William Petty

William Petty (born in Romsey, in the Hampshire in England on May 27th 1623 and died with London on December 16th 1687) was a touch-with-all (economist, scientist, doctor, philosophical, businessman, member of the Parliament and Royal Company,…) British.

He is especially known for his work on the arithmetic policy, which poses the bases of the political economy and the Démographie - to some extent of econometrics like Schumpeter says it -, by proposing the use of the Statistiques as regards public administration. It to him is also allotted the statement of the philosophy of the Leave-to make governmental matter.

Biography

William Petty is born in a modest family. It is described like early and intelligent. Young person, it embarks like apprentice sailor on ships. At 14 years, it resumes studies at the Jésuite S with Caen. It studies there the Latin , the Greek , the French, as well as the Mathématiques and the Astronomie. It returns then to England.

In 1643, the First English civil war the conduit to be exiled in Holland where it is interested in the Anatomie. With Amsterdam, he becomes the personal secretary of Hobbes while meeting Descartes, Gassendi and Mersenne. The finished civil war, it returns in 1646 to Oxford to study the Médecine. It also enters to the company of Philosophy of London. In 1651, he becomes professor of Anatomie to Oxford and of music in London.

In 1652, it joined the army of Oliver Cromwell in Ireland as doctor-general. Its opposition to conventional teaching and perhaps its adoption of the New Science inspired by Francis Bacon moves away it from Oxford.

In 1654, it obtains the load of Cadastre R Ireland: it is the Down Survey , completed in 1656. The importance of this task holds in what Cromwell refunds its financeurs with grounds. William Petty is also remunerated out of ground: it receives 30 000 acre S in the south-west of Ireland, like 9000 books. The importance of the amount leads to suspicion. Until its death, he is suspected of Corruption and fraud, without formal evidences not being produced.

Of return in England, in favor of Cromwell, it fails to be made elect at the Parliament in 1659. In spite of its policy options, it is well treated with the Restauration, although it loses part of its properties. In 1662, invited to join the Royal Society, it writes its first work of economy, the Traité on the taxation . It launches out in the Naval architecture without much success, is made knight by Charles II then turns over to Ireland in 1666, where it passes large to leave the twenty years following.

The events which lead it of Oxford in Ireland mark its evolution of medicine and physical sciences towards the Social sciences. Consequently, it devotes its life to it. Its main interest becomes the prosperity of Ireland and he proposes many means to leave it his late situation.

He draws an assessment contrasted from his life. Of modest origin, it mixes with the intellectual elite and at 35 years is a rich man. Its contemporaries regard it as a spirit shining, rational jovial fellow and . Nevertheless, there remains dubious on the perenniality of its properties and frustrated by its political failures. In 1685, it goes back to London and dies there two years later.

There remains famous for its writings of economic history and Statistiques, pre smithiens. Its work in Arithmetic, with those of John Graunt, founded modern technologies of Recensement and deepened by others, like Josiah Child, they resulted in creating the modern Assurance. Schumpeter describes it as “one of these individuals full with vitality who transform into success almost all that they touch, even their failures”. Although it paid the price of its too great dispersion of interests, there remains one of the great figures of the economic thinking.

One of the principal precursors of the economic scene

Philosophical influences

In the context of the optimistic philosophy of the 18th century, marked by the new spirit which could lead a Montesquieu to define the scientific laws as the expression “of the reports/ratios necessary which derive from the nature of the things”, the work of Petty was marked by two considerable influences. Initially, that of Thomas Hobbes for which the theory should establish the requirements with “civil peace and material abundance”. Hobbes had been devoted to peace, Petty chooses the Prospérité.

In addition, the influence of Francis Bacon was deep. Bacon, like besides Hobbes, had the conviction that mathematics and physical sciences were to be the bases of all rational sciences. This passion for exactitude led Petty to establish that its scientific practice would use only of the measurable phenomena and would seek a quantitative precision, rather than to be based on comparisons, producing a new subject which he baptized arithmetic policy.

Belief in natural laws

Marked by its studies of anatomy, he concluded with the superiority from the natural laws on the positive laws : “I was explained on the possibility and the sterility of the positive civil laws against the natural laws”. Petty thus created for itself a speciality as a first scientific economist, in the middle of the merchants lampoonists in the orbit of the English Compagnie of the Eastern Indies, like Thomas Mun or Josiah Child, and of the scientific philosophers discussing economy occasionally, like Locke. William Petty, with the abbot of Condillac and Richard Cantillon , mark the 18th century and announces the traditional economic thinking.

