Calculated Values: Finance, Politics, and the Quantitative Age by William Deringer (review)

Deringer argues that our modern quantitative age characterized by facts, figures, and calculations began in England after the Glorious Revolution of 1688. It was well established in Great Britain by the late eighteenth century. Before 1688, the use of data and calculations was marginal; it had little impact on thinking about anything. A century later, the authority of numbers and calculations became an accepted feature of discussions about almost everything.

Was the triumph of quantitative analysis a product of the so-called scientific revolution or of the eighteenth-century enlightenment? Deringer barely discusses these possible explanations. Instead, he focuses on great political debates in Parliament and the pamphlet literature at the time, which increasingly resorted to numbers and calculations to score debating points.

Far from using data and calculations to get at the truth, as in "numbers don't lie," eighteenth-century calculators used them as arguments to advance particular politico-economic stances and policies. The calculators that Deringer studies were primarily "spin doctors" seeking partisan political advantage from their work, and only incidentally seekers after truth. If quantitative reasoning became more authoritative within the century, Deringer hints that it must have happened because the partisan debates led to the creation of better data and more convincing calculations.

Most of the debates that Deringer studies were related to British government finances. Charles Davenant, an early calculator and frustrated politician, estimated what English taxes in the 1680s and 1690s should have yielded in revenue and compared his calculations to what they actually yielded, which was substantially less. The implication was mismanagement, corruption, or both.

A second debate involved the "equivalent," a payment that England needed to pay Scotland when the two countries agreed to a union in 1707, because Scots would thenceforth have to pay higher English taxes. Sophisticated calculations led to the present value of Scotland's future higher tax payments being £398,085.50. William Paterson, the Scot who founded the Bank of England in 1694, was involved in the calculation; much of the "equivalent" payment went to a bailout of Paterson and other Scottish investors who had lost heavily from the failure of a colony that they had tried to establish in Panama.

A third debate concerned the balance of trade in the early 1700s. Tories performed calculations to show that England gained from its trade with France, whereas Whigs performed them to show the opposite. The freer-trade Tories lost out to the Whigs, who kept high tariffs on imports.

A fourth debate c. 1715 centered on the size of the national debt, which had risen rapidly because of England's wars. Debt management became a major concern of the government. The South Sea Company in 1720 hatched a plan to absorb the national debt by exchanging its own stock for public debt. Company insiders tried for huge profits by fraudulently pushing up its stock price, the notorious South Sea Bubble, leading to a fifth debate about what the stock was really worth. Some calculators showed it to be worth much less than the Company and the market said. Their analyses were confirmed when the bubble burst.

Sir Robert Walpole's sinking fund, a plan for ridding Britain of debt, generated a sixth debate. It was a sound and sophisticated idea, but lack of fiscal discipline and poor execution undermined and discredited the program. Richard Price, a devoted calculator, later resuscitated the idea, influencing statesmen in both Britain and the United States.

David Hume, a key Enlightenment figure, was skeptical of the quantitative bent that arose in his lifetime. "Every man, who has ever reason'd on this subject," Hume said, "has always prov'd his theory, whatever it was, by facts and calculations." Deringer adds, "You could make the numbers say whatever you wanted them to" (xvi).

Deringer's study is essentially old-fashioned intellectual history. His message, however, resonates in a modern ear. Calculating has two possible meanings: using data and quantitative methods in neutral ways...