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Home , Andreas Peter Bernstorff, Cameralism, Friedrich List, Giovanni Botero, Guillaume du Tillot, John Habakkuk

The Eighteenth-Century Entrepreneurial State in the Political of Johann Heinrich Gottlob von Justi (1717-1771)

A thesis submitted to The University of Manchester for the degree of in the Faculty of Humanities

2020

Xuan Zhao

School of Arts, Languages and Cultures

Contents Abstract ...... 4 Declaration and Copyright Statement ...... 5 Introduction ...... 6 i. Justi and His Cameral Science ...... 11 ii. Historiography of Justi and German ...... 19 iii The Argument of This Thesis ...... 26 iv Methodology and Structure ...... 40 Chapter One. The of Absolute Monarchy ...... 47 1.1 Absolute Monarchy in the ...... 48 1.2 The Nature of Absolute Monarchy: Niccolò Machiavelli ...... 52 1.3 The Political Economy of Absolute Monarchy: Giovanni Botero ...... 54 1.4. Manufacturing and the of Nations: the for Manufacturing .... 61 1.5. Free and Trade Protection in Old Austrian Cameralism ...... 68 1.6 Conclusion ...... 73 Chapter Two. The Political Economy of the Enlightenment ...... 75 2.1 in Continental , especially in ...... 76 2.2 The Nature of Enlightened Absolutism: Anti-Machiavel of Frederick II ...... 81 2.3 The Philosophy of Enlightened Absolutism: Christian Wolff ...... 86 2.4. The Political Economy of Enlightened Absolutism: Policeystaat ...... 91 2.5 Science, Academy of Sciences, and ...... 99 2.6 Conclusion ...... 107 Chapter Three. Public Happiness in Justi’s Political Economy ...... 110 3.1 Justi’s Public Happiness, , and the Principle of State Intervention .. 111 3.2 Public Happiness as the Aim of (I): National Internal Strength ...... 116 3.3 Public Happiness as the Aim of Economic Policy (II): Security ...... 119 3.4 Strategies towards Happiness: Self-Sufficiency and Commercial Supremacy ... 123 3.5 Conclusion ...... 129 Chapter Four. Justi’s Theory of Manufacturing and National Intellectual .... 132 4.1 The Configuration of : and Diversity of Industries .. 132 4.2 Maximising the Diversity of Manufacturing in and Cameralism .. 138 2

4.3 The Expansion of Market: The Force of Increasing Returns and Mechanisation 141 4.4 The Expansion of Market: Product Innovation and Luxuries ...... 147 4.5 The Economic Significance of Science ...... 155 4.6 Directing the Private Initiative for ...... 159 4.7 Conclusion ...... 162 Chapter Five. Justi’s Proposals for Manufacturing and Innovation Policies ...... 165 5.1 Building manufacturing: Industrial Plan and Enterprise Policy ...... 168 5.2 Building Manufacturing: Manufacturing Houses and Industrial Regulations ..... 176 5.3 Promoting Innovations: Patenting Inventions and Manufacturing Academy ...... 185 5.4 Promoting Innovations: Industrial Education ...... 192 5.5 Policy, Configuring National Market, and Other Miscellaneous Policies . 195 5.6 Conclusion ...... 198 Conclusion ...... 200 Bibliography ...... 207 1. Primary Sources ...... 207 2. Secondary Sources: ...... 210

Word Count: 78,958

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Abstract This thesis investigates the German cameralist Johann Heinrich Gottlob von Justi’s economic theories and policy proposals about manufacturing, innovation, technological progress, and people’s industrial spirit and skills. It contextualises Justi’s theories and policy proposals about these topics with the political economy of absolute monarchy represented by the economic thought of Giovanni Botero and the late seventeenth- century Austrian cameralists. It also contextualises Justi’s theories and policy proposals with the political economy of enightened absolutism represented by the natural law theory of Christian Wolff and the thought of the “Industrial Enlightenment” in the . This thesis challenges and revises two kinds of prevailing interpretations of Justi’s economic thought: one believes that Justi’s economic thought aimed at sheltering the rent-seeking of monarchs and cameralists, and the other thinks that Justi’s economic thought advocated a with the minimised and reactive state intervention. This thesis argues that Justi’s economic theories and policy proposals were primarily concerned with not rent-seeking but how to create an economy fitting his definition of public happiness, namely an economy having a large of , strong demand, high productive powers, prevented the polarisation of , and provided citizens with abundant chances to work to earn their comfortable lives. This thesis also finds that Justi theorised the phenomenon of the economic expansion driven by the development of new manufacturing and by the introduction of product and process innovations and the progress of technology and science, and that Justi proposed a set of policies based on his theoretical understandings and expected to create the economy of public happiness through building diversified manufacturing sectors and stimulating innovations and technological progress. This thesis also shows that the proposed by Justi was an economy under the strong leadership of the state especially in the aspects of realising the evolution of industrial structure and promoting the progress of industrial technologies. Justi’s model of “free market” was not a market free from proactive and visionary state intervention but a proper division of labour between state intervention and private initiative. In general, this thesis argues that there was a set of theories and policy proposals deserved to be named “the eighteenth-century entrepreneurial state” in Justi’s economic thought and that Justi represents a long-forgotten but noteworthy forefather of economic modernity.

