Freedom and Capitalism in Early Modern Europe: Mercantilism and the Making of the Modern Economic Mind 9783030533083

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PALGRAVE STUDIES IN ECONOMIC HISTORY

Freedom and Capitalism in Early Modern Europe Mercantilism and the Making of the Modern Economic Mind Philipp Robinson Rössner

Palgrave Studies in Economic History

Series Editor Kent Deng London School of Economics London, UK

Palgrave Studies in Economic History is designed to illuminate and enrich our understanding of economies and economic phenomena of the past. The series covers a vast range of topics including financial history, labour history, development economics, commercialisation, urbanisation, industrialisation, modernisation, globalisation, and changes in world economic orders.

More information about this series at http://www.palgrave.com/gp/series/14632

Philipp Robinson Rössner

Freedom and Capitalism in Early Modern Europe Mercantilism and the Making of the Modern Economic Mind

Philipp Robinson Rössner School of Arts, Languages and Cultures University of Manchester Manchester, UK

ISSN 2662-6497 ISSN 2662-6500 (electronic) Palgrave Studies in Economic History ISBN 978-3-030-53308-3 ISBN 978-3-030-53309-0 (eBook) https://doi.org/10.1007/978-3-030-53309-0 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: Photo 12/Alamy Stock Photo This Palgrave Pivot imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

In this book I would like to argue two things. First, capitalism did not originate in post-1688 England (or Britain); and English certainly was not, as suggested by some historians and implied in many recent studies, capitalism’s first language. Secondly, mercantilism was a handmaiden of capitalism, but not in the way usually assumed by Marxists, an approach that has all but vanished now but once highlighted an important detail in the political dynamics of pre-industrial Europe which most recent histories have failed to capture. As argued by Marx, in chapter 24 of the German edition of Capital on original or “primitive” accumulation, mercantilism facilitated the process of capital formation in the West: by the industrial policies and political economies practiced by rulers who thus acted as accomplices of bourgeois capitalist entrepreneurs during the centuries of modern capitalism’s making, c. 1450s–1800s. Modern historians in the West have advanced a different model but reaching similar conclusions: usually encapsulated in the institutionalist “mercantilism-as-rent-seeking-society” argument, they reach the same negative assessment of mercantilism as Marx did, suggesting that mercantilist political economies were anti-market and anticapitalist, prone to promote rent seeking and other suboptimal processes of factor allocation, with an overall negative impact on economic development. This narrative very much views pre-industrial or “early modern” European history as hampered by imperfect political economies that

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were finally overcome during the nineteenth-century rise of globalism, liberalism and industrial capitalism. I argue that neither the Marxist nor the modern institutionalist approach are ultimately fair assessments of mercantilism, albeit both have their wider virtues in explaining historical dynamics. Instead I suggest, by means of synthesizing the above two propositions and applying them to a more continental-European perspective, that mercantilism, as embodied in its continental European political economy often called “Cameralism”, represented variants of capitalist political economies that positively connoted private enterprise and competitive price formation on essentially free markets: key items on the modern capitalist economic mind. Mercantilism and its continental variant(s) Cameralism represented political economies of coordinated or controlled capitalism tuned to the idiosyncratic social, political and cultural conditions on the ground, i.e. the respective countries where they were practiced, and their respective socio-economic and institutional frameworks on the ground—down to the village level so to speak. They were positively attuned towards balanced growth, economic and social fairness and dynamic economic development. Cameralist political economy was explicitly opposed to rent-seeking and other welfare-reducing practices of political economy. They provided practical solutions for how European social, cultural and economic development and people’s welfare could be promoted, but not in the way supposed by Marx and Marxists (who have entertained a similarly negative view on mercantilism because it gave rise to class conflict and inequality), or by the neo-institutionalists, who overemphasized their negative features (which probably any political economy has). Instead, mercantilism and Cameralism positively worked towards reducing inequality and improving the performance of pre-industrial market societies. Continental Europe in the early modern age knew strategies of capitalism and competitive markets which looked, however, different from the political economies found in Britain after the Glorious Revolution. This is because idiosyncratic conditions were very different on the continent. These aspects should not be mistaken for continental political economies being late-comers or non-native speakers of the language of capitalism. Their capitalisms—from the Renaissance to the industrial revolution—simply looked different from Anglo-Dutch models of capitalism.

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Mercantilism and Cameralism, often misunderstood as pre- or protocapitalist political economies, thus represent key and crucial cornerstones of continental capitalism and economic modernity. In this way I would also like to bring Renaissance and early modern history back into the history of capitalism and economic modernity. Manchester, UK

Philipp Robinson Rössner

Contents

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Cameralism, Mercantilism and the Making of the Modern Economic Mind Was English Really Capitalism’s First Language? Freedom and Capitalism: Rethinking the Political Economy of Societal Change, 1300s–1800s Cameralism, Mercantilism and the Making of the Wealth of Nations Mercantilism, Liberalism and Capitalism: A Non-Anglocentric Perspective Enter Cameralism: A Lost Road to Capitalism? Deep and Hidden Histories of Laissez-Faire: Sketching the Argument Debating Capitalism and Economic Modernity in Early Modern Europe How Old Is Capitalism? Political Economies of Markets and Economic Lives in Medieval and Early Modern Europe: Historians’ Debates Mercantilism, Capitalism and Nations That Did Not Fail: On the Origins of Prosperity

1 2 13 17 19 29 40

51 58 62 72

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Early Modern Economic Lives Pigs, Geese and Purgatory: Frameworks of Economic Life in Early Modern Continental Europe Discoveries of the Future and the Origin of Economic Dynamics Household Oeconomy, the Rise of Fiscal States and Societal Structure as a Force to Be Reckoned with When Explaining Political Economies of Development—The Very Peculiar Case of the Holy Roman Empire, pars pro toto

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Early Modern Political Economy and the Market: A Life on the Margins? From Oikonomics to Economics: Marginalizing Oeconomy Origins of Growth and Early Modern Political Economy Agrarian Economies and the Origin of Modern Economic Thought Capitalism and Freedom in Pre-modern Thought The Dark Origins of Liberalism Dialectics of Modernity in Pre-industrial Europe Freedoms in the Plural: Early Modern Discourses on “Liberty” ( Fryheit) Feudalism, Freedom and Capitalism in Early Modern Europe: Why Smithianism Didn’t Work The Cameralist Way Towards Capitalism in Early Modern Europe

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Creating Freedom, Constructing “Laissez-Faire” Governing Freedom: Autocratic Origins of Laissez-Faire Constitutional Black-Holes, Enlightened Despots and Cameralist Economic Enlightenment: How Laissez-Faire Was Created in Continental Europe

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Strange Origins of Capitalism Contrasting Capitalisms: British Capitalism Revisited Through a Scottish Lens

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Mercantilism and “Capitalism on Home Ground”—Commercial Revolutions of the Eighteenth Century (1736–1771) Leviathan Unchained: Industry and the Making of the Wealth of Nations Conclusions: Cameralism, Mercantilism and Origins of Capitalism Index

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List of Figures

Fig. 7.1

Fig. 7.2

The development of quantity and quality (average price) of Scotch Linen, 1727–1783 (Left axis: number of yards produced; right axis: average value in £ Sterling [decimal value]) The regional economics and structural change of Scottish Linen Industry in the eighteenth century (Value of linen output per person in several Scottish shires [£ sterling]. Note that the values have not been adjusted for price level changes in the economy (CPA), which cannot at present be determined. Figures taken from Hamilton, Economic History, tables)

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CHAPTER 1

Cameralism, Mercantilism and the Making of the Modern Economic Mind

Abstract This chapter introduces and summarizes the argument of the book on how mercantilism and its continental variant(s) Cameralism represented foundational cornerstones of capitalism and economic modernity. This transcends traditional historians’ debates on industrial and trade policy (which I will only summarize briefly)—where mercantilist policy and thought are commonly located, introducing aspects of wider industrial policy, regulation and especially Cameralism as a panEuropean discourse that positively connected free markets and tried to reconcile laissez-faire with proactive rulers and states intervening in the common weal or common economy in an effective way so as to reduce inequality and promote good social and economic development. Commonly understood as a continental variant or Sonderweg of mercantilism, I argue instead that British or insular mercantilism represented a Sonderweg within a very multifaceted and dynamic system of pan-European economic discourses and political economies commonly summarized as “Cameralism”. I argue that Cameralism needs, ultimately, to be written in the plural, as it can be found not only in the Germanies, i.e. the countries located within the Holy Roman Empire. Cameralism is now understood to have reached from Portugal and Spain to Finland and Norway. But I will focus on the German-speaking lands (where the older literature has commonly located Cameralism), in order to make a point pars pro toto that capitalism’s first language was not English, and that mercantilism (or Cameralism) was much more than a political © The Author(s) 2020 P. R. Rössner, Freedom and Capitalism in Early Modern Europe, Palgrave Studies in Economic History, https://doi.org/10.1007/978-3-030-53309-0_1

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economy attuned to either the need of the ruler (or centralized) state or a minority of rent seeking individual merchants and capitalists. Cameralists were mainly interested in raising the welfare of the common weal or nation in general. Attuned to each and individual circumstances in situ, Cameralist political economy thus provided rational strategies of empowering competitive laissez-faire and economic development in situ, attuned to its individual circumstances on the ground. With Cameralism we thus have an unusual suspect for modern capitalism; far transcending mercantilism as commonly understood by historians of early modern Europe and histories of economic thought. Keywords Capitalism · Market · Modernity · Economy · Industry · Enlightenment

Was English Really Capitalism’s First Language? There is a common and quite pertinacious myth that capitalism was naturally English, and that capitalism was either invented or first developed in the Anglosphere. “The market economy retained a bit of foreignness for those for whom English and, by extension, capitalism are second languages”, wrote the late Joyce Appleby, one of the most distinguished historians of our age, in what still is a beautifully written and one of the most authoritative history books of today.1 This myth has influenced historians’ narratives on the rise of capitalism and the West. It couches the origin story of economic modernity in market practices and political economies found in the post-1650 Anglo-Dutch experience of the “first modern economy”; or the example of post-1688 England, later the United Kingdom in what subsequently became the “first industrial nation”; embodying intellectual models that authors such as Hume or Smith would employ in describing and analysing such imputed “new”

1 Joyce Appleby, The Relentless Revolution: History of Capitalism (New York: W. W. Norton, 2011).

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modes of economy.2 The problem is that what twentieth-and twentyfirst-centuries historians regard as “new” ways of conceptualizing political economy often were, from an idiosyncratic in situ-viewpoint of the seventeenth and eighteenth-century, old hats. Accordingly, the Dutch and British cases have been interpreted as templates for economic modernity, or the way how things should have been run.3 The problematic nature of such foregone conclusions is at once revealed, if we pay some attention to some other lost voices who are often portrayed by historians as the very antinomy of capitalist economic modernity. Consider this writer for instance. I will reveal his identity in a minute, but just listen to these words. “But no man can become luxurious, in our acceptation of the word, without giving bread to the industrious, without encouraging emulation, industry and agriculture; and without producing the circulation of an adequate equivalent for every service”.4 Sentiments such as these are today most commonly associated with great thinkers of the Enlightenment. We would expect to find them in writings by figures such as Montesquieu, Hume or Smith. In his Theory of Moral Sentiments (1759), fourth book, Adam Smith indeed advanced a similar argument connecting consumption and luxury by the rich with a model of paternalistic capitalist economic development. Here the luxury of the rich would give food and employment to the poor, and thus raise welfare for all, by trickle-down and multiplier effects that German sociology has, ironically, as the “elevator trick”, moving upward not trickling down (Fahrstuhleffekt ).5 But that is just a minutiae. But strangely enough, the above quote comes not from the protoliberal camp of the usual Scottish Enlightenment suspects, but from a rather unexpected corner, an author who has sometimes been labelled the “last of the mercantilists”: Jacobite exile and contemporary of Adam Smith, Sir James Steuart (1712–1790). Steuart fled his native country Scotland after supporting the Jacobite cause in 1746. He spent years 2 Most recently in Larry Neal & Jeffrey G. Williamson (eds.), The Cambridge History of Capitalism, 2 vols. (Cambridge: Cambridge University Press, 2015), vol. I, introduction by the editors. 3 See previous note. 4 Sir James Steuart, An Inquiry into the Principles of Political Oeconomy: Being an Essay

on the Science of Domestic Policy in Free Nations, 1767 . 5 See, e.g. Terry Peach, “Adam Smith’s ‘Optimistic Deism’, the Invisible Hand of Providence, and the Unhappiness of Nations,” History of Political Economy, 46:1, 55–83.

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in exile travelling France and the Holy Roman Empire. In the Duchy of Württemberg, at the university town of Tübingen around 1756 he completed major chunks of his opus magnum on political economy which finally appeared in print in 1767 (and was only two years later translated and published in German, at Tübingen). Some would reckon Stuart to the mercantilist genre; others more knowledgeable to the Cameralist spectrum of economic thinking.6 Cameralism is usually seen as a decidedly non-Anglo-Saxon way of economic thinking that is often deplored by modern scholarship as strange and marginal, and in many ways as antiEnlightenment as mercantilism, the other spectrum of economic thought that Steuart is most commonly reckoned to. Still others have put Steuart into the classical economics box, which is a likewise partisan interpretation (based on a close reading of Marx, Das Kapital, vol. I),7 and likewise indicative of the ultimately unfruitful task of the historian trying to label pre-modern authors and put them into boxes where they only ill or very loosely fit: mercantilism, Cameralism, classicism, liberalism—all these labels are intrinsically problematic, fluid and fuzzy and often distort more than they enlighten us, but more on that below. But as we will see in subsequent chapters, Cameralism represented not a variant of mercantilism but rather a very mainstream mode of occidental economic thinking in the age before industry, of which mercantilism in the Anglo-Saxon fashion represented a special branch or Sonderweg. And of course, Cameralism squarely belonged to the Enlightenment, as did mercantilism. And, like mercantilism, Cameralism contributed significant features to later views on political economy, including liberalism in its manifold variants. Thus, the Soul of Modern Economic Man (Myers)8 may actually be schizophrenic, especially when the history of economic thought in the West as commonly portrayed in the mainstream literature of the post1970 neoliberal turn is taken as the reference point: this literature has often limited the idea of capitalism and possessive individualism to AngloSaxon thinkers and sketched its genealogy from Hobbes to Smith, largely ignoring or dismissing continental contributions under Cameralism and 6 Keith Tribe observed this most important connection of Steuart with continental economic thought. 7 Michael Perelman, The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation (Durham & London, 2000). 8 Milton L. Myers, The Soul of Modern Economic Man: Ideas of Self -Interest, Thomas Hobbes to Adam Smith (University of Chicago Press, 1983).

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related natural law theories of governance and economy as belonging to a different canon. Modern software such as the new MS Office 365 spell check constantly wants me to change “Cameralism” (a word it does not know) into “camelish”, which the common English language dictionary renders as “like a camel”, or “obsolete.” If switched to the German language version, where Kameralismus —one of the oldest university disciplines in the West—is likewise unknown, the spell-checker suggests “Amoralismus” (amoralism) instead. Both suggestions are fully in line with the neoliberal economic world view; malevolent minds including conspiracy theorists may suspect a neoliberal Trojan or malware at work here. But capitalism and economic modernity, from an intellectual as well as political economy viewpoint, had many origin points, which many histories have failed to grasp by assigning economic modernity to only certain nations, political economy practices and modes of thought. Only if we believe that thinkers such as Hume and Smith represented the true beginnings of modern political economy and modern sentiments about capitalism, luxury, consumption and economic development, we can credibly reckon Cameralism, mercantilism as marginal voices in the intellectual contributions to the formation of capitalism. But what the above also shows us is how close “continental” Cameralist and mercantilist authors in the early modern period really were to the enlightened schools of economic analysis that emerged during the mid-eighteenth century, even to core tenets later on covered under the likewise fuzzy “-ism” of liberalism. And that is what the following book wants to draw out, really. And if “mercantilism” is such a problematic term (it is!)—for different reasons, never mind that “liberal” and “liberalism” have little meaning in an eighteenth-century context, either, being profoundly anachronistic in any case when applied to the pre-1800 world. But there is a wider point to be made here about freedom and capitalism: these were not reserved in any way to, nor discovered by the Anglo-Scottish thinkers of the Enlightenment. And they often took off from a “mercantilist” or better: Cameralist frame of mind.9 Clark has summarized the mainstream history from an institutional viewpoint thus: “The Glorious Revolution replaced a corrupt, autocratic monarchy, which financed itself by a variety of extortionary means, with 9 In a very erudite and well-written account in Joel Mokyr, The Enlightened Economy: Britain and the Industrial Revolution, 1700–1850 (New Haven: Yale University Press, 2011), ch. 4.

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a political system in which Parliament, admittedly drawn from a limited franchise, controlled the monarch. This political system was remarkably stable. There were no coups, and few attempted coups, after I689, but an unbroken line of governments elected by a popular franchise”.10 Usually England is chosen as origin of such constitutional modernity, underpinning economic modernization and ideologies possessive individualism; and it also serves as the European angle point in reciprocal analyses of world regions and the Great Divergence.11 Alongside Dutch Golden Age economic practices of markets, freedom and institutional efficiency, the Glorious Revolution is evoked as the fundamental constitutional moment underpinning possessive individualism and capitalist economic modernity in the West, by laying the foundations for industrial growth, development and the makings of an “enlightened economy”.12 This view has not gone unchallenged, with scholars pointing out the deeper histories of good government long pre-dating the Glorious Revolution,13 or the existence 10 G. N. Clark, “The Political Foundations of Modern Economic Growth: England, 1540–1800,” The Journal of Interdisciplinary History, 26:4 (Spring 1996), 563–588, at 563. 11 China, India and Southeast Asia have been chosen on the other side; but mostly the debate has centred on the Chinese experience, and especially the Yangtze Delta: Roy Bin Wong, China Transformed: Historical Change and the Limits of European Experience (Cornell University Press, 1998); Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, NJ: Princeton University Press, 2000); Prasannan Parthasarathi, Why Europe Grew Rich and Asia Did Not: Global Economic Divergence, 1600–1850 (Cambridge: Cambridge University Press, 2011); Victor Lieberman, Strange Parallels Southeast Asia in Global Context, c. 800–1830, 2 vols. (Cambridge: Cambridge University Press, 2001); Kaveh Yazdani, India, Modernity and the Great Divergence: Mysore and Gujarat (17th to 19th C.) (Leiden & Boston: Brill, 2017); Andre Gunder Frank, ReOrient: Global Economy in the Asian Age (Berkeley, CA: University of California Press, 1998). See the recent overview on the debate in Tirthankar Roy & Giorgio Riello (eds.), Global Economic History (London & New York: Bloomsbury Academic, 2019). 12 The term has been coined by Mokyr, Enlightened Economy. The story of institutional change in the wake of the Glorious Revolution has been covered inter alia by Douglass C. North & Barry Weingast, “Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth Century England,” Journal of Economic History, XLIX (1989), 803–883; Douglass C. North, John J. Wallis, & Barry R. Weingast, Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History (Cambridge: Cambridge University Press, 2013), or Daron Acemoglu & James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (New York: W. W. Norton, 2012). 13 Clark, “The Political Foundations.”

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of similarly inclusive institutions elsewhere before the 1650s, including Portugal. The latter compared favourably with England until the 1680s in terms of standard metrics for good governance, but can seldom be found in scholarly narratives about “good” governance and economic modernity.14 Whilst global historians have recently added other world regions into the picture from the Asian part of the divide (such as India or Southeast Asia), continental-European experiences in the process of capitalism and development have been left out at best, as examples of “small” or “little divergences” within the West, meaning regions that failed to hold pace with Holland and England.15 Earlier comparative European surveys on the dynamics of capitalism and economic development by Cameron and DuPlessis, with the latter stretching capitalism back to the middle ages, still very much represent the state-of-the-art.16 Moreover, the story of capitalism, industry and economic modernity is often written in a decidedly short-termist perspective. Modern capitalism “began”, so to speak, with the (British) industrial revolution or, by admission of a slightly longer time-frame, with the Dutch economic miracle of the Golden Age (1580–1650).17 Some scholars have back-dated the origins of British industrialization and modern economic development to the era of the

14 Antonio ´ Henriques & Nuno Palma, “Comparative European Institutions and the Little Divergence, 1385–1800,” EHES Working Paper No. 171, November 2019. 15 Robert C. Allen, “Economic Structure and Agricultural Productivity in Europe, 1300–1800,” European Review of Economic History, 3 (2000), 1–25; id., “The Great Divergence in European Wages and Prices from the Middle Ages to the First World War,” Explorations in Economic History, 38 (2001), 411–447; id., “Progress and Poverty in Early Modern Europe,” Economic History Review, LVI (2003), 403–443; Alexandra M. De Pleijt & Jan Luiten van Zanden, “Accounting for the ‘Little Divergence’: What Drove Economic Growth in Pre-Industrial Europe, 1300–1800,” European Review of Economic History, 20 (2016), 387–409. 16 Rondo Cameron, “A New View of European Industrialization,” The Economic History Review, New Series, 38:1 (February 1985), 1–23; id., A Concise Economic History of the World: From Paleolithic Times to the Present, 3rd ed. (New York & Oxford: Oxford University Press, 1997); Robert DuPlessis, Transitions to Capitalism in Early Modern Europe: Economies in the Era of Early Globalization, c. 1450–c. 1820, 2nd ed. (Cambridge: Cambridge University Press, 2019). 17 E.g. Cambridge History of Capitalism, introduction. Jan de Vries & Ad van der Woude, The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500–1815 (Cambridge: Cambridge University Press, 1997).

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English Civil Wars of the 1640s.18 Only few recent studies of long-term development would go deeper back in time and consider a Renaissance pedigree, as well as give more weight to the non-Anglosphere.19 It is not the purpose here to comprehensively review the quite buoyant literature on the “history of capitalism”. This is a field which in recent years has retained a decidedly post-1800, short-termist, Anglo-American perspective centred on business history, corporations, finance, slavery and global commodity chains, with very little consensus of what capitalism was, what it means, or how it can be meaningfully separated from what Braudel shorthandedly defined as “market economy”.20 I will give this more consideration in Chapter 2. The main point is to connect this history of economic dynamics—which history of capitalism most usually means when employed in a deep history perspective21 —with the conceptual origin points marked by Cameralism and mercantilism. The latter are both contested political economies and scholarly concepts that will be explained in more detail below, but at one point in history they represented something like the commonly accepted “no-nonsense”, no-frills, in other words: the mainstream ways of looking at things, conceptualizing society and economy. The mainstream histories of our day on the other hand are very different. They contain a series of fundamental truths and important insights about the historicity and mechanisms of capitalism

18 Patrick O’Brien, “The Nature and Historical Evolution of an Exceptional Fiscal State and Its Possible Significance for the Precocious Commercialization and Industrialization of the British Economy from Cromwell to Nelson,” Economic History Review, 64:2 (2011), 408–446. 19 E.g. Eric H. Mielants, The Origins of Capitalism and the “Rise of the West” (Temple University Press, 2007); Fernand Braudel, Civilization and Capitalism, 3 vols. (London, 1982–1984); Werner Sombart, Der moderne Kapitalismus, 4th ed., 3 vols. (Munich & Leipzig: Duncker & Humblot, 1927ff.); Jürgen Kocka, Capitalism: A Short History (Princeton, NJ: Princeton University Press, 2018); Michael Mitterauer, Warum Europa? Mittelalterliche Grundlagen eines Sonderwegs (Munich: Beck, 2004). 20 See for instance the surveys in Kenneth Lipartito, “Reassembling the Economic: New Departures in Historical Materialism,” The American Historical Review, 121:1 (February 2016), 101–139, or “Interchange: The History of Capitalism,” Journal of American History, 101:2 (September 2014), 503–536; Jürgen Kocka & Marcel van der Linden (eds.), Capitalism: The Reemergence of a Historical Concept (London: Bloomsbury, 2017); Kaveh Yazdani & Dilip M. Menon (eds.), Capitalisms: Towards a Global History (Oxford: Oxford University Press, 2020). 21 I am implicitly following works like DuPlessis, Transitions to Capitalism, but will offer my own thoughts on that matter in Chapter 2.

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and economic growth. But by disregarding the non-British experiences, mercantilism and Cameralism and the longer durée, often dismissing or misinterpreting the conceptual contributions made by continental thinkers to capitalism and economic development since the Renaissance, many modern narratives fall short of crucial mechanics regarding capitalism, good governance and the rise of the wealth of nations. Most importantly perhaps, any “origin” story of capitalism and economic modernity should benefit from bridging what nowadays are two very distinct disciplines: that is general or archival-based history, with specific attention, obviously, to economic and global history, and metrics such as prices, wages, productivity, incomes, etc., on the one hand, and the history of concepts and ideas on the other hand, or the history of economic and political thought, traced through (normally) printed texts that found a wider audience or circulation. There is a very obvious problem with the concept of origin, when it relates to ideas. It is also problematic to leave conceptual and intellectual history purely to printed, that is published texts. The history of ideas obviously needs to consider archival sources and writings that were never intended to see the light of day, i.e. publication.22 One could legitimately claim that ideas don’t normally have an “origin”, or in case they do, that it is hard for the historian to find it out. It may be more important to understand how certain ideas were formed, shaped and appropriated or used by different actors in different contexts of time and space, and for different purposes.23 Often the history of ideas has been narrowly framed as the history of economic thought, nowadays a rather niche discipline in either history or economics. But we need such niches; they are vital when it comes to a balanced understanding of freedom, capitalism and possessive individualism—especially those cases where the Western mind

22 Quentin Skinner, “Meaning and Understanding in the History of Ideas,” History and Theory, 8:1 (1969), 3–53; K. R. Minogue, “Skinner Method in Intellectual History: Quentin Skinner’s Foundations,” Philosophy, 56:218 (October 1981), 533–552. 23 For the history of economic ideas, Schefold’s approach is interesting: Bertram Schefold, “Economics Without Political Economy: Is the Discipline Undergoing Another Revolution?,” Social Research: An International Quarterly, 81:3 (2014), 613–636.

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has seen them in perennial struggle with its imputed bête noire—regulation: a classic playing field of the historian’s debates on mercantilism.24 These concepts and intellectual histories can fruitfully be understood by combining a viewpoint that studies these concepts in practice, as well as discourse and thought.25 Approaches that centre either on the intellectual trajectories of these ideas, disregarding what happened when certain concepts and ideas were applied (or tried to be applied) in practice; or the political economy of, say, regulation without considering the underlying discourses and conceptual histories are unlikely to capture the full reality. In the following I assume that social reality is generated, constituted and constantly re-configured by the underlying key concepts and ideas that we as humans share, employ and discuss, and that we use when looking at, speaking about, structuring and interpreting the material world that surrounds us.26 (The same applies to language, but that would clearly be the topic of another book, yet to be written).27 Scholars commonly associate, in fact over-emphasize, certain aspects of economic regulation that are usually defined as “mercantilist”, with more sinister items in the economic black box that also contains market infringements such as rent seeking, monopoly, cartels and the like. The latter mercantilisms are the very antinomy of capitalism and economic modernity; the former often represent forms of good practice on markets to the present day. When talking about mercantilism a rogue economic philosophy is evoked, of competition as a means of carrying out war with non-military means, zero-sum games and an early modern world full of rent seeking, ruinous competition, empire, unfairness and socalled “Nash-equilibria”, i.e. suboptimal scenarios of factor allocation and

24 Eli F. Heckscher, Der Merkantilismus, 2 vols., transl. G. Mackenroth (Jena: Gustav Fischer, Jena 1932), concluding remarks to vol. II. 25 Perceptive remarks of how economic knowledge—as embodied in “textbooks”—and economic practice have remarkably diverged, or kept separate in the past century or so see the perceptive remarks in See also his most recent observation on the lack of juncture between economic policy and theory: Bertram Schefold, Die Bedeutung des ökonomischen Wissens für Wohlfahrt und wirtschaftliches Wachstum in der Geschichte (Stuttgart: Franz Steiner, 2018). 26 Peter L. Berger & Thomas Luckmann, The Social Construction of Reality: A Treatise in the Sociology of Knowledge (1966). 27 But see Lars Magnusson, Mercantilism: The Shaping of an Economic Language (London & New York: Routledge, 1994).

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economic development: the very Dark Side of Economic Modernity.28 Trentmann has summarized the mainstream view: In the seventeenth and eighteenth centuries, the context was set by mercantilism, a mix of trade barriers, monopolies and shipping restrictions, with which states tried to seize trade and power at the expense of their rivals. In this view, one country’s gain was another’s loss.29

Only when these hindrances were overcome, so the story implies, were the foundations of enlightened economy and modern industrial capitalism created.30 History provides a lot of evidence to the contrary. There is very little to be found of the monopolistic, rent seeking and other zero-sum games in mercantilist or Cameralist writings of the early modern period. Early modern trade politics is a different bunch, often subsumed under the “mercantilist” label as well. But if we look at European states at different periods of time it is difficult to find a coherent or stringent-enough policy that would have been the same all the time deserving of the label of a general policy template. And yet, there were remarkable features and patterns which deserve consideration, in making European economic development, and they can, for the sake of simplicity, be reckoned to the mercantilist-Cameralist package of ideas. I will explain later why I do not particularly like such “-isms”, but why they are still necessary for the historian today, to stay clear of the opposite intellectual risks represented by Antiquarianism and the Mistaking-the-Forest-for-the-Tree-Fallacy. To the present day trade barriers and shipping restrictions are quite normal, not only for America in the Age of Trump, or European nations in the Age of Covid-19; but even for supra-national trading blocs in the so-called capitalist West, including the European Union (which is super-mercantilist in 28 See, e.g. John V. C. Nye, War, Wine, and Taxes: The Political Economy of AngloFrench Trade, 1689–1900 (Princeton, NJ: Princeton University Press, 2018); Mokyr, Enlightened Economy, ch. 4; Andrea Finkelstein, Harmony and the Balance: An Intellectual History of Seventeenth-Century English Economic Thought (University of Michigan Press, 2000), p. 247, and discussions in Isenmann (ed.), Merkantilismus, esp. the chapter by Lars Magnusson. 29 Trentmann, Empire of Things, p. 120. Similar view in Finkelstein, Balance. 30 Mokyr, Enlightened Economy, ch. 4; Robert E. Ekelund & Robert D. Tollison,

Mercantilism as a Rent-Seeking Society: Economic Regulation in Historical Perspective (College Station: Texas A&M University Press, 1981).

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certain fields, if we employ the rather traditional definition of mercantilism). And whilst there is good reason to think of trading monopolies, often seen as a key feature of mercantilist Europe, as reducing economic well-being, writers of the mercantilist ilk were neither particularly enthusiastic about them; nor did their writings usually evolve or concentrate on monopolies. They were mostly employed in the East and West Indian trading Companies established by quite a few European states between 1600 and the 1730s (England, Scotland, Denmark–Norway, Sweden, Prussia, Habsburg/Ostend). However, if we consider economic and commercial life in the age of capitalism’s ascendancy (1250s–1850s) on a broader scale, the volume of trade handled by these regulated monopolies was truly marginal. They certainly did not represent salient features of European commercial and economic life. In other words: the monopolistic, rent-seeking aspects of mercantilist political economy represented marginalities that have been massively exaggerated by many modern scholars trying to understand the mercantilist world, and their imputed character of having held back European’s economy and productivity from their imputed yet counterfactual “natural” levels of strength.31 Counterfactuals are interesting and intuitively creative, but fairly useless when trying to understand historical reality and explain what actually happened, and why. They represent one of a potentially infinite number of alternative worlds, and are thus perhaps best left to theoretical physics (a discipline that indeed knows parallel universes in infinite numbers). For once, the worlds of the seventeenth and eighteenth centuries were never in equilibrium, neither politically nor economically; notwithstanding the fact that even today “equilibrium” probably ill-describes economic and social reality (because it rarely happens, and the next crisis is looming round the corner, see Covid-19). Andrew Fletcher of Saltoun, one of seventeenth-century Scotland’s most distinguished politicians, exile and vehement opponent to the incorporating Union between the English and the Scottish kingdoms in 1707, wrote in 1698:

31 See, e.g. Stanley N. Engerman, “Mercantilism and Overseas Trade, 1700–1860,” in: R. Floud & D. McCloskey (eds.), The Economic History of Britain Since 1700, Vol. I: 1700–1860, 2nd ed. (Cambridge: Cambridge University Press, 1994), pp. 182–204.

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But must we in time of Peace be taxed beyond measure to maintain Forces, which upon occasion are to serve for the defence of two of the richest Nations in the world; Nations that have manifested their unwillingness to let us into the least copartnership with them in Trade, from which all our Riches, if over we have any, must arise? This is to load a poor Nation with Taxes, and to oppress them with Soldiers in order to procure Plenty and Riches to other Countries, of which they are not to have the least share. Rich and opulent Nations are to enjoy the benefits of the Peace, and we are to suffer, that they may enjoy them with security.32

Can we resolve these perennial antinomies between plenty and power?33 I think we can. By adopting a longer-term European perspective on the origins of freedom, capitalism and modern economic growth, a perspective that considers both the practical or empirical content and nature of premodern political economy commonly labelled “Cameralist” or “mercantilist”, as well as its intellectual dynamics and contributions made to modern political economy, I wish to argue that capitalism rested on both: freedom and regulation, possessive individualism and state coercion. One cannot be thought of without thinking the other. Moreover, what has crystallized from the historical record as the Anglo-Saxon (or AngloDutch) mercantilist way towards capitalism represented in many ways a deviation from the norm, or classical Sonderweg towards capitalism and economic modernity.

Freedom and Capitalism: Rethinking the Political Economy of Societal Change, 1300s–1800s When thinking about capitalism we usually think “markets” and “freedom”. Just consider the iconic works written during the twentieth century such as Schumpeter’s classic, Capitalism, Socialism and

32 Andrew Fletcher of Saltoun, Two Discourses Concerning the Affairs of Scotland (1698), first discourse, p. 26. See Giovanni Lista’s forthcoming Ph.D. 33 Ronald Findley & Kevin H. O’Rourke, Power and Plenty: Trade, War, and the World Economy in the Second Millennium (Princeton: Princeton University Press, 2007). Intellectually they have been discussed in the works by Istvan Hont and others which will be referred below.

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Democracy,34 Hayek’s Road to Serfdom,35 or Friedman’s Capitalism and Freedom.36 Markets and freedom seem indispensable for good economic development and capitalist dynamics. Often, but not always, they are evoked in tandem with the rise of the individual,37 or liberalism’s virtues in a more general sense, because in the Western narrative the two—individual freedom and laissez-faire capitalism—are commonly portrayed as causally related. This is, of course, wrong, and the departure point of the current book wishing to add an historical nuance to debates that are, in many ways, timeless and relevant to the present day. I certainly do not wish to endorse the notion of the West claiming an intellectual monopoly on modernity, albeit to the present day quite a few historians have certainly advanced such claims and would insist that capitalism was invented in Europe.38 Nor do I wish to step down from the explanatory power of concepts such as “individual” and “liberalism” when explaining long-term positive economic development: clearly they did matter in forming and empowering capitalism and economic development in Europe. But key terms explaining capitalism as embodied in post-1800 western economic modernity such as “market”, “laissez-faire” and “freedom” are so fraught with ideological baggage and, moreover, were subject to important conceptual changes over time, that we must refrain from uncritically using them. Known for centuries, words like “market” or “freedom” meant very different things to different people at different times. Chapter 5 will pick up some of the pre-modern threads, sideways and loopholes in these notions, as there was no linear or “natural” development towards our modern conceptions of freedom, capitalism and laissez-faire. Their modern meanings represent abnormalities in many ways when contrasted 34 Joseph A. Schumpeter, Capitalism, Socialism, and Democracy, 3rd ed. (Harper Perennial Classics, 2008). 35 Friedrich A. Hayek, The Road to Serfdom (Routledge, 1944). 36 Milton Friedman, Capitalism and Freedom, Fortieth Anniversary Edition (University

of Chicago Press, 2009). 37 Not so in the excellent account by Larry Siedentop, Inventing the Individual: The Origins of Western Liberalism (London: Penguin, 2014). 38 Good examples include David S. Landes, The Wealth and Poverty of Nations: Why Some Are So Rich and Others So Poor (New York: W. W. Norton, 1998); Jonathan Daly, The Rise of Western Power: A Comparative History of Western Civilization (London: Bloomsbury, 2014), or from a more intellectual history point of view the books by McCloskey on “Bourgeois virtues”, dignity and so on.

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with their longer conceptual history that often reaches back into the Renaissance and middle ages and certainly, in the case of the word “economy”, back to Christian Antiquity. They often are historical peculiarities that are idiosyncratic and accordingly call for historicization. Often, they owed more to the shaping of the (neo)liberal world view that formed in the wake of World War Two than anything else. To a person living in the Renascimento, or sixteenth-century Upper Germany, the word “market” meant something very different than to us: less abstract than today, a more concrete physical and moral space, embodying individuals and their moral values that were soteriologically framed or configured, often using Purgatory, Heaven and Hell as possible subtexts, not only for the question of whether (or better: in which particular scenarios and economic transactions) the taking of interest was allowed (usury), but also informing each and every other individual economic transaction between people.39 And yet, during the mercantilist period, arguably even before, people began to develop more abstract understandings describing what turned from “economy” (or more commonly called oeconomy) into “the economy”, as a separate realm of human interaction. Key linguistic markers, such as market, interest, prices were reconfigured within a developing economic language that became increasingly abstract and decoupled market and exchange mechanisms from their immediate social contexts: a process of disembedding beautifully described by Karl Polanyi who got it too late, however, by at least two centuries.40 Mercantilists adopted these concepts in an increasingly formulaic language and building models of the market process, in many ways marking early resemblances of the way we use them nowadays and often pre-figuring Polanyi’s great divide.41 From a linguistic-historical viewpoint, the post-1945 twentieth century was just a short period within a much longer and richer and 39 Jacques LeGoff, The Birth of Purgatory (Chicago: University of Chicago Press, 1991); Charles L. Geisst, Beggar Thy Neighbour: A History of Usury and Debt (University of Pennsylvania Press, 2018). 40 Karl Polanyi, The Great Transformation (New York, 1945). See Diana Wood, Medieval Economic Thought (Cambridge: Cambridge University Press, 2002); Joel Kaye, Economy and Nature in the Fourteenth Century: Money, Market Exchange, and the Emergence of Scientific Thought (Cambridge: Cambridge University Press, 2004); id., A History of Balance 1250–1375: The Emergence of a New Model of Equilibrium and Its Impact on Thought (Cambridge: Cambridge University Press, 2016). 41 Magnusson, Mercantilism: The Shaping of an Economic Language, reissued as: id., The Political Economy of Mercantilism (London & New York: Routledge, 2015).

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manifold conceptual history of political economy. We yet have to fully understand the connections between linguistics, semiotics and economics, and the role that language plays in constituting and configuring economic reality, today as in the past.42 It is one thing to accept the basic translational barrier that remains between any two languages spoken, or even within one particular language that changes over time, as say the English in the age of Shakespeare, compared to the English in the age of Boris Johnson; or the German economic language in the age of the Baroque compared to the modern German that was shaped by Johann Wolfgang von Goethe and Friedrich Schiller during the Enlightenment and Romanticism. This is still the very German language used today, including economic analysis, but with very different word meanings. Never mind the semantic contribution made by the Historical School and figures such as Wilhelm Roscher, Gustav Schmoller, which continued to live on in inter-war and postwar economic schools, including the Ordoliberals around Eucken and Röpke, even in modern German-language economics textbooks.43 What is meant in one idiom can never be fully replicated in another language, even in cases where there is resemblance and near-full congruence, as is the case in the German/English words for market /Markt and so on; words that have remained the same since the middle ages and yet went through significant lexical changes or word meaning. We should, on the other hand, not over-emphasize idiosyncratic differences and linguistic or institutional varieties of capitalism, just because different languages were spoken in different countries (as per Appleby’s quibble quoted above). The following chapters will clarify why that is the case.

42 For the twentieth century, see Robert J. Shiller, Narrative Economics: How Stories Go Viral and Drive Major Economic Events (Princeton: Princeton University Press, 2019). For earlier periods, e.g. Carl Wennerlind, “Money Talks, but What Is It Saying? Semiotics of Money and Social Control,” Journal of Economic Issues, 35:3 (2001), 557–574; ¨ Werner Plumpe, “Okonomisches Denken und wirtschaftliche Entwicklung. Zum Zusam¨ menhang von Wirtschaftsgeschichte und historischer Semantik der Okonomie,” Jahrbuch f¨ur Wirtschaftsgeschichte (2009), Heft 1, 27–52. 43 Bertram Schefold, “Goethe’s Economics: Between Cameralism and Liberalism,” in: Philipp R. Rössner (ed.), Economic Growth and the Origins of Modern Political Economy: Economic Reasons of State 1500–2000 (London & New York: Routledge, 2016), pp. 79– 100.

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Cameralism, Mercantilism and the Making of the Wealth of Nations In order to make this point and solve the conundrum I want to bring in yet another strange beast into the story, commonly known by its misnomer “mercantilism”: an ideology, set of policies, discourse and political economy shared across all Europe in the early modern age yet with some distinct regional and conceptual variations, as well as variation over time. Ask any of the big questions of today: How did “the West” get rich? How did we get where we are now? Why did European countries eventually overtake China and Asia, experiencing the first industrial revolutions and attaining wealth levels that are, as of today, twenty times or more the average per capita income witnessed in the average Sub-Saharan African country? This almost invariably raises the question of mercantilism, its continental sibling Cameralism, and how economic ideology, even cosmology—think of the various biblical origin stories and politico-economic metaphors, of “Leviathan”, or evocations of God’s “invisible hand”—would have underpinned these processes.44 What role did mercantilism or its siblings and variants such as Cameralism play in shaping modern development from the Renaissance to the industrial revolution?45 Some of the key strengths, for good and for worse, exhibited since the past two centuries in “the West” can only be explained by reference to its mercantilist heritage. Consider manufacturing, where Europe since the

44 Paul Oslington, “God and the Market: Adam Smith’s Invisible Hand,” Journal of Business Ethics, 108:4 (2012), 429–438; Peter Harrison, “Adam Smith and the History of the Invisible Hand,” Journal of the History of Ideas, 72:1 (January 2011), 29–49; William D. Grampp, “What Did Smith Mean by the Invisible Hand?” Journal of Political Economy, 108:3 (June 2000), 441–465; Peach, “Adam Smith’s ‘Optimistic Deism’,” John Milbank, Theology and Social Theory: Beyond Secular Reason, 2nd ed. (Oxford: Blackwell, 2006), pp. 37–41. 45 See the excellent comparative survey by Peer Vries, “Governing Growth: A Compar-

ative Analysis of the Role of the State in the Rise of the West,” Journal of World History, 13:1 (2002), 67–138, as well as relevant sections on European mercantilism in id., State, Economy and the Great Divergence: Great Britain and China, 1680s–1850s (London: Bloomsbury, 2015); O’Brien, “The Nature and Historical Evolution of an Exceptional Fiscal State.”

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mid-eighteenth century outpaced India and other parts of the Asian continent, the workshops of the world before the industrial revolution.46 Then consider amongst other things the frenzy about manufactories, porcelain and faience making, or the desire to imitate and emulate initially superior manufacturing products that originated in India (cotton textiles) and China (porcelain). The calico, porcelain and faience crazes of the eighteenth century were cultural fashions with manifest economic force sufficient to change global production chains. They emerged from ideas embodied in writings, books and pamphlets commonly known to have arisen from the pen of “mercantilist” authors, then playing out on the field of the individual consumer, desire and a somewhat virtuous synthesis with larger reason of state and state policy, often driven by the fisc.47 But there was more to the mercantilist package than import substitution, rogue protectionism and trade flow regulation. The scientific analysis of market behaviour and market failures that we find elaborated in thick books such as infamous alchemist-Cameralist polymath and project maker Johann Joachim Becher’s Political Discourse on the Rise and Fall of Cities, Nations and Republics (orig. Politischer Discurs Von den eigentlichen Vrsachen/ deß Auf - und Abnehmens/ der Städt/ Länder/ und Republicken, 1668) have shaped our thinking about markets to the present day. Becher not only was an infamous alchemist.48 He also formulated what Schumpeter called “Becher’s Law”, better known amongst economists of today as Say’s Law, i.e. the theorem that every supply creates its own demands.49 Besides, Becher scientifically analysed the working of markets and modelled fair and unfair transactions today known as market failures, such as monopoly, forestalling or ruinous competition—which Becher called polipoly. Mercantilism sometimes included more rogue policies of infant industry protectionism. In fact, the term “infant industry” can be 46 Parthasarathi, Why Europe Grew Rich, esp. ch. 5. 47 Sophus Reinert, Translating Empire: Emulation and the Origins of Political Economy

(Cambridge, MA: Harvard University Press, 2011), esp. ch. 1; id., “Rivalry: Greatness in Early Modern Political Economy,” in: Philip J. Stern & Carl Wennerlind (eds.), Mercantilism Reimagined: Political Economy in Early Modern Britain and Its Empire (Oxford: Oxford University Press, 2013), pp. 348–370; Giorgio Riello, Cotton: The Fabric That Made the Modern World (Cambridge: Cambridge University Press, 2013). 48 Pamela H. Smith, The Business of Alchemy: Science and Culture in the Holy Roman Empire, new ed. (Princeton, NJ: Princeton University Press, 1994). 49 As claimed by Joseph A. Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954).

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found less than a century later verbatim and very much in the meaning of today in the minutes of the Scottish Board of Trustees for the Fisheries and Manufactures, established 1727 when addressing the failings of an ailing Scottish industry facing harsh competition from German and Muscovy linens on the American markets in the 1750s.50

Mercantilism, Liberalism and Capitalism: A Non-Anglocentric Perspective But mercantilist thought also contained enough elements of laissezfaire.51 As Max Weber noted in Chapter 22 of his General Economic History (1922), capitalism rested on free markets, but strangely Weber did not offer a definition of “free market” that would have resonated with the modern ear.52 The very idea that free markets or economic liberalism could ever be based on de-regulation or light-touch markets seems to have been a twentieth-century cultural trope that became popular when the post-war welfare state apparatus created by coordinated capitalism began, in the 1970s, to show signs of inertia and decay, when those problems it had initially meant to solve, had given way to different ones partly generated by this welfare regime itself.53 Some of the basic ideas of market regulation that served as crucial underpinnings of western Ordoor neoliberalism after the Second World War built upon ancient and venerable pedigrees. The idea of currency and monetary regulation as an anchor of social and economic stability—a philosophy that underpinned West-German economic policy after 1945 and shaped the underlying 50 Philipp Robinson Rössner, “Merchants, Mercantilism, and Economic Development: The Scottish Way, c. 1700–1815,” Annales Mercaturae, 1:1 (2015), 97–126. 51 Bruce Elmslie, “Early English Mercantilists and the Support of Liberal Institutions,” History of Political Economy, 47:3 (2015), 419–448; William D. Grampp, “An Appreciation of Mercantilism,” in: Lars Magnusson (ed.), Mercantilist Economics (Boston: Kluwer, 1993), pp. 59–85; William D. Grampp, “The Liberal Elements in English Mercantilism,” The Quarterly Journal of Economics, 66:4 (November 1952), 465–501. 52 Weber’s free market was marked by the “absence of irrational limitations on trading on the market.” By this he meant social and class monopolies and restrictions on the freedom of occupation, e.g. prohibitions for noblemen to carry on business and vice versa, i.e. commoners to acquire a landed estate. Max Weber, General Economic History, transl. F. H. Knight, ch. 22. 53 Andreas Reckwitz, Das Ende der Illusionen. Politik, Ökonomie und Kultur in der Spätmoderne (Berlin: Suhrkamp, 2019).

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Germanic vision of economic liberalism known by its idiosyncratic nomer Ordoliberalism—was embodied in Renaissance thought as well as and many early modern economic writings reckoned especially to the Cameralist tradition of thought.54 Many of the mercantilist writings of the seventeenth and eighteenth centuries also contained outlines of a dynamic theory, recipes of how the respective territory or state could be made wealthier and its citizens more affluent or in other words: the origins of economic development.55 Often, these dynamics were conceptualized against a situation of perceived or real underdevelopment, but it would be short-charged to argue that mercantilism was just that, or mainly about redressing underdevelopment.56 Never mind that economic growth, defined as sustained increases in per capita gross domestic product (or national income) was off the table for most times before the industrial revolution.57 But where there was some growth, however humble in figures and metrics, amongst the nations and states in

54 Philipp Robinson Rössner, “Monetary Theory and Cameralist Economic Management, c. 1500–1900 A.D.,” Journal for the History of Economic Thought, 40:1 (2018), 99–134. 55 See Erik S. Reinert & Sophus Reinert, “Mercantilism and Economic Development: Schumpeterian Dynamics, Institution Building and International Benchmarking,” in: Jomo K. Sundaram & Erik S. Reinert (eds.), The Origins of Development Economics: How Schools of Economic Thought Have Addressed Development (London: Zed Books, 2005), pp. 1– 23; Ingomar Bog, “Ist die Kameralistik eine untergegangene Wissenschaft?,” Berichte zur Wissenschaftsgeschichte, 4 (1981), 61–72; Cilly Böhle, Die Idee der Wirtschaftsverfassung im deutschen Merkantilismus (Jena: Gustav Fischer, 1940); Hans Joachim Röpke, “Die Wachstumstheorie der deutschen Merkantilisten” (Ph.D. diss., Marburg, 1971); essays collected in Erik S. Reinert, The Visionary Realism of German Economics: From the Thirty Years’ War to the Cold War, ed. R. Kattel (London & New York: Anthem, 2019). 56 Erik S. Reinert & Philipp Robinson Rössner, “Cameralism and the German Tradition of Development Economics,” in: Erik S. Reinert, Jayati Ghosh, & Rainer Kattel (eds.), Elgar Handbook of Alternative Theories of Economic Development (Cheltenham & Northampton: Edward Elgar, 2016), pp. 63–86; Cosimo Perrotta, “Serra and Underdevelopment,” in: Rosario Patalano & Sophus A. Reinert (eds.), Antonio Serra and the Economics of Good Government (Palgrave, 2016), pp. 214–233; C. Perrotta, “Antonio Serra’s Development Economics: Mercantilism, Backwardness, Dependence,” History of Economic Thought and Policy, 2 (2013), 5–19. 57 Angus Maddison has left a rich legacy and living heritage and website with panel data on European countries and their GDP per capita since the birth of Christ, which are constantly being updated and revised.

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Europe before the industrial revolution, there usually were “mercantilist” policies of some form behind it. Moreover, epistemic core tenets of the mercantilist-Cameralist faith: that the origins of wealth and dynamics lay in manufacturing not agriculture (as the Hausväterliteratur or pater familias genre of oeconomics flourishing around 1600, and the later Physiocrats claimed); and that creativity, learning, emulation and technology transfers were crucial in the process of generating the wealth of nations, came also from the Renaissance; they were no mercantilist or Cameralist inventions in the strict sense of the word.58 They did not always work effectively and sometimes could not be fully applied in practice, due to many idiosyncratic hindrances, social structure or politics on the ground which worked against centralized policies requiring strong central government—another thing that was off the table before the industrial revolution: the strong centralized state is largely a twentieth-century innovation (albeit there was a lot of theory pointing towards it since the Renaissance).59 It is not the purpose here to study causal origins of economic divergence in the wake of the industrial revolution, albeit some scholars have attempted such explanations, for instance by contrasting European mercantilist fiscalmilitary states with an assumed less interventionist Chinese state that may have left much less of a role for proactive development.60 For Mughal India the case has been made recently that although the Mughal rulers may not have had a trade policy per se, they did pay considerable attention to the flourishing of the agrarian and manufacturing economy, promoting market development, road building, trading posts and arms manufacturing quite as much as states did in the so-called

58 Erik S. Reinert, “The Role of the State in Economic Growth,” Journal of Economic Studies, 26:4/5 (1999), 268–326, reprinted in id., Visionary Realism, ed. R. Kattel; Sophus A. Reinert, “Achtung! Banditi! An Alternate Genealogy of the Market,” in: Philipp Robinson Rössner (ed.), Economic Growth and the Origins of Modern Political Economy: Economic Reasons of State, 1500–2000 (New York: Routledge, 2016), pp. 239–295. 59 Regina Grafe, Distant Tyranny: Markets, Power and Backwardness in Spain, 1650– 1800 (Princeton, NJ: Princeton University Press, 2012). 60 Vries, “Governing Growth,” and id., State, Economy and the Great Divergence; Wong, China Transformed, Chapter 6 provides a fascinating interpretation of Western-Chinese comparative political economies but rests, for the European part or “mercantilism”, on a very limited set of literature that can now be considered outdated and/or biased.

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West.61 Sombart, in his magnum opus Der moderne Kapitalismus (4th ed., 1927), made the connection between the proactive mercantilist state and promotion of domestic business and capitalism, as the state was the largest single purchaser of standardized manufactured goods, such as weapons and uniforms, which could be produced in large manufactories using economies of scale. Lind has presented similar evidence for smaller fiscal-military mercantilist powers of the early modern age such as Denmark–Norway.62 Since the middle ages European political economy remained remarkably mercantilist, and there is a rich mercantilist heritage of practice and thought in European political economy, not all of which was biased or geared towards rent seeking, zero-sum games or and exploiting rivals. At first view the mere association of “mercantilism” and “capitalism” may seem bewildering. The (neo)liberal world view, professed by generations of thinkers in the wake of Adam Smith to Eli Heckscher or even more radical anarcho-capitalist thinkers such as Murray Rothbard, would defend a view that defined mercantilism was the political economy antithesis of liberalism, capitalism and “Enlightened economy”. This view interprets mercantilism as the political economy of absolutism, an economic relic of a foregone age, with mercantilists professing policies of restrictions, regulation, rent seeking and protectionism, in other words the exact antinomy to capitalism and economic modernity, and that this “wrong” ideology was surpassed, finally, during the nineteenth-century rise of liberalism, free trade and globalization. Below we will turn to the somewhat enigmatic question of what mercantilism actually was, ontologically, and whether it existed in any more than a fuzzy set of unsystematic ideas that were repeatedly tried, sometimes successfully sometimes less so, as applied policies across early modern Europe without ever following a homogenous or coherent theory. Let’s just accept for the moment that mercantilism existed, because to say no, it didn’t exist means disregarding entire libraries worth of economic works written in a tradition that Adam 61 Prasannan Parthasarathi, “State Formation and Economic Growth in South Asia, 1600–1800,” in: Rössner (ed.), Economic Reasons of State, pp. 189–203; Wong, China Transformed, has similarly argued for a Chinese state that was quite “strong” in practice. 62 Gunner Lind, “Early Military Industry in Denmark–Norway, 1500–1814,” Scandi-

navian Journal of History, 38:4 (2013), 405–421.

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Smith condemned, in the fourth book of the Wealth of Nations; on false grounds, to be sure, but something that did exist and massively shaped people’s minds, rulers and policies. Mercantilist ideas informed and shaped economic policies, rulers and their policymakers (administrators) across Europe. They ranged from the biggest territorial states and monarchies such as France under the Sun King Louis XIV and his congenial first minister Jean Baptiste Colbert, hence aka—Colbertism,63 down to micro-states covering only a few square kilometres within the unwieldy imperium that was neither Holy nor Roman, nor really an empire.64 Just consider, for example, the Imperial Abbey of Kempten in Swabia, whose Prince-Abbots after the Treaty of Westphalia 1648 applied essentially the same set of core principles of industry promotion, protectionism as well as market regulation known from the writings of the big mercantilists of the age, such as Johann Joachim Becher (1635–1682) or Philipp Wilhelm von Hörnigk (1640–1714).65 The Counts of Hanau, rulers over another one of the numberless small territorial states of the Holy Roman Empire, located in modern-day Hesse, even tried upon recommendation by congenial

63 Charles W. Cole, Colbert and a Century of French Mercantilism (Columbia University Press, 1939); Thomas J. Schaeper, The French Council of Commerce, 1700–1715: A Study of Mercantilism After Colbert (Columbus: Ohio State University Press, 1983). But see more recently the work by Moritz Isenmann, Der ‘Colbertismus’ und die Ursprünge des wirtschaftlichen Liberalismus. Französische Außenhandelspolitik im Zeitalter Ludwigs XIV (unpublished Habilitationsschrift, University of Cologne, 2016); and his important chapters: “War Colbert ein ‘Merkantilist’?,” in: id. (ed.), Merkantilismus. Wiederaufnahme einer Debatte (Stuttgart: Franz Steiner, 2014), pp. 143–167; id., “From Privilege to Economic Law: Vested Interests and the Origins of Free Trade Theory in France (1687– 1701),” in: Rössner (ed.), Economic Reasons of State, pp. 105–121. 64 Peter Wilson, The Holy Roman Empire: A Thousand Years of Europe’s History

(London: Allen Lane, 2016); Joachim Whaley, Germany and the Holy Roman Empire, 2 vols. (Oxford: Oxford University Press, 2013). 65 Philipp Robinson Rössner, “Introduction,” in: id. (ed.), Philip Wilhelm von Hörnigk, Austria SUPREME (If It So Wishes): A Strategy for European Economic Supremacy (1684), transl. Keith Tribe (London & New York: Anthem, 2018), pp. 1–120; Maximilian Walter, Das Fürststift Kempten im Zeitalter des Merkantilismus. Wirtschaftspolitik und Realentwicklung (1648–1802/03) (Stuttgart: Franz Steiner, 1995).

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alchemist-economist Becher, and with a considerable degree of worldpolitical hubris, to set up a colony in what is now Suriname.66 They did so in the same mercantilist spirit as other smaller nations such as Scotland did, with her short-lived Darien venture in the 1690s, or Prussia which tried out both an African, as well as East India trading company.67 Even though mercantilism certainly never existed as a closed theory, there was enough of a manifestly visible spirit behind it to massively shaped policies and politics of regulation. Indeed, economic policy in the seventeenth and eighteenth centuries was often enough designed “by the book”, following massively successful economic bestsellers such as Becher’s Political Discourse, or Philipp Hörnigk’s Austria Supreme (1684). If it were true that capitalism rested upon economic enlightenment and “the defense of private property, free work, the rule of law and an ethical consensus around the legitimacy and the necessity of the development of entrepreneurship and the encouragement of innovations”; if we further accept as a valid proposition that useful knowledge and “bourgeois virtues” represented “the causes and consequences of modern economic growth and modern political freedom”,68 we can see key elements of modern capitalism embodied within the inhomogeneous writings and practices of Renaissance and early modern Europe known by names such as “mercantilism” and Cameralism. It is thus worthwhile revisiting some of mercantilism’s central tenets. True, mercantilism “never

66 Herbert Hassinger, Johann Joachim Becher 1635–1682. Ein Beitrag zur Geschichte des Merkantilismus (Vienna: Verlag Adolf Holzhausens NFG, 1951); Smith, Business of Alchemy. 67 Douglas Watt, The Price of Scotland: Darien, Union and the Wealth of Nations, 2nd ed. (Luath Press, 2014); Florian Schui, “Prussia’s ‘Trans-Oceanic’ Moment: The Creation of the Prussian Asiatic Trade Company in 1751,” The Historical Journal, 49 (2006), 143–160. 68 McCloskey, quoted after Cardoso in Neal & Williamson, Cambridge History of Capitalism, vol. 1, p. 587. See also Mokyr, Enlightened Economy; Neal & Williamson, Cambridge History of Capitalism, vol. 1, introduction, and further works to be discussed below.

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had a creed”.69 Scholars have been at pains stressing its fuzzy nature.70 It certainly constituted no unified coherent theory, as has been said, notwithstanding that apart from Scholasticism perhaps, no pre-modern social or economic theory ever claimed to be, let alone aspired to being,

69 The full quote: “The truth seems to be that there was never a living doctrine at all, nothing that can be compared with vital philosophies of action like physiocracy or liberalism or Marxism. Mercantilism never had a creed; nor was there a priesthood dedicated to its service.” A. V. Judges, “The Idea of a Mercantile State,” Transactions of the Royal Historical Society, 4th ser., XXI (1934), reprinted in Donald C. Coleman (ed.), Revisions in Mercantilism (London: Methuen, 1969). Earlier influential works include Heckscher, Der Merkantilismus, 2 vols. (Jena, 1932), or Jacob Viner, Studies in the Theory of International Trade (New York, 1937). See also Lars Magnusson’s important conceptual introduction to the new English edition of Eli F. Heckscher, Mercantilism (London: Routledge, 1994). Major recent studies include Steven Pincus, “Rethinking Mercantilism: Political Economy, the British Empire, and the Atlantic World in the Seventeenth and Eighteenth Centuries,” The William and Mary Quarterly, 69:1 (January 2012), 3–34; Jonathan Barth, “Reconstructing Mercantilism: Consensus and Conflict in British Imperial Economy in the Seventeenth and Eighteenth Centuries,” The William and Mary Quarterly, 73:2 (April 2016), 257–290; Terence Hutchison, Before Adam Smith: The Emergence of Political Economy 1662–1776 (Oxford: Oxford University Press, 1988); Philip J. Stern & Carl Wennerlind (eds.), Mercantilism Reimagined: Political Economy in Early Modern Britain and Its Empire (Oxford: Oxford University Press, 2014); Lars Magnusson (ed.), Mercantilist Economics, new ed. (Springer, 2012), a collection of essays originally published in 1993, is very useful still. Lars Magnusson, “Mercantilism—A Useful Concept Still?,” in: Moritz Isenmann (ed.), Merkantilismus. Wiederaufnahme einer Debatte (Stuttgart: Franz Steiner, 2014), pp. 19–38, as well as other essays in Isenmann’s volume. See also Lars Magnusson, Mercantilism: The Shaping of an Economic Lang uage (London: Routledge, 1994); id., The Political Economy of Mercantilism (London & New York, 2015). Some earlier writers such as Eli F. Heckscher, Mercantilism, 2 vols. (London: Allan & Unwin, 1935), but specifically Robert E. Ekelund & Robert D. Tollison, Mercantilism as a Rent-Seeking Society: Economic Regulation in Historical Perspective (College Station: Texas A&M University Press, 1981) sketched a negative assessment of mercantilism, which many historians still share, see, e.g. Mokyr, Enlightened Economy, ch. 4. See also review articles by Salim Rashid, “Economists, Economic Historians and Mercantilism,” Scandinavian Economic History Review, 28:1 (1980), 1–14, or more recently, Philipp Robinson Rössner, “Heckscher Reloaded? Mercantilism, the State and Europe’s Transition to Industrialization (1600–1900),” The Historical Journal, 58:2 (2015), 663–683. Works such as Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective (London: Anthem, 2003), or Erik Reinert, How Rich Countries Got Rich…And Why Poor Countries Stay Poor (London: Constable 2007), have painted a more positive picture, but from an (heterodox) economics perspective. 70 Recently with respect to Anglo-American discourses and Whig vs. Tory politics in seventeenth and early eighteenth century Britain, see Steven Pincus, 1688: The First Modern Revolution (New Haven: Yale University Press, 2009), and id., “Rethinking Mercantilism.”

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epistemically closed. That also applies, by and large, to most of the modern social sciences, if we exclude some epistemic extremes, such as Marxism–Leninism or Luhmann’s System Theory. The same, by the way, applies to other “-isms”, such as liberalism. But we should not dismiss some common tropes, either in the Englishspeaking literature, or economic works in other languages that were produced in Cameralism across early modern Europe. One would be money; nearly all authors and politicians of the mercantilist-Cameralist spectrum discussed money and monetary issues in extended passages.71 Some scholars have argued that Cameralism was specifically geared towards silver mining, as a main industry in those lands where the Cameralists flourished.72 But Seckendorff—the “Adam Smith of Cameralism”, who wrote one of the most famous treatises of the age on the Princely State (1655)—was an author in the service of the Dukes of Saxony-Gotha, rulers over a territory that had no domestic silver mines of substance. The other common thread running through mercantilist and Cameralist writing across the ages is manufacturing and the idea of adding value. There is a passage in Giovanni Botero’s Book Eight of his Ragione di Stato, originally part of his other opus magnum Delle cause della grandezza delle città (Rome, Martinelli, 1588) but since 1589 included in the Reason of State, where Botero explains why manufacturing was the origin of wealth, embodying more added value than primary activities, using economies of scale, people’s art and creativity and giving employment and food to more people than production in its raw, unfinished stage.73 Botero also suggested that “Such is the power of industry (meaning manufacturing at the time, PRR) that no mine of silver or gold in New Spain or in Peru can compare with it, and the duties from the merchandise of Milan are worth more to the Catholic King than the

71 Barth, “Reconstructing Mercantilism;” Philipp Robinson Rössner, “Mercantilism as an Effective Resource Management Strategy: Money in the German Empire, c. 1500–1800,” in: Isenmann (ed.), Merkantilismus, pp. 39–64. 72 In a text drawing on Soetbeer’s outdated statistics regarding silver mining: Andre Wakefield, “Silver Thaler and Ur-Cameralists,” in: Mary Lindeman & Jared Poley (eds.), Money in the German-Speaking Lands (New York: Berghahn Books, 2017), pp. 58–73. 73 Erik Reinert & Ken Carpenter, “German Language Economic Bestsellers Before 1850, also Introducing Giovanni Botero as a Common Reference Point of Cameralism and Mercantilism,” in P. R. Rössner (ed.), Economic Reasons of State, pp. 26–54.

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mines of Zacatecas or Jalisco”.74 It is not so surprising to find this trope in certain “mainstream” writings and authors of the time such as Thomas Mun’s England’s Treasure by Foreign Trade, where the virtues of manufacturing and creating additional value—which was not possible, or only to a much lesser extent in agriculture or most other primary sector activities—were discussed alongside more commonly known ideas regarding a positive balance of payment and protectionist measures that rulers and kings should adopt to attain such balance. What is more baffling is that we find nearly exactly the same emphasis on manufacturing and manufactories in writings in languages other than English, or in texts with much more limited print runs, pamphlets that were more obscure, addressed to audiences of a much narrower spectrum, such as the (anonymous) A representation of the advantages that would arise to this kingdom by the erecting and improving of manufactories (1683) written in connection (and by someone involved) with the Newmills cloth manufactory, one of the great industrial enterprises in pre-Union Scotland,75 or the writings of the near simultaneous Saxon author Daniel Crafft’s Bedencken von den Manufacturen (1684), as well as much more famous Philipp Wilhelm von Hörnigk’s Austria Supreme If Only It So Wishes (1684), a work that was massively influential in the German-speaking lands, used as a textbook at Austrian universities well into the 1780s.76 Often the metaphor of manufacturing as a “gold” or “silver” mine was employed. And this metaphor seems to have made it into a lot of mercantilist and Cameralist writings, in English, Swedish, German and many other languages, between the sixteenth and eighteenth centuries. Countries that had no native precious metal supply would use manufacturing as an alternative means of generating inflows of precious metals in return for manufacturing exports: manufacturing was their gold (or silver) mine. This drive towards increasing efficiency, improving the arts and generating useful

74 Giovanni Botero, The Reason of State/Della ragione di stato, transl. P. J. & D. P. Waley, with an introduction by D. P. Whaley, The Greatness of Cities, transl. Robert Peterson, 1606 (New Haven: Yale University Press, 1956), pp. 150–153. 75 Edinburgh 1683. Mentioned and discussed in Gordon Marshall, Presbyteries and Profits: Calvinism and the Development of Capitalism in Scotland, 1560–1707 (Edinburgh: Edinburgh University Press, 1992), pp. 147f. 76 Philipp Robinson Rössner (ed.), Philipp Wilhelm von Hörnigk’s Austria SUPREME (If It So Wishes): A Strategy for European Economic Supremacy (1684), transl. Keith Tribe (London & New York: Anthem, 2018), introduction.

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knowledge seems to have been one of the common threads uniting early modern mercantilist-Cameralist writings, topically and epistemically. So even if there was no unified theory behind mercantilism, as a political economy it probably was visible enough and up to shape to drive many a statesman’s decisions and entrepreneur’s and visions. One of the most congenial analyses came from the hand of Swedish historian and economist Eli Heckscher, known for his contributions to trade theory in the shape of the Heckscher-Ohlin theorem. In his magnum opus (1931, Ger. Translation Der Merkantilismus 1932) Heckscher took the existence of mercantilism for granted: as something that manifestly shaped European ways of thinking and doing political economy since the middle ages. But Heckscher argued that mercantilism finally gave way, during the nineteenth century, to other more liberal ways of organizing the market process, to economic modernity shaped by liberalism, free trade and laissez-faire. This has, perhaps, been the most enduring misconception that has stuck with historians today who often associate early modern European political economy with notions of regulated moral economies, or dirigiste mercantilist rulers trying to interfere with and steer domestic economies towards rogue aims of the emerging absolutist state. Such states—the story goes—were marked by social and economic stasis, lacking the basic dynamics necessary to generate economic growth and development.77 In its clearest version the argument was brilliantly exposed by Murray G. Rothbard thus: “Mercantilism, which reached its height in the Europe of the 17th and 18th centuries, was a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as special subsidy and monopolistic privilege to individuals or groups favored by the state. Thus, mercantilism held that exports should be encouraged by the government and imports discouraged. Economically, this seems to be a tissue of fallacy; for what is the point of exports if not to purchase imports, and what is the point of piling up monetary bullion if the bullion is not used to purchase goods?”78

77 Most elegantly presented in Mokyr, Enlightened Economy, ch. 4, drawing manifestly upon the work of Ekelund and Tollison. 78 Murray G. Rothbard, “Mercantilism: A Message for Our Times?” https://mises.org/ library/mercantilism-lesson-our-times, retrieved on 12 April 2020, 15:12 p.m. GMT.

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Although written by an heterodox economist belonging to the extreme spectrum of modern market fundamentalism,79 the above definition is still useful inasmuch as it captures common late twentieth-century mainstream assessments of mercantilism, in the shape of Chrysohedonism or the Midas Fallacy: that mercantilism was all about attracting foreign gold. Midas was the Greek mythological king figure so greedy that the Gods finally granted his wish, which came with a curse: everything he touched turned into gold. This may be one of the most absurd of labels ever awarded by historians, not only because European currencies mostly consisted of silver—not gold—in the early modern age. Moreover, few mercantilist or Cameralist writers would have wittingly succumbed to the relatively stupid fallacy of conflating silver or gold with real wealth (as Adam Smith and many subsequent authors insinuated). But such has been the shared sentiment on mercantilism in the so-called West, which after the 1950s became more and more ideological, sectarian and politicized, torn by the global ideological battles fought conflict of the two super powers. Before the 1960s many historians and economists were more positive on mercantilism. J. M. Keynes certainly was, in Chapter 23 of his General Theory, where he sought out history as the crown witness for the truths he suggested for the contemporary age.

Enter Cameralism: A Lost Road to Capitalism? But strikingly Keynes disregarded mercantilism’s older and bigger sibling Cameralism, which may have given him even better historical underpinnings for the lessons sought in the General Theory, especially regarding 79 Rothbard is reckoned to the anarcho-capitalist spectrum, certainly a niche in the contemporary economic and social sciences. But the extreme view of market fundamentalism expressed in his writings was common in the post-1970 period and shared widely; influencing politics in many a country of the West, especially in the wake of landslide regime changes post-1979, in the UK (Thatcher), Germany (Kohl) and the US (Reagan). In some countries more extreme versions of market fundamentalism were implemented in several dictatorial regimes in south and central America. See David Harvey, A Brief History of Neoliberalism (Oxford: Oxford University Press, 2007). To be sure, there were mixed and fluid variants of the liberal faith. The conservative governments of the Kohl era retained a sense of post-war ordoliberalism and thus strongly coordinated capitalism doctrine in many areas, adopting more extreme versions of liberalism only in special areas (where they have nonetheless wrought considerable havoc, as in the de-regulation of the inner city housing and property markets, the dramatic social costs of which are only fully realized and experienced as we speak, i.e. 2020 AD).

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the role of the state in promoting industry, useful knowledge and economies of scale. Interestingly, in the preface to the German translation of his General Theory in 1936, Keynes made a rather unfortunate positive assessment of national socialist economic policy of the 1930s.80 During that time Hjalmar Schacht, former deputy director of the Dresdner Bank, and since 1934 German minister for economic affairs and President of the Reichsbank until 1939, was responsible for policies that Keynes judged rather positively on in his preface. Schacht had defended his doctoral thesis On the Theory of the English Mercantilists at the University of Kiel in 1900.81 He had studied under Lujo Brentano and Gustav von Schmoller, two of the most distinguished economists of their age.82 Schmoller had studied Cameral Sciences at the University of Tübingen, a hothouse of Cameralism in the later eighteenth and nineteenth centuries, which had seen figures such as Friedrich List emerge,83 but also hosted Scottish Jacobite exile and crypto-Cameralist and leading figure of the Scottish Enlightenment, Sir James Steuart whom we have encountered above, 80 Keynes, General Theory, reprint of the translated German ed. in Keynes, J. M. Collected Works (London: Royal Economic Society, 1971). See also Bertram Schefold, “The General Theory for a Totalitarian State? A Note on Keynes’s Preface to the German Edition of 1936,” Cambridge Journal of Economics, 4:2 (1980), 175–176. 81 Original: Der theoretische Gehalt der englischen Merkantilismus, see Arie van der Hek, Hjalmar Schacht: Präsident der Reichsbank Zwischen Zwei Weltkriegen (Frankfurt-on-Main & New York: Springer, 2020), p. 3. I am indebted to Georg Christ for pointing me to Schacht and his doctorate on mercantilism, and to Xuan Zhao, for identifying some literature on that matter. See, e.g. Erik Reinert & Arno M. Daastøl, “The Other Canon: The History of Renaissance Economics,” in: Erik Reinert (ed.), Globalization, Economic Development and Inequality: An Alternative Perspective (Cheltenham: Edward Elgar, 2004), pp. 21–70, at p. 35. 82 Jens Herold, Der junge Gustav Schmoller. Sozialwissenschaft und Liberalkonservatismus im 19. Jahrhundert (Göttingen: Vandenhoeck & Ruprecht, 2019); Harald Winkel, “Gustav von Schmoller (1838–1917),” in: Joachim Starbatty (ed.), Klassiker des Ökonomischen Denkens vol II: Von Karl Marx bis John Maynard Keynes (Munich: Beck, 1989), pp. 89–117; Birger P. Priddat, Die andere Ökonomie. Über G. v. Schmollers Versuch einer „ethisch-historischen“ Ökonomie im 19. Jahrhundert (Marburg: Metropolis, 1995); Wolfgang Drechsler, “The German Historical School and Kathedersozialismus,” in: Erik S. Reinert et al. (eds.), Handbook of Alternative Theories of Economic Development (Cheltenham & Northampton, MA: Edward Elgar, 2016), pp. 109–123. 83 Georg Eckert, Zeitgeist auf Ordnungssuche: Die Begr¨ undung des K¨onigreiches W¨urttemberg 1797 –1819 (G¨ottingen: Vandenhoeck, 2016); most recently on List see the chapters in Harald Hagemann, Stephan Seiter & Eugen Wendler (eds.), The Economic Thought of Friedrich List (Routledge Studies in the History of Economics) (London & New York: Routledge, 2018). An historian’s view on List’s place and role within a

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and who completed nearly half of his Principles of Political Oeconomy there; a book widely read on the continent and commonly regarded as a milestone in economic thought.84 We know close to nothing about Steuart’s legacy at Tübingen, particularly as the local and university archives yield no personal trace of this great Scottish enlightenment economist during his two-year spell in what at the time was still considered a “shit-hole” by many; a remote countryside town.85 But perhaps it is no coincidence—and certainly fitting—that the first German translation of Steuart’s Principles into the German language appeared with the venerable academic publisher Cotta (to the present day in Tübingen) only two years after the English original had come out.86 Further editions and translations were to come.87 The point I want to make here is that mercantilism and Cameralism cast a long shadow, as much as they had a long past and pre-history; that they were closely related siblings; but that it would be far-fetched to call Cameralism (as has usually been done) a

longer discourse on reason of state and rivalry of trade is presented in Istvan Hont, Jealousy of Trade: International Competition and the Nation State in Historical Perspective (Cambridge, MA: Belknap Press at Harvard University Press, 2005). 84 See the introduction in: Andrew Skinner (ed.), James Steuart, an Inquiry into the Principles of Political Oeconomy (London, 1998); Ramon ´ Tortajada (ed.), The Economics of James Steuart, new ed. (London, 2014); Perelman, The Invention of Capitalism; Deborah Redman, “Sir James Steuart’s Statesman Revisited in Light of the Continental Influence,” Scottish Journal of Political Economy, 43:1 (1996), 48–70. One of the first (in fact literally the only) scholars to call Steuart a “Cameralist” was Keith Tribe, “Polizei, Staat und die Staatswissenschaften bei J. H. G. von Justi,” in: Heinz Rieter & Bertram Schefold (eds.), Vademecum zu einem Klassiker des Kameralismus: [Kommentarband zur Faksimile-Ausgabe der 1756 erschienenen Erstausgabe von Johann Heinrich Gottlob von Justi: Grunds¨atze der Policey-Wissenschaft] (Düsseldorf: Verlag Wirtschaft und Finanzen, 1993), pp. 107–140; id., “Die Wirtschaftssemantik der Frühen Neuzeit,” in: Bertram Schefold (ed.), Philipp Wilhelm von Hörnigks „Österreich über alles.“ Vademecum zu einem Klassiker absolutistischer Wirtschaftspolitik (Düsseldorf: Verlag Wirtschaft und Finanzen, 1997), pp. 245–289. 85 I am indebted to Matthias Asche, then Tübingen, for answering my pertinent query, if in the negative. 86 Sir James Stewart (sic!), Baronets, Untersuchung der Grund-Säze von der StaatsWirthschaft als ein Versuch über die Wissenschaft von der Innerlichen Politik bey freyen Nationen (Stuttgart: Cotta, 1769). 87 Erik Reinert, K. Carpenter, Sophus Reinert, & Fernanda Reinert, “80 Economic Bestsellers Before 1850: A Fresh Look at the History of Economic Thought,” Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics No. 74 (2017).

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“German” version of mercantilism. In many ways it would have been the other way round. And surely the term as such is a misnomer, in many ways: mercantilism, when fully developed as a world view during the age of enlightenment, was not about primarily about trade (as the term “mercantile system” implies, deployed in the eighteenth century by Mirabeau and Adam Smith, deriving from the Latin mercator/mercari—trader/to trade, deal, sell), but rather production. It was concerned with emulation and generating value, rather than distributing or destroying wealth. And when looked at in a European perspective, mercantilism’s Germanic variant known widely outside the German lands by the likewise awkward term “Cameralism” was arguably much more dynamic, formalized and scientific and had much more of a heyday. It is now known to have spread widely outside the German-speaking lands and having attained enough of contours to properly classify as a manifest and visible system of thought geared towards generating positive conditions for economic freedom, capitalist enterprise and economic growth.88 Cameralists emphasized 88 The only systematic bibliography ever carried out surveying the range and history of writings in the Cameralist ilk was Magadalene Humpert, Bibliographie der Kameralwissenschaften (Köln: Kurt Schröder Verlag, 1937); Humpert found several tens of thousands of works, but was also eclectic, including writings written in the older Staatswissenschafts tradition dating back to the late middle ages. Humpert focused on the German-speaking lands, but scholars have now used the term “Cameralism” rather flexibly and found it in early modern Spain, Portugal, Denmark, Sweden, Finland, Norway and many more locations, possibly including Russia, see, e.g. Ernest Lluch, “Cameralism Beyond the Germanic World: A Note on Tribe,” History of Economic Ideas, 5:2 (1997), 85–99; José Luís Cardoso & Alexandre Mendes Cunha, “Enlightened Reforms and Economic Discourse in the Portuguese-Brazilian Empire (1750–1808),” History of Political Economy, 44:4 (2012), 619–641. There is now a growing literature on Cameralism in German as well as English. Important recent collections with the current state of the art include Marten Seppel & Keith Tribe (eds.), Cameralism in Practice: State Administration and Economy in Early Modern Europe (Woodbridge: Boydell & Brewer 2017); Ere Nokkala & N. B. Miller (eds.), Cameralism and the Enlightenment: Happiness, Governance and Reform in Transnational Perspective (London & New York: Routledge, 2019); Jürgen G. Backhaus (ed.), The Beginnings of Political Economy: Johann Heinrich Gottlob von Justi (Boston, MA: Springer, 2009) and the forthcoming (2021) special issue in History of Political Economy. Important recent and less recent monographs include Keith Tribe, Strategies of Economic Order. German Economic Discourse, 1750–1950 (Cambridge: Cambridge University Press, 1995); id., Governing Economy: The Reformation of German Economic Discourse 1750–1840, new pbk ed. (Threshold Press, 2017); Marc Raeff, The Well-Ordered Police State: Social and Institutional Change Through Law in the Germanies and Russia, 1600– 1800 (New Haven & London: Yale University Press, 1983); Bertram Schefold (ed.), Vademecum zu einem Klassiker des Kameralismus: Johann Heinrich Gottlob von Justi,

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a country and its citizen’s being industrious, valorizing a country’s economic and national resources, ingenuity, creativity and put a great deal of trust in manufacturing, adding value and processing the bounties that Mother Nature provided. Another aspect was the acknowledgement of geography and the idiosyncratic variations in modes of thinking about political economy in different locations that influenced ways of thinking about the environment: location, location, location, so to speak. Or in Sophus Reinert’s words, “As such, Cameralism perforce demanded an awareness of place, of the shifting terroir of political economy, from the sunbaked shores of the Mediterranean to the desolate edge of the northern ice floes”.89

Grundsätze der Policey-Wissenschaft (Düsseldorf: Verlag Wirtschaft und Finanzen, 1993); Ulrich Adam, The Political Economy of J.H.G. Justi (Oxford: Lang, 2006); Ere Nokkala, From Natural Law to Political Economy: J.H.G. von Justi on State, Commerce and International Order (Zurich: LIT, 2019); Jutta Brückner, Staatswissenschaften, Kameralismus und Naturrecht: Ein Beitrag zur Geschichte der politischen. Wissenschaft im Deutschland des späten 17. und frühen 18. Jahrhunderts (Munich: Beck, 1977), and the unpublished Ph.D. by my student Xuan Zhao. Andre Wakefield, The Disordered Police State: German Cameralism as Science and Practice (Chicago: University of Chicago Press, 2009). Older classics on Cameralism comprise Kurt Zielenziger, Die alten deutschen Kameralisten. Ein Beitrag zur Geschichte der Nationalökonomie und zum Problem des Merkantilismus (Jena: G. Fischer, 1914); Albion W. Small, The Cameralists: The Pioneers of German Social Polity (Chicago: University of Chicago Press, 1909). I found the following articles and chapters enlightening: R. C. Bowler, “Menschenbild und Wirtschaftsordnung: Der Menschenbegriff im Kameralismus und in der Nationalökonomie,” Berichte zur Wissenschaftsgeschichte, 25:4 (2002), 283–299; Birger P. Priddat, “Kameralismus als paradoxe Konzeption der gleichzeitigen Stärkung von Markt und Staat. Komplexe Theorielagen im deutschen 18. Jahrhundert,” Berichte zur Wissenschaftsgeschichte, 31 (2008), 249–263; Vera Keller, “Perfecting the State: Alchemy and Oeconomy as Academic Forms of Knowledge in Early Modern German-Speaking Lands,” in: Mary Lindemann & Jared Poley (eds.), Money in the German-Speaking Lands (Berghahn, 2017); ead., “‘A Political Fiat Lux’: Wilhem von Schroeder (1640–1688) and the Co-production of Chymical and Political Oeconomy,” in: Sandra Richter & Guillaume Garner (eds.), ‘Eigennutz’ und ¨ ‘gute Ordnung’: Okonomisierungen der Welt im 17. Jahrhundert (Wiesbaden: Harrassowitz, 2016), pp. 353–378. 89 Sophus Reinert, “Northern Lights: Political Economy and the Terroir of the Norwegian Enlightenment,” Journal of Modern History, 92:1 (2020), esp. 99–101, 109; quote on 111. See essays in Seppel & Tribe (eds.), Cameralism in Practice; Fredrik Albritton Jonsson, “Climate Change and the Retreat of the Atlantic: The Cameralist Context of Pehr Kalm’s Voyage to North America, 1748–51,” The William and Mary Quarterly, 72:1 (January 2015), 99–126; Lissa Roberts, “Practicing Oeconomy in the Late Eighteenth Century,” special issue of History and Technology 30–33; and the works by Vera Keller, Oregon.

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The main problem tackled in Cameralist economics on one hand was philosophical. It was the ubiquitous divergence between intention or imagination on the one hand, and reality on the other hand, similar to Schopenhauer’s World as Will and Representation. This was, on the other hand, an eminently practical and perennial problem. In order for possessive individualism and a competitive market oeconomy to function, such oeconomy had to be created first. It had to be made to work. This meant the configuration of a state and reliable government institutions, including what we cherish today as the so-called ‘Free Market’. This almost goes without saying: good or inclusive institutions require strong and proactive states.90 But things were, unfortunately, not as easy as they looked on paper. According to Sommer, Cameralist economics were marked by the desire to strengthen the absolutist state. This was, of course, not an accomplishable goal at the time; truly absolutist rulers were not to be found before Hitler or Stalin. Connected to this was the creation of free markets and integrated territorial economies, where goods would flow freely uninhibited by local or regional tariffs, tolls and dues and where the local nobility did not enjoy the obnoxious and perverse social and economic privileges which it did in practice in most countries on the continent, which hampered societal progress, and perennially interfered with the larger interests of the means and aims at the same time.91 These obvious divergences between Cameralist theory and reality on the other hand, have led to a refreshing growth of new scholarly works in recent years. According to Wakefield the Cameralists’ main purpose was to get a job by cultivating a body of expert knowledge sometimes bordering upon the occult (e.g. alchemy) which would hopefully secure permanent employment with a prince interested in raising the wealth of the country but mainly the princely purse. Such certainly was neither the sole nor main aim of English economic pamphleteers, who more often came from

90 Douglass C. North, John Joseph Wallis, & Barry R. Weingast, Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History (Cambridge & New York: Cambridge University Press, 2009); Daron Acemoglu & James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (New York: Crown, 2012) are prominent works which do not always explicitly stress this aspect. 91 Louise Sommer, Die österreichischen Kameralisten. In dogmengeschichtlicher Darstellung, 2 vols. (Vienna: Konegen, 1920/25), I, 48–56, quote on 55.

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a commercial background but otherwise shared many convictions with the writers who have come to be known as Cameralists.92 Priddat has made another important intervention, suggesting that the conception of human nature entertained by the Cameralists was somewhat distinct from other models prevailing at the time—the homo imperfectabilis with her often conflicting or antagonistic and childish desires lacking a deeper understanding of the needs of the dynamic developmental state. Such subjects needed the strong hand of a caring autocrat—the Prince—to steer the economy, akin to a big household, into a better schedule of resource allocation. Markets clearing spontaneously to the best outcome were as unknown to this conception as the idea of an economy that would have functioned independently from the state, or as a mechanism that was governed by its own laws of demand and supply and allocation. One important conclusion derived from this was that “Free markets” as we know them (and as pre-classical thinkers knew them) had to be created first, usually upon the initiative of the ruler. This was very much a product of Enlightenment thought, influenced by Wolffian philosophy and natural law theory,93 coupled with a sometimes pessimistic outlook on the idiosyncratic features of seventeenth- and eighteenth-century politics and human reality in the continental feudal market economies.94 Small’s dictum that “[a]ccording to the Cameralist conception then, the state was a magnified family with a big farm as its property”95 is plain wrong, especially in the light of more recent research.96 In a rather well-written account Wakefield has drawn our attention to the discrepancy between what Cameralists suggested as plans, projects and socio-economic Utopias, and social-economic reality: Cameralist models 92 Tribe, “Die Wirtschaftssemantik der Frühen Neuzeit.” 93 Nokkala, From Natural Law to Political Economy; id., “The Machine of State in

Germany—The Case of Johann Heinrich Gottlob von Justi (1717–1771),” Contributions to the History of Concepts, 5:1 (2009), 71–93; id., “Triebfeder und Maschine in der politischen Theorie Johann Heinrich Gottlob von Justis (1717–1771),” in: Michael Eggers & Matthias Rothe (eds.), Wissenschaftsgeschichte als Begriffsgeschichte. Terminologische Umbrüche im Entstehungsprozess der modernen Wissenschaften (Bielefeld: Transcript, 2009), pp. 157–173. 94 Priddat, “Paradoxe Konzeption.” 95 Quoted after Zielenziger, Die alten Kameralisten, 96. 96 Nicely discussed in Bernard Harcourt, The Illusion of Free Markets: Punishment and

the Myth of Natural Order (Cambridge, MA: Harvard University Press, 2012).

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usually failed. They simply did not work, and perhaps were conceived in a dishonest fashion in the first place, to get them what Cameralists wanted: a permanent job in the service of one of the numerous bigger or lesser courts that sprawled across the early modern German and AustrianHabsburg lands. Cameralists, Wakefield argues, were habitual vagabonds, travelling from one court to another. With their voluminous textbooks— from Veit Ludwig von Seckendorff’s Teutscher Fürstenstaat (first ed. 1655; nine editions were printed; Seckendorff was read until the end of the eighteenth century!) to Johann Heinrich von Justi’s Staatswirthschaft (Principles of Economics, 1755)—they sketched idealized versions of economy. Their vision couldn’t possibly be translated into practice. They were too good to be true. Cameralists captured an absurdly wide-ranging panoptical array of topics, ranging from agriculture, horticulture, mining, forestry, chemistry, animal husbandry; mineralogy, geology, botany to public finance and fiscal sociology. Here the Cameralists seem near to the Hartlibian economists studied by Wennerlind.97 Around mid-seventeenth century a learned circle with an inclination towards alchemy (which was not at all unusual at the time) had formed in England around Prussian émigré Samuel Hartlib who believed that infinite economic growth and advancement were principally possible, using the tools of empiricism and scientific reasoning in uncovering the hidden working mechanisms of nature’s panoptical world of goods and endowment.98 Parallels with similar developments on the continent are obvious, both topically as well as geographically (with Hartlib being from Prussia). Whilst around 1600 much of German economics had focused on thoroughly agrarian household management issues (Hausväterliteratur)—the characteristic genre resting between medieval neo-Aristotelianism or Scholastic economics and mainstream mercantilism on the other hand—by the later 1600s the

97 I have a learned a lot from the following three studies: Carl Wennerlind, “Theatrum Œconomicum: Anders Berch and the Dramatization of the Swedish Improvement Discourse,” in: Robert Freedona & Sophus Reinert (eds.), The Legitimacy of Power: New Perspectives on the History of Political Economy (Basingstoke: Palgrave Macmillan, 2018); id., “The Political Economy of Sweden’s Age of Greatness: Johan Risingh and the Hartlib Circle,” in: Rössner (ed.), Economic Reasons of State, 1500–2000 (New York, NY & Abingdon, Oxon: Routledge, 2016); id., “Money: Hartlibian Political Economy and the New Culture of Credit,” in: Stern & Wennerlind (eds.), Mercantilism Reimagined: Political Economy in Early Modern Britain and Its Empire (New York: Oxford University Press, 2014). 98 Wennerlind, “Money: Hartlibian Political Economy and the New Culture of Credit.”

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development of the economy, as opposed to the singular household or oikos, now occupied centre stage in Cameralist thought. The transition from oikonomics to economics had begun.99 But the Cameralists would, Wakefield argues, serve two conflicting interests. One was to fill the coffers of the prince. The other was to promote public welfare. These two goals were irreconcilable. If you furthered the wealth of the prince you would have to take away something from the public via additional taxes and levies; if you chose to promote public welfare, this would mean that the prince (or state) could not take as much out of the economy. Cameralists were cunning, scheming, strategic, smooth operators. As Wakefield concludes, “Cameralist projectors and adventurers, from Johann von Justi and von Pfeiffer to Johann Heinrich Jung-Stilling (to name only a few), routinely proposed ambitious enterprises, Cameralist enterprises, only to see them fail spectacularly”.100 This interpretation leaves room for discussion. It is easy for the historian to play judge ex posteriori, seeing projects fail. But were they bound to fail from the beginning? This is far more difficult to determine; especially given the precious little evidence we have from archival records. We should also avoid the mildly Whiggish assumption that only “good” projects count: the history of failure needs yet to be written.101 Separating ideas into good and bad, realistic or unrealistic, false or honest, bound to fail means to an extent that the historian acquires powers of God.102 Nor should we make the mistake to judge Cameralist achievement from a twentieth- or twenty-first-century vantage point, that is what is taught 99 On the Hausväterliteratur see Keith Tribe, Land, Labour, and Economic Discourse (Routledge, 1978), and the relevant sections in Johannes Burkhardt & Birger P. Priddat (eds.), Geschichte der Ökonomie (Frankfurt-on-the-Main: Deutscher Klassiker Verlag, 2009); Otto Brunner, Adeliges Landleben und europäischer Geist. Leben und Werk Wolf Helmhards von Hohberg (Salzburg: Otto Müller Verlag, 1949). 100 Andre Wakefield, “Cameralism, Physiocracy and Antiphysiocracy in the Germanies,” in: Steven L. Kaplan & Sophus A. Reinert (eds.), The Economic Turn: Recasting Political Economy in Enlightenment Europe (London & New York: Anthem, 2019), pp. 657–676, at p. 660. 101 But see Francesco Boldizzoni, Foretelling the End of Capitalism: Intellectual Misadventures Since Karl Marx (Princeton, NJ: Princeton University Press, 2020), and from an early modern business history perspective Thomas Max Safley (ed.), The History of Bankruptcy: Economic, Social and Cultural Implications in Early Modern Europe (Abindgon & New York: Routledge, 2013). 102 Andre Wakefield, “Butterfield’s Nightmare: The History of Science as Disney History,” History and Technology: An International Journal, 30:4 (2014), 232–251.

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today as core knowledge in economics or other social sciences (which would be anachronistic). Only if we believe in progress in the history of ideas—an assumption that is eminently possible and still shared nowadays even amongst respectable historians—then Cameralist economic theory and project proposals may look ridiculously underdeveloped at times. But should we not judge the Cameralists and their theories from their contemporary context and vantage point, i.e. from the worlds that the Cameralists set out to analyse and improve? Tribe has, I think, provided an important answer here, by drawing attention to Cameralism as a peculiarly eighteenth-century form of pedagogical discourse that followed its own epistemic patterns and quite idiosyncratic rules, and that these rules are certainly lost to us (of course, Cameralism was older than that).103 So, we should not “judge” Cameralism along a “win” or “fail” spectrum, but actually lend our ears to what Cameralists actually had to say, given the context of time and space. Moreover, were the two goals: raising the Prince’s finance, and promoting economic development, really mutually exclusive, as suggested by some scholars? The available evidence suggests not. True, Cameralist texts and pamphlets look as though Cameralism was more about discourse and the purpose of selling oneself so as to get a job. But if you think twice about it, they also sound, in many places, quite like the somewhat idealized and in many was surreal models that can be found in modern economics textbooks. Cameralist textbooks did sketch an ideal world, starting with Seckendorff’s Teutscher Fürstenstaat (1655) that was a model of the ideal princely state. Were these models conceived in a dishonest or naïve fashion? Combining the available textual evidence, the politics of eighteenth-century German states with the conceptual and intellectual history approaches that we adopt when reading contemporary texts, conclusions regarding Cameralism and dishonesty are rather far-fetched. In fact, re-reading Wakefield’s fascinating Disordered Police State in the light of recent research we may conclude the opposite, i.e. that the Cameralists actually had a firm and clear and realistic theory, given their time and space. Only from a modern or backward reading

103 Keith Tribe, “Cameralism and the Sciences of the State,” in: Mark Goldie & Robert Wokler (eds.), The Cambridge History of Eighteenth-Century Political Thought (Cambridge: Cambridge University Press, 2006), pp. 525–546; Tribe, Strategies of Order; id.; Governing Economy; Humpert, Bibliographie der Kameralwissenschaften shows the long history of Cameralism.

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of history we can, quite easily, discover failures. That means we need to appreciate the idiosyncratic societal features of the seventeenth and eighteenth centuries: the social, cultural and economic framework will thus receive due consideration in Chapters 3, 4 and 5. Cameralists had a clear set of axiomatic principles on how markets should work; how exchange should be governed and put on fair grounds, and how economy could be developed towards a more effective production frontier: given the numerous averse and from a modern view often paradox contradictions given by eighteenth-century German social and economic life “on the ground”. Some of Cameralism’s key principles shared common ground with what has been called “mercantilism”. Many of the Cameralists’ ideas about “free” markets (in a sense of “just” or “fair” exchange) found their way into modern theory, even liberal visions of the market104 —and, as an authority with no apparent tendentious inclination has demonstrated, not always with expressive acknowledgement.105 Other than mercantilism, Cameralism became codified to an extent, and certainly institutionalized as an academic discourse and university science by 1727. Far transcending its academic-pedagogical aura as a university discourse once again it may seem that “mercantilism” as commonly framed was more of an Anglo-Saxon Sonderweg , within a broader continental system of Cameralist thought that emphasized happiness, manufacturing, scientific discovery and creativity—not trade wars, protectionism and restrictive systems of oeconomy—as the origins of wealth, power and prosperity.106 Thus, it is thus not at all clear whether or to what extent Dutch-AngloBritish political economy—true: we can neither think British capitalism after 1650 without thinking Dutch, nor vice versa107 —really represents the norm template to write a global history of capitalism. The present

104 Most recently Hans-Erich Bödeker, “Reconciling Private Interests and the Common Good: An Essay on Cameralist Discourse,” in: Nokkala & Miller (eds.), Cameralism and the Enlightenment, pp. 47–79. 105 Grampp, “An Appreciation of Mercantilism.” 106 See also, e.g. Lars Magnusson, “Was Cameralism Really the German Version of

Mercantilism?,” in: Philipp R. Rössner (ed.), Economic Growth and the Origins of Modern Political Economy: Economic Reasons of State, 1500–2000 (Abingdon: Routledge, 2016). 107 Jonathan Scott, How the Old World Ended: The Anglo-Dutch-American Revolution, 1500–1800 (New Haven: Yale University Press, 2020).

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book presents an alternative view, situating scholars’ debates on mercantilism, Cameralism and early modern political economies of capitalism within a broader European perspective transcending traditional Anglocentric approaches to the history of political economy, offering strategies of how the three: mercantilism, Cameralism and capitalism may be married and reconfigured, to better understand the history of European development from the Renaissance to the present age.

Deep and Hidden Histories of Laissez-Faire: Sketching the Argument Although pronounced dead several times now and somewhat locked into the backyard of history during the past century, Mercantilism has shown remarkable stamina in coming back. But it is still interpreted in an old-fashioned manner. As one of the most influential economists of our day writes, The history of economics is largely a struggle between two opposing schools of thought, ‘liberalism’ and ‘mercantilism.’ Economic liberalism, with its emphasis on private entrepreneurship and free markets, is today’s dominant doctrine. But its intellectual victory has blinded us to the great appeal – and frequent success – of mercantilist practices. In fact, mercantilism remains alive and well, and its continuing conflict with liberalism is likely to be a major force shaping the future of the global economy. (Rodrik 2013)

Protectionism and state interventionism seem in the air; and Covid-19 has made this deal final—for the time being. After the historical 2016 US presidential election the flagship weekly of the German liberal press, Der Spiegel, featured a series of caricatures portraying the US president in the posture of an Islamic State soldier decapitating the Statue of Liberty as the epitome of everything considered essential to the Free West. The Spiegel issues explicitly included several features on trade policy, free markets and the general fear that free trade and laissez-faire were up for grabs. The allusion with mercantilism was omnipresent in these debates. Mercantilism is often associated with protectionism, primitive interventionism and, when admitted a constitutive or foundational role in the making of the modern economy, considered as the antithetical Dark Side of economic modernity.

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But rather than looking at mercantilism and liberalism as binary opposites, or mercantilism as the pre-historical Dark Side of capitalism and liberalism finally replacing European mercantilism (the rise of laissezfaire by ways of the French and industrial revolution), we should see them as parts of the same parcel. From the Renaissance to the present day the liberal-capitalist economies of the West have remained remarkably mercantilist.108 But what exactly such mercantilism entailed is much less clear. In the chapters that follow I want to unpick some of the main threads in debates about capitalism, mercantilism and the making of modern economic growth in a long-run perspective. In the same way as the virtues of a competitive market economy are largely undisputed today, in terms of generating virtue, wealth and welfare, a similarly broad consensus had been shared since the Renaissance. Significant parts of this consensus can, with a pinch of salt, indeed be labelled “mercantilist” (or Cameralist). And in the same way as the state plays a significant role as an actor within the capitalist process today, it did so in the centuries of capitalism’s ascendancy, but in ways very different from ours.109 This age of capitalism’s ascendancy will in the following refer to the period roughly between the 1250s and 1850, a period which Werner Sombart and Karl Marx, two of the most original thinkers before the First World War, had as “early capitalism” (Frühkapitalismus )110 : limiting a discussion of mercantilism and Cameralism to the later seventeenth and eighteenth centuries would be too short-sighted. Mercantilism contained significantly more liberal and laissez-faire elements than is usually acknowledged. It was significantly less concerned with prohibition, protectionism and outright interventionism than many historians would admit. Mercantilists—or the emerging European 108 Georg Schanz, Englische Handelspolitik gegen Ende des Mittelalters, mit besonderer Berücksichtigung des Zeitalters der beiden ersten Tudors Heinrich VII. und Heinrich VIII (Leipzig: Duncker & Humblot, 1881); Erik Reinert, How Rich Countries Got Rich; William J. Ashworth, The Industrial Revolution: The State, Knowledge and Global Trade (London: Bloomsbury, 2017); from an economist’s point of view: Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective (London: Anthem, 2002). 109 See articles collected in Margaret Schabas & Neal de Marchi (eds.), Oeconomies in the Age of Newton (History of Political Economy, 2003 Supplement) (Duke University Press, 2003); Jonsson, “Climate Change and the Retreat of the Atlantic.” 110 Incidentally this term and concept was also used by German Marxist scholars, especially in East Germany, but in a more value-laden Marxist rationale.

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economic mainstream literature in the wake of the Scholastics labelled by Schumpeter “consultant administrators”,111 “monetarists” by the Marxists, broadly speaking “mercantilists” and Cameralists in modern accounts—built, since the twelfth and thirteenth centuries, on the basic premise that in principle markets were better allocators of resources than central government or the state, that private profit-making enterprise was a good thing, and that to improve the nation’s wealth, including the notion of individuals and welfare (which are often left out by modern historians when discussing mercantilism112 ), was one of the supreme goals of state. I do not want to uncritically or without modification entertain the idea that it would be particularly clever to use a modern frame of analysis when studying past centuries and societies long gone; on times and societies that operated according to ideologies, cosmologies and under social structures fundamentally different from ours. Never mind that the franchise for women was not introduced in the United Kingdom before the 1920s, but the times and ages when capitalism was invented and mercantilism and Cameralism were at its bloom, were radically different. They knew feudal society, aristocratic values and structures and strictures of social organization firmly in place. This went with patterns of land holding and agrarian property rights—land was, until the 1800s, the dominant capital asset and factor of production—so fundamentally alien to us that we can only look back with astonishment, through “distant mirrors” (Tuchman) or into “foreign countries” (Lowenthal).113 Nor should we succumb to short-termism and completely give up a longue durée perspective.114 Long-term comparative studies of the role of the state and the economic development of Europe, and the economic faith that stood behind such processes, are seldom, and we need them ever more, especially as during ages of crisis—Brexit, Trump and Covid-19—there tends to be confusion about whether or not, or in which ways, history is repeating itself. Historians have begun to better understand the role of the state in making the industrial revolution. But both the history of industrialization as well as 111 Schumpeter, History of Economic Analysis. 112 See Mokyr, Enlightened Economy. 113 David Lowenthal, The Past Is a Foreign Country (Cambridge: Cambridge University Press, 1985). 114 Jo Guldi & David Armitage, The History Manifesto (Cambridge: Cambridge University Press, 2017).

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the role of the state in the economic, or capitalist process have a much longer history than the industrial revolution.115 For centuries this capitalist package or deal entailed another aspect, which recent narratives have treated with less attention than it really deserves. This was a strong role for the ruler, later on the state116 ; in governing and empowering capitalism, in short: making capitalism work. Facilitating capitalism could be done by empowering the market and making sure, at least on paper, that market exchange and economic transactions between individuals should be governed by norms of equivalence and basic fairness.117 Later visions considered the well-being and growth of the common weal, including notions of creativity, productivity and useful knowledge in creating and adding value. Since the Renaissance “adding value” to a thing was understood to be a tool to raise the nation’s wealth, or make the common weal grow. Only since the 1920s and 1930s the idea transmorphed into the concept known as “economic growth”, which is the reason why we should use such modern terminology sparingly and with utmost caution.118 We find traces and elements of this mercantilist package buried in writings by churchmen such as Thomas Aquinas (1225–1274), churchman, astronomer and monetary theorist Nicolaus Oresme (d.1382), later Cameralists such as Veit Ludwig von Seckendorff (1626–1692), even Adam Smith and his sketch of advanced pre-industrial capitalism in the Theory of Moral Sentiments (1759) and more fully developed in his Wealth of Nations (1776). We find traces of mercantilism in texts written by ordoliberal thinkers of the 1940s and 1950s such as Walter Eucken or

115 With some exceptions that have been mentioned above. The most recent study is Silvia A. Conca Messina, A History of States and Economic Policies in Early Modern Europe (London & New York: Routledge, 2019). 116 Martin van Creveld, The Rise and Decline of the State (Cambridge: Cambridge University Press, 1999); Wolfgang Reinhard, Geschichte der Staatsgewalt. Eine vergleichende Verfassungsgeschichte Europas von den Anfängen bis zur Gegenwart (Munich: Beck, 2000). 117 My forthcoming book on Managing the Wealth of Nations (Bristol: Bristol University Press, 2021) will deal with this in more detail. 118 Matthias Schmelzer, The Hegemony of Growth: The OECD and the Making of the Economic Growth Paradigm (Cambridge: Cambridge University Press, 2016); Dirk Philipsen, The Little Big Number: How GDP Came to Rule the World and What to Do About It (Princeton, NJ: Princeton University Press, 2015); Philip Lepenies, Die Macht der einen Zahl. Eine politische Geschichte des Bruttoinlandsprodukts (Frankfurt a. M.: Suhrkamp, 2013), Engl. version The Power of a Single Number: A Political History of Gross Domestic Product (New York: Columbia University Press, 2016).

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Wilhelm Röpke.119 In recent years the study of institutions as normative forces structuring economic reality on markets has also included the study of beliefs.120 Here the state, if indirectly, through the implicit as well as explicit rules it sets for the social and economic process, and the intervention it performs in order to enforce these rules, became an important actor in the economic game. Since the middle ages this spirit of governing capitalism included the idea that rulers and kings should also be proactive in promoting the domestic market economy. This extended far beyond the enforcement of good behaviour in the market, but also the duty to intervene in the natural development of the market if things went wrong, to improve the economic well-being and productive capacities of the common weal. Some anachronisms and abstractions that come as natural with any such subjects of study can be dealt away with at once. Any historical study, be that a model in Cliometrics, a narrative on Martin Luther’s male sexuality,121 or the micro-history of a particular village, a person and her sexuality or mentality, in short: everything we do as historians, is by definition anachronistic (but clearly some studies are more so, others less so). Luther, to take but one example, never knew about father complexes and

119 An excellent comparison of two of the leading figures in post-war German neoliberalism or Ordoliberalism, Eucken and Hayek, can be found in Stefan Kolev, Neoliberale Staatsverständnisse im Vergleich (Neoliberal Theories of Government in Comparison), 2nd ed. (Berlin & Boston: De Gruyter Oldenbourg, 2017); see also Sean Irving, Hayek’s Market Republicanism: The Limits of Liberty (London & New York: Routledge, 2019). 120 The field is usually associated with Douglass C. North and Robert Coase, but has been grown and is still practiced by many, including prominent economists such as Acemoglu and Robinson, see their block buster Daron Acemoglu & James Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (New York: Crown, 2012). Other recent landmark studies would, apart from works quoted already, probably include, Avner Greif, “Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies,” Journal of Political Economy, 102:5 (1994), 912–950; Avner Greif, Institutions and the Path to the Modern Economy: Lessons from Medieval Trade (Cambridge: Cambridge University Press, 2006); Avner Greif & Guido Tabellini, “Cultural and Institutional Bifurcation: China and Europe Compared,” American Economic Review, 100 (May 2010), 135–140; Douglass C. North, Institutions, Institutional Change, and Economic Performance (Cambridge: Cambridge University Press, 1990); Douglass North, Understanding the Process of Economic Change (Princeton: Princeton University Press, 2005). 121 Lyndal Roper, Oedipus and the Devil: Witchcraft, Religion and Sexuality in Early Modern Europe: Witchcraft, Sexuality and Religion, 1500–1700 (London & New York: Routledge, 1994).

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anality; he suffered from constipation and obesity.122 And yet these have, alongside many other conceptual approaches, become accepted ways of thinking about him and the Reformation. Taking a deep-historical look at economic policy and the way states and polities tried to empower capitalism in the long run—as the present study attempts—may mean to become apostate to the modern historian’s fashionable commitment to studying only micro-phenomena related to one particular time, usually a few years, and one particular space. But it is done in full consciousness, driven by the belief that this will be helpful clarifying a bigger picture. In the following I will argue: • “Mercantilism” referred to a set of ideas, theories and discourses about what we today call “economics” or “the economy”, as well as models about how the state and society—again: very different beasts at different times and in different countries—should go together. So, debating mercantilism means as much debating “economics” as it means debating the “politics” of economic change, as well as the ideas underpinning these policies: ideas about freedom and capitalism, in modern words. • Most mercantilist ideas were related to some form of what we would call a “steering” of the economy, but most mercantilists were generally happy to leave market forces to fend for themselves where no intervention was considered necessary. Nowadays parts of it are also known as “regulation”. It is interesting to see (and perhaps deserving of closer scrutiny) how writers of the mercantilist age and the Enlightenment including Adam Smith had a very different definition of regulation than we do today. In Adam Smith’s writings “regulation” usually referred to a self-contained functional relationship between two variables. Perhaps during the nineteenth and twentieth centuries the term “regulation” acquired a more proactive, statedriven meaning. Today it is the bête noire of capitalism, but as the discussion in subsequent chapter shows, quite undeservedly so.

122 Funnily an unrelated namesake of mine, a leading Swedish gastroenterologist, has studied this: Stephan Rössner, “Martin Luther (1483–1546),” Obesity Review, 15:12 (December 2014), 1008–1009. I have also written a book on Luther: Philipp Robinson Rössner, Martin Luther on Commerce and Usury (London & New York: Anthem, 2015).

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• Many Mercantilists were concerned with trade as a source of domestic wealth, mainly with the goal to raise domestic manufacturing exports and competitiveness. That does not mean they were trade-driven or succumbed to absurd fallacies such as Chrysohedonism—otherwise known amongst historians as the “Midas Fallacy”, that is the idea that the wealth of the nation was based upon the monetary treasures that it possessed. Most mercantilists and Cameralists did have the bigger picture in mind. They knew that money was not a source but simply signifier of wealth, and they appreciated how to promote industry and good economy and raise the welfare of the common weal. Thinking in terms of models was no invention of the so-called Physiocrats.123 And surely no self-respecting author of the mercantilist-Cameralist fashion would have succumbed to the rather simplistic, and eminently falsifiable, fallacy of mistaking money for real wealth. We just need to get over the Fallacy of the Midas Fallacy. • The mercantilists cherished “free markets” domestically whilst safeguarding their home market against undue foreign competitors. This does not mean they usually proposed or generally advocated what we would consider generally “protectionist” trade policies. By keeping up protective tariffs and policies only on those branches of economy identified as key industries and key areas of economic strength for the time being, they at the same time cherished openness and competitive international trade. In other words, mercantilist and Cameralist conceptions of economy were remarkably dynamic, flexible, pragmatic and future-orientated.124 By adopting a longue durée history, de-centring from the AngloDutch experience and combining a conceptual history and history of ideas approach with more nuanced empirical histories of capitalism and economic modernity, we can see that even those whose first language

123 Elmslie, “Early English Mercantilists.” For a contrasting view, see Mary S. Morgan, The World in the Model: How Economics Work and Think (Cambridge: Cambridge University Press, 2012). 124 I am developing the idea of Cameralism and the discovery of the open future in a forthcoming article and special issue for History of Political Economy (2021).

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wasn’t English—those writers who spoke “Cameralism” not mercantilism—largely shared “English” understandings of possessive individualism and the positive nature of markets in shaping political economies of development and growth, and contributed to and shaped modern capitalism, in all its shapes and varieties, as we know it, from the middle ages to the present day. But their institutional contexts were different, making for a language and syntax of capitalism that sometimes sounds different. Chapter 2 reviews historians debates on markets, capitalism and state formation since the Renaissance with specific respect to economic policies known under the “mercantilist” and “Cameralist” label and their contributions made to the idiosyncratic varieties of capitalism in early modern Europe. This transcends traditional historians’ remarks on industrial and trade policy, where mercantilist policy and thought are most commonly located.125 Chapter 3 provides a concise overview on early modern European economic lives—the groundwork or empirical pre-text for subsequent analyses of political economic and economic discourse relating to crucial parts of economic lives, particularly within a mercantilist spectrum: trade, urban industry and economic life, and the idea that both could be improved upon by a combination of private vices and public virtues and possessive individualism. Chapter 4 situates political economy and economic literatures of capitalism within the idiosyncratic conditions provided on the ground in early modern Europe. Most European regions remained decidedly agrarian and non-urbanized until late, shot-through with feudal systems of allocation, modes of production and forms of extraction that created very specific institutional frameworks for economic activity. Individual freedom was located within social networks and feudal webs of power, coercion and belonging. And with native nobilities and feudal grand seigneurs enjoying wide-ranging claims on the economic, social and emotional resources of the individual, the existence of numerous freedoms in the plural infringed with the basic notion of possessive individualism and competitive laissez-faire which became later on associated with the unfolding of economic dynamics. This was the age when basic ideas of capitalism formed, and some key capitalist institutions and practices were founded, such as stock exchanges, giro and deposit banking, modern theories of money and monetary management, to name but a few. But given the prevailing societal frameworks: 125 Most recently, this “mainstream” opinion has been reiterated in Conca Messina, A History of States and Economic Policies.

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70–90 per cent of the people lived and worked on the countryside, such models of political economy still by and large represented and described economic life at the margin, literally speaking. But margins (as every economist knows) can be productive and often representative of future or forward dynamics: life at the margin often is where life is most dynamic. Since the early modern period economic discourse thus moved away from a purely agrarian-focused household or demesne management literature towards incorporating wider ideas and conceptions about markets, economy, industry and international competition. In many ways the mercantilist and Cameralist economic literature—which has left broad traces in modern conceptions and understandings of market and economy—transcended traditional economic framings which had centred either on the region, the respective city or the agrarian household. Texts now came to address economic questions of a wider remit (value added, prices, wages, exchange rates, industrial competition, etc.) and models within a territorial, and thus emerging macro frame. Cameralists and mercantilists also understood the origins of economic dynamics and growth. As Chapter 5 argues, early modern writers chose, in this process, to frame and re-frame the question of freedoms in the plural, especially the privileges enjoyed by the nobility and other market infringements, when making their dynamic models of economy work. Conditions for capitalism and competitive markets—economic freedom in the modern way—had to be created, designed and managed, as Chapter 6 discusses. They could not be found, or assumed, as much of the modern literature does, to just exist in situ, or continue to exist automatically once established. Capitalism and freedom needed careful management, and these looked regulatory, autocratic and state-led in because the initiative of creating laissez-faire invariably came from the state, as the Cameralists described. But in many ways their works bear out a similar understanding of the virtues of free enterprise and competitive price formation as writers in the Scottish Enlightenment or later traditions within the “liberal” camp would emphasize. Chapter 7 builds up on this. It first engages with the quite common assumption that European capitalism developed in spite, not because, of mercantilism and Cameralism as political economies commonly frowned upon by modern historians as development-inhibiting forces. We will look at one particular nation which has not often been reckoned amongst capitalism’s prime examples but which saw a rather dynamic transition during the eighteenth century under mercantilist fetters: Scotland, a nation which had a long-standing history of connections with continental Europe and

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which produced, alongside Adam Smith, the other great figure of the Enlightenment economic tradition, Sir James Steuart, whose work also has, as we have seen and will see, a foot in the “Cameralist” camp. This example will highlight the close and intrinsic connections between private virtues and public vices in the mercantilist-Cameralist age. Such economic dynamics could not be replicated exactly on the continent, but the second part of this chapter turns back to the continental visions of capitalism and the market process wrapping up the argument and key ideas especially of the Cameralists as ideas that were widely shared across Europe, inside and outside the early modern German-speaking lands, and which provided foundational for capitalism. They created foundations for capitalist dynamics even in nations and for people whose first language wasn’t English. Mercantilism thus was not what it is usually assumed to have been. More importantly, continental states and especially the German-speaking “late-comers” to economic modernity were more fluent in the language of capitalism than we may think, after all.

CHAPTER 2

Debating Capitalism and Economic Modernity in Early Modern Europe

Abstract This chapter reviews historians, economists’ and other scholars’ debates on markets, mercantilism and state formation since the Renaissance with specific respect to economic policies known under the “mercantilist” and “Cameralist” label, and their contributions made to the unfolding and idiosyncratic varieties of capitalism in early modern Europe. Markets were ubiquitous in early modern Europe, and mercantilist– Cameralist political economy was positively attuned towards regulating and perfecting markets in the interest of the common good. The central argument is that we cannot see “state” and “economy” as either separate or different interest spheres in the way many scholars still do today (Most recently, Daron Acemoglu & James A. Robinson, The Narrow Corridor: States, Societies, and the Fate of Liberty [London: Penguin, 2019]), nor were mercantilism and Cameralism “anti-market” in any way (quite the contrary). By the same token the present chapter also calls us to critically engage with the notion that before the eighteenth-century continental European societies were leaning more towards traditional notions of a “moral economy” which would only later, during Polanyi’s Great Transition, be gradually surpassed by a more capitalist mentality and outlook on the material economy. In this way the chapter offers a new view on the dynamics of markets and political economy in pre-industrial Europe that transcends both popular narratives on European society “before capitalism”, as well as mercantilism and related political economies as anti-market and welfare-reducing. © The Author(s) 2020 P. R. Rössner, Freedom and Capitalism in Early Modern Europe, Palgrave Studies in Economic History, https://doi.org/10.1007/978-3-030-53309-0_2

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Keywords Capitalism · Mercantilism · Cameralism · Marxist · Market · Sombart

It is not the purpose of the present chapter to provide a thorough review of the relatively buoyant and essentially unsettled literature, recent or less recent, on the history of capitalism. This is a field which has received a dynamic revival in the last decade. Mostly the new history of capitalism boils down to American slavery, cotton and global commodity chains, or nineteenth-century (usually US-American) business history. My aim is simply to explore the missing links between capitalism and mercantilism via Cameralism, and to put both into a longue durée perspective on the history of economic development, without succumbing to the Marxist teleology assuming a directional causal causality between the two. Marx, in Das Kapital, Vol. I, German ed., Chapter 24, assumed a functional connection between capitalism and mercantilism as a “bourgeois” political economy, which conceptually and ideologically underpinned the process of original accumulation, often rendered as “primitive accumulation” in the common unhappy English translations of Capital . In Marx’s reading of history, the state and mercantilist policies (or “monetarism” as “mercantilism” was labelled often by Marxist scholars) gave capitalists a helping hand in speeding up processes of workers’ and small producers’ alienation, expropriation and thus helped capital formation in the West in its crucial stage. But as Sombart, in his Der moderne Kapitalismus (4th ed., 1927) realized, even when avoiding a dogmatic Marxist perspective, one could not fail but realize the strong connections between European economic development between the fifteenth and nineteenth centuries, and the role played by mercantilist political economy. I should also avoid making too much fuss about the Braudelian analytical separation between market economy and capitalism.1 One can really get bogged down in pernickety conceptual debates which can become progressively less helpful the more dogmatic the chosen use becomes of the labels employed. There is some lack of clarity about what the history of capitalism is actually about, and how it is different from a simple history of the market economy. There were markets across nearly all areas and eras of recorded human history. Some would even see the market almost 1 Braudel, Civilization and Capitalism.

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as an anthropological constant, a natural human inclination or what Adam Smith called the human instinct to truck, barter and exchange.2 However, market economies don’t necessarily mean that capitalism is around, and Braudel made this very clear in devoting the first volume of his tripartite opus magnum on Civilization and Capitalism to features of regular economic life that took place on markets, i.e. economic life “on the ground”, which to him was the antithesis of capitalism. Capitalism and capital accumulation according to Braudel took place outside the normal market economy, on the high ground where profits were absurd, and the air thin, in big overseas trading ventures, financing, speculation, etc. Historically speaking we should be more nuanced, as Bavel’s recent book reminds us; we should perhaps relax artificial analytical boundaries. Braudel’s definition of capitalism came at the expense of separating it from market economy: this was Marxian and massively influenced by Sombart (from his footnotes we know that Braudel was a great admirer of Sombart’s work). So, capitalism and market economy overlapped and may to an extent be used interchangeably, in particular since history of capitalism has turned into a bit of a sales pitch in recent years. My main interest in the following, when connecting mercantilism/Cameralism and capitalism, relates to market economy, capital formation in towns and countryside especially in those processes and areas where we observe market-driven visible economic dynamics and positive economic development. “Visible” meaning in terms of accepted historians’ benchmark metrics such as prices and inflation rates, incomes, productivity and real wages, and where these metrics testify to dynamic expansion within the economies of Europe during the age of capitalism’s ascendancy, 1250s– 1850; “dynamic” meaning that they contributed to a per capita expansion of economic resources.3 Such cycles of dynamics are known from virtually all times and places, and certainly the bigger cities of their age and their surroundings, be that Venice, Genoa or Florence in the twelfth and thirteenth century, or late medieval and sixteenth-century Augsburg, Nuremberg, Leipzig, Antwerp, Amsterdam, London etc.

2 Gary M. Feinman & Christopher P. Garatty, “Preindustrial Markets and Marketing: Archaeological Perspectives,” Annual Review of Anthropology, 39 (2010), 167–191. 3 DuPlessis, Transitions to Capitalism.

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When talking about the role of markets, mercantilism and the rise of capitalism we should perhaps start with the institution central to any capitalist process, the market. Whilst critics and critiques of the market have been around for as long as markets and capitalism have, it is hard to think of an alternative that would be equally efficient in generating and sustaining dynamics as competitive markets, if handled or coordinated well. Not even Martin Luther, one of the most ardent critics of the market when its practices were driven over the top, ever hesitated to state about markets that the next best thing will be to hold our wares at the price which they fetch in the common market, or which is customary in the neighbourhood. In this matter we can accept the proverb: ‘Do like others and you are no fool.’ Any profit made in this way, I consider honest and well earned. (Luther, On Commerce and Usury, 1524)4

This has been the creed of nearly all believers in the free market, from the conservative to the neoliberal spectrum. Luther was hailed by Hayek as an early proponent of laissez-faire; not entirely wrongly, but somewhat anachronistically. But recent research has established interesting connections between post-war German Ordoliberalism and Lutheran theology of order,5 showcasing the long lines of Renaissance modes of thought that made it into modern economic ideologies. Luther was indeed marketliberal in the best sense of the word, albeit many historians to the present day describe his thinking as reactionary and outdated even at the time it was conceived; it is probably based on a misreading of Luther’s German five hundred years ago, especially when we got our neoliberal looking glasses on.6 In such mainstream interpretations Luther comes across as

4 Rössner, Martin Luther on Commerce and Usury, introduction. 5 Philipp Manow, “2001: Ordoliberalismus als ökonomische Ordnungstheologie,”

Leviathan, 29:2 (2001), 179–198; Troels Krarup, “‘Ordo’ versus ‘Ordnung’: Catholic or Lutheran Roots of German Ordoliberal Economic Theory?,” International Review of Economics, 66 (2010), 305–323. 6 Rössner, Martin Luther on Commerce and Usury, introduction; Werner Plumpe,

“Die o¨ konomische Bedeutung des reformatorischen Denkens. Zur wirtschaftshistorischen Bedeutung des religi¨osen Wandels im 16. Jahrhundert,” in: Udo di Fabio (ed.), Reformation und die Ethik der Wirtschaft (T¨ubingen: Mohr Siebeck, 2018), pp. 1–20. On vices and virtues of neoliberalism as a concept, see Harvey, A Brief History of Neoliberalism; Kolev, Neoliberale Staatsverständnisse.

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the medieval ignoramus shouting helplessly against the forces of capitalism and economic modernity. This ignoramus or anti-capitalist he certainly never was. Luther had undergone a sound training in law (until 1505) and concluded his studies of theology with a Divinity doctorate in 1512. Before 1727 economics did not exist as a subject taught at universities. But law and theology were, during Luther’s days, those two academic disciplines that dealt with what we would call “economics”. Luther therefore had learnt his nuts and bolts of the workings of the contemporary market process. He was well acquainted with all main texts and theories on the market written by the medieval Scholastics and churchmen, from Aquinas to Duns Scotus, Oresme or Gabriel Biel, the leading churchman of his time in the German-speaking lands and beyond (Biel was highly acclaimed across Western Christendom). And he wrote at a time, not of a rise of capitalism, but when the high-powered central-German capitalist economy went through secular decline, 1500–1525.7 This is not equal to saying that the market is and was the only possible or chief way of allocating resources, not even in the capitalist process. Modern propositions know alternatives such as “peer production”, “commons” or “sharing economy”, some of which are known from Europe’s pre-industrial heritage, with some basic scepticism as to their efficiency in terms of sustaining (or raising) overall welfare. Along the market we also find redistributive and reciprocal modes of exchange (which have remained important in capitalist societies to the present day). Historians have spared no ink, either, in trying to prove that in European history the market never mattered so much, that there was a moral economy of the crowd, or that there generally were times and ages before capitalism.8 The question comes down, partly at least to the old question 7 Rössner, Deflation—Devaluation—Rebellion. On medieval Scholastic economics, see Odd Inge Langholm, Economics in the Medieval Schools: Wealth, Exchange, Value, Money and Usury According to the Paris Theological Tradition 1200–1350 (Leiden: Brill, 1992), id., The Legacy of Scholasticism in Economic Thought: Antecedents of Choice and Power (Cambridge: Cambridge University Press, 1998); Diana Wood, Medieval Economic Thought (Cambridge: Cambridge University Press, 2002). 8 Polanyi, Great Transformation. Fred L. Block & Margaret R. Somers, The Power of Market Fundamentalism: Karl Polanyi’s Critique (Cambridge, MA: Harvard University Press, 2014); Chris Hart & C. Mann, Market and Society: The Great Transformation Today (Cambridge: Cambridge University Press, 2011); Hart & Hann, Economic Anthropology; see relevant discussion on Polanyi and other market critics in Lisa Herzog & Axel Honneth (eds.), Der Wert des Marktes: Ein ökonomisch-philosophischer Diskurs vom 18. Jahrhundert bis zur Gegenwart (Frankfurt-on-Main: Suhrkamp, 2014). Historical viewpoints in Martha

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raised by Polanyi: how much market is there in one particular society or culture? And we can be reasonably sure, without ever being able to measure it (one possible proxy is per capita money supply or per capita mint output, when documented, i.e. the degree of monetization 9 ) that quantitatively and in relative terms there was less market in pre-industrial society and economy, than, say in the nineteenth or twentieth centuries. As summarized by Spoerer: First, in the Middle Ages only a small fraction of goods, services and hours was exchanged via markets. Peasant households consumed most of what they produced themselves, and most of what they had to hand over to nobles and the church was consumed by them and their courts or abbeys. Only a small fraction of the harvest found its way to what we call a market. Second, why should the parties involved in market transactions record the prices they paid or earned? This was the case only when some bookkeeping was necessary, typically in institutions where the acting agent had to justify his market transactions to his principal. This may have been the city council, the board of a charity institution or the principal of a trading company. Apart from account books, another source are market reports, often compiled by the city administration. Third, whether the price paid (and recorded) by a large consumer like a city or a hospital was the same as that paid by a day labourer is unclear. Fourth, whether the price one can find in market reports compiled by the city administration was the (correctly calculated average) actual price or just a norm, for example an upper limit for the price that could be asked for, is often not clear. And, fifth, in premodern times prices [were] in effect local. Insufficient transport infrastructure and ineffective means of transport increased trading costs, and so market integration is supposed to have been weak until the nineteenth century.10

C. Howell, Commerce Before Capitalism in Europe, 1300–1600 (Cambridge: Cambridge University Press, 2010); Craig Muldrew, The Economy of Obligation: The Culture of Credit and Social Relations in Early Modern England (Palgrave Macmillan, 1998). 9 E.g. Jan Lucassen, “Deep Monetisation: The Case of the Netherlands 1200–1940,” TSEG/Low Countries Journal of Social and Economic History, 11:3 (2014), 73–122. 10 Eva Brugger, Angela Huang, Ulla Kypta, & Mark Spoerer, “Introduction into the Study of Markets,” in: Ulla Kypta, Julia Bruch, & Tanja Skambraks (eds.), Methods in Premodern Economic History: Case Studies from the Holy Roman Empire, c. 1300–c. 1600 (Palgrave Macmillan, 2019), pp. 99–101, at pp. 105f.

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Bavel notes that the market does not necessarily represent the most natural system of economic organization in human economic history: advanced societies may know decaying market economies. Nor does human economic history usually evolve in a linear or end-driven (teleological) way from less marketized to more marketized societies. The market is not the end of economic history.11 Neither is capitalism: great thinkers of their time, such as Karl Marx, Werner Sombart or Joseph Schumpeter, were convinced that capitalism was not made to last. It was bound to come to an end.12 But does this make pre-1800 (or pre-1650) English or Dutch or European society any less capitalist?13 This is important, especially if we want to understand mercantilism’s role in the process. There is no clear-cut answer to the question. Even in contemporary capitalism a lot of productive factors and resources are sourced outside the market, or following a reciprocal or redistributive rationale.14 Although never priced into mainstream measures of wealth, such as GDP (including women’s recreational and childcare work when in the household), no one would claim that they were part of a non-capitalist or “moral economy”. As Ronald Coase, one of the inventors of modern transaction cost theory and New Institutional Economics has found, in modern capitalism, where large firms and corporations are characteristic, such firms often use vertical integration to cut down on operating costs and increase efficiency. Vertical integration (inhouse production) essentially means withdrawing from the market, as a sure means of saving transaction cost.15 But this does not make the business or enterprise any less capitalistic. Redistributive modes of exchange such as taxation, compulsory pension schemes, social security and the welfare state, are omnipresent today as they were seven hundred years ago but likewise represent fundamental underpinnings of capitalism—the 11 Bas van Bavel, The Invisible Hand? How Market Economies Have Emerged and Declined Since AD 500 (Oxford: Oxford University Press, 2016). 12 Marx, Das Kapital; Werner Sombart, Der moderne Kapitalismus, esp. vol III. Schumpeter, Capitalism, Socialism and Democracy. 13 See Peter Temin’s review of Neal & Williamson (2015). Temin, “The Cambridge History of ‘Capitalism’,” Journal of Economic Literature, 53:4 (2015), 996–1016. 14 Chris Hart et al. (eds.), The Human Economy (Polity Press, 2010). 15 R. H. Coase, “The Nature of the Firm,” Economica, 4:16 (1937), 386–405 and

the chapter by Karl Gunnar Persson in Neal & Williamson (eds.), Cambridge History of Capitalism, vol. 1, p. 242.

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grease on which capitalism’s wheels turn.16 As one eminent scholar has pointed out recently in response to a major new history of capitalism, “people even today rely on a mixture of behavioral modes, choosing which one to use as a result of internal and external forces”.17 In fact, as this chapter argues, redistributive modes of production known as the manorial or demesne system, vulgariter “feudalism”, help a great deal explaining why continental European market theory such as James Steuart, Principles of Political Oeconomy (1767) or Johann Heinrich Justi’s Staatswirthschaft (Principles of Economics, 1755)—arguably two of the most important and widely read economics treatises on the continent before 1776, read so different from Smith’s contemporaneous Wealth of Nations, but were none the less “capitalistic” in what they described, modelled and analysed. In England, serfdom had vanished by the 1600s. In Scotland forms of it survived in the coal industry until the 1770s, but most forms of leasehold and property rights were developed according to relatively free schedules. On the continent on the other hand the political process and property rights structures, into which capitalism was embedded, looked in many ways fundamentally different, bar, of course, bar the Netherlands.18 This is also a reason why early modern England (and Holland) should not be seen as the normal templates or benchmark for the history of European capitalism.

How Old Is Capitalism? This opens up the question “how old is capitalism”, and “what is capitalism”, questions on which scholars are undecided to the present day.19 Some argue that the early modern Netherlands and post-1688 early industrial England represented origins of modern capitalism.20 Recent studies in the history of capitalism exhibit a clear, almost exclusive focus

16 An updated survey in Hart et al. (eds.), Human Economy. 17 Temin’s review of Neal & Williamson, Cambridge History of Capitalism. 18 See this chapter and Chapter 3 below. 19 Most recent survey Jonathan Levy, “Capital as Process and the History of Capitalism,” Business History Review, 91, Special Issue 3 (A Special Issue on Methodologies) (2017), 483–510, esp. 505. 20 Neal & Williamson (eds.), Cambridge History of Capitalism, introduction.

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on England and the USA and nineteenth-century business history.21 But does this automatically make these examples archetypical of capitalism and everything else that came before proto-capitalist or pre-capitalist? Perhaps we should be careful not to take specific manifestations of modern capitalism, such as the early modern Dutch economic miracle (1500s–1750s) or the first industrial nation (England, 1750s–1850s), as capitalism’s essence or ideal-typical norm.22 The problem is compounded by the fact that economic development hardly stops at territorial borders. This was pointed out by Pomeranz, suggesting that global comparisons should focus on specific regions instead, such as the Yangtze-Delta, rather than China, to avoid the arbitrary framework of twentieth-century state borders.23 The regional paradigm has taken up this call and advanced our understanding of early industrial dynamics in Saxony and Silesia and elsewhere, where certain areas that could be usefully analysed as more or less distinct economic regions overlapped multiple territorial borders, notwithstanding the potential barrier to economic integration represented by tariffs and customs duties. This makes it difficult to pin down dynamic or capitalist economic development in early modern Europe completely to specific territories or borders.24 Some scholars would add another note by finding elements of capitalism and dynamic economic development outside Europe, within the Arab world, Indian Ocean, even China, since the middle ages, albeit Weber (his articles on the protestant ethic and capitalism, as well as his work on world religions), Marx (Capital ) and Werner Sombart (Der moderne Kapitalismus, esp. volumes I and II) did their best to locate the

21 See above. 22 Pomeranz, Great Divergence, and a lot of studies in Pomeranz’s wake have done this

as a matter-of-course. This has certainly also been enforced by recent quantitative studies on Europe’s pre-industrial “small divergences” that have also been discussed above. New research by Nuno Palma, mentioned above, on early modern Portugal, or Ulrich Pfister, on pre-industrial Germany, should make us pause and accept that other regions were similarly dynamic until at least 1700 or so. Ulrich Pfister, “The Timing and Pattern of Real Wage Divergence in Pre-Industrial Europe: Evidence from Germany, c. 1500–1850,” Economic History Review, 70:3 (2017), 701–729. 23 On this see Christopher A. Baily, The Birth of the Modern World: 1780–1914 (Wiley Blackwell, 2004). 24 Hubert Kiesewetter, Region und Industrie in Europa 1815–1995 (Stuttgart: Franz Steiner, 2000); Nikolaus O. Siemaszko, Das oberschlesische Eisenhüttenwesen 1741–1860 (Stuttgart: Franz Steiner, 2011).

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origins of capitalism in Europe.25 Marx and Sombart also employed the concept of “early capitalism” (Frühkapitalismus ), but Sombart’s concept of “high capitalism” (Der moderne Kapitalismus, Vol. III) should not be mistranslated as modern capitalism: Capitalism came from the profound depths of the European soul. It is the same spirit as that from which the new state and the new religion, the new science and the new technique were born; and it also created the new economic life. It is the spirit of earthliness and worldliness, a spirit with a tremendous power for the destruction of old, natural creations, old constraints and barriers, but also a strong power for the reconstruction of new forms of life, of artificial and artistic creations, serving a purpose. It is that spirit which, since the ending of the middle ages tore mankind from the quiet, organically grown attachments of kindliness and social relations and flung it upon the path of restless self-seeking and self-determination. First striking root in this or that strong man, it drove him from the mass of calm, peace-loving associates, and then always into wider spheres, performing, active, moving.26

Modern capitalism Sombart saw originating in the medieval European demesne economy; he also saw it embodied within the spirit of the seventeenth-century privateer, the late medieval Italian military condottiere or the eighteenth-century manufactory entrepreneur who ran largescale arms and uniform works,27 others in the Italian republics and their commercial revolution of the twelfth and thirteenth centuries.28 Modern capitalism as invented in twelfth- and thirteenth-century Genoa, Venice or Florence brought us, amongst other things, double-entry book-keeping, giro and deposit banking, the bill of exchange and cashless payment, 25 But see, for a balanced world-historical view, e.g. Irfan Habib, “Potentialities of Capitalistic Development in the Economy of Mughal India,” The Journal of Economic History, 29:1 (The Tasks of Economic History) (March 1969), 32–78; Kocka, Capitalism; Janet Abu-Lughod, Before European Hegemony: The World System A.D. 1250–1350 (Oxford: Oxford University Press, 1991); Frank, ReOrient. 26 Sombart, Der moderne Kapitalismus, last ed. (Leipzig & Munich: Duncker &

Humblot, 1927), vol. I, ch. 20. 27 Werner Sombart, Quintessence of Capitalism: A Study of the History and Psychology of the Modern Business Man (New York, 1915). 28 E.g. Robert S. Lopes, The Commercial Revolution of the Middle Ages, 950–1350 (Cambridge: Cambridge University Press, 1976); Peter Spufford, Power and Profit: The Merchant in Medieval Europe (London: Thames & Hudson, 2002).

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virtual money (Bitcoin’s precedent), marine insurance and, if we follow Max Weber, a certain rationality (we may doubt the latter because obviously the concept carries propositions that can be identified as Eurocentric and Orientalist).29 Learning to live with the market economy, capitalist or not, was what marked the rise of religious orders since the turn of the millennium, when religious practice turned more and more lenient towards capitalism and business in the twelfth century and beyond.30 It is difficult to see what made these capitalisms any different from industrial capitalism, except from the trivially obvious fact that steam engines, steel and coal replaced other forms of energy and transformed the physical materiality of capitalism, as well as its global reach beyond 1800.31 There is, of course, some virtue in considering the mid-nineteenth century as a watershed. 1848 changed the material and mental landscape, by ways of political revolutions and the ongoing industrial revolutions on the continent, 1789–1848, but also in terms of political economy: not only the Paulskirchen revolution in Germany, but with Karl Marx and John Stuart Mill writing books that turned out to be foundational for modern economic analysis.32 The extension of the franchise and implementation of proto-democratic processes by means of the revolutions 1848, massive population growth, the expansion of global trade and colonial imperialism, the abolition of serfdom in wide parts of Europe between the 1810s and 1870s, and the physical reconfiguration of the material world considerably changed capitalism’s fabric and face. With the rise of

29 Max Weber, Religion und Gesellschaft (Engl. The Sociology of Religion), orig. 1920; on marine insurance see the ongoing work by Markus A. Denzel, e.g. Denzel, “Die Seeversicherung als kommerzielle Innovation im Mittelmeerraum und in Nordwesteuropa vom Mittelalter bis zum 18. Jahrhundert,” in: Ricchezza del mare. Ricchezza dal mare. Secc. XIII –XVIII. Atti della “Trentasettesima Settimana di Studi”, 11–15 Aprile 2005, a cura di S. Cavaciocchi (Florence, 2006), vol. I, pp. 575–609; Iris Origo, The Merchant of Prato, Francesco di Marco Datini (London: J. Cape, 1967). 30 Lester K. Little, Religious Poverty and the Profit Economy in Medieval Europe (Ithaca: Cornell University Press, 1978); Rodney Stark, The Victory of Reason: How Christianity Led to Freedom, Capitalism, and Western Success (New York: Random House, 2005). 31 The literature on the industrial revolution is now endless; scholars to be mentioned— inasmuch as their work is connected with a certain debate, or who have made a landmark contribution—include Nick Crafts, Joel Mokyr, Pat Hudson, E. A. Wrigley, T. S. Ashton and many more. 32 E. Reinert et al., “80 Economic Bestsellers Before 1850.”

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bourgeois dignity and values,33 the emergence of large corporations, the growth of big business, stock companies and railways, a gradual emancipation of women and the working class, the rise of the ethnocentric nation state, etc., a series of landslide changes happened in the human-economic environment during the nineteenth century. But did this change modern capitalism’s essence? There is room for doubt. For this reason, the present book focusses its discussion on the time between the 1250s and 1850s, an age of capitalism’s ascendancy, avoiding timelines and teleology. Capitalism was in place as clear-cut in the medieval trading republics of Genoa, Florence and Venice, as it was in the industrial hot house of Krupp City Essen (Germany) in 1914. But it had changed and morphed over time.

Political Economies of Markets and Economic Lives in Medieval and Early Modern Europe: Historians’ Debates Historians have accumulated sound evidence that full-fledged market economies driven by elements of capitalist dynamics existed in the European cities and their hinterland since the twelfth century.34 Often trade in essentials such as meat and grain was subject to the basic working

33 Sombart, Der Bourgeois; Engl. Quintessence of Capitalism; Deirdre McCloskey, Bourgeois Equality: How Ideas, Not Capital or Institutions (University of Chicago Press, 2016); ead., Bourgeois Dignity: Why Economics Can’t Explain the Modern World (University of Chicago Press, 2010); The Bourgeois Virtues: Ethics for an Age of Commerce (University of Chicago Press, 2006). 34 See the works mentioned above by Bas van Bavel, or Jan Lucassen. Furthermore Victoria Bateman, “The Evolution of Markets in Early Modern Europe, 1350–1800: A Study of Wheat Prices,” Economic History Review, 64:2 (2011), 447–471; Karl Gunnar Persson, Grain Markets in Europe 1500–1900: Integration and Deregulation (Cambridge: Cambridge University Press, 1999), or any of the older works on European price history composed by people affiliated with the research group on price history in the 1920s and 1930s, e.g. Moritz Elsas, Umriss einer Geschichte der Preise und Löhne in Deutschland vom ausgehenden Mittelalter bis zum Beginn des neunzehnten Jahrhunderts, 3 vols. (Leiden, 1936–1949); Wilhelm Abel, Agrarkrisen und Agrarkonjunktur in Mitteleuropa vom 13. bis zum 19. Jahrhundert [Berlin, 1935], 3rd ed. (Hamburg & Berlin: Parey, 1978); id., Agricultural Fluctuations in Europe from the Thirteenth to the Twentieth Centuries (London, 1980).

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mechanisms of a full-fledged market economy,35 after the age of the medieval emporia or regulated trading posts had vanished.36 Often cities took the lead, with merchants and entrepreneurs creating value and commodity chains, as putting-out merchants or Verleger, integrating a city’s wider hinterland into inter-regional systems and logics of commerce, be that Nuremberg, Augsburg or smaller such economic centres such as Leipzig.37 Otherwise there would have been little occasion for Luther to write his sermons anent usury in 1519, 1529 or 1540, the latter picking up on profiteering and beginning inflation since 1538, but not freemarket practices as such; or why writers until the end of the eighteenth century should habitually address the question of usury: this literary tradition only makes sense if we assume that commands against usury, overly high profits and other capitalist business techniques were habitually broken, i.e. capitalist practices on full-fledged market economies prevailed.38 The mercantilists and Cameralists after the 1500 usually attained a more relaxed role about trading, the taking of interest, business and profits, even though we find elements of such positive views on

35 For medieval Germany, see survey in Eberhard Isenmann, Die deutsche Stadt im Mittelalter 1150–1550: Stadtgestalt, Recht, Verfassung, Stadtregiment, Kirche, Gesellschaft, Wirtschaft (Cologne, Weimar, & Vienna: Böhlau, 2014) and works mentioned previously on medieval economic and price history. 36 Henri Pirenne, Mohammed and Charlemagne (1937); Michael McCormick, Origins of the European Economy: Communications and Commerce AD 300–900 (Cambridge: Cambridge University Press, 2015). 37 The classic study for Upper Germany is Wolfgang von Stromer, Oberdeutsche Hoch-

finanz: 1350–1450, 3 vols. (Wiesbaden: Franz Steiner, 1970), or more recently Donald J. Harreld, High Germans in the Low Countries: German Merchants and Commerce in Golden Age Antwerp (Leiden & Boston: Brill, 2004). For Leipzig and the Fuggers, see Enno Bünz, “Die Fugger und Leipzig. Messeplatz, Faktorei und landesherrlicher Hof an der Wende vom Mittelalter zur Neuzeit,” in: Susanne Sch¨otz (ed.), Leipzigs Wirtschaft in Vergangenheit und Gegenwart. Akteure, Handlungsspielr¨aume und Wirkungen (1400– 2011) (Leipzig: Leipziger Universitätsverlag, 2012), pp. 73–94, and literature discussed in subsequent chapters. 38 Johann Peter Wurm, Johannes Eck und der oberdeutsche Zinsstreit 1513–1515 (Münster: Aschendorff, 1997); Hermann Barge, Luther und der Frühkapitalismus (Gütersloh: C. Bertelsmann, 1951).

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enterprise already within the later Scholastic literature of the sixteenth century.39 The great French historian Fernand Braudel, however, took a different view, by making the analytical separation between market economy (or daily material life, covered in vol. 1 of his massive Civilization and Capitalism) on the one and capitalism as an “unnatural” spirit on the other hand, in foreign trading and emerging global circuits of profit and trade, where profits were reaped by a small group of cunny individuals controlling commodity chains and “driving” the capitalist engine forward to new shores.40 These were, so the assumption goes, more likely to be found in the Western European cities and areas facing the Atlantic, with access to exotic goods upon which much of early modern commercial revolution of the Atlantic economy rested.41 New research on the dynamism of the early modern east Elbian demesne system, however, has found elements of dynamics within the central-east European economy before and after 1500, when a process of re-feudalization set in many regions there.42 There has been a fashion amongst historians and economists to interpret the River Elbe as an institutional demarcation line of less (east of the Elbe) vs. more inclusive (West of the Elbe) institutions, and a more developed Western Europe compared to the less developed East Elbian regions.43 A similar assertion was made by Noble Laureate Douglass North in a groundbreaking study on the rise of Europe in the early modern age.44 But recent comparative studies, drawing on Slavic language historiography unavailable to North and Thomas, or more recently Acemoglu

39 Francesco Boldizzoni, Means and Ends: The Idea of Capital in the West, 1500–1970 (Basingstoke & New York: Palgrave Macmillan, 2008). 40 Braudel, Civilization and Capitalism. 41 Daron Acemoglu, Simon Johnson, & James A. Robinson, “The Rise of Europe:

Atlantic Trade, Institutional Change, and Economic Growth,” American Economic Review, 95:3 (2005), 546–579. 42 Witold Kula, An Economic Theory of the Feudal System: Towards a Model of the Polish Economy 1500–1800 (London: N. L. B., 1976); Francesco Boldizzoni, The Poverty of Clio: Resurrecting Economic History (Princeton, NJ: Princeton University Press, 2011). 43 Acemoglu, Johnson, & Robinson, “The Rise of Europe.” 44 Douglass C. North & Robert Paul Thomas, The Rise of the Western World: A New

Economic History, new ed. (Cambridge University Press, 2012) (original 1973).

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et al., suggest that this divide may be overdrawn.45 Cities flourished east of the Elbe as well, but were not as large, on average, as west of the river Elbe, which distorts the quantitative metrics of international comparisons, when economic growth is approximated using urban growth rates as a proxy. But agrarian economies in central-East Europe could be as capitalist and market-driven as societies in the west. Similar features we can observe on the countryside in the hinterland of the larger cloth-exporting and manufacturing cities such as Nuremberg and Augsburg in remote agrarian Germany, cities that were integrated into a nascent capitalist world economy from the fourteenth century onwards.46 Even on the German countryside on the eve and in the wake of the Reformation there was a lot of market-driven, even capitalistic enterprise shown by commercial farmers and richer peasants.47 In fact the series of uprisings known as the German Peasant War of 1524–1525 manifestly evolved around questions of market economy, coinage and mining, capitalist farming and growing commercialization in town and countryside alike.48

45 Markus Cerman, Villagers and lords in Eastern Europe, 1300–1800 (= Studies in European History) (Basingstoke: Palgrave Macmillan, 2012). 46 See, e.g. the meticulously researched studies on late medieval Augsburg—one of the centres of nascent Upper German capitalism in the middle ages and into the sixteenth century—and its hinterland: Rolf Kießling, Die Stadt und ihr Land: Umlandpolitik, Bürgerbesitz und Wirtschaftsgefüge in Ostschwaben vom 14. bis ins 16. Jahrhundert (Cologne & Vienna: Böhlau, 1989), on Thuringia at the eve of the Reformation: Wieland Held, Zwischen Marktplatz und Anger. Stadt-Land-Beziehungen im 16. Jh. in Thüringen (Weimar: Böhlau, 1988); Rolf Kießling, “Markets and Marketing, Town and Country,” in: R. Scribner (ed.), Germany: A New Social and Economic History 1450–1630 (London & New York: Arnold, 1996), pp. 145–180; Franz Mathis, Die deutsche Wirtschaft im 16. Jahrhundert (Munich: Oldenbourg, 1991); Tom Scott, Freiburg and the Breisgau: Town– Country Relations in the Age of Reformation and Peasants’ War (Oxford: Clarendon Press, 1986). 47 E.g. H. Kellenbenz, “Bäuerliche Unternehmertätigkeit im Bereich der Nord- und Ostsee vom Hochmittelalter bis zum Ausgang der neueren Zeit,” Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, XLIX (1962), 1–40. 48 The literature on the German peasant war is vast, and I have discussed this issue at length in Philipp Robinson Rössner, Deflation—Devaluation—Rebellion. Geld im Zeitalter der Reformation (Stuttgart: Franz Steiner, 2012), esp. ch. IV. The leading historian on this was Blickle, and his landmark studies include Peter Blickle, The Revolution of 1525: The German Peasants War from a New Perspective, transl. Thomas A. Brady, Jr. & H. C. Midelfort (Baltimore: Johns Hopkins University Press, 1981). The latest synthesis is in id., Der Bauernkrieg: Die Revolution des Gemeinen Mannes, 5th ed. (Munich: C. H. Beck, 2017).

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But there is a grain of truth to the story: large-scale industry and manufacturing, and thus processes of value added and economies of scale, which have been named as crucial for economic development under mercantilist political economy49 seem to have clustered and been more dynamic in the west rather than east of the Elbe River since the 1200s.50 And it focused on big city life and civic activities. Mercantilist and Cameralist theory were grounded upon a logic of cities and emphasized urban development, ever since Jesuit father Giovanni Botero, in his treatise on cities and the reason of state (1588–1589) had suggested that higher value-added economic activity was to be found in manufacturing, and that manufacturing industry was most conveniently located in cities.51 There was a manufacturing crescent which extended from upper Italy to Flanders and the Netherlands and later on England. Here we also find the biggest cities since the Middle Ages. Even if there was more diversity and flexibility within the East Elbian demesne economies than researchers have admitted, on balance the manufacturing edge thus lay in

49 See above; Erik S. Reinert & Philipp Robinson Rössner, “Cameralism and the German Tradition of Development Economics,” in: Erik S. Reinert, Jayati Ghosh, & Rainer Kattel (eds.), Elgar Handbook of Alternative Theories of Economic Development (Cheltenham & Northampton: Edward Elgar, 2016), pp. 63–82. 50 The foundational survey, for the early modern period, probably still is Karl Heinrich Kaufhold, “Gewerbelandschaften in der fr¨uhen Neuzeit (1650–1800),” in: Hans Pohl (ed.), Gewerbe und Industrielandschaften vom Spätmittelalter bis ins 20. Jahrhundert (Stuttgart: Franz Steiner, 1986), pp. 112–202; and for the middle ages: Wolfgang von Stromer, “Gewerbereviere und Protoindustrien in Spätmittelalter und Fr¨uhneuzeit,” in: ibid., pp. 39–111. This manufacturing crescent has been recently rediscovered by Jean-Laurent Rosenthal & Roy Bin Wong, Before and Beyond Divergence: The Politics of Economic Change in China and Europe (Harvard University Press, 2011). 51 Giovanni Botero discussed this in his Delle cause della grandezza delle città / Treatise Concerning The Causes of the Magnificency and Greatness of Cities and the Della Ragion di Stato (1589). See the English translation, new ed. On the Causes of the Greatness and Magnificence of Cities, transl. Geoffrey Symcox (Toronto: University of Toronto Press, 2012); Erik S. Reinert & Kenneth Carpenter, “German Language Economic Bestsellers Before 1850, with Two Chapters on a Common Reference Point of Cameralism and Mercantilism,” The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics, No. 58, 2014, most recently in Philipp Robinson R¨ossner (ed.), Economic Growth and the Origins of Modern Political Economy: Economic Reasons of State, 1500–2000 (London & New York: Routledge, 2016), pp. 26–53.

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Western, not east Europe. This is an interesting contrast to later Physiocrat reasoning which stressed almost exactly the opposite; suggesting that original value was only created in agriculture. One last word of caution regarding an historical discussion of markets and any assumptions that over time there was an evolutionary development towards capitalism and towards market economy. We must not forget that not so long ago it was possible to trade human salvation by means of indulgences, an assumption thrown over board by Martin Luther and the Lutheran Reformations gradually between 1517 and 1531. The trade in indulgences was abolished by the Catholic church in the 1570s. And until the 1840s, humans were traded in the West and regarded as a marketable commodity, including the British, French, Danish, Dutch Caribbean or the cotton economy in the US south. The history of European economic development since the last millennium can hardly be written along the Polanyian divide between substantivist and positivist approaches. There hardly ever was a “Great Transformation”. Things that were marketed or considered marketable under capitalism changed over time. Neither a substantivist nor positivist approach elucidates the dynamics of capitalism and economic development in Europe since the commercial revolution of the twelfth and thirteenth century. Markets, in the sense of formal markets and market places, were ubiquitous in European society since the middle ages. Economists sometimes employ a wider-ranging concept of markets as a general framework explaining the working forces of demand and supply, going beyond commodity transactions involving money, accounting and the settling of debts, including aspects of culture, preference, even religious choice.52 Presently I will focus on the historian’s definition of markets as mainly physical spaces, where demand and supply meet in situ. Such formal markets were around for as long as the historical record provides written accounts for. They can be found across Mesopotamia and Europe since the first millennium BC,53 but also across wider parts of the world, including the Americas, where the Spaniards were, in the early 1510s, 52 David Graeber, Debt—The First 5,000 Years. Updated and expanded version (Melville House, 2014). Recently from an economics perspective, e.g. Jared Rubin, Rulers, Religion, and Riches: Why the West Got Rich and the Middle East Did Not (Cambridge: Cambridge University Press, 2017). 53 Bavel, The Invisible Hand?; Lucassen, “Deep Monetisation.”

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overawed by the great market of Tenochtitlan, a city strewn with markets, which covered an area larger than contemporary Seville.54 Since the high middle ages market transactions not only grew considerably by volume, but also relative to total income and production, in particular as the rental or lease systems of land tenure expanded. This also massively increased people’s demand for money, especially small and medium coins, such as pennies, groats (Groschen), shillings, Batzen, Kreuzer, etc., to settle transactions.55 As we have seen above, there is an overwhelming evidence of market prices recorded for grain, victual and basic consumables since the thirteenth century that exhibit precisely those cyclical fluctuations we expect from a market economy, where prices form, usually but not exclusively (very much as today), on a competitive basis and follow basic trends or cycles in production, supply and demand. These price data were first collected systematically by the research group around Moritz J. Elsas, M. M. Postan, or Wilhelm Abel. These historians were once iconic but have become all but forgotten today, and the Second World War nearly completely interrupted what essentially was a European-wide research network on prices and markets. To the present day their data have been used especially by global economic historians.56 Such markets, as the data they have left us with tell us, were governed by certain laws and implicit conventions as well as tacit assumption, as much as our own

54 Cortes, Travel report, second letter: “There is one square twice as large as that of

the city of Salamanca, surrounded by porticoes, where are daily assembled more than sixty thousand souls, engaged in buying, and selling; and where are found all kinds of merchandise that the world affords, embracing the necessaries of life, as for instance articles of food, as well as jewels of gold and silver, lead, brass, copper, tin, precious stones, bones, shells, snails, and feathers.” See also Christopher C. Garatty & Barbara Stark (eds.), Archaeological Approaches to Market Exchange in Ancient Societies (University Press of Colorado, 2015); Mark Casson & John S. Lee, “The Origin and Development of Markets: A Business History Perspective,” Business History Review, 85:1 (2011), 9–37. 55 Friedrich Lütge, Geschichte der deutschen Agrarverfassung vom fr¨ uhen Mittelalter bis zum 19. Jahrhundert (Stuttgart: Ulmer, 1963); B. H. Slicher van Bath, The Agrarian History of Western Europe, AD 500–1850 (St. Martin’s Press, 1963); Rolf Kießling, Frank Konersmann, & Werner Troßbach, Grundzüge der Agrargeschichte. Vol 1: Vom Spätmittelalter bis zum Dreißigjährigen Krieg (1350–1650) (Cologne, Weimar, & Vienna: Böhlau, 2016); Reiner Prass, Grundzüge der Agrargeschichte. Vol. 2: Vom Dreißigjährigen Krieg bis zum Beginn der Moderne (1650–1880) (Cologne, Weimar, & Vienna: Böhlau, 2016); Rössner, Deflation, esp. ch. IV. 56 See above and Allen-Unger database, especially the works by Robert C. Allen.

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“(free) markets” of today are governed by certain laws and tacit assumptions, even though these market economies were different in many ways from ours. But in the words of an authority, Jan de Vries: “Still, in normal times, most grain markets (meaning pre-modern Dutch markets, but sketching a bigger picture, PRR) were relatively free”.57 But as the range of products traded shifted, so did areas of intervention: market intervention and regulation in the middle ages looked different from market regulation in 2020, not only because markets looked different, but also because underlying economic ideology and politics were different.58 Still not all scholars are convinced, and some would insist that a specifically “medieval market morality” existed.59 This is obvious, as times and ages change, as do people’s conceptualizations of markets and economy. But if we use them to demarcate a mercantilist from a capitalist period in European history, or separating pre-modern moral economy from modern industrial disembedded capitalism in a manner suggested by Polanyi and the substantivist schools, this does not help our understanding of the present or the past, potentially leading to misunderstandings of the dynamics of European development since the last millennium. There also emerged, since the high middle ages, an increasingly clear vision of how markets should be designed and regulated to make the common weal flourish. From the late middle ages we find an increasing number of urban market ordinances trying to capture the basic frame of regulation, including hours of trading and market access (for city dwellers as well as traders coming in from outside), the spatial distribution of markets across town (make sure that flesh markets are separated from fowl and vegetable markets), how market stalls were to be constructed and

57 Jan de Vries, The Price of Bread: Regulating the Market in the Dutch Republic (Cambridge: Cambridge University Press, 2019), p. 39. For Germany, see Hans-J¨urgen Gerhard, Wesen und Wirkung vorindustrieller Taxen. Preishistorische W¨urdigung einer wichtigen Quellengattung (Stuttgart: Franz Steiner, 2009). 58 Philipp Robinson Rössner, “Freie Märkte? Zur Konzeption von Konnektivität, Wettbewerb und Markt im vorklassischen Wirtschaftsdenken und die Lektionen aus der Geschichte,” Historische Zeitschrift, 303 (2016), 349–392; Wolf-Hagen Krauth, Wirtschaftsstruktur und Semantik. Wissenssoziologische Studien zum wirtschaftlichen Denken in Deutschland zwischen dem 13. und 17. Jahrhundert (Berlin, 1984). 59 James Davis, Medieval Market Morality Life, Law and Ethics in the English Marketplace, 1200–1500 (Cambridge: Cambridge University Press, 2011).

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then placed in the market, and so on. This is a clear manifestation of capitalism having taken hold in the cities (and beyond). The wording of the ordinances often remained remarkably similar over the ages. The Leipzig city market ordinances of the mid-seventeenth century were sometimes copied verbatim into nineteenth-century ordinances (and records of such ancient ordinances were kept by the Leipzig city council into the twentieth century), and in terms of structure and design the early modern ordinances again closely resemble certain patterns and features contained in their medieval predecessors.60 In other words, there was a remarkably stable “market morality” employed in managing urban markets which was neither particularly medieval—since the mercantilists and Cameralists drew upon these templates as well; nor particularly pre-modern, since some of the patterns in the medieval and early modern ordinances reoccurred throughout the nineteenth century, when industrial capitalism in Saxony (and elsewhere) was in full swing. To be sure, most market transactions went down unrecorded. Today we have transaction receipts and evidence from VAT and other means of recording of economic activity and governmentality: such measures of capturing, monitoring and governing markets were largely unavailable to governments and states before 1900, or temporal authority to use a more historically neutral term. In medieval and early modern Europe many markets were unregulated by default. Because whatever governments did to regulate or enforce regulation it was often met by relatively little compliance; or measures to monitor and enforce compliance were limited, which also comes close to “laissez-faire” in the negative. My suggestion would be to interpret such market ordinances and related governmentality templates of regulation, such as monetary ordinances and coin edicts, likewise omnipresent in late medieval and early modern stately archives, as a form of normative discourse appealing to the individual trader’s moral consciousness when acting and transacting on the physical market space. Especially on the local village level the moral economy remained a counterbalancing force, where legislation by the ruler or state was ineffective, non-existent, or considered inept to address societal requirement. Exchanges and bourses (known since medieval times in Bruges and Antwerp), country fairs or large long-distance trade fairs were 60 I am discussing this in my forthcoming book Rössner, Managing the Wealth of Nations, ch. 4. The documents I found in the collections of the Stadtarchiv Leipzig, STA Leipzig, Tit. LIV.

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more formally regulated than village markets.61 Long-distance trading often resorted to private-order enforcement mechanisms, or employing intermediaries such as licensed brokers and other middle(wo)men to increase transparency and turnover volume where central government and thus enforcement potential was weak.62 Such semi-formal or semi-public forms of market intervention were used into in the age of high industry, too, as the history of the chambers of commerce shows, which replaced, in terms of many functions and purposes, the early modern craft guilds and other such corporations located between “private” and “public” sector, and which proved foundational for nineteenth-century capitalism in Britain, Germany and beyond.63 They combined private-order means of market governance with elements of state regulation.64 In Europe

61 Richard Britnell, “The Proliferation of Markets in England, 1200–1349,” Economic History Review, Second Series, 33 (1981), S. 209–221; id., “Local Trade, Remote Trade: Institutions, Information and Market Integration 1050–1330,” in: S. Cavaciocchi (ed.), Fiere e mercati nella integrazione delle economie europee, sec. XIII –XVIII (Florence, 2001), pp. 185–203; Michel Pauly, “Jahrmärkte in Europa vom 14. bis zum 16. Jahrhundert. Regionale Untersuchungen und der Versuch einer Typologie,” in: Franz Irsigler & Michel Pauly (eds.), Messen, Jahrmärkte und Stadtentwicklung in Europa (Trier, 2007), pp. 25–40; Richard Britnell, “The Proliferation of Markets in England, 1200–1349,” Economic History Review, Second Series, 33 (1981), 209–221; id., “Local Trade, Remote Trade: Institutions, Information and Market Integration 1050–1330,” in: S. Cavaciocchi (ed.), Fiere e mercati nella integrazione delle economie europee, sec. XIII –XVIII (Florence, 2001), pp. 185–203; Ellen Wedemeyer Moore, The Fairs of Medieval England: An Introductory Study (University of Toronto Press, 1985); Michael Rothmann, Die Frankfurter Messen im Mittelalter (Stuttgart: Franz Steiner, 1998); survey in Philipp Robinson Rössner, “Messen und Jahrmärkte in England im Spiegel der gesamtwirtschaftlichen Entwicklung und der europäischen Wirtschaft, c. 1000–1800 n. C.,” in: Markus A. Denzel (ed.), Internationale Messen in Vergangenheit und Gegenwart –International Fairs in Past and Present (Berlin: de Gruyter, 2017), pp. 83–114. 62 Oscar Gelderblom, Cities of Commerce: The Institutional Foundations of International Trade in the Low Countries, 1250–1650 (Princeton: Princeton University Press, 2013); id., & Francesca Trivellato, “The Business History of the Preindustrial World: Towards a Comparative Historical Analysis,” Business History, 61:2 (2018), 225–259. 63 Arnd Kluge, Die Zünfte (Stuttgart: Franz Steiner, 2009); Sheilagh Ogilvie, The European Guilds: An Economic Analysis (Princeton: Princeton University Press, 2019); ead., Institutions and European Trade: Merchant Guilds, 1000–1800 (Cambridge: Cambridge University Press, 2019); Stephan R. Epstein & Maarten Prak (eds.), Guilds, Innovation and the European Economy, 1400–1800 (Cambridge: Cambridge University Press, 2008), especially the chapter by Pfister. 64 See also relevant sections in Lars Magnusson, Nation, State and the Industrial Revolution (London & New York: Routledge, 2009); Paul Johnson, Making the Market:

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most cities, where formal markets were located (some yearly or quarterannual fairs took place on the countryside65 ), were under the authority of a prince or king but practically self-governed by local oligarchies of merchants or craftsmen, which some scholars have seen as another important marker of European capitalism.66 Foodstuff markets and markets for important materials, such as flax and hemp for the urban textile economies, were sometimes more tightly regulated than other goods.67 But the majority of markets and market transactions in pre-industrial Europe tended to be informal, unrecorded and largely undocumented; governed by private order enforcement or spontaneous ad hoc arrangements with most contracts sealed per handshake. Where markets were formal and where we do have written documentation, the institutional and moral norms suggest that kings, princes, dukes and the state could do, and would do, a lot in order to stabilize and make the market economy work, but that in general they believed in a principle of competitive price formation. And here the mercantilists and Cameralist templates of market regulation, which usually formed centrepieces of Cameralist treatises such as Johann Heinrich Justi’s Policeywissenschaft (1756), drew upon late medieval precedents and templates of market regulation.68

Mercantilism, Capitalism and Nations That Did Not Fail: On the Origins of Prosperity How are we to place the history of markets into the larger debates on capitalism, mercantilism and economic development? There were many types of capitalism such as agrarian, merchant, industrial, gentlemanly,

Victorian Origins of Corporate Capitalism (Cambridge: Cambridge University Press, 2011). 65 See above. 66 E.g. Gelderblom, Cities of Commerce. 67 E. Isenmann, Die Stadt. 68 Johann Heinrich Gottlob von Justi, Grundsätze der Policeywissenschaft, 3rd ed., ed. Beckmann (Göttingen: Vandenhoeck, 1782), p. 48.

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financial capitalism to mention just a few.69 Some assume stages of capitalist development, as for instance in Cains and Hopkins’ long-term study of English capitalism between the “Old” Atlantic empire established in the 1600s, and the post-1800 colonial empire in India and beyond. English capitalism went through successive but partly overlapping stages or types, from agrarian to gentlemanly and also chimed well with an imputed development towards rentier capitalism which is sometimes held responsible for a failing nineteenth-century British economy that was starved of capital rather invested in Indian railroads than “at home” in Manchester or Birmingham.70 In the much-acclaimed “Brenner-debate” a case was made for the pre-history in fifteenth- and sixteenth-century agrarian capitalism when rents and leases, and thus patterns of farming and agrarian productivity, had become increasingly orientated towards a profit- and market-based rationale, and where enclosures represented the form of economic streamlining known from Marx’s concept of original accumulation.71 Meiksins Wood also made an important comment on the role of the state in this transition, which is supported by Epstein’s work, and again features prominently in Marx’s story of original or “primitive” accumulation.72 Recent studies on slavery, cotton and industrialization have added nuance to the debate on capitalism and its illiberal side and thus, inadvertently (because hardly ever acknowledged), returned to Sombart’s moderne Kapitalismus: Sombart is hardly found in the footnotes of

69 Peter J. Cain & Anthony G. Hopkins, “Gentlemanly Capitalism and British Expansion Overseas I. The Old Colonial System, 1688–1850,” Economic History Review, 39:4 (1986), 501–525; id. & id., “Gentlemanly Capitalism and British Expansion Overseas II: New Imperialism, 1850–1945,” Economic History Review, 40:1 (1987), 1–26. 70 Survey in Michael Edelstein, “Foreign Investment, Accumulation and Empire, 1860– 1914,” in: Roderick Floud & Paul Johnson (eds.), The Cambridge Economic History of Modern Britain, vol. 2: Economic Maturity, 1860–1939 (Cambridge: Cambridge University Press, 2008), pp. 190–226. 71 Triggered by an article by Robert Brenner, “Agrarian Class Structure and Economic Development in Pre-Industrial Europe,” Past & Present, 70 (1976), 30–75. See discussions and replies by Postan, Le Roy Ladurie, Hatcher, Wunder and others in subsequent issues of P&P (1978); Robert Brenner, “The Agrarian Roots of European Capitalism,” Past & Present, 97 (1982), 16–113. 72 Ellen Meiksins Wood, The Origin of Capitalism (Monthly Review Press, 1999); S. R. Epstein, Freedom and Growth: The Rise of States and Markets in Europe, 1300–1750 (London & New York: Routledge, 2000).

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modern studies today.73 His capitalism was profoundly illiberal, as was Marx’s. Some scholars have suggested that the first industrial revolution was not chiefly British, but happened somewhat at the expense of the Indian cotton economy,74 by means of a coercive and exploitative state that was stronger or more militant-aggressive in the West than the rest.75 Europe enjoyed, during the centuries of capitalism’s ascendancy, a comparative advantage in coercion.76 Given the sheer force and scale with which industrial capitalism spread across wider colonial and subcolonial parts of the less developed world after 1800,77 we may doubt the proposition that the secret of success for Western culture was a propensity to taming her innate demons78 ; at least capitalism had more to do with letting those demons loose. For all these reasons (and many others left unexplored in the present book for reasons of economy), it seems difficult to establish either successive stages or firm chronologies of capitalism. Reversions in modes of production were possible, e.g. from mercantile capitalism to an agrarian lord-like rentier capitalism in the demesne economies east of the River Elbe in their second and third ages of serfdom (sixteenth and nineteenth centuries), or the contraction of European economy and trade outside

73 Trentmann, Empire of Things, is a notable exception. 74 Parthasarathi, Why Europe Grew Rich; see also Prasannan Parthasarathi & Kenneth

Pomeranz, “The Great Divergence Debate,” in: Tirthankar Roy & Giorgio Riello (eds.), Global Economic History (Bloomsbury, 2018), pp. 19–37. 75 Vries, “Governing Growth;” id., State, Economy and the Great Divergence; recent

remarks on Chinese state capacity in Kent Deng & Patrick K. O’Brien “The Tyranny of Numbers: Are There Acceptable Data for Nominal and Real Wages for Pre-modern China?,” in: John Hatcher & Judy Z. Stephenson (eds.), Seven Centuries of Unreal Wages: The Unreliable Data, Sources and Methods That Have Been Used for Measuring Standards of Living in the Past (Palgrave Macmillan, 2018), pp. 71–95, at pp. 73ff. 76 Philip T. Hoffman, Why Did Europe Conquer the World? (Princeton, NJ: Princeton

University Press, 2015); Charles Tilly, Coercion, Capital and European States, A.D. 990– 1992 (Oxford: Blackwell, 1990). 77 Jürgen Osterhammel, Transformation of the World: A Global History of the Nineteenth Century (Princeton, NJ: Princeton University Press, 2015). 78 Steven Pinker, The Better Angels of Our Nature: Why Violence Has Declined (London: Penguin, 2011).

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the Netherlands during the “dark” seventeenth century.79 Successful merchants turned, once they had acquired the fortune in trade that would allow them a more leisurely lifestyle, to agrarian and sometimes aristocratic ways of life.80 Merchant capitalism was known since Babylonian times, and its basic features have remained observable to the present day. And other forms of nineteenth- and twentieth-century coordinated capitalism had, as the present book argues, important pretexts and shared features with earlier versions of European capitalism, so that we should perhaps avoid over-emphasizing certain features of capitalism specific to certain times and age.81 Longitudinal studies in the history of economic development have sometimes observed nations that succeeded and those that “failed”, where different strategies were chosen to implement good government, framed as “inclusive” as opposed to exclusive social, political and economic institutions and other arrangements designed to lower transaction cost as a major way to improve capitalism’s performativity.82 Whilst the very concept of both “nation” as well as “failure” is unhistorical and in some instances even counterintuitive for most periods before the twentieth 79 DuPlessis, Transitions to Capitalism; Jan de Vries, The Economy of Europe in an Age of Crisis, 1600–1750 (Cambridge: Cambridge University Press, 1976); Jan de Vries, “The Economic Crisis of the Seventeenth Century After Fifty Years,” The Journal of Interdisciplinary History, 40:2 (The Crisis of the Seventeenth Century: Interdisciplinary Perspectives) (Autumn 2009), 151–194; Geoffrey Parker: Global Crisis: War, Climate Change and Catastrophe in the Seventeenth Century (New Haven & London: Yale University Press, 2013). 80 Robert Mandrou, Die Fugger als Grundbesitzer in Schwaben, 1560–1618, 2nd ed. (G¨ottingen: Vandenhoeck & Ruprecht, 1998). Thomas M. Devine, The Tobacco Lords: A Study of the Tobacco Merchants of Glasgow and Their Trading Activities c. 1740–90 (Edinburgh: Edinburgh University Press, 1990); Martin Wiener, English Culture and the Decline of the Industrial Spirit: 1850–1980, new ed. (Cambridge: Cambridge University Press, 2004); but see William D. Rubinstein, Capitalism, Culture, and Decline in Britain, 1750–1990 (London: Routledge, 2001). 81 As in Neal & Williamson, Cambridge History of Capitalism, vol. 1, intro. 82 Acemoglu & Robinson, Why Nations Fail; Avner Greif, Institutions and the Path

to the Modern Economy: Lessons from Medieval Trade (Cambridge: Cambridge University Press, 2006); Douglass C. North, Institutions, Institutional Change, and Economic Performance (Cambridge: Cambridge University Press, 1990); Douglass North, Understanding the Process of Economic Change (Princeton: Princeton University Press, 2005); Douglass C. North, John J. Wallis, & Barry R. Weingast, Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History (Cambridge: Cambridge University Press, 2009).

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century,83 some of the conclusions are intuitive and valuable. Suffice it to say here—a clearer exposition will follow in subsequent chapters with reference to actual practices and circumstances of capitalism and mercantilism on the ground—that the mercantilists, Cameralists or however you may want to call early modern European economic writers outside the Hausvater and Physiocratic spectrum were no strangers to this insight, but to the contrary usually strongly supported private property rights and inclusive institutions, in similar spirit as post-1800 liberal economists and philosophers would.84 But the latter wrote in economic and political contexts fundamentally different from those prevailing before 1800, especially outside the British context. And it is precisely these different contexts which explain why political economy writings on the continent were often so different as to look alien, if the history of capitalism is looked at entirely through the lens of British writers since the age of Hobbes, Petty and Locke. One last comment on mercantilism and state formation. The logical connection was obvious to earlier scholars such as Sombart or Gustav von Schmoller, who suggested that mercantilism and Cameralism had been, above all, political economies of market centralization and state formation.85 O’Brien’s work on England after the Civil Wars and the industrial revolution has wonderfully corroborated this argument.86 But the mechanisms are not ultimately clear-cut. As studies of competition, territorial fragmentation and institutional arbitrage have shown, territorial

83 See Francesco Boldizzoni, “On History and Policy: Time in the Age of Neoliberalism,” Journal of the Philosophy of History, 9:1 (2015), 4–17, or Peer Vries, “Does Wealth Entirely Depend on Inclusive Institutions and Pluralist Politics? A Review of Daron Acemoglu and James A. Robinson, ‘Why Nations Fail: The Origins of Power, Prosperity and Poverty’,” Tijdschrift voor Sociale en Economische Geschiedenis, 9:3 (2012), 74–93. 84 See, most recently, Elmslie, “Early English Mercantilists,” or for Sweden, Wennerlind’s chapter in Rössner (ed.), Economic Reasons of State. 85 In the English language rendering, see Gustav (von) Schmoller, The Mercantile System and Its Historical Significance (London: Macmillan & Co., 1896). See also remarks in Sophus Reinert, “Achtung! Banditi! An Alternate Genealogy of the Market,” in: Philipp Robinson Rössner (ed.), Economic Growth and the Origins of Modern Political Economy: Economic Reasons of State, 1500–2000, pp. 239–295, now reprinted in Sophus Reinert, The Academy of Fisticuffs: Political Economy and Commercial Society in Enlightenment Italy (Harvard University Press, 2018), ch. 4. 86 Patrick O’Brien, “The Nature and Historical Evolution of an Exceptional Fiscal State.”

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fragmentation can have positive effects on institutional quality.87 Regulatory competition between states and institutional arbitrage by actors choosing between locations and states could have led to a natural selection of “good” regulatory frameworks; and mercantilist and Cameralist political economy were indeed targeted at establishing coherent markets and standardized legal frameworks for their respective territories. Constant competition for taxable resources, i.e. tenants, denizens and subjects, made the hundreds of kings, rulers and feudal lords strive to improve the terms of business. Whoever offered the best deal got the most subjects; people, as the assumption goes, voted with their feet.88 What worked for politics also worked for ideas and the growth of the modern knowledge economy: in an international Community of Letters and emergent “Culture of Growth” (Mokyr) with a shared cultural consensus towards improving culture, curiosity and knowledge, original thinkers and ideas could flourish, because wherever someone tried and suppressed heterodoxy people switched to a more tolerant ruler and realm.89 Others would stress the virtuous circle of military competition and urban growth. The demand for arms and war-related investment—things that could not be crafted on the countryside but in centralized urban workshops and manufactories—crowded out other forms of investment, creating a very peculiar European system of statecraft, state power and state expenditure overproportionally geared towards financing and waging war.90 As the work by O’Brien and Ashworth suggests, this fiscal-military engagement positively contributed to the British industrial revolution.91 Sombart’s work

87 For the Holy Roman Empire, see, e.g. Oliver Volckart, Wettbewerb und Wettbewerbsbeschränkung im vormodernen Deutschland 1000–1800 (T¨ubingen: Mohr Siebeck, 2002). On a bigger historical scale, see, e.g. Walter Scheidel, Escape from Rome: The Failure of Empire and the Road to Prosperity (Princeton, NJ: Princeton University Press, 2019). 88 Implicit also in David S. Landes, The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (New York: W. W. Norton, 1998). 89 Joel Mokyr, A Culture of Growth: The Origins of the Modern Economy (Princeton: Princeton University Press, 2018). 90 Rosenthal & Bin Wong, Before and Beyond Divergence; Hoffman, Why Did Europe Conquer the World? 91 Ashworth’s chapter in Rössner, Economic Reasons of State; William J. Ashworth, The Industrial Revolution: The State, Knowledge and Global Trade (London: Bloomsbury, 2017); Patrick O’Brien, “The Nature and Historical Evolution of an Exceptional Fiscal State.”

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on war and capitalism followed the same instinct.92 The hypothesis of the fiscal-military state and economic development has been asserted more recently even for smaller fiscal-military states such as eighteenthcentury Denmark–Norway.93 The story was likewise important in Marx, Das Kapital, Chapter 27 on primitive accumulation.94 Whilst the competition and institutional arbitrage argument have much to commend in terms of explaining some of the salient features of modern European capitalism, the argument can go both ways. What can be beneficial for the businessman may be a disaster for the community (and vice versa). For Reformation Germany in the period between 1450 and 1550 (and way beyond into the industrial period) territorial fragmentation led to monetary fragmentation. Every sovereign ruler—there were about three to five hundred of them—was allowed to strike their own coin and money. This in turn considerably increased transaction cost, whenever actors were to use several different currencies without establishing a transparent and commonly accepted value or price for each coin. This gave rise to frequent social unrest and revolts. In nearly every peasant uprising in the German lands from the Alps extending to the Baltic from the 1450s to the Great German Peasant War 1524–1525, the written complaints or gravamina that were produced during the political process accompanying such revolts reported about bad coin and lack of an integrated monetary system and transparent monetary standard. This problem was not limited to the Reformation period. By and large it extended throughout the entire pre-industrial period; into the 1870s contemporaries complained about bad coins and lack of an integrated monetary

92 Werner Sombart, Krieg und Kapitalismus (Munich: Duncker & Humblot, 1913). A slightly different tune is blown in Ian Morris, War! What Is It Good For? Conflict and the Progress of Civilization from Primates to Robots (Farrar, Straus and Giroux, 2014). 93 Lind, “Early Military Industry.” Foundational works on the fiscal-military state include Jan Glete, War and the State in Early Modern Europe: Spain, the Dutch Republic and Sweden as Fiscal-Military States, 1500–1660 (London: Routledge, 2006), or John Brewer, The Sinews of Power: War, Money and the English State 1688–1783 (Harvard University Press, 1990). A more recent synopsis is in Bartolomé Yun-Casalilla & Patrick O’Brien (eds.), The Rise of Fiscal States: A Global History 1500–1914 (Cambridge: Cambridge University Press, 2012). 94 On original (or “primitive”) accumulation, see Marx, Das Kapital, vol. I, ch. 24.

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landscape.95 The other side of the fragmented state system was ubiquitous tolls and customs duties upon cross-border traffic, where goods’ prices and transaction costs could multiply comparatively easily even on short-distance trade routes and clearly worked in the opposite of, and thus, partly at least, offset such imputed gains from competition. They also gave rise to massive levels of tax evasion and smuggling.96 In this way, mercantilist political economy can be placed into the history and problem of state formation, which the Cameralists tried to achieve through market integration, especially by standardized weights, measures and currencies, and specific regulation herefore. By taking a step down and looking at the politics of daily economic lives on the ground, we can unpick some of these features and look at them in more detail and in situ, trying to understand what mercantilists and Cameralist were actually concerned with. Which is what the following chapters will try to do. But first we need some context, to further explain why conditions for capitalism were so different outside the British Isles.

95 Rössner, Deflation—Devaluation—Rebellion (2012), ch. IV; on the political economy of German money in the sixteenth century on the imperial level, see Oliver Volckart, Eine Währung für das Reich: Die Akten der Münztage zu Speyer 1549 und 1557 (Stuttgart: Franz Steiner, 2017), introduction. 96 Philipp Robinson Rössner, Scottish Trade in the Wake of Union (1700–1760): The Rise of a Warehouse Economy (Stuttgart: Franz Steiner, 2008), ch. 5.

CHAPTER 3

Early Modern Economic Lives

Abstract This chapter provides a concise overview on early modern European economic lives—the groundwork or empirical pre-text for subsequent analyses of political economic and economic discourse relating to the mercantilist spectrum: trade, urban industry and the improvement of economic lives by a combination of private vices and public virtues. Early modern economic lives, as well as underlying cosmological outlooks, midframes and time horizons, especially the virtues of the “here-and-there” compared to the Afterlife and Purgatory, Hell and eternal time, combined with social inequality embodied particularly within a framework of noble privileges, demesne systems and feudal economy provided a material and mental framework different from post1800 capitalism. Political economy was adjusted accordingly (and looked very different from post-1800 political economy). This has often led to modern scholars putting mercantilism, Cameralism and other contemporary political economies in boxes were they ill-fit or do not really belong (e.g. “heterodox”, suboptimal, rent seeking, etc.). In order to understand pre-industrial capitalism and its dynamics we need to shed modern concepts and definitions of it. Accordingly, political economy during the early modern period often started with modelling the agrarian household—as city life and urban economic activities still represented a life at the margin. However, since the sixteenth and seventeenth centuries political economy turned more and more towards the margins, picking up questions of trade, competitiveness and economic development on a © The Author(s) 2020 P. R. Rössner, Freedom and Capitalism in Early Modern Europe, Palgrave Studies in Economic History, https://doi.org/10.1007/978-3-030-53309-0_3

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larger scale, integrating into their models agrarian lives on the ground, and taking account of the prevailing frameworks of hindrances and negative dynamics. Keywords Purgatory · Renaissance · Capitalism · Protestantism · Mercantilism · Roman Empire

Pigs, Geese and Purgatory: Frameworks of Economic Life in Early Modern Continental Europe At the onset of the so-called early modern age, hens and chickens lived four times as long as today (8 years), with one-fourth of the average yield of today when measured as slaughtering weight. Pigs could reach ages three times as old as today, with an average of one-third of today’s average yield (slaughter weight again). Throughput of vital resources and intensity of agrarian production processes were low compared to today; as was total factor productivity in agriculture and most other sectors of economic activity.1 Rhythms of economic life were accordingly different, as were 1 For England, a good recent synopsis is in Mark Overton, Agricultural Revolution in England: The Transformation of the Agrarian Economy, 1500–1850 (Cambridge University Press, 1996); on the continent, particularly in German academia, Wilhelm Abel, Agrarkrisen und Agrarkonjunktur was foundational. See id., Massenarmut und Hungerkrisen im vorindustriellen Deutschland (Göttingen: Vandenhoeck, 1971); id., Geschichte der deutschen Landwirtschaft vom fr¨uhen Mittelalter bis zum 19. Jahrhundert, 3. ed. (Stuttgart, 1978); Slicher van Bath, Agrarian History; Walter Achilles, Landwirtschaft in der Fr¨uhen Neuzeit (Munich: Oldenbourg, 1991); Friedrich-Wilhelm Henning, Handbuch der Wirtschafts- und Sozialgeschichte Deutschlands, Vol. 1: Deutsche Wirtschafts- und Sozialgeschichte im Mittelalter und der Fr¨uhen Neuzeit (Paderborn, Munich, Vienna, & Zurich: F. Sch¨oningh, 1991); id., Landwirtschaft und ländliche Gesellschaft in Deutschland, Vol. 1: 800–1750, 3. ed. (Paderborn et al.: F. Sch¨oningh, 1996); Hermann Kellenbenz, The Rise of the European Economy: An Economic History of Continental Europe from the Fifteenth to the Eighteenth Century (London: Weidenfeld and Nicolson, 1976); European country chapters in Ilja Mieck, Handbuch der europ¨aischen Wirtschafts- und Sozialgeschichte. 4, Europ¨aische Wirtschafts- und Sozialgeschichte von der Mitte des 17. Jahrhunderts bis zur Mitte des 19. Jahrhunderts (general ed. Wolfram Fischer et al.) (Stuttgart: Klett-Cotta, 1993). One of the best recent English-language surveys I found was Paolo Malanima, Pre-Modern European Economy: One Thousand Years (10th–19th Centuries) (Leiden & Boston: Brill, 2009).

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interpretations by people of certain aspects of economy and economic life. Most people lived on the countryside. In some regions in Finland or the composite monarchy of Denmark–Norway this share could reach as much as 90 per cent, and some areas, such as Iceland lacked cities or manufacturing altogether. In the more urbanized, wealthier and economically more advanced areas of Italy such as Genoa and Florence, the Netherlands or southern England the figure stood much lower, at 50– 60 per cent.2 Average life expectancy in early modern Europe was, in most regions, about half as high as during the twentieth century: less than forty years. Disposable incomes were low, as were rates of economic growth, when measured in terms of change in per capita income over time.3 In the 1800s when industry began to modernize and several European regions underwent their regionally dispersed processes of first and second industrial “revolution”, figures began to change. Purgatory, as an intermediary step between Heaven and Earth (if you were lucky), and promises of a potentially better eternal life (if you lived your earthly life well) considerably eased conditions on the ground. This pertained especially to the preparedness, ability and willingness of humans to accept suffering, hunger, illness and war.4 Death was, contrary to today, not externalized: it was accepted as a normal part of daily life and could strike any time. Half of newborn children did not survive their first twelve months in life. And for some that would be a blessing, allowing the newborn a direct way to heaven, bypassing Purgatory and avoiding Hell altogether; a supreme state of bliss which may 2 Malanima, Pre-Modern European Economy; the foundational work establishing the quantitative framework for European urbanisation is Jan de Vries, European Urbanisation, 1500–1800, new ed. (London: Routledge, 2013). 3 Malanima, Pre-Modern European Economy. For England: Stephen N. Broadberry,

Bruce M. S. Campbell, Alexander Klein, Mark Overton, & Bas van Leeuwen, British Economic Growth, 1270–1870 (Cambridge: Cambridge University Press, 2015). 4 LeGoff, The Birth of Purgatory; Engl. version: id., Your Money or Your Life: Economy and Religion in the Middle Ages, transl. Patricia Ranum (New York: Zone Books, 1990); on indulgences on the eve of the Reformation, see Thomas Kaufmann, Geschichte der Reformation (Frankfurt: Verlag der Weltreligionen, 2009), p. 83; Bernd Moeller, “Die letzten Ablaßkampagnen: Der Widerspruch Luthers gegen den Ablaß in seinem geschichtlichen Zusammenhang,” in: H. Boockmann (ed.), Lebenslehren und Weltentwürfe im Übergang vom Mittelalter zur Neuzeit: Politik – Bildung – Naturkunde – Theologie; Bericht über Kolloquien der Kommission zur Erforschung der Kultur des Spätmittelalters 1983 bis 1987 (Göttingen: Vandenhoeck & Ruprecht, 1989), pp. 539–567.

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explain high rates of infanticide.5 Accordingly, most people entertained a somewhat different view of the role and place of the economic in the grand scheme of things. Where soteriological time lines were infinite and individual salvation all that mattered, life spans on earth were infinitely small. Nobody strove for a long life but many would for a life that was pious. Time horizons remained short, which also applied to financial engagement and investment. People designed their lives accordingly, with somewhat different time preferences, future horizons or preferences for economic improvement. As the Max Weber thesis on Protestantism and capitalism suggested—a thesis much in debate—this could well elicit positive connotations of business, profit and economic life. It could also lead to considerable “embarrassment of riches” (Schama), as well as cosmological underpinnings of interest rates and market prices that we nowadays reckon to belong to “moral economy”.6 But as we will see below, during the long age of Mercantilism since the Renaissance, and particularly after the mid-seventeenth-century people did place an increasing emphasis on the virtues of earthly lives and economic development. Before the 1900s people considered economic growth as a possibility but not a priority. Seventeenth-century Swedish thinkers knew concepts of infinite improvement, and the idea that Mother Earth could be productively transformed yielding a per capita growth in available resources slowly took ground.7 But growth was not quite as much defined as a supreme economic zeal the way it is defined today (or was, that is in the age before Covid-19).8 It came after centuries’ worth of secularization and rise of alternative worldviews presented by, inter alia, Calvinism, Presbyterianism, Lutheranism, Anabaptism, Millenarianism, Catholicism, Catholic Counter-Reformation, to name but the most famous ones, and 5 Arthur E. Imhof, Lost Worlds: How Our European Ancestors Coped with Everyday Life and Why Life Is So Hard Today (German original: Die verlorenen Welten. Altagsbew¨altigung durch unsere Vorfahren-und weshalb wir uns heute so schwer damit tun) (Charlottesville: University Press of Virginia, 1996). 6 Geisst, Beggar Thy Neighbour; Wood, Medieval Economic Thought; Simon Schama, The Embarrassment of Riches: An Interpretation of Dutch Culture in the Golden Age (New York: Vintage Books, 1987). 7 Reinert, Visionary Realism; Paul Slack, The Invention of Improvement: Information and Material Progress in Seventeenth-Century England (Oxford: Oxford University Press, 2015). 8 Schmelzer, Hegemony of Growth; Philipsen, Little Big Number; Lepenies, Macht der einen Zahl.

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which all opened up the menu of potential future scenarios for individual salvation, later on material improvement. Such open future forward thinking is important for capitalism and economic development,9 and as I have shown elsewhere, the Cameralists began to understand and model the epistemic foundations of such dynamic futures.10 In pre-modern Europe conceptions of time and temporality were, accordingly, different. And an economic culture of ever-more intensive exploitation of nature and its eco-systems made a fairly late appearance.11 Before the Enlightenment people were also more superstitious. The introduction of the Lutheran faith in the reformed countries after 1517 during Europe’s Age of Confessionalization, as well as the process of Catholic reformation and Re-catholicization in some areas of Europe after the 1550s, during the Age of Baroque and the post-1648 Westphalian state system, formerly known as the “age of absolutism”, did not exactly improve on the situation.12 Witch hunts could be severe in some areas of Germany and the continent. The last child witch trials on German soil took place in the early 1720s.13

Discoveries of the Future and the Origin of Economic Dynamics But there also were gradual changes, and from the late 1500s onwards some writers came up with the idea of an open human-economic future, meaning an economic future independent from predestination or the Second Coming of Christ as foretold in St. John’s Book of the Apocalypse: the idea of a manageable economic future was born long before

9 Jens Beckert, Imagined Futures: Fictional Expectations and Capitalist Dynamics (Harvard University Press, 2016). 10 In a forthcoming special issue of History of Political Economy (2021). 11 But see Paul Warde, The Invention of Sustainability: Nature and Destiny, c.1500–1870

(Cambridge: Cambridge University Press, 2019). 12 On superstition and the German reformations, see Robert Scribner, For the Sake of Simple Folk: Popular Propaganda for the German Reformation (Cambridge: Cambridge University Press, 1981); one of the most recent European survey is Carlos Eire, Reformations: The Early Modern World 1450–1650 (Yale University Press, 2016), pp. 618–659. 13 A masterful micro-history of this process can be found in Rainer Beck, Mäuselmacher: oder die Imagination des Bösen. Ein Hexenprozess 1715–23 (Munich: C. H. Beck, 2012).

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it was applied in modern post-1800 capitalism. I have dealt with this elsewhere, but the once-famous hypothesis of Reinhart Koselleck and his disciples of the discovery of the open human future in Koselleck’s Sattelzeit (1750–1850) does not pass the historical scrutiny test any more: since the later 1500s European political and economic writers fairly much knew open, dynamic and multiple futures that were open and manageable and could be modelled. As Koselleck largely limited his study to political writings which self-reinforced his chronology of the future in the European axial age (Sattelzeit ) he was almost bound to ignore the more mundane economic writers of pre-modern Europe which knew these open futures.14 I hinted above that Cameralism and mercantilism were mainly geared towards manufacturing and concerned with urban industry, i.e. dynamic political economies trying to transform initially agrarian economies into more diversified and productive ones where manufacturing, workshops and manufactories attained a growing share of output and incomes. In many ways, mercantilist and Cameralist political economy was concerned with completely transforming people’s mindscapes and timescapes, as it was with transforming the productive or material landscapes, including a transformation of economic geography towards a more clearly separated urban manufacturing economy which generated higher value added than agriculture and an accordingly rural outlook, mentality and economy. Culture and economic history have often remained separate, notwithstanding considerable improvement in our understanding of their interplay in recent decades,15 including attempts at endogenizing culture into

14 See my forthcoming contribution to a special issue of History of Political Economy. It engages with key works in the field, such as Reinhart Koselleck’s Futures Past: On the Semantics of Historical Time, transl. Keith Tribe (New York: Columbia University Press, 2005); German original first edition Vergangene Zukunft. Zur Semantik geschichtlicher Zeiten (Frankfurt am Main: Suhrkamp 1979); Lucian Hölscher, Die Entdeckung der Zukunft, 2nd ed. (Göttingen: Wallstein Verlag, 2016). 15 Eric L. Jones, Cultures Merging: A Historical and Economic Critique of Culture (Princeton: Princeton University Press, 2016); Mokyr, Enlightened Economy; Mokyr; Culture of Growth; Deepak Lal, Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long Run Economic Performance (Cambridge, MA: MIT Press, 1998); Hartmut Berghoff & Jakob Vogel (eds.), Wirtschaftsgeschichte als Kulturgeschichte: Dimensionen eines Perspektivenwechsels (Frankfurt am Main & New York: Campus, 2004).

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models of economy, usually through studying commercial and legal institutions.16 But there is more to culture than institutions. A Christian world view beyond superstition should be taken seriously as a factor explaining European economic and capitalist development.17 And whilst the Enlightenment in many ways remained superstitious,18 mercantilist and Cameralist political economy provided strategies of rationalization and disenchanting the world and transcending superstition in the spheres of production, distribution and, to a lesser extent, consumption; which served to provide foundations for a better understanding of economic dynamics.19

Household Oeconomy, the Rise of Fiscal States and Societal Structure as a Force to Be Reckoned with When Explaining Political Economies of Development---The Very Peculiar Case of the Holy Roman Empire, pars pro toto The same goes for society and social structure, both of which are often de-emphasized or dismissed in the literature on historical economic development, especially when it comes to institutions, where the literature has often focused on institutions, vested interests and rent seeking, or power politics at the grand or meso level.20 Social structure and social organization mattered considerably, from the individual household up to regional customs of inheritance, especially when it comes to explaining agrarian change, productivity and economic development. Customs of inheritance could determine a locality or region’s fate for centuries to come. For instance, if partible inheritance was practiced as a regular form of intergenerational property transfer, this could mean the ruin of the respective economic region in the long run, if the local population failed to find

16 See the works mentioned above by Greif, Tabellini, North, Acemoglu, & Robinson. 17 Weber, Religion and Society; Stark, The Victory of Reason. 18 See Vera Keller’s excellent works on alchemy. 19 But see some of the later “mercantilists’” modelling of consumption and luxury as

virtuous, e.g. Sir James Steuart’s Principles of Political Oeconomy, vol. I, Book II, ch. XX. 20 Ekelund & Tollison, Mercantilism as Rent-Seeking Society; North & Thomas, Rise of Europe; Acemoglu & Robinson, Why Nations Fail.

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sufficient sources of non-agrarian by-incomes.21 Most land was owned by the nobility and leased out in return for rent in money or kind, or composite forms of rental payment, which might include labour services, either specified or unspecified (“ungemessen” in early modern German), as well as certain one-off payments on important events and stages in the life-cycle of the farm, such as death duties, Besthaupt (best piece of cattle), etc. Practices and customs varied considerably, even within individual states of the Holy Roman Empire, sometimes even within single peasant villages.22 In southern Europe share-cropping and metayage arrangements were much more characteristic, where up to one half of yearly produce would be due to the lord. East of the River Elbe demesne lands and manorial economy prevailed, i.e. farming enterprises run by noble landowners with attached leaseholds whose peasants were due to perform a certain amount of labour services, such as harvesting, haulage and carrier services on the lord’s farm (corvée). Further west, copy- and leasehold, essentially rent-based farming, were more frequent, where peasant farmers could more or less do as they wanted with the land in their possession, in return for a yearly rent paid to the proprietor. In early modern England, such freer forms farming and leasehold were the norm. Feudalistic relationships in the proper sense of the term had all but vanished by the 1600s. The church was a force to be reckoned with, either as an owner of land, or charging the tithe, round about 10 per cent of the farm’s yearly profit or yield. Cloisters, monasteries often worked their lands along the “feudal” or demesne-manorial mode of production. Territorial lords (princes, dukes, counts, abbots, etc.) on the other hand exerted the higher 21 An excellent regional case study for early modern Hesse is Brigitta Vits, Hüfner, Kötter und Beisassen: die Wirtschafts- und Sozialstruktur ländlicher Siedlungen in Nordhessen vom 16. bis zum 19. Jahrhundert (Kassel: GhK-Bibliothek, 1993); André Holenstein, Bauern zwischen Bauernkrieg und Dreißigjährigem Krieg (Munich: Oldenbourg, 1996); Ann Kussmaul, A General View of the Rural Economy of England, 1538–1840 (Cambridge: Cambridge University Press, 1993); Peter Laslett, World We Have Lost: Further Explored (Routledge, 2016). 22 To the present day the foundational study remains Friedrich L¨ utge, Geschichte der deutschen Agrarverfassung vom fr¨uhen Mittelalter bis zum 19. Jahrhundert, 2nd ed. (Stuttgart: Ulmer, 1967). Cerman, Villagers and Lords; Erich Landsteiner & Ernst Langthaler (eds.), Agrosystems and Labour Relations in European Rural Societies (Middle Ages —Twentieth Century) (Turnhout, 2010); id., “Landwirtschaft und Agrargesellschaft,” in: M. Cerman, F. X. Eder, P. Eigner, A. Komlosy, & E. Landsteiner (eds.), Wirtschaft und Gesellschaft. Europa 1000–2000 (Innsbruck, Vienna, & Bolzano: Studienverlag, 2011), pp. 178–210.

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judicial authority including capital punishment, providing peace, protection and safe conduct on public roads (Geleit in early modern German23 ), upholding public order and establishing frameworks of law and order intended to safeguard private property rights. This included a whole array of other things which we may summarize under “economic policy”.24 In return for this rulers or states, kings, princes, counts, dukes, imperial knights, city councils of the free imperial as well as semi-autonomous territorial cities, abbots, prince-bishops, etc., charged numerous taxes, dues, tolls and customs, such as hearth tax or general levies such as Bede in the German lands, collected on either land or moveable assets. The basic unit of economy was what Otto Brunner, an important historian of the Koselleckian history of concepts camp (with a dark history under national socialism) has called the Ganze Haus, meaning extended peasant or aristocratic farming household.25 This was headed by the pater familias , and it worked, according to the economic theory of management associated with it, the early modern oeconomics or Hausvater economy literature, as a self-contained production unit (more on which below). It was not at all unusual for early modern villagers to have several feudal lords and sometimes even more than one territorial overlord. Dues, duties and obligations were accordingly split across two, three or more institutions and persons who were all claiming some form of “power over people” which later political theory would reserve to the state (legislation, juridical system, executive). Often tax, tithe, rent and fees for local courts of justice were separate, as claims to power over people, rent extraction and taxation were tied to personal–direct relationships of lord-serf or lord-peasant; territorial ruler-subject, etc., rather than a-personal abstract state-denizen relationships of “republic”, “state” or “citizen” known especially from Anglo-Saxon political writings in the 23 These have produced sources that can be used for a quantitative view on commerce and trading frequency, as Straube’s study of fifteenth- and sixteenth-century Germany shows: Manfred Straube, Geleitswesen und Warenverkehr im thüringisch-sächsischen Raum zu Beginn der Frühen Neuzeit (Cologne, Weimar, & Vienna: Böhlau, 2015). 24 On economic policy in the early modern German lands, see, e.g. Fritz Blaich, Die Wirtschaftspolitik des Reichstags im Heiligen Römischen Reich: ein Beitrag zur Problemgeschichte wirtschaftlichen Gestaltens (Stuttgart et al.: Fischer, 1970); Karl Weidner, Die Anfänge einer staatlichen Wirtschaftspolitik in Württemberg (Stuttgart: Kohlhammer, 1931). 25 Otto Brunner, Neue Wege der Verfassungs- und Sozialgeschichte, 3rd ed. (Göttingen Göttingen: Vandenhoeck und Ruprecht, 1981).

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fashion of Hobbes or later Enlightenment authors. This made for a rather fuzzy, multivariate social and political fabric of early modern states.26 But fiscal-military states were in the making since the fourteenth century.27 They received a formidable boost increasing powers of governance with Luther’s writings and other Reformation texts which openedup a not entirely new but radically enlarged field of state intervention. Confessional politics or religious management in the conflicts, discourses and state politics on church endowments and indulgences had been known long before Luther: during the fourteenth century the Saxon Dukes and Electors had pursued a strategic policy of religious management by actively promoting churches and shrines that contained saints’ relics or where miracles had been observed, as these attracted a growing number of foreign visitors, pilgrims and other folks who paid for religious indulgences and thus brought money into the country—a proto-mercantilist or bullionist policy approach.28 Whilst the idea of management was thus not alien to medieval theories of state, the menu of economic and political intervention increased considerably with the Reformation. This also led to the blowing up of state administration, new offices and bureaucratic processes created post-1517, and it increased the demand for literate people, written records and more and more state capture of denizen’s actions and transactions, including economic transactions, by means of written deeds, acts, edicts and ordinances; by way of confessionalization, that is religious policy and management of confessional unity or disunity, and many others. A good example is monetary ordinances governing coin exchange rates, which were known from the middle ages, but considerably increased in number and frequency since the 1500s, especially because, since the invention of movable print types, they could now be distributed in printed form across the country. Such ordinances could be read after 26 Epstein, Freedom and Growth. Case studies include e.g. Kersten Krüger, Finanzstaat Hessen 1500–1567: Staatsbildung im Übergang vom Domänenstaat zum Steuerstaat (Marburg: Elwert, 1980); Charles Ingrao, The Hessian Mercenary State: Ideas, Institutions, and Reform Under Frederick II, 1760–1785 (Cambridge: Cambridge University Press, 1987); Peter Wilson, The Holy Roman Empire: A Thousand Years of Europe’s History (London: Allen Lane, 2016). 27 See above. 28 Die Wallfahrt zu Grimmenthal: Urkunden, Rechnungen, Mirakelbuch, ed. Johannes

Mötsch (Cologne et al.: Böhlau, 2004); Christoph Volkmar, Reform statt Reformation. Die Kirchenpolitik Herzog Georgs von Sachsen, 1488–1525 (Tübingen: Mohr Siebeck, 2008) on the management of relics, veneration and shrine tourism.

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church sermon on Sunday. And the fervent zeal to enforce and monitor church attendance which we find especially manifested in the politics and discourses of the sixteenth-century Reformed countries bear out the growing reach of the state, especially its attempt to control, manage and subdue the individual as a state subject. Foucault’s governmentality was not far away…. But whilst modern states and modern denizens were in the making during the mercantilist age of capitalism’s ascendancy, with changing and fluid discursive boundaries and practical configurations of such denizen and state—consider states so different as Tudor England or sixteenth-century Hesse-Darmstadt—the dominant unit of analysis, social, economic and cultural remained the household.29 Economic life commenced at the household level.30 So did culture, social and political life. In a society dominated by men, male values and patriarchal sentiments and power structures, the pater familias (Ger. Hausvater) was in control not only of immediate relatives as well as an extended household that included maidservants, farm servants, in-servants and wage labourers. The pater familias was the one who would be assessed for tax; he was the one who paid the feudal due and levy or—if the relationship was commercialized—yearly farm rent to his overlord. He answered before the local noble village court for every member of the household. He paid the church tithe, to the local parson or, more likely after the middle ages, the to the bailiff or reeve, i.e. the extended but usually localized arm of the state. Pre-modern political economy was terribly non-gendered. This is one of the reasons why the (o)economic literature since the later 1500s often began with a discussion of pigs, geese and hens, the management of meadows and cows, of fish ponds and forests, ending with the pater familias as manager of the extended household, embodied in the aristocratic landed estate. The father of the house or oeconomus , literally “manager”, represented the Haus to the wider community, as there was, as yet, no such thing as society. To be a prudent manager or “economist” was considered the supreme goal. References were made to the New Testament where God also acts as the supreme oeconomus of

29 Brunner, Neue Wege. 30 See, e.g. Richard van Dülmen, Kultur und Alltag in der Frühen Neuzeit. vol. 1: Das

Haus und seine Menschen 16.–18. Jahrhundert, and vol. II: Dorf und Stadt (Munich: C. H. Beck, 1990).

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people’s salvation and souls.31 And this entailed not only a well-governed Christian faith and spirituality, but also a well-balanced oeconomic relationship between Hausvater and house mother. His wife managed servants and everything that took place within the farm, with a lot of responsibility and respect commanded by this interior managerial position, in a relationship that was often marked by mutual affection and respect, as it was by the command for cooperation. There was an entire economic literature focused on the household level, called Hausväterliteratur (in German). This literature can be found across Germany, Sweden, England and elsewhere during the early modern period. It drew on classical Greek templates provided by Aristotle and others.32 During the early modern period Xenophon’s Oeconomicus remained a widely printed bestseller.33 But the Hausväterliteratur economics’ blossoming came towards the later sixteenth and early seventeenth century, particularly after the population boom of the sixteenth century had petered out giving way to the critical conditions of midseventeenth century wars, disease, climate change and low agrarian prices. Economic writings suggested a streamlining of management to optimize agrarian strategies in the framework of decreasing average profits emphasizing the virtues of rational accounting and good estate management, even with some view towards improvement and growth of the farm or estate as an enterprise—i.e. growth of the business.34 But after the Thirty Years War the conceptual framework of the Hausväterliteratur became extended and embodied into a wider framework which came to include

31 Dotan Leshem, “What Did the Ancient Greeks Mean by Oikonomia,” Journal of Economic Perspectives, 30:1 (2016), 225–231; id., The Origins of Neoliberalism: Modeling the Economy from Jesus to Foucault (University of Columbia Press, 2016). 32 Tribe, Land, labour. 33 Erik S. Reinert & Fernanda A. Reinert, “33 Economic Bestsellers Published Before

1750,” The European Journal of the History of Economic Thought, 25:6 (2018), 1206– 1263, at 1216. 34 See also the discussion of Coler’s work in Johannes Burkhard & Birger Priddat, Geschichte der Ökonomie (Frankfurt-am-Main: Deutscher Klassiker Verlag, 2009); see also Morgen Witzel, A History of Management Thought (London & New York: Routledge, 2012), ch. 1.

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the discussion of prudent fiscal state administration (Kaspar Klock,35 Georg Besold) and what is today known as fiscal sociology; power politics, but also increasingly addressed questions of a bigger economic scope, considering the emerging territorial polity as a unit of analysis, as well as discussing elements of price formation, market regulation and wider economic policy. Known as Cameralism and sometimes “German” variant of mercantilist economics, scholars are now in the position to better understand its pan-European nature and dimension. There was not much specifically German about this literature. Central propositions could be found in other idioms, such as Spanish, Portuguese, Italian, Swedish, etc. Writers such as Cesare Beccaria or Anders Berch (Sweden) are now as comfortably ranked by historians amongst the extended Cameralist umbrella, as much as some of the earlier Cameralists such as Johann Becher, Philipp Wilhelm von Hörnigk or Wilhelm von Schröder have sometimes been reckoned to the “mercantilist” spectrum.36 Boundaries are fluid, especially in the history of ideas and economic thought. At present we are only interested in some of the shared core elements that can usefully be identified as “mercantilist”: productioncentred, growth-faced,37 manufacturing-driven. But in order to understand mercantilism on home ground and to clarify the connections made in the introduction between freedom, capitalism and the role played by mercantilism and Cameralism in shaping the evolution of modern liberalism and laissez-faire ideology, we need to briefly return to the analytical positioning of mercantilism and Cameralism in the socio-economic geography and fabric of the early modern European world, which is what Chapter 4 will try to achieve.

35 See the introduction by Bertram Schefold in id., ed. (Kaspar Klock) Tractatus juridico-politico-polemico-historicus de aerario, sive censu per honesta media absque divexatione populi licite conficiendo, libri duo (Hildesheim & New York: Olms-Weidmann, 2009). 36 E.g. Heckscher, Der Merkantilismus. 37 I am indebted to my student Zhao Xuan for coining this phrase.

CHAPTER 4

Early Modern Political Economy and the Market: A Life on the Margins?

Abstract As this chapter argues, since the early modern period economic discourse increasingly moved away from a purely agrarian-focused household or demesne management literature towards incorporating wider ideas and conceptions about markets, economy, industry and international competition. In many ways the mercantilist and Cameralist economic literature—which has left broad traces in our modern conceptions and understandings of market and economy—transcended traditional economic framings which had centred either on the region, the respective city or the individual household and came to address economic questions (value added, prices, wages, exchange rates, industrial competition, etc.) within a territorial, and thus emerging macroscopic frame. Keywords Political economy · Cameralists · Botero · Reformation · German Peasants’ War · Luther

From Oikonomics to Economics: Marginalizing Oeconomy The history of modern political economy is often written as a history of the margins. This becomes clear when we take stock of the debates reviewed in Chapters 1 and 2, as well as the conditions of economic life © The Author(s) 2020 P. R. Rössner, Freedom and Capitalism in Early Modern Europe, Palgrave Studies in Economic History, https://doi.org/10.1007/978-3-030-53309-0_4

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on the ground as sketched in Chapter 3. Economic analysis in pre-modern Europe—if we take out the pater familias (Hausväter economics) genre and Physiocracy—usually focused on urban writers with urban professions: physicians, lawyers, traders or administrators who usually emphasized an urban, later on, since Antonio Serra and Giovanni Botero, a territorial frame of analysis, but where chief economic dynamics came out of, and were located in, cities. What Locke, Hobbes or the mercantilists, Serra, in his Breve Trattato, 1613,1 or the post-1648 Cameralists described were urban worlds, goods flows and mechanisms of money, prices, markets, trade balances and interest rates. These urban political economies were very different from the conceptual frame of the works discussed in the previous chapter. And at a time, roughly, when in England, Sweden, Prussia and elsewhere rulers began to order first national quantitative surveys of trade, trade balances, production of essentials such as beer and spirits that were taxed by means of excise duty, this initial view on household management and oeconomy began to merge with quantitative views of state, i.e. proto-forms of statistical analysis prefiguring elements of national income accounting,2 thus transcending what German economist Karl Bücher or Eli Heckscher called the “medieval city economy” (Stadtwirtschaft ).3 The older economic literature often assumed that economic analysis proceeded alongside a conceptual spectrum of analysis that focused, in the middle ages, on the immediate city and its polity, but since the early modern age began to attain a territorial and later on, after the onset of the industrial revolution, a “national” frame of mind. Yet analyses of Botero in his Ragion di Stato (1588) where he argued that manufacturing was more dynamic than primary production (agriculture) in generating 1 Sophus A. Reinert (ed.), Antonio Serra, a Short Treatise on the Wealth and Poverty of Nations (1613) (London & New York: Anthem Press, 2011); Rosario Patalano & Sophus A. Reinert (eds.), Antonio Serra and the Economics of Good Government (Palgrave Studies in the History of Finance) (New York: Palgrave Macmillan, 2016). 2 Lars Behrisch, Die Berechnung der Glückseligkeit: Statistik und Politik in Deutschland und Frankreich im späten Ancien Régime (Ostfildern: Thorbecke, 2016); William Deringer, Calculated Values: Finance, Politics, and the Quantitative Age (Harvard University Press, 2018); on eighteenth-century Bavaria: Markus A. Denzel, Professionen und Professionisten: die Dachsbergsche Volksbeschreibung im Kurf¨urstentum Baiern (1771–1781) (Stuttgart: Franz Steiner, 1998). 3 Heckscher, Der Merkantilismus; Karl Bücher, Die Entstehung der Volkswirtschaft (Tübingen: Laupp, 1893).

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or embodying useful knowledge, employment, income and growth; or analyses by Scholastics such as Martìn de Azpilcueta (1491–1586) (aka “Doctor from Navarra”) on the quantity of coins and the prices of goods,4 Thomas Gresham’s memorial on exchange rates5 or English mercantilist debates around Thomas Mun and Misselden focusing on the price of money (exchange rates): they all were dealing with economic phenomena that were, in the strictest of senses, still marginal, or capitalism as practiced and lived in cities. Apart from some Italian regions, most of the Netherlands, Flanders and, after 1600, England, less than five per cent of the European population lived in big cities before 1800. Smaller cities were more abundant. In the Holy Roman Empire as many as 20 per cent of the population in the 1600s may have lived in cities, but only if we count those small communities of sometimes 80–200 people which legally, on paper or by ancient privilege, classified as “city” but obviously represented nothing more than walled villages.6 Political economy since the days of Nicolaus Oresme (c. 1320–1382) or Gabriel Biel (1420/25– 1495) focused on coins, exchange and markets7 ; it centred on and took place at the margin: city life and city economy. The agrarian household remained the predominant unit of economic action and human analysis of the economy, and there were parallel concepts in the extended family of the urban artisan and patriciate. But it did not feature as much in

4 Marjorie Hutchinson, The School of Salamanca; Readings in Spanish Monetary Theory, 1544–1605 (Oxford: Clarendon, 1952); ead., Early Economic Thought in Spain, 1177 – 1740 (London, 1978); Bertram Schefold (ed.), Vademecum zu zwei Klassikern des spanischen Wirtschaftsdenkens. Martin de Azpilcuetas “Comentario resolutorio de Cambios. Martin de Azpilcueta: Auszugsweise Übersetzung aus “Comentario resolutorio de Cambios”. Ernest Lluch: Luis Ortiz’ Buch über die Frage, wie in Spanien dem Müßiggang Abhilfe zu schaffen sei”. Luis Ortiz: Auszugsweise Übersetzung aus “Memorial del Contador Luis Ortiz a Felipe II” (Düsseldorf: Verlag Wirtschaft und Finanzen, 1998). 5 See commentary in Raymond de Roover, Gresham on Foreign Exchange: An Essay on Early English Mercantilism with the Text of Sir Thomas Gresham’s Memorandum: For the Understanding of the Exchange (Cambridge, MA: Harvard University, 1949). 6 Heinz Schilling, Die Stadt in der Fr¨ uhen Neuzeit (Berlin: De Gruyter Oldenbourg, 2015). For Saxony, see Karlheinz Blaschke, Bevölkerungsgeschichte von Sachsen bis zur Industriellen Revolution (Weimar: Böhlau, 1967). 7 Cary J. Nederman, Lineages of European Political Thought. Explorations Along the Medieval/Modern Divide from John of Salisbury to Hegel (Washington: Catholic University of America Press, 2009), pp. 246ff. on Oresme and the origins of political economy; Kaye, Economy and Nature; id., A History of Balance.

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economic writings before the Hausväter and, since the Enlightenment, the Physiocratic literature. This is important to bear in mind when assessing the role of the market in pre-1848 society. In continental Europe before 1800, city life was the exception rather than the norm, albeit over time and space there was considerable change and variation. The Oikonomics or Household Management genre and the Cameralist school of thought that partly emerged from this genre since the early 1600s8 would give agricultural oeconomy its due weight in the emerging sphere of “economy” an economic analysis. By far the majority of economic bestsellers before 16509 were either products of the oikonomics genre, or re-editions of Antique Greek texts on household and economy, notably Xenophon and Aristotle. And although it is no more than a simple truism that political economy during the age of capitalism’s ascendancy was largely written by, and probably for, people who came from or had an urban background, often merchants (English economic writings), theologians (Scholastic economics), lawyers or state servants (German Cameralism and nearly everywhere else), pre-1848 mainstream market theory can only be meaningfully understood by placing these writings into an agrarian framework of society and thus appreciating their marginal character, and often innovative and revolutionary scope in opening up completely new horizons of expectation.

Origins of Growth and Early Modern Political Economy How do we bring dynamics into political economy? It is difficult, even dangerous, in the light of the previous sketch, to generalize about the role of the market in pre-modern capitalist society. Let us try to do so nonetheless because that helps putting mercantilist views on the market process—aspects of which will be studied in more detail in subsequent chapters—in perspective. Historians and historical demographers agree that population growth after the Black Death (c. 1348–1352), temporarily halted between the 1400s and 1460s or 1470s, intensified in the sixteenth century. Coupled with the onset of urban growth, 8 Zielenziger, Die alten deutschen Kameralisten is still one of the best. 9 Reinert et al., “80 Economics Bestsellers.”

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halted during the crisis of the seventeenth century, this is an important marker of structural transformation, growth and intensification of capitalist economic live before the industrial revolution. When early modern population grew on the countryside, this usually meant a growth of land-less people, living-in servants and other members of the lower strata of rural society. Part of the solution was to adopt what has become known as the European Marriage Pattern (EMP), fewer births and delayed marriages; in some areas where the legal framework permitted, landed possession would be divided amongst heirs, a pattern called partible inheritance or Realteilung in modern German. People were forced to seek non-agricultural by-employment giving rise to processes known as the Verlag or putting-out industry, industry on the countryside or “proto-industrialization.”10 Property would remain in the hands of the nobility. But the claim to the farming rights, i.e. the possession of land, could and would in most cases be passed on from father to son, with the noble lord or proprietor’s approval which could often be obtained by paying a levy and fee. But property rights were fuzzy and divided between farmer (peasant) and lord, and the level of such fees also determined the validity and strength of such shared claims to property rights. There could be a considerable element of negotiability within the system.11 Lords tried to infringe on common property such as the commons, to make good for real (inflation-adjusted) rent losses during

10 Franklin Mendels, “Proto-Industrialization: The First Phase of the Industrialization Process,” Journal of Economic History, 32:1 (1972), 241–261; Sheilagh Ogilvie & Markus Cerman, “The Theories of Proto-Industrialization,” in: Ogilvie & Cerman (eds.), European Proto-Industrialization: An Introductory Handbook (Cambridge: Cambridge University Press, 1996), pp. 1–11. The pace-setting classic in the debate was Peter Kriedte, Hans Medick, & Jürgen Schlumbohm, Industrialisierung vor der Industrialisierung. Gewerbliche Warenproduktion auf dem Land in der Formationsperiode des Kapitalismus (Göttingen: Vandenhoeck, 1977), Engl. transl. Industrialization Before Industrialization, transl. Beate Schempp (Cambridge: Cambridge University Press, 1979); Ulrich Pfister, “Protoindustrialisierung: die Herausbildung von Gewerberegionen, 15.–18. Jahrhundert,” Schweizerische Zeitschrift f¨ur Geschichte, 51 (1991), 149–160; id., “Protoindustrielles Wachstum: ein theoretisches Modell,” Jahrbuch f¨ur Wirtschaftsgeschichte, 39:2 (1998), 21–47. 11 Cerman, Villagers and Lords.

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the 1530–1620 “price revolution”, or the post-1740 agrarian boom all over Europe.12 Peasant households looked different from the modern industrial household. Many of the economic actions of the pre-industrial farmer followed a logic that is either not captured particularly reliably in, or even runs fundamentally against, preconceived notions of modern economic rationality.13 That does not mean agrarian society in the age of capitalism’s ascendancy was not necessarily capitalistic. East Elbian demesne farms operated along a profit-orientated and sometimes profit-maximizing rationale; their owners and estate managers made entirely rational decisions in the light of the market and the given market framework. In parts of Germany on the eve of the Peasant War (1524–1525) farmers, when population growth halted temporarily during two decades of economic crisis before the Reformation (1500–1525), switched from grain farming to pasture and the production of industrial raw materials such as woad. Whole branches of specialized agriculture had sprung up in the hinterland of cities such as Augsburg, Nuremberg or Leipzig since the middle ages during the fourteenth century that were geared towards the diversified and expanding demand of each respective focal city. East of the Elbe on the large Prussian agrarian estates, surplus yields of grain were exported to the booming Dutch cities. Overall, as Sombart and Kula’s work has shown, the outlook of the demesne as a business enterprise could be as capitalist as a merchant’s venture, saw mill, textile manufacturing business, etc. in any one of the leading cities of the western European world. But it is impossible to value all flows of goods and services at monetary values (prices), as in many cases no monetary exchange ratio existed for them, especially for inputs of raw material and labour sourced under the demesne system of economy.14

12 The standard work was Günther Franz, Der deutsche Bauernkrieg (orig. 1926), 12th ed. (Darmstadt: Wissenschaftliche Buchgesellschaft, 1984). Franz was one of the most ardent and active supporters of the national socialist regime before and during the war, but became, after a lacunae of some 12 years, completely rehabilitated after the War. Blickle, Revolution 1525; id.; Bauernkrieg. 13 Alexander Tschajanow (Aleksandr Vasil eviˇc Cajanov), ˇ Die Lehre von der bäuerlichen Wirtschaft: Versuch einer Theorie der Familienwirtschaft im Landbau (Berlin: Parey, 1923). 14 Witold Kula, An Economic Theory of the Feudal System: Towards a Model of the Polish Economy 1500–1800, 2nd ed. (London: Verso, 1987); Boldizzoni, Poverty of Clio; Howell, Commerce Before Capitalism.

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The fuzzy nature of property rights, the self-exploitative nature of small-scale peasant farming, the intermingling of redistributive, coercive, moral-economy and market-based exchange processes within the agrarian economy of pre-1850 Europe, the iron grip of the nobleman on peasant resources (especially labour), disputes about the nature of and access to commons and many others, makes any generalizations or quantification of the agrarian market process in monetary terms difficult. On the other hand, we find ubiquitous documentation of formal markets both in the cities as well as the countryside, and an overwhelming evidence of regular peasant engagement with the markets since the late middle ages. Peasants all over Europe regularly appeared, since the twelfth century as sellers and purchasers of grain, as lenders of money and people taking loans, whether this was an advanced export-orientated agrarian region such as south German Rhineland viticulture15 ; the economic hinterland in the catchment area of the wealthy free imperial towns of Augsburg and Nuremberg, where we find not only highly commercialized agriculture but also export-orientated cloth manufacturing industries spread across the countryside; or the demesne economies east of the Elbe.16 The system 15 Gerhard Fouquet & Kurt Andermann (eds.), Zins und Gült. Strukturen des ländlichen Kreditwesens in Spätmittelalter und Frühneuzeit (Epfendorf: bibliotheca academica, 2016). 16 See, e.g., Govind P. Sreenivasan, The Peasants of Ottobeuren, 1487 –1726: A Rural Society in Early Modern Europe (Cambridge: Cambridge University Press, 2004); Paul Warde, Ecology, Economy and State Formation in Early Modern Germany (Cambridge: Cambridge University Press, 2010); R. Kießling, “Markets and Marketing, Town and Country,” in: R. Scribner (ed.), Germany: A New Social and Economic History 1450–1630 (London & New York: Arnold, 1996), pp. 145–180; Mathis, Die deutsche Wirtschaft; Kellenbenz, “Bäuerliche Unternehmertätigkeit;” Kießling, Die Stadt und ihr Land; Tom Scott, Freiburg and the Breisgau: Town–Country Relations in the Age of Reformation and Peasants’ War (Oxford: Clarendon Press, 1986); id., “Economic Landscapes,” in: Scribner (ed.), Germany: A New Economic and Social History, 1, pp. 1–31; T. Scott, “Introduction,” in: id. (ed.), The Peasantries of Europe: From the Fourteenth to the Eighteenth Centuries (London & New York: Longman, 1998), pp. 1–20; id., “Defining an Economic Region: The Southern Upper Rhine, 1450–1600,” in: P. Ainsworth & T. Scott (eds.), Regions and Landscapes. Reality and Imagination in Late Medieval and Early Modern Europe (Oxford et al.: Peter Lang, 2000), pp. 155–176; T. Scott, “Town and Country in the German-Speaking Lands, 1350–1600,” in: S. R. Epstein (ed.), Town and Country in Europe, 1300–1800 (Cambridge: Cambridge University Press, 2001), pp. 202–228; T. Scott, Society and Economy in Germany 1300–1600 (Basingstoke & New York: Palgrave, 2002); W. Held, “Ländliche Lohnarbeit im 15. und 16. Jahrhundert unter besonderer Berücksichtigung Thüringens,” Jahrbuch für Wirtschaftsgeschichte, I (1978), 171–189; id., “Bemerkungen zur Rolle der ländlichen Tagelöhner im 16. Jahrhundert in Thüringen,” in: S. Hoyer (ed.), Reform—Reformation—Revolution

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of local markets and countryside fairs in medieval England has been welldocumented; on the continent the density of such market centres may have been slightly smaller in places but generally resembled the general picture.17 The common complaints during the German Peasants’ War of the 1520s suggest that this war was a series of conflicts fought over marketable resources and participation in a market society that knew capitalism, spearheaded by peasants who were capitalist farmers, people who had something to lose, as their feudal lords tried to reclaim ancient privileges relating to the redistributive rather than the market economy. For the lords this would have been economically rational, as rising grain prices and prices for victual raising much faster than for manufactured goods in the age of “price revolution” meant an erosion in the real value of rents mostly paid in money.18 The German Peasant War was a conflict fought over access to the market economy with capitalist practices that had widely spread across the countryside. It was often the poorest together with the richest members of pre-industrial European village society who used markets more frequently, who had to use markets regularly, the poor in order to procure food, because they had too little land to be selfsufficient; the richer farmers to sell food, because they had more land than they needed to be self-sufficient. In towns and cities markets were, of course, much more characteristic, but with city populations ranging between three and 10 per cent on the pre-modern average, they were still a decidedly marginal phenomenon.

(Leipzig: Karl-Marx-Universit¨at, 1980), pp. 44–51; W. Held, “Geldwirtschaftliche und marktwirtschaftliche Aspekte der Stadt-Land-Beziehungen in Thüringen im 16. Jahrhundert,” Jahrbuch für Wirtschaftsgeschichte, III (1983), 107–122; id., Zwischen Marktplatz und Anger. Stadt-Land-Beziehungen im 16. Jahrhundert in Thüringen (Weimar: Böhlau, 1988). 17 Richard Britnell, “Proliferation of Markets,” Economic History Review, Second Series, 33 (1981), 209–221; id., “Local Trade, Remote Trade”; Letters et al., Gazetteer of Markets and Fairs; James Masschaele, Peasants, Merchants, and Markets: Inland Trade in Medieval England, 1150–1350 (New York, 1987); Braudel, Civilization and Capitalism. 18 Rössner, Deflation—Devaluation—Rebellion, ch. IV.

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Agrarian Economies and the Origin of Modern Economic Thought Given all the above caveats, there was, as we have seen above, a lot of market exchange in Europe, and also capitalism before 1850,19 a lot of which was not located in cities. Cities however, have, due to the way and history of the historian’s archives, usually provided better documentary or archival evidence on markets and market exchange than the countryside. Cities also acted as catalysts for economic development and specialization. They served as the analytical blueprint for political economy analyses of the market process from Nicholas Oresme (Treatise on Money) to modern writers such as Schmoller and Roscher. Most cities were dominated by manufacturing and services, such as commerce, menial work and food provisioning. This means they required constant imports of foodstuffs and—because cities were harbingers of death, vermin and disease—fresh people. Straube has reconstructed patterns of land transport in Saxony in the 1520s and 1530s and found that there were highly specialized agricultural regions in northern Saxony that produced regular grain surpluses that could be exported into the south-west Saxon mining cities in the Erzgebirge which had sprung up like mushrooms during the mining boom of the 1470s and 1480s, which petered out during the age of Luther’s adolescence, leaving a manifest impression of crisis and decline on young Luther’s mind.20 In such marginal regions farming yields were low; the manufacturing and mining population required constant food supplies from elsewhere, where farming was more buoyant and productive. At Luther’s times day after day whole caravans of carts loaded with grain plied Saxon roads southward from the northern areas day in day out; passing through Grimma near Leipzig21 and other staging posts where the Saxon rulers levied the Geleit payment, a convoy duty; leaving us with ample records documenting the frequency and intensity of domestic

19 See Chapter 1. 20 Rössner, Luther on Commerce and Usury. 21 Uwe Schirmer, Das Amt Grimma 1485–1548. Demographische, wirtschaftliche und

soziale Verhältnisse in einem kursächsischen Amt am Ende des Mittelalters und zu Beginn der Neuzeit (Beucha: Sax Verlag, 1996).

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transport patterns.22 In 1525 alone—the second year of the great Peasants’ War (from which most areas of Saxony emerged unscathed, though) circa 3500 carts with teams of up to 14,000 horses and oxen carrying a total of perhaps 8000 tons of grain passed through the Saxon toll post of Borna south of Leipzig, bound for the Erz Mountains. At conservative estimates, assuming an average per capita consumption of 200 kilograms of grain per annum, these grain supplies may have fed about 40,000 nonpeasants, i.e. people working in and around the mines; or three to four medium-sized cities of the age.23 These were the regions where the later writings of the Cameralist ilk came from; where the authors started out from, conceptually, mentally and often physically. The above figures need to be set in context. Within a world that was still profoundly agrarian, with the share of people living in the countryside at anywhere between 80 and 90 per cent, depending upon the respective region within the German lands, the mining regions were exceptional, inasmuch as they were significantly more urbanized and industrial than any other region and district in contemporary Germany. 40,000 people would have been about four-and-a-half times the population of large mining towns such as St. Annaberg in the Saxon Erz Mountains; or about seven times the population of Leipzig. Around 1500 St. Annaberg was Saxony’s largest city (at about 9000 inhabitants); followed by Leipzig, which by that time had already acquired a reputation as one of the larger supra-regional markets and fair cities of Germany. Most towns in the central German lands ranged at about 2000–3000 inhabitants (such as the residential country town of Mansfeld, where Luther grew up).

22 Straube, Geleitswesen und Warenverkehr; Rössner, Luther on Commerce and Usury,

introduction. 23 Ibid. See also Manfred Straube, “Nahrungsmittelbedarf, Nahrungsmittelproduktion und Nahrungsmittelhandel im Thüringisch-Sächsischen Raum zu Beginn des 16. Jahrhunderts,” in: Herwig Ebner et al. (eds.), Festschrift Othmar Pickl zum 60. Geburtstag (Graz & Vienna: Leykam, 1987), pp. 579–588, at p. 582; Id., “Notwendigkeiten, Umfang und Herkunft von Nahrungsmittellieferungen in das sächsische Erzgebirge zu Beginn des 16. Jahrhunderts,” in: Ekkehard Westermann (ed.), Bergbaureviere als Verbrauchszentren im vorindustriellen Europa. Fallstudien zu Beschaffung und Verbrauch von Lebensmitteln sowie Roh- und Hilfsstoffen (13.–18. Jahrhundert) (Stuttgart: Franz Steiner, 1997), pp. 203– 221, at pp. 203–204, 208–209. The figure for grain consumption has been taken from Isenmann, Die Deutsche Stadt, p. 979.

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It is clear that such figures are above all impressionistic. Yet they serve to provide us with the rough dimensions. As early as the late fifteenth century a significant share of the economically active population had become integrated into the market economy. This pattern of division of labour and structural-economic change, triggered by the silver mining boom of the 1470s and 1480s, must have left an imprint not only on the regions under consideration here, which by means of trade became connected and integrated into the emerging global economy of the day. Reversals were possible, as economic dislocation and disintegration during the Thirty Years War shows, which led in many regions to decline in market integration, economic dislocation and monetary disintegration.24 But the increasingly dynamic urban landscape in Europe after the twelfth century commercial revolution set in motion patterns and processes which only intensified later centuries without real chances of reversal. Added dynamics were provided by an increasingly rural system of manufacturing, putting-out or Verlag , notwithstanding that writers such as Botero or seventeenth- and eighteenth-century German Cameralists insisted habitually that manufacturing should be located in cities.25 On the countryside as well as in the cities many historians have tried to locate an “industrious revolution”.26 To be sure, not all members of village or rural society would have equally participated in such dynamics. In the late 1400s some vintners in the Rhine valley (Rheingau) could make as much as 30 florins or more yearly profit exporting Rhine wine as far as England and the Mediterranean, which compares well with the

24 Henry Kamen, “The Economic and Social Consequences of the Thirty Years’ War,” Past and Present, 39 (1968), 44–61; Theodore K. Rabb, “The Effects of the Thirty Years’ War on the German Economy,” Journal of Modern History, 34:1 (1962), 40–51. 25 Marcus Sandl, Ökonomie des Raumes: der kameralwissenschaftliche Entwurf der Staatswirtschaft im 18. Jahrhundert (Cologne: Böhlau, 1999). 26 Jan de Vries, “The Industrial Revolution and the Industrious Revolution,” Journal of Economic History, LIV:2 (1994), 249–270; id., The Industrious Revolution: Consumer Behavior and the Household Economy, 1650 to the Present (Cambridge: Cambridge University Press, 2008). For pre-industrial Germany, see Ulrich Pfister & Christine Fertig, “Coffee, Mind and Body: Global Material Culture and the Eighteenth Century Hamburg Import Trade,” in: Anne Gerritsen & Giorgio Riello (eds.), The Global Lives of Things: The Material Culture of Connections in the Early Modern World (London: Routledge, 2016), pp. 221–240.

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yearly profits or proceeds of an urban artisan or tradesman.27 Around 1500 A.D. we know about 500 peasants from around 35 villages around Erfurt, an important cloth producing and trading city in central Germany within the territory of the Archbishopric of Mainz, who were involved in producing woad. Woad was the early modern textile blue before the introduction of the “devil’s plant”, Indigo.28 Similar cases can be documented from nearly everywhere else in early modern Germany. Wherever there was poverty, and reduced chances of inheriting a farmstead—or where partible inheritance had reduced the average size of farmsteads well below the threshold size that was necessary to maintain a family household (as was the case in many areas of Upper Hesse)29 —members of the subpeasant social strata, such as cottars and half-cottars, in-servants (in German: Kätner/Kötter, Seldner, Halbkötter, Inwohner, Brinksitzer), who since the late middle ages accounted for the majority of village society had to increasingly rely on the market, either for buying and selling surplus to requirement, or for paid wage labour and by-employment.30 What role did the emerging mercantilist state and Cameralistmercantilist political economy play in this? In the main, an expanding population and growing market economy with capitalism taking firm grip in city and countryside alike, new fields of regulation and state intervention emerged. We should appreciate the long-term nature of such dynamics and their medieval roots, but also pay due heed to the fact that such dynamics tended to cluster socially (strata of urban and village society) as well as regionally. Social structure thus matters considerably in explaining change and dynamics in pre-industrial European capitalism and market society. Population growth and social change in both the cities as

27 Kießling, “Markets,” p. 155. Ulf Dirlmeier, Untersuchungen zu Einkommensverhältnissen und Lebenshaltungskosten in oberdeutschen Städten des Spätmittelalters (Mitte 14.–Anfang 16. Jh.) (Heidelberg: Winter, 1978). 28 Kießling, “Markets,” p. 161. 29 See above. 30 Werner Troßbach & C. Zimmermann, Die Geschichte des Dorfes. Von den Anfängen im Frankenreich zur bundesdeutschen Gegenwart (Stuttgart: UTB, 2006); W. Troßbach, Bauern 1648–1806 (Munich, 1993); W. Rösener, Agrarwirtschaft, Agrarverfassung und ländliche Gesellschaft im Mittelalter (Munich: Oldenburg, 1992); id., Bauern im Mittelalter (Munich, 1985); A. Holenstein, Bauern zwischen Bauernkrieg und Dreißigjährigen Krieg (Munich: Oldenbourg, 1996); und Walter Achilles, Landwirtschaft in der Frühen Neuzeit (Munich: Oldenbourg, 1991).

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well as the countryside had made the self-contained peasant farm increasingly obsolete. It also increased the demand for economic regulation by the state. As Epstein has suggested, “lowered domestic transport costs made it easier to enforce contracts and to match demand and supply, intensified economic competition between towns and strengthened urban hierarchies, weakened urban monopolies over the countryside, and stimulated labor mobility and technological diffusion”.31 Now, there is a sound literature demonstrating the viability of private-order, that is non-governmental enforcement mechanisms in certain contexts, usually long-distance trade: improving market integration and reducing transaction costs could be effectively achieved using private-order enforcement mechanisms. As scholars have argued this worked best for specialized and highly formalized markets, usually overseas trade, finance and insurance.32 Epstein’s work has provided a different nuance, arguing that on a larger, territorial scale, as rulers tried, and since the later middle ages often managed, to abolish local or noble privileges, tax exemptions and local jurisdictions. This was the making of the early modern territorial or fiscalmilitary state. The territorial state also emerged as a manifest economic actor with a comparative advantage in social violence, providing contractenforcing mechanisms lowering transaction cost and improving private property rights and market integration.33 How then, did political economy writings frame the origins and working mechanisms of the capitalist process during the early modern period? And how much of this has survived into much later conceptions, which to the present day inform and shape modern political economy and our view on the market? This we will try to answer in the following chapters: by first, giving due recognition to the notions and contested discourses on freedom. Freedom has been a central concept for capitalism and economic development, conceptually as well as in real terms, and this chapter analyses how mercantilist-Cameralist economic analysis responded to problems of market freedom, given the conditions and restraints described in Chapters 2, 3 and the present one. It suggests ways of how these conceptual framings may be placed into a wider and longer history of economic analysis, with specific regards to market economy, freedom and the makings of capitalism.

31 Epstein, Freedom and Growth, p. 69. 32 Gelderblom, Cities of Commerce. 33 Epstein, Freedom and Growth.

CHAPTER 5

Capitalism and Freedom in Pre-modern Thought

Abstract This chapter studies the somewhat darker origins of liberalism by situating continental economic literature during the age of capitalism’s ascendancy (1450s–1850s) within the idiosyncratic conditions provided on the ground in early modern Europe. Most European regions, as seen in Chapter 4, remained decidedly agrarian and non-urban, shot-through with feudal systems of allocation, modes of production and forms of extraction which created a very specific institutional framework for individual economic activity. Individual freedom (or the absence of it) was embedded within social networks and feudal webs of power, coercion. With native nobilities and feudal grand seigneurs enjoying wide-ranging claims on the economic, social and emotional resources of the individual, numerous freedoms in the plural infringed on concepts of possessive individualism and competitive laissez-faire which shaped during that time and which became important for the unfolding of capitalism. Early modern economic writers, in this process, framed and re-framed the question of freedoms in the plural, especially the privileges enjoyed by the nobility and other market infringements, when making their dynamic models of economy work. Conditions for capitalism and competitive markets— economic freedom in the modern way—had to be created from scratch, designed and managed. They could not be found, or assumed (as much of the modern literature does) to just exist in situ, or continue to exist automatically once established. Capitalism and freedom needed careful management. Whilst societal premises were different, conclusions reached © The Author(s) 2020 P. R. Rössner, Freedom and Capitalism in Early Modern Europe, Palgrave Studies in Economic History, https://doi.org/10.1007/978-3-030-53309-0_5

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by Cameralists such as Johann Heinrich Justi or, in Scotland, Sir James Steuart, about markets and price formation were surprisingly often very similar to those used to the present day. Thus, we have, in Cameralism and mercantilism, yet another origin point for modern ideologies regarding the nature and role of markets, especially in terms of their positive connotation for capitalism and economic development. Keywords J.S. Mill · Cameralism · Machiavelli · Feudalism · Liberalism · Freedom

The Dark Origins of Liberalism In England, from the peculiar circumstances of our political history, though the yoke of opinion is perhaps heavier, that of law is lighter, than in most other countries of Europe; and there is considerable jealousy of direct interference, by the legislative or the executive power, with private conduct; not so much from any just regard for the independence of the individual, as from the still subsisting habit of looking on the government as representing an opposite interest to the public. John Stuart Mill, On Liberty (1859), pp. 19f.

With these words Mill, one of the most influential thinkers of the nineteenth century, often seen as a spearheading figure in liberalism, encapsulated a common view on an early English Sonderweg as a pioneer of modern laissez-faire thinking. “(…) [T]he sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection”, Mill further argued in this foundational text for modern liberalism, whatever that “-ism” may actually be: There were many liberalisms in the nineteenth and twentieth centuries, different streams of thoughts with different nuances, which all shared a number of core tenets.1 Mill however, continued with two important qualifications. Liberty as a human entitlement did not apply to

1 An excellent genealogy of liberal thought is provided in Siedentop, Inventing the Individual. See also Michael Freeden, Liberalism: A Very Short Introduction (Oxford: Oxford University Press, 2015), ch. 1 entitled “A House of Many Mansions.”

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children. It would not apply to savages in uncivilized nations, either. He went on: The early difficulties in the way of spontaneous progress are so great, that there is seldom any choice of means for overcoming them; and a ruler full of the spirit of improvement is warranted in the use of any expedients that will attain an end, perhaps otherwise unattainable. Despotism is a legitimate mode of government in dealing with barbarians, provided the end be their improvement, and the means justified by actually effecting that end. Liberty, as a principle, has no application to any state of things anterior to the time when mankind have become capable of being improved by free and equal discussion. Until then, there is nothing for them but implicit obedience to an Akbar or a Charlemagne, if they are so fortunate as to find one. But as soon as mankind have attained the capacity of being guided to their own improvement by conviction or persuasion (a period long since reached in all nations with whom we need here concern ourselves), compulsion, either in the direct form or in that of pains and penalties for non-compliance, is no longer admissible as a means to their own good, and justifiable only for the security of others. (Mill, On Liberty, pp. 22f.)

From modern vantage point we may find it paradoxical to see illiberal reasoning at the core of laissez-faire. But with these lines Mill was firmly in line with the theories that surrounded and preceded him, especially Natural Law (Pufendorf, Wolff), Reason of State (Machiavelli, Botero) and Cameralism, and an Enlightenment which very much saw all the important achievements of human individualism and liberty as entitlements of European nations—although Cameralists such as Johann Heinrich Justi (1717–1771) shared the Enlightenment hype of Sinophilia and admiration for the Chinese empire—and their upper classes; moreover, a liberty conditioned by the social order and legal status quo which, for most areas and countries of the pre-French Revolution era was embodied in some form of feudalism, demesne economy or society of estates (Ständestaat ), which we have encountered in Chapters 2, 3 and 4.2 Looking for or even discovering anti-modernity in a work such as

2 Most recently on Cameralism and Natural Law, see the works by Nokkala mentioned above and in the next footnote, but also a forthcoming Ph.D. thesis by Mr. Xuan Zhao entitled “The Political Economy of Johann Heinrich Gottlob von Justi (1717–1771): The Eighteenth-Century Entrepreneurial State.”

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Mill’s, even if written from a non-continental vantage point, also means using the term “liberalism” in a decidedly anachronistic manner. When applied to pre-1800 times, including slightly later writings such as Mill’s, the concept of “liberalim” obviously makes very little sense.3 But what we can see are hints at notion of preconditions to liberalism—the management of freedom or different freedoms, when written, as was the case on the continent, in the plural. Were there notable or apparent differences in Anglo-Saxon economic framings of liberty compared to the continent? After all, not the Anglo-Saxon path towards liberalism but rather continental political and economic thought, before and beyond the French Revolution, has been conceptualized as different, a Sonderweg, sometimes even Dark Side of Modernity, because from a twentieth-century viewpoint it seems so easy to see how continental writings diverged from what became the AngloSaxon liberal model in the wake of thinkers like Bentham and Mill. Abortive and failed liberalisms we find in the nineteenth-century German states which later historians have sometimes used to construct continuities of a Dark Road into oblivion, a or Sonderweg through the second into the third Reich, authoritarianism and Hitler. Cameralism, a mainstream dogma widely exported beyond the German lands, as more and more recent studies suggest,4 may easily be mistaken as part and parcel of this Dark Side of modernity. Did it really belong to an “Other Canon” (E. Reinert) or did it simply represent a different Enlightenment, a different way of looking at economy and society?5 In the Germanies, surely liberalism was nipped in the bud in wake of the Paulskirchen-Revolution 1848. And even those thinkers of a more liberal ilk on the German side, such as Friedrich List—who was an ardent liberal by principle—have made it into an authoritarian, not liberal, canon of the modern mind. List, a liberal, became earmarked as a more authoritarian economic thinker because he

3 Nokkala, From Natural Law to Political Economy; id., “The Machine of State in

Germany—The Case of Johann Heinrich Gottlob von Justi (1717–1771),” Contributions to the History of Concepts, 5:1 (2009), 71–93; id., “Triebfeder und Maschine in der politischen Theorie Johann Heinrich Gottlob von Justis (1717–1771)”. But see Adam’s work on Justi: Adam, The Political Economy of J.H.G. Justi. 4 Seppel & Tribe (eds.), Cameralism in Practice. 5 As per Johannes Burkhardt & Birger P. Priddat (eds.), Geschichte der Ökonomie.

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advanced protectionism and state intervention as policies to achieve, eventually, a higher state marked by a liberal world order.6 This is very odd indeed.

Dialectics of Modernity in Pre-industrial Europe “No servitude whatsoever, neither of the vassal to his lord, nor the dependent peasant to the proprietor of his land, of journeyman to master etc., regardless how much such relationships may have changed or diverged from their original character of mutuality and reciprocity, can be compared to the relationship of the debtor to his creditor, in terms of its inherent dishonouring and humiliating nature”.7 Thus wrote economic romanticist (and ardent anti-Semite) Adam Müller in his Treatise on Money in 1816.8 What Müller described was the transformation from an Ancien règime paternalistic agrarian Ständestaat to a full-fledged market economy with free markets in land, labour and capital. In Müller’s day and age this transition was still under way in many German territories. In Russia the process was only completed by the liberation edict of 1873. Müller made a startling case, certainly strange to the modern ear, for the old corporate system of economy. This old mode of production was threatened, Müller was convinced. There had been first attempts at agrarian reform during the later eighteenth century in many countries on the continent, but an effective start was made in Prussia by the notorious “October Edict” of 1807. The Prussian reforms were aimed at abolishing serfdom, creating private property and a free market in labour, capital and land, as well as establishing commercial society by stroke of pen and from above, through the abolishment of old guild privileges in the cities and towns as well as withering away of noble privileges and entitlements that were tied to the land. To Müller, and many other sceptics of his

6 Seiter et al., The Economic Thought of Friedrich List. 7 German original: “Keine Dienstpflichtigkeit der Welt, weder des Vasallen gegen seinen

Lehnherrn, noch des Unterthanen gegen seinen Grundherrn, noch des Gesellen gegen seinen Meister u. s. f. wie diese Dienstverhältnisse auch von dem alten Charakter der Gegenseitigkeit abgefallen seyn mochten, ist wohl an innerlicher Schmach und Demüthigung mit dem Verhältniß des Schuldners gegen seinen Gläe ubiger zu vergleichen.” Compare this to the remarks in Graeber, Debt. 8 On Müller’s monetary economics, see relevant sections in Jan Greitens, Geld-TheorieGeschichte (Marburg: Metropolis, 2019).

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age, this transition smacked of “Smithianism”, the new fashion in political economy that had swept parts of the continent shortly after the Wealth of Nations had appeared in 1776. Smithian political economy met with scepticism amongst the learned classes in the Germanies and beyond.9 Müller, an ardent anti-Semite, reads backward, awkward and awful, advocating a return to a static social and corporatist order characteristic of the Ancien règime, shouting against the forces of modern capitalism which had created an atomistic, inorganic market society and disfigured the German body politick in the wake of the agrarian reforms of property rights across the German lands in Napoleon’s wake.10 But similar such voices could be heard elsewhere—Justus Möser comes to mind—and at earlier times. And perhaps they are to be expected in any time and age when there are massive changes to the rhythms of economic life, be that major depressions, or spurts, major transformations, economic upswings or transitions towards capitalism. Luther, in his On Commerce and Usury (1524), presented elements of such a critique of contemporary capitalism that had gone through decline but has been interpreted by most scholars as directed against a rise of capitalism.11 Luther’s writings on usury were a sign of an age when a small handful of late medieval Upper German super companies such as Fugger and Welser controlled large shares of the global spice trades which yielded astronomic monopoly rents. Complaints on these were voiced during the German Peasants’ War 1524–1525, as well as various Utopias and grievances, e.g. Michael Gaismair’s Tyrolean Constitution (1526). They came after two decades of economic stagnation and price deflation which had left market-driven peasant farmers with a protracted decline in real incomes, as their market sales had faced nearly continuously sinking prices, 1500–1517 and then again went through a trough marked by the economic low of the Peasant War, 1524–1525.12 In a sense it is normal to except sceptical voices wherever landslide societal and economic changes occur, not least because human brains aren’t hardwired for change.

9 Schefold, “Goethe’s Economics.” 10 See also Jerry Z. Muller, The Mind and the Market: Capitalism in Modern European

Thought (Knopf, 2002), ch. 4 on Justus Möser. 11 R. H. Tawney, Religion and the Rise of Capitalism (London, 1926). 12 Rössner, Deflation—Devaluation—Rebellion, chs. II and IV.

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Freedoms in the Plural: Early Modern Discourses on “Liberty” (Fryheit) The interesting thing is that the later mercantilist-Cameralist texts often drew on templates and narratives exposed by Luther and other authors in the age of the early Reformation, sometimes verbatim, as passages in Philipp Wilhelm von Hörnigk, Austria Supreme If Only She So Wills (1684) show, which replicate sections from Luther’s 1524 economic milestone On Commerce and Usury.13 These texts were written during the crucial period of the turbulent 1520s and 1530s that would decide whether Luther’s Reformation would be made or break. They teem with notions of economy and visions on markets, often critical but never principally in opposition to capitalism, and templates of how a new better economic society would be designed according to the laws of God and a true Christian kingdom on earth. Never mind that Luther has been reckoned by some Marxist historians to be an early or crypto-mercantilist writer.14 He also conceptualized notions of liberty that remained important for the rest of the early modern period. In his Von der Freiheit eines Christenmenschen (On Christian Liberty, 1520), a text contemporaneous to some of his other big pamphlets, e.g. Address to Christian Nobility of German Nation (1520), Luther advocated freedom from Pope and yoke of the Papal Church in an interpretative monopoly of Holy Scripture. It built on the premise that a Christian was a free man and lord over all things material, whilst at the same time being serf and subservient to everybody and everything. (“Ein Christenmensch ist ein freier Herr über alle Dinge und niemandem untertan. Ein Christenmensch ist ein dienstbarer Knecht aller Dinge und jedermann untertan.”) Lutheran religious anthropology built on the notion of Man’s two natures (“dass ein jeglicher Christenmensch zweierlei Naturen hat, eine geistliche und eine leibliche. Nach der Seele wird er ein geistlicher, neuer, innerlicher Mensch genannt, nach dem Fleisch und Blut wird er ein leiblicher, alter und äußerlicher Mensch genannt”). Countless scholars have read these passages as though Luther paved the way towards an authoritarian theory of state, with the unholy Deutsche Christen, a national-socialist Protestant group in the 1930s and 1940s leading by bad example, standing firmly on Luther’s 13 Rössner (ed.), Philip Wilhelm von Hörnigk, Austria SUPREME (If It So Wishes). 14 Günter Fabiunke, Martin Luther als Nationalökonom (Berlin: Akademie Verlag,

1963).

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Two Swords Doctrine, building upon a deeply ingrained German culture of masochistic authoritarianism (Autoritätshörigkeit ). Goldhagens book15 or Hannah Arendt’s earlier psychograms of Adolf Eichmann confirmed this notion from a different standpoint. Lutheran theologians still accept that the distinction between inner and outer realm, and the rejection of material goods as a road to salvation (abolition of indulgences etc.), could have had an important impact on subsequent darker notions of “freedom”, in politics, economy and culture. This, however, also means to ignore some of the hidden features in German discourses on freedom, which coupled with the evolution of an economic language and linguistic framing of the market. Luther suggested (On Christian Liberty, 1520) For Holy Scripture makes no distinction between them, except that those, who are now boastfully called popes, bishops, and lords, it calls ministers, servants, and stewards, who are to serve the rest in the ministry of the Word, for teaching the faith of Christ [117] and the liberty of believers. For though it is true that we are all equally priests, yet we cannot, nor, if we could, ought we all to minister and teach publicly. Thus Paul says “Let a man so account of us as of the ministers of Christ, and stewards of the mysteries of God.” (1 Cor. iv. 1.). This bad system has now issued in such a pompous display of power, and such a terrible tyranny, that no earthly government can be compared to it, as if the laity were something else than Christians.16

In the German original Luther uses the Latinized Greek term for steward17 of the Godly treasure—“oeconomus” (or oeconomos in the plural).18 In practice, this concept of freedom simply meant freedom from papal fees, which some historians have interpreted as a proto-national

15 Daniel Jonah Goldhagen, Hitler’s Willing Executioners: Ordinary Germans and the Holocaust (Vintage, 1997). 16 https://sourcebooks.fordham.edu/mod/luther-freedomchristian.asp. 17 See the new book by Dotan Leshem on the deep history of oikonomics and neoliberalism. 18 On Christian Liberty, 1520: “Die heilige Schrift kennt keinen anderen Unterschied, als dass sie die Gelehrten oder Geweihten nennt ministros, servos, oeconomos, das heißt: Diener, Knecht, Haushalter, die sollen den andern Christus, den Glauben und die christliche Freiheit predigen.”

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discourse.19 This discourse built on an imagined outflow of silver and drain of money out of the German lands.20 Different notions of Fryheit were entertained by the peasants who happily surfed the “Luther wave” when trying to legitimize their claims in the countless peasant uprisings and movements, especially the Bundschuh since the 1460s: Their freedom meant freedom from undue rent extraction and feudal exploitation, from serfdom and unduly high levies upon inheritance and property transfers which would cripple and impoverish peasant household economies. Usually the people leading the peasant uprisings belonged to the upper strata of village society. These were people complaining about hindrances to capitalist enterprise. People paid hefty fines if they violated marriage commandments, such as the requirement to ask for the lord’s permission to marry, or prohibition to marry outside the lord’s demesne or someone else’s feudal retinue (Leibeigenschaft ). But as early as the 1510s Roman jurists such as Ulrich Zasius argued that most Eigenleute—serfs, usually of cloisters and monasteries in Southern/Upper Germany—held their farms and possessions in similar tenure and customs and acted in practice entrepreneurially just as any freeholder would.21 This reminds me of Russian serfs in the nineteenth century known to have run iron works and pretty much carried out functions that we would classify as “entrepreneurial”; their superior financial wealth did not bear out their inferior legal status. Sometimes in early modern Germany, calls for “freedom” were no more than a legal-political finesse addressed at changing certain economic arrangements, expressed not by the oppressed but in fact the wealthy: people who had a stake in capitalism and the market economy, without necessarily implying a broader political claim of the grand sort we today associate with liberty.

19 Caspar Hirschi, The Origins of Nationalism: An Alternative History from Ancient Rome to Early Modern Germany (Cambridge: Cambridge University Press, 2011); Tom Scott, The Early Reformation in Germany: Between Secular Impact and Radical Vision (Farnham: Ashgate, 2013). 20 Philipp Robinson Rössner, “Monetary Theory and Cameralist Economic Management, c.1500–1900 A.D.,” Journal for the History of Economic Thought, 40:1 (2018), 99–134; id., “Burying Money? Monetary Origins and Afterlives of Luther’s Reformation,” History of Political Economy, 48:2 (2016), 225–263. 21 Blickle, Der Bauernkrieg, 4th ed. (2012), ch. 3.

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In other contexts, e.g. Epstein’s Freedom and Growth (2000) freedom was freedom from having to pay taxes, levies and contributions. The French Revolution saw the abolition of privileges enjoyed by half the nobility of the realm. In Scotland post-1707 certain noblemen remained exempt from paying duty on imported wines for their own household consumption.22 Under the new 1707 British customs framework this was extraordinary, and certainly so given the modern institutional economists’ literature that suggests that the Glorious Revolution 1688 established the “modern economy”.

Feudalism, Freedom and Capitalism in Early Modern Europe: Why Smithianism Didn’t Work How did pre-industrial political economy, especially the literature variously known as “Cameralism” or mercantilism respond to these idiosyncratic challenges and conditions? Cameralism—the modern literature is still unclear what it was and whether or in what form it existed, but at least it is even better served than its brainchild mercantilism—has been left out from most genealogies of modern liberalism, albeit some scholars have seen the connection.23 As we have seen above Wakefield suggests that Cameralism was “fake news”, sketching visions of alternative worlds that were well-nigh impossible, to get their authors into paid employment. Priddat (2008) discusses the paradoxical concept of Cameralism as simultaneous strengthening of market capitalism and state, and Tribe’s works have highlighted its role and nature of an academic pedagogy of administrators-to-be. Justi—Germany’s leading figure in the economic enlightenment and prolific author of widely sold (and copied) Cameralist works—was not principally opposed to what later liberals saw as an important economic undertone of modern capitalism, i.e. competitive price formation on deregulated markets. Schumpeter made the perhaps anachronistic but certainly interesting pun of Justi advocating “laissez-faire with the nonsense taken out”. And as ongoing work has demonstrated, Justi did believe in the virtues of regulation and

22 Rössner, Scottish Trade in the Wake of Union, ch. 2. 23 Joseph A. Schumpeter, History of Economic Analysis (New York: Oxford University

Press, 1954); Muller, Mind and the Market, pp. 84–89.

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coordination of markets by the state in regards of economic structure, product quality, production techniques, skills of labourers. In his 1761 major synthesis Foundations of Power and Happiness of Nations (Grundfeste zu der Macht und Glückseeligkeit der Staaten, 1761). Justi argued that the state of “freedom” was achieved, when trades were restricted only by public welfare. Public welfare on the other hand was conditioned, framed and embedded within the laws of the country (MGI, pp. 698–699), so this definition left ample room for state intervention, at least to direct industry (MGI, pp. 700–701). Freedom could go both ways and become, from a modern viewpoint, illiberal.24 Because there were imperfections in the prevailing societal framework (Ständegesellschaft, serfdom, feudalism, manorial or demesne economy) coupled with the sometimes disturbingly corrupted human nature, autocracy was seen, by continental Enlightenment authors, as the best form to implement such “laissez-faire”. Hayek’s ardent supporters and the Chicago Boys active in the service of several southern American military dictators would testify to this simple truism in the 1960s and 1970s. David Hume confirmed from a British standpoint that a capitalist economy could flourish under conditions of autocracy (enlightened despotism). The Enlightenment thinkers, in Britain and on the continent, were no strangers to authoritarianism. The German lands, and most continental nations and states, were latecomers to the industrial revolution. But were they also latecomers to capitalism? And was capitalism really their second language, as suggested by scholars, mentioned in the introduction? Smith had published his analysis of an advanced-agrarian commercial society in his Wealth of Nations (1776). Important conceptualizations of a compassionate-paternalistic model of capitalism can be found in his earlier work Theory of Moral Sentiments (1759), Part IV, Chapter I. Later on, especially after the Second World War, Smith’s work was mistaken for the first work in modern economics, and google ngram easily shows the fashionable hype of post1945 Smithianism in the Western world. Before the war there had been much less of such hype. What Smith had described was a historically peculiar model and exceptional case, referring to England and parts of Lowland Scotland south of the so-called “Highland line”. This emerging British high-powered market economy was marked by a long tradition 24 I am indebted to my student Zhao Xuan, who has worked mainly on Justi’s Grundfeste, for this interpretation.

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of freedom, meaning free negotiability of prices for factors of production such as land, labour and capital. Such a mode of production rather ill-describes economy in other corners of the British Isles, such as Scotland’s Highlands and Islands until the nineteenth century, where agrarian production was embedded in social logics that were only part marketorientated, partly cooperative and partly corporational-patriarchic—up to models such as clans and chiefdom (as in Highland & Island Scotland into the nineteenth century).25 And it completely failed to map on to the societal conditions for capitalism on the ground as experienced on the continent. In continental Europe, as we have seen in the previous chapter, odd modes of production and agrarian economy prevailed, usually described as “feudalism”, manorial or demesne economy, under which capitalism and development unfolded—and sometimes at rates that were comparable with other European nations and states until the early 1700s: these regions knew capitalism, as did the usual suspect regions in the northwest such as the Dutch Republic.26 But the continental agrarian systems were fuzzy; restrictive feudal structures intermingled with more liberal political economies of markets and factor allocation based on copyhold and freehold leases and other forms of agrarian economy and management usually called Rentengrundherrschaft that we have encountered in Chapters 3 and 4. This complex, fluid, fuzzy and muddled societal framework is bound to look alien to the modern reader, not only since it seems fundamentally at variance with the Anglo-British experience post1618 or 1688, which is often taken as the template for capitalism and economic modernity in the (likewise very fuzzy) “West”. It also reflects understandings of property and possessing of productive factors simply unknown in the modern economic world. “Private property” would have been an empty term with little concrete meaning in most places before the French Revolution.27 Western Anglo-Saxon concepts of statehood, citizenship and participation in the political process, which became since 25 Alan Kennedy, “Managing the Early Modern Periphery: Highland Policy and the

Highland Judicial Commissions, c.1692–c.1705,” Scottish Historical Review, 96:1 (2017), 32–60. 26 Pfister, “The Timing and Pattern of Real Wage Divergence.” 27 Rafe Blaufarb, The Great Demarcation: The French Revolution and the Invention of

Modern Property (Oxford: Oxford University Press, 2016); Jerome Blum, The End of the Old Order in Rural Europe (Princeton, NJ: Princeton University Press, 1991).

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the days of Hobbes based on an increasingly differentiated notion and legalistic tradition of private property, saw a gradual process towards political and economic modernization, in discourse and practice, in the wake and in consequence of the English Civil Wars and the Glorious Revolution. On the continent and in particular east of the River Elbe systems of property rights and agricultural modes of production such as Grundherrschaft (rental system), Gutsherrschaft (demesne/manorial economy), etc., were often tied to, or carried with them, statutory labour services, restrictions on marriage, huge fees paid upon passing on possession of a landed holding to a designated heir and many more. Such dues and fees were not unknown in other rent-based agricultural farming economies in western Europe, which retained, in many cases, elements of the medieval manorial system whilst switching over, in other cases, to a commercialized system in which most tenants, in return for a yearly (and renegotiable fee) obtained hereditary possession of their landed holdings (the property of which in most cases remained in the hands of the nobility). Often these systems were mixed; one peasant farmer could hold landholdings from multiple landowners and under multiple different systems of tenure. The English tradition of free farming and commercialized agriculture went back to the middle ages, and the demesne system had vanished by the 1600. England’s agrarian economies had also been marked by a rather high level of commercialization, a high level of market integration and an increasingly integrated market on a national scale.28 In other words, in most European regions before the industrial revolution, conditions were decidedly distinct from English Hobbesian concepts of property, agrarian or non-agrarian, and they remained so in many cases into the mid- till late nineteenth century. In the eastern Prussian lands, the manorial system fully ended, and the social powers of the aristocracy were finally broken, only in 1945, when these areas passed under Polish and Soviet rule, and when the old aristocratic families were forced to move West. The memoirs of Marion Gräfin Dönhoff (1909–2002), one of the last East Elbian aristocrats, who had to flee the parental manorial estate of Friedrichstein in East Prussia in 1945 and who became one of the most distinguished

28 Gregory Clark, “Markets and Economic Growth: The Grain Market of Medieval England,” Cliometrica, 9:3 (October 2014).

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liberal intellectuals in West Germany, vividly recall daily life and economy on a Juncker estate in the 1920s and 1930s.29 To many contemporaries, Adam Smith’s model therefore made little sense if applied to the continental spheres of time and space. Friedrich List, in his National System of Political Economy (1841) was not the first to discover this. First editions of Smith’s Wealth of Nations had appeared in German translation much earlier, slightly after the first German translation of his great contemporary Enlightenment economist, Sir James Steuart’s Principles of Political Oeconomy became available in German in 1769.30 They were as eagerly read and reviewed by German oeconomic writers as was Steuart’s book in the numerous periodicals produced by the “popular enlightenment”.31 But contrary to Steuart, who received a lot of praise, Smith’s Wealth of Nations was looked upon with suspicion, often seen as unscientific and unsuitable for continental contexts.32 Johann Wolfgang von Goethe, Germany’s most prolific and skilled poet of the time, Cameralist administrator in the service of the Saxon dukes at Weimar belonged to the widening group of intellectuals engaging with Smith’s and Hume’s works, but the circle of “Smithianer” positively endorsing Smith’s model of possessive individualism remained small. The German Enlightenment, in particular in its popular version of useful knowledge enlightenment (Volksaufklärung ), with the Intelligenzblätter detailing useful oeconomic knowledge from the raising of pigs, goose and hens, to strategies of glass making and tallow candles—up to bigger questions of economic development—had little understanding or taste for Smith’s ideas, emphasizing the need to tune capitalism towards existing patriarchal modes of economy and exchange in situ. Classical political economy had begun to permeate the landscape but only gradually and slightly, and Marx’s and Engel’s writings were soon 29 Marion Gräfin Dönhoff, Namen die keiner mehr nennt (Cologne: Eugen Diederichs Verlag, 1962); ead., Kindheit in Ostpreussen, 15th ed. (Munich: Siedler, 1988). 30 James Stewart (sic!), Baronets, Untersuchung der Grund-Säze von der Staats- Wirthschaft als ein Versuch über die Wissenschaft von der Innerlichen Politik bey freyen Nationen (Stuttgart: Cotta, 1769). 31 Another version of German Enlightenment which combined elements of Cameralism, pater familias literature with useful knowledge management quite akin to the concept as framed by Joel Mokyr. See Holger Böning, Hanno Schmitt und Reinhart Siegert (eds.), Volksaufklärung. Eine praktische Reformbewegung des 18. und 19. Jahrhunderts (Bremen: Edition Lumière, 2007). 32 Schefold, “Goethe’s Economics.”

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to make an inroad within and beyond the Germanies. There remained as much scepticism amongst nineteenth-century German economists of the emerging Historical School in the wake of Friedrich List, marked by figures such as Schmoller, Roscher and Bücher,33 towards Smithian liberalism as towards Physiocracy, both of which were considered to be important stepping-stones for this new fashion of liberalism and reconceptualization of political economy. Abolishing corporatism, feudalism and the cultural-social ties that bound humans together in the human economic process, Müller (see above) argued, would not only lead to atomistic competition and a-personal individualism in the market place. It would create a life- and bloodless society, ridden by personal debt.34 Not all Anti-Smithians would go as far as Müller did. But it was clear to many writers that political economy in the Anglo-Saxon fashion would create armies of proletariat workers unable to pay off the new debts incurred in return for private property. The introduction of private property according to the Roman Law concept, of allodial property or individual ownership, Müller and the Romanticists were convinced, would bring society back to the pre-Hobbesian state of nature of homo homini lupus: in other words, they would trigger exactly the opposite and reverse-engineer pre-Hobbesian states of society. This logic looks like the antithesis to capitalism. Just one or two generations before Müller, writers of the continental-mercantilist or Cameralist ilk sounded much closer to visions of the market process as laid out in the Wealth of Nations. “We must emphasize”, wrote Johann Heinrich Gottlob von Justi, eighteenth-century Germany’s star economist in his 1760 treatise on principles of political economy (Die Grundfeste zu der Macht und Glückseeligkeit der Staaten oder ausführliche Vorstellung der gesamten Policey-Wissenschaft, 1760), “that freedom is more conducive to the flourishing of the common weal, than any government support”.35 Neither Friedman nor any other of the Chicago Boys could have possibly disagreed with this. James Steuart, a Jacobite whom we have encountered above and who must have studied Justi’s works when in exile at the University of Tübingen, wrote: “The prices of subsistence are made to fluctuate, in markets by the same principle which regulates the prices of all

33 See introduction. 34 Graeber, Debt: The First 5000 Years is interesting in this context. 35 Justi, Grundfeste (1760), p. 698.

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commodities, viz. the proportion between the demand and the supply”,36 and “Private Interest is the great spring of all actions in political life”.37 Such axioms have remained central credos of the modern economic mind and represented key stones of an economic language of the market which most historians commonly ascribe to Smith’s Wealth of Nations. But contrary to historians’ interpretations,38 there was nothing peculiar eighteenth century to it: the (ill-labelled) “mercantilists” built on centuries worth of medieval and Renaissance foundations that would continue to crop up back and again into the twentieth century, for instance, in the Freiburg School of neoliberalism or coordinated capitalism commonly labelled Ordoliberalism.39 Cameralism and mercantilism and the Alteuropäische Kanon expressed a remarkably flexible and versatile, even laissez-faire attitude towards markets and price formation and put, since the dawn of the early modern age, an increasing emphasis on the role of the ruler or state in empowering, guarding, steering and protecting the market process. The Cameralists as well as Steuart with his Inquiry (1767) thus stood on the shoulders of giants. We can assume that Cameralism influenced and shaped the writing of Steuart’s Inquiry into the Principles of Political Oeconomy (1767).40 Steuart’s work proved to be one of the most influential economic texts during the age of the Enlightenment. It enjoyed a degree of influence deep into the nineteenth century in academiceconomic cultures on the continent and Japan, but received less acclaim amongst liberal economists, especially during the twentieth century, probably because Steuart, alongside his “liberal” views on competitive markets and economic freedom, also advocated policies today known as import substitution industrialization and the infant industry rationale. Associating Steuart’s—or the Cameralists’—work with what has been one of the central credos of market fundamentalism, including neoliberalism of

36 James Steuart, “Considerations on the Interest of the County of Lanark in Scotland,” Steuart’s Works, pp. 289–290. 37 Ibid., 309. 38 Adam, Justi, ch. 1. 39 See the works mentioned above, e.g. by Kolev, Tribe, Manow and Irving. 40 Keith Tribe, “Polizei, Staat und die Staatswissenschaften bei J. H. G. von Justi,” in:

Bertram Schefold (ed.), Vademecum zu einem Klassiker des Kameralismus: Johann Heinrich Gottlob von Justi, Grundsätze der Policey-Wissenschaft (Düsseldorf, 1993), pp. 107–140.

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all shapes and shades,41 thus sounds counterintuitive from the modern vantage point. But upon closer inspection, the mercantilist faith and its congenial continental sibling Cameralism, often dismissed as dirigiste, should appear in a somewhat brighter light. If anything, they show us the similarities and shared tropes in early modern economic discourse and conceptions of the market process, in particular the idea of price formation within a competitive market process. It was the state’s first and foremost aim to promote public happiness (Glückseligkeit ). For this, all means necessary had to be taken, as Justi argued in what would become one of his most famous treatises on economics, Staatswirthschaft (1755). Such Public Happiness Justi defined: “as such good order and nature of state and society that everyone would enjoy a fair and reasonable degree of freedom to acquire, by use of their industry and industriousness, all those moral and temporal goods needed for a good and happy life according to one’s own state and status (Stand) in society.”42 This notion of social status and freedom built upon medieval Scholastic notions, and Martin Luther, On Commerce and Usury (1524) had not been alien to this concept.43 “Public Happiness” was a later Cameralistic modification of an earlier discourse with roots in Antiquity (Eudaimonia) that needs to be placed within Enlightenment discourse and visions of the good life according to the Eudaimonia concept.44 Other concepts of economic freedom included freedom from servitude, and those revolutionaries who in the German Peasant Revolts of the 1520s swung the flag of Fryheit (freedom) mainly referred to freedom meaning being free from servitude, i.e. the dues to be paid to feudal lords, as well as the arbitrary degree of labour extraction and services (corvee labour) to be rendered to some lords at will under the manorial 41 Including Ordoliberalism which German economists and historians of economic thought would commonly reckon to the “neoliberal” spectrum, which is mainly due to some German-language conventions. 42 “Gl¨ uckseligkeit der Unterthanen, eine solche gute Einrichtung und Beschaffenheit eines Staats, daß jedermann einer vern¨unftigen Freyheit genieße, und durch seinen Fleißvermögen sich diejenigen moralischen und zeitlichen G¨uter zu erwerben, die er nach seinem Stande zu einem vergn¨ugten Leben nöthig hat.” 43 Rössner, Martin Luther on Commerce and Usury. 44 Ulrich Engelhardt, “Zum Begriff der Glückseligkeit in der kameralistischen Staatslehre

des 18. Jahrhunderts (J. H. G. von Justi),” Zeitschrift für historische Forschung, 8 (1981), 37–79; Darrin McMahon, Happiness: A History (Atlantic Monthly Press, 2006).

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or demesne economy.45 The vast literature on central European peasant wars of the middle ages (1460s–1520s) has shown the multifaceted nature of these discourses, their dynamics, negotiability and flexibility. Often the actors did not go as far as demanding freedom in the modern sense. Fryheit to them could mean to return to old or ancient levels of duty and tithe, as they had been in the just age of the past. It was a tricky thing, because “altes Recht”, one of the key tropes deployed in such discourses on freedom, was never specified in terms of “which year”, or “to conditions of which year do we want to return to?” This was as much a discursive strategy as well as political communication technique to legitimize claims to a better future against a system of power and authority whom statutory law saw as God-given.46 There were a few far-reaching attempts at revolution, i.e. at completely overturning the current system of freedom and property rights, as the activities of Thomas Müntzer in Mühlhausen, as well as Michael Gaismayr in Tyrol (1524–1526) during the Peasant War, or the Münster Anabaptist “empire” (Täuferreich zu Münster) of the 1530s show. But these were brutally crushed. Soviet and East German historiography before 1989 argued that the Peasant War as well as Martin Luther’s Reformation represented the beginnings of an abortive bourgeois revolution completed only 500 years later by the 1917 Revolution and subsequent creation of the Soviet Union.47 Most likely however, it was rather a way of re-establishing peasant agency without revolutionizing the system—because revolution always entailed a change of society and regime that was, under the contemporary conditions of understanding, against the Will of God. Martin Luther, who had originally professed a moderate and mildly approving position to the peasants’ cause in 1524 wrote, a few months later, his infamous “Letter to the Uprising Peasants” in which he called the authorities to slay and kill and 45 Blickle, Revolution; for Thuringia, which was one of the commercially more developed regions of the Germanies, see essays in Günter Vogler, Bauernkrieg zwischen Harz und Thüringer Wald (Stuttgart: Franz Steiner, 2008). 46 E.g. C. Nubola & A. Würgler (eds.), Forme della communicazione politica in Europa nei secoli XV –XVIII, Suppliche, gravamina, lettere / Formen der politischen Kommunikation in Europa vom 15. bis 18. Jahrhundert. Bitten, Beschwerden, Briefe (Bologna & Berlin: Duncker & Humblot, 2004); ead. & id. (eds.), Bittschriften und Gravamina. Politik, Verwaltung und Justiz in Europa (14.–18. Jahrhundert) (Berlin: Duncker & Humblot, 2005). 47 One flagship volume in the GDR was Adolf Laube, Max Steinmetz, & G¨ unter Vogler, Illustrierte Geschichte der fr¨uhb¨urgerlichen Revolution (Berlin: Dietz, 1982).

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uproot the revolt which, in his eyes had gone out of hands, challenging the worldly as well as godly order. Such revolutions and revolts were relatively unknown in England since the fourteenth century. The only major exceptions were the Civil Wars post-1642 and the Scottish revolution of 1638.48 But outside the British Isles such revolts and revolutions recurred much more regularly, mostly on the local level, apart from the political revolts and revolutions of the mid-seventeenth century.49 They represent an intrinsic part of the European political process and its dynamics. But they also underline how early modern market theory was embedded within a monarchical frame of mind; with all its dynamic aspects of agency. The post-Smithian nineteenth-century Anglo-Saxon models of liberty which made it into denoting the mainstream visions of modern liberalism represented a historical peculiarity. In a comparative European perspective, they did not represent the norm and should not represent a norm along which to write the history of modern capitalism. The preceding examples show us the framework under which occidental European market society worked in the age of capitalism’s ascendancy. Political economies of daily life were framed within an aristocratic-monarchical mode of governance which required peculiar strategies of modelling laissez-faire and competitive market processes.

The Cameralist Way Towards Capitalism in Early Modern Europe The point I would like to make is that there were many proto-liberalisms and many paths to capitalism and economic modernity in pre-1800 Europe. Cameralism, the problem child of the Enlightenment, provided one of them. In Cameralist Europe liberty and competitive market economy was no “natural” phenomena; they could never emerge spontaneously as the later Anglo-Saxon liberal economics tradition often had it. Free markets were creations by design. The initiative came from the ruler, often portrayed as omnipotent, but in reality no rulers were, certainly not 48 Julian Goodare, “The Scottish Revolution,” in: Sharon Adams & Julian Goodare (eds.), Scotland in the Age of Two Revolutions (Woodbridge: Boydell and Brewer, 2014), pp. 79–96. 49 Parker, Global Crisis; Jack A. Goldstone, Revolution and Rebellion in the Early Modern World (University of California Press, 1991).

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in early modern or “absolutist” Europe. Rulers were stylized in Cameralist writings as the main initiators of social and economic change who could curb and slash the societally predatory prerogatives, monopolies and freedoms enjoyed especially by the nobility who infringed, left, right and centre, with the working principles of a competitive market economy based on freedom of choice and economic occupation, a productive export-oriented production sphere as well as a flourishing common weal. It depends on how we read Cameralism, and which texts and authors we consult, and without doubt Justi’s or James Steuart’s Cameralism (that Steuart was a crypto-Cameralist was first observed by Keith Tribe) was different from sixteenth- or seventeenth-century authors reckoned to the Cameralist spectrum such as Melchior Osse, Georg Obrecht, Jacob Bornitz, Besold, or Kaspar Klock.50 Especially in the later Cameralist writings we find specific notions of how capitalism could be empowered using elements of a “liberal” framework of analysis: as liberal as one could get in an age where liberalism was neither known in practice nor concept, and where the nobleman—not the commercial-economically active individual—was still the socially most powerful figure, certainly on the local and regional level. But how was such freedom to be achieved? This will be discussed in the next chapter.

50 Erhard Dittrich, Die deutschen und österreichischen Kameralisten (Darmstadt: Wissenschaftliche Buchgesellschaft, 1974); Zielenziger, Die alten Kameralisten.

CHAPTER 6

Creating Freedom, Constructing “Laissez-Faire”

Abstract This chapter builds up on this, by mainly focusing on some key ideas of the mercantilists and Cameralists of how markets could be positively stimulated and the material environment productively improved, given all the hindrances to economic freedom discussed in the previous chapters. These ideas were widely shared across Europe and outside the German-speaking lands, where Cameralism is usually located by scholars. Often identified as interventionist following a rather brutal strategy of infant industry promotion and other forms of harsh regulation, I argue that these measures were conceptualized as tools governing or working towards achieving individual economic freedom, not roads to serfdom. Keywords Capitalism · Serfdom · Freedom · Becher · Hume · Hobbes · Liberty · Commonwealth

Governing Freedom: Autocratic Origins of Laissez-Faire But how was such freedom to be achieved? Here the market process, capitalism and government or political economy come together. Post-1700 Cameralism was massively influenced by Natural Law theory in the wake

© The Author(s) 2020 P. R. Rössner, Freedom and Capitalism in Early Modern Europe, Palgrave Studies in Economic History, https://doi.org/10.1007/978-3-030-53309-0_6

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of Grotius, but in particular Samuel Pufendorf (1632–1694), Christian Thomasius (1655–1728), and the towering figure of the German Enlightenment before Kant: Christian Wolff (1679–1754).1 Natural Law often saw individual freedom and happiness as inseparable from the welfare and interests of the common weal (or state), which often gave these theories a slightly autocratic edge (it is quite easy—once the postulate is accepted that all humans share a certain set of certain mental preconditions, preferences and inclinations—to logically derive some “eternal” rules from it that should govern not only each human individual and her behaviour and passions, but also entitle the prince or ruler over a commonweal to enforce these key principles from above, per ordre de mufti, i.e. to govern their subjects in the light of those principles, because individual and public happiness naturally coincide, if in equilibrium, or correctly identified. Human rights naturally turn out to be, under such auspices, commitments framed in law. The road from Natural Law to Foucauldian governmentality was a short one). But especially in the continental societies, as we have seen in Chapters 4 and 5, Natural Law theorists and Cameralists had a point: these were societies marked by ancient statutory entitlements, exemptions and numerous freedoms in the plural which came at the expense of the majority, where economic and political freedom perforce had to come from above, not below. It had to be governed. Justi, an author of the mercantilist-Cameralist spectrum whom we can hold representative for German Enlightenment economic thought (he was by all means of fame and reputation eighteenth-century Germany’s celebrity economist2 ), added a few important qualifications. He said that the regent or king must take care that “no one in the polity should be allowed to attain such power and wealth as to withstand the supreme power of state” (Staatswirthschaft, §80); that Public Happiness could not be dealt out to one particular class of society and leave other classes at prey and deprivation of such Happiness (§80); that a wise regent should take care that property, wealth and fortunes should not be distributed

1 Brückner, Staatswissenschaften, Kameralismus und Naturrecht; Nokkala, From Natural Law to Political Economy, and the Ph.D. thesis by Xuan Zhao submitted at the University of Manchester (2019) on The Political Economy of Johann Heinrich Gottlob von Justi (1717 –1771): The Eighteenth-Century Entrepreneurial State. 2 Erik and Hugo Reinert, “A Bibliography of J.H.G. von Justi,” in: Jürgen Georg Backhaus (ed.), The Beginnings of Political Economy (New York: Springer, 2009), pp. 19–31.

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too unequally so as to retain social peace and stability (§81); and that “everyone should be allowed to acquire so much comfort and convenience of life as is legitimately possible and commensurate with the welfare of the common weal” (§81).3 And in another work on the Character and Nature of States (Wesen und Natur der Staaten, 1760), Justi said that “next to public happiness – the common superior goal of all states – the first and foremost aim of the polity must be civic freedom.”4 His words and works chimed in with other Cameralists, such as Cesare Beccaria (1738–1794) in Milan, or Anders Berch (1711–1774) in Sweden.5 Justi’s concept of economic freedom and the role of the state to establish and maintain such freedom was by no means peculiar. But it was very different from what the modern tradition has read into the market process, based on a somewhat anachronistic reading of Smith’s Wealth of Nations as the starting point of the modern economic mind, where the competitive market was more or less a given, simply there, existed without creation, somewhat out of the Blue.6 But now came the Dark Side of the Enlightenment. Justi went on to state that such civic freedom could be realized in monarchy and republics alike. Justi’s use of the term “Republic” was ambiguous, sometimes including monarchy, which suggests that in eighteenth-century German translation it sometimes simply meant “state”. But the best way of empowering civic freedom and capitalism was, Justi claimed, under a monarchy. Democracy he discussed as a purely hypothetical possibility. Even the few republican polities, such as the prime example of the early modern Netherlands after the Treaty of Westphalia (1648), were oligarchic, and the medieval “peasant republics” such as the Dithmarschen in German Schleswig-Holstein had long gone or were, in the “Grand Scheme of Things”, rather insignificant. England and Britain after the Glorious Revolution (1688) had a relatively stable but no less corrupt (see Walpole) constitutional monarchy, with a well-integrated national market, a more transparent and after the abolition of tax farming in the 1680s more homogenized (and heavier) tax system; all conditions positive for 3 Justi, Staatswirthschaft. 4 Justi, Die Natur und das Wesen der Staaten (1760), pp. 425f. 5 Most recently Lars Magnusson, “Comparing Cameralisms: The Case of Sweden and

Prussia,” in: Seppel & Tribe (eds.), Cameralism in Practice, pp. 17–38; Carl Wennerlind, “Theatrum Œconomicum.” 6 E.g. Seabright, Company of Strangers.

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economic development. With the above assessment Justi was perfectly in line with early modern reason of state theory based on Machiavelli and Thomas Hobbes’ Leviathan, and the idea that authority must be submitted to a centralized authority which was most commonly an autocrat, lest self-interest and the innate human trait of homo homini lupus make all society impossible. “Liberty is equally compatible with monarchy as with democracy” declared, once again, James Steuart (Principles of Political Oeconomy, Book II, p. 242). Steuart elaborated: “By a peoples’ being free, I understand no more than they being governed by general laws, well known, not depending upon the ambulatory will of any man or any set of men and established, so as not to be changed, but in a regular and uniform way”.7 David Hume, On Civil Liberty, concurred by concluding that monarchical government could create equally beneficial frameworks for the free unfolding of the individual as any republic would.8 One of the clearest explanations why hereditary monarchy was a most conducive framework to a flourishing common weal and dynamics in development was given by Johann Joachim Becher (1635–1682), whom we have already encountered above.9 Clerics and bishops, abbots and the like, Becher argued in his famous Political Discourse (1664) never pursued the best of common weal: their rule was not hereditary and therefore could not be directed towards stability and conservation but would invariably support the natural desire to “enrich themselves”. “Wo Pfaffen führen das Regiment, da nimbt es selten ein gut End”—where priestly is the regiment, there hardly ever is good end, Becher wrote.10 This is hardly how modern scholars would interpret this matter.11 True, clerical rulers were less inclined to wage war than secular rulers, princes, dukes and kings. They were not vested in dynastic policy and feud, but could also

7 Steuart, Principles, Bk II, ch. XIII. 8 Hume, “On Liberty.” 9 This “law” predicts that any supply will create its own demand. See Schumpeter,

History of Economic Analysis; Hassinger: Johann Joachim Becher; Wilhelm Roscher, “Die österreichische Nationalökonomik unter Kaiser Leopold I,” Jahrbücher für Nationalökonomie und Statistik (1864), 25–59, 105–22; Smith, Business of Alchemy. 10 Becher, Politischer Discurs, 1688 ed., ch. 1 (p. 12). 11 Rodney Stark, in the Victory of Reason, has advanced quite the opposite hypothesis

of why the medieval church as a non-dynastic institution was so successful.

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be expected to follow the Christian commandment of loving thy neighbour. But since ecclesiastical rulers were directly subordinate only to the Emperor and Pope, and the Emperor was powerless and the Pope far away, they also remained outside any instance of political control, checks and balances. Secular government Becher divided into monarchical, aristocratic and democratic. He concluded that monarchy was to be favoured, chiefly because it most closely corresponded to good Biblical order. Monarchs would take better care of their subjects’ well-being, which included economic policy, as well as currency and market regulation. Becher admitted that many voices argued against monarchy, on the grounds of greed, laziness, lust for war and dynastic strife, which probably all European kings of the age could be proven guilty of, and quite easily so. But above all there were the greedy and corrupt princely administrators. Becher praised aristocratic government on the other hand, whose virtues he saw in a selection of best-qualified people, lack of dynastic strife, lack of the possibility of the princely seat and head of state falling vacant, which, in the case of monarchies, gave rise to dynastic wars of succession. But there was also a lot of corruption in oligarchic or aristocratic governments. Democratic government shared the mishaps of aristocratic society, namely the propensity to factionism and corruption. Too many voices, lack of a clear social zeal—this was Becher’s (negative) model of oligarchy. As early as 1519 France Claude de Seyssel (La monarchie de France) had argued that monarchy would be the best form of governance. Monarchy was limited by religion, law and policey/policy or order and economic development. A monarchy should prevent corruption, care for strict enforcement of law; equality before the law inasmuch as no social order or class should have privileges—all these factors were considered essential for a common weal to flourish.12 The legal and political literature on reason of state and absolutism in the wake of Macchiavelli and Jean Bodin and others is well known, but similar arguments were not unknown in other world regions, as Ibn Khaldun’s treatise on good government (Muqaddima) shows. And a lot of “good government” theory in early modern political treatises can be shown to have had borrowings in medieval state theory on good government, such as the Princes Mirrors (Fürstenspiegel ) genre. 12 Andrea Iseli, Gute Policey. Öffentliche Ordnung in der fr¨ uhen Neuzeit (Stuttgart: Ulmer, 2009), pp. 21–22.

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Constitutional Black-Holes, Enlightened Despots and Cameralist Economic Enlightenment: How Laissez-Faire Was Created in Continental Europe What were the implications of this? Historians studying medieval and early modern market mentality would be quick to assert that nearly all these commandments were habitually violated. Kings and governments never had a monopoly but rather comparative advantage on violence (Jan Glete). “Absolutism” as an historical concept has been dethroned13 ; European kings and princes might have been absolutist on paper, but these were paper tigers. Even the French Sun King only projected princely absolutism in the shape of the Palace of Versailles and its praxeological logic embedded in the shape of ceremonies, rhythms of court attendance, procedures and rituals from dressing to dancing with the King.14 On the ground social power was fragmented, shared and constantly negotiated between individuals and their immediate superiors, most of the time the nobility. European history is also full of revolts and revolutions, amongst peasants as well as urban populations. In fact, some historians argue that revolts represented a common and institutionalized form of political negotiation and discourse.15 Not all of them could be reasonably considered as valid forms of political “discourse”, but to an extent we can see the voicing of discontent as part of the normal political process within pre-democratic Europe headed by Queens, Kings, bishops, abbots and oligarchic city governments. And such revolts and times of discontent would usually pick up where the rulers had neglected their duty or had allowed others to do harm violating precisely those principles which an ancient literature of Princes Mirrors , and later writings in political theory and political economy saw as intrinsic features of monarchy—to be impartial and empower the economic capabilities of the Common Weal. But there was even a graver form of danger. If there was any freedom in the age of capitalism’s ascendancy, it was freedom written in the plural: partial and negative freedoms, or better several freedoms: especially the special privileges and tax exemptions enjoyed by the nobility under the feudal 13 Ronald Asch & Heinz Duchhardt (eds.), Der Absolutismus - ein Mythos?: Strukturwandel monarchischer Herrschaft in West- und Mitteleuropa (ca. 1550–1700) (Cologne, Weimar & Vienna: Böhlau, 1996). 14 Peter Burke, The Fabrication of Louis XIV (Yale University Press, 1992). 15 Nubola A. Würgler (eds.), Forme della communicazione.

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mode of production which neither the traditional Divine Right of Kings model nor emerging “liberal” visions such as Locke’s, Hobbes’s and others’ had much to counteract; these special freedoms of the nobility, as well as corporations’ prerogatives and privileges often remained intact until the dissolution of the second Kaiserreich in 1918, and sometimes, as we have seen above, even beyond.16 Justi’s and the enlightened Cameralists’ answer to this constitutional black hole was this. “Freedom of business and industry means that anyone who runs a business or industry be entitled to act and do as they feel right and in favour of their self-interest, as long as it is not against the common weal, interest and welfare of the nation”.17 Many modern visions of economic freedom have stopped at precisely this point. But this was not the full story. Justi continued: “Prohibitions against exports or imports, or the requirement for domestic wares to be inspected by officials before sale (Beschauen), runs as little against this freedom as the imposition of taxes and other duties, or the prescription of weights and measures to be used in the markets, so as to prevent fraud, or the commandment that agriculture must not be neglected”.18 In contemporary Scotland the institution was known as the stamp masters: expert weavers appointed by the state to inspect all pieces of Scotch linen before it could be put on the market for sale.19 These masters would put their stamp on each cloth that had passed the test, reminiscent of later nineteenth-century trademarks. The mercantilist-Cameralist concept of freedom to do business however went further. It included the right of the state to grant monopoly privileges in certain cases, especially the big overseas trading companies and the whole spectrum of what today are conceived as protectionist measures, under one condition: they had to be proven means of improving the wealth and welfare and happiness of the nation. In short, one important component of economic freedom, of the individual (which did not yet, in this form exist), was freedom from disadvantage and deprivation, and it was the state’s—the ruler’s, king’s—first and foremost aim to establish freedom and empower the market, by abolishing or reducing any 16 Epstein, Freedom and Growth; William Hagen, German History in Modern Times: Four Lives of the Nation (Cambridge: Cambridge University Press, 2012). 17 Justi, Grundfeste (1760), p. 699. 18 Justi, Grundfeste (1760), p. 699. 19 A. Durie, The Scottish Linen Industry in the Eighteenth Century (Edinburgh: J.

Donald, 1979).

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such disadvantages, rent seeking, monopoly and other forms of market distortion. On a macro-scale this entailed freedom of sovereign states take measures into their own means and establish, for instance, freedom from having to rely on someone else for manufactured goods. Dependency was seen as a means of unfreedom or lack of sovereignty; by setting up protective frameworks of tariffs, subsidies and bounties, the nation could establish or regain its freedom. A flourishing economy marked by quality controls, bounties and other encouragements would complete this process of creating freedom and happiness on the home ground. Very few Cameralists however would have advocated prohibitions and protectionism for protectionism’s sake; most were probably free traders by heart. Justi certainly was, as was Friedrich List, who thought it to be the best of all worlds. Only it was most of the time unrealistic.

CHAPTER 7

Strange Origins of Capitalism

Abstract This chapter builds upon preceding chapters, working towards a conclusion. Its first section discusses an under-rated example of British mercantilism in practice positively promoting eighteenth-century capitalism and economic development in one of the smaller (and most dynamic) nations of the West: Scotland. Scotland was a European nation, with trade links as close as those with England during the early modern period; after the Union 1707 it vanished as an independent kingdom and underwent a fundamental transformation in overseas trade in terms of volume and trade orientation, before contributing to the first industrial revolution. The chapter then wraps up by summarizing debates and discourses on the continent, by mainly focusing on some key ideas of the mercantilists and Cameralists on freedom, capitalism and economic development in early modern Europe—the age of capitalism’s ascendancy. These ideas were widely shared across Europe and outside the Germanspeaking lands, where Cameralism is usually located by scholars, thus suggesting a new use of the term mercantilism as a Sonderweg within a broader European mainstream way of thought that may be better encapsulated in the terminus technicus of Cameralism. The third section places debates about Cameralism and mercantilism in a wider scholarly perspective from Marx to Hilferding and Sombart. I conclude that Mercantilism on the one hand was not what it is usually assumed to have been, especially from a modern (neo)liberal perspective; on the other hand, what we

© The Author(s) 2020 P. R. Rössner, Freedom and Capitalism in Early Modern Europe, Palgrave Studies in Economic History, https://doi.org/10.1007/978-3-030-53309-0_7

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can see as “mercantilist” social and market theory represented key ingredients to the making of modern capitalism, in Britain as well as beyond. This can be demonstrated focusing on continental European countries— here: the Germanies (mainly)—and their political economies in the age of capitalism’s ascendancy, usually embodied in the strange beast called Cameralism. Keywords Mercantilism · Capitalism · Scotland · Industrialization · Cameralism · Wealth of Nations

Mercantilism was the origin of capitalism. This statement is as blunt can be given that neither term has gone uncontested. In fact, both terms, as we have seen, are problematic in their own right; and both have been subject to intense debate, controversy and much confusion. With the benefit of hindsight, as well as a swell of new research on Cameralism, capitalism and mercantilism, we can see manifest connections between all these three “-isms”. But before drawing things to a close, I would like to engage with one last contention still popular amongst historians, and that is that European economies in the early modern age grew despite of mercantilism in place, and that countries and states would have been better off, more dynamic without the mercantilist shackles.1 This somewhat represents the common “no-frills” statement that doesn’t require backup or deeper intellectual engagement when stated, as it is adopted and widely accepted even in the popular press, and from left to right. Some new studies give occasion to pause and add more nuance, and there is even evidence that suggests the contention may be plain wrong.2 Since it is virtually impossible to measure the precise impact that state policy had on economic development in the pre-industrial period (the evidence for both GDP as well as state expenditure is shaky, and even on theoretical grounds it is difficult to make an argument on the imputed net benefit or effects of

1 Most recently to be found e.g. in Nye, War, Wine and Taxes; Mokyr, Enlightened Economy; Engerman, “Mercantilism and Overseas Trade.” 2 See studies discussed in Chapters 1 and 2, especially by Patrick O’Brien, Peer Vries, Prasannan Parthasarathi, Will Ashworth; the infant industry argument was also developed earlier by William Henderson on Prussia, or Friedrich List.

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any economic policy or political economy) there is another dimension to British mercantilism, from the less well studied Scottish angle, which clearly shows the almost symbiotic relationship between private enterprise and state policy in making capitalism work, even in a relatively unintended and spontaneous way. And it shows mercantilism at work beyond the common rent-seeking or zero-sum argument, with visibly positive effects on Scottish and British economic development towards capitalism.

Contrasting Capitalisms: British Capitalism Revisited Through a Scottish Lens The case can be made with regards to a small trading nation, initially poor and peripheral, which vanished from the map as an independent kingdom by the Anglo-Scottish Treaty of Union in 1707, but subsequently went through one of the most dynamic transitions to capitalism ever witnessed in history.3 There are mainly four reasons why I would like to look at mercantilism, capitalism and industrialization through a Scottish lens. First, as Sombart argued in Der Bourgeois (1913; later translated as Quintessence of Capitalism, a book that contained the argument of his later magnum opus Der moderne Kapitalismus in a nutshell): “From the end of the 17th century onwards, but more especially since the union with Scotland, the course of capitalist development in England was greatly influenced by the fortunes of the capitalist spirit in the Northern Kingdom”.4 Scotland has been left out of most studies on industrialization, modern economic growth and the “Great Divergence”. These narratives that have to the present day remained almost completely Anglo-centric, for either the “European” (great divergence) or “British” part (capitalism and industrialization) of the story. Based on meticulous archival ground work, Scottish historians have in more recent years corroborated Sombart’s suggestion, by noting the over proportionally high share

3 Thomas M. Devine, “Urbanisation,” in: id. & R. Mitchison (eds.), People and Society in Scotland, Vol. I: 1760–1830 (Edinburgh: John Donald, 1988), pp. 27–52; T. M. Devine, The Scottish Nation: A History, 1700–2000, Amer. ed. (New York, 1999). 4 Werner Sombart, Der Bourgeois. Zur Geistesgeschichte des modernen Wirtschaftsmenschen (original 1913) (Reinbek bei Hamburg: Rowohlt, 1988), p. 148; my own translation. Engl. Quintessence of Capitalism (New York: E. P. Dutton, 1915).

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of Scots actively running British colonial administration and imperial business, in the Americas as well as India, after 1707.5 Second, Scotland’s transition to capitalism after 1707 was peculiarly fast and in many ways very different from England. Sombart again: “Nowhere else in the world did the birth of capitalism come about in so curious a fashion as in Scotland. Nothing is more surprising than the suddenness of its appearance. It is as though a pistol shot had given the signal for the capitalist spirit, fully grown, to come into the land and dominate it. You cannot help thinking of the Victoria Regia, which blooms overnight”.6 Recent historical studies on Scotland’s overseas trade and economy have confirmed this again, in particular the colonial trades, whose turnover of American tobacco and Caribbean sugar re-exports increased by a factor of at least ten if not much more between 1707 and the eve of the War of Independence (at conservative estimates, taking into account smuggling, which was particularly high during the first half of the eighteenth century).7 Scotland experienced a commercial revolution between 1736 and 1776, turning into a “warehouse economy” until, from the 1760s onwards, the figures also suggest a beginning industrial revolution in linen and cotton. Between 1700 and 1800 Scotland also changed from one of Europe’s least urban into one of the most heavily urbanized societies not only in Europe but the entire world. By the early nineteenth century she had overtaken the Netherlands in terms of the share of people living in cities, and was only surpassed by England. With the colonial trades we thus find much evidence of Braudel’s concept of “capitalism on home ground”,8 surpassed by the almost simultaneous (delayed by about two decades at most) onset of industrial capitalism. Third, the state and mercantilism can be shown to have played a manifest role in both these two capitalist transformations. The independent Scottish nation state had vanished in 1707. Scottish economic politics

5 E.g. Thomas M. Devine, Scotland’s Empire, 1600–1815 (Penguin Books, 2003, reprinted 2012). 6 Sombart, Der Bourgeois, p. 148. My own translation. 7 The most recent figures are in Philipp Robinson Rössner, Scottish Trade in the Wake

of Union (1700–1770): The Rise of a Warehouse Economy (Stuttgart: Franz Steiner, 2008), statistical Appendix. 8 Vols. 2 and 3 of Braudel, Civilization and Capitalism.

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did not happen so much through the British Parliament at Westminster,9 but through very different channels, which makes the study of the Scottish example of state-promoted capitalism interesting in its own right. The British mercantilist state has often been personalized in the role of First Minister Robert Walpole,10 but as the case with parliamentary policy this was a very English way of handling industrialization through planning and lobbying. Scotland’s mercantilist way to capitalism was very different. Fourth, with Sir James Steuart (Inquiry into the Principles of Political Oeconomy, 1767) and Adam Smith (Theory of Moral Sentiments, 1759; Inquiry into the Nature and Causes of the Wealth of Nations, 1776), Scotland also “produced” two of the leading thinkers of the Enlightenment whose works have remained foundational for the modern social sciences, including classical liberalism, Marxism and modern economics. Smith and Steuart are best seen in comparison, and as I have argued above, with Steuart and his extended stay in Tübingen (where he completed major chunks of his “Principles”) we have a missing link between the Anglo-phone Enlightenment and continental mainstream doctrines such as Cameralism. Without stretching the evidence too far as to ask where both authors got their main inspiration from (Smith may have been more influenced by French thinkers than Steuart, whose work is clearly more “Germanic” in concept and outlook), it remains a stark coincidence that those works commonly seen as the origin of modern economic analysis were written by fellow countrymen of that nation whose capitalist transformation was, by all means, probably the fastest and most unusual one in the history of economic development before the twentieth century. The two mainstream views on eighteenth-century Scottish development in recent decades are aptly summarized by Lee. On the one hand we have what he calls the “gloomiest version of the economic thesis depicts early eighteenth-century Scotland as a backward and impoverished state whose only chance of rescue from enduring stagnation lay in joining with a larger and more affluent partner in what has been termed the largest common market in Europe at the time”. This notion, as Lee pointed 9 Most recently Hoppit, Britain’s Political Economies, who has only found sparse evidence of Scottish economic matters treated in parliament after 1707. This is because economic policy worked through different channels in post-union Scotland compared to England, which should also caution us against using the term “British” as a catch-all label when studying post-1707 political economy. 10 In a popular economics work: Chang, Kicking Away the Ladder, pp. 21f.

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out, was refuted by Devine, who in a lifetime work, “sought to modify this version of events by advancing the case that pre-Union Scotland was not without some capacity for economic growth and that the expansion achieved in the eighteenth century was, therefore, partly inherent in Scottish society”.11 Recent years have seen the emergence of even more radical views. These have given rise to a fundamental re-interpretation of Scottish economic development after the Restoration 1660 and Union 1707. In a carefully researched study, full of archival details, it has been proposed that “Considerable caution must also be exercised before accepting claims about impoverishment or even bankruptcy when applied to Scotland as a whole in this period as distinct from its government, central or local”.12 Steve Murdoch has, in his masterpiece Network North, reached a very similar conclusion, after an extensive study of Scots networks of commercial nature, kin and religion focusing on the Baltic Sea region in the early modern period.13 As Scots were frequently active as third-party carriers and tramp skippers, this could often mean that some of the triangular trades between, say, England, Holland and Sweden involved goods that never touched a Scottish shore nor paid any duty in Scotch customs precincts. As Murdoch continues: Thus Scottish merchants in England, the Dutch Republic and Danzig consigned their goods to Sweden on a ship that sailed through the Danish Sound under Swedish flag. It returned from Sweden, being consigned by a Scottish merchant to another countryman in the Dutch Republic, carrying iron bought from Scots who not only dealt in it, but produced it as well. Neither the origin of the goods nor their destination have been considered by historians; on paper this looks like a straight transaction between Swedes and Dutchmen since the sources consulted are usually the port books and the Sound Toll Registers.14

This is a powerful claim against mercantilism (and fully in line with the modern neoliberal economic mind). It is blatantly obvious that state 11 Clive Lee, Scotland and the United Kingdom: The Economy and the Union in the Twentieth Century (Manchester: Manchester University Press, 1995), p. 9. 12 Allan Macinnes, Union and Empire: The Making of the United Kingdom in 1707 (Cambridge: Cambridge University Press, 2009), pp. 219f. 13 Steve Murdoch, Network North: Scottish Kin, Commercial and Covert Associations in Northern Europe, 1603–1746 (Leiden & Boston: Brill, 2005), pp. 242–244. 14 Murdoch, Network North, pp. 245–246.

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records and regulation produced under mercantilist frameworks captured less economic and commercial activity, on paper or in tax, than they were meant to.15 This has not changed fundamentally for modern states. Taxation always includes a gamble on the future, because not all taxpayers commit to behaving legally and declaring tax in full; taxation and trade policy have to be carefully designed accordingly. For some high-taxed commodities that made the Atlantic consumer revolution of the seventeenth and eighteenth centuries, such as tobacco and other colonial goods “enumerated” in the Navigation Acts, smuggling levels could indeed be abysmally high, particularly during the eighteenth century, because tax rates were high and enforcement capacities of the state low: tax fraud was endemic, part of the moral economy of the crowd, and occasionally economically rational. The British customs administration were aware of that, and the British state even partly took that into account when planning to administering new duties.16 This does not invalidate trade records produced under the mercantilist regime, though; nor did it make the nature and working mechanism of the mercantilist customs system necessarily any less effective than intended. Whilst the abovementioned studies thus significantly advance our understanding of Scotsmen active in tax-evading or bypassing British customs regulation, there remains a dimension to early modern capitalism, mercantilism and the transformation of Scottish economic life which cannot be particularly well understood by micro-level studies of individuals evading or trading outside the mercantilist umbrella. It can, in fact be shown that the English-mercantilist system of commerce and trade regulation, adopted in Scotland in 1707, exerted massive positive stimuli to Scots traders, as well as Scottish economic development in a wider sense, even though quantitatively, in terms of total economic activity (GDP) overseas trade probably remained marginal.17 First we will look at colonial trade and

15 Rössner, Wake, chs. 2 and 3; and Philipp Robinson Rössner, “Chapter 7: Counting Cows and Coins: Monitoring the Economy Through Port Records and Trade Statistics in the Early Modern Period,” in Georg Christ & Philipp Robinson Rössner (eds.), History and Economic Life: A Student’s Guide to Approaching Economic and Social History Sources ( = Routledge Guides to Understanding Historical Sources) (London & New York: Routledge, 2020), pp. 168–183. 16 Ibid. 17 The following sections partly draw on Thomas M. Devine & Philipp Robinson Rössner, “Scots in the Atlantic Economy 1600–1800,” in: John MacKenzie & Thomas M.

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the commercial revolution in post-1738 western Scottish ports, notably Glasgow. Secondly I will study Scotland’s key industry: linen.

Mercantilism and “Capitalism on Home Ground”---Commercial Revolutions of the Eighteenth Century (1736–1771) Around 1760 Scotland handled around one per cent of total European trade. And yet she was, after England, Europe’s second largest purveyor of American tobacco. In 1773, when the highest figure ever was recorded, 46 million lbs of American tobacco were shipped to continental destinations. They may have supplied one quarter of north-western European, and seventeen times the Scottish population with snuff, chewing or smoking tobacco. Only English ports handled more tobacco than the Scots. Tobacco accounted for up to 40 per cent of Scotland’s total imports and exports. Most of it, usually 90 per cent of yearly imports, was re-exported without much processing. This development in the service sector economy, manifested by the colonial re-export trades was facilitated, even triggered, by the introduction of English mercantilism, framed by the Restoration customs system of Charles II.18 It gave rise to, facilitated and was based on sophisticated business methods in Glasgow, particularly the store system in the colonies19 (as opposed to the more

Devine (eds.), Scotland and the British Empire (Oxford: Oxford University Press, 2011), pp. 30–54; Rössner, Wake. 18 The eighteenth-century political economy of domestic production and trade under the mercantilist umbrella has been masterfully surveyed in Ashworth, Customs and Excise. For the present exercise the following customs manuals and merchants’ digests have been used: C. Carkesse, The Acts of Tonnage and Poundage, and Rates of Merchandize […] (London, 1726); H. Crouch, A Complete View of the British Customs […], Part I (London, 1725); Id., A Complete View of the British Customs […], Part II (London, 1728; 2nd ed. 1731; 3rd ed. 1738; 4th ed. 1745; 5th ed. 1755); H. Saxby, The British Customs (London, 1757). For the later eighteenth century, see S. Baldwin, A Survey of the British Customs […] (London, 1770); T. M. Barker, The Merchants and Traders Guide […] (London, 1787). Merchants’ digests: here I have used Langham’s digests: T. Langham, The Neat Duties (All Discounts and Abatements Deducted) of All Merchandize Specify’d in the Book of Rates (London, 1708); Id., The Neat Duties (All Discounts and Abatements Deducted) of All Merchandize, Specified in the Book of Rates (London, 3rd ed. 1715; 7th ed. 1754). For a full discussion, see Rössner, Wake, chs. 2 and 3. 19 T. M. Devine, “Industrialisation,” in: Id., C. H. Lee, & G. C. Peden (eds.), The Transformation of Scotland: The Economy Since 1700 (Edinburgh: Edinburgh University

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traditional consignment pattern) and business networks that had existed and flourished long before and after the adoption of English mercantilism in 1707.20 Of course, geography played a hand in this, due to the shorter sea route between the Chesapeake and Glasgow compared to London and other English ports.21 The sea routes across the North Atlantic were safer than the more southerly crossings, particularly during the numerous wars with France. Glaswegian success was also dependent on business success and productivity change, for instance due to decreasing turnaround time of tobacco ships engaged in the multi-angular voyages between America, Scotland and Europe. Without doubt an increase in routine and practice in the trades over time would also have contributed towards building up a pool of useful business knowledge, which was most important for success in the colonial trade.22 But it is difficult to conceive of Scotland’s commercial transformation between the mid-1730s and mid-1770s without the helping hand of the British state. Sometime after the Excise Crisis in 1733 the turnover record of the Clyde tobacco trade became quite impressive. This increased activity went hand in hand with a significant decline in smuggling. Glaswegian entrepreneurs obviously decided to switch from evasion to cooperation. Obviously, they would now derive more benefits from collaboration rather than customs evasion (albeit smuggling, of course, continued; albeit at a reduced scale).23

Press, 2005), pp. 34–70, at p. 53. Full elaboration in the same author’s classic The Tobacco Lords: A Study of the Tobacco Merchants of Glasgow and Their Trading Activities, 1740– 1790 (Edinburgh: Edinburgh University Press, 1975), and an updated version in id., “The Golden Age of Tobacco,” in: T. M. Devine & G. Jackson (eds.), Glasgow, Vol. I: Beginnings to 1830 (Manchester: Manchester University Press, 1995), pp. 139–183. 20 Allan Macinnes, “Scottish Circumvention of the English Navigation Acts,” in: Günther Lottes, Eero Medijainen, & Jón Viðar Sigurðsson (eds.), Making, Using and Resisting the Law in European History (Pisa University Press, 2008). 21 J. M. Price, “The Rise of Glasgow in the Chesapeake Tobacco Trade, 1707–1775,” William and Mary Quarterly, II (1954), 179–199; I. W. Stevenson, “Some Aspects of the Geography of the Clyde Tobacco Trade in the Eighteenth Century,” The Scottish Geographical Magazine, LXXXIX (1973), 19–35. 22 Dell, “Operational Record.” 23 This does not mean they gave up smuggling totally, as the record of the Customhouse

papers of any major Scottish port at the time demonstrates. Rössner, Wake, chs. 4 and 5, especially on tea smuggling.

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In short, the system worked as follows. The English Customs System was adopted in Scotland after the 1707 Union. In a big once-and-forall upwards adjustment, real taxation yields, as well as the average level of taxation, sky-rocketed. Duties on tobacco increased eightfold in 1707 vis-à-vis those in the old Scots Book of Rates of 1670. Customs rates on plantation sugar doubled, to name but two of Scotland’s most important imports and exports. Overall, the English structure of duties imposed a much heavier nominal tax burden. But in the end, the system provided a dynamic stimulus to Scotland’s commercial development. Some of the commodities enumerated in the English Navigation Acts were taxed excessively when retained for domestic consumption. For example, as of 1 May 1707, tobacco imported into Scottish ports paid more than 240 per cent of its domestic market value.24 This was because the original English rate of 1660 was retained, which at 1660 tobacco prices (which had been much higher in the early phase of the Atlantic economy) had worked out at a lower rate of 20 per cent ad valorem. But as tobacco prices collapsed between the 1660s and 1760s, this increased the effective duty by a factor of at least twelve.25 As the formidable smuggling sector shows the domestic market would not bear such levels of duty and mostly supplied through illicit channels26 ; there even is indirect evidence that the state tolerated this business in the interest of the moral economy of the crowd. But a large share of import duty could be obtained as a refund (“drawback”) when colonial imports were re-exported again within three years from a British port, provided that the importers, their ships and the ships’ crews were British.27 Tobacco drew back 100 per cent after 1723, West Indian sugar only 78– 89 per cent, American rice up to 90 per cent. These were Scotland’s main re-export commodities in the eighteenth century (rice was usually sent to Lisbon directly). Tobacco was, under the changed regulations of this customs system after 1723, the only commodity that could draw back all import duties, provided it had been shipped in an orderly way, and

24 Rössner, Wake, Appendix, p. 312, Tables 2–5. 25 Rössner, Wake, ch. 2. 26 R. C. Nash, “The English and Scottish Tobacco Trades in the Seventeenth and Eighteenth Centuries: Legal and Illegal Trade,” Economic History Review, Second Series, XXXV (1982), 354–372. 27 Meaning that at least 75 per cent of the crew had to be of British birth.

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duty had been paid down in cash. In Scotland, the principle of transforming Britain into a “warehouse” of the world eventually came across even more clearly than in England.28 England since the 1660s developed a much more diversified export portfolio, with textile manufactures supplying a considerable share of total exports.29 Colonial re-exports (the “Tory” political economy schedule) only created some additional but by no means the main dynamics in England’s commercial portfolio, and scholars have argued that the Whig ascendancy in parliament would have shifted politics towards promoting domestic industry exports rather than colonial re-exports.30 But in Scotland, with re-exports usually exceeding domestic exports in value terms until late in the century,31 overseas trade became focused on warehousing. Regardless of whether an imported cargo would be re-exported subsequently, importing merchants always became liable for the full amount of nominal import duty upon declaration of their cargoes. This seems to have been, at least in the Scottish case, one of the ironies built into the system. After all, if nearly 90 per cent of tobacco imports were to be re-exported, why bother levying import duties in the first place? The answer is that most of the payments of import duty on commodities that were destined for re-export were settled using book money.32 Cash hardly ever changed hands in Scotland’s tobacco trades. Rather, the British customs system permitted parts of the duties due upon import to be “bonded”. That is, a promise was made to pay a certain amount of cash at a specified later day plus interest on the principal for the time specified and a bond was issued by the merchant upon importation of a certain cargo in lieu of paying cash. Usually the cargoes were lodged

28 Rössner, Wake, 51–54. Most recently, Nuala Zahedieh, The Capital and the Colonies: London and the Atlantic Economy, 1660–1700 (Cambridge: Cambridge University Press, 2012). 29 Ralph Davis, “English Foreign Trade, 1700–1774,” Economic History Review, Second Series, XV (1962), 285–303; Id., “English Foreign Trade, 1660–1700,” Economic History Review, Second Series, VI (1954), 150–166. 30 Pincus, 1688. 31 Rössner, Wake, esp. chs. 5 and 6 and Appendix. 32 I have re-constructed these working mechanisms on the basis of the works cited in n.

412 above, in combination with a manual designed for newly-appointed customs officers in Scotland in 1707. National Archives of Scotland (NAS), CE 7/11, Instructions 1707 (1707), passim.

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in the King’s/Queen’s warehouse until a final decision as to their destination had been made. When re-exported, the sums stated on the bond were refunded by clearing the debts on the bond against the draw-back or tax refund to which the cargo was nominally entitled. Cash only changed hands to clear a small remaining difference between the sums stated on the bond and the draw back of customs duties. Since the British customs system operated a variety of discounts upon ready payment in cash, but draw backs were always calculated on the basis of nominal (pre-discount) liabilities, a difference of about eleven per cent usually remained after clearing the books. These sums represented the net fiscal income of the state or Treasury from the warehouse economy around Glasgow. The rationale of this peculiar customs scenario becomes obvious when we consider the nature of eighteenth-century commerce. Especially in the colonial trades, dependent upon an intrinsically linked import and re-export business, nominal import duty easily reached into several thousands of pounds Sterling that were due immediately and in cash, if the discounts were to be taken. It is obvious that only a small number of merchants were able to advance these sums on-the-spot and in cash.33 In Scotland, where revenue accounts are available for the 1707–1783 period, “bonded” customs duties, i.e. those sums that were never paid in cash, represented between 50 (in the early period) and 90 per cent of total duties payable on imported tobacco (in the later period).34 The Glaswegian trade boom was founded upon tax credit, a mercantilist customs rationale, but above all, a mutually beneficial deal between the Crown and the merchant.

Leviathan Unchained: Industry and the Making of the Wealth of Nations The British mercantilist state also played a major role in stimulating the Scottish linen and fustian industry after 1727, thus facilitating the process of industrialization.35 Linen was, in the long run—because it was an industry, with value added and giving rise to employment—certainly more

33 Braudel, Civilization and Capitalism, vol. III. 34 Rössner, Wake, Appendix. 35 Rössner, “Merchants, Mercantilism, and Economic Development.”

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important for Scottish development than the colonial trades based on reexporting American tobacco and sugar, and very much focused in the southwestern Scottish ports. The general history of the Scotch linen industry has been told well and needs no reiteration.36 The wider implications, however, especially with regard to overall change in Scotland’s productive landscape and the transition towards an industrial economy, have not been considered much. Linen provided up to half of Scotland’s active working population with employment. It was firmly embedded within the web of social and economic relationships commonly known as the “Atlantic economy”. The American colonies emerged as Scotland’s major, and usually only, consumer of domestically produced linen outside Britain. The state, manifested in the Board of Trustees for the Fisheries and Manufactures (1727)—prior to that date economic coordination had been mainly in the hands of the Convention of the Royal Burghs —actively promoted and funded the major steps in the production sequence—the growing of flax, combing and heckling, the spinning of yarn, and finally the weaving, colouring, bleaching, printing and selling the final product to the customer. But there were problems. Wages were low in the industry, and low wages made for cheap products, as noted by Patrick Lindsay in a pamphlet published first in 1733.37 It was said that Scots weavers could, under normal conditions, make six to eight yards (yds) of Ozenbrigs or Osnaburgh linens per day, a basic to medium brand of linen, in imitation of some German linens from Osnabrück in Westphalia. Compared to Flanders, where weavers produced about four yards a day, or Ireland, where this figure is believed to have been even less, the Scotch productivity record was not bad. But in the wake of Union the challenge was to raise the average quality, and thus the average price of the product, to improve overall conditions of demand, living standards and employment. Above all, the goal was to raise income by means of a raised average 36 Esp. A. J. Durie, “The Markets for Scottish Linen, 1730–1775,” Scottish Historical Review, LII:1 (1973), 30–49; Id., “The Scottish Linen Industry in the Eighteenth Century: Some Aspects of Expansion,” in: L. M. Cullen & T. C. Smout (eds.), Comparative Aspects of Scottish and Irish Economic and Social History, 1600–1900 (Edinburgh: John Donald, 1977), pp. 88–99; Id., The Scottish Linen Industry in the Eighteenth Century; Id., “Textile Finishing in the North East of Scotland 1727–1860,” in: J. Butt & K. Ponting (eds.), Scottish Textile History (Aberdeen: Aberdeen University Press, 1987), pp. 1–18. 37 Patrick Lindsay, The Interest of Scotland Considered (1733/6).

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value or price of the final product—because the Scots product faced harsh competition on foreign markets, especially from German producers. The art of adding value was a fundamental insight understood exceptionally well by eighteenth-century mercantilist and Cameralist pamphleteers; it was a strategy not exclusively aimed at increasing productivity per se, but rather at raising the average value of the product, so as to face better export sales.38 Contemporaries were unanimous in their assessment of Scottish products. Referring to the bounty granted on exports of Scottish linens since 1742, Lord Deskford (James Ogilvy, 6th Earl of Findlater), a commissioner of the Customs and trustee on the board for promoting manufactures in Scotland wrote in 1752 that The Bounty has enabled us at a very small Expence to the Government to send considerable Quantities of our own Linens to the Plantations, which were formerly supplied with foreign, & must be so again if the Bounty is not continued. […] The Exportation of our Coarse Linens has been the Cause of opening new Branches of Trade between Scotland and the Plantations, where-by the Revenue has been increased & Smuggling discouraged.39

The obvious question is how to evaluate whether state intervention, as laid out in contemporary discourse and the Board’s actual record was successful. Durie has estimated the annual average expenses by the Trustees on the Scotch linen sector between the 1720s and 1770s at roughly £2600 sterling. Compared to total output valued at £150,000 on average for the 1730s, or £600,000–£700,000 sterling in the 1770s (all official figures which may over- or underestimate total market values), these sums appear trivial.40 One could even make the case that the state did not contribute much to the industry at all.41 But ultimately the question of absolute size is inconclusive. It would be analytically more rewarding to see how and where the money was spent and what its 38 Erik S. Reinert, How Rich Countries Got Rich. 39 National Records of Scotland (formerly National Archives of Scotland), Seafield MSS,

GD 248/954/5/38, Reasons for Continuing the Bounty on Low Priced British Linens. 40 Ranging anywhere between 0.37 and 1.73 per cent. 41 Durie, Linen Industry, pp. 162–165; Henry Hamilton, An Economic History of

Scotland in the Eighteenth Century (Oxford: Clarendon Press, 1963), Appendix IV.

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dynamic spill-over effects were, i.e. whether it was spent well. Seen in this light, the Board’s achievements require a re-assessment, because in some ways the Scottish linen industry became very dynamic after 1727, and— more astonishing even—it survived on the world market. Given that it was Scotland’s biggest and most important industry, and strong Irish and continental competition (Muscovy and German linens) this was no small feat. According to the idea of comparative advantage that nations should specialize in the production and export of those goods which they can produce relatively more cheaply than their competitors, a paradigm developed by David Ricardo in the wake of the Scottish Enlightenment, the Scottish linen industry should have vanished from world markets, where, as the empirical record shows without doubt, it was initially uncompetitive. The salt industry, a major industry in lowland Scotland, did just this; it vanished from the European market, where its export share collapsed from a still respectable level around 60 per cent around 1700 to zero towards the end of the century.42 The linen industry was in similar danger, if we believe contemporary voices in the 1710s and 1720s. But could eighteenth-century politicians sacrifice the key industry of Scotland? Could they sacrifice the boost to employment received from export sales if competitiveness could indeed be raised with the help of the state? Probably not (albeit, we of course will never know). The decision to keep alive the Scotch linen export economy was above all a political one. In 1727 in the midst of depression and Robert Walpole’s ascendancy, the Board of Trustees for the Fisheries and Manufactures was established in Scotland.43 Its main task was to promote the Scotch linen industry in the way sketched by the “Scottish mercantilists” and their

42 Philipp Robinson Rössner, “‘New Light on Whatley’s Numbers’: The German Market for Scots Salt in the Eighteenth Century,” The Scottish Historical Review, LXVII:1 (2008), 101–120. 43 On the place of linen in Scotland’s industrial development, see R. H. Campbell, The

Rise and Fall of Scottish Industry, 1707 –1939 (Edinburgh: John Donald, 1980), pp. 7–9. Some key documents and statistics of the Board have been published in: R. H. Campbell (ed.), States of the Annual Progress of the Linen Manufacture 1727 –1754: From the Records of the Board of Trustees for Manufactures etc., in Scotland preserved in the Scottish Record Office (Edinburgh: H.M. Stationery Off., 1964).

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pamphlets of the 1720s and 1730s44 : by funding projects that were risky or under-funded, such as bleach fields and printing ventures; by paying bounties and premiums on good quality work; by recruiting foreign experts for key stages of production where value was most likely to be added (bleaching, printing and dyeing), mostly from Holland (emulation, technology transfer), or in stages of the production process that were seen as problematic, such as the spinning and heckling of flax, which in many regions was still considered to be deficient in the 1750s.45 Quality control was paramount; “emulation” was a key strategy of the age. Similar measures were widely used in other areas and countries as well, such as Germany or France. The Scottish Trustees appointed a number of stamp masters located all across Scotland, who examined the linens produced by the native weavers before they could get a pass for sale. Furthermore, the Trustees formulated a strategy for growth and improvement. A glimpse on the scope and scale of the Board’s early activities in the crucial stage of the industry’s infancy may be obtained from Table 7.1, based on a sifting of the Board’s minutes, from 1727 to 1754. Foreign experts were hired for the more elaborate finishing processes, such as bleaching or colouring. The trustees “spread the news” by regularly communicating knowledge of better techniques to the spinners, weavers and bleachers using written notes, memorandums and letters. Spinning schools were set up. Select weavers were provided with stipends and sent abroad, usually to Holland, sometimes to France, in order to study best-practice methods.46 The Board’s 1749 minutes explicitly mention “The Trustees, with a view to support the Infant Manufacture”,47 a term that sounds almost modern (infant industry protection). There is evidence that the Board’s strategy paid off. In 1747, the Board’s minute suggested that

44 G. Seki, “Policy Debate on Economic Development in Scotland: The 1720s to the

1730s,” in: T. Sakamoto & H. Tanaka (eds.), The Rise of Political Economy in the Scottish Enlightenment (London & New York: Routledge, 2003), pp. 22–38. 45 Campbell (ed.), Records, passim. 46 Campbell, Rise and Fall. 47 Board’s minutes, 1747, Campbell (ed.), States, original pagination: p. 108. My italics.

7

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x

1728 x

x x x

x

en s lin n eig of fo r

x

x

1733 x

x

x

x

1734 x

x

x

x

1735 x

x

x

x

x

x

1736 x

x

x

1737 x 1739 x

po rts

Te ch no l x

x

1732 x

1738 x

im

on

og y

Tr an sf er I x x

1730 x x

Te ch no l x

x x

1731 x

og y

Pr ize

Pa ck i

Aw ar di ng

ng

TECHNOLOGY TRANSFER and EMULATION

x

1729 x

s

ng

en ne ts Im pr ov i

FINISHING

N /"b rin gi ng Tr an in sf fo er re In :S ig tro ne en du rs d ct : in io m g n ak O of ut in lin g of en re Pe ed Pr w op s ev ea l /C e en vi Ab ng tf am ra ro in br ud a to ic d ule t h nt e pr Hi ac gh tic la es nd s up

es /L ap pi ng

m /I

pr op er r

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INPUT

1727 x

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Table 7.1 The emulation strategy of the Board of Trustees (1727)

x x

x

x x

1740 x

x x

1741

x x

1742 x

ACHIEVED

x x

x

1743 x

ACHIEVED

1744 x

x

1745 REBELLION; some of the usual activities disturbed 1746 x 1747 x

x x

x

1748 x

x x

1749 x

x x

1750

x

x

1751

x

x

x

1752

x

x

1753

x

1754

x

Campbell (ed.), States, passim

A very remarkable change begun now to be observeable on the Manufacture. The fabrick of the Coarse was much improven, and the quantity made greatly increased, which was attributed to the Bounty lately granted on the Exportation of Coarse linens and to a great Spirit for Manufacture promoted over the Country by means of the British Linen Company, which was erected last year by a Charter from his Majesty.48

This development can be traced in Figs. 7.1 and 7.2. Note that Fig. 7.2 captures two related shifts: one in population; the other in average value, suggesting—albeit tentatively—that overall the added value in the Scotch industry increased. As all figures for the period 48 Ibid., p. 97.

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Fig. 7.1 The development of quantity and quality (average price) of Scotch Linen, 1727–1783 (Left axis: number of yards produced; right axis: average value in £ Sterling [decimal value])

have been derived from government sources, they need to be treated with appropriate caution, suggesting rough dimensions and trends rather than “exact” data in the modern sense. In the western shires of Scotland, population and average product value increased in unison and grew more dynamically than anywhere else. We may speculate that regional agglomeration effects were at work.49 Deflated by population effects, the change in value added would probably even be greater. Those five shires (Fife, Renfrew, Perth, Dumbarton and Lanark) that had led in terms of quality and value in 1727 still produced, in value terms, significantly more and better linen per person than any other region in Scotland. It is certainly no coincidence that Scotland’s early industrial hotspots became located in the southwest as well, especially around Glasgow and Paisley where the 49 A. Slaven, The Development of the West of Scotland, 1750–1960 (London: Routledge, 1976).

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Fig. 7.2 The regional economics and structural change of Scottish Linen Industry in the eighteenth century (Value of linen output per person in several Scottish shires [£ sterling]. Note that the values have not been adjusted for price level changes in the economy (CPA), which cannot at present be determined. Figures taken from Hamilton, Economic History, tables)

colonial trades, a highly capital-intensive business, were also concentrated. This region, whilst harbouring only about 14 per cent of total population, handled about 60 per cent of Scotland’s total overseas trade.50 The figures speak for themselves. Between 1730 and 1745 the production of chequered handkerchiefs, a higher-grade type of linen manufacture, expanded about 300 per cent. The significant process of improvement, in terms of a rise in the average price of the product and

50 Rössner, Wake. At 1755 official valuations, derived from custom house statistics; a source which is problematical in its own right.

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thus value added, only came after 1760. The share of Cambrics and Lawns—very fine linens—in total linen output expanded from seven per cent (1758–1762) to 24 per cent (1768–1772) and 23 per cent in the 1780s.51 The output of printed linens grew almost exponentially after the 1760s. Whereas production had hovered around 30,000–50,000 yds in the 1740s, it had increased to levels in the range of 800,000 yds in the 1770s.52 So did imports of foreign yarns, rising from a meagre yearly average of 6000 lbs (1755–1759) to 227,000 lbs (1775–1779). Altogether, the growth of the high-end sector of the linen trade took off after the 1760s. Whilst in 1758, 290,000 yds of fine linens had been produced, a staggering 1,540,000 million were reached on the eve of the American War of Independence in 1776.53 The number of bleach fields also increased. By 1760, 40 new fields had been set up, thus increasing the capital coefficient of Scottish production. “By 1775 virtually all linen made in Scotland was bleached there”.54 Overall, a significant increase in price and quality of the product had been achieved in less than five decades. Once again, this was no mean feat, given the generally slow rhythms of economic life in pre-industrial Europe. Capitalism under the mercantilist framework thus operated by combining private enterprise, the profitmotive and laissez-faire with the more rigid fetters of the nascent proactive modern state. In this way, the English Restoration Customs System of 1660, and the idiosyncratic context of its adaptation in Scotland after 1707 provided powerful stimuli to Scotland’s economic development even when, in 1707, Scotland lost her status as an independent nation and thus parliament as a source of economic legislation and intervention (in the 1670s and 1680s the Scottish parliament seems to have been particularly proactive in its economic legislation).55 It was not the British state per se—because states don’t do economic policy; it’s state actors who do—nor was it the Westminster parliament which steered post-1707 Scottish economic development; such forms of strong state

51 Durie, Linen Industry, pp. 26–27. 52 Ibid., pp. 75 and 87. 53 Ibid., pp. 65–69. 54 Ibid., p. 86. 55 Ian D. Whyte, “The Growth of Periodic Market Centres in Scotland, 1600–1707,” Scottish Geographical Magazine, 95 (1979), 13–26.

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interventionism were items of the future yet to come.56 But mercantilism played a leading role here, with many intended as well as unintended consequences, and mainly through intermediary state institutions such as the Board of Trustees (1727), and some more, as well as individual noblemen, members of parliament and, not insignificantly, the circle of Scottish cronies of Sir Robert Walpole around the influential Duke of Argyll.57

Conclusions: Cameralism, Mercantilism and Origins of Capitalism But let us return to mercantilism on a continental scale, where, as I have argued above, the term and concept of Cameralism seems more apt to denote the prevailing discourses and political economies of change and dynamics towards capitalism. The connections to the British experiences and political economies of capitalism and enlightenment are apparent and significant, and there were lots of shared templates, of politics and economic thinking. Scotland may have been closer to continental Europe in outlook, and the English experiences of economic change may represent the “odd man out” in European histories of good government, capitalism and economic development. When seen in a European perspective, mercantilism’s Germanic variant known by the likewise awkward term “Cameralism” is known to have spread widely outside the Germanspeaking lands and attained enough of contours to properly classify as a manifest and visible system of thought (and other than mercantilism, it became a university science by 1727). Far transcending its academicpedagogical aura as a university discourse it may seem that “mercantilism” as commonly framed represented more of an Anglo-Saxon, or better: specifically English Sonderweg , within a broader continental system of thought that emphasized happiness, manufacturing, scientific discovery and creativity—not trade wars, protectionism and restrictive systems of oeconomy, as the origins of wealth, power and prosperity of nations. As we have seen above (Chapters 3–5) pre-modern political economy 56 Hoppit, Britain’s Political Economies. Cf. the remarks made by Peer Vries on interventionist states, in id., Averting a Great Divergence: State and Economy in Japan, 1868–1937 (London: Bloomsbury, 2019), introduction and ch. 6. 57 Especially the Convention of Royal Burghs, an age-old institution that existed from the mid-sixteenth to the early twentieth century.

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writings of the mercantilist-Cameralist ilk—to which Steuart’s Principles clearly belong, but not Smith’s Wealth of Nations which may have founded a different tradition—contained significantly more liberal and laissez-faire elements than usually acknowledged. Mercantilist and Cameralist economic reasoning were significantly less concerned with prohibition, protectionism and outright interventionism than historians would be ready to admit. Mercantilists had not so much of a problem with business and enterprise, competitive or free markets or laissez-faire, generally speaking, in the same way as capitalism and laissez-faire during the last two centuries never really had problems with violence and coercion. Mercantilism and mercantilists built, since the twelfth and thirteenth centuries, on the basic premise that markets were principally better allocators of resources than central government or the state. This has been the capitalist creed to the present day. Mercantilists were outspoken in arguing that without intervention such competitive forces would neither emerge spontaneously nor prevail in a sustained way. Capitalism, in other words, needed a helping hand. Mercantilism and Cameralism provided such helping hand. As a basic way of reconceptualizing economy, not only as a separate field of human action but also intervention, Mercantilism—thus framed—was a brainchild of the Renaissance. The European Renaissance model of the world placed Man (homo) in the forefront of a cosmos or universe designed by an omniscient and benevolent God. The Creator had laid all the important tools of decoding its hidden working laws into homo’s hands and called her to arms to productively and innovatively interfere with her material environment. This included an understanding of improvement and emulation, of competition and growth as basic opportunities.58 In a speech delivered in 1455 Lorenzo Valla, a famous Renaissance scholar and Catholic priest who supported the idea that Man should follow her appetite for material indulgence, also highlighted how the arts and sciences of his age were growing; how improvement and competition were in the air (Aemulatio), where people competed for the best concept in an ever-lasting tournament to surpass one another (vel superare conatur). This philosophy, germinated since the Quattrocento, laid important intellectual foundations of the later European competitive

58 Clemes Zintzen, Vom Menschenbild der Renaissance (Berlin: De Gruyter, 2000); Mokyr, A Culture of Growth; Reinert, Visionary Realism.

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culture and politics of the seventeenth- and eighteenth-century mercantile world,59 in the same way as the rise of bourgeois values and political culture,60 or consumption in the world of goods and the industrious revolution.61 In turn, one can see overlaps with medieval agonal culture, but also ideas of knighthood and chivalry.62 The foundations for a competitive European culture addressing the basic human quest for growth and improvement were laid in the fourteenth-and fifteenth-century spirit and age of Renaissance. The ill-suited nature of “mercantilism” as a term is revealed at once by the simple fact that a fair amount, perhaps the majority of topics covered by early modern mercantilism, were covered or had been covered in writings as early as the twelfth century and sometimes earlier, viz: a positive connotation of profit and enterprise, merchants and business; an acknowledgement of the proactive role of the state in making capitalism work, getting people into productive employment by promoting domestic industry and exports, a circular and even dynamic vision of the economic process, an encouragement to attain a positive balance of trade and many more.63 They can be found in writings as diverse as Ælfric’s Colloquy, a late tenth-century work, in John Fortescue’s The Governance of England, or in the fourteenth-century Libelle of the Englyshe Polycye, in the several princely and Kings’ Mirrors of the thirteenth and fourteenth century that reached from Italy to Norway, or in the anonymous Reformatio Sigismundi in the German lands, c. 1439. Therefore, the term “mercantilism” can only be retained for reasons of convenience: other than that it makes very little sense. Since the very beginning the term “mercantile system”, when popularized by Adam Smith (who was not the first but clearly the most

59 S. Reinert, Translating Empire, 2011; Hont, Jealousy of Trade. 60 See the books by McCloskey, Bourgeois Equality; ead., Bourgeois Dignity; ead.,

Bourgeois Virtues. 61 De Vries, Industrious Revolution; Neil McKendrick, John Brewer, & J. Plumb, The

Birth of a Consumer Society: Commercialization of Eighteenth Century (London, 1982); Trentmann, Empire of Things. 62 On medieval agonal cultures, see, e.g. Christian Jaser, “Agonale Ökonomien. Städtische Sportkulturen des 15. Jahrhunderts am Beispiel der Florentiner PalioPferderennen,” Historische Zeitschrift, 298:3 (2014), 4592–4623. 63 Wood, Medieval Economic Thought.

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famous author to use the term64 ), has been defined in the negative. We have encountered some common assumptions about Mercantilism being a zero-sum game between nations; that mercantilists succumbed to a gold or silver fetish; that mercantilism was about monopoly and rent seeking and thus created sub-optimal scenarios of societal resource allocation65 ; implying that mercantilists embraced protectionism and abhorred the free market principle. Certainly, some of that was true, as the history of pre-Civil War Stuart England shows which had been, according to Hill, a society of monopolies66 ; but such voices were in the minority and such features never represented mercantilism’s essence. The reader can be, and has been, spared an extended debate on proving or disproving the Midas Fallacy (MF); given the state-of-the-art of historical research today we can consider it a Fallacy of the Midas Fallacy (FMF), a trickery smuggled into the discourse by Adam Smith and the fourth book of his Wealth of Nations , and simply move on: no self-respecting author of the mercantilist or Cameralist spectrum would have naively equated gold and silver—or money—with a nation’s wealth, as many authors in the wake of Smith and the Wealth of Nations insinuated. Writing an intellectual history of this insinuation: a history of the reasons why people either advanced or subscribed to the Smithian Fallacy of the Midas Fallacy would deserve a separate study in its own right. It still represents one of the big future tasks of intellectual historians wanting to understand the origins of neoliberalism.67 We have seen above how mercantilism never represented much of a unified theory. Cameralism post-1727, when it was first established as a university subject at the enlightened universities of Halle/Saale and Frankfurt/Oder, came closer perhaps. But whilst some scholars have emphasized the varied or undecided positions within the (mostly AngloSaxon) mercantilist spectrum,68 others have found a common tune in the 64 A version of the term can also be found in Mirabeau’s writings. 65 Very elegantly presented, e.g. in Mokyr, Enlightened Economy, ch. 4. 66 Christopher Hill, The Century of Revolution, 1603–1714, new ed. (London & New

York: Routledge, 2006). 67 See most recent surveys and chapters in Isenmann (ed.), Merkantilismus; Stern & Wennerlind (eds.), Mercantilism Reimagined; Rössner (ed.), Economic Reasons of State; Seppel & Tribe (eds.), Cameralism in Practice; Nokkala & Miller (eds.), Cameralism and the Enlightenment; Magnusson, Political Economy of Mercantilism. 68 Pincus, “Rethinking Mercantilism.”

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emphasis on money in all mercantilist writings, which new research on continental mercantilism has tended to confirm.69 Mercantilism, regardless how much discursive variety there was, was fundamentally important in shaping views and policies in the English empire in the Americas.70 We should now be in a position to add more of a European nuance to it. England’s oeconomic writers of the sixteenth to eighteenth centuries, often depicted as the mainstream mercantilists, developed an increasingly mercantile, meaning naval, outlook. They often focused on commercial matters such as money and exchange rates, rather than agriculture or industry. This can be explained by reference to their backgrounds as well as basic geography. England had no native silver or gold mines; any increment in the circulating stock of money and means of payment had perforce to come from abroad. German writings on the other hand—illlabelled as “Cameralism”—often edged towards silver mining and mining administration.71 German princes oversaw revenue that came from the native gold and silver mines. Being under the surface of the earth, usually within mountainous regions, any such proceedings belonged to the Prince by statutory law called Regalian right (Bergregal in German). The prince could sublet the mines to private entrepreneurs in return for a charge, which we may call seigniorage (in today’s monetary economics “seigniorage” tends to denote something different: the state profit from minting money, but the practical effect is the same), and such management of the princely mines directly affected the volume and tendency of money supply.72 This explains the administrative edge we often find in early modern “German” economic writings in the Cameralist ilk during the early modern period; an edge that English writings often lacked, but in England money supply before the age of paper money was contingent 69 Philipp Robinson Rössner, “Mercantilism as an Effective Resource Management Strategy: Money in the German Empire, c. 1500–1800,” in: Isenmann (ed.), Merkantilismus, pp. 39–64; Rössner, “Monetary Theory and Cameralist Economic Management”; Barth, “Reconstructing Mercantilism.” 70 John J. McCusker & Russell R. Menard, The Economy of British America, 1607 –1789 (Chapel Hill: The University of North Carolina Press, 1998); chapters in Stern & Wennerlind (eds.), Mercantilism Reimagined; Sophus A. Reinert & Pernille Røge (eds.), The Political Economy of Empire in the Early Modern World (Basingstoke: Palgrave Macmillan, 2013). 71 Wakefield, “Silver Thaler and Ur-Cameralists.” 72 Rössner, Deflation—Devaluation—Rebellion, ch. III with practical examples and case

study of sixteenth-century Saxony.

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upon fluctuations in the balance of payment, because precious metal could only be sourced from abroad by means of trade but not domestic production. German Cameralist writings also reflected the specific geographic conditions of the German lands assembled under the clumsy fetters of the Holy Roman Empire. With discontiguous patches of territory, exclaves and enclaves being part of the norm-fabric of the early modern state; multiple borders and often disputed claims by rulers and nobility, particularly on individual people, farmsteads and villages, with subsidiary and fuzzily defined social powers, the continental institutional framework could look like a mess before the 1850s. The German Cameralist vision of economy, and accordingly the composition of the books written under the Cameralist imprint, was bound to look different and emphasized, with long passages on how the postal system had to be governed, how the princely mines should be administered, what types of tax and toll was to be levied etc., quite different things from what English mercantilist writers considered important. English writers wrote from a vantage point of a unified territory and increasingly integrated national market with an emerging colonial empire in the Atlantic and no native silver and gold mines with which domestic money supply could have been boosted— it was almost by default trade-biased, because bullion only came in from outside. Moreover, mercantilist writers, from John Smith to Thomas Mun or John Carey73 often were business men, whilst German economists of the Cameralist ilk had, before 1727, usually trained as lawyers. From 1727 onwards, the first university chairs in Cameralism were established in the German lands. The first chairs in political economy in the Anglo-Saxon world were founded about hundred years later. Apart from these differences in nuance, German, Swedish and other writings of the Cameralist age also had a notable common ground in their zeal for natural improvement, scientific discovery and usage of the natural science, including alchemy, and economic growth. In the same right, we could speak of the whole mercantilist deal as Cameralism—prevalent in the German and Austrian lands, in Sweden, Denmark– Norway and Finland, Spain, Portugal and Italy in the early modern period. German and Swedish Cameralists emphasized similar points as the Anglo-Scottish writers as important for the empowerment of capitalism, namely the importance of domestic manufacturing, the creation of 73 S. Reinert, Translating Empire, discusses the translations of Cary’s work into French, German and Italian.

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wealth by promoting dynamic increasing returns activities, retaining fair behaviour on competitive markets74 —efforts which could most usefully be promoted and carried through using the help of the state. Cameralism can, of course, but does not to be exclusively understood, from the German context, because of the devastating consequences of the Thirty Years War, when texts such as Veit Ludwig von Seckendorff’s Teutscher Fürstenstat (The German Princely State) were written, first published in 1655, with more than twelve known editions until the end of the eighteenth century, making it, as well as several other texts written by Cameralists early modern economic bestsellers.75 Later, Cameralism spread, with university chairs in cameral sciences established in Universities as far north as Tartu or Stockholm or as far south as Italy and Spain. By the end of the eighteenth century it had become a full-fledged and fully institutionalized academic science. In 1798, there were 23 chairs in Cameralist science in the German-speaking lands. Cameralism was also taught at universities in Italy and Sweden, with Swedish Cameralist Anders Berch holding the first university chair in economics ever to be established in Sweden 1741. Cameralism can now be considered a pan-European discourse. With Cameralists departing from a legal-administrative tradition this makes this new tradition in economic reasoning slightly different from preceding economic traditions such as Scholasticism, whose main proponents had been churchmen or academic theologians (or both). In the Cameralists’ works of the eighteenth century we see a vision of “die geeinte Volkswirtschaft”; i.e. an integrated national economy. Johann Heinrich von Justi’s Cameralism would include the curbing of rentseeking and the abolition of monopolies and other market distortions within the domestic economy, including those institutional rigidities that negatively impacted property rights (villainage and serfdom), reducing

74 This is my own reading of Wennerlind, “The Political Economy of Sweden’s Age of Greatness.” 75 E. Reinert et al., “80 Economic Bestsellers Before 1850”; Sophus A. Reinert, “Cameralism and Commercial Rivalry: Nationbuilding Through Economic Autarky in Seckendorff’s 1665 Additiones,” European Journal of Law and Economics, 19 (2005), 271–286.

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the privileges or “freedoms”76 of the native aristocracy. In many ways, the Cameralists were early institution builders of what we know as laissez-faire. From the vantage point of modern research it is therefore difficult to mark out a firm difference between English mercantilism and continental Cameralism. The two had too much in common and seem to have built upon a common intellectual heritage marked by the writings of Giovanni Botero, in particular his Ragion di Stato (1588). Close to eighty editions of Botero’s work on cities and economic development, including translations into German, Latin, English and French were published during the sixteenth and seventeenth centuries. Botero’s books can be found in many continental libraries in the age of enlightenment, as remote as Skokloster in the middle of nowhere in the Swedish woods near Uppsala, or the opaque residence of Gotha in the German mini-state of SaxonyGotha.77 There is also a direct link between Seckendorff’s argument and Italian Jesuit Giovanni Botero’s treatise on Ragion di Stato (1589), which qualifies, alongside Hobbes’ Leviathan, not only as one of the grand early modern treatises on reason of state in the early modern period, but also may provide a missing link between the economic discourses known as mercantilism and Cameralism.78 In his treatise on cities Botero made a clear case for protecting domestic industry, providing one of the first rigorous analyses of the higher value added in industry and the resulting dynamic spin-offs which a growth in manufacturing would have on incomes, employment and the happiness of the common weal. This was stock-in-trade of later writings in the age of mercantilism or Cameralism, be that in England, the German lands, or Sweden. Mercantilism and Cameralism had a double purpose, fostering state health and domestic development simultaneously. This aspect has been over-emphasized by scholars, suggesting an “economic reason of state”

76 See Epstein, Freedom and Growth on different notions of ‘freedom’ as ‘freedoms’ (libertas, liberty, freedom from privilege) entertained in medieval and early modern Europe. 77 Research is just at the beginning here, suggesting a massive intellectual influence of Botero’s treatise on the shaping of early modern European economic thought. See comments on Carpenter’s files in Reinert & Carpenter, “German Language Economic Bestsellers,” in: Philipp R. Rössner (ed.), Economic Reasons of State, 1500–2000. 78 Reinert & Carpenter, “German Language Economic Bestsellers.”

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rationale,79 as though the raising of state income through taxes and charges for monopoly and privileges would have been the essential feature of the early modern political-economic mind, and profit-oriented enterprise only came to be positively valued during the age of liberalism. But since the middle ages Princes Mirrors , political theory and economic writings had emphasized, alongside the mercantilist agenda how important a flourishing common weal was as a good thing in itself. Clearly, in the writings of Machiavelli, Hobbes and later writers, the reason of state dimension emerged as a distinct category of political analysis detached from moral high ground, which emphasized the survival of the body politic as the main aim of state. Such focus on the reason of state aspect however misses mercantilism’s and Cameralism’s essence. As much as it is true, as Austrian mercantilist Wilhelm von Schröder emphasised in his work on “Princely Treasure”, only a flourishing common weal would generate a healthy tax base.80 A strong state was seen as a precondition for healthy economic development and good markets. This comes through in the writings of Johann Heinrich Justi who perfected Cameralist “laissez-faire”. Contrary to the reason of state literature, the strong tax state was not an end in itself. It was a means to achieve a certain end in form of a flourishing and pious Christian common weal or, in modern words: empower capitalism. In Marx’s (Capital ) reading mercantilism coincided with the earlycapitalist era (no difference to Sombart here!). This ties in smoothly with a narrative favoured amongst many modern historians that mercantilism went away sometime after industrial capitalism had commenced. In the Marxist model merchants were aliens within the traditional logic and fabric of agrarian-feudal society because they were focused on generating capital whilst almost no-one else was. “[C]ommercial capital [was] the first independent mode of existence of capital in general”, as Marx would say in Capital.81 In this perspective mercantilism coincided with Early Modern Capitalism (Frühkapitalismus ), a capitalism that was neither here nor there: a capitalism essentially unfinished. Braudel’s marvellous Civilization and Capitalism (Engl. 1982–1984), or Wallerstein’s World System 79 See introduction to Rössner, Economic Reasons of State. 80 Wilhelm Freyh. von Schrödern Fürstliche Schatz- und Rentkammer, 1st ed. 1686. On

Schröder, see Keller, “Perfecting the State”; ead., “‘A Political Fiat Lux’.” 81 Quoted and discussed in Daniel Gaido, “Rudolf Hilferding on English Mercantilism,” History of Political Economy, 48:3 (2016), 449–470.

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theory, vol. II made important borrowings from Marx.82 As many later writers, Marx emphasized what would become a neoliberal foundation myth. In the mercantilist era, he wrote, “within a country, if we consider the total capital, no creation of surplus- value in fact takes place. It can only arise in the relations between one nation and other nations”.83 This chimes in with common interpretation of mercantilism as “zero-sum” or “Beggar-thy-Neighbour” game.84 Werner Sombart, in Der moderne Kapitalismus (1917–1927) historicized mercantilism, as well as its place within the longer history of capitalism and its dynamics. Sombart wrote: Rather, in my view the condition for an understanding of the theorists of mercantilism is the realisation that their thought had a fundamentally different orientation to those of later thinkers; that the inner nature of their questions and methods, and of the area and purpose of their investigations, stood in sharp contrast to so-called ‘classical’ national economics, and what followed after it. If we were to try and express the difference between the mercantilists and their successors with a few key words, we might say: their thought was organic, dynamic, centred on production, activist, and idealist, while that of the ‘classical’ authors and of almost all the theoretical authors in the nineteenth century, was mechanical, static, centred on circulation, materialist, and passive. (…) The thought of the classical authors is mechanical, because its guiding idea is an Ordre naturel, whose mechanism essentially corresponds to a society made up of independent individuals, i.e. a society which is amorphous and only held together by freely chosen contractual relations. In contrast, all mercantilist thought is organic, insofar as it proceeds from the assumption of a totality, conceived as an organism, and its conditions of existence, and insofar as it always views all individual processes of economic life only as expressions of the national economy as a living body, and insofar as it imagined this living body of the national economy to be filled with a common spirit.85

82 Braudel, Civilisation and Capitalism, vols. 2 and 3; Wallerstein, The Modern World System, 4 vols. (to-date). 83 Quoted after Gaido, “Hilferding on English Mercantilism”, 453. 84 Elegantly referred, e.g. in Mokyr, Enlightened Economy, or Ekelund and Tollison’s

works. 85 Sombart, Der moderne Kapitalismus, Vol. II/2, ch. 55, transl. Keith Tribe & Daniel Steur (in preparation: publication intended 2021).

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This view would not go unchallenged, as economics as well as the history of political economy are dynamic fields and evolving. But what we can say for sure now is that from the Renaissance onwards mercantilism and Cameralism represented natural centrepieces of capitalism and dynamic economic development. Only very lately did modern economics depart from its centuries’ old heritage marked by Cameralism and mercantilism. The foundations of the modern capitalist mind were laid when individual freedom was the exception rather than norm, a privilege more than entitlement; when states had no monopoly but a comparative advantage on violence, and where aristocrats and few others enjoyed powers over people that fundamentally went against basic instincts of freedom, Natural Law and humanity. Moreover, homo was never oeconomicus but most of the time considered imperfectabilis, driven by her animal spirits, with rationality being a trait so profoundly alien to human anthropology that the state and prudent prince was considered essential in counteracting these instincts. Because the prevailing social and legal framework often exhibited more hindrances than incentives to human freedom and entrepreneurial drive, strategies had to be adopted to empower capitalism that sound alien to the modern ear. These non-Anglo-Saxon political economies of markets and capitalism look so fundamentally alien in many ways nowadays that we may easily be led to mistake them as written in idioms foreign to capitalism, and by people whose first language was not capitalism. Defocusing origin stories of power, prosperity and the wealth of nations, however, tells us something very different. Capitalism was a native language spoken in many tongues. But it was certainly not invented, nor did it originate, in the Anglo-sphere.

Index

A absolutism, 22 absolutist state, 28 African, 17, 24 agrarian, 21 agriculture, 3, 21, 27 Alps, 78 American, 19 America(s), 11, 67, 161 Amsterdam, 53 Anabaptism, 84 Ancien règime, 113, 114 Anglo, 2, 39 Anglo-Dutch, 13, 46 Anglo-Saxon, 13, 89, 123, 127, 160, 162 Anglo-Scottish, 162 Antwerp, 53, 70 Aquinas, Thomas, 43, 55 Arendt, Hannah, 116 Aristotelianism, 36 Aristotle, 92, 98 Asia, 17

Asian, 7, 18 Atlantic, 64 Augsburg, 53, 63, 65, 100, 101 Austrian, 27, 162 Austrian-Habsburg, 36

B Baltic, 142 Baroque, 16 Beccaria, Cesare, 93, 131 Becher’s Law, 18 Becher, Johann Joachim, 18, 23, 24, 93, 132, 133 Bentham, 112 Berch, Anders, 93, 131, 163 Besold, Georg, 93, 128 Biel, Gabriel, 55, 97 Birmingham, 73 Bodin, Jean, 133 Bornitz, Jacob, 128 Botero, Giovanni, 26, 66, 96, 105, 111, 164

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 P. R. Rössner, Freedom and Capitalism in Early Modern Europe, Palgrave Studies in Economic History, https://doi.org/10.1007/978-3-030-53309-0

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INDEX

bourgeois revolution, 126 Braudel, Fernand, 64 Brentano, Lujo, 30 Britain, 71, 131, 147 British, 3, 7, 39, 67, 76, 119, 143, 145, 148 British Isles, 79 Bruges, 70 Bücher, Karl, 123 bullionist, 90 C calico, 18 Calvinism, 84 Cameralism, 4, 5, 17, 24, 26, 29–31, 33, 38–42, 47, 48, 52, 53, 76, 86, 93, 98, 111, 112, 118, 124, 125, 127, 128, 138, 157, 158, 160–165, 167 Cameralistic, 125 Cameralist(s), 4, 5, 11, 13, 18, 20, 21, 26–28, 32, 34–39, 41–43, 46–49, 63, 66, 70, 72, 76, 77, 79, 85–87, 93, 96, 98, 104–107, 111, 115, 118, 122–124, 127, 128, 130, 131, 135, 136, 158, 160–165 Capital , 52 capitalism(s), 2, 5, 7, 8, 10, 12–14, 16, 22, 39–45, 47–49, 52–55, 57–62, 64, 67, 70–76, 79, 84, 86, 91, 100, 102, 106, 107, 114, 117–120, 122–124, 127–129, 131, 134, 138, 143, 158, 159, 162, 165–167 capitalist, 3, 32, 41, 43, 47, 49, 54, 55, 57, 59, 61, 62, 64, 65, 73, 99, 102, 119, 158, 167 capitalistic, 57, 58 Catholicism, 84 China, 17, 18, 59 Chinese, 21, 111

Chrysohedonism, 29, 46 circulation, 3 Civil Wars, 127 classical, 4 classicism, 4 Coase, Ronald, 57 coin exchange rates, 90 Colbertism, 23 Colbert, Jean Baptiste, 23 common weal, 43, 44, 128, 131, 132, 134, 164, 165 consumption, 5 coordinated capitalism, 75 corvée, 88 cotton, 18 Crafft, Daniel, 27 currency, 19 D Danish, 67, 142 Danzig, 142 Darien, 24 de Azpilcueta, Martìn, 97 democracy, 14 Denmark, 78 Denmark-Norway, 12, 22, 83, 162 de-regulation, 19 Dresdner Bank, 30 Duns Scotus, 55 Dutch, 2, 3, 6, 7, 39, 57, 59, 100, 142 Dutch Caribbean, 67 Dutchmen, 142 Dutch Republic, 120 E East German, 126 East India, 24 economic development, 5 economy, 2, 3, 15, 16 Elbe, 64–66, 74, 88, 101, 121

INDEX

171

Elbian, 64, 66, 100, 121 Engel, Friedrich, 122 England, 2, 6, 7, 12, 58, 59, 66, 76, 83, 88, 92, 97, 102, 105, 121, 127, 131, 142, 144, 161 English, 8, 16, 27, 47, 49, 52, 57, 73, 98, 144, 146, 161, 162, 164 enlightened, 11, 22, 119 enlightened economy, 6 Enlightenment, 3, 4, 16, 35, 48, 49, 85, 87, 90, 98, 111, 112, 119, 122, 125, 130, 131 Erzgebirge, 103 Erz Mountains, 104 Essen, 62 Eucken, Walter, 16, 43 Europe, 14, 17, 22, 23, 47, 55, 64, 65, 67, 70, 74, 101, 105, 120, 128, 141, 144 European, 6, 7, 11, 12, 17, 22, 28, 40, 41, 47, 52, 55, 57, 60, 64, 67, 74, 75, 83, 102, 120, 127, 133, 134, 138, 144, 157, 159 European capitalism, 58 European mercantilist, 21 European Union, 11

Friedrich List, 30, 112, 122, 123, 136

F faience, 18 fairs, 72 feudal, 35, 47, 134 feudalism, 58, 111, 119, 120 Finland, 83, 162 Flanders, 66, 97 Florence, 53, 60, 62, 83 Foucault’s governmentality, 91 Frankfurt/Oder, 160 freedom, 13, 14, 47, 48, 107, 112, 115–120, 123, 125, 126, 128, 131, 134–136, 164, 167 free trade, 22, 28 French, 67, 164

H Habsburg, 12 Halle/Saale, 160 Hanau, 23 Hartlibian, 36 Hartlib, Samuel, 36 Hausväter, 76, 89, 91, 92, 96, 98 Hausväterliteratur, 21, 36, 92 Hayek, Friedrich A., 54 Heaven, 15 Heckscher, Eli, 28 Hell, 15, 83 Hesse, 23 Hesse-Darmstadt, 91 Historical School, 123

G Genoa, 53, 60, 62, 83 German, 16, 19, 27, 30, 36, 38, 49, 55, 65, 78, 85, 89, 93, 98, 101, 104–106, 112–114, 116, 122, 131, 157, 161, 162, 164 Germanic, 20 German language, 16 German oeconomic, 122 German Peasants’ War, 102, 114 Germany, 61, 62, 65, 71, 78, 85, 92, 100, 104, 106, 112, 130 globalization, 22 Glorious Revolution, 6, 131 God, 17 Goethe, Johann Wolfgang von, 16, 122 Gotha, 164 Great Divergence, 6 Greek, 29, 92 Gresham, Thomas, 97 Grundherrschaft, 121 Gutsherrschaft, 121

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INDEX

history of capitalism, 8 Hitler, Adolf, 112 Hobbesian, 123 Hobbes, Thomas, 76, 90, 96, 132, 135, 164, 165 Leviathan, 132 Holland, 7, 58, 142 Holy Roman Empire, 4, 23, 88, 97, 162 Hume, David, 3, 122, 132

I improvement, 84 India, 7, 18, 73 Indian, 12, 74 Indian Ocean, 59 industrialisation, 148 industrial revolution, 7, 21, 43, 61, 74, 77, 119 industry, 3, 26 invisible hand, 17 Italian, 60, 93, 97 Italy, 66, 162, 163

J Jung-Stilling, Johann Heinrich, 37

K Keynes, J.M., 29, 30 Kings’ Mirrors, 159 Klock, Kaspar, 93, 128

L laissez-faire, 14, 28, 40, 41, 47, 48, 54, 70, 118, 119, 158 Latin, 164 Leipzig, 53, 63, 70, 100, 104 Leviathan, 17

liberal, 5, 15, 28, 40, 41, 48, 54, 76, 118, 124, 127, 135 liberalism(s), 4, 5, 14, 19, 22, 26, 28, 40, 41, 112, 118, 127, 128 liberty, 112, 116, 117, 127, 132 little divergences, 7 Locke, John, 76, 96, 135 London, 53 Louis XIV, 23 Lutheran, 54, 67, 115, 116 Lutheranism, 84 Luther, Martin, 44, 54, 55, 63, 67, 103, 104, 114–116, 125, 126 luxury, 3, 5 M Machiavelli, N., 111, 132, 133, 165 Manchester, 73 manorial, 121 manufactories, 22, 27 manufacturing, 21, 26, 27, 66 market economy, 2 market(s), 2, 13–15, 18, 19, 21, 28, 29, 34, 35, 40–48, 52–58, 61–65, 67, 69–72, 98, 102, 103, 106, 107, 113, 117–120, 127–129, 131, 135, 136, 158, 160 Marxian, 53 Marxist, 42, 52, 115 Marx, Karl, 41, 52, 57, 59–61, 73, 74, 78, 122, 165, 166 mechanism, 166 Mediterranean, 105 mercantile, 32, 159, 161 mercantile capitalism, 74 mercantilism(s), 4, 5, 10, 12, 17, 18, 20, 22, 24, 28, 29, 31, 32, 36, 39–43, 45, 47–49, 52–54, 57, 72, 76, 84, 86, 93, 118, 124, 138, 143, 144, 157–161, 164–167

INDEX

mercantilist(s), 3–5, 10–13, 15, 18– 24, 26–28, 30, 40–43, 45–49, 52, 63, 66, 70, 72, 76, 77, 79, 86, 87, 90, 91, 93, 96, 98, 106, 107, 115, 123–125, 130, 135, 138, 143, 158, 160–162, 165, 166 Mesopotamia, 67 Midas, 29 Midas Fallacy (MF), 29, 46, 160 middle ages, 22, 90 Millenarianism, 84 Mill, John Stuart, 61, 110–112 On Liberty, 110 mine(s), 26, 27 Mirabeau, 32 Misselden, Edward, 97 modernity, 2, 3, 5, 7, 13, 14, 28, 49, 55, 127 monetary regulation, 19 monopolistic, 12 monopoly(ies), 10, 12 Montesquieu, 3 moral economy, 70 Mughal, 21 Mughal India, 21 Müller, Adam, 113, 114, 123 Mun, Thomas, 97, 162 Muscovy, 19

N Napoleon, 114 natural law, 35 Navarra, 97 Navigation Acts, 143, 146 neoliberal, 54, 166 neoliberalism, 124, 160 Netherlands, 58, 66, 75, 83, 97, 131 New Testament, 91 Norway, 78 Nuremberg, 53, 63, 65, 100, 101

173

O Obrecht, Georg, 128 occidental economic thinking, 4 oeconomic(s), 15, 21, 34, 39, 89, 92, 96, 98, 157, 161 oeconomos/oeconomus/oikonomics, 91, 98, 116 ordo-liberal, 43 Ordoliberalism, 20, 54, 124 Oresme, Nicolaus, 43, 55, 97, 103 Osse, Melchior, 128 Ostend, 12

P pater familias, 89, 91, 96 Peasant Revolts, 125 Peasant War, 100, 104, 126 Petty, Sir William, 76 Pfeiffer, Johann von, 37 Physiocracy/Physiocratic/Physiocrat(s), 21, 46, 67, 76, 96, 98, 123 plenty, 13 Polanyian, 67 Polanyi, Karl, 56 Polish, 121 political economy, 16 porcelain, 18 Portugal, 7, 162 Portuguese, 93 Presbyterianism, 84 Princes Mirrors , 134, 165 protectionism, 22 Protestantism, 84 Prussia, 12, 24, 36, 113 Prussian, 113, 121 Pufendorf, Samuel, 111 Purgatory, 15, 83

R Reformation, 65, 78, 100, 115, 126

174

INDEX

regulation, 10, 13, 22, 45, 70, 72, 106, 107, 123 regulatory, 77 Reichsbank, 30 Renaissance, 8, 17, 20, 21, 24, 40, 41, 43, 47, 54, 84, 124, 158, 159, 167 Renascimento, 15 rent-seeking, 10–12, 22 Rhine, 105 Rhineland, 101 Röpke, Wilhelm, 16, 44 Roscher, Wilhelm, 16, 103, 123 Russia, 113

S Saxon, 27, 103, 122 Saxony, 59, 70, 103, 104 Saxony-Gotha, 26, 164 Say’s Law, 18 Schacht, Hjalmar, 30 Schiller, Friedrich, 16 Scholasticism, 25, 163 Scholastic(s), 36, 42, 55, 64, 98 Schumpeter, Joseph, 18, 42, 57, 118 Scotland, 3, 12, 24, 27, 48, 58, 119, 120, 135, 141–148 Scots, 142–144 Scottish, 19, 31, 127, 142–144, 146 serfdom, 58, 61, 74 Serra, Antonio, 96 Seville, 68 Shakespeare, William, 16 Silesia, 59 small, 7 Smith, Adam, 3, 26, 32, 43, 45, 49, 53, 58, 119, 122, 124, 131, 159, 160 Smithian, 123, 127 Smithianism, 119 smuggling, 143, 145

socialism, 13 Sombart, Werner, 22, 41, 52, 53, 57, 59, 60, 73, 76, 100, 165, 166 Sonderweg, 13, 39, 110, 112, 157 Sound Toll Registers, 142 Southeast Asia, 7 southern Europe, 88 Soviet, 121, 126 Spain, 162, 163 Spaniards, 67 Spanish, 93 state(s), 13, 22, 28, 35, 42, 43, 47, 70, 76, 78, 79, 106, 131, 135, 148, 158, 159, 163, 167 Steuart, James, Sir, 3, 4, 30, 31, 49, 58, 122–124, 128 Stockholm, 163 Suriname, 24 Sweden, 12, 92, 131, 142, 162 Swedes, 142 Swedish, 27, 28, 84, 93, 142, 162, 164 T Tartu, 163 temporal authority, 70 Tenochtitlan, 68 Theory of Moral Sentiment, 43 Thirty Years War, 105, 163 tobacco, 144–148 trade, 13 Treaty of Westphalia, 23 Trump, Donald, 42 Tübingen, 30 Tudor England, 91 Tyrol, 126 U underdevelopment, 20 United Kingdom, 2 Upper Germany, 15

INDEX

US, 59 V Venice, 53, 60, 62 Verlag, 105 Verleger, 63 Versailles, 134 von Hörnigk, Philipp Wilhelm, 23, 24, 27, 93, 115 von Justi, Johann Heinrich, 36, 37, 58, 72, 111, 118, 123, 125, 128, 130–132, 135, 163, 165 von Schmoller, Gustav, 16, 30, 76, 103, 123 von Schröder, Wilhelm, 93, 165

175

von Seckendorff, Veit Ludwig, 26, 36, 38, 43, 163, 164

W Wealth of Nations, 43, 160 Weber, Max, 59, 61, 84 West, 2, 6, 7, 11, 14, 17, 41, 52, 74 Western, 14, 67, 74 Western Europe, 64 Wolff, Christian, 111

X Xenophon, 92, 98