Nicholas Barbon on A Discourse of Trade. 1690 Volume

by Nicholas Barbon

This is a copy of the original book. In this series, we are bringing old books back into print using our own state-of-the-art techniques. Generally, these books are created from careful scans of the original. This allows us to preserve the book accurately and present it in the way that the author intended. However, as we are working with old material, so occasionally there may be certain imperfections within the text. We are so pleased to ensure these classics are available again for generations to come.

Genres: Economics

58 pages, Paperback

First published January 1, 1690

About the author

Nicholas Barbon (c.1640 - c.1698) was an English economist, physician, and financial speculator. Historians of mercantilism consider him to be one of the first proponents of the free market.

In the aftermath of the Great Fire of London, he became an active London property developer and helped to pioneer fire insurance and mortgages as a means of financing such developments.

Reviews

[Kyle]

In Barbon's 1690 tract, the most impressive section is that where he discusses the value of products. We see him lay out how value is determined, predating Smith by over 80 years, in a way that is superior to the great Scottish philosopher. Barbon explicitly states that "the value of all Wares arise from their Use; things of no use, have no value." This allows Barbon to avoid the value paradox that Smith, Ricardo and later Classical Economists fell into by attempting to explain value by the costs of production or labor. Later in the same section, Barbon again comes to the conclusion that Price is just the present value of a good that will fluctuate over time, influenced both by the the demand of the good (how useful/valued it is) as well as the supply of the good (how plentiful or scarce). Finally, before concluding the section he seems to hint at time preference, developed later by Bohm Bawerk and Wicksell, when discussing what drives the price of interest.

In his discussion on money and interest, Barbon is consistent in his analysis of value by applying to money as well, stating that it is the scarcity of gold and silver that keeps up the value. However, in this section he does deviate from the above thought of him potentially understanding the impact of time preference on the rate of interest. Barbon correctly deduces that interest is a function of potential loss for the borrower, though he ends up concluding that the rate of interest must be settled by law or else the merchant would just go about making up his own rates.

Overall Barbon makes a few great contributions to economic thought. In addition to the call outs above, he concludes that trade incentives peace as well as makes a nation more productive. Unfortunately, he does seem to advocate for the growth of the state and expanding the empire, though I do not fault him for a common goal given the historical context in which he is writing.