A history of Portuguese economic thought A History of Portuguese Economic Thought offers the first account in English of the development of economic thought in Portugal. The volume covers from the golden age of the Discoveries until the end of the first half of the twentieth century. It presents the main features of Portuguese economic literature and provides a summary of the theoretical and economic policy problems that have been identified and discussed by Portuguese economists over the last five centuries. The authors adopt a comparative approach to analyse how economic doctrine, theories and policies have been disseminated and assimilated by Portuguese authors in different periods. They assess the influence on Portuguese economic thought of major economists such as say, Smith, Jevons, Walras, Pareto and Keynes. The volume argues that national histories of economic thought are not only useful for the extra knowledge they provide but also for their contribution to the renewal of a valuable historiographic tradition which explores marginalised historical and intellectual discourses. António Almodovar is Assistant Professor of the History of Economic Thought at the University of Oporto. He is the author of several books in Portuguese on the history of economic thought and is a member of the advisory board of the European Journal of the History of Economic Thought. José Luís Cardoso is Associate Professor of the History of Economic Thought at the Technical University of Lisbon. He has published several articles and books in Portuguese and is the general editor of the series Classics of Portuguese Economic Thought, published by the Bank of Portugal. He is co-editor of the European Journal of the History of Economic Thought, published by Routledge. A history of Portuguese economic thought António Almodovar and José Luís Cardoso London and New York First published 1998 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 This edition published in the Taylor & Francis e-Library, 2001. © 1998 António Almodovar and José Luís Cardoso Allrightsreserved.Nopartofthisbookmaybereprintedorreproducedorutilizedinanyformorbyany electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book has been requested ISBN 0–415–17887–8 (Print Edition) ISBN 0-203-00380-2 Master e-book ISBN ISBN 0-203-17218-3 (Glassbook Format) Contents Introduction 1 Why national histories of economic thought? 1 National histories and the renewal of the historiography of economic thought 6 The Portuguese case 9 Concluding remarks 12 1 The Golden Age and the mercantilist era (1500–1750) 14 The medieval prelude 14 Discovering new economic worlds and new market relations 15 Maritime enterprise and the systems of insurance and exchange 17 Mercantilism in the making 22 Restoration and trade 23 Population and subsistences 26 Industry and the trade balance 29 Balance and conclusion 32 2 The new path to the wealth of the Portuguese nation (1750–1808) 36 The legacy of Marquês de Pombal 36 The Royal Academy of Sciences and the emergence of physiocratic influences 39 Political and financial constraints 41 Natural law, social order and legal despotism 43 Physiocracy and the emergence of political economy 46 The influence of Smith 49 Smith in the shadow: a theoretical pretext for economic policy debates 51 From economic liberalism to economic reform 53 3 The difficult reception of classical political economy (1810–1850) 55 Old and new strategies for economic development 55 Political economy, industry and progress 58 vi A history of Portuguese economic thought Political economy and economic change 63 Institutional change and the role of political economy 66 The teaching system and the institutionalisation of political economy 70 4 The avoidance of analytical economic thought (1850–1920) 78 Economics, politics and law 78 Nationalist, historical and socialist concerns 81 Socialist thought and state intervention 84 The state and the market: the role of competition and economic freedom 88 The formation of a plural canon 90 The difficult existence of a mathematical economist 96 5 From corporatism to Keynesian economics (1920–1960) 100 The absence of neo-classical economics 100 Salazar and the rise of the corporative state 103 Political economy and the economic policies of corporatism 105 The ambiguous reception given to Keynesian ideas 110 The spread of Keynesian economics 112 Keynesianism, politics and economic policy 114 Concluding remarks: peaceful coexistence in ‘the age of extremes’ 116 Epilogue 120 Notes 122 References 127 Name Index 138 Subject Index 142 Introduction ‘They tell us Maine can now communicate with Texas. But does Maine have anything to say to Texas?’1 Both for the publisher and the authors, this is surely a meaningful thought. In fact, who cares about Portuguese economic thought? Accordingly, we think that it is better to provide some straightforward answers right from the beginning than to hope the reader will be curious enough to go through the entire book without any previous guidance. The problem is that the essentials of the history of economic thought – the major authors, the most relevant schools, the main analytical trends – are easily grasped from any of the several standard textbooks available. So why should one bother with details, with the exotic peculiarities of some small peripheral country? There are a number of useful hints that can be learned from a nation- based study of economic ideas. Firstly, it is the only way to deal with the spread and international flow of economic theories, practices and doctrines. Secondly, it is an approach that provides information about certain important driving forces behind the research path followed by past authors, therefore helping to reshape some of the existing perceptions of the growth of economic knowledge. Lastly, we can of course learn some historical facts pertaining to the nation we choose to use as the standpoint for our inquiry. Although based on and related to Portugal, this is surely not a book that is meaningful only to those who care about Portuguese problems and ideas. It also deals with Scots and Frenchmen, with Italians and Spaniards. But, most of all, it openly attempts to discuss some theoretical and practical problems that are central to all those engaged in the making of the history of economic thought. WHY NATIONAL HISTORIES OF ECONOMIC THOUGHT? Before we begin our introductory survey of Portuguese economic culture, let us start by highlighting some methodological problems. It has by now become a cliché to say that national issues and problems and those of nationalism are at the heart of intellectual debate in the contemporary world. However, it is worth remembering that this is particularly true in the case of discussions about the construction of a European Union, in which the topical nature of such a theme is only too 2 A history of Portuguese economic thought obvious, with its profound implications for the shaping of the very destiny of Europe. As one strives to set up the conditions and instruments necessary to economic, social and political convergence, tensions are built up and signs of disintegration begin to appear that have the opposite effect of working in favour of those national communities that will not surrender their own cultural and political identity. In such a context, where there looms the threatening spectre of attitudes of extreme nationalism, any defence of the legitimacy of national histories of economic thought may be erroneously interpreted. This is why one must clearly define the scope of rehabilitation attempted in this book. Economic science has no homeland, though it is represented and conveyed through different tongues, anthems and flags. But, as it is the work of scientists, we cannot ignore the fact that this homeless quest creates links between a huge number of people (researchers, teachers). Although these people are united by a common pursuit of knowledge, they are nevertheless spread all around the world, giving factual existence to schools and other particular institutional environments where science is actually produced and nurtured. This communication problem implies that although we can all be said to be striving to comprehend and master economic discourse and reality, as a result of particular environmental characteristics, our modes of expression and appropriation of economic discourse are potentially different. Hence the absolute necessity of analysing the processes2 that have given birth to a body of economic knowledge with a fair degree of homogeneity, in spite of the diversity of the national forms and contents of economic thought. Research work of this nature, when performed on a national basis, is likely to come across three main situations. Firstly, in a given country one may find the continuing existence of a certain theme or a coherent series of problems that have been considered over successive generations. This situation may have led to the formation of a national tradition or specific style of economic thought, a tradition or style consisting of the prevalence of the same subjects of discussion and of the same procedure of methodological analysis. Secondly, in some other given country, one may find only mechanisms for reproducing an economic knowledge previously constructed in a different cultural and historical setting. In such a case we have to consider modes of transmission, reception, familiarisation and assimilation, detect the existence of barriers to entry or of incentives to importation, find the reasons for the different impacts of imported intellectual products. In other words, we have to discover why some ideas or theories are irrefutably successful whereas others remain totally unknown.