Freedom and Capitalism in Early Modern Europe: Mercantilism and the Making of the Modern Economic Mind

Abstract

The author's wide ambitions and aims with this quite compressed book (only 167 pages) seem clear: to raise and discuss in synthetic fashion topics in economic history with a very long pedigree, the rise of capitalism and the role of political economic discourse before Adam Smith and classical political economy in Britain (and France). The leading idea here is to argue against what Milton Friedman formulated in his famous Capitalism and Freedom (1962), namely, that neither phenomenon could have existed without the other and that it was the West that gave birth to these Siamese twins. During later decades this symbiosis has been particularly emphasized by many institutional new economic historians, more specifically suggesting that capitalism was born in 1688 with the Glorious Revolution in England (perhaps in combination with the Dutch so-called first modern economy), with the gradual abolition of rent-seeking and the rise of free trade leading to sustained economic growth and, in sequel, the first industrial revolution.This thesis is here put in question by Philipp Robinson Rössner, taking his point of departure from new research in economic history, which instead seeks to place the birth of capitalism much earlier in history and argue that its birthplace was not so much England but rather continental Europe. To some extent, this is old hat of course, and the author refers for support to older polymath authorities like Fernand Braudel and Werner Sombart, the latter perhaps the last of the famous German school of historical economists. Like many others skeptical of the claim that the Glorious Revolution was the starting point of market society and capitalism—but even more insistently so—Rössner talks in favor of another story that he thinks ought to offer a better explanation: the pivotal role of the state and old early modern political economy in the rise of capitalism in Europe, including what is usually categorized as mercantilist and cameralist thought and practices. Rössner argues that it is a misnomer to regard both of these “schools”—to the extent they can be seen as such, he rightly adds—as the antithesis of either capitalism or the rise of markets and economic growth. In fact, they were harbingers of the modern capitalist market economy, not as it is supposed to work according to blackboard neoclassical theory, but rather how it operates in reality in the West and elsewhere.At least for this present reviewer it is easy to agree with many of the propositions and critical arguments that the author puts forward. However, it is important to add that his conclusions are not by any means the final say, but should rather be seen as contributions to a longer debate which is most certainly still open on the origins of capitalism and the market economy and also for how to understand the development of economic discourse and practice before the nineteenth century. Rössner's text is at points very condensed, and it is not always easy to follow him in his discussions. Rushing between different subjects, using multitudes of sources, and placing his history in different ages and localities, it is at times hard to perceive the path that the author wants us to tread. Sometimes even this all in all positive reader can worry about how the author defines concepts, including important ones such as capitalism and market. Still, I think that the main messages running through the book are sufficiently clearly presented and very much worthy of thorough discussion.On a number of points that Rössner raises it is easy to agree. First, he is surely right when emphasizing the Anglo-Saxon bias of much economic doctrinal history that uses England and perhaps also to some extent France as blueprints and thus neglects what was going on elsewhere. As many others have already done, the author justly asks whether the English case was the real “Sonderweg,” noting that cameralism certainly was much more standard in its different varieties in Europe until the end of the nineteenth century. Second, Rössner is right when he states that the antimarket character of mercantilism and cameralism has been too much exaggerated in general doctrinal treaties. Rather what seems to emerge, especially from the seventeenth century onward, is a number of discourses—differing between countries—which seek to build up a modern economy that acknowledges the important positive role of extended markets, and the introduction of industries and manufactories as a means of making the state more powerful and the people more “happy” (Glucksaligkeit), in terms of welfare. In this instance, our author justly points out—as has been done extensively in modern research on mercantilist theory—Adam Smith's straw man, the king Midas fallacy of mercantilism to confuse wealth with money. Most certainly, the existence of chrysohedonism has very little bearing if one empirically consults what the mercantilists actually said and wrote. As Rössner points out, in general mercantilists were more interested in production and introducing value-added export selling on international markets (the “jealousy of trade” mentioned by David Hume) not in order to have a surplus of bullion but to create employment and more industry.Nonetheless, there are many things that need to be further discussed and/or clarified. This concerns especially Rössner's discussion of the historical development of mercantilism and cameralism as discourse and practice and the links between them. His definitions of each “school” are very generous indeed, with quite fuzzy borders. Whether, for example, Johann Joachim Becher or James Steuart should be defined as mercantilists or cameralists is perhaps at the end of the day not so very important. Moreover, the author to a large extent, perhaps rightly, leaves out the nearly hundred-year debate—initiated by Jacob Viner and Eli Heckscher—whether mercantilism should be regarded as a system of power or plenty; it most surely should be regarded as both. More problematic is that he tends to treat both mercantilism and cameralism as basically identical over time. He insists that they were children of the Renaissance (stemming especially from Giovanni Boteri with perhaps Niccolò Machiavelli as the godfather) who dominated political economy from the sixteenth through eighteenth centuries. Such a treatment ought to be qualified to say the least. The mercantilism of the sixteenth century, before Thomas Mun and Edward Misselden as well as between them and Charles Davenant and indeed James Steuart, was without doubt very different. The same is true of cameralism, for example, when comparing Ludvig von Seckendorff's Teutsche Fursten Staaten (1655) with Joseph von Sonnenfels Grundsätze (1765) or, even more so, Johann Justus Gottleib Justi's works from the 1750s and 1760s, the latter named by Rössner as perhaps the leading cameralist of all times. It is surely necessary to mark their differences over time, charting, for example, the development of natural rights discourse and the influence of thinkers such as Thomas Hobbes, Samuel Pufendorf, Christian Wolff, and Christian Thomasius, which varied considerably. Also, concerning practical political economy the kind of messages that could be drawn from them varied considerably. To this extent, we must acknowledge that mercantilism and cameralism had a multifarious history.I am certain that acknowledging the history of cameralist and mercantilist discourse is easy to include in the kind of perspective Rössner offers in this volume. He spends quite a lot of time linking different versions of mercantilism and cameralism in spatial room: note for example his very interesting discussion on the lack of silver and gold mines as an explanation for differences in political economy, for example, between England, Naples, Germany, and Spain. However, in this very condensed and rapid promenade through several hundred years of intellectual and economic history the importance of intellectual developments over time is to some extent lost. However, at the end it is clear that Rössner's book is worthy of great attention and discussion. Perhaps even more pertinently, it shows the vitality of present intellectual and economic history. We have certainly moved far since the great debates on pre–Adam Smith political economy first drawn up in The Wealth of Nations, book 4, on systems of political economy in 1776.