Domestic and Foreign Trade and the State

The works on trade published from the end of the sixteenth century onwards prima­rily relate to foreign trade, considered to be the true way of increasing the wealth of a nation.

Thus the exercise of traffic, which represents a large part of political action, has always been practised between the peoples, who have thriven with glory and power. And now more dili­gently than ever by those who seek their strength and enlargement. It is also the shortest way to become rich. And through wealth, to rise to the height of honour and authority. (Montchretien 1615 [1999]: 288-9)

The same author wrote a little later that if domestic trade is “more secure, more common, more constant, and universally more useful”, foreign trade is in return “larger, more famous, more hazardous, both in loss or in profit” (ibid.: 291). The idea that domestic trade looks after the preservation of a country’s economy, while foreign trade (or war) looks after its expansion runs through the French literature (for example, Colbert 1663 [2000]: 101; Richelieu 1668 [1995]: 333; and later Melon 1735: 92; Forbonnais 1758 I: 1-2).

This view recurs in the English writers (see Steiner 1992: 111-16). They also frequently used other antinomies which, although not strictly equivalent, clarified and reinforced the distinction: natural/artificial, matter/form, natural exchange/political exchange, native/foreign, internal/external, inland/abroad, inward/outward. When it is internal, trade is generally considered from the viewpoint of its effect on civil peace and the pres­ervation of common wealth. When it is carried out with foreign countries, it comes under international relations and is discussed alongside war and conquest.

There is also a clear link with political thought. Niccolo Machiavelli (1469-1527) dis­cussed the case in which small republics in a world of political instability were facing the alternative of “manternersi” or “fare un imperio” (Machiavelli 1531 [1984]: 74), that is, the preservation of what was acquired - land, riches and the liberty of citizens - or the policy of empire, expansion and acquisition of new territories, increasing wealth, great­ness and glory. These policies were based on two distinct arguments: that of reason which rather indicated preservation, and that of necessity which justified expansion (ibid.: 78). These two objectives referred to two characteristics of human nature: the desire for liberty (“affezione del vivere libero”) and the desire to acquire, to conquer (“desiderare di acquistare”). Machiavelli’s conclusion was the following: assuming instability in international relations, it may be an advantage, or a necessity, for a republic to expand rather than develop internally and be transformed into a tyranny. Hence, the imperialist strategy is not incompatible with the desire for liberty and security.

Machiavelli assumed that international relations were shaped by jealousy and war, however he did not deal with trade. This is what Nicholas Barbon objected to him (1690 [1905]: 5), proposing a more commercial version of the problem of preservation and expansion, partly inspired by Machiavelli but applied to the English case, in which the desire for greatness was transposed from the land - as it became impossible to establish a territorial empire in Europe - to the sea, which remained a free area. Also, he explicitly linked the desire for wealth and greatness to the growth in foreign trade and navigation.

Giovanni Botero (1544-1617) responded to the Machiavellian alternative differently (Botero 1598 [1956]: 6): it is better to preserve the state, once it has been territorially enlarged. This politics of preservation is justified by the primacy of the internal economy: the strength of a nation lies in its population, because where it is numerous, goods abound, the genius of man and industry are deployed, money pours in and the Treasury becomes rich (ibid.: 144-6).

This politics of preservation is also apparent in Thomas Hobbes (1588-1679). In Leviathan (1651 [1991]: 230), he pointed out that one of the causes of the dissolution of a Commonwealth was that a sovereign or an assembly was prey to an “insatiable appe­tite, or Bulimia, of enlarging dominion”. He criticised international merchants on the grounds that their interests were separate: “the end of their incorporating, is to make their gaine the greater; which is done two wayes; by sole buying, and sole selling, both at home, and abroad” (ibid.: 160). This tendency towards monopoly made them harmful both to national and to foreign consumers, and could lead them to form a state within a state. This was the reason why these merchants should be placed under the authority and the supervision of the state (ibid.: 173-4).

This position of Hobbes in favour of preservation did, of course, not please the sup­porters of foreign trade. William Petyt (1636-1707) ranked Hobbes among the defenders of the “meer absoluteness of monarchy” (1680 [1856]: 384), a kind of predatory govern­ment, hostile to trade, depreciating individuals and instilling fear in them. He contrasted this with the government of “legal liberty and property” (ibid.: 385), the main feature of which was to use liberty as a means to promote foreign trade. Jacob Vanderlint (d.1740) insisted on the distinction between the state of nature and the civil state - a state in which individuals give up their natural right to possess land and their natural equality in return for greater happiness. He argued that the latter was only legitimate if it achieved the dual objective of “peace and plenty”. And since peace was a more probable condition in the eighteenth century, a civil state that did not achieve wealth, because of the slug­gishness in trade and agriculture, would have been “worse than a State of Nature itself” (Vanderlint 1734 [1914]: 159), as in the state of nature at least the individual still had a right to possess land.