I

The forthcoming tri-lingual (German, French, English) edited volume on Merkantilismus: Wiederaufnahme einer Debatte by Moritz Isenmann has thirteen papers dealing with pre-classical political economy and its translation into ‘real’ economic settings. The focus is on seventeenth- and eighteenth-century France and Germany; with some topical, epistemological and qualitative variation characteristic of most edited volumes. The continental focus is welcome inasmuch as most recent works have focused on the British-Atlantic context. The introductory chapter by the editor, in combination with the survey by Magnusson entitled ‘Is mercantilism a useful concept still?’, gives us an important précis of the current mercantilism debates.Footnote ¹⁰ Both authors seem uncomfortable with the term ‘mercantilism’. But Magnusson suggests that giving it up would be even worse. True, using labels such as ‘mercantilism’ implies a degree of theoretical coherence characteristic of a ‘closed’ epistemological paradigm – which mercantilism perhaps never was. For matters of fairness we should add, however, that this is similar in the modern economic sciences, where there apparently is and always has been more diversity – from classical liberalism to marginalism, Keynesianism to New Institutional Economics, etc. – than unity. Many modern economists would be sceptical of the notion that economics have reached (or will ever be likely to reach) the status of a ‘closed’ paradigm.Footnote ¹¹ Moreover, are there not – have there not been – always and everywhere considerable differences between theory and practice?

The basic insight of mercantilism's rather amorphous nature, however, represents an important advance from an older vantage point championed by E. F. Heckscher, who had attacked mercantilism based on the implicit assumption that it existed as a closed ‘system’, meaning that it was demarcated and recognizable as such, both as a sort of theory as well as a real action schedule, so as to lend itself to scholarly deconstruction. Modern academics are more sceptical, apparently; the contributions to Isenmann (2014) serve as a useful primer in this department. The main lines of interpretation through which the scholarly ‘mercantilism’ discourse has passed over the last century, and which are very conveniently summarized are: the Midas fallacy (A. Smith) meaning the confusion of money and wealth; the unifying state system (E. Heckscher); mercantilism as state building (G. Schmoller and W. Roscher); mercantilism as an economic discourse (L. Magnusson; for the German Cameralists: K. Tribe); mercantilism as rent-seeking society (R. Ekelund/R. Tollison); mercantilism/Cameralism as development economics (E. Reinert); mercantilism as ‘Enlightenment economics’ (S. Reinert); finally the ‘Jealousy of Trade’ paradigm (I. Hont). Magnusson stresses that mercantilism was not about rent seeking or monopoly – one of the more prominent charges levied against mercantilism by some twentieth-century researchers.Footnote ¹² Rather, the mercantilists did have a well-developed concept of adding value and promoting export-led growth; particularly by furthering domestic industry, specifically manufacturing over agriculture, as Magnusson says. Sustained development is only possible if a country builds up a healthy and competitive industrial sector, Magnusson argues. This chimes in well with recent hypotheses put forward by ‘heterodox’ development economists sceptical of the ‘standard’ or neoclassical general equilibrium models, suggesting that countries should specialize according to what they can do best, whether that be agriculture or industry; however, there are clearly differences between these two types of activity, and that is something we may have lost in the ‘modern’ theories. Some modern scholars working in development studies have started to look back to pre-classical authors instead for more realistic recipes addressed at alleviating contemporary problems of global poverty, income inequality, and ‘underdevelopment’.Footnote ¹³ Clearly, a renewed interest in mercantilism as a historical moment has also much to commend to it in terms of modern solutions to contemporary problems. Magnusson's paper is followed by a chapter on money and the monetary theory of the Cameralists. T. Simon provides an important comparison between mercantilism and its continental variant called ‘Cameralism’. Both were idiosyncratic, Simon states, i.e. tied to specific location points in time and space. Mercantilism was trade-orientated (handelsorientiert), whilst Cameralism was production-orientated (produktionsorientiert). Simon's argument, however, that Cameralism was dirigiste, based on an older neo-Aristotelian conception of household economics or œconomics, in which the economy was conceived as a stylized household, headed by the regent or Hausvater or pater familias, with no or little conception of the national economy as a system, is at variance with new research on Cameralist economics.Footnote ¹⁴ A chapter by Grenier on market regulation in early modern France resonates well with a recent book on the Illusion of free markets by Harvard legal scholar B. Harcourt.Footnote ¹⁵ Both suggest, broadly speaking, that in order for a market to be ‘free’, i.e. a market without distortions such as monopoly, speculation, arbitrage, usury, and other constellations that harm individual actors economically, it can only be a tightly regulated market. These ideas were known to medieval Scholastic theory, in the same way as they are nowadays applied even in the more liberal or market-friendly economies of our times, where we find, sometimes, quite a dense level of regulation in the market whilst at the same time most of us would probably have no problem calling this a ‘free market’ still. The market theory Grenier is sketching was obviously different from the market theory entertained by the Physiocrats and the Scottish philosophers since the eighteenth century, and many economists in their wake, who argued that market equilibrium and thus optimum welfare outcome should obtain spontaneously, based on complete freedom of the individual actors, when no state or regulator interferes in the process. The volume goes on with a polemical deconstruction by W. Reinhard of economic rationality and the homo oeconomicus as analytical concepts. By studying the immediate pre-history of the Anglo-French commercial treaty of 1667, Isenmann then works out Jean Baptiste Colbert's seemingly more laissez-faire nuances; the man gave his name to French mercantilism, after all. Contrary to earlier assumptions Colbert did not advocate prohibitive duties across the board, but made important specifications. Some goods were to be taxed lightly. International trade was a game of give-and-take between rival countries, after God's natural order had endowed the different parts of the earth with different factor endowments.

Obviously, mercantilism had many faces.Footnote ¹⁶ Some contributions share a somewhat sceptical conviction about mercantilism as a concept of analysis, whilst at the same time acknowledging that there is still a lot to be said on it, and that certain principles entertained by mercantilist authors, especially on market regulation and economic governance, represent actual foundation stones of modern economic thought. A chapter by B. Nolte on Prussian mercantilism demonstrates, perhaps unwittingly, where one of the main areas of challenge for future research lies. Nolte concludes that literally all measures aimed at creating a unified and uniform Prussian market under Frederick the Great (1712/r. 1740–86) using a mercantilist ratio of state building ultimately failed, as did attempts at effectively promoting domestic industry. Does this mean that mercantilist ideas were ‘bad’? Or did they simply unfold, in the repeated attempts to implement them, in ‘bad’ contexts? Prussia managed, after the 1830s, one of the fastest transitions towards industrialization, as Magnusson's 2009 volume on the Invisible hand, to be discussed below, argues – but only after basic restrictions on individual economic activity were lifted by the abolition of feudalism (villainage, manorial system) in 1806/11. The latter had little if anything to do with mercantilist political economy, but represented regional variations upon a rather restrictive legal-institutional system in situ (which the Germanic language has called Agrarverfassung),Footnote ¹⁷ which in fact many contemporary mercantilist and Cameralist pamphlets sought to redress and abolish. So perhaps we need to turn the problem back on its feet: it was not mercantilism that did not work – it was the context that apparently did not do the trick.

The problem of ‘translating’ ideas into different contexts comes across nicely in a contribution by Regina Grafe to Philip Stern and Carl Wennerlind's excellent volume on Mercantilism reimagined (2013). Grafe argues that in seventeenth- and eighteenth-century Habsburg Spain mercantilist ideas of domestic industry promotion and protection circulated widely. But it was the institutional structure of multi-ethnical and regionalized Spanish society which prevented the application of a national economic policy effectively promoting Spain's common wealth. Grafe argues that a strong tradition of institutional fragmentation in Spain created a bias towards promoting municipal policies at the expenses of the royal or national interest. In a nicely phrased introduction to the volume, Stern and Wennerlind invoke the metaphor of reflection. Rather than trying (ultimately in vain) to define what mercantilism was, they argue that we should better look at the ‘images’ mercantilism left when unfolding in contexts of time, space, and social fields. Mercantilist reflections are grouped into five larger sections called ‘Circulation’; ‘Knowledge’; ‘Institutions’; ‘Regulation’; and ‘Conflict’. As is the case with any book-length project of its kind, there are chapters that are more coherent and focused on the overall agenda of the book and some that are less so. Overall, however, this volume exhibits an atypically high degree of analytical stringency whilst at the same time offering a panacea of fresh insights.

Knowledge is important – now and then. This notion comes across forcefully from the first bit of the volume. Two papers on mercantilist social engineering and concepts of labour by McCormick and Swingen stress the increasing focus adopted by contemporaries on the quality rather than quantity of labour since about the mid-seventeenth century. This gave rise to new conceptions of productive labour, knowledge generation, and circulation: of ideas, goods, and money, all of which seem to have been directed one way or another, at quickening, speeding up the economic process. It is striking, for instance, how the death penalty became gradually substituted by sentences of deportation to the nascent colonial empire in the Atlantic. These ‘cultural transformations’ (p. 52) demonstrate a changed perception of the material world and the means of altering it and the productive uses which ‘superfluous’ labour could be put to. This was something which Wennerlind also finds to have been at work in the intellectual movement known as the Hartlib Circle, an opalescent think-tank brought to England by Prussian émigré and polymath Samuel Hartlib (1600–62). The intellectual efforts of the Hartlib Circle focused on raising productivity by a radical transformation of the productive landscape, using new methods and technologies across the full economic spectrum, from agriculture, mining, and chemistry, up to more esoterically minded exercises in alchemy or modern banking and paper money. Whilst Hartlibian economics rested on the crossroads between neo-Aristotelian and Scholastic theory on the one hand and full-fledged Baconian or mercantilist–Cameralist economics on the other hand, we find here, as Wennerlind argues, an important turning point in the history of early modern political economy and intellectual history: and that is the notion of infinite growth. The promotion of useful knowledge became increasingly important over the course of the seventeenth century as a self-conscious effort to push beyond the neo-Aristotelian focus on harmony, order, and balance. And for the first time, as Wennerlind claims convincingly, people actually began to believe in a world in which infinite economic expansion was principally possible, if only the right choices were made. A lot of it hinged upon what we may call, using a modernism, ‘knowledge management’. And this was reflected in the political economy discourse of the period.

This notion is somewhat at odds with alternative interpretations of mercantilism we may call for want of a better term ‘neoliberal’.Footnote ¹⁸ It demonstrates how much in need of revision our picture of ‘mercantilism’ as a pillar of modern economic and social science apparently is. It also raises the important question (not touched on in the volume) whether or not we may find here, in this peculiar discourse, a vital component to Europe's progress towards industrialization – another important departure point for future research efforts. Two chapters by T. Leng and F. Albrytton Jonsson develop the concept of useful knowledge further. Wakefield's chapter on German Cameralism represents the ‘odd man out’ in a volume on British/Imperial mercantilism, but it provides an energetic synthesis of another energetic argument put forth in this author's book-length study which will be given more detailed consideration in subsequent sections of this article.

The chapters in Part iii of Mercantilism reimagined on institutions urge us, in a way, to re-think our analytical concepts of ‘state’ and governance. This is another major achievement of the Stern/Wennerlind volume. In his study on corporations in the Elizabethan age, H. Turner suggests that ‘the state’ was only one among several competing models of governance in the early modern age. Others included corporations, guilds, monopoly and joint stock companies. The English East India Company represents a prime example. Was India after the Battle of Plassey a business run by the state – or rather a state run by a business? Apparently, Max Weber's concepts of state, statehood, and government do not take us very far any more. And if we rethink mercantilism, a discourse that was expressively connected with the state and certain perceptions of state power, we must also rethink what the early modern state actually was. Governance, political power, and economic policy were, in the early modern British Atlantic context, subject to processes of constant re-balancing, re-shifting, and re-negotiation between ‘state’, merchants, and other actors with vested interests in the game. This notion is picked up on by the remaining chapters in this section on the maritime-oceanic aspects of British mercantilism by Sirota, and the study of south-east English tea and brandy smuggling economy in the eighteenth century (Frykman).

Part iv on regulation develops the connection between state and economic discourse further, comprising the above-mentioned chapter on Spain by Grafe; a useful survey by Murphy on the financial revolution, as well as a chapter by Powell highlighting the detrimental aspects of British mercantilist regulation on eighteenth-century Ireland. Part v – which may well have been integrated with Part iv – is entitled ‘Conflict’. Here, Shovlin argues that trade and international conflict were changing variations on the same tune, but that after 1700 increasingly commerce replaced war as a form of competitive conflict. This story is developed further by Sophus Reinert's chapter on rivalry and economic competition in European discourse and economic practice. Since the middle ages, texts on the ‘reason of state’ had entangled the desire for state power and regulation of the economy with the goal of economic development. Frequently, this turned out to be a dynamic spiral, with the quest for power translating into successful economic development by the ‘visible hand’ of the state. Since the Renaissance, Reinert argues credibly, economic writers had also been aware that primary or agrarian products, subject to decreasing returns of scale and only little value added were not as suitable to achieve long-term economic growth as manufactured or industrial goods were. And that the state could help out if the market failed to develop productive resources at home. This is in line with the above-mentioned recent studies especially in ‘heterodox’ development economics,Footnote ¹⁹ but something the Physiocrats and classical economic theory seem to have missed; readers vested in the more traditional neoclassical approaches in the social sciences may find this slightly bewildering. But this notion – which we may call ‘mainstream’ economics – partly rests, as the contributions to the Magnusson volume below, particularly by Grampp, demonstrate,Footnote ²⁰ on a somewhat skewed interpretation of the emergence of modern economics. ‘Mercantilist’ theory already contained a lot of the ingredients to be found in nineteenth-century classical and twentieth-century neoclassical and Keynesian, even liberal, economics; it simply seems as though the emerging nineteenth-century post-Smithian discourse denied mercantilism its pedigree in the family tree of modern economics. The idea that the state should intervene in the economy never really disappeared from the academic landscape; but it went out of focus in the modern social sciences, despite a growing empirical evidence to the contrary in terms of real-life policy – as the other book by Magnusson on the Visible hand suggests (discussed below). This is one of the more prominent cognitive dissonances to be found in more recent times, which research on the crossroads between philosophy, law, history of science, and economics has started to look into more closely recently.Footnote ²¹

In fact, a wealth of accumulating evidence suggests that the genealogy of the modern economic sciences needs to be re-drawn. Adam Smith and David Ricardo, Reinert argues, did not differentiate between types of economic activities (agriculture, industry, services). They would have no role for the pro-active state that set or changed the (international) rules of competition. Reinert makes the point instead that pre-Smithian political economy (which he interestingly calls ‘enlightenment economics’ rather than using the term ‘mercantilism’) was centred on achieving economic growth. Again, this runs counter to some of the more recent interpretations, which have reserved the term ‘Enlightened’ for the classical economists and later free market ideologues in the wake of Adam Smith, who said that a non-interventionist state would be the better trick to achieve sustained economic growth.Footnote ²² Reinert calls for an overhaul of the modern economic sciences. By putting the history of political economy on to its feet again, he demonstrates that those authors whom the modern economic sciences have often claimed as their founding fathers were never really re-published during their lifetime. This means they were not widely read. Those authors, on the other hand, which we have lost on the way, so to speak (as they are not usually held in much regard in modern textbooks as forefathers of modern political economy) – Giovanni Botero (c. 1544–1617) for instance, or the seventeenth- and eighteenth-century Cameralists – were re-published over and over again during their time. Thus, our intellectual heritage, Reinert argues, is skewed. And the argument can be tested in a sense that it is possible to measure the ‘balance of translation’ of economic works, something Reinert develops at full length in his other contribution to the edited volume on the Political economy of empire in the early modern world. More authors on political economy and economic knowledge than anywhere else, Reinert argues there, were translated from English into other languages. This process went fairly synchronously to the economic catching-up of England since the seventeenth century, eventually managing the transition into the first industrial nation. Here is yet another important touching point between the history of political economy and actual economic development in historical perspective which should prove promising for future research studies. The Stern/Wennerlind volume is concluded by an afterword by Craig Muldrew, who argues that a correction of the history of European economic thought may help us towards a better understanding of the origins of our current economic crises.

A somewhat similar tune in a different key can be heard in the smaller edited volume by Røge and Reinert on Political economy of empire in the early modern world, in which the authors seek to bridge the gap between empirical histories and the political economy discourse of empire. The book features contributions on Holland, the French, Spanish, and British empires – i.e. the bigger European ‘empires’ of the early modern period. Obviously, future studies may adopt a different focus, including the Danish, Swedish, and other ‘smaller’ European empires. Hartman and Weststeijn argue that political economy texts in seventeenth-century Holland were ‘mercantilist’, inasmuch as they favoured the protection of domestic manufacturing and the promotion of Holland's common weal. On domestic markets, however, writers such as the brothers De la Court in their Interest van Holland (1662) – one of the pre-eminent Dutch political economy texts of the seventeenth century – advocated de-regulation. This mix between laissez-faire and protectionism was a strategy chosen by England as well as numerous other countries in the eighteenth century (and ever since), as new research has shown; and it was not unsuccessful.Footnote ²³ The Røge/Reinert book makes clear, if implicitly in places, that we should abolish stereotypes such as ‘free market’, ‘liberalism’, or ‘dirigiste’, etc. They do not really work when applied to real context and experience. Mercantilist authors had no problems with free markets; however, it was the mix between regulation and de-regulation that mattered to them. Some markets needed regulation, others did not. The successful economies – from the medieval Italian textile cities, the early modern Netherlands, eighteenth-century Britain or nineteenth-century Germany and the US – all at certain times combined laissez-fare schedules with dirigisme, and quite successfully so. Has it been much different ever since?

So far, the works discussed raise two important points. First, we are still far from a consensual definition of what ‘free market’ is, how it can be achieved and how it is beneficial for the economic process. If we mean that ‘free’ markets are (largely) de-regulated ones – then it is hard to trace them from the empirical record. In fact, most states and governments have – both in recent as well as more distant historical periods, such as the middle ages – adopted a different definition of ‘free’ exchange, in a sense that a free market is a market where usury, rent seeking, monopoly, and other welfare-reducing constellations of actors and interests are absent or reduced to a minimum level. Such markets, however, require constant and dense regulation and supervision, usually by some government authorities and institutions. Such markets can hardly be called ‘free’ in the literal sense, but seem to have been the type of market encountered and aimed at most usually in Europe's economic history and discourse.Footnote ²⁴ Secondly, it may just be that some of the theoretical side-strands in modern political economy which have been earmarked as the pedigree for modern or ‘mainstream’ economic thought, such as late eighteenth-century Physiocracy and its emphasis on de-regulation and the idea of the economy as a self-contained mechanism tending towards spontaneous equilibrium when left unfettered by outside intervention – seem to have been, in many ways, aberrations due to time-space specific constellations of individual actors and their interests. Røge, a co-editor of Political economy of empire, has a fascinating chapter on how French Physiocracy developed in the wake of France's defeat in 1763 and the loss of some of her colonial possessions. Mainland France was, after all, an agrarian country – and Physiocrat theory after the 1760s was profoundly agrarian in outlook and focus. The caesura of 1763, one must note in passing, also comes across clearly as a turning point in the discursive as well as economic history of many other European countries. The 1760s were an era of Rétablissement (for those who lost the war). We should also remember that it was not until 1765 that Adam Smith, eventually meeting with the main exponents of the French économistes of the Physiocrat School, turned into the ‘liberal’ economic thinker which he probably never was (in the way he was portrayed in later accounts). So fashion comes into the game again. The Physiocratic notion of natural order and self-clearing markets was something Smith also applied to his view on colonies, which should be left free to decide about production and resource allocation, as the chapter by Hopkins argues. Physiocratic reasoning about free trade also informed ideas of provisioning the remaining French overseas possessions in the Atlantic world after the 1760s as a chapter by Mandelblatt shows: the colonies argued for free exchange so as to improve market supply whereas metropolitan commercial interests argued for protection of their interests and their monopoly of supplying the colonies. Obviously, the issue is still open to debate. But certainly the modern economic sciences have a lot to learn from history, in terms of a more nuanced view on their history and pedigree than usually to be found in the undergraduate textbooks on the history of economic doctrine.

So, we may ask, if pointedly: to what extent is modern economic thought, especially the free market discourse simply based on coincidence? To what extent on the changing political contingencies of the day in the 1760s? What happens if ideas are applied ‘out of context’? As the chapter on Portuguese political economy discourse in the eighteenth century by G. Paquette in the Røge/Reinert volume shows, eighteenth-century contemporaries widely complained about the Anglo-French commercial treaty of Methuen in 1703. As is well known, this treaty made it into later economics textbooks as the prime example why liberalized trade is good for everyone – in that case of English cloth in return for Portuguese wine. The Marquis de Pombal, in the 1730s and 1740s, however, would have none of that. He argued that the export of a raw material such as wine (unfinished; no value added, decreasing returns to scale)Footnote ²⁵ in return for manufactured imports of cloth (finished, value added, and subject to increasing returns) would, over time, progressively enrich England at Portugal's expense. So whilst history shows that ‘free trade’ and specialization according to one's comparative advantage do not necessarily benefit everybody participating in the game equally, modern textbooks have often maintained exactly the opposite.Footnote ²⁶ In fact, most European countries during the seventeenth to nineteenth century were protectionist. Most economic writers before 1800 would usually argue for import substitution and protecting those branches of domestic industry earmarked as important for the nation's health and economic development. Why it was exactly the partisan view, heralded by the ‘classical’ economists in the wake of Adam Smith and David Ricardo, that developed into the later mainstream is a question yet to be analysed in more detail.Footnote ²⁷

Because, apparently, as a new book by Lars Magnusson on the Visible hand argues, protectionism and import substitution – what we may call (with all due caution) a mercantilist–Cameralist or dirigiste paradigm – seems to have been not only the norm, but in fact the key ingredient in Europe's transition to industrialization since the early modern period. Magnusson forcefully argues that contrary to much previous belief, the state played an active, even decisive, role in Europe's industrialization. In fact, the degree of the state's interference with the economy seems to have increased after c. 1800, when measured in terms of state expenditure in gross domestic product. State ‘intervention’ had already been significant before 1800 in some areas of the economy, if limited compared to later periods, given the circumstances and capabilities of the pre-industrial states to interfere with the economy. Accordingly, it was the type rather than the degree of state interference that changed after c. 1800. Then there was no general path towards industrialization, either, Magnusson says. Industrialization always happened within specific location points of time, space, sociology, and culture, unfolding very differently in different countries, requiring different recipes and strategies and thus causing different outcomes and quite idiosyncratic trajectories. Where there is no general path, no predetermined trajectory towards industrialization, there can be no Sonderweg, either – another of Magnusson's important and well-taken conclusions. What Magnusson calls, borrowing from M. Mann, ‘soft’ or ‘particularist states’ (i.e. broadly speaking states where government's claims to economic resources were disputed or shared with competing actors on the sub-state level, and where monopolies and rent seeking prevailed) survived, in many instances into the nineteenth century. For all these reasons, it is difficult to pinpoint a general trajectory from dirigiste to free trade in Europe around 1800. But there were changes in the type or field of state intervention. In the British case, regulation, after the abolition of the Navigation Laws in the 1840s (which are said to have established a period of trade liberalization), switched to sectors such as harbours, railways, and the regulation of joint stock companies and large businesses (this was similar on the continent). Thus, the forces of the market played out to the best result only when the two hands – Smith's Invisible and Magnusson's Visible one – were united.

Magnusson divides his analysis into a chapter on early modern political economy (ch. 2); a useful survey on the state-of-the-art in the research on the industrial ‘revolution’ (ch. 3), and a survey of the early industrializers (Britain, France; Belgium: ch. 4). This is followed by the later-comers (Germany, Austria; Italy; Sweden: ch. 5) and the very peculiar case of the US (ch. 6). The volume concludes that since we do not know the counterfactual of a truly ‘free market’ process of industrialization, every available evidence seems to suggest that the state did make a significantly positive contribution to all available cases discussed here (interestingly, Russia is missing). Magnusson even calls the free market discourse, which developed especially in nineteenth-century Britain, ‘hypocritical’. It was ironically the very same country where state interference with the economy had been and remained significant even during the industrial revolution – Britain – that a discourse evolved which ritually reiterated a somewhat counterfactual notion.

Magnusson ends his book with the brief statement (p. 145) that belief matters. This aspect clearly deserves much further attention in the future; it is perhaps the most interesting one in the book. Are we not ultimately faced with a paradox? On the one hand, it seems obvious that belief structures and cultural connotations of economic liberalism vs. dirigisme are important in history, perhaps the more so than ‘real’ economic performance. Beliefs can be powerful; they inform people's choices and actions, in the same way as people's actions and reality feed back into the realm of belief. The two are inseparably entangled. Yet at the same time, belief and action may develop into totally separate, even opposite, directions or practical configurations. The nineteenth-century British economy was, if we follow Magnusson (and others),Footnote ²⁸ quite dirigiste. Yet public discourse maintained that an era of liberalization had set in and that this was actually the main source of Britain's economic health.Footnote ²⁹ But only for a brief time, between the 1840s and 1870s, we do indeed find a comparatively liberalized framework during the age of ‘globalization’ – after the foundations for industrial growth had been laid long ago by the interventionist states of early modern Europe. How do we explain this divergence between perception and empirical reality? Can we label this ‘cognitive distortion’?Footnote ³⁰ Just how these dynamics between belief structure and empirical reality work out and mutually influence each other in practice is something that needs much further attention by historians in the future.Footnote ³¹ As there are certain and very obvious limits to empiricism in the study of the interaction of culture, economics, and belief, this task will not be an easy one to solve.Footnote ³²

But we may find, in some way, a somewhat unexpected answer; a step towards a solution. It lays in a small book that looks across the channel to the continental political economy discourse. This is usually identified as Cameralism; something that has been given only orphan-like attention in the English-speaking literature.Footnote ³³ Some of the more likely misconceptions in the literature, both recent as well as more distant, have been that

• • Cameralism was simply a variant of mercantilist theory (it seems as though it was the other way round: English and French mercantilism may have been a side strand of a much larger continental theory we may for want of a better term label ‘Cameralism’ or ‘economic reason of state’)

• • Cameralism represented a peculiarly German thing or Sonderweg (but in fact we find Cameralism all over the place; from Sweden to Italy)

• • Cameralism was not a theory but a random set of principles extending across the entire spectrum of economic activity – from raising pigs, horticulture, to building up a manufacturing industry and financing a standing army, subject to the overall strategic goal of filling the state's coffers.

It is not the place to go into detail here. Suffice it to say that a host of recent (mostly German) scholarly contributions have convincingly identified accusations such as those mentioned above as fallacious.Footnote ³⁴ Wakefield, however, takes a completely different in-route into the field. In an extremely well-written account on The disordered police state (2009) he has set himself the task to de-bunk the myth of the Cameralists by focusing on what we may call their praxeology. Cameralists, Wakefield argues, were habitual vagabonds, travelling from court to court; trained in a science that has gotten lost and which ranged between things we may call, in modern terms, ‘fiscal sociology’, ‘development economics’, and ‘public finance’. Cameralists, with their voluminous textbooks – from Veit Ludwig van Seckendorff's Theutscher Fürstenstaat (first edition 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) – sketched an idealized version of the economy. This could not possibly be translated into practice, Wakefield says. It was too good to be true. Cameralists captured an absurdly wide-ranging panoptical array of topics, from agriculture, horticulture, mining, forestry, chemistry, animal husbandry; mineralogy, geology, botany to public finance, and fiscal sociology. Here, the Cameralists seem near, to the present reviewer, to the Hartlibian economists studied by Wennerlind (see above). Parallels are obvious, both topically as well as geographically (with Hartlib being from Prussia!); economic growth and development was on the Cameralists’ minds. But 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 mutually exclusive. 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 as they would like. Obviously, this peculiar vision of state and governance was ‘Germanic’ in its focus on the hundreds of small principalities within the early modern Holy Roman Empire. Wakefield discusses the lives and times of key Cameralists such as Seckendorff and Justi; as well as their output on selected matters of science using case-studies on silver mining and technology in the Saxon Erz Mountains (ch. 2), the intellectual history of the University of Göttingen and the desire to transform this sleepy mud-hole into a Hanoverian ‘knowledge factory’ (ch. 3). He moves on to discuss the misguided attempts by Johann Justi at running a Prussian iron works, pocketing some of the meagre proceeds for himself (for which Justi ended his life in prison, ch. 4) and the history of the Cameralist Hohe Schule at (Kaisers) Lautern (ch. 5). Cameralists were cunning, scheming, strategic, smooth operators. We should not, as Wakefield observes, ‘conflate Seckendorff's model police state with an actually existing principality’ (p. 143). ‘Only in the well-ordered worlds of his imagination was Justi sovereign. He escaped there by candlelight, safe from the tortures of everyday failure and frustration’ (pp. 143–4).

This sounds quite like the somewhat idealized and in many ways surreal models that can be found in modern economics textbooks sometimes. Re-reading Wakefield in the light of recent research (mainly by German historical economists) we may conclude – without Wakefield expressively stating this – that the Cameralists actually had a theory. They had a clear set of axiomatic principles on how markets should work; how exchange should be governed and put on fair grounds, and how an economy could be developed towards a more effective production frontier. Some of their key principles shared common ground with what has been called ‘mercantilist’ economics. Many of their ideas about ‘free’ markets (in a sense of ‘just’ or ‘fair’ exchange) have found their way into modern neoclassical and liberal theory without expressive acknowledgement.

We must set these findings against Magnusson's earlier edited volume on Mercantilist economics – an economist's book mainly – which originally came out more than twenty years ago (1993) but is now launched with Springer and still as timely, or arguably even more so, as back then when it came out. Even though Magnusson in his introductory essay is as cautious as ever about the usage of the term ‘mercantilism’ (see his chapter in Isenmann 2014), the contributions assembled in this volume support two notions fairly clearly. First, mercantilist economic thought exhibited enough similarities and internal stringency so as to be classified as a ‘theory’. Second, modern classical, even ‘liberal’ (not to speak of Keynesian) economic thought has much more common ground with mercantilism than modern economists and historians will usually admit. Thus, there may not even be much of a divergence in later, i.e. post-1800, economic thought from the earlier ‘mercantilist’ paradigm in the way it has been portrayed by many modern researchers, trying to earmark zones of rupture and breaking points in the genealogy of the modern economic sciences where no such junctures strictly speaking ever existed. The chapter by Grampp, entitled ‘An appreciation of mercantilism’, is by no means uncritically defensive of mercantilism or dismissive of modern neoclassical theory, but effectively demonstrates that mercantilist authors thought in terms of a system: very much like later economists in the nineteenth and twentieth centuries would. Mercantilists used theoretical abstraction where appropriate and empirical evidence where necessary, Grampp says. They cherished the principle of self-interest as much as later classical writers and utilitarian authors would. But they also accepted that self-interest and markets must be ruled, governed, and curbed where appropriate. Again, most modern economists would probably concur, as Grampp suggests. A chapter by Rashid attacks the Ekelund–Tollison ‘rent-seeking’ interpretation of mercantilism. Four chapters by Tribe, Barber, Koot, and Hetne study the post-1800 survival of mercantilism in modern strands of economic and social theory, from the German Historical School up to late twentieth-century calls for ‘neomercantilist’ policy, the important difference being, as the contribution by Hettne argues, that neomercantilism has, during the twentieth century, transcended the nation-state by grouping the emergent world economy into blocs. These blocs may internally liberalize exchange within the member states but externally, i.e. against the other blocs, still act very much like Europe's ancien régime states known to early modern mercantilist or ‘Economic Reason of State’ theory. Plus ça change?

II

The presently discussed works have thrown open a gold mine: of challenging insights, but also for further research issues. Certainly, the list of conclusions and suggestions is subjective, reflecting above all the intellectual limitations and individual preferences of the present reviewer.

The first is: mercantilism has always been with us, ever since the days it emerged in its raw shape between the thirteenth and sixteenth centuries (with its ancestor called ‘bullionism’). It has never been away. But it has changed its shape over the centuries; adapting to the idiosyncratic conditions, possibilities, and limitations of its respective countries and fields of application. But this seems quite natural; expectable in fact. Therefore, rather than over-stretching our efforts and the available evidence by trying to look for a unified theory and an internally closed paradigm behind it (in the way Heckscher and others did), we should perhaps acknowledge mercantilism's variations, adaptability, and idiosyncrasy as a given, in the same way as is the case with many modern economic and social theories. We should not, however, give in to the easy temptation of total deconstruction. This also means ‘mercantilism’ is still highly useful, in fact indispensable: both as a heuristic concept as well as a tool of analysis.

Second, we may say that mercantilism was quite distinct as a theory, with much to commend to it when applied wisely and within favourable institutional environments. Many a mercantilist and Cameralist text was about abolishing monopoly and fabricating the ‘free market’ (in the definition of ‘fair’, ‘equitable’). But these theories did not always work to the desired extent within societies that were fragmented in terms of claims to economic resources and political power, as in many feudal societies in pre-industrial Europe, i.e. where particular interests directed at rent seeking and monopoly counteracted attempts by the ‘state’ to create a more equitable environment of exchange. So it was not necessarily mercantilist economic thought and practice that was about rent seeking – as many historians still argueFootnote ³⁵ – it was the environment that often created and perpetuated rent-seeking interests. Mercantilist and Cameralist principles were quite apt to promote domestic growth and industrial development; and they were often principally directed against rent seeking and devised to foster economic growth – they can indeed be shown to have worked exceedingly well in post-1688 England.Footnote ³⁶ They worked less well in more restrictive contexts.

Third, these problems have also informed the way we have tended to frame, linguistically as well as conceptually, the ‘free market’. The latter has become, if we interpret the on-going research efforts in history, law, and economics correctly,Footnote ³⁷ more and more akin to the Yeti – every child knows it; but has any one ever be able to spot it? To be fair, following a Popperian Black Swan rationale of falsification, we must acknowledge the theoretical proposition that simply because we have not been able to spot something, it does not mean this thing does not exist (which applies equitably to the Yeti and the free market). Quite obviously, as an analytical tool, the speculative, abstract, and time-space-indifferent models do have their place in the modern economic sciences. But they should not be applied out of context. The famous comparative advantage model, just to take another obvious example (which suggests that countries should specialize in the production of those goods which they can craft at lower opportunity cost compared to their respective trading partners) may be ‘true’ axiomatically. It may even be proper when applied in proper contexts. It benefited eighteenth- and nineteenth-century England but harmed, if we follow the contemporary discourse, the economic interests of Portugal by the uneven patterns of specialization on manufacturing (see above). It did – as even some of the most ardent initial advocates of ‘free trade’ such as Noble Laureate Paul Krugman have admitted in recent years – a lot of damage when applied in the wrong context. Many African countries liberalizing their markets in the 1980s and specializing in the export of raw materials, giving up industry instead, have experienced the detrimental effects of the Ricardian proposition marked by negative per capita GDP growth in the 1990s and early 2000s.Footnote ³⁸ So perhaps the most interesting task for further intellectual efforts is to tease out more closely how modern economists came to believe in the ‘truth’ of principles that are, in many instances, empirically wrong, i.e. at variance with reality. Harcourt's study does a good job in terms of kicking off the debate,Footnote ³⁹ but the presently discussed works suggest that there is a lot more out there yet to be done.

Fourth, there is the apparent difference between the political economy discourse we call ‘mercantilism’ and the strange beast we have labelled ‘Cameralism’. Most scholars seem to be convinced that Cameralism was a Germanic Sonderweg. But mercantilist economics usually evolved around pamphlets. Their authors came from a mercantile background (and some of the more venerable forefathers in the history of modern political economy were bankers, such as David Ricardo). Cameralists on the other hand were professionals who wrote textbooks designed for university curricula. Were they more objective, less dependent upon vested interests than the ‘mercantilists’? Or were they even more vested in their specific interests, as Wakefield has argued, in their striving to get jobs as princely administrators? Be that as it may – and a major part certainly hinges upon questions of definition (see above) – mercantilist/Cameralist/Economic-Reason-of-State thought was on its way, during the eighteenth century at the very latest, to turn into a fully accredited academic discipline. More rigorous comparative surveys on the history of European economic thought are needed that tease out the somewhat broken genealogy of modern economic science and mercantilism's place in it.

Mercantilism was by no means either the origin or intermediate step, or worse: aberration on the way towards a ‘modern’ paradigm in the economic sciences; it was simply one theory amongst many. It built upon previous theories. Future theories would in turn build upon mercantilism/Cameralism, even if modern scholars have sometimes dismissed this opportunity. In their focus on abstraction, knowledge management, and circulation, the mercantilists seem to have prefigured many of the ‘modern’ ideas in the social sciences. Internally, there was considerable variance in mercantilist discourse. But this seems quite normal for most modern academic disciplines. Many of the current research exercises on mercantilism demonstrate that we need to re-think Europe's economic history, especially the role of the state in economic development up to and including industrialization, but especially the mental framework and economic discourse guiding this process. Mercantilism still matters.