Before the Enlightenment

Obviously, the economic ideas of the Age of Enlightenment did not emerge out of nothing, and authors, to various degrees and on certain themes, ben­efited from prior developments made during the medieval period or during the Renaissance with, most of the time, Greek and Latin texts in the background.

Prices in Roman law and canon law

In his book Economics in Medieval Schools. Wealth, Exchange Value, Money and Usury according to the Paris Theological Tradition, Odd Langholm (1992) links the development of scholastic thought in the thirteenth and fourteenth centuries with that of the university, in particular the University of Paris. Established at the beginning of the thirteenth century, this university was renowned for its teaching of theology, philosophy, morals and ethics. It was in these different fields of knowl­edge that the questions known today as “economic” were dealt with, including those of wealth and poverty, and the relationship between private and public good.

To address these questions, the Schoolmen teaching at this university had four sources at their disposal: the writings of the evangelical and patristic tradition; canon law (Corpus iuris canonici) rearranged under the name of Decretum Gra- tiani (ca 1140); Roman law (Corpus iuris civilis, of which the Digesta and the Codex are the main subdivisions) compiled in the sixth century and revised in the thirteenth century by Bolognese and Florentine jurists (such as Acursius ca 1182- post 1260); and finally the ethical and political writings of Aristotle recently trans­lated into Latin: Nicomachean Ethics, translated in 1247 by the Franciscan Robert Grosseteste (ca 1167-1253) and his collaborators, and Politics translated in 1260 by the Dominican William of Moerbeke (1215-1286). The intellectual production of the University of Paris followed three main literary genres: exegetical commen­taries on evangelical, patristic and Aristotelian texts (sententiae), freely disputed questions on various subjects (quodlibets) and syntheses gathering the elements of doctrine (summae). Overall, for the thirteenth century, Langholm lists 250 writings, and counts 47 theologians who studied or taught in Paris. To this first academic moment, historians of scholastic thought (Langholm 1992; Todeschini [2004] 2008; Kaye 2014; Piron 2018 inter alios) add a second, Franciscan moment at the end of the thirteenth century and during the fourteenth century, which re-examined the questions of wealth and poverty, the place of the merchant in a Christian soci­ety, and the relationship between the acquisitive mind and the common good.^[22]

In the twelfth century, in his Sententiarum libri (ca 1155), Peter Lombard (ca 1095-1164), who became bishop of Paris in 1159, dealt with phenomena such as buying, selling and lending in a chapter on theft (rapina). In the following century, the Dominican Thomas Aquinas (ca 1225-1274) addressed them in two short questions on fraud (fraudulentia) and the sin of usury (peccatum usurae) in his Summa theologiae.

In terms of commercial exchanges, scholastic thought borrowed two problem­atic notions from Roman law compiled in the Corpus iuris civilis (Baldwin 1959; Kaye 2014; Lenoble 2020): the “just price” (iustum pretium) and the “common estimation” (aestimatio communis). The (just) price was usually based on an adage: “A thing is worth as much as it can be sold for” (res tantum valet quantum vendi potest). Roman law seemed to make very little use of the word valor in the sense of a market or intrinsic value of a good, but used more frequently the verb valere in the sense of “being equivalent to”, but also, more commonly, of “being allowed to”, “having force of law”. As for the word pretium, it meant a common agreement established through bargaining, or the result of a negotiation between the parties, often expressed in money (Benveniste 1969, 140; Piron 2020, 231-2).

In Roman law, the validity of a commercial exchange depended on the respect of two rules: (i) the freedom of negotiation and (ii) the agreement of the contracting parties. The free agreement of the contracting parties being sufficient to establish a just price, the words price, just price (iustum pretium) or true price (verum pretium) had a roughly equivalent meaning.

From Roman law, medieval jurists thus retained the idea of a price negotiated in common, accepted in common and considered to be just. This common estimation was a procedure by approximation allowing the judge to identify a fair exchange and to correct any price suspected of laesio enormis. Accurcius envisaged a toler­able latitude (latitudo) of 50% above or below the common price.