Many economic work and founders

He wrote before the real development of the political economy, such as it was created by the classic authors following Adam Smith. So much of its claims of precision were of imperfect quality. Petty wrote three major work in economy: Treatise off Taxes and Contributions (1662), Verbum Sapienti (1665) and Quantulumcunque concerning money (1682). This work, which held the attention in the years 1690, underlines its innovative contributions in many fields.

The National accounting

By making its calculations, Petty introduced into Verbum Sapienti first rigorous analyzes of the national product and the Richness, which represents much more than the Or and the money. It thus draws up an estimate of the average personal income which was to reach 6 books 13 Shilling S and 4 Denier S per annum, for a population of six million inhabitants, and that the national product approached 40 million Livre S. Petty produced of the estimates, some surer than of others, the various components of the national revenue, including the ground, the ships, the personal properties and the residences. It distinguished then between the funds and values (£250m) and flows coming from those (£15m). The difference between these flows and its estimate for the national revenue (£40m) led Petty to postulate that the others £25m came from the £417m of the stock of work, the value of the labor force. That gave a total richness of £667m for England in the years 1660. In this direction, one can say that the modern analysis of the income started with him and Quesnay. Its analysis of the factors of production recognizes in the Traité Taxes and Contributions : " work is the father… of the richness, just as the ground is the mère".

The taxation

The Fiscalité is a major subject for the politicians of the 17th century; the well managed countries should not spend more than their incomes. During the war of the England with Holland, William Petty seeks to off establish in the Treatise Taxes and Contributions the principles of the taxation and the public expenditure to which must adhere the Monarque when it finances military operations. Petty lists six types of public expenditure: the defense, the Administration, the religious framing, the education, the assumption of responsibility of the invalid S and the universal Good. He discusses then the general and particular causes of evolution of this expenditure. He thinks that there are great possibilities of reduction of the four first, and recommends contrary increasing the welfare expenditures for sick elderly, , Orphelin S, etc, like the creation of public employment in excess.

As for the increase in the tax S, Petty shows a burning defender of the taxes on the Consommation. It recommended that the general taxes are just sufficient to cover the public expenditure such as it defines it. They must be horizontally equitable, regular and proportional. He condemns the local taxes like very uneven and the rights indirect on the Bière like taxing the poor excessively. He pleads in favor of a better quality of information Statistique in order to increase the taxes in a way righter. The Importation S should be taxed, but only to level them with the local productions. A major aspect of the savings in this time was their transformation of a saving in Troc into a monetarized economy. Bound to that, and conscious of the scarcity of the Currency, Petty recommends that the taxes are payable in other forms that in Or or money which it estimates to represent less 1 % of the national wealth. For him, too much importance is given to the currency.

The offer of currency and its speed of circulation

This amount of the stock of richness was contradictory compared to the offer of currency out of gold and silver which reached only £6m. Petty believed that it was necessary to any nation to have a minimal amount of currency to carry out its trade. Also, it could occur to suffer from a lack of active money in the economy, which forced people to be satisfied with barter. It could be also that there is too much currency. But, the fundamental question was, as he wondered it, the £6m were sufficient to finance the Commerce, especially if the King wanted to borrow other funds to finance the war with Holland?

The answer of Petty came from its use the speed of circulation of the currency. Anticipating the Quantity theory of money of which it is often known as that it was initiated by John Locke, in which: $\ mathbf {Y=MS*v} \,$ . Petty establishes that if the production of richness (noted Y) increases while the offer of currency (MS) is determined and constant, then it is necessary that the speed of circulation of the currency (v) is higher. This phenomenon could be permitted by banking. He declared explicitly that neither the increase in money Supply, nor its reduction occurred during the twenty previous years, is the universal answer to all the finalities of a well organized State, but that this answer was an increased speed of the money circulation. It also mentioned that the currency is a means, not an end. What is striking in connection with these analyzes is this intellectual rigor, which places Petty very advances some on the writers mercantilists. It is also interesting to note its biological references to illustrate its demonstrations, analogies which also the Physiocrate S in France at the beginning of the 18th century will use.

Theory of value and interest rate

Petty continues the debate launched by Aristote and develops a theory of value based on the inputs: the goods can be evaluated starting from the two natural values which are the ground and the work. Like Richard Cantillon after him, he seeks to determine the relation between the ground and work (the “mother and the father” of the production) and to express the value of it. He still includes the general Productivité, made “art and of industry”. He applies his theory of value to the revenue. According to the precepts thus developed, the natural rent of the ground must correspond to the excess of what a plowman produced in one year beyond what it consumes itself and sells to buy of the goods of first need. It releases thus the concept of Profit like surplus of the various associated costs to the factors of production.

