David Hume also clarified that there can be no political freedom without economic freedom, as he truly believed and noted that “freedom of choice does not exist if there is no freedom to refuse”.
By Anthony Kila
Our Unforgettable today is David Hume, a perfect example of a thinker. His highly original thoughts have informed many wonderful lives and works. Before he died in 1776, David Hume gave instructions that when the time came, his remains would be placed in a simple Roman tomb and the stone above him would have nothing written on it but his name, the year he came into the world and the year he left the world. He had lived his life and he wanted to let “posterity add the rest”. Here we are, well over two centuries later, from Lagos, adding the rest.
It didn’t start today however, the rest of David Hume’s life was already appreciated and described by even the best of his contemporaries. Adam Smith, with whom David Hume shared a close friendship, noted of David Hume: “On the whole I have always regarded him both during his lifetime and since his death as coming closest to the idea of a perfectly wise and virtuous person. man as perhaps the nature of human frailty will allow.
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In his “Prolegomena to All Future Metaphysics”, Immanuel Kant stated that “it was David Hume’s objection which many years ago interrupted my dogmatic slumber”. Charles Darwin considered the thoughts of David Hume a central influence on his theory of evolution. Jeremy Bentham took the time to jot down to let everyone know that reading David Hume “brought the scales off” from his eyes.
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Yes, thanks to the depth and originality of his thought, his mode of reasoning and even his style of writing, there is more than a little David Hume in most of the ideas that have shaped our intellectual worlds. and practices. He argued that our reasonings and prescriptions must be based on practical observations, experience and persuasion and not on intuition or inspirations and he noted that “for it must or must not express a new relationship or affirmation, it is necessary that it be observed”. and explained; and at the same time a reason is given, for what seems quite inconceivable, how this new relation can be a deduction from others, which are entirely different from it. This may seem obvious to many of us now, but it wasn’t back then.
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Naturally, most regard David Hume as a philosopher, historian and essayist, the general tendency is to rank him among thinkers like Francis Bacon, George Berkley, Thomas Hobbes and John Locke. General education, however, is bad, incomplete, and mean to David Hume when we introduce economics into our classrooms with little or, in some cases, no reference to David Hume. We may be on the road to redemption, because centuries later Paul Krugman observed that “David Hume created what I consider to be the first real economic model”.
A good way to rediscover and appreciate David Hume’s contributions to our understanding of political economy should begin with his notion and articulation of the system of private property. No doubt he was for the institution of private property. Unlike other Enlightenment theorists (such as John Locke) who advocated the same God-ordained or designed institution, David Hume did not take the position that the system of private property was born and justified by natural law.
Rather, he argued that the system of private property arose out of need, due to limited resources, and should be based on conventionally agreed law (justice) necessary to facilitate transactions in an organized society. In the discontinuity and against the tradition of the naturalists, David Hume specifies that “the property of a man is an object which is linked to him. This relationship is not natural, but moral, and based on justice” and that it is therefore very absurd to imagine that one can have an idea of property, without fully understanding the nature of justice, and show its origin in artifice. and artifice of man. The origin of justice explains that of property. The same artifice engenders both.
With the positions he expressed in his “On the Balance of Trade, against the central idea of commodity hoarding, championed by mercantilists who held that bullion equals wealth, David Hume announced the ‘mechanism of price-cash flow” with which we are now familiar and with it he established perhaps the first of our economic models. David Hume argued that it was wrong to limit exports (and imports) because allowing trade creates more production and more wealth. He noted that “it is very usual, in nations ignorant of the nature of commerce, to prohibit the exportation of commodities, and to keep among themselves all that they deem valuable and useful.” They do not consider that, in this prohibition, they act directly against their intention; and that the more we export of any commodity, the more we will harvest at home, of which they will always have the first supply themselves”.
Meanwhile, David Hume also laid the foundations of the monetarist quantity theory of money by showing that in a system there is a correlation between the level of money supply and the prices of goods and services. His example, using England as a case study, was that as exports increase and more silver (gold) is poured into the system to pay for items sold, the prices of goods will also increase, balancing the perceived profit. An increased flow of gold to England would therefore not necessarily translate into an increase in England’s wealth.
One of the central points of our lives that David Hume brought to light in an original way, are interest rates. The general assumption of all then, and of many now, is that the amount of money in circulation determines interest rates. The idea being that an increase in the money supply will reduce interest rates. Rather, David Hume showed us that high interest arises from three circumstances: high demand for borrowing; little wealth to meet such a demand; and thirdly, great profits from trade: And these circumstances are a clear proof of the little progress of trade and industry, not of the scarcity of gold and silver. A low interest rate, on the contrary, results from three opposing circumstances: a weak demand for borrowing; great wealth to meet such demand; and small profits from trade.
It would be strange not to mention that David Hume also made it clear that there can be no political freedom without economic freedom, as he truly believed and noted that “there is no freedom of choice without freedom to refuse “.
Join me if you can @anthonykila to continue these conversations.
- Professor Anthony Kila is Center Director at CIAPS Lagos.