For their part, following the evangelical and patristic tradition and the example of Aquinas ([1266—74] 1934, q. 52, art. 2, resp.; q. 58, art. 11, resp.), medieval theologians stated more ostensibly that “justice implies equality”, that the purpose of an exchange is the equality of the contracting parties, or again that “the proper act ofjustice is nothing but giving to each one his due”, without excess or damage. Initially hostile to the idea of legal deception, which was contrary to Christian pre­cepts, they finally accepted this notion of latitude, which made it possible to affirm (i) that the price is variable and knowable by approximation and (ii) that there is a moral and legal limit to price variation.

As for the common price (pretium commune), it could mean a price established by communities of industrious merchants and tradesmen working for the com­mon good, or even by free and equal citizens exchanging in a market governed by laws aimed at justice and equality. This is the meaning Olivi ([1293-94] 2012, 94; 110; 122-4) seemed to give through the expressions “civil community” or “com­munity of sellers and buyers” - Todeschini ([2002] 2017, 158; 275) also points to the expression “community of contractors”. It could also mean the price over which the community has ultimate control in order to eliminate abuse and cupid­ity and to ensure social justice. In his writings, the Dominican Albert the Great (ca 1200-1280) tended to identify the just price with the estimation of the public place. However, the expression forum commune which he used could mean both marketplace and administrative place, and the Dominican admitted the intervention of the prince to fix a maximum price in the name of the common utility in case of scarcity (Albert 1894, 638, [post 1260] 1891, 355). Similarly, Aquinas wrote that “it belongs to the rulers of the city to determine the just measures of marketable things, taking into account the conditions of places and things. Therefore, it is not permitted to exceed these measures instituted by public authority or custom” (Aquinas [1266-74] 1934, q.77, art.2, ad 2). It is thus an external authority which acts here on the determination of price, rather than the merchants who are known for their industria, that is, their expertise, their knowledge of the market and their judgement made in good faith.

Value and price

Translated into Latin, the Nicomachean Ethics and the Politics were the subject of several commentaries. Albert first commented on the Ethics around 1250 and then a second time after 1260 - followed in 1269 by his pupil, Aquinas. The idea was put forth that market activity had a necessary civil function for the community and should be recognised for all ordinary goods, except for spiritual goods. Aquinas presented trade and merchants as a necessary evil: an evil because this activity is morally hazardous - the desire to buy as cheaply as possible and sell at the high­est possible price is not natural, but vicious - and because the existence of too many merchants would corrupt the city; a necessity because the supply of the city depended on them. Henry of Ghent (1217-1293) - who taught at the University of Paris from 1275 until his death - pointed to the same defect in trade, but he recog­nised an essential quality of merchants, industria, which can justify a reward and thus the resale of goods at a slightly higher price.^[25] Although necessary, exchange must remain useful to the community, aiming to satisfy basic needs and not to excite cupidity.

Unlike Roman law, the Nicomachean Ethics had the advantage for scholastic theologians of presenting exchange not as an exercise in deception or cupidity but as a rational system aimed at justice and equality, expressible in mathematical terms (Kaye 2014, 88). Indeed, Aristotle argued that all exchange should take place according to the criterion of equality and that a rational procedure should lead the exchangers to a point of equality in their transactions (ισοτης), considered not only as the middle ground between two extreme positions (Aristotle 1934, 271; 277) but also as a condition for the cohesion and preservation of the community. He thus distinguished between two forms of justice, called “corrective” and “distributive”. The first made it possible to achieve or restore equality arithmetically, by addi­tion or subtraction, with a judge taking away the excess received by one party and giving it to the other party who had overpaid, while the second implemented pro­portional equalisation (κατd την dναλογιαν ισον, Aristotle 1934, 282), called geo­metric, by multiplication or division, taking into account the “quality” and “merit” of the persons (dξiα, Aristotle 1934, 268).

To these two forms, Aristotle added a third, which he considered applicable to exchange relations: “reciprocity”, a sort of mixture of the two previous ones. Since the works (εργα) exchanged were by nature different in quantity and quality, and since each had its own unit of measurement, exchange could not consist in equat­ing one unit of one work with one unit of another work - this would have implied that the works and their producers were of identical quality. Instead, exchange consisted in equalising “different and unequal” arts (Aristotle 1934, 283) by allo­cating to the producers shares of works in proportion to their quality and merit. The exchange could not take place according to arithmetical equality because the producers were different, and what was needed was a proportion of objects that equalised their situation.