The natural rate of the rent is related to the theory on the wear. To this period, much of religious writers the interests like a Péché condemn. Petty is implied in the debate on wear and the Interest rate, analyzing the phenomenon like a payment compensating for the absence of immediate perception of its remuneration by the Prêt eur. Incorporating its theory of value, he affirms that with a perfect safety, interest rate must be equal to the rent of the ground which the lender could buy. When safety is more ordinary, remuneration must be more important in order to reward the risk. It is an early vision of what will be later the observations of general stability. Having established the justification of wear itself, that of the absence of immediate perception, it shows also its qualities hobbesiennes , pleading against a governmental regulation of interest rates, pointing “vanity and sterility to want to make positive laws against the natural laws”.

“Leave-to make”, foreign trade and exchange control

It is a major topic in the writings of Petty summarized by its use of the maxim Vadere sicut vult , from where we hold “Leave-to make”. As indicated higher, the Médecine was a source of inspiration for Petty, and it warned against any excess of intervention of the government in the economy, finding this similar to the doctor intervening excessively on his patients. It applied that to the Monopole S, the control of the Exportation S of money and to the Commerce of goods. That was for him harmful with the nation. It put forward effects of the monopolies on the prices, quoting in example the monopoly of the King of France on the salt.

On the exits of species, Petty thought that it was vain and dangerous to try to control them because that let the merchants decide which goods a nation buys with a smaller amount of currency. It foot-note in Quantulumcunque concerning money that the countries abounding in gold did not have restrictive laws. On exports in general, it looked at the regulations, like the recent Legislative acts prohibiting the export of Laine and wire, like “annoying”. Moreover fuller restrictions “would cost us twice as much as the simple loss of this trade”, though conceding that he was not an expert in the trade of wool.

On the prohibition of the Importation S, for example of Holland, such restrictions would not do anything more than to push the prices upwards, and would be useful only for the case or the imports would exceed exports enormously. Petty saw much more interest to go to Holland to study which qualities they had implemented to resist nature. Summarizing its point of view, he thought preferable to sell clothing to acquire foreign wines, rather than to leave tailors to unemployment.

Full employment and the division of the labor

The objective of full employment was moreover high importance for Petty which had established that work was the primary source of the Richesse for the individuals and the “Richness and the Capacity largest of the Kingdom”. In this vein, it included the argument clothing/wine, arguing which it was preferable to employ the men and to burn their products or to engage them in extravagant public works, rather than to leave them indolent - from where its famous example to move Stonehenge through the plains of Salisbury.

It used a convincing example for this purpose. If 10% of the population can produce enough Nourriture for all, with 80% of the other employees in exporting industries, the administration, the production of goods of Luxe and the sectors of the Droit, the Médecine or the distribution, how the 10% without employment find their food?

For Petty, the answer does not come from the begging or the Charité, which it named “fallacious tenderness” , but in public employment. Road S and Pont S was to be built and maintained, like the Rivière S or the mines.

In another book, Arithmetic Policy , Petty insisted on the economies of scale. It described the phenomenon of the Division of the labor, affirming that the goods are of better quality and less expensive, so much of people work there. Petty said that the profit is larger " as manufacture itself is more forte" . It made a practical study of the division of the labor, showing its existence and its interest in the shipyards Dutch. Classically the workers in the building sites built the boats with the unit, finishing one before launching the following. But the Dutchmen had organized several teams carrying out the same tasks on the various boats. The people with a particular task discovered new methods which were then observed and justified by the authors of political economy.

Foundations of statistical demography

Petty projected the growth of the town of London and supposed that it could swallow the remainder of the England:

In her Test of Arithmetic policy (1682), William Petty devotes himself to speculations on the doubling of the population. It evaluates the speed of growth of the population of London, then, more generally, that of the population of all the ground. After having led curious calculations of Prospective founded on the biblical chronology, it shows the variability this speed of growth. This essential thesis was by no means an obviousness for spirits marked by the theology and in search of constancy and linearity in the demographic phenomena.

Petty poses the bases of a quantitative study of the English and Irish population. In the absence of census, he proposes the first realistic estimates of the number of inhabitants of British Isles starting from the systematic exploitation of a demographic body of statistics. He analyzes also the mechanisms of the growth of the population and tries to formulate the mathematical laws governing mortality and fruitfulness.

