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DAVID HUME AND EIGHTEENTH CENTURY MONETARY THOUGHT: A CRITICAL COMMENT ON RECENT VIEWS To the argument that it makes little difference what precise roles were played by various actors in a great movement, and that the busy modern reader cannot be bothered to go behind the scenes of popular successes, the answer is simple: it is on the whole better to call men and events by their right names; it is on the whole wiser not to make false diagrams of the way things happen. What, after all, are we so busy about? Jacques Barzun, Darwin, Marx, Wagner The praise that has been bestowed upon David Hume's monetary thought in recent years would suggest that however little attention is paid to the history of economic thought otherwise, no one is averse to a long and respectable lineage.1 However, it is just when an individual is singled out and focused upon that the most misleading ideas can arise; furthermore, when the scholars who provide this attention are renowned authorities in specialized fields, their views receive very widespread circulation. It would not be easy to find a contemporary student of the eighteenth century who would assert that the mercantilists believed real wealth to consist of gold and silver, yet the late Harry Johnson made just such an assertion not very long ago, and the number of economists who read Harry Johnson must far outnumber those who read eighteenthcentury scholars.2 By the same token, the liberal praise bestowed upon those credited with having "demolished" mercantilism, such as David Hume, requires careful scrutiny. A recent article by Dietrich Fausten3 has shown how different Hume's analysis 157 actually was from modern monetarism, despite the many attempts to designate Hume the father of monetarist doctrines, and this critical approach can be taken farther. Before turning to an examination of Hume's position, it may be worthwhile to make a methodological point. There are those who consider delving into indebtedness and priorities "antiquarian" (but not if their own contributions are in question!). After all, they claim, Hume's views are there in black and white, he wrote elegantly and his philosophical merits are widely admired; does it really matter if Hume did not acknowledge his sources, that he was somewhat inconsistent, or that he caricatured his opponents? Surely some compassion is appropriate for someone who wrote at the very dawn of "economic science." This is to miss the point of such historical scrutiny altogether. If compassion were required, why should it be bestowed upon Hume, rather than on such predecessors as Gervaise, Cantillon or Vanderlint? Scholars employ certain critical standards in judging published work; let us employ these standards to Hume and if sympathy be required, let it follow and not precede the analysis. II The following passage is certainly one of the most frequently quoted in the history of economics but its importance for our argument makes repetition necessary. Suppose, that all the money of Great Britain were multiplied fivefold in a night, must not the contrary effect follow? Must not all labour and commodities rise to such an exorbitant height, that no neighbouring nations could afford to buy from us; while 158 their commodities, on the other hand, became comparatively so cheap, that, in spite of all the laws which could be formed, they would be run in upon us, and our money flow out; till we fall to a level with foreigners, and lose that great superiority of riches, which had laid us under such disadvantages?4 Two points should be noted about the above. First, Hume assumes a sudden, large inflow of money to make his point. This is a very different thing from the small [relative to the money stock] and steady inflow advocated by the so-called mercantilists. Secondly, Hume assumes that this sudden inflow is met by instantaneous adjustment in prices. Otherwise, if the change in, say, wages attracts more labour, there is no reason why the increased money supply could not lead to a greater output and thus avoid inflation. International labour mobility was a standard feature of mercantilist thought and so it will be seen that Hume's "new" result is obtained by his...


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