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Declaration and Copyright Statement I declare that no portion of the work referred to in the thesis has been submitted in support of an application for another degree or qualification of this or any other university or other institute of learning. i. The author of this thesis (including any appendices and/or schedules to this thesis) owns certain copyright or related in it (the “Copyright”) and s/he has given The University of Manchester certain rights to use such Copyright, including for administrative purposes. ii. Copies of this thesis, either in full or in extracts and whether in hard or electronic copy, may be made only in accordance with the Copyright, Designs and Patents Act 1988 (as amended) and regulations issued under it or, where appropriate, in accordance with licensing agreements which the University has from time to time. This page must form part of any such copies made. iii. The ownership of certain Copyright, patents, designs, trademarks and other intellectual property (the “Intellectual Property”) and any reproductions of copyright works in the thesis, for example graphs and tables (“Reproductions”), which may be described in this thesis, may not be owned by the author and may be owned by third parties. Such Intellectual Property and Reproductions cannot and must not be made available for use without the prior written permission of the owner(s) of the relevant Intellectual Property and/or Reproductions. iv. Further information on the conditions under which disclosure, publication and commercialisation of this thesis, the Copyright and any Intellectual Property and/or Reproductions described in it may take place is available in the University IP Policy (see http://documents.manchester.ac.uk/DocuInfo.aspx?DocID=24420), in any relevant Thesis restriction declarations deposited in the University Library, The University Library’s regulations (see http://www.library.manchester.ac.uk/about/regulations/) and in The University’s policy on Presentation of Theses

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Introduction

This thesis studies the economic thought of the eighteenth-century German cameralist Johann Heinrich Gottlob von Justi (1717-1771). It aims to uncover Justi’s economic theories of industrialisation (in the sense of building manufacture and increasing its share in the economy) and national intellectual capital (defined in this thesis as innovation, progress of science and technology, skill and other useful knowledge, entrepreneurship, diligence and other mentalities promoting economic development) and his policy proposals in those fields. It finds that Justi theorised the phenomenon of manufacturing-centered and innovation-driven , that Justi expected to realise national economic welfare through building and developing manufacturing and stimulating innovation, and that Justi’s proposals deserve to be called “the eighteenth-century entreprenuerial state”. On these bases, it believes that Justi, the epitome of German cameralism, is an unjustly long-forgotten and important forefather of some aspects of economic modernity. However, as a contribution to the field of the history of economic thought, this thesis merely presents Justi as an early modern theorist and designer of the entrepreneurial state and does not make any effort to determine the efficacy of his policy proposals in the eighteenth-century political and economic fields. It neither looks into whether and how Justi’s policy proposals were practiced, nor judges the success or failure of such policies when practiced.

Broadly speaking, this thesis studies the economic thought in German cameralism. This field is particularly timely, given the context of scholars’ recent in the economic theories of the German tradition as an alternative system of economics. The economic theories of the German tradition are believed to be marked by following characteristics: the understanding that different economic activities have different qualities (for example, primary sectors have and manufacturing sectors have increasing returns) and thereupon the preference for manufacturing in economic policy; the awareness that innovation and useful knowledge are crucial components of the source of national wealth; the proposal that state intervention should extend beyond the dichotomy of being regulatory or laissez-faire but lie in leading and cooperating with the private sector to create more national wealth; and the inclusion of the ethical factor in economic analysis and the emphasis of a relatively just wealth distribution and a

6 . 1 The early modern origin of the economic theories of the German tradition is commonly believed to be German cameralism.2 In this thesis, German cameralism is studied from the perspective of the history of economic thought. Using Justi’s economic thought as an example, this thesis will observe how, at the time when the economic theories of the German tradition originated, German cameralism addressed some key elements reappearing in later generations of German economics: the preference for manufacturing, the promotion of national intellectual capital, and the entrepreneurial function of the state. In this thesis, some of other German cameralists will also be adduced to contextualise Justi’s economic thought, to provide the background of how Justi built his economic thought, and to evaluate how representative Justi’s economic thought was for the wider field of cameralism.

