Richard Cantillon

Richard Cantillon was a non-French author whose work first appeared in France. In the first chapter of the Essai sur la Nature du Commerce en General, entitled “De la Richesse,” Cantillon writes, “The Land is the Source or Matter from whence all Wealth is produced.

In this passage there are all the ingredients for a theory of wealth that could provide an alternative to the mercantilists’ balance of trade theory. Land is there, but above all Cantillon mentions the productive powers of labor. Cantillon follows Petty in saying that land and labor are the two original sources of production and of value. Wealth is clearly defined as produced commodities, and all products designed to satisfy the wants of individuals—both for necessaries and for luxury goods—are equally regarded as wealth.

As Petty, Cantillon also believes that part of the population maintains all the people of a country: “it is shown that the Labour of 25 grown persons suffices to provide 100 others, also grown up, with all the necessaries of life” (1755, 87).

Thus, leaving aside the children and the elderly, who amount to 50 people, at least another 25 adults can be employed as soldiers and domestic servants, and also to create the things necessary for life (ibid.). This implies that “the State will be deemed rich in pro­portion to this increase of work” (ibid.), even if there is no increase in subsistence goods.

However, two pages later Cantillon writes that if the 25 extra workers “were employed to produce permanent commodities,” which includes all the raw materials and the work needed to transform them “into Tools and Instruments for the use of man,” then “the state will not only appear to be richer for it but will be so in reality” (ibid., 89).

Here Cantillon hints at the difference between commodities that are going to be used as inputs for further production and those that will be consumed. It looks like a rudimen­tary division of economic activities into productive and sterile ones.

Cantillon clearly shows that agriculture is the most important among all human activ­ities, since it provides subsistence for all the people of the country. As in Petty, the surplus element appears in terms of the number of people who can be maintained by those employed in the production of necessaries. It is the productivity of agriculture that allows provisions for the extra 75 people. However, as in Petty, Cantillon does not give any explanation for the existence of the agricultural surplus and of what determines its size. He assumes that the 25 individuals generate more products than what is needed for their subsistence.

Cantillon highlights the role of the entrepreneurs: the farmers are true entrepreneurs, who by their advances and by their work enhance the productivity of the soil. The role of the farmer is completely different from that of the landlord. It is the farmer who organizes and coordinates agricultural production, and he is an undertaker who bears the risks of the activity (ibid., 47 and 49; see also Murphy, 1986, 255-57). As compensa­tion for these risks and for his coordinating activity, the farmer obtains one-third of the produce of the land, while he uses another third for the subsistence of his workers. The last third is the landlord’s rent.⁵ Cantillon’s “three rents theory” emphasizes the crucial role played by the agricultural entrepreneur, and it anticipates Smith’s view of the value of the social product as being made up of three different distributive shares. In a sense this theory answers the question posed by Petty with the 100 supernumerary men—the output is entirely distributed according to the functions of the different groups in the process of production.

However, Cantillon did not produce a new satisfactory theory of wealth.

Cantillon follows Petty’s indication that the land and labor involved in the production of a commodity are the basis for its “intrinsic value” (ibid., 29). The measurement of this value depends on the solution to the problem of finding a “par or relation between the Value of Land and Labour” (ibid., 31). According to Cantillon, this is a fundamental problem that has been posed but has not been solved by Petty.

Notwithstanding his emphasis on the role of the farmers, on the importance of hav­ing a surplus in the production of necessaries and on the influence of production on the value of commodities, Cantillon fails to provide an alternative to mercantilism. I believe this failure depends on the fact he did not provide an explanation of how the 25 persons could produce necessaries for a hundred; Cantillon lacks an analysis of the causes of wealth. He fails to relate agricultural surplus to the process of economic growth (see Murphy, 1986, 261), and there is little analysis of the role of capital in the process of production.

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