Aristotle also insisted on the notion of need as the basis of exchange. Works were made comparable through money, a common measure making exchange possible, assuming of course that it was stable (Aristotle 1934, 287). As money substituted for need as a measure (1934, 286), equality was achieved when both exchangers were satisfied with the proportion of objects obtained.^[26] [27]

Another point, important for later developments, deserves to be stressed. In Book V of the Ethics, Aristotle used a vocabulary that did not express the idea of an essence contained in the goods intended for exchange and which would have made them commensurable. For him, the only idea that mattered was of a ratio or pro­portion equalising those who exchange. In his first commentary, however, Albert ([1250] 1968, 343) used the expression valet melius (the good is worth more), which is a neologism taken from the vocabulary of civil law, and made frequent use of the word valor. A notable development can thus be seen here: unlike Aristotle, Albert seeks not only to equalise the situations of two people involved in an exchange but also to equalise what we have subsequently agreed to call the value of the exchanged goods. Value appears here as a relation between the goods themselves, a quality inherent in the goods and pre-existing the exchange, and not only a relation between those who exchange that depends on their quality or their social merit.

Following Aristotle, Albert defined equality in exchange as a proportional equal­isation of works, but he made two readings of the Aristotelian exchange. In his first commentary, taking the example of a house builder and a shoemaker exchanging their respective works (the house and the pair of shoes), he wrote, “The house builder surpasses the shoemaker in the labour and expenses [in labore et expensis] that he puts into his work, as much as the house surpasses the shoe” (Albert [1250] 1968, 343). With the word value, Albert thus linked the works to the labour and the expenses incurred to produce them and bring them to market. Since the house builder incurred more labour and expenses than the shoemaker, the exchange is just and the two agents are brought to equality when their goods equalise according to the efforts and expenses. “If the house builder had only received one pair of shoes for the house, he would never have made a house” (Albert ([1250] 1968, 343). In the second commentary, in the 1260s, Albert wrote that an equal exchange is obtained by comparing needs (secundum indigentiam)² (Albert [post 1260] 1891, 356). The second commentary does not invalidate the first, but makes mutual need the cause of exchange: “For the city is not maintained if the needs of the citizens are not supplied” (Albert [post 1260] 1891, 355). Thus, in these comments, two criteria of justice appear: a correct remuneration of labour and expenses, and an estimation of the goods according to the need for them. Need is itself associated with two notions: usage (usus) and social utility (utilitas). Albert used the expres­sions “needs of the citizens” and “needs of the city” (Albert [post 1260] 1891, 355; 358), and stressed that works are “appreciable according to whether they come into use and utility to the community” (Albert [1250] 1968, 344).

In his commentary on the Nicomachean Ethics written in the years 1269-70, Aquinas, following Albert, adopted the expression in labore et expensis and made need (indigentia) the measure of all things:^[28]

But this unit which measures everything... is need.......... For things are

not appreciated according to the dignity of their nature; otherwise a mouse, which is a sentient animal, would be of higher price than a pearl, which is an inanimate thing; but prices are imposed on things according to men’s needs for their use [usum].

(Aquinas [ca 1269] 1969, 294-5)

Finally, in his Tractatus de contractibus, Olivi distinguished between “absolute value” and “venal value”. Beginning his treatise by examining the question of value (valor) - the capacity of a commodity to receive a price - he distinguished, like Aquinas, between the natural dignity of things, which he calls “absolute value” (secundum absolutum valorem), and the “venal value” based on social utility (in repectu ad nostrum usum et utilitatem) (Olivi [1293-94] 2012, 108). In exchange, things are not equivalent according to their absolute or natural value, but according to the use made of them and the utility they provide. The market value of a thing is measured according to three criteria: its real properties, which make it more or less useful; the greater or lesser scarcity and difficulty of obtaining it; and the greater or lesser pleasure it gives to the individual consumer and the pleasure of a satisfied will.

