Sir James Steuart on the Origins of the Exchange Economy

WP ECON 14.08

21 Pages Posted: 7 Oct 2014

Date Written: October 7, 2014


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

Suggested Citation

Menudo, José Manuel, Sir James Steuart on the Origins of the Exchange Economy (October 7, 2014). WP ECON 14.08, Available at SSRN: or

José Manuel Menudo (Contact Author)

Universidad Pablo de Olavide ( email )

Carr. Utrera km 1
Seville 41013

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