William Petty
Encyclopedia
Sir William Petty FRS
(27 May 1623 – 16 December 1687) was an English economist, scientist and philosopher. He first became prominent serving Oliver Cromwell
and Commonwealth
in Ireland. He developed efficient methods to survey the land that was to be confiscated and given to Cromwell's soldiers. He also managed to remain prominent under King Charles II
and King James II
, as did many others who had served Cromwell.
He was Member of the Parliament of England
briefly and was also a scientist, inventor, and entrepreneur, and was a charter member of the Royal Society
. It is for his theories on economics and his methods of political arithmetic that he is best remembered, however, and he is attributed as having started the philosophy of 'laissez-faire
' in relation to government activity. He was knighted in 1661. He was the great-grandfather of the future Prime Minister, William Petty Fitzmaurice, 2nd Earl of Shelburne and 1st Marquess of Landsdowne
.
and was a contemporary and friend of Samuel Pepys
. In 1858, Henry Petty-Fitzmaurice, 3rd Marquess of Lansdowne
, one of Petty's descendants erected a memorial and likeness of Petty in Romsey Abbey
. The text on it reads: "a true patriot and a sound philosopher who, by his powerful intellect, his scientific works and indefatigable industry, became a benefactor to his family and an ornament to his country". His grave slab on the floor of the south choir aisle reads HERE LAYES SIR WILLIAM PETY.
Petty's father and grandfather were clothiers. He was a precocious and intelligent youngster, and became a cabin boy in 1637, but was set ashore in Normandy
after breaking his leg on board. After this setback, he applied in Latin
to study with the Jesuits in Caen
, supporting himself by teaching English. After a year, he returned to England and had by now a thorough knowledge of Latin, Greek
, French
, mathematics and astronomy.
After an uneventful period in the Navy, he left to study in Holland in 1643, where he developed an interest in anatomy. Through an English professor in Amsterdam
, he became the personal secretary to Hobbes
allowing him contact with Descartes
, Gassendi
and Mersenne
. In 1646, he returned to England
and, after developing a double-writing instrument with little success in sales, he studied medicine
at Oxford University. He befriended Hartlib
and Boyle
, and he became a member of the London Philosophical Society, and possibly met John Milton
. By 1651, he had risen to Professor of Anatomy at Brasenose College, Oxford
and was also Professor of Music in London.
In 1652, he left on a leave of absence and traveled with Oliver Cromwell
's army in Ireland
, as physician-general. His opposition to conventional universities, being committed to ‘new science’ as inspired by Francis Bacon
and imparted by his afore-mentioned acquaintances, perhaps pushed him from Oxford. He was pulled to Ireland perhaps by sense of ambition and desire for wealth and power. His breadth of interests was such that he successfully secured the contract for charting Ireland in 1654, so that those who had lent funds to Cromwell's army might be repaid in land - a means of ensuring the army was self-financing. This enormous task he completed in 1656 and became known as the Down Survey
, later published (1685) as Hiberniae Delineatio. As his reward, he acquired approximately 30000 acres (121.4 km²) in Kenmare
, in southwest Ireland, and £9 000. This enormous personal advantage to Petty led to persistent court cases on charges of bribery
and breach of trust
until his death. None were ever proven.
Now back in England, as a Cromwellian supporter, he ran unsuccessfully for Parliament in 1659 for West Looe. Despite his political allegiances, he was well-treated at the Restoration
, although he lost some of his Irish lands. In 1662, he was invited to join the 'Invisible College
', a club of intellectuals and was a charter member of the Royal Society
of the same year. This year also saw him write his first work on economics
, his Treatise of Taxes and Contributions. Petty counted among his many scientific interests naval architecture: he had become convinced of the superiority of double-hulled boats, although they were not always successful; the Experiment reached Porto
on 1664, but sank on the way back. He was knighted in 1661 by Charles II and returned to Ireland in 1666, where he remained for most of the next twenty years.
The events that took him from Oxford to Ireland marked a shift from medicine and the physical sciences to the social sciences, and Petty lost all his Oxford offices. The social sciences became the area that he studied for the rest of his life. His primary interest became Ireland’s prosperity and his works describe that country and propose many remedies for its then backward condition. He helped found the Dublin Society
in 1682. Returning ultimately to London in 1685, he died in 1687.
He regarded his life in bittersweet terms. He had risen from humble origins to mix with the intellectual elite and was by 35 a considerably wealthy man and leading member of the 'progressive sciences'. Nonetheless, he was insecure about his land holdings and his ambitions of obtaining important political posts remained frustrated. Perhaps he expected the astronomical rise he experienced in his early years to continue throughout his life. Contemporaries described him, nonetheless, as humorous, good-natured and rational.
He is most well known for economic history
and statistic writings, pre-Adam Smith
. Of particular interest were Petty's forays into statistical analysis. Petty's work in political arithmetic, along with the work of John Graunt
, laid the foundation for modern census
techniques. Moreover, this work in statistical analysis, when further expanded by writers like Josiah Child
, documented some of the first expositions of modern insurance
. Vernon Louis Parrington notes him as an early expositor of the labor theory of value
as discussed in Treatise of Taxes in 1692. http://xroads.virginia.edu/~Hyper/Parrington/vol1/bk02_01_ch03.html
, for whom Petty acted as personal secretary. According to Hobbes, theory should set out the rational requirements for ‘civil peace and material plenty’. As Hobbes had centered on peace, Petty chose prosperity.
Secondly, the influence of Francis Bacon
was profound. Bacon, and indeed Hobbes, held the conviction that mathematics and the senses must be the basis of all rational sciences. This passion for accuracy led Petty to famously declare that his form of science would only use measurable phenomena and would seek quantitative precision, rather than rely on comparatives or superlatives, yielding a new subject that he named political arithmetic. Petty thus carved a niche for himself as the first dedicated economic scientist, amidst the merchant-pamphleteers, such as Thomas Mun
or Josiah Child
, and philosopher-scientists occasionally discussing economics, such as Locke
.
He was indeed writing before the true development of political economy
. As such, many of his claims for precision are of imperfect quality. Nonetheless, Petty wrote three main works on economics, Treatise of Taxes and Contributions (written in 1662), Verbum Sapienti (1665) and Quantulumcunque concerning money (1682), all refreshingly concise. These works, which received great attention in the 1690s, show his theories on major areas of what would later become economics. What follows is an analysis of his most important theories, those on fiscal contributions, national wealth, the money supply and circulation velocity, value, the interest rate, international trade and government investment.
