Commerce, Credit, and Capitalism: Political Economy in the Scottish Enlightenment, 1688-1776

Abstract

This thesis examines the political economy of David Hume, Sir James Steuart, and Adam Smith. Through a close reading of their economic arguments, it argues that these Scottish intellectuals were grappling with the political ramifications of credit-based monetary innovations that have yet to receive sufficient scholarly attention. Political theorists of commercial society had little trouble in identifying finance as a qualitatively different activity from trading. The unfamiliarity soon became open hostility, particularly towards the politically explosive institution of public credit. The three political economists studied, however, discerned the economic logic that extends from the rise of commerce to the advent of credit. Their varied conceptualizations of this logic constitute the subject of this thesis, as it recovers a debate about the ambivalent relationship between monetary innovation, societal revolution, and political constitution. It proposes that major eighteenth-century political economists were envisaging an exit from commercial society and the approaching of credit society. Hume entertained grave misgivings about its political soundness, while Steuart calmly unfolded how private credit might shape the world into one more familiar to us. Smith superseded the discourse with a radically inventive conceptual framework of capital which, in retrospect, accounts for the prolonged submergence of important reflections on the monetary regime integral to modern capitalism. The recovery of a fuller picture of Scottish political economy could render instrumental assistance in the understanding of our own. After an introduction that sets the intellectual and historiographical context, Chapter I examines Hume’s moral defence of commercial society. Chapter II explores Hume’s account of the historical rise of commerce, and of the impending corruption of credit. Chapter III argues that Steuart was a close follower of Hume in analysing commercial society, while his divergence from Hume regarding credit forms the subject of Chapter IV. The final chapter presents a reading of Smith as he shifted analytical perspective from demand to supply, incurring immense dividends as well as regrettable losses.