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The Prehistory of of Political Economy

Why We Call It Prehistory

The naissance of political economy was a very complex process that took place over a long time horizon: at least from the classical Greek period to the sixteenth and seventeenth centuries.1 Only in the nineteenth century, with the creation of the first economics chairs in universities, was the economist recognised as an autonomous professional figure.2

References to issues now commonly considered as belonging to economics already made their appearance in classical antiquity and the Middle Ages. Authors such as Diodorus Siculus, Xenophon or Plato, for instance, considered the economic aspects of the division of labour, maintaining among other things that it favours a better product quality. However, for a long time - at least up to the seventeenth century - the approach to economic issues was substantially different from present-day practice. Indeed, the very economic mechanisms regulating production and income distribution have since seen radical transformation. Suffice it to recall just how much sheer violence, authority and tradition weighed in the economic life of classical antiquity, based on slave labour, and of the feudal period, based on serf labour, in comparison with economic life in a market economy. Moreover, given the relatively primitive technology in use in those historical periods, human life was dominated by natural phenomena (such as natural calamities, epidemics) as well as wars and arbitrary exercise of political power. If we add to this a largely superstitious religious sensibility, we can understand how repetitive cycles of

  • 1 In that period the term political economy began to be used; the first to use it as a title for a book (the Traite de I’economie politique, 1615) was the Frenchman Antoine de Montchretien (a. 1575-1621).
  • 2 To be precise, the first chair in political economy was established in Naples in 1754, for Antonio Genovesi; in 1769 Milan followed with Cesare Beccaria. Elsewhere (France, England) things moved more slowly. Alfred Marshall was still fighting for the institution of a degree course in economics in Cambridge and the professionalisation of economics between the end of the nineteenth and the beginning of the twentieth century.
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work and life, day by day, year by year, were systematically preferred to innovation and change. We can also understand why the philosophers of classical antiquity and theologians of the Middle Ages considered it their task not so much to describe and interpret the way the economy works as, rather, to provide advice on morally acceptable behaviour in the field of economic relations.

Actually, political economy was born from the conjunction of two major issues. On the one hand, we have the moral issue: which rules of conduct should human beings respect in the domain of economic activities? On the other hand, we have the scientific issue: how does a society based on the division of labour function, where each person or group of persons produces a specific commodity or group of commodities and needs the products of others, both as subsistence and as means of production, to keep the production process going?

The two questions are connected, both with respect to the search for objective grounds for moral evaluation of human behaviour and for the idea (dominant in the Aristotelian tradition) that ‘good’ is what ‘conforms to nature’. For a long time, authors writing on economic matters seemed not to distinguish clearly between the two issues, as shown by the ambiguities of the notion of ‘natural law’ itself: ambiguities still to be perceived in protagonists of the classical school such as Adam Smith and David Ricardo.

Political economy was thus born as a moral science and as a science of society. At this stage, distinction between the different aspects now included in the field of economics was in many instances more clear-cut than the dividing line between economics and the other social sciences. Thus, for instance, the distance between the study of economic institutions and that ofpolitical institutions was minimal. Much larger was the distance separating the study of institutions from that of the behaviour of the good pater familias with respect to consumption activities and supervision of the family budget: for instance, discussion on the economic tasks of the pater familias generally involved reflections on the upbringing of children.

An important factor in the progressive separation between the two fields of research, as we shall see in the next chapter, was a change in perspective prompted by discoveries taking place in the natural sciences: from Galileo’s (1564-1642) contributions in the field of astronomy to the discovery of the circulation of blood announced by Harvey in 1616; from Newton’s (1642-1727) physics up to the shift, with Lavoisier (1743-1794), from descriptive chemistry to chemistry based on quantitative relations. Such discoveries favoured gradual recognition of the existence of scientific issues, concerning our understanding of the physical world, to be tackled independently of moral issues, with methods of analysis other than those traditionally applied to the latter. Earlier on, Niccolo Machiavelli (1469-1527) had taken a turn in the same direction with his distinction between political science and moral philosophy, between analysis of the behaviour princes must adopt in pursuit of power and moral judgement on such behaviour.

The importance of the formative stage of political economy derives from the fact that it left as inheritance to successive stages a set of deeply embedded ideas and concepts. Around the seventeenth century, however, a change took place in the way economic issues were tackled, connected to the radical changes that had intervened in the organisation of economic and social life. In particular, we may take the role of exchanges as an example.

The market, interpreted as exchange of goods against money, was already in existence in Pericles’ Athens and Caesar’s Rome. However, exchanges then accounted for a relatively limited share of the total social production and took place under conditions of extreme irregularity, due to factors such as the incidence of meteorological factors on crops, difficulties of transportation and above all widespread insecurity about property rights arising not only from private criminality but also, and indeed mainly, from the arbitrary intervention of the political authorities, exercising a drastic and often unpredictable re-distributive function.

As far as the former aspect is concerned - the limited share of exchanges - we may recall that, for instance, in the feudal economy exchanges through the market mostly concerned the surplus product, namely that part of the product that is not necessary as a means of production or of subsistence for the continuance of productive activity. On the other hand, there was already a network of exchanges involving luxury products - spices, lace, precious metals - connecting geographical areas even over great distances; side by side with it, a web of financial relations gradually developed connecting major commercial centres, based mainly on letters of exchange. At this stage, self-production - i.e. production for direct consumption on the part of the producers themselves - characterised small rural communities. In these small communities some degree of productive specialisation and payments in money coexisted with exchanges in kind.

Self-production lost ground to production for the market only as private ownership extended over land and as artisan manufacturing production grew. A different system of social relations and a different technological structure were thus born. With this new system, neither in agriculture nor in manufacturing were the workers now owners of the means of production or the goods they produced, which, in any case, were usually different from the goods they themselves consumed. Moreover, artisan manufacturing - and later on industrial plants - were increasingly characterised by use of specialised means of production, produced by firms other than those utilising them.

As far as the second aspect is concerned - the irregularity of exchanges - suffice it to recall the multiplicity and continuous variability of the standards of measurement for commodities - standards of weight, of length, of volume - only gradually superseded.[1]

It is precisely the absence of regularity and uniformity in economic activity that may possibly account for the generic remarks by writers of this period about the conditions of demand and supply as determinants of market prices. In the presence of a marked variability in demand and supply and in the absence of clear indications on the factors determining them, such generic remarks cannot be considered as adding up to a fully fledged theory of prices, let alone anticipating the marginalist theories that take equilibrium prices to correspond to the point where demand and supply (defined as well-specified and stable functions of prices and incomes) of the given commodity meet.

Indeed, up to the end of the seventeenth century reflection on economic issues, when not addressing a technical aspect connected, for instance, with the origins of accountancy (up to the invention of double-entry bookkeeping, commonly attributed to the Italian Luca Pacioli, c. 1445-c. 1517), essentially formed part of the study of rules for the government of society: Plato’s Republic or Aristotle’s Politics, for example, were fundamental texts. The writings of the philosophers of classical antiquity or the Middle Ages held ideas or observations of interest for the development of political economy, but embedded in a context that failed to constitute systematic analysis of economic issues.

The acceleration in economic debate from the sixteenth century onwards was also catalysed by a more general technical factor, namely the invention of the printing press with moveable type, which led to a rapid and significant reduction in the cost of books.

  • [1] Standards of measurement were, for a long stretch of human history, the object of harshsocial conflict regulated by local conventions, generally temporary and fairly flexible.The central authority of the new nation states succeeded in imposing legal standards ofmeasurement only after great efforts, which came to fruition towards the end of theeighteenth century. This most interesting story is described in Kula 1970.
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