Sir James Steuart on the Origins of the Exchange Economy

Abstract

This paper examines James Steuart’s explanation of the emergence of the exchange economy. An initial hypothesis holds the decisive influence of a plan designed and implemented by merchants. Our proposal evokes the importance, acknowledged by Steuart, of the construction of institutions, involving designs aimed at achieving self-interest purposes. It is argued that "commercial" subordination explains how individuals become dependent on a new institutional organisation. Finally, we conclude that Political OEconomy is a science of the artificial that seeks to understand the functioning of nonnatural mechanisms and to create instruments that the statesman adapts to the needs and of objectives individuals.

Keywords: James Steuart, development, institutions, subordination, economic system

JEL Classification: B12, O20, D02, Z13, P16