Since the nineteenth century, German cameralism has been understood as a German variation of mercantilism and therefore a political economy confined specifically within the context of the early modern German-speaking world, a Sonderweg. 3 This understanding focused on how ‘mercantilistic’ the policy proposals of German cameralists were: the pursuit of export surplus, trade protection, building national industries, state regulations and subsidies, all were covered by cameralism. Proponents

1 About recent literature following this perspective, see Jürgen Backhaus, ‘The German Economic Tradition: from Cameralism to the Verein für Sozialpolitik’, in Political Economy and National Realities, eds., by M.Albertone and A.Masoero (Torino: Fondazione , 1994), pp. 329-356; Jürgen Backhaus ed., Essays on Social Security and Taxation. Gustav von Schmoller and Reconsidered (Marburg: Metropolis, 1997); Peter Koslowski, The Theory of Capitalism in the German Economic Tradition: Historism, Ordo-, Critical Theory, Solidarism (Berlin: Springer, 2000); Helge Peukert, ‘The Schmoller Renaissance’, History of Political Economy, 33:1(2001), pp. 71-116; Yuichi Shionoya ed., The German Historical School: The Historical and Ethical Approach to Economics (: , 2001); Erik S. Reinert ed., Globalization, Economic, Development and Inequality: An Alternative Perspective (Cheltenham: Edward Elgar, 2004); Erik S. Reinert, How Rich Countries Got Rich…and Why Poor Countries Stay Poor? (London: Constable, 2007); Jürgen G. Backhaus ed., The Beginning of Political Economy: Johann Heinrich Gottlob von Justi (New York: Springer, 2009); Erik Reinert and Philipp R. Rössner, ‘Cameralism and the German tradition of ’, in Handbook of Alternative Theories of Economic Development, eds, by Erik Reinert, Jayati Ghosh, and Rainer Kattel (Cheltenham: Edward Elgar, 2016), pp. 63-86; Philipp R. Rössner ed., Economic Growth and the Origins of Modern Political Economy: Economic Reasons of State, 1500-2000 (London: Routledge, 2016); Philipp Wilhelm Hörnigk, Austria Supreme (if it so wishes) (1684): A Strategy for European Economic Supremacy, trans. by Keith Tribe, ed., by Philipp Robinson Rössner (London: Anthem Press, 2018); Erik S. Reinert, The Visionary Realism of German Economics: From the Thirty Years’ War to the Cold War, ed.by Rainer Kattel (London: Anthem Press, 2019); Harald Hagemann, Stephan Seiter and Eugen Wendler eds., The Economic Thought of (New York: Routledge, 2019). 2 Except the literature listed in the last footnote, also see Keith Tribe, Governing Economy: The Reformation of German Economic Discourse 1750-1840 (Cambridge: Cambridge University Press, 1988) and Keith Tribe, Strategies of economic order: German economic discourse, 1750-1950 (Cambridge: Cambridge University Press, 1995). 3 About the literature of this tradition, see Wilhelm Roscher, Geschichte der National-Oekonomik in Deutschland (Munich: R.Oldenbourg, 1874); Gustav von Schmoller, Grundriß der Allgemeinen Volkswirtschaftslehre, vol.2 (: Duncker & Humblot, 1904), pp. 599-600; Kurt Zielenziger, Die alten deutschen Kameralisten (Jena: Gustav Fischer, 1914); Louise Sommer, Die Österreichischen Kameralisten in Dogmengeschichtlicher Darstellung, vol.1 and vol.2 (Vienna: Verlagsbuchhandlung Carl Konegen, 1920). 7 of this narrative were impressed by how cameralism fitted the circumstance of the early modern German-speaking world, which was characterised by landlocked and economically backward lands.4 Now this definition has come under scrutiny. Lars Magnusson rejected the Sonderweg thesis, suggesting that German cameralism was a local version of the “power and plenty” discourse, a political and economic concern shared by nearly all early modern European states.5 More recent studies emphasised that the formation, development, and spread of German cameralism extended beyond the German-speaking world. 6 This narrative emphasises how German cameralists absorbed ideas from the thinkers of other countries and how their thoughts were received outside the German-speaking world, for instance in , Portugal, Italy, and Russia. Based on this understanding, recent research regards cameralism as an economic doctrine shared by many continental European countries and providing a different approach to Enlightenment economics comparable with British political economy and French . 7 This thesis will regard cameralism as both a German response to the early modern concern for “power and plenty” and a pan- European Enlightenment economics. This thesis will demonstrate that Justi’s economic thought can be contextualised within both the thought of “the reason of state” and Enlightenment economics.

