Authors Forum: An Essay on Economic Theory - An English Translation of Richard Cantillon’s "Essai sur la Nature du Commerce en General"

0:00There was another book that I missed. It had to be added at the last minute. This is even more embarrassing because it was my book. And it's called an essay on economic theory. And it's a new English translation of Richard Cantillon's book, an essay on the nature of commerce in general, which Peter mentioned earlier. Murray Rothbard brought Richard Cantillon to my attention, as well as one of my professors, Robert Hebert, in graduate school. In the late 1990s, I was asked to write an essay on Cantillon for the book, 15 Great Austrian Economists. And basically what I did is I took Rothbard's work on Cantillon, all of his references, and developed an essay that shows that Cantillon was the real originator of economic theory.

0:54And in doing that research, I came up with a lot of questions that existed in the literature, a lot of unanswered questions regarding Cantillon's policy views, in particular, as well as his theory of value, and also some interesting questions that remained about who he influenced in the history of economic thought. And so I was basically doing research following Rothbard's hunches Integrating Economic History to try to answer this question, in some cases retranslating passages in Cantillon, and through all that effort I realized that, you know, someone really needs to do a new translation of Cantillon.

1:41And then I talked to my professor Robert Abear about that and he concurred, he said, yes, a new translation is definitely needed and he mentioned other people, historians of economic thought, who also thought that there should be a new translation. The only problem was is I don't speak French, which was the original, the language that it was originally written in. But at a Mises Institute conference I met Dr. Chantelle Saussier, who has a degree in French studies Studies, and she agreed to help me co-author a new translation of Cantillon's essay. And so we used a variety of sources, including the original French edition, the Higgs translation, the 1952 edition in French, the German translation, which was conducted by Friedrich Hayek and and His Wife, and it only took us about six years to do it.

2:45It was a lot more work than I ever would have imagined trying to get a correct interpretation of Cantillon's French into American English. So basically what we accomplished was we Americanized the text. We provided footnotes on all the people, places, history, the currencies that are in there so that as you're reading it, you don't have to drop back into the 18th century to try to figure out what he's talking about. We added section titles. The book appears in three different sections. We modernized the chapter titles. We provided abstracts for each of the chapters so that you know pretty much what you're going to find in a chapter before you actually start reading it.

3:33We provided an index, and I think one of the hardest things was to clarify the meaning of his text. Because Cantillon is writing this in a day and age when there is no economic theory. So he's making up all of the terms as he goes along. And so we would battle over email between myself and Chantal and various consultants that we used and that helped us to try to clarify the meaning of a particular paragraph. And it might take an entire week of going back and forth on something like that. What do you get out of a project like this? Well, it's a tremendous book. It's the first book on economic theory, and now I think it's pretty crystal clear about what its actual content is.

4:32In the first section of the book, where the microeconomics is discussed, on page 1, chapter 1, he defines what wealth is. The mercantilists thought it was money. Cantillon shows, no, it's really the ability to consume, which is what we have to this day. Chapter 2, he shows that society is based on property rights. Chapter 3, in subsequent chapters, he develops a theory of economic geography and urban economics. He goes on to develop labor economics and wage determination. And then he has a chapter, what he called intrinsic value, but what we actually found was our modern understanding of opportunity cost.

5:20and you can actually see examples in there of opportunity cost, of apprenticeship in the 18th century is very, very similar to the examples in modern textbooks today about students going to college. He develops a circular flow model, mutual interdependence between capital and labor, entrepreneurship, a model of the isolated estate and consumer sovereignty where he basically describes what actually goes on in Adam Smith's Invisible Hand. He gives us a population theory that accurately predicts the population of the United States in 1920.

6:07He shows that the wealth of nations depends on saving and labor productivity. And in the last chapter, in the first section, he gives what essentially is Carl Menger's theory of the origin of money. That's just the first section. Section two is on money and interest. Part three is on international trade and the business cycle, where he lays out a proto-theory of the Austrian theory of the business cycle. So it has just about everything in there. It's short, it's fairly simple, and I encourage everyone to take a look at the origins of economic theory. Thank you very much.