Usury and interest

Lending was examined in the same way as buying and selling, or renting out: it must result in an equality between the parties. Like his co-religionists, Olivi took as his starting point the adage of Luke the Evangelist (lending without expect­ing anything in return), which sums up the initial Christian position which led to the condemnation of what was called “usury”. Derived from Roman law (Digesta 16.2.11), the term usury meant successively the use and enjoyment of a property, then the price paid for the use of a property by a person who does not own it, and finally an excess beyond the amount of the property or money lent, claimed by the lender from the borrower. Roman law also distinguished between two types of contract, the foenus, condemned by Christian morality, which included an interest agreement (in the current sense of the term interest), and the mutuum, which was a simple transfer of the ownership of a good, involving the restitution of a good identical in quantity and quality and nothing more.

The Church always condemned usury and the merchants who practised it on the grounds that it was a negation of charity. With the development of the mon­etary economy, the condemnation became more severe. Equated with theft, and therefore a sin, by Peter Lombard in the twelfth century, its prohibition became universal with the Second Lateran Council (1139) and in the Decretum Gratiani (causa 14, q.3, c.2 and 3): “Everything demanded beyond what is given is usury”, “everything that comes from the capital [sors] is usury.” The official canon was thus set, condemning not only the gain exceeding the initial amount of the loan but also the expectation of such a gain. The grievances were clearly established: the sin of cupidity, the sin of injustice, the theft of time that belongs only to God, the unnatural act of believing that money is fruitful, etc.

A change occurred in the thirteenth century: theologians sought to distinguish more clearly between merchants, who were good Christians - professionals in exchange, experts in price, contributing through their activities and investments to the common good - and usurers who diverted their wealth from the common good by hoarding it, withdrawing it from circulation (Todeschini 2005, 155; 180-81). Among the gains demanded in addition to the sum loaned, it was therefore neces­sary to distinguish between those that were licit or illicit. Theologians, especially Franciscans, had no intention of absolving the sin of usury, nor did they imag­ine that the usurer serves the common good. On the other hand, they intended to demonstrate the possibility of Christian wealth and a marketplace governed by the criterion of common utility. A double movement took place. While the condemna­tion of usury was maintained, certain gains paid to lenders in addition to the loaned sums were justified: they were considered as compensation, or penalties, and called by a term taken from Roman law, interesse (that is, reparation of a damage). More­over, while the usurious loan contract was abhorred, the contract of association between a merchant who invested in the business of another merchant, thus form­ing a company with risks shared by both, was not, nor was the census between a landowner and a cultivator, or even the currency exchange contract, although the latter was often suspected of concealing usury.

In order not to weaken the doctrine of usury, the justification of interest (inter- esse) as a licit excess over the just price was presented by theologians as an extrin­sic title to interest which was not part of the contract itself but was caused by external circumstances. Five circumstances were then disputed: damnum emergens (compensation for damage created by delayed repayment); lucrum cessans (com­pensation for a fund which could have been more profitable if it had been placed in another business);periculum sortis (remuneration for the risk of loss of the fund advanced); ratio incertudinis (provision against the threat of uncertainty) and sti- pendium laboris (remuneration for an industria, an expertise and labour). The legal payment of interest under these five circumstances shows that the contract between a lender and a borrower has the same characteristics as a purchase/sale contract: it must be established on an equality, not arithmetical, but proportional, and the excess over the sum loaned is considered as a means to recover this equality (Kaye 2014, 33). Finally, it should be noted that, in all this reasoning, only the person of the lender is concerned: the use made by the borrower of the borrowed sum is never taken into account to justify any increment paid to the lender (contrary to what later theorists, such as Turgot, for example, would do).

Not all theologians accepted these five derogations. For example, Aquinas did not approve of an indemnity covering a hypothetical loss of gain (lucrum cessans) because it boils down to selling something probable, without real existence. He also adopted an argument from the Decretum Gratiani and Aristotle that allowed him to distinguish between a contract of loan and a contract of lease. Unlike the latter where the ownership of the thing is retained by its owner, the owner of the money - which is included in the so-called “fungible and consumable things” (res fungibilis etprimo usu consumptibilis)^{[29] [30] - by lending it, transfers his property right to the borrower and thus cannot charge a price for the use of a thing he no longer possesses (Aquinas [1266-74] 1934, I, q.78, art.1, resp.).}