It is said that the term “cameralism” (Kameralismus) was first used by Wilhelm Roscher (1817-1894), a protagonist of the Older German Historical School of Economics, to describe the mainstream German economic thought and policy after the Thirty Years War until the the late eighteenth century.8 Theorists and practitioners of cameralism are therefore called “cameralists” (Kameralisten). American sociologist Albion Small (1854-1926), who provided the first comprehensive introduction to cameralism in English, identified main cameralists as: Melchior von Osse (1506-1557), Georg

4 About the most recent literature of this perspective see Erik Reinert, “German economics as Development Economics: From the Thirty Years' War to World War II”, in Visionary Realism of German Economics: From the Thirty Years' War to the Cold War, ed. by Rainer Kattel (London: Anthem Press, 2019), pp. 15-36. 5 See Lars Magnusson, The Political Economy of Mercanitlism (New York: Routledge, 2015), pp. 78-99; Lars Magnusson, ‘Was Cameralism really the German version of Mercantilism?’, in Economic Growth and the Origins of Modern Political Economy: Economic Reasons of State, 1500-2000, ed. by Philipp R. Rössner (London: Routledge, 2016), pp. 57-71. 6 See Marten Seppel and Keith Tribe eds., Cameralism in Practice: State Administration and Economy in Early Modern Europe (Woodbridge: The Boydell Press, 2017); Ernest Lluch, ‘Cameralism beyond the Germanic World: A Note on Tribe’, History of Economic Ideas, 5.2(1997), pp. 85-99. 7 See Ere Nokkala and Nicholas B. Miller eds., Cameralism and The Enlightenment: Happiness, Governance and Reform in Transnational Perspective (New York: Routledge, 2020). 8 Magnusson, ‘Was Cameralism really the German version of mercantilism?’, p. 57. 8

Obrecht (1547-1612), Veit Ludwig von Seckendorff (1626-1692), Johann Joachim Becher (1635-1682), Philipp Wilhelm von Hörnigk (1638-1712), Wilhelm von Schröder (1640-1688), Ephraim Gerhard (1682-1718), Julius Bernhard von Rohr (1688-1742), Simon Peter Gasser (1676-1745), Justus Christoph Dithmar (1677-1737), Georg Heinrich Zincke (1692-1768), Joachim Georg Darjes (1714-1791), Johann Heinrich Gottlob von Justi (1717-1771), and Joseph von Sonnenfels (1732-1817).9 Among them, Gasser and Dithmar represented the watershed between “old cameralists” and “new cameralists”, because in 1727 King Frederick William I of Prussia set up chairs to teach cameralism at the Universities of Halle and Frankfurt/Oder and respectively appointed Gasser and Dithmar to the chairs.10 Afterwards, cameralism existed as a state science in universities (cameral science, Kameralwissenschaft) to train future bureaucrats. Its axioms were embodied in university textbooks, and cameralists became university professors. In comparison, old cameralism existed primarily in the form of propositions of economic strategy contained in pamphlets for policy proposal, and old cameralists usually acted as pamphleteers and monarchs’ advisors.

It is impossible to thoroughly study the economic thought of all above-mentioned cameralists in a single thesis. An example should be selected as the subject of a case study of the economic thought of German cameralists. After a review of the literature about cameralism, selecting Johann Heinrich Gottlob von Justi as a case in point seems almost natural. Justi is a forgotten figure in today’s standard economics textbooks. Yet his importance to the development of German economics is beyond doubt. Justi has always been regarded by scholars as the most important German cameralist. In cameralist scholarship, Justi has been characterised in the following ways: “an epitome of cameralism”, “without doubt one of the most important authors of the mercantile period in Europe”, a figure who “epitomises the heyday of the German brand of mercantilist writing, cameralism”, “one of the founders of modern German political and economic thought”, “the first major representative of political economy in Germany” and “a founding father of both German political economy and of the science of the

9 See, Albion Small, The Cameralists: The Pioneers of German Social Polity (London: T. Fisher Unwin, 1909). 10 See Zielenziger, Die alten deutschen Kameralisten, pp. 98-104; Erhard Dittrich, Die deutschen und Österreichischen Kameralisten (Darmstadt: Wissenschaftliche Buchgesellschaft, 1974), pp. 89-124; Keith Tribe, Governing Economy, pp. 42-44. 9 state”.11

