Social and Behavioral Sciences Commons^™

Adam Smith On Money, Mercantilism And The System Of Natural Liberty, Ryan P. Hanley, Maria Pia Paganelli

Maria Pia Paganelli

Adam Smith’s theory of money played a key role in his development of one of the conclusions for which he is most famous today: the superiority of the system of natural liberty to mercantilism. This essay examines the part played by money in this argument, and specifically Smith’s theory of money’s origins and evolution and its relevance to his theory of natural liberty. The essay goes on to show how his position contributes to his critique of mercantilism and other proto-monetary policies as illustrative of his wider objection to interventionism, in conjunction with his understanding of the ‘science of the …

In Medio Stat Virtus: An Alternative View Of Usury In Adam Smith’S Thinking, Maria Pia Paganelli

Maria Pia Paganelli

Some specific positions of Adam Smith have been, and still are, sources of problems and debates. Generally, the controversies concern apparent contradictions in the Smithian theory. An example of these puzzling contradictions in Smith is his position on usury laws:

In countries where interest is permitted, the law, in order to prevent the extortion of usury, generally fixes the highest rate which can be taken without incurring a penalty. This rate ought always to be somewhat above the lowest market price, or the price which is commonly paid for the use of money by those who can give the most …

Is A Beautiful System Dying? A Possible Smithian Take On The Financial Crisis And Its Aftermath, Maria Pia Paganelli

Maria Pia Paganelli

Adam Smith is not an optimistic describer of a providential order moved by an always-successful invisible hand. I present some of the more pessimistic analysis of Smith, which, unfortunately, seems to be most appropriate to describe and analyze our current affairs. This reading of Smith may provide an explanation for the events started in the fall of 2008. The ‘beautiful system of natural liberty’ that Smith describes is a system that may be achieved only under rare circumstances. Smith recognizes systematic biases in human behaviours, ranging from overestimation of probability of success to almost blind admiration for the rich. He …

David Hume On Monetary Policy: A Retrospective Approach, Maria Pia Paganelli

Maria Pia Paganelli

Monetary policy is a modern idea of which David Hume is generally considered a precursor. Moreover, thanks to Milton Friedman and Robert Lucas, he is often presented as one of the first and most illustrious endorser of monetarism. This paper argues against this view, and in agreement with Joseph Schumpeter, that Hume’s contribution to economics, while not insignificant, cannot claim any real novelties. It offers an interpretation of Hume as a descendant of a pre-modern understanding of money rather than a forerunner of modern monetary ideas, and as a scholar exposing common ideas of his time rather than a prophet …

'The Good Policy Of The Magistrate': Deflation As A Policy Option In David Hume's Economic Essays, Maria Pia Paganelli

Maria Pia Paganelli

In his 1752 essay Of Money, David Hume proposes that a good policy for a magistrate would be to keep money still encreasing. This paper proposes that, for Hume, money can be kept still encreasing through deflationary policies, rather than through inflationary policies as commonly presented in the literature. Decreasing the quantity of money in circulation in an open economy decreases prices and gives a competitive edge to the country's products. The increase in exports keeps money still encreasing. Deflation may be achieved through the promotion of hoarding and non-monetary uses of precious metals. The position of this paper is …

Scottish Enlightenment And Public Governance Of The Economic System, Maria Pia Paganelli

Maria Pia Paganelli

This paper questions the idea that natural, in the natural system of liberty Adam Smith describes, means inevitable, normal, or perfect. For Smith, what is natural in a natural system that governs the economy seems to be a normative prescription.

The Same Face Of The Two Smiths: Adam Smith And Vernon Smith, Maria Pia Paganelli

Maria Pia Paganelli

No abstract provided.