By comparison, Olivi argued for a reduction in the domain of usury. Thus, to the question: “Can one buy a future good cheaper than a present good?”, the Franciscan answered positively. There is not necessarily usury in this case, because buying a future good that does not yet exist - that is to say, buying a future right to that good - is not buying the good itself and really possessing it. The future good is virtual, unlike the present good, so the certainty of possessing it in the future is less than the certainty of actually possessing it. Its price will be lower depending on the degree of uncertainty and the probability of owning it. To buy in anticipation the future harvest of a field that may be exposed to bad weather is therefore not to buy the time that belongs only to God and is “common to all”, but the “time proper to the thing itself’ (Olivi [1293-94] 2012, 204). Moreover, on the question of whether compensation for a shortfall (loss of gain, lucrum cessans) could be claimed, Olivi considered that the renunciation by the lender of a probable gain is a circumstance that can be stipulated in a contract and give rise to legitimate reparation or interest: on the condition, however, that the lender is lending from his “capital” - and not every fund of money or goods is “capital for trade” (capitale ad mercandum, [1293-94] 2012, 222). Olivi clearly used the word capitale²² in the sense of a fund invested by the lender, “immediately” or “mediately”, in a commercial affair aimed at profitability and thus including a probable gain - that is, a fund which must “not only yield its mere value but also this additional value” (Olivi [1293-94] 2012, 232). Unlike Aquinas, Olivi thus admitted that a lender can claim interest (interesse lucri) for the compensation of the probable gain he could have made by investing his capital in a commercial venture.^[31] This gain, which the lender deprives himself of, is not knowable with certainty, but its probable magnitude can be estimated and measured by a quantity of money, according to the common estimation and within a certain latitude. It can therefore be lawfully bought and sold at this price ([1293-94] 2012, 216). The price of this probable gain is determined by the merchants themselves, because their experience of uncertainty and risk in commercial affairs has taught them to rationally estimate the value of probable things.

Money

Invented to facilitate exchanges, measure things and make them comparable, money has an eminently political role: it guarantees the life of the city. However, as Olivi pointed out in De usupaupere ([post 1279-prima 1283] 1992), it is not, or should not be, anybody’s property: as soon as it is received, it must circulate. As soon as money leaves its owner, it no longer belongs to him, it is destroyed by the use made of it and is transformed into something else comparable. All men, including those who take a vow of poverty like the Franciscans, can therefore enjoy money for its common use, but they cannot accumulate it, for this would make it “immo­bile”, give it an owner and attribute an intrinsic value to it. On the contrary, it must be circulated and considered as a conventional measure (Todeschini [2004] 2008, 135-42). Olivi and the Franciscans therefore distinguished the use of money from its ownership and were neither against its (moderate) use nor against the trades that circulated it. If properly controlled, it is conducive to the civil community.

Things took on another, more political dimension as time went by and espe­cially during the Hundred Years’ War, with the intervention of Nicole (or Nicolas) Oresme (ca 1320-1382). Oresme was a theologian, philosopher and mathemati­cian, and wrote on physics and astronomy. He was a friend and then counsellor of Charles V (Charles the Wise), and in 1377 he became bishop of Lisieux in Nor­mandy. He reacted against the great number of monetary alterations^[32] - through arbitrary changes in the relative mint prices of gold and silver, for example, or through changes in the definition of the money of account (the “livre tournois”), or else through recoinage - which were made in order to finance the wars. He did this in a text written in Latin around 1360 (the date and precise circumstances are unknown), De moneta. Tractatus de origine, natura, jure, et mutacionibus monetarum - of which some very unreliable French translations and editions (Traite de la premiere invention des monnaies) were made after Oresme’s death.^[33] Mainly basing his analysis on Aristotle, De Moneta is a clear statement of a scholastic moral and political doctrine of money. The core of Oresme’s ideas later became part and parcel of monetary orthodoxy, that is, of the widespread view that the political power should not manipulate its value.

Oresme’s aim was to prove that alterations of the coinage and of the defini­tion of the unit of account “is against the king’s honour and injures his poster­ity” (Oresme [ca 1360] 1956, 47), provokes the ruin of the kingdom and turns the monarchy into a tyranny. An inquiry into the nature of money was thus in order and Oresme - who translated, inter alia, Aristotle’s Nicomachean Ethics and Politics - refers to Aristotle’s developments, and in particular his famous analysis of the invention of money due to the difficulties raised by barter. Money, an arti­ficial wealth, was established for the common good of the community: it conse­quently belongs to the community, not to the Prince.