The reason why Justi is so important is because he was the first to organise the doctrines of cameralism into a systematic state science covering , political economy, economic policy proposal, and state .12 Justi was also the first to extensively modernise German cameralism through absorbing important theoretical innovations of the Enlightenment.13 Justi described himself as the earliest systematiser of cameralism. Justi thought that after it became a university faculty in 1727, cameral science lacked competent lecturers and a systemisation of knowledge. Justi’s reasoning was threefold: first, traditional scholars were unfamiliar with this new faculty; second, bureaucrats who had practical knowledge lacked clear principles to systematise their knowledge; and third, scholars who were familiar with existing textbooks of cameral science did not have “philosophical minds” and thus could not comprehend this faculty in its entirety.14 Justi’s solution to these problems was to reorganise the knowledge of cameral science by measuring and linking every part of it to the pivot of the eighteenth century German natural law about public happiness (Gemeinschaftliche Glückseligkeit). Justi successfully achieved his goals, and his accomplishment was recognised in his time. Joseph von Sonnenfels, an Austrian cameralist who continued the work of systemising cameral science after Justi, wrote: “The first, who attributed the state science [Staatswissenschaft] with all its subordinated sciences to one general principle, was Justi, and he believed that this principle was promoting the general happiness [allgemeine Glückseligkeit].”15

11 See Small, Cameralists, p. 248; Bertram Schefold, ‘Glückseligkeit und Wirtschaftspolitik: Zu Justis Grundsätze der Policey-Wissenschaft’, in J.H.G. von Justis Grundsätze der Policey-Wissenschaft, ed.by Bertram Schefold (Düsseldorf: Verlag Wirtschaft und Finanzen, 1993), pp. 5-32 (p. 5); Erik S. Reinert, ‘Johann Heinrich Gottlob von Justi-The Life and Times of an Adventurer’, in The Beginnings of Political Economy: Johann Heinrich Gottlob von Justi, ed., by Jürgen Georg Backhaus (New York: Springer, 2009), pp. 33-74 (p. 33); Ulrich Adam, The Political Economy of J.H.G. Justi (: Peter Lang), p. 11; Ere Nokkala, From Natural Law to Political Economy: J.H.G. von Justi on State, Commerce and International Order (Vienna: LIT, 2019), p. 1, p. 5. 12 See Jutta Brückner, Staatswissenschaften, Kameralismus und Naturrecht: Ein Beitrag zur Geschichte der Politischen Wissenschaft im Deutschland des späten 17. und frühen 18. Jahrhunderts (Munich: Verlag C. H. Beck, 1977), p. 229. 13 See Roscher, National-Oekonomik, p. 444, p. 451; Sommer, Die Österreichischen Kameralisten, vol.2, pp. 170- 188; Small, Cameralists, p. 285; Tribe, Governing Economy, pp. 55-90; Reinert, ‘Johann Heinrich Gottlob von Justi’. 14 Johann Heinrich Gottlob von Justi, Staatswirthschaft, oder Systematische Abhandlung aller Oeconomischen und Cameral-Wissenschaft, vol.1 (Leipzig: Verlegts Bernhard Christoph Breitkopf, 1755), preface, pp. iv-v. 15 Joseph von Sonnenfels, Grundsätze der Polizey, Handlung und Finanzwissenschaft, vol.1 (Vienna: bei Joseph Kurzböck, k. k. illyrisch-und orientalischen Hof-wie auch N. Oe. Landschafts-und Universitätsbuchdruckern, 1770), pp. 32-33. The original text is: “Der erste, die Staatswissenschaft mit allen ihren untergeordneten Wissenschaften zu einem allgemeinen Grundsaße zurückführt, war G. H. Von Justi, und er hat hierzu die Beförderung der allgemeinen Glückseligkeit angenommen.” 10