David Hume On Public Credit, Maria Pia Paganelli

Maria Pia Paganelli

In his essay Of Public Credit, David Hume argues against the institutionalization of public credit. Contrary to what is commonly believed, I claim Hume’s analysis of public credit is sound and it is an example of his worst-case thinking. Through textual and contextual analysis, I show for Hume public credit brings catastrophic results because men are knaves, systematically biased, and unlucky. Public credit is an appropriate institution to stimulate the economy only if men are perfect and perfectly predictable. But they are not. For Hume, considering the worst-case rather than the best-case helps prevent potential disasters. Public credit should therefore …

'The Good Policy Of The Magistrate': Deflation As A Policy Option In David Hume's Economic Essays, Maria Pia Paganelli

Maria Pia Paganelli

In his 1752 essay Of Money, David Hume proposes that a good policy for a magistrate would be to keep money still encreasing. This paper proposes that, for Hume, money can be kept still encreasing through deflationary policies, rather than through inflationary policies as commonly presented in the literature. Decreasing the quantity of money in circulation in an open economy decreases prices and gives a competitive edge to the country's products. The increase in exports keeps money still encreasing. Deflation may be achieved through the promotion of hoarding and non-monetary uses of precious metals. The position of this paper is …

'The Good Policy Of The Magistrate': Deflation As A Policy Option In David Hume's Economic Essays, Maria Pia Paganelli

Maria Pia Paganelli

In his 1752 essay Of Money, David Hume proposes that a good policy for a magistrate would be to keep money still encreasing. This paper proposes that, for Hume, money can be kept still encreasing through deflationary policies, rather than through inflationary policies as commonly presented in the literature. Decreasing the quantity of money in circulation in an open economy decreases prices and gives a competitive edge to the country's products. The increase in exports keeps money still encreasing. Deflation may be achieved through the promotion of hoarding and non-monetary uses of precious metals. The position of this paper is …

The Moralizing Distance In Adam Smith: The Theory Of Moral Sentiments As Possible Praise Of Commerce, Maria Pia Paganelli

Maria Pia Paganelli

No abstract provided.

The Causal Effect Of Market Priming On Trust: An Experimental Investigation Using Randomized Control, Omar Al-Ubaydli, Daniel Houser, John Nye, Maria Pia Paganelli, Xiaofei Sophia Pan

Maria Pia Paganelli

We report data from laboratory experiments where participants were primed using phrases related to markets and trade. Participants then participated in trust games with anonymous strangers. The decisions of primed participants are compared to those of a control group. We find evidence that priming for market participation affects positively the beliefs regarding the trustworthiness of anonymous strangers and increases trusting decisions.

Is A Beautiful System Dying? A Possible Smithian Take On The Financial Crisis And Its Aftermath, Maria Pia Paganelli

Maria Pia Paganelli

Adam Smith is not an optimistic describer of a providential order moved by an always-successful invisible hand. I present some of the more pessimistic analysis of Smith, which, unfortunately, seems to be most appropriate to describe and analyze our current affairs. This reading of Smith may provide an explanation for the events started in the fall of 2008.

The ‘beautiful system of natural liberty’ that Smith describes is a system that may be achieved only under rare circumstances. Smith recognizes systematic biases in human behaviours, ranging from overestimation of probability of success to almost blind admiration for the rich. He …

Approbation And The Desire To Better One’S Condition In Adam Smith: When The Desire To Better One’S Conditions Does Not Better One’S Condition And Society’S Condition…, Maria Pia Paganelli

Maria Pia Paganelli

No abstract provided.

Are Two Knaves Better Than One? Every Man A Knave: Hume, Buchanan, And Musgrave's View On Economics And Government, Andrew Farrant, Maria Pia Paganelli

Maria Pia Paganelli

It is commonplace to view market agents as self-interested knaves, while government agents are either as knaves or public-spirited angels. What are the consequences of these different motivational assumptions in modeling governmental and market behavior? We compare David Hume, James M. Buchanan, and Richard Musgrave. We claim that Hume, the only one thinking consistently in terms of the worst-case, offers a second best solution for both the government and the economy, which may turn out to be the best possible solution given human nature. Because of the reciprocal check, two knaves are better than one. More is preferred to less …