It is in Ireland of the Interregnum that is worked out the reflection of Petty then charged to count the whole of the territory, within the framework of the cromwellien great project of confiscation of the grounds of the catholics. Impassioning itself for the economic and human geography, it provides the foundations of what it will call its “political anatomy”, company of census of the richnesses of the nation, in the foreground of which figure population. The lacunar character of the sources at that time represented an obstacle of size with very undertaken of this type, at the same time as a challenge. The imperfections of the ecclesiastical statistics have constrained Petty to resort to other data, like the tax registers. With the wire of the writings of “arithmetic policy”, it improves the method known as of the multiplying and corrects the generally accepted ideas of its contemporaries on the number of inhabitants of England and Ireland.

The demographic knowledge also seems a precondition necessary to the development of any government scheme. Petty, anxious to pacify Ireland where clash catholic and Protestants for the control of the territory, conceives in the years a 1680 great project aiming at “transplanting” in England a million catholic Irishmen. The way in which this project combines quantitative arguments of a high degree of accuracy to a vision that one can describe as utopian is emblematic thought of Petty, grayed by the infinite possibilities of control of the human factor which seems to offer the quantitative analysis.

Close friend and familiar of John Graunt, regarded as the founder of the Demography, it had suggested the idea making to him very clever research on the bulletins of Mortalité on the Port of London. Petty was also interested in dynamics of the populations. Inventor of the method of demographic projections, it tries to work out a mathematical model likely to give an account of the growth rate of a population. Its work remains dependant on the representations of the time, marked by the Populationnisme and the obsession of a depopulation of England to which seems to contribute man sending in the colony S. At the end of its life, it foresees the possibility of accelerating the settlement of British Isles, even of the whole of the world, by an active policy of encouragement to the Mariage and the Natalité. This project, whose disproportion and irrealism echo that of the transplantation of the Irishmen, constitutes one of the most innovative parts of the work of Petty: it tries to quantify the impact of the age of the marriage on the Fécondité and wonders about the regulating role of the State as regards demographic behaviors.

Quite front Thomas Robert Malthus, it noticed the growth potential of the human population. While not seeing, contrary to the famous demographer, why a company could not continue to be prosperous.

Posterity

The elements above show the contribution of Petty to the theoretical questions which dominated the economy since then. It covered a very significant number of subjects with its method of Arithmetic policy, i.e. like the modern economists, it established to show something while trying to accumulate the facts and the statistics, rather than the anecdotic or theoretical evidence, to prove its demonstration.

It did not influence only its disciples like Charles Davenant or its successors immediate such as Richard Cantillon but also some of the great minds in economy, including Adam Smith, Karl Marx or John Maynard Keynes.

With Adam Smith, it divided a " Weltanschauung " who was based on a natural harmony of the world. The parallels in their standpoint on the imposition summarize their common belief in natural freedom and the equality. Both transfer the benefit of the specialization and the division of the labor. More still, Smith and Petty developed theories on the value work, as Karl Marx at the 19th century did it. However Smith did not mention Petty in his work, just as it rejected the Arithmetic policy in the the Richness of the Nations .

Petty exerted a continuous influence. Thus, Karl Marx, which saw in Petty " the father of the economy anglaise" believed, like him, which the total effort that the ordinary workers produced represented a much greater contribution to the economy than the contemporaries did not want to admit it. Petty concluded in its estimates that work was placed like the greatest source of richness of the Kingdom. The conclusions of Marx were that the surplus of work was the source of all the profit, and that it hard-working was alienated of its appreciation and thus of the company.

John Maynard Keynes also writes in a time of major dissensions, whereas unemployment was crawling and the stagnant economies lasting the years 1930. He showed how the governments were to manage the total request to stimulate the production and employment, as Petty had done with simpler examples at the 17th century. The simple multiplier of Petty (£100-with through-100-hands) was refined by Keynes and was incorporated in its general model.

Increasingly many economists for twenty years (cf the “Nobel Prize” of economy of Gary Becker in 1992 or Daniel Kahneman in 2002) have returned to these concepts of arithmetic policy by using the statistics in a political context (to include/understand sociological and psychological) in order to establish the fundamental springs of the economic activity while deviating from the theories resulting from the standard model from the economy.

Works of William Petty

Treated Taxes and Contributions , 1662
Political Arithmetic (Tests of arithmetic policy) posthumous, approx. 1676, pub. 1690
posthumous Verbum Sapienti , 1664, pub. 1691
Political Anatomy off Ireland posthumous. (1672, pub. 1691)
Quantulumcunque relating to the posthumous Currency . (1682, pub. 1695)
economic Works of Sir William PETTY, Paris, 1905,2 volumes, Giard and Brière. Translated according to HULL C.H., The Economic Writings off Sir William PETTY, Cambridge, 1899.

References

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