, or things of universal good. He then discusses general and particular causes of changes in these charges. He thinks that there is great scope for reduction of the first four public charges, and recommends increased spending on care for the elderly, sick, orphans, etc., as well as the government employment of supernumeraries.
On the issue of raising taxes, Petty was a definite proponent of consumption tax
es. He recommended that in general taxes should be just sufficient to meet the various types of public charges that he listed. They should also be horizontally equitable
, regular and proportionate. He condemned poll tax
es as very unequal and excise on beer as taxing the poor excessively. He recommended a much higher quality of statistical information, in order to raise taxes more fairly. Imports should be taxed, but only in such a way that would put them on a level playing field with domestic produce. A vital aspect of economies at this time was that they were transforming from barter
economies to money economies. Linked to this, and aware of the scarcity of money, Petty recommends that taxes be payable in forms other than gold
or silver
, which he estimated to be less than 1% of national wealth. To him, too much importance was placed on money, 'which is to the whole effect of the Kingdom… not [even] one to 100'.
. To him, it was all too obvious that a country’s wealth lay in more than just gold and silver. He worked off an estimation that the average personal income was £6 13s 4d per annum, with a population of six million, meaning that national income would be £40m. Petty produces estimates, some more reliable than others, for the various components of national income, including land, ships, personal estates and housing. He then distinguishes between the stocks (£250m) and the flows yielding from them (£15m). The discrepancy between these flows and his estimate for national income (£40m) leads Petty to postulate that the other £25m is the yield from what must be £417m of labour stock, the value of the people. This gives a total wealth for England in the 1660s of £667m.
Petty's only statistical technique is the use of simple averages. He would not be a statistician
by today's standards but during his time a statistician was merely one that employed the use of quantitative data. Because obtaining census data was difficult, if not impossible, especially for Ireland, he applied methods of estimation
. The way in which he would estimate the population would be to start with estimating the population of London. He would do this by either estimating it by exports or by deaths. His method of using exports is by considering that a 30 percent increase in exports corresponds to a similar proportionate increase in population. The way he would use deaths would be by multiplying the number of deaths by 30 — estimating that one out of thirty people die each year. To obtain the population of all of England he would multiply the population of London by 8. Such a simple use of estimation could have easily have been abused and Petty was accused more than once of doctoring
the figures for the Crown. (Henry Spiegel)
in gold and silver of only £6m. Petty believed that there was a certain amount of money that a nation needed to drive its trade. Hence it was possible to have too little money circulating in an economy, which would mean that people would have to rely on barter
. It would also be possible for there to be too much money in an economy. But the topical question was, as he asks in chapter 3 of Verbum Sapienti, would £6m be enough to drive a nation’s trade, especially if the King wanted to raise additional funds for the war with Holland?
The answer for Petty lay in the velocity of money
’s circulation. Anticipating the quantity theory of money
often said to be initiated by John Locke
, whereby Yp = MSv, Petty stated that if Y was to be increased for a given money supply, 'revolutions' must occur in smaller circles (i.e. higher v). This could be done through the establishment of a bank
. He explicitly states in Verbum Sapienti "nor is money wanting to answer all the ends of a well policed state, notwithstanding the great decreases thereof which have happened within these Twenty years (p. 113)" and that higher velocity is the answer. He also mentions that there is nothing unique about gold and silver in fulfilling the functions of money and that money is the means to an end, not the end itself:
What is striking about these passages is his intellectual rigour, which put him far ahead of the mercantilist
writers of earlier in the century. It is also interesting to note the use of biological analogies to illustrate his point, a trend continued by the physiocrats
in France
early in the 18th century.
, and chose to develop an input-based theory of value: all things ought to be valued by two natural Denominations, which is Land and Labour (p. 44). Both of these would be prime sources of taxable income
. Like Richard Cantillon
after him, he sought to devise some equation or par between the 'mother and father' of output, land and labour, and to express value accordingly. He still included general productivity
, one’s 'art and industry'. He applied his theory of value to rent. The natural rent of a land was the excess of what a labourer produces on it in a year over what he ate himself and traded for necessities. It was therefore the profit
above the various costs related to the factors involved in production.
. At the time, many religious writers still condemned the charging of interest as sinful. Petty also involved himself in the debate on usury and interest rate
s, regarding the phenomenon as a reward for forbearance on the part of the lender. Incorporating his theories of value, he asserted that, with perfect security, the rate of interest should equal the rent for land that the principal could have bought - again, a precocious insight into what would later become general equilibrium findings. Where security was more 'casual', the return should be greater — a return for risk. Having established the justification for usury itself, that of forbearance, he then shows his Hobbesian qualities, arguing against any government regulation of the interest rate, pointing to the 'vanity and fruitlessness of making civil positive laws against the laws of nature' (p. 48).
. As mentioned earlier, the motif of medicine was also useful to Petty, and he warned against over-interference by the government in the economy, seeing it as analogous to a physician tampering excessively with his patient. He applied this to monopolies, controls on the exportation of money and on the trade of commodities. They were, to him, vain and harmful to a nation. He recognized the price effects of monopolies, citing the French king’s salt monopoly as an example. In another work, Political Arithmetic, Petty also recognized the importance of economies of scale. He described the phenomenon of the division of labour, asserting that a good is both of better quality and cheaper, if many work on it. Petty said that the gain is greater 'as the manufacture itself is greater'.
, Petty thought it vain to try to control it, and dangerous, as it would leave the merchants to decide what goods a nation buys with the smaller amount of money. He noted in Quantulumcunque concerning money that countries plentiful in gold have no such laws restricting specie
. On exports in general, he regarded prescriptions, such as recent Acts of Parliament forbidding the export of wool and yarn, as 'burthensome'. Further restrictions 'would do us twice as much harm as the losse of our said Trade' (p. 59), albeit with a concession that he is no expert in the study of the wool trade.