Although it is the duty of the prince to put his stamp on the money for the common good, he is not the... owner of the money current in his prin­cipality. For money is a balancing instrument for the exchange of natural wealth.... It is therefore the property of those who possess such wealth. For if a man gives bread or bodily labour in exchange for money, the money he receives is as much his as the bread or bodily labour of which he (unless he were a slave) was free to dispose.

(Oresme [ca 1360] 1956, 10)

This is a natural law: the ownership of money cannot thus “be transferred to the Prince. Neither the community nor anyone else has the right to misuse or unlaw­fully use his own property” (Oresme [ca 1360] 1956, 37). This is the reason why the Prince cannot make monetary alterations “unless perhaps under eminent neces­sity or for the obvious advantage of the whole community” - something which is exceptional - because all contracts are denominated in money of account and the latter should be stable. “This is indicated by the fact that pensions and yearly rents are reckoned according to the value of money, i.e. in a certain number of pounds or shillings. From which it is clear that a change in money should never be made” (Oresme [ca 1360] 1956, 13).

Most monetary changes, however, are not made for the good of the community but only in the Prince’s personal interest. The consequences of these unjustified alterations are dramatic: (i) they bring unlawful profit to the Prince and impoverish the subjects; (ii) they generate unwanted transfers of property, not only between the subjects and the Prince but also between the subjects themselves - the most fre­quent alterations, the so-called “augmentations”, benefiting debtors to the detriment of creditors; (iii) they increase uncertainty in economic and personal relationships. Most of the time, therefore, monetary alterations constitute grave ethical and politi­cal misconduct. From an ethical point of view, they are a rebellion against divine laws. The profit made in this “monstrous” way by the Prince is condemned because money, which is a sterile thing, cannot generate money: “Therefore when profit is made from money, not by laying it out in the purchase of natural wealth, its proper and natural use,... such profit is vile and unnatural” (Oresme [ca 1360] 1956, 25). This attitude is deemed equivalent to usury, but the (deadly) sin thus committed is actually worse than that of usury because a monetary alteration is (i) unilateral (there is no consent by the members of the community), (ii) without any utility for the subjects, and, moreover, (iii) made on a large scale (the whole community).

In so far then as he receives more money than he gives, against and beyond the natural use of money, such gain is equivalent to usury; but is worse than usury because it is less voluntary and more against the will of his subjects, incapable of profiting them, and utterly unnecessary. And since the usurer’s interest is not so excessive, or so generally injurious to the many, as this impost, levied tyrannically and fraudulently, against the interest and against the will of the whole community, I doubt whether it should not rather be termed robbery with violence or fraudulent extortion.

(Oresme [ca 1360] 1956, 28)

Alterations are also a form of political misconduct because they undermine the social order and transform the Prince into a tyrant. The profit of the Prince is the community’s loss: through repeated money alterations “the Prince would be at length able to draw to himself almost all the money or riches of his subjects and reduce them to slavery. And this would be tyrannical, indeed true and absolute tyr­anny” (Oresme [ca 1360] 1956, 24-5). With this clear-cut conclusion: “It has thus been proved that a dominion which is turned from a kingdom to a tyranny is bound to have a speedy end” (Oresme [ca 1360] 1956, 46).

Controversies on the alleged right of the Prince to define and alter money at any time he sees fit lasted for centuries during the Ancien Regime, and usually set lawyers favourable to the absolute monarchy against those who rather supported the interest of the subjects possibly assembled in the Estates-General of the realm - significantly enough, the Estates-General was not convened by the kings between 1614 and 1789, this last meeting marking the end of the absolute monarchy. But progressively, with the development of monetary theory, the question of money became one of political economy.