In this way, Justi becomes a proper and main subject of a case study on German cameralism for the following two reasons. Firstly, Justi’s contribution to German cameralism and his systematizing of previous cameralist texts. According to Keith Tribe wrote “The reader who seeks precision, originality, and theoretical elaboration in the writings of eighteenth-century Cameralism is doomed to disappointment and frustration. Such qualities are not the strong points of Justi and Sonnenfels.”16 This thesis will depart from Tribe’s verdict, and will not try to explore how original Justi’s thought was, but focus on how Justi systemized and epitomized the development of cameralism up to his days. This thesis regards Justi’s thought as typical and representative of cameralism. Secondly, Justi’s economic thought greatly influenced later developments in German economics. Because his work of systematizing, Justi’s cameralist works became regarded as a set of classical economic textbooks in German universities since 1760s.17 In the University of Halle, a research and education hub in eighteenth-century German political economy, Justi’s works were used as textbooks at least until 1819.18 When ’s economic doctrine was introduced in the classrooms of German universities in the early nineteenth century, Smith’s Wealth of Nations was taught in combination with Justi’s textbooks. 19 In an instruction published in 1834 about educating bureaucrats in Prussia, Justi’s textbooks was still listed as recommanded readings. 20 In general, Justi’s doctrine arguably shaped the minds of German and economic bureaucrats since the second half of the eighteenth century at least until the early nineteenth century. Based on these reasons, this thesis will focus on Justi’s economic thought as a case study of the economic thought in cameralism. Before discussing the historiography and the scholarship about Justi, it is necessary to briefly outline his biography and his main economic works, since Justi is a largely forgotten figure today. i. Justi and His Cameral Science

Biographies of Justi have already provided very detailed accounts of his life.21 All that

16 Tribe, Governing Economy, p. 60. 17 Ibid., pp. 55-78. 18 Wilhelm Kähler, Die Entwickelung des staatswissenschaftlichen Unterrichts (Jena: Gustav Fischer, 1898). 19 Tribe, Governing Economy, p.147; Ludwig Heinrich Jakob, Grundsätze der National-Oekonomie oder National-Wirthschaftslehre (Halle: Ruffschen Verlag, 1805), pp. 10-11. 20 Joh. Christoph Rinne. Anleitung bei der Vorbereitung auf den höhern Staatsdienst (Leipzig: B. G. Teubner, 1834), pp. 32-37; p. 117. 21 See Wilhelm Roscher, ‘Der sächsische Nationalökonom Johann Gottlob von Justi’, in Archiv für die Sächsische 11 is needed here, is to summarise previous research. Justi lived a life of a “state adventurer” (Staatsabenteurer) or “scholarly adventurer” (gelehrte Abenteurer). Other famous cameralists, such as Becher, Zincke, and Johann Friedrich Pfeiffer (1718-1787, from Prussia), lived similar lives. Compared to the more well-known lifestyle of “merchant adventurer” who adventured in overseas markets in search of profiteering opportunities, “state adventurers” like Justi roamed in different states to serve in , -run enterprises, and universities. 22 In his nomadic life, Justi, as Erik Reinert sums up, had been “a university professor of economics and , an economic adviser to governments, a publisher and organiser of translations, a personal national research council in several fields, a manager of government , a prospector of mines, and an entrepreneur of last resort on behalf of the state.”23

Justi was born and raised in the Electorate of Saxony. He served for one year (1741- 1742) in the Saxon army as the secretary of lieutenant colonel Wigand von Gersdorff and was deployed in Bohemia and Moravia during the War of the Austrian Succession.24 Under the influence of Gersdorff, Justi developed an enthusiastic interest in natural science. 25 Financially supported by Gersdorff, Justi entered the University of Wittenberg to study law and graduated with a thesis on military desertion titled De Fuga Militiae in 1744.26 The war was still on, so he went back to the army upon graduation. After the war, he resided in Dresden in the house of Gersdorff who died in the Battle of Hohenfriedberg in 1745.27 In 1747 Justi was recruited by the widowed Duchess of Saxe-Eisenach to work as a legal counsellor and moved back to his birthplace Sangerhausen.28

In 1750 Justi moved to Vienna upon an invitation to be the family tutor of Count

Geschichte, 6 (1868), pp. 76-112; Ferdinand Frensdorff, ‘Uber Das Leben und Die Schriften Des Nationalokonomen J.H.G. von Justi’, Nachrichten der König.Gesellschaft der Wissenschaften zu Göttingen, phil.-historische Klasse, 4 (1903), pp. 355-503; Small, Cameralists, pp. 285-291; Tribe, Governing Economy, pp. 56-58; Reinert, ‘Johann Heinrich Gottlob von Justi’, pp. 36-44; Adam, The Political Economy of J.H.G. Justi, pp. 23-48; Nokkala, From Natural Law to Political Economy, pp. 28-48; Andre Wakefield, The Disordered State: German Cameralism as Science and Practice (London: The University of Press, 2009), pp. 68-75; pp. 81-110. 22 Reinert, ‘Johann Heinrich Gottlob von Justi’, pp. 33-34. 23 Ibid., p. 34. 24 Frensdorff, ‘J.H.G.von Justi’, pp. 363-364. 25 Ibid., p. 363. 26 Ibid., p. 361; Adam, The Political Economy of J.H.G. Justi, p. 25. 27 Frensdorff, ‘J.H.G. von Justi’, p. 369; Reinert, ‘Johann Heinrich Gottlob von Justi’, p. 37. 28 Frensdorff, ‘J.H.G. von Justi’, p. 375. 12