On prohibiting imports, for example from Holland, such restrictions did little other than drive up prices, and were only useful if imports vastly exceeded exports. Petty saw far more use in going to Holland and learning whatever skills they have than trying to resist nature. Epitomizing his viewpoint, he thought it preferable to sell cloth for 'debauching' foreign wines, rather than leave the clothiers unemployed.
was of most importance to Petty, having recognised that labour was one of the major sources of wealth for individuals and 'the greatest Wealth and Strength of the Kingdom'. In this vein, he extended the cloth-wine argument above, arguing that it is better to employ men and burn their product or to engage in extravagant public works projects, than to have indolent 'supernumeraries' in an economy — hence his famous example of relocating Stonehenge
across the plains of Salisbury
.
, showing its existence and usefulness in Dutch shipyards. Classically the workers in a shipyard would build ships as units, finishing one before starting another. But the Dutch had it organised with several teams each doing the same tasks for successive ships. People with a particular task to do must have discovered new methods that were only later observed and justified by writers on political economy
.
Petty also applied the principle to his survey of Ireland. His breakthrough was to divide up the work so that large parts of it could be done by people with no extensive training.
He imagined a future in which "the city of London is seven times bigger than now, and that the inhabitants of it are 4,690,000 people, and that in all the other cities, ports, towns, and villages, there are but 2,710,000 more." He expected this some time round 1800, extrapolating existing trends. Long before Malthus
, he noticed the potential of human population to increase. But he also saw no reason why such a society should not be prosperous
.
He influenced not only immediate successors such as Richard Cantillon
but also some of the greatest minds in economics, including Adam Smith
, Karl Marx
and John Maynard Keynes
. With Adam Smith, he shared a Weltanschauung that believed in a harmonious natural world. The parallels in their canons of taxation epitomise their joint belief in natural liberty
and equality
. They both saw the benefits of specialisation and the division of labour
. Furthermore, Smith and Petty developed labour theories of value, as did David Ricardo
, Henry George
, and Karl Marx in the 19th century.
Smith says nothing about Petty in The Wealth Of Nations
. In his published writings, there is nothing apart for a reference in a letter to Lord Shelburne, one of Petty's aristocratic descendants (Correspondence Of Adam Smith, Letter No. 30, Glasgow Edition).
Petty continued to exercise influence. Karl Marx believed, as did Petty, that the total effort put in by the aggregate of ordinary workers represented a far greater contribution to the economy than contemporary thought recognised. This belief led Petty to conclude in his estimates that labour ranked as the greatest source of wealth in the kingdom. Marx’s conclusions were that surplus labour
was the source of all profit
, and that the labourer was alienated
from his surplus and thus from society. Marx's low esteem of Adam Smith is mirrored in his high consideration of Petty's analysis, as witnessed by countless quotations in his major work Das Kapital
.John Maynard Keynes
also wrote at a time of mass discord, as unemployment was rampant and economies stagnant during the 1930s. He showed how governments could manage aggregate demand
to stimulate output and employment, much as Petty had done with simpler examples in the 17th century. Petty’s simple £100-through-100-hands multiplier was refined by Keynes and incorporated into his model.
For information on his family.
The National Portrait Gallery has five portraits of Sir William Petty
A criticism of William Petty's defense of religious intolerance
Royal Society
The Royal Society of London for Improving Natural Knowledge, known simply as the Royal Society, is a learned society for science, and is possibly the oldest such society in existence. Founded in November 1660, it was granted a Royal Charter by King Charles II as the "Royal Society of London"...
(27 May 1623 – 16 December 1687) was an English economist, scientist and philosopher. He first became prominent serving Oliver Cromwell
Oliver Cromwell
Oliver Cromwell was an English military and political leader who overthrew the English monarchy and temporarily turned England into a republican Commonwealth, and served as Lord Protector of England, Scotland, and Ireland....
and Commonwealth
Commonwealth of England
The Commonwealth of England was the republic which ruled first England, and then Ireland and Scotland from 1649 to 1660. Between 1653–1659 it was known as the Commonwealth of England, Scotland and Ireland...
in Ireland. He developed efficient methods to survey the land that was to be confiscated and given to Cromwell's soldiers. He also managed to remain prominent under King Charles II
Charles II of England
Charles II was monarch of the three kingdoms of England, Scotland, and Ireland.Charles II's father, King Charles I, was executed at Whitehall on 30 January 1649, at the climax of the English Civil War...
and King James II
James II of England
James II & VII was King of England and King of Ireland as James II and King of Scotland as James VII, from 6 February 1685. He was the last Catholic monarch to reign over the Kingdoms of England, Scotland, and Ireland...
, as did many others who had served Cromwell.
He was Member of the Parliament of England
Parliament of England
The Parliament of England was the legislature of the Kingdom of England. In 1066, William of Normandy introduced a feudal system, by which he sought the advice of a council of tenants-in-chief and ecclesiastics before making laws...
briefly and was also a scientist, inventor, and entrepreneur, and was a charter member of the Royal Society
Royal Society
The Royal Society of London for Improving Natural Knowledge, known simply as the Royal Society, is a learned society for science, and is possibly the oldest such society in existence. Founded in November 1660, it was granted a Royal Charter by King Charles II as the "Royal Society of London"...
. It is for his theories on economics and his methods of political arithmetic that he is best remembered, however, and he is attributed as having started the philosophy of 'laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
' in relation to government activity. He was knighted in 1661. He was the great-grandfather of the future Prime Minister, William Petty Fitzmaurice, 2nd Earl of Shelburne and 1st Marquess of Landsdowne
William Petty, 2nd Earl of Shelburne
William Petty-FitzMaurice, 1st Marquess of Lansdowne, KG, PC , known as The Earl of Shelburne between 1761 and 1784, by which title he is generally known to history, was an Irish-born British Whig statesman who was the first Home Secretary in 1782 and then Prime Minister 1782–1783 during the final...
.
Life and influences
Petty was a founder member of The Royal Society. He was born and buried in RomseyRomsey
Romsey is a small market town in the county of Hampshire, England.It is 8 miles northwest of Southampton and 11 miles southwest of Winchester, neighbouring the village of North Baddesley...
and was a contemporary and friend of Samuel Pepys
Samuel Pepys
Samuel Pepys FRS, MP, JP, was an English naval administrator and Member of Parliament who is now most famous for the diary he kept for a decade while still a relatively young man...