An important step in this direction was the reflection on the influence of money on prices. It is of course best exemplified by the celebrated controversy between Jehan Cherruyt de Malestroict,^[34] an officer in the Cour des Monnaies established in 1552, and Jean Bodin (ca 1530-1596), a lawyer and political philosopher, in the context of what was called the great inflation of the sixteenth century. The former authored Les Paradoxes du seigneur de Malestroict, conseiller du Roi et maistre ordinaire de ses comptes, sur le fait des monnaies^[35] in 1566 and, a year later, pre­sented his lesser known Memoires sur le faict des monnoye to the Private Council of the king (Malestroict [1567] 1937). The latter published the first edition of his reply, La response de Maistre lean Bodin advocat en la Cour au paradoxe de mon­sieur de Malestroict, touchant l'encherissement de toutes choses, & le moyen d'y remedier, in 1568. He included his main ideas in his opus magnum, Les six livres de la Republique (1576), and finally published a second, revised edition of the Response in 1578. One major concern of the debate was to take seriously the wide­spread complaints that the prices of all commodities and services had constantly increased in the recent past. The controversy also involved some other authors.^[36] In a nutshell, if the questions of sovereignty and the nature of the monetary system are left aside, the main theme was a reflection on the respective roles played by the money of account and the circulating medium (coins of all denominations) in the variation of prices.

Malestroict presented two “paradoxes”. The first simply denies the reality of inflation: “In France, people wrongfully complain about the rise in the prices of all things, because nothing has become more expensive there for three hundred years” (Malestroict [1566] 1934, 58). The second, rather enigmatically, states that “There is much to lose on one ecu or any other gold or silver coin, even though one gives it for the same price as one receives it” (Malestroict [1566] 1934, 58). In fact, in both cases, Malestroict referred to the definition of the unit of account. Taking some examples of commodities - and among them the celebrated example of one ell of velvet - he admitted that over a long period of time their prices increased in terms of livres, that is, units of account. But comparing their prices in terms of the medium of exchange, namely coins (that is, the quantities of precious metals con­tained in those coins), he stated that nothing was more expensive because, for the same commodities, the same quantities of gold or silver were given in exchange. The widespread belief that everything was more expensive was thus an illusion, based on prices expressed in livres: they were effectively higher, but this was just because the definition of the livre had changed - successive monetary alterations had diminished the definition of the unit of account in terms of precious metals. “So, the claim that the price of everything has nowadays increased is just a vain opinion or an image of account [une image de compte] without any effect or sub­stance” (Malestroict [1566] 1934, 60). As for the second paradox, it simply states that monetary alterations are not neutral and possess real effects, as Oresme had already emphasised. As contracts - whether commercial or specifying wages, feu­dal dues or any kind of rent - are expressed in terms of livres, any diminution in the metallic definition of the unit of account provokes a transfer of wealth from creditors to debtors.

Bodin, in his 1568 Response, mainly dealt with prices expressed in terms of the circulating medium, that is, coins, and stated the reality of inflation. He first criticised Malestroict on the choice of the years chosen for the comparison of prices (for example, the metallic content of coins had not been constant over the years) and of the commodities whose prices were compared over time. In modern terms, he questioned the choice of the reference years and indicators.^[37] He then listed four causes of inflation. “The first and main cause (that nobody has stressed until now) is the abundance of gold and silver that is greater today in this kingdom than four hundred years ago”, an abundance mainly due to foreign trade. The second cause was “the existence of monopolies” (that is, any kind of coalition made with the view of raising prices), the third was the shortages which could arise in some mar­kets because of exports and waste, and the fourth was fashion: “the pleasure of the kings and noblemen [grands seigneurs], which increases the price of the things they like” (Bodin [1568] 1578, 84). In the second edition, a fifth cause was added, the debasement of monies, together with a plea in favour of a stable, clear and almost pure metallic content of coins. Bodin’s reasoning was thus twofold. Based on the idea that prices are determined by supply and demand and that precious metals are in this respect commodities like any other, he stressed the rise of all prices in coins, firstly due to the depreciation of the precious metals because of their sudden abun­dance, and secondly sometimes due to the diminution of the metallic content of the various kinds of circulating medium. He also noted the deformation of the structure of relative prices due to the other causes (export, fashion and so on). Finally, he remarked that the abundance of precious metals also had real positive effects on economic activity.

