy, in the fifteenth in Germany, in the sixteenth (under Elizabeth) in England, first in the financial and commercial sphere and then in the sphere of production. But, substantially, the manufacturing industry that economists beheld and reasoned about was all along the manufacturing industry of the artisan (still organized in craft guilds), of the ‘master’ of domestic industry, and of the owner-manager of factories that were few and mostly quite small. In Western Europe, especially in England, this changed (significantly but not fundamentally) in the Industrial Revolution of the last decades of the eighteenth century, but the full consequences did not reveal themselves before the first decades of the nineteenth. Many authors, occasionally even A.Smith, class the manufacturer with the workman. No author, not even A.Smith, The consultant administrators 145 had any very clear idea of what the processes really meant that led to what economic historians have dubbed the Industrial Revolution. A.Smith felt that the corporate form of industry was an anomaly except in such cases as canals and the like. To him and his contemporaries big business still meant commercial and financial big business—colonial enterprise particularly. And they looked upon it much as modern economists look upon any kind of largest-scale business, namely, with feelings of resentful distrust. IV. This industrial and commercial evolution was characterized, almost until the end of the period under discussion, by ‘monopolistic’ policies and business practices that were one of the chief topics of the economic literature of that period and have been visited with sweeping condemnation by economists and economic historians from A.Smith to this day. By ‘monopolistic’ public policy and private business practice, we mean measures and forms of behavior intended to secure profitable ‘vent’ for the products or services of an individual or group by (1) keeping the foreigner out of national and international markets—which, so long as national territories had not become economic units, often included keeping out the producers and traders of the neighboring town or district; (2) keeping out of a trade, so far as possible, all connationals other than the favored individual or group—for instance, keeping retailers out of the merchant’s business; (3) restricting the output of the favored individual or group itself and regulating its distribution between markets. Let us stay for a moment in order to analyze, in the light of the preceding considerations, the reasons for the prevalence of this policy and practice. First, we might expect that, if fullfledged capitalism had suddenly burst upon the world and if it had been permitted to unfold without being distorted by the factors referred to, both business behavior and public policy would have been from the first what they became in fact, for a time, in the nineteenth century. That is to say, we might expect that in this case there would have been, in countries that were so poor in goods and so rich in possibilities, an onward rush of competitive enterprise. This expectation would be, however, only in part justified. Poverty is a bad customer, and normal risks of doing business are greatly increased in an environment where the wealth from which demand is to proceed has not only to be attracted but created. In business as elsewhere, forward strategy very often requires defensive tactics as a complement, though most economists of all ages stubbornly refuse to see this. But under conditions in which long-run advance was inevitably slow, each stage had to be safeguarded with particular care in order to gain means and time for advancing beyond it. It is quite natural that the observing historian should be much more impressed by the practices and policies that aimed at protective restriction, which dominate the scene at every point of time, than by the picture of the process over time. 7 But it is true nevertheless that even an ideally rational government, actuated by the sole motive of fostering industrial development, would have had to grant privileges of monopoly in many cases in which enterprise would not have been possible at all without it, and that, in others, it would have had to permit monopolistic practice on the part of the businessmen concerned. This holds, of course, with added force for those countries that had been ravaged by war, such as Germany, where only prospects of abnormal gain could call forth entrepreneurial effort from a population immersed in misery and despair. Second, however, capitalism did not burst upon a world that was a blank: it grew by slow degrees from a pre-existing pattern dominated, in the respect under discussion, by the spirit, institutions, and practice of craft guilds. New History of economic analysis 146 7 There is no better illustration for this attitude than the late George Unwin’s brilliant essay on the Merchant Adventurers in Studies in Economic History (1927). Professor Heckscher (op. cit.), with less reluctance to penetrate beyond that short-run view, formalized the situation into the two polar concepts of ‘hunger for goods’ and ‘fear of goods,’ which do not express well the economics of it. products, new methods of production, and new forms of enterprise are resisted by any environment; but in these centuries there was in existence a legal machinery of resistance that worked automatically. This bears upon our topic in two ways. On the one hand, legislation and administration in all countries, under pressure from craft guilds and in their interest, subjected the newer ‘free’ enterprise to various regulations that spelled restriction of output. On the other hand, though these regulations have no roots in the capitalist system, but spell distortion of it, the merchants, masters, and so on who were affected by them naturally made the best of a bad business and organized themselves in a similar way. There were several reasons—besides the gains to be expected from restrictive regulation—why this came easily to them: the merchants and masters were themselves the products of a world in which organization and corporate action was the recognized thing and they had no objection to accepting ‘ethical’ and religious codes, enjoining standardized behavior, prayer meetings included. They lacked standing and political weight so long as they acted as individuals, whereas each Worshipful Company was a political power; and, in the most important case of overseas trade, the need of providing for physical protection and aggression—there were such things as joint stock companies formed for no other business than piracy—was a motive that was bound to throw traders together and to invite corporate action in other respects also. The Chartered Company, not a trading company itself but rather the organizational shell for the trade of its members, was, partly in opposition to, and partly in alliance with, the medieval Staple System (jus emporii), the obvious answer to all these needs and the natural instrument for making the most of the opportunities afforded by the protectionism of the age. 8 Third, the governments of the national states had particular motives of their own for creating or favoring more or less ‘monopolistic’ organizations or positions. One of these motives has been mentioned already, the reconstruction motive. Another was the prospect of personal gain for the rulers—Queen Elizabeth participated personally in the gains (and losses) of ‘monopolistic’ ventures, even in the proceeds of downright robbery. The same great monarch offers outstanding examples of the method of providing for favorites by granting them letters patent of monopoly. Also, ‘monopolist’ organizations were sponges, which it was much easier to squeeze than it would have been to 8 It is unfortunate that we cannot go more fully into the meaning and structure of both. Reference to Professor Heckscher’s work must suffice. One point must be mentioned, however. The staple system has been called medieval because it grew out of the pattern of craft-guild industries in the thirteenth century (it had spread to England by the time of Edward III, as his ordinance on staples shows). But, adapting itself to changing conditions, it survived, as a general method of regulating international trade through the greater part of the period under survey, in Venice even until the Napoleonic occupation. In England, the loss of Calais in 1558 killed one form of it but in another form it continued to prevail: in fact, it was fully developed only by the Navigation Act of 1660 (for the policy of the Navigation Acts is but a special type of staple policy) and by the Staple Act of 1663. The consultant administrators 147 squeeze a large number of independent entrepreneurs. And, finally, given Strong governments, such organizations are not only easier to exploit but also easier to manage: their own administrative organs are so many ready-made handles for governments to seize. This aspect will appear in its full importance if we remember the nature of the policy of those governments for whom measures concerning trade were just one of the instruments of aggressive power politics: to force trade in one direction, to stop it entirely in another, was in some cases almost as effective as was a campaign; moreover, colonial companies of different nations might wage war upon each other while the respective national governments were officially at peace. 9 Very naturally, the public at large resented being exploited in any of those ways and for any of those purposes without troubling to distinguish between them and without asking the question whether or not there were any compensating advantages to those practices in some cases, for instance, in cases where certain articles could not have been provided at all without them. The copious literature on the subject—the reader knows most of it if he knows the corresponding popular literature of today—simply reflected this resentment and rarely 10 went beyond denouncing favored individuals and groups, the East India Company and the Merchant Adventurers being, in England, the most popular targets. Even the businessmen joined the fray against restriction and privilege in almost every case that was not the writer’s own: everyone was the sworn enemy of everyone else’s privilege. Thus, most search- 9 Again we may appeal to Dr. Unwin’s lectures (op. cit.) for illustration of a kind of ‘liberal’ criticism of such attitudes and policies that tends to obstruct historical understanding even where it asserts nothing that is not correct. He offers strong reasons for believing that England did not net any national advantage from either her ‘monopolistic’ policies or her buccaneering (though it is going rather far to assert that robbery of treasure was not nationally remunerative because it destroyed the essential thing, credit) and, so far as this goes, errs only by ignoring the long-run aspects of ‘monopolistic’ restriction and ‘monopolistic’ gains. But his case, were it even stronger than it is, must remain inconclusive precisely because it is the case of the nineteenth-century liberal. The pattern of sixteenth and seventeenth-century behavior must be considered from the standpoint of sixteenth and seventeenth-century data and men. If we do this, even from a purely economic angle, irrationality is not so obvious. But in a situation of perennial warfare, where harming the other fellow is an end in itself, purely economic considerations are obviously inadequate. And there is something else. In discussing historical situations we must always distinguish between the principles underlying a form of behavior and the efficiency with which they are acted upon. This is very important. A.Smith, for instance, argued as much against the corruption and mistakes incident to the state management of his own and earlier times as he argued against state management per se. And so do we: the present-day argument against socialism or against extension of bureaucratic control is as much an argument from inefficiency to be expected in the application of the principles of socialism or control as it is an argument against these principles themselves. Both types of argument have their place but they must be kept separate. 10 The most important instance is the ‘discovery’ of oligopoly (see below, ch. 6, sec. 3c). History of economic analysis 148 ing analysis was produced principally by ‘special pleaders’ who defended individual cases. 11 Let us recall, however, from Part I that the motives of the analyst are not relevant to the question whether his facts or arguments are or are not true, valuable or not valuable, and that the presence of ‘interested motive,’ however effective its revelation may be in popular discussion, no more invalidates the reasoning that proceeds from it than its absence avails to validate a man’s reasoning. For us, the special pleader’s facts and argument are just as good or bad as those of the ‘detached philosopher,’ even if he exist. Explanations too obvious to detain us may be offered for the fact that the public’s reaction to restrictive practice was much stronger in England than it was on the Continent: to mention a symptom, free trade, which in the seventeenth century meant, among other things, abolition of the staple system or abolition of the chartered companies or at least every trader’s right to become a member of the latter, found support in parliament and a fairly sweeping bill against restrictions of trading—not, of course, for free trade in the later sense of the term—was introduced, though not carried, as early as 1604. But there is another point of difference that is of considerable interest to us. The reader may have observed that, however objectionable to the man in the street most of the restrictive practices and legislative measures may have been, they did not create monopolists in the strict sense of Single Sellers, 12 and did not result in specifically monopolistic pricing. Nevertheless, the general outcry against them all was against monopoly. The reason is not far to seek. Though the English public of Queen Elizabeth’s time can hardly have been influenced by the fact that monopoly had been stigmatized already by Aristotle and the scholastics, it harbored old resentments, dating from the Middle Ages, against corners and the like. These resentments flared up into fury when Elizabeth and James I adopted the practice of creating in large numbers what were in fact genuine monopolies and, moreover, monopolies that presented, in most 11 One of the best of those performances may be mentioned by way of example: John Wheeler’s Treatise of Commerce, Wherein are shewed the Commodities arising from a well ordered and ruled trade, such as that of the Societie of Merchants Adventurers is proved to be. Written principally for the better Information of those who doubt of the Necessarinesse of the said Societie in the State of the Realme of England (1601), and, so we may add, in view of impending hostile legislation. 12 Monopoly in the strict sense denotes the position of a single (individual or corporate) seller, who faces a demand schedule that is given to him independently of his own action and of the action of sellers of competing goods. The exclusive right to sell port wine may, in the conditions of sixteenth and seventeenth-century England, be considered as a good practical approximation to strict or genuine monopoly, although, in general, a seller of port wine could not expect the demand schedule to stay put when the prices of similar beverages varied. But the big trading companies such as the Merchant Adventurers were not monopolies in this sense, for though they regulated the business of their members they did not in general fix prices. The reason why economists should confine the term Monopoly to the ‘genuine’ case defined is that their theory of monopoly price applies to this case only—or, to put it differently, because specifically monopolistic price policy is possible in this case only—so that nothing but confusion can result from any wider definition. The consultant administrators 149 cases, no redeeming features. In the struggles over these, the word Monopoly became loaded with emotion, a bugbear for all time to come, that was in the mind of the average Englishman associated with royal prerogative, favoritism, and oppression; and Monopolist became a term of opprobrium. But once a word has acquired an emotional value, positive or negative, that guarantees automatic reaction from almost anyone who hears or reads it, speakers and writers will try to exploit this psychic mechanism by applying the word as extensively as possible. And so monopoly came to denote almost anything that a man disliked about capitalist practice. This emotional attitude naturally spread to the United States the more readily because a large percentage of English emigrants to this country were, for other reasons, strong opponents of the Tudor-Stuart regime. It has survived, and has powerfully influenced public opinion, legislation, and even professional analysis to this day, both in England and the United States. 13 Most of what has been said in this section indicates definite patterns of behavior that seem to invite sublimation into ‘principles.’ This has in fact been done, and the phrases Mercantilism, Mercantile System, Mercantilist Policy have been coined, first by hostile critics, to denote the result. Nevertheless, I have tried to avoid using them so far. The reason for this will be explained in Chapter 7, where we shall make Mercantilism— phrase and reality—our central theme. Meanwhile I wish to ask my readers to forget all they may know about it and to peruse what follows with an open mind, that is, with a mind unbiased by unhistoric preconceptions. [2. THE ECONOMIC LITERATURE OF THE PERIOD] We shall now try to classify the unwieldy material from which we are to extract more or less significant products of analytic effort. This is a difficult task. Even in our own day economists are not always of one mind as to which performances do and which do not measure up to professional standards. But we are dealing with a formative period in which there were no professional standards, not, at all events, before the Classical Situation at the end of it. Moreover, the field itself was undefined and, by virtue of this fact alone, much wider than it is now: it covered, for instance, technology. However, in order to reduce our task to manageable proportions, we shall right away exclude from consideration certain bodies of literature that are also excluded 13 This explanation seems to be more convincing than the usual general references to a specifically English love of freedom and fair play or to a specifically continental propensity to accept regimentation and the like. An English example that will illustrate both the phenomenon to which I wish to draw attention and its persistence is afforded by the nineteenth-century English champions of free trade in foodstuffs, who loved to refer to their opponents as ‘monopolists’ although neither the English farmers nor the English landowners were monopolists in any meaningful sense of the term. Even Sir Robert Peel, who occasionally displayed a sense for demagogical values, used the phrase in his speech in the Commons delivered on the defeat of his great ministry in 1846. History of economic analysis 150 by modern practice, though we must not conceal from ourselves that, in so doing, we may be excluding pieces of analysis that are not inferior to some we include without question. This operation on our material is performed in the four paragraphs which follow. [(a) The Material Excluded.] I. In the sixteenth century and even later, Oeconomia still meant household management. This type of literature seems to have been extremely popular. The no doubt unreliable method of browsing among books of this sort did not yield anything that would qualify for notice in this history. But two samples may be mentioned: first, the famous Oeconomia ruralis et domestica (1593–1607) by Johann Colerus, which lived for over a century and contains all sorts of advice about housekeeping, including farming, gardening, and domestic medical practice; second, L’Economo prudente (1629) by B. Frigerio, who defined economia as ‘a certain prudence with which to govern a family’ (ch. IX, for instance, deals with the governo of one’s wife) and might conceivably interest some economists because it attempts to describe national economic behavior—in fact its concept of the economo is a common-sense forerunner of the concept of the Economic Man. Similarly, B.Keckermann, Systema disciplinae politicae (1606) defined Oeconomia as disciplina de domo et familia recte dirigenda. II. Much more important is the literature on accounting and commercial arithmetic, which shades off into the neighboring literature on business management, business law, commercial geography, and business conditions in various countries. A few examples will characterize the contents of these literatures, which we exclude, although little pieces of purely economic analysis do occur in them. Fra Luca Paccioli’s Summa de arithmetica, geometria, proportioni e proportionalità (Venice, 1494) contains, besides the ordinary commercial calculations of interest, bills, exchanges, and so on, also an exposition of double- entry bookkeeping. The first German book on double-entry bookkeeping that I have seen is W.Schweicker’s Zwifach Buchhalten (1549). Such texts became common in the sixteenth and seventeenth centuries. So did guides to commercial practice in the trading centers of Europe. One of the earliest and most famous of these which the reader may look up in Cunningham’s Growth of English Industry and Commerce (5th ed., vol. I, pp. 618 et seq.) was F.B.Pegolotti’s La Pratica della mercatura (about 1315). The consultant administrators 151 . should continue to hold a position of social and economic privilege. The wealth and power of this state was the unquestioned object of policy: History of economic analysis 142 maximum public revenue—for. E.F.Heckscher’s Mercantilism (193 1, English trans. by M.Shapiro, 193 5) and P.Mantoux’s The Industrial Revolution in the Eighteenth Century (rev. ed., History of economic analysis 144 192 7, English trans defeat of his great ministry in 1846. History of economic analysis 150 by modern practice, though we must not conceal from ourselves that, in so doing, we may be excluding pieces of analysis