. In 1858, Henry Petty-Fitzmaurice, 3rd Marquess of Lansdowne
Henry Petty-FitzMaurice, 3rd Marquess of Lansdowne
Henry Petty-Fitzmaurice, 3rd Marquess of Lansdowne KG, PC, FRS , known as Lord Henry Petty from 1784 to 1809 and then as The Earl of Kerry to 1818, was a British statesman...
, one of Petty's descendants erected a memorial and likeness of Petty in Romsey Abbey
Romsey Abbey
Romsey Abbey is a parish church of the Church of England in Romsey, a market town in Hampshire, England. Until the dissolution it was the church of a Benedictine nunnery.-Background:...
. The text on it reads: "a true patriot and a sound philosopher who, by his powerful intellect, his scientific works and indefatigable industry, became a benefactor to his family and an ornament to his country". His grave slab on the floor of the south choir aisle reads HERE LAYES SIR WILLIAM PETY.
Petty's father and grandfather were clothiers. He was a precocious and intelligent youngster, and became a cabin boy in 1637, but was set ashore in Normandy
Normandy
Normandy is a geographical region corresponding to the former Duchy of Normandy. It is in France.The continental territory covers 30,627 km² and forms the preponderant part of Normandy and roughly 5% of the territory of France. It is divided for administrative purposes into two régions:...
after breaking his leg on board. After this setback, he applied in Latin
Latin
Latin is an Italic language originally spoken in Latium and Ancient Rome. It, along with most European languages, is a descendant of the ancient Proto-Indo-European language. Although it is considered a dead language, a number of scholars and members of the Christian clergy speak it fluently, and...
to study with the Jesuits in Caen
Caen
Caen is a commune in northwestern France. It is the prefecture of the Calvados department and the capital of the Basse-Normandie region. It is located inland from the English Channel....
, supporting himself by teaching English. After a year, he returned to England and had by now a thorough knowledge of Latin, Greek
Greek language
Greek is an independent branch of the Indo-European family of languages. Native to the southern Balkans, it has the longest documented history of any Indo-European language, spanning 34 centuries of written records. Its writing system has been the Greek alphabet for the majority of its history;...
, French
French language
French is a Romance language spoken as a first language in France, the Romandy region in Switzerland, Wallonia and Brussels in Belgium, Monaco, the regions of Quebec and Acadia in Canada, and by various communities elsewhere. Second-language speakers of French are distributed throughout many parts...
, mathematics and astronomy.
After an uneventful period in the Navy, he left to study in Holland in 1643, where he developed an interest in anatomy. Through an English professor in Amsterdam
Amsterdam
Amsterdam is the largest city and the capital of the Netherlands. The current position of Amsterdam as capital city of the Kingdom of the Netherlands is governed by the constitution of August 24, 1815 and its successors. Amsterdam has a population of 783,364 within city limits, an urban population...
, he became the personal secretary to Hobbes
Thomas Hobbes
Thomas Hobbes of Malmesbury , in some older texts Thomas Hobbs of Malmsbury, was an English philosopher, best known today for his work on political philosophy...
allowing him contact with Descartes
René Descartes
René Descartes ; was a French philosopher and writer who spent most of his adult life in the Dutch Republic. He has been dubbed the 'Father of Modern Philosophy', and much subsequent Western philosophy is a response to his writings, which are studied closely to this day...
, Gassendi
Pierre Gassendi
Pierre Gassendi was a French philosopher, priest, scientist, astronomer, and mathematician. With a church position in south-east France, he also spent much time in Paris, where he was a leader of a group of free-thinking intellectuals. He was also an active observational scientist, publishing the...
and Mersenne
Marin Mersenne
Marin Mersenne, Marin Mersennus or le Père Mersenne was a French theologian, philosopher, mathematician and music theorist, often referred to as the "father of acoustics"...
. In 1646, he returned to England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
and, after developing a double-writing instrument with little success in sales, he studied medicine
Medicine
Medicine is the science and art of healing. It encompasses a variety of health care practices evolved to maintain and restore health by the prevention and treatment of illness....
at Oxford University. He befriended Hartlib
Samuel Hartlib
Samuel Hartlib was a German-British polymath. An active promoter and expert writer in many fields, he was interested in science, medicine, agriculture, politics, and education. He settled in England, where he married and died...
and Boyle
Robert Boyle
Robert Boyle FRS was a 17th century natural philosopher, chemist, physicist, and inventor, also noted for his writings in theology. He has been variously described as English, Irish, or Anglo-Irish, his father having come to Ireland from England during the time of the English plantations of...
, and he became a member of the London Philosophical Society, and possibly met John Milton
John Milton
John Milton was an English poet, polemicist, a scholarly man of letters, and a civil servant for the Commonwealth of England under Oliver Cromwell...
. By 1651, he had risen to Professor of Anatomy at Brasenose College, Oxford
Brasenose College, Oxford
Brasenose College, originally Brazen Nose College , is one of the constituent colleges of the University of Oxford in the United Kingdom. As of 2006, it has an estimated financial endowment of £98m...
and was also Professor of Music in London.
Oliver Cromwell
Oliver Cromwell was an English military and political leader who overthrew the English monarchy and temporarily turned England into a republican Commonwealth, and served as Lord Protector of England, Scotland, and Ireland....
's army in Ireland
Cromwellian conquest of Ireland
The Cromwellian conquest of Ireland refers to the conquest of Ireland by the forces of the English Parliament, led by Oliver Cromwell during the Wars of the Three Kingdoms. Cromwell landed in Ireland with his New Model Army on behalf of England's Rump Parliament in 1649...
, as physician-general. His opposition to conventional universities, being committed to ‘new science’ as inspired by Francis Bacon
Francis Bacon
Francis Bacon, 1st Viscount St Albans, KC was an English philosopher, statesman, scientist, lawyer, jurist, author and pioneer of the scientific method. He served both as Attorney General and Lord Chancellor of England...
and imparted by his afore-mentioned acquaintances, perhaps pushed him from Oxford. He was pulled to Ireland perhaps by sense of ambition and desire for wealth and power. His breadth of interests was such that he successfully secured the contract for charting Ireland in 1654, so that those who had lent funds to Cromwell's army might be repaid in land - a means of ensuring the army was self-financing. This enormous task he completed in 1656 and became known as the Down Survey
Down Survey
The Down Survey, also known as the Civil Survey, refers to the mapping of Ireland carried out by William Petty, English scientist in 1655 and 1656....
, later published (1685) as Hiberniae Delineatio. As his reward, he acquired approximately 30000 acres (121.4 km²) in Kenmare
Kenmare
Kenmare is a small town in the south of County Kerry, Ireland. The name Kenmare is the anglicised form of Ceann Mara meaning "head of the sea", referring to the head of Kenmare Bay.-Location:...
, in southwest Ireland, and £9 000. This enormous personal advantage to Petty led to persistent court cases on charges of bribery
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
and breach of trust
English trusts law
English trusts law is the original and foundational law of trusts in the world, and a unique contribution of English law to the legal system. Trusts are part of the law of property, and arise where one person gives assets English trusts law is the original and foundational law of trusts in the...
until his death. None were ever proven.
Now back in England, as a Cromwellian supporter, he ran unsuccessfully for Parliament in 1659 for West Looe. Despite his political allegiances, he was well-treated at the Restoration
English Restoration
The Restoration of the English monarchy began in 1660 when the English, Scottish and Irish monarchies were all restored under Charles II after the Interregnum that followed the Wars of the Three Kingdoms...
, although he lost some of his Irish lands. In 1662, he was invited to join the 'Invisible College
Invisible College
The Invisible College has been described as a precursor group to the Royal Society of London, consisting of a number of natural philosophers around Robert Boyle...
', a club of intellectuals and was a charter member of the Royal Society
Royal Society
The Royal Society of London for Improving Natural Knowledge, known simply as the Royal Society, is a learned society for science, and is possibly the oldest such society in existence. Founded in November 1660, it was granted a Royal Charter by King Charles II as the "Royal Society of London"...
of the same year. This year also saw him write his first work on economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, his Treatise of Taxes and Contributions. Petty counted among his many scientific interests naval architecture: he had become convinced of the superiority of double-hulled boats, although they were not always successful; the Experiment reached Porto
Porto
Porto , also known as Oporto in English, is the second largest city in Portugal and one of the major urban areas in the Iberian Peninsula. Its administrative limits include a population of 237,559 inhabitants distributed within 15 civil parishes...
on 1664, but sank on the way back. He was knighted in 1661 by Charles II and returned to Ireland in 1666, where he remained for most of the next twenty years.
The events that took him from Oxford to Ireland marked a shift from medicine and the physical sciences to the social sciences, and Petty lost all his Oxford offices. The social sciences became the area that he studied for the rest of his life. His primary interest became Ireland’s prosperity and his works describe that country and propose many remedies for its then backward condition. He helped found the Dublin Society
Royal Dublin Society
The Royal Dublin Society was founded on 25 June 1731 to "to promote and develop agriculture, arts, industry, and science in Ireland". The RDS is synonymous with its main premises in Ballsbridge in Dublin, Ireland...
in 1682. Returning ultimately to London in 1685, he died in 1687.
He regarded his life in bittersweet terms. He had risen from humble origins to mix with the intellectual elite and was by 35 a considerably wealthy man and leading member of the 'progressive sciences'. Nonetheless, he was insecure about his land holdings and his ambitions of obtaining important political posts remained frustrated. Perhaps he expected the astronomical rise he experienced in his early years to continue throughout his life. Contemporaries described him, nonetheless, as humorous, good-natured and rational.
He is most well known for economic history
Economic history
Economic history is the study of economies or economic phenomena in the past. Analysis in economic history is undertaken using a combination of historical methods, statistical methods and by applying economic theory to historical situations and institutions...
and statistic writings, pre-Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
. Of particular interest were Petty's forays into statistical analysis. Petty's work in political arithmetic, along with the work of John Graunt
John Graunt
John Graunt was one of the first demographers, though by profession he was a haberdasher. Born in London, the eldest of seven or eight children of Henry and Mary Graunt. His father was a draper who had moved to London from Hampshire...
, laid the foundation for modern census
Census
A census is the procedure of systematically acquiring and recording information about the members of a given population. It is a regularly occurring and official count of a particular population. The term is used mostly in connection with national population and housing censuses; other common...
techniques. Moreover, this work in statistical analysis, when further expanded by writers like Josiah Child
Josiah Child
Sir Josiah Child of Wanstead, 1st Baronet , English merchant, economist proponent of mercantilism and governor of the East India Company, was born in London, the second son of Richard Child, a London merchant of old family.-Family:...
, documented some of the first expositions of modern insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
. Vernon Louis Parrington notes him as an early expositor of the labor theory of value
Labor theory of value
The labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...
as discussed in Treatise of Taxes in 1692. http://xroads.virginia.edu/~Hyper/Parrington/vol1/bk02_01_ch03.html
Economic works and theories: overview
Before discussing Petty's economic theories, it is important to point out two crucial influences in his life. The first is Thomas HobbesThomas Hobbes
Thomas Hobbes of Malmesbury , in some older texts Thomas Hobbs of Malmsbury, was an English philosopher, best known today for his work on political philosophy...
, for whom Petty acted as personal secretary. According to Hobbes, theory should set out the rational requirements for ‘civil peace and material plenty’. As Hobbes had centered on peace, Petty chose prosperity.
Secondly, the influence of Francis Bacon
Francis Bacon
Francis Bacon, 1st Viscount St Albans, KC was an English philosopher, statesman, scientist, lawyer, jurist, author and pioneer of the scientific method. He served both as Attorney General and Lord Chancellor of England...
was profound. Bacon, and indeed Hobbes, held the conviction that mathematics and the senses must be the basis of all rational sciences. This passion for accuracy led Petty to famously declare that his form of science would only use measurable phenomena and would seek quantitative precision, rather than rely on comparatives or superlatives, yielding a new subject that he named political arithmetic. Petty thus carved a niche for himself as the first dedicated economic scientist, amidst the merchant-pamphleteers, such as Thomas Mun
Thomas Mun
Thomas Mun was an English writer on economics who has been called the last of the early mercantilists. He was among the first to recognize the exportation of service, or invisible items, as valuable trade, and made early statements strongly in support of capitalism.Mun began his career by engaging...
or Josiah Child
Josiah Child
Sir Josiah Child of Wanstead, 1st Baronet , English merchant, economist proponent of mercantilism and governor of the East India Company, was born in London, the second son of Richard Child, a London merchant of old family.-Family:...
, and philosopher-scientists occasionally discussing economics, such as Locke
Locke
-People:*Locke , information about the surname and list of people*Locke *John Locke , English philosopher*Matthew Locke , baroque composer*Edwin A...
.
He was indeed writing before the true development of political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...
. As such, many of his claims for precision are of imperfect quality. Nonetheless, Petty wrote three main works on economics, Treatise of Taxes and Contributions (written in 1662), Verbum Sapienti (1665) and Quantulumcunque concerning money (1682), all refreshingly concise. These works, which received great attention in the 1690s, show his theories on major areas of what would later become economics. What follows is an analysis of his most important theories, those on fiscal contributions, national wealth, the money supply and circulation velocity, value, the interest rate, international trade and government investment.
Fiscal contributions
Fiscal contributions were of prime concern to policymakers in the 17th century, as they have remained ever since, for the wise country would not spend above its revenues. By Petty’s time, England was engaged in war with Holland, and in the first three chapters of Treatise of Taxes and Contributions, Petty sought to establish principles of taxation and public expenditure, to which the monarch could adhere, when deciding how to raise money for the war. Petty lists six kinds of public charge, namely defence, governance, the pastorage of men’s souls, education, the maintenance of impotents of all sorts and infrastructureInfrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
, or things of universal good. He then discusses general and particular causes of changes in these charges. He thinks that there is great scope for reduction of the first four public charges, and recommends increased spending on care for the elderly, sick, orphans, etc., as well as the government employment of supernumeraries.
On the issue of raising taxes, Petty was a definite proponent of consumption tax
Consumption tax
A consumption tax is a tax on spending on goods and services. The tax base of such a tax is the money spent on consumption. Consumption taxes are usually indirect, such as a sales tax or a value added tax...
es. He recommended that in general taxes should be just sufficient to meet the various types of public charges that he listed. They should also be horizontally equitable
Equitable
-Companies:*Scottish Equitable, is an investment company located in Edinburgh*Equitable PCI Bank*The Equitable Life Assurance Society, life insurance company in the United Kingdom...
, regular and proportionate. He condemned poll tax
Poll tax
A poll tax is a tax of a portioned, fixed amount per individual in accordance with the census . When a corvée is commuted for cash payment, in effect it becomes a poll tax...
es as very unequal and excise on beer as taxing the poor excessively. He recommended a much higher quality of statistical information, in order to raise taxes more fairly. Imports should be taxed, but only in such a way that would put them on a level playing field with domestic produce. A vital aspect of economies at this time was that they were transforming from barter
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...
economies to money economies. Linked to this, and aware of the scarcity of money, Petty recommends that taxes be payable in forms other than gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
or silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, which he estimated to be less than 1% of national wealth. To him, too much importance was placed on money, 'which is to the whole effect of the Kingdom… not [even] one to 100'.
National income accounting
In making the above estimate, Petty introduces in the first two chapters of Verbum Sapienti the first rigorous assessments of national income and wealthWealth
Wealth is the abundance of valuable resources or material possessions. The word wealth is derived from the old English wela, which is from an Indo-European word stem...
. To him, it was all too obvious that a country’s wealth lay in more than just gold and silver. He worked off an estimation that the average personal income was £6 13s 4d per annum, with a population of six million, meaning that national income would be £40m. Petty produces estimates, some more reliable than others, for the various components of national income, including land, ships, personal estates and housing. He then distinguishes between the stocks (£250m) and the flows yielding from them (£15m). The discrepancy between these flows and his estimate for national income (£40m) leads Petty to postulate that the other £25m is the yield from what must be £417m of labour stock, the value of the people. This gives a total wealth for England in the 1660s of £667m.
Statistician
Statistician
A statistician is someone who works with theoretical or applied statistics. The profession exists in both the private and public sectors. The core of that work is to measure, interpret, and describe the world and human activity patterns within it...
by today's standards but during his time a statistician was merely one that employed the use of quantitative data. Because obtaining census data was difficult, if not impossible, especially for Ireland, he applied methods of estimation
Estimation
Estimation is the calculated approximation of a result which is usable even if input data may be incomplete or uncertain.In statistics,*estimation theory and estimator, for topics involving inferences about probability distributions...
. The way in which he would estimate the population would be to start with estimating the population of London. He would do this by either estimating it by exports or by deaths. His method of using exports is by considering that a 30 percent increase in exports corresponds to a similar proportionate increase in population. The way he would use deaths would be by multiplying the number of deaths by 30 — estimating that one out of thirty people die each year. To obtain the population of all of England he would multiply the population of London by 8. Such a simple use of estimation could have easily have been abused and Petty was accused more than once of doctoring
Forgery
Forgery is the process of making, adapting, or imitating objects, statistics, or documents with the intent to deceive. Copies, studio replicas, and reproductions are not considered forgeries, though they may later become forgeries through knowing and willful misrepresentations. Forging money or...
the figures for the Crown. (Henry Spiegel)
Money supply and the velocity of its circulation
This figure for the stock of wealth was contrasted with a money supplyMoney supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
in gold and silver of only £6m. Petty believed that there was a certain amount of money that a nation needed to drive its trade. Hence it was possible to have too little money circulating in an economy, which would mean that people would have to rely on barter
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...
. It would also be possible for there to be too much money in an economy. But the topical question was, as he asks in chapter 3 of Verbum Sapienti, would £6m be enough to drive a nation’s trade, especially if the King wanted to raise additional funds for the war with Holland?
The answer for Petty lay in the velocity of money
Velocity of money
300px|thumb|Similar chart showing the velocity of a broader measure of money that covers M2 plus large institutional deposits, M3. The US no longer publishes official M3 measures, so the chart only runs through 2005....
’s circulation. Anticipating the quantity theory of money
Quantity theory of money
In monetary economics, the quantity theory of money is the theory that money supply has a direct, proportional relationship with the price level....
often said to be initiated by John Locke
John Locke
John Locke FRS , widely known as the Father of Liberalism, was an English philosopher and physician regarded as one of the most influential of Enlightenment thinkers. Considered one of the first of the British empiricists, following the tradition of Francis Bacon, he is equally important to social...
, whereby Yp = MSv, Petty stated that if Y was to be increased for a given money supply, 'revolutions' must occur in smaller circles (i.e. higher v). This could be done through the establishment of a bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
. He explicitly states in Verbum Sapienti "nor is money wanting to answer all the ends of a well policed state, notwithstanding the great decreases thereof which have happened within these Twenty years (p. 113)" and that higher velocity is the answer. He also mentions that there is nothing unique about gold and silver in fulfilling the functions of money and that money is the means to an end, not the end itself:
Nor were it hard to substitute in the place of Money [gold and silver] (were a comptency of it wanting) what should be equivalent unto it. For Money is but the Fat of the Body-Politick, whereof too much doth often hinder its agility, as too little makes it sick... so doth Money in the State quicken its Action, feeds from abroad in the time of Dearth at home.' (Hull 1899: p.113)
What is striking about these passages is his intellectual rigour, which put him far ahead of the mercantilist
Mercantilism
Mercantilism is the economic doctrine in which government control of foreign trade is of paramount importance for ensuring the prosperity and security of the state. In particular, it demands a positive balance of trade. Mercantilism dominated Western European economic policy and discourse from...
writers of earlier in the century. It is also interesting to note the use of biological analogies to illustrate his point, a trend continued by the physiocrats
Physiocrats
Physiocracy is an economic theory developed by the Physiocrats, a group of economists who believed that the wealth of nations was derived solely from the value of "land agriculture" or "land development." Their theories originated in France and were most popular during the second half of the 18th...
in France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
early in the 18th century.
Theory of value
On value, Petty continued the debate begun by AristotleAristotle
Aristotle was a Greek philosopher and polymath, a student of Plato and teacher of Alexander the Great. His writings cover many subjects, including physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology...
, and chose to develop an input-based theory of value: all things ought to be valued by two natural Denominations, which is Land and Labour (p. 44). Both of these would be prime sources of taxable income
Taxable income
Taxable income refers to the base upon which an income tax system imposes tax. Generally, it includes some or all items of income and is reduced by expenses and other deductions. The amounts included as income, expenses, and other deductions vary by country or system. Many systems provide that...
. Like Richard Cantillon
Richard Cantillon
Richard Cantillon was an Irish-French economist and author of Essai sur la Nature du Commerce en Général , a book considered by William Stanley Jevons to be the "cradle of political economy". Although little information exists on Cantillon's life, it is known that he became a successful banker and...
after him, he sought to devise some equation or par between the 'mother and father' of output, land and labour, and to express value accordingly. He still included general productivity
Productivity
Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...
, one’s 'art and industry'. He applied his theory of value to rent. The natural rent of a land was the excess of what a labourer produces on it in a year over what he ate himself and traded for necessities. It was therefore the profit
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
above the various costs related to the factors involved in production.
The interest rate
The natural rate of rent is related to his theories on usuryUsury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...
. At the time, many religious writers still condemned the charging of interest as sinful. Petty also involved himself in the debate on usury and interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
s, regarding the phenomenon as a reward for forbearance on the part of the lender. Incorporating his theories of value, he asserted that, with perfect security, the rate of interest should equal the rent for land that the principal could have bought - again, a precocious insight into what would later become general equilibrium findings. Where security was more 'casual', the return should be greater — a return for risk. Having established the justification for usury itself, that of forbearance, he then shows his Hobbesian qualities, arguing against any government regulation of the interest rate, pointing to the 'vanity and fruitlessness of making civil positive laws against the laws of nature' (p. 48).
Laissez-faire governance
This is one of the major themes of Petty’s writings, summed up by his use of the phrase vadere sicut vult, whence we get laissez-faireLaissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
. As mentioned earlier, the motif of medicine was also useful to Petty, and he warned against over-interference by the government in the economy, seeing it as analogous to a physician tampering excessively with his patient. He applied this to monopolies, controls on the exportation of money and on the trade of commodities. They were, to him, vain and harmful to a nation. He recognized the price effects of monopolies, citing the French king’s salt monopoly as an example. In another work, Political Arithmetic, Petty also recognized the importance of economies of scale. He described the phenomenon of the division of labour, asserting that a good is both of better quality and cheaper, if many work on it. Petty said that the gain is greater 'as the manufacture itself is greater'.
Foreign exchange and control of trade
On the efflux of specieMoney
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
, Petty thought it vain to try to control it, and dangerous, as it would leave the merchants to decide what goods a nation buys with the smaller amount of money. He noted in Quantulumcunque concerning money that countries plentiful in gold have no such laws restricting specie
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
. On exports in general, he regarded prescriptions, such as recent Acts of Parliament forbidding the export of wool and yarn, as 'burthensome'. Further restrictions 'would do us twice as much harm as the losse of our said Trade' (p. 59), albeit with a concession that he is no expert in the study of the wool trade.
On prohibiting imports, for example from Holland, such restrictions did little other than drive up prices, and were only useful if imports vastly exceeded exports. Petty saw far more use in going to Holland and learning whatever skills they have than trying to resist nature. Epitomizing his viewpoint, he thought it preferable to sell cloth for 'debauching' foreign wines, rather than leave the clothiers unemployed.
Full employment
The goal of full employmentFull employment
In macroeconomics, full employment is a condition of the national economy, where all or nearly all persons willing and able to work at the prevailing wages and working conditions are able to do so....
was of most importance to Petty, having recognised that labour was one of the major sources of wealth for individuals and 'the greatest Wealth and Strength of the Kingdom'. In this vein, he extended the cloth-wine argument above, arguing that it is better to employ men and burn their product or to engage in extravagant public works projects, than to have indolent 'supernumeraries' in an economy — hence his famous example of relocating Stonehenge
Stonehenge
Stonehenge is a prehistoric monument located in the English county of Wiltshire, about west of Amesbury and north of Salisbury. One of the most famous sites in the world, Stonehenge is composed of a circular setting of large standing stones set within earthworks...
across the plains of Salisbury
Salisbury Plain
Salisbury Plain is a chalk plateau in central southern England covering . It is part of the Southern England Chalk Formation and largely lies within the county of Wiltshire, with a little in Hampshire. The plain is famous for its rich archaeology, including Stonehenge, one of England's best known...
.
Division of labour
Petty made a practical study of the division of labourDivision of labour
Division of labour is the specialisation of cooperative labour in specific, circumscribed tasks and likeroles. Historically an increasingly complex division of labour is closely associated with the growth of total output and trade, the rise of capitalism, and of the complexity of industrialisation...
, showing its existence and usefulness in Dutch shipyards. Classically the workers in a shipyard would build ships as units, finishing one before starting another. But the Dutch had it organised with several teams each doing the same tasks for successive ships. People with a particular task to do must have discovered new methods that were only later observed and justified by writers on political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...
.
Petty also applied the principle to his survey of Ireland. His breakthrough was to divide up the work so that large parts of it could be done by people with no extensive training.
Urban society
Petty projected the growth of the city of London and supposed that it might swallow the rest of England—not so far from what actually happened:
Now, if the city double its people in 40 years, and the present number be 670,000, and if the whole territory be 7,400,000, and double in 360 years, as aforesaid, then by the underwritten table it appears that A.D. 1840 the people of the city will be 10,718,880, and those of the whole country but 10,917,389, which is but inconsiderably more. Wherefore it is certain and necessary that the growth of the city must stop before the said year 1840, and will be at its utmost height in the next preceding period, A.D. 1800, when the number of the city will be eight times its present number, 5,359,000. And when (besides the said number) there will be 4,466,000 to perform the tillage, pasturage, and other rural works necessary to be done without the said city". (OF THE GROWTH OF THE CITY OF LONDON — among the essays downloadable at the Gutenberg link.)
He imagined a future in which "the city of London is seven times bigger than now, and that the inhabitants of it are 4,690,000 people, and that in all the other cities, ports, towns, and villages, there are but 2,710,000 more." He expected this some time round 1800, extrapolating existing trends. Long before Malthus
Thomas Malthus
The Reverend Thomas Robert Malthus FRS was an English scholar, influential in political economy and demography. Malthus popularized the economic theory of rent....
, he noticed the potential of human population to increase. But he also saw no reason why such a society should not be prosperous
Prosperity
Prosperity is the state of flourishing, thriving, good fortune and/or successful social status. Prosperity often encompasses wealth but also includes others factors which are independent of wealth to varying degrees, such as happiness and health....
.
Summary and legacy
The above shows the contribution Petty made to theoretical issues that have dominated the later subject of economics ever since. He covered such a wide range of topics according to his political arithmetic method, i.e. like modern economists, he set out to prove his claims by finding data and statistics, rather than relying on anecdotal evidence. He wrote rigorously, but also with concision and humour. The issues that Petty thought about and wrote are major topics that have plagued the minds of economic theorists ever since.He influenced not only immediate successors such as Richard Cantillon
Richard Cantillon
Richard Cantillon was an Irish-French economist and author of Essai sur la Nature du Commerce en Général , a book considered by William Stanley Jevons to be the "cradle of political economy". Although little information exists on Cantillon's life, it is known that he became a successful banker and...
but also some of the greatest minds in economics, including Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
, Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
and John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
. With Adam Smith, he shared a Weltanschauung that believed in a harmonious natural world. The parallels in their canons of taxation epitomise their joint belief in natural liberty
Liberty
Liberty is a moral and political principle, or Right, that identifies the condition in which human beings are able to govern themselves, to behave according to their own free will, and take responsibility for their actions...
and equality
Equal opportunity
Equal opportunity, or equality of opportunity, is a controversial political concept; and an important informal decision-making standard without a precise definition involving fair choices within the public sphere...
. They both saw the benefits of specialisation and the division of labour
Division of labour
Division of labour is the specialisation of cooperative labour in specific, circumscribed tasks and likeroles. Historically an increasingly complex division of labour is closely associated with the growth of total output and trade, the rise of capitalism, and of the complexity of industrialisation...
. Furthermore, Smith and Petty developed labour theories of value, as did David Ricardo
David Ricardo
David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...
, Henry George
Henry George
Henry George was an American writer, politician and political economist, who was the most influential proponent of the land value tax, also known as the "single tax" on land...
, and Karl Marx in the 19th century.
Smith says nothing about Petty in The Wealth Of Nations
The Wealth of Nations
An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith...
. In his published writings, there is nothing apart for a reference in a letter to Lord Shelburne, one of Petty's aristocratic descendants (Correspondence Of Adam Smith, Letter No. 30, Glasgow Edition).
Petty continued to exercise influence. Karl Marx believed, as did Petty, that the total effort put in by the aggregate of ordinary workers represented a far greater contribution to the economy than contemporary thought recognised. This belief led Petty to conclude in his estimates that labour ranked as the greatest source of wealth in the kingdom. Marx’s conclusions were that surplus labour
Surplus labour
Surplus labour is a concept used by Karl Marx in his critique of political economy. It means labour performed in excess of the labour necessary to produce the means of livelihood of the worker . According to Marxian economics, surplus labour is usually "unpaid labour"...
was the source of all profit
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
, and that the labourer was alienated
Marx's theory of alienation
Marx's theory of alienation , as expressed in the writings of the young Karl Marx , refers to the separation of things that naturally belong together, or to put antagonism between things that are properly in harmony...
from his surplus and thus from society. Marx's low esteem of Adam Smith is mirrored in his high consideration of Petty's analysis, as witnessed by countless quotations in his major work Das Kapital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
.John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
also wrote at a time of mass discord, as unemployment was rampant and economies stagnant during the 1930s. He showed how governments could manage aggregate demand
Aggregate demand
In macroeconomics, aggregate demand is the total demand for final goods and services in the economy at a given time and price level. It is the amount of goods and services in the economy that will be purchased at all possible price levels. This is the demand for the gross domestic product of a...
to stimulate output and employment, much as Petty had done with simpler examples in the 17th century. Petty’s simple £100-through-100-hands multiplier was refined by Keynes and incorporated into his model.
Publications
- A Treatise of Taxes and Contributions (1662)
- Political Arithmetic posthum. (approx. 1676, pub. 1690)
- Verbum Sapienti posthum. (1664, pub. 1691)
- Political Anatomy of Ireland posthum. (1672, pub. 1691)
- Quantulumcunque Concerning Money posthum. (1682, pub. 1695)
External links
Some of Petty's works are available on the Archive for the History of Economic Thought websiteFor information on his family.
The National Portrait Gallery has five portraits of Sir William Petty
A criticism of William Petty's defense of religious intolerance