During the entire period of monetary troubles, many reflections on money devel­oped along Oresme and Bodin’s lines,^[38] in favour of the stability of money and against all monetary alterations, thus opposing the absolutist views of the monar­chy. The flow of publications lasted approximately until the monetary stabilisation which followed the collapse of Law’s system. Among these publications were Le denier royal. Traicte curieux de l'or et de l'argent, by Scipion de Gramont (1620), and Traicte des monnaies (1621, republished in 1709), by Henry Poullain,^[39] which is to be noted especially because he took international trade and the exchange rates between currencies into account. Another notable text of the time was that of Henri Francois d’Aguesseau (1668-1751), a leading lawyer, for a time Minister of Jus­tice during the Regency of Philippe d’Orleans. An opponent of John Law’s pro­jects, he had to resign and, most probably in 1718, wrote his Considerations sur les monnaies, published posthumously in 1777.

Trade and peace

During the late sixteenth century and the first half of the 17th, the literature on trade and manufactures was not very original and conveyed no new ideas in political economy: it dealt essentially with economic policy, as was the case with Barthelemy de Laffemas (1545-1612) and Montchrestien, a so-called “mercan­tilist” approach that was to be rejected by most authors during the Enlighten­ment.^[40] However, one theme is worth noting because, in a different context, it gave rise to the “doux commerce” thesis illustrated particularly by Montesquieu. This was the theme of “perpetual peace”, especially developed during the long periods of war: the Wars of Religion, the Thirty Years’ War and the unceasing wars of Louis XIV, for example. A few writings included economic develop­ments, in opposition to the bellicose nationalistic rhetoric of the time directed against foreigners and using trade as a weapon in favour of the international political power of the king.

An interesting example of such a discourse on peace can be found in Bodin dur­ing the Wars of Religion. Some people claimed that the country was so rich that it could be self-sufficient and dispense with any foreign exchange: this was not true, Bodin stressed in his Response:

But because this cannot enter into the minds of those who are concerned only with gain, even though it is sordid and dishonest, God by his admirable pru­dence has given good order to it: for he has so distributed his graces that there is no country in the world so fertile [plantureux] that is not lacking in many things. This, God seems to have done in order to keep all the subjects of his republic in friendship, or at least to prevent them from waging war against each other for a long time, having always to do with each other.

(Bodin [1568] 1578, 120)

And even if it were true, France should continue to trade with foreigners - and even give them goods for free - in order to communicate and establish friendly relation­ships with them (Bodin [1568] 1578, 118).

Another notable intervention was that of Emeric Cruce (ca 1590-1648)^[41] who, in 1623, during the Thirty Years’ War, published Le nouveau Cynee ou Discours des occasions et moyens d'establir une paix generalle, & la liberte du

commerce par tout le monde.^[42] Opposing the doctrine of the balance of powers in Europe - in his view a doctrine leading to war - he proposed that the European and also non-European states should participate in an institution which would be located in a neutral place, Venice, and to which each country would appoint an ambassador. The main aim of this institution would be to arbitrate to settle dis­putes between countries and thus avoid conflicts. In Cruce’s approach, economic activities were also to be encouraged (they keep men busy and avoid idleness, which is a source of unrests and wars). Free trade, both domestic and interna­tional, was advocated. Domestic and foreign merchants should be treated in the same way, and foreign trade, establishing a greater interdependence between nations, lessens the occasions for conflict. “What a pleasure it would be, to see men go here and there freely, and mix together without any hindrance of country, ceremonies, or other such like differences, as if the earth were as it really is, a city common to all” ([1623] 1909, 66). The figure of the merchant is opposed to that of the soldier:

[T]here is no occupation to compare in utility with that of the merchant who legitimately increases his resources by the expenditure of his labour and often at the peril of his life, without injuring or offending anyone: in which he is more worthy of praise than the soldier whose advancement depends upon the spoil and destruction of others.

([1623] 1909, 58)

To finance the State, and also to moderate indirect taxes and duties, the king him­self could engage in trade and make profits. This was of course a bold idea at a time when noblemen were extremely reluctant to trade because they could lose their status through derogation (“derogeance”) - a tradition regularly questioned, especially in the eighteenth century during the controversy over the “noblesse com- mer^ante” provoked by the publication in 1756 of La noblesse commerςante by Gabriel-Franςois Coyer (1707-1782).^[43]