Frederick William von Haugwitz (1702-1765), the chancellor of Habsburg Austria who launched reforms to restore the power of the Habsburg monarchy after the War of the Austrian Succession.29 Supported by Haugwitz, Justi was appointed firstly to the chair of eloquentia Germanica in 1750 then to the chair of Praxis im Cameral-, Commercial- und Bergwesen in 1752 at the Theresianum, the facility to train future bureaucrats as part of Empress ’s administrative reform.30 Meanwhile, Justi was also appointed as the Councilor of Mines (Bergrat) to explore silver mines in Lower Austria.31 In 1753, Justi was compelled to leave Austria for the following reasons: 1) he, as a Lutheran, conflicted with the Jesuits on many issues and was hostile to Catholicism in general; 2) he was hated by provincial nobilities for his support of Haugwitz’s reform to create a centralised state; 3) other Viennese scholars were jealous of his impressive salary and reputation; and 4) he was unable to materialise his promise of developing silver mines.32 However, Justi’s influence in Vienna persisted. He was never officially dismissed from his chair at the Theresianum.33 When Sonnenfels took the chair of cameral science at the University of Vienna in 1763, Justi’s work was his first choice of textbook.34

From 1753 to 1755, Justi moved to Mansfeld and Leipzig and finally was invited to Göttingen by Gerlach Adolf von Münchhausen (1688-1770), a famous cameralist, the first curator of the University of Göttingen since 1734, and the Kammerpräsident (President of Chamber) of Hannover Electorate after 1753.35 In Göttingen, Justi was appointed as the Ober-Policey-Commissar in charge of improving the economy and public security of the city, the first professor of cameral science at the University of Göttingen, and the Councilor of Mines to develop mining industries in the Harz Mountains.36 After the outbreak of the Seven Years’ War, Justi supported the alliance between Prussia and Britain.37 In 1757, Justi was compelled to leave Göttingen for the following reasons: 1) the French army was approaching; 2) his administration was

29 Adam, The Political Economy of J.H.G. Justi, p. 26. 30 Reinert, ‘Johann Heinrich Gottlob von Justi’, p. 38; Nokkala, From Natural Law to Political Economy, pp. 29- 32. 31 Frensdorff, ‘J.H.G. von Justi’, p. 382. 32 Reinert, ‘Johann Heinrich Gottlob von Justi’, p. 39; Adam, The Political Economy of J.H.G. Justi, pp. 36-39; Nokkala, From Natural Law to Political Economy, pp. 34-35. 33 Adam, The Political Economy of J.H.G. Justi, p. 38. 34 Tribe, Governing Economy, p. 55. 35 Frensdorff, ‘J.H.G. von Justi’, p. 391. 36 Wakefield, Disordered Police State, pp. 68-74. 37 Adam, The Political Economy of J.H.G. Justi, p. 40. 13 unsatisfying; 3) his divorce from his wife was a shameful scandal; and 4) he had accured heavy financial debts.38

From 1757 to 1758, upon the invitation of Danish prime minister Count Johann Hartwig Ernst von Bernstorff (1712-1772), Justi was briefly appointed as the Councilor of Mines and the Colonial Inspector for the colonisation of Jutland.39 In early 1758, Justi moved to Altona near .40 From 1758 to 1766, he was occupied with writing and sought an opportunity to work for Prussian King Frederick II.41 In the spring of 1760, he moved to Berlin. Justi’s wish was finally fulfilled in 1765, when he was appointed as the Berghauptmann in charge of all government enterprises producing iron and steel.42 Justi’s specific task was to manage an iron-plate mill in Neumark with the aim to make Prussia self-sufficient in iron, but in 1768 Justi’s management was found to be inefficient, and he was jailed on suspicion of fraud and embezzlement.43 On 21 July 1771, Justi was found dead in prison. 44 The suspicion of his guilt was never substantiated, and after his death Frederick II took care of his children personally.45

“Cameralism” is a term coined by modern scholars as discussed above. Old cameralists did not have a common name to describe their doctrines. New cameralists named their doctrines Kameralwissenschaft (cameral science), which contained their economic thought. In his first textbook of cameral science, Justi gave a clear definition of what it was. To Justi, cameral science was a synonym for “oeconomic science” (öconomischen Wissenschaften), so it could also be named “oeconomic- and cameral-science” (öconomischen- und Cameralwissenschaften).46

Justi defined that cameral science was about “how the Vermögen of a nation should be preserved, increased, and wisely used”. 47 In Justi’s works, “Vermögen” should be understood as the material and intellectual resources of a nation. In the broad sense, Vermögen was “all goods and skills which we possess and which we can utilize to

38 Nokkala, From Natural Law to Political Economy, p. 41. 39 Adam, The Political Economy of J.H.G. Justi, pp. 40-42. 40 Nokkala, From Natural Law to Political Economy, p. 42. 41 Ibid., pp. 43-48; Adam, The Political Economy of J.H.G. Justi, pp. 42-46. 42 Frensdorff, ‘J.H.G. von Justi’, p. 443. 43 Wakefield, The Disordered Police State, pp. 81-110. 44 Frensdorff, ‘J.H.G. von Justi’, p. 459. 45 Jürgen G. Backhaus, ‘Introduction’, in The Beginning of Political Economy: Johann Heinrich Gottlob von Justi, ed. by Jürgen Georg Backhaus (New York: Springer, 2009), pp. xi-xii (p. xi). 46 Justi, Staatswirthschaft, vol.1, p. 28. 47 Ibid., vol.1, p. 28. 14 acquire the necessities and comforts of our lives”, and in the narrow sense, Vermögen only consisted of immovable and movable goods. 48 “Immovable goods” were the territory of a nation and its natural conditions and resources.49 In cameralist texts, discourses about the preservation and management of environment and natural resources and the prefiguration of the concept of “sustainable development” have appeared.50 “Movable goods” were goods produced by immovable goods and “the industriousness and skills of people”, namely, primary and manufactured products.51 Skills were “the acquired capabilities and expertise of mind and body with which we can become useful in trade, industries and overall in the public life”, and Justi believed that skills were as important as immovable and movable goods.52 To Justi, people needed good morality to wield their capabilities and skills according to the requirements of public welfare, and the good morality was “civil virtue” (bürgerliche Tugend).53 Therefore civil virtue and skills of people were explicitly regarded by Justi as the subjects of state governance and therefore the subjects of cameral science.54 People of a nation, which were vessels of skills, were also considered one of the Vermögen of a nation.55 In summary, according to his definition of cameral science and Vermögen, Justi’s cameral science essentially studied the comprehensive management of the natural, physical and intellectual resources of a . The name “Kameralwissenschaft” connoted this essence. Justi explained that the government departments that took care of preserving, increasing, and utilising the Vermögen of a country in German states in his time were generally named Kammern or Kammercollegia. 56 In this way, cameral science, therefore, was the managerial guidance for the Chancellor, the head of Kammern or Kammercollegia.57 Justi believed

48 Ibid., vol.1, pp. 382-383. 49 Johann Heinrich Gottlob von Justi, Grundsätze der Policey-Wissenschaft (Göttingen: Abraham van den Hoecks seel. Witbe: 1756), p. 7; Johann Heinrich Gottlob von Justi, Die Grundfeste Macht und Glückseeligkeit der Staaten, vol.1 (Königsberg and Leipzig: Verlag seeligen Johann Heinrich Hartungs Erben, 1760), p. 11. 50 See Paul Warde, ‘Cameralist Writing in the Mirror of Practice: The Long Development of in Germany’, in Cameralism in Practice: State Administration and Economy in Early Modern Europe, eds. by Marten Seppel and Keith Tribe (Woodbridge: The Boydell Press, 2017), pp. 111-131; Paul Warde, The Invention of Sustainability: Nature and Destiny, c. 1500-1870 (Cambridge: Cambridge University Press, 2018). 51 Justi, Macht und Glückseeligkeit, vol.1, p. 15; also Justi, Grundsätze, pp. 9-10. 52 Justi, Staatswirthschaft, vol.1, p. 385; also Justi, Grundsätze, p. 11. 53 Justi, Grundsätze, pp. 11-12; Johann Heinrich Gottlob von Justi, Die Grundfeste Macht und Glückseeligkeit der Staaten, vol.2 (Königsberg and Leipzig: Verlag seel. Gebhard Ludwig Wöltersdorfs Wittwe., 1761), p. 4. 54 Justi, Macht und Glückseeligkeit, vol.1, p. 19; also Justi, Grundsätze, p. 12. 55 Justi, Grundsätze, p. 6. 56 Justi, Staatswirthschaft, vol.1, p. 28. 57 Jürgen G. Backhaