Richard Cantillon - OpenMeans

Who was Richard Cantillon ?

Richard Cantillon ,was an Irish merchant(But he had a Spanish name, and lived in France) and he also a famous economist who is known for his significant contributions, to the study of political economy,to be specific internation Political Economy.

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Early life and Fame

Many historians gave him the credit as the first great economic "theorist".The early life of Cantillon is not well known by the hitorians but many information reveals that he gained huge wealth as a merchant in London and then as a banker in Paris and during his death he was living in London

Great Economist

Cantillon is best known for his Essay on the Nature of Trade in General and unfortunately it was published only after his death in 1755.It was aroun in 1880 his work was popularized by British economist named,William Stanley Jevons,and he called it the

“cradle of political economy”

as he was able to deal the political economy, in a systematic way.

Explaination in his book?

The first part his book defines wealth,and it narrows the elements of land and labor. It also states that the time, expense, and difficulty of learning a type of work, combined with the risk involved in the work, and the capacity and responsibility required of the worker, account for the variations in wages.Basically Cantillon's book discussed topics such as Barter

1)Market prices

2)Circulation of money in amount and rapidity Credit

3)Interest and its causes

4)The rise and fall of interest rates Foreign trade

5)Banking

Theory of Wages

Naturally this forms the basis of the theory of wages put forth by Scottish philosopher and economist Adam Smith.But Cantillon contrasted real value,with the market value, with market value, which depends on supply and demand rather than the real value which arises from the cost of production.

Nations Eealth - Currency or Land

He also stated that Nations wealth is not really dependent on currency but he was brave enough to argue that land was the source of wealth and this postulate was the aslo basis of the Physiocratic doctrines,which was upheld by François Quesnay, founder of the Physiocratic school.

Income returned by Land

Cantillon argued that land returned three kinds of income and this includes

1)It first payed the expenses of the cultivator

2)Next the profits of the operator

3)and third the owner.

He also explained that nonagricultural enterprises did not offer any equivalent to the third kind of income.He had wider vision about the
future and the reason for this is his treatment of some subjects clearly anticipated later ideas, such as the theory of population, which was set forth by Thomas Robert Malthus at the end of the 18th century.

Cantillon ideas

Cantillon also wrote that

'Men multiply like mice in a barn, if they have the means of subsistence without limit; and the English in the colonies became proportionally more numerous in three generations than they would in England in thirty; because in the colonies they find new lands to cultivate.'

and he was the first to use the phrase real or intrinsic value and he showed its whole relation to the market value. His treatment of these and other topics, such as the effect of an increase in money supply on the general price level, and his treatment of bimetallism (monetary policy based on the use of two metals), show that he was far ahead of his time. Cantillon eventually died in 1734,infact he was murdered by his servant.