European Enlightenment

The Enlightenment, also known as the Age of Reason, was a crucial period in European history, which began (according to some authors) in the late seventeenth century and was a dominant movement during the eighteenth century. It was a major period of development in all the sciences and in philosophy, and assumed different aspects in different countries. For instance, it has been characterized as being more areligious or anti-religious in France than in Scotland, and some recent discussion has centred on drawing a distinction between the movement’s ‘radical’ and ‘moderate’ wings. However, it is generally considered as a period characterized by the victory of human reason over the forces of obscurantism and tradition. As the German philosopher Immanuel Kant wrote in 1784, in his essay entitled ‘What is Enlightenment?’: ‘Enlightenment is man’s release from his self-incurred tutelage. Tutelage is man’s inability to make use of his understanding without direction from another. Self-incurred is this tutelage when its cause lies not in lack of reason but in lack of resolution and courage to use it without direction from another. Sapere aude! “Have courage to use your own reason!”—that is the motto of enlightenment.’ This intellectual groundswell found its expression in a work which became well known throughout Europe: the celebrated Encyclopédie, ou Dictionnaire raisonné des sciences, des arts et des métiers, edited by Denis Diderot and Jean le Rond d’Alembert between 1751 and 1772.

During this period, economic thought witnessed dramatic developments, and (from the viewpoint of most contemporary authors) eventually emerged as a new discipline—political economy, or economic science, which was distinct from moral and political philosophy, in which economic themes had been embedded for centuries. Here also, developments took a slightly different course in different national contexts, with intellectual output, in particular, not existing in equal abundance and strength in all countries. Traditionally, as regards political economy, three main currents of the Enlightenment can be distinguished: the French Enlightenment, which included authors such as Pierre Le Pesant de Boisguilbert, Charles-Louis de Montesquieu, Étienne Bonnot de Condillac, François Quesnay and the Physiocrats, Anne-Robert-Jacques Turgot, Antoine-Nicolas Caritat de Condorcet (and, by extension, John Law and Richard Cantillon); the Scottish Enlightenment, with Francis Hutcheson, David Hume, James Steuart, Adam Ferguson and Adam Smith; and the Italian Enlightenment, with two different strands: the so-called Naples school, with Antonio Genovesi and Ferdinando Galiani, and the Milan school with Pietro Verri and Cesare Beccaria.

Along with the rise of commercial exchanges—both domestic and international—other phenomena which influenced thinkers at this time included the first major financial ‘bubbles’, which occurred in the United Kingdom, the Netherlands and France, accompanying the development of those countries’ national monetary and financial systems. The reflections of the so-called Mercantilist authors were further expanded upon as regards the role and influence of money, the rate of interest, the rise of manufactures, free trade and protectionism, the balance of trade, public expenditure, public debt and taxation, employment and poverty. This formed a powerful current of thought—the science of commerce, by no means homogeneous, which did not deny the State the right to intervene in markets in order to harmonise public and private interests, which were not supposed a priori to converge. This is the so-called artificial harmony of interests. Josiah Child, Law, Cantillon, Genovesi, Galiani, Verri, Steuart, and even, on some aspects, Hume, are among the most well-known names to feature in a vast and complex current of thought.

But the Enlightenment period also saw the emergence and decisive development of another current of thought, which expounded a radical free trade, or laissez-faire, and had assumed intellectual dominance by the end of the eighteenth century. In a nutshell—and disregarding the important differences which exist between the authors, from Boisguilbert to Quesnay, Turgot and Smith, the economy was conceived as a system of interdependent markets in which, under a regime of free competition, self-interested economic agents realise public prosperity as an unintended consequence of their actions in those markets. Thanks to free competition, a natural harmony of interests was supposed to prevail in the economy. The State was not allowed to intervene in economic affairs except to provide what we would now term the public goods of police, justice and defence, as well as, possibly, merit goods, and to deal with the problems posed by externalities. This approach relies heavily on theories of value and/or of equilibrium prices, in which money plays almost no role.

Among the many other remarkable aspects of the emergence of political economy—and of the various critiques it attracted from different quarters—it should be noted that it contributed to a formalisation of economic ideas, either through the increasing use of schemes and tables depicting the working of the economy as a whole—the Tableau économique of the Physiocrats being the most celebrated example—or through its mathematisation. This was attempted principally by Daniel Bernoulli in St Petersburg; by Beccaria and Verri in Milan; and, in the late eighteenth century, by Charles-François de Bicquilley and Nicolas-François Canard in France. While the attempts of Bernoulli and Beccaria were pertinent and groundbreaking, those of Verri, Bicquilley and Canard were seriously flawed: but all opened the door to many subsequent nineteenth-century attempts at a further formalisation of economic discourse.

Suggested readings: The Enlightenment period has left us with a wealth of literature from all parts of Europe and—in its last decades—from the United States of America. However, the greatest numbers of works came out of Scotland and, above all, France. A useful overview of discussions is to be found in Eighteenth Century Economics, by Peter Groenewegen.

In France, the movement started with Boisguilbert and gathered pace as lively controversies arose, lasting until the French Revolution. Recommended reading includes The Foundations of Laissez-faire: The Economics of Pierre de Boisguilbert, by Gilbert Faccarello, and the same author’s article entitled ‘The enigmatic Mr Graslin. A Rousseauist bedrock for classical economics?’. Other suggestions include Richard Cantillon, Pioneer of Economic Theory, by Anthony Brewer, as well as ‘Decline and progress: the economic agent in Condillac’s theory of history', by Arnaud Orain. Also interesting are the essays collected in Studies in the History of French Political Economy: From Bodin to Walras, edited by Faccarello. Some of the readings detailed under Public Economics would also be relevant to the Enlightenment period.

As regards Scotland, while discussions of authors such as Steuart are available (for example, it would be useful to read ‘The trade wind, the statesman and the system of commerce: Sir James Steuart’s vision of political economy', by Robert Urquhart, and the essays published in The Economics of James Steuart, edited by Ramon Tortajada), literature on the history of economic thought has focused mainly on Hume and, above all, Smith. For an introduction to Hume’s thinking, you could read some of the essays collected in David Hume’s Political Economy, edited by Carl Wennerlind and Margaret Schabas, or in David Hume, edited by Richard Whatmore and Knud Haakonssen. Some aspects of Smith’s thought are analysed in ‘The Scottish Tradition in Economics and the Role of Common Sense in Adam Smith's Thought', by Flavio Comim, and Adam Smith's Discourse: Canonicity, Commerce, and Conscience, by Vivienne Brown, is also a useful source. Most aspects of Smith’s theories of political economy are presented systematically in Tony Aspromourgos’s book The Science of Wealth: Adam Smith and the Framing of Political Economy. A Critical Bibliography of Adam Smith (edited by Keith Tribe with Hiroshi Mizuta) contains essays on the reception of Smith’s works in various countries. The Adam Smith Review, sponsored by the International Adam Smith Society, is also of great interest for those wishing to study the work of Smith in greater detail.