Luis de Molina (1535-1600)

1. Luis de Molina (1535-1600) • Underlying Molina’s social thinking is an unwavering belief–shared by many of the early Jesuit thinkers–in the free choice of the human person. • In essence, the human person, Molina asserts, is an active agent of the divine will

2. Luis de Molina • An active agent of the divine will is a concept that finds concrete expression in Molina’s writings on economics, in which he affirms the importance of individual liberty in free-market exchanges, opposes government regulation of prices and markets, condemns the slave trade as immoral, and upholds private-property rights theory

3. Luis de Molina • “Many are the circumstances that cause the price of things to move upward or downward. Thus, for example, a shortage of goods caused by a bad harvest or similar factors provokes a rise in the just price. Plenty on the other hand bring it down. The number of buyers who come to the market is greater at some times than at others, and their keener desire to buy also causes a rise in prices. Likewise, the greater the need that people for some special things at a certain moment,

4. Luis de Molina • assuming that the quality of the things is unchanged, causes an increase in its price, as happens in the case of horses, which are worth more when war is is imminent than in times of peace. Similarly, lack of money in a place causes the price of other things to fall, and the abundance of money makes it rise. The less money that circulates in a place the more it is worth, and therefore, caeteris paribus, with the same amount of money we can buy more things”

5. Martin de Azpilcueta Navarrus (1493-1586) • Spanish Dominican priest and leading scholar of Salamanca. Early expositor of the Quantity Theory of Money. • Goes on to argue that "all merchandise becomes dearer when it is in strong demand and short supply" , i.e. general scarcity theory of value.

6. William Petty 1623-1687

7. Pettys’ Main Contribution • His book Political Arithmetic written in 1676 but published in 1690 • He discussed the need to obtain measurements for what to day we call macroeconomic and demographics variables • He is considered one of the first economist to use statistical methods • Wrote five book but only one appeared while he was alive

8. Richard Cantillion 1680?-1734 Essay on the Nature of Commerce in General

9. Cantillion • He was a broker in Paris • influenced by Francois Quesnay • He was killed by a servant he discharged who then try to burn the house to cover the his assassination • He is best remember not necessarily by his point of view but by the topics he considered important in the discussion of the economy

10. Points Introduced to the Economic Debate • Tract Population data as integral part of the economic process • Develop and explanation of the location of cities • Distinction between Market Price and Intrinsic Price • Analyze economic flows between major sectors in the economy

11. Points Introduced to the Economic Debate (Cont.) • Change in money supply had an impact of the economic level • Private property essential for the development of the market

12. David Hume (1711-1776) Political Discourses (1752) • Overall intellectual with contributions in Economics, History, Philosophy, and Politics • In Economics his understanding of political economy lead him to the Equation of exchange (along with John Locke) • MV = PQ

13. David Hume (1711-1776) Cont. • HUME’S DICTUM: What ought to be (normative statement) CANNOT be derived from what is (positive statement) • A Continuos Favorable Balance of Trade is Impossible to Maintain: • Because as gold ­ ® ­ Prices while other countries would have ¯ Balance of Trade so their Prices ¯ so they would export and we would import

14. Bernard Mandeville November 30, 1670 - February 1, 1733 • The Fable of the Bees (1714) • Believed in INNATE selfishness and lack of goodness in humans • Human Wickedness could only be turned to public benefit by skillful politicians

15. Bernard Mandeville (cont.) • VIEW OF LABOR: • Production, not consumption is the goal of the society • advocated large population, child labor, high labor force participation and low wages • IN OTHER WORDS HE BELIEVED IN A DOWNWARD SLOPING LABOR SUPPLY CURVE (i.e. ­ wages ®¯ participation

16. Thomas Robert Malthus 1766-1834

17. BIO • His father knew David Hume and Jean-Jacques Rousseau who apparently spend time with Malthus when he was a kid • He went into the ministry but remained at Cambridge with a scholarship until he married (so he had to give up the scholarship) • Known for ONE ESSAY

18. Population • An essay on the Principle of Population as It Affects the Future Improvement of Society, with Remarks on the Speculations of Mr. Godwin, M. Condorcet, and Other Writers 1798 (Anonymous) • However, after impact of book he put his name on it and produced a total of 6 editions and concluded then with: • A Summary View of the Principle of Population 1830

19. About the Book: • Disagreed with the optimism that the French Revolution had permeated to authors such as Godwin and Condorcet • First edition strictly a theoretical essay • Later editions attempts to find data to support position though does not always succeed

20. Main Points: • Two Main Propositions: • Population, when unchecked, increases in a geometrical progression of such a nature that it doubles itself every twenty five years • Under even the most favorable circumstances, the means of subsistence (i.e. the food supply) cannot possibly increase faster than in arithmetic progression

21. Population Dilemma • Positive vs. Preventive Checks • POSITIVE: factors increasing the death rate • War, Famine, Pestilence • PREVENTIVE: factors reducing birth rate • Contraception, Moral Restrain (Abstinence ), Abortion • Finally, he wrote some on monetary policy but he is remembered for his population essay (more during the David Ricardo Lecture)