MONEY AND INTERNATIONAL TRADE:THE PERSPECTIVES OF JOHN LAW AND RICHARD CANTILLON

Radu Musetescu ()
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Radu Musetescu: Academy of Economic Studies, Bucharest
Authors registered in the RePEc Author Service: Radu Cristian Musetescu ()

Romanian Economic Business Review, 2012, vol. 7, issue 4, 45-61

Abstract: John Law and Richard Cantillon are two economists whose lives and works are intrinsically related. They were at one moment close collaborators and at a later moment bitter enemies. On the one hand, John Law significantly shaped the institutional and policy framework of the French financial system in the beginning of the eighteenth century after the theory he exposed in his „Money and Trade Considered, With a Proposal for Supplying the Nation with Money” (1705). The system he put in place led to one of the first financial crashes in the history of the West, the so-called Mississippi Bubble. On the other hand, Richard Cantillon was a successful banker and financial investor who reacted to these extraordinary events by building his own arguments that were later articulated in his „Essai sur La Nature de Commerce en General” (1734, translated into English as “An Essai on Economic Theory”). The legacy of the two economists is impressive in the development of economic thought. The fundamental ideas of their perspectives lie even today at the core of the contemporary debates surrounding monetary policies. But their contribution related to the relation between money and international trade has been largely marginalized because of the focus on their role and the relevance of their theories for the Mississippi Bubble. We attempt to address this situation by highlighting their valuable contribution in this respect.

Keywords: monetary theory; history of economic thought; financial bubbles; inflation; international trade (search for similar items in EconPapers)
Date: 2012
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