Bodin's Analysis of Inflation

The work of Jean Bodin (1530-1596) has been known to economists at least since the mid-nineteenth century (McCulloch [1862] 1995, 37), even though his wider fame, by far, lies in political philosophy. But there has been disagreement over precisely what Bodin achieved in his writings on economics. ¹

There is no disputing that the interest of his economic writing lies chiefly in his analysis of the causes of the inflation that was affecting France at the time that he published the two editions of his Response to Malestroit (1568 and 1578). But there is considerable dispute about the nature of his achievement. On one hand, we have J. A. Schumpeter expressing the clear view that Bodin's "analysis needs but little readjustment or generosity of interpretation to be a correct diagnosis of the historical case as it presented itself in 1568. Even as regards general theoretical content, it is superior to much later work" (1954, 312). Similarly, in his study of Bodin's monetary thought, Bodin's descendant Jean Bodin de St. Laurent ([1907] 1970, 31-35), had no difficulty in crediting Bodin with the first correct statement of a metallist version of the quantity theory, while the distinguished French economic historian Henri Hauser (1932, xliv) expressed astonishment at those who denied Bodin's achievement in formulating, with remarkable clarity, a version of the quantity theory of money.

But on the other hand, scholars both inside and outside France have been inclined to downplay the extent of Bodin's achievement. Thus P. Harsin, in a controversial (Hauser 1932, ix-x) volume, dismissed Bodin's claim to pioneering achievement (1928, 31-44, esp. 40). After World War II, the Swedish economist Hugo Hegeland also denied Bodin credit, on the grounds that in 1568 the quantity theory was not as fully worked out as it was in later centuries; Hegeland also made the claim--which, as we shall see, is baseless--that Bodin believed "that the price level was solely a function of the quantity of money" (1951, 37n., 153).

The controversy has continued. A recent revisionist interpretation of Malestroit credits him with a formulation of the idea of money as a veil and, correspondingly, downplays Bodin's achievement (Servet 1994).

It is, however, worth emphasizing that neither critics nor proponents (with the exception of Hauser) call in evidence of their position a detailed examination of the text. It is my contention in this article, based on just such an examination, that the dismissal of Bodin's priority rests--where the grounds for such dismissal are clear at all--upon an inappropriate and incomplete statement of the quantity theory. If we identify the theory with five generally accepted propositions associated with it, however, Bodin does indeed have a strong claim to be regarded as the pioneer formulator of that theory.

By "the quantity theory of money," I take as understood the following propositions: (1) there is a demand for money, dependent primarily on the existing price and income levels; (2) there is a supply of money --in the historical context we are discussing this means specie; (3) the money market clears, with demand for money equal to its supply; (4) a disturbance to either demand or supply requires an adjustment in the price (or income) level to enable the money market to clear; (5) the direction of causality is from changes in the money supply to changes in the price level.

In the present context, an increase in the money supply is of key interest. In addition it should be recognized that, until quite recently, quantity theorists did not assume completely inelastic aggregate supply, so that there may also be some change in output associated with a change in the money supply.

While it is unreasonable to expect these five key points to be set out clearly by the earliest writers, formulating the issues in this way makes clear what we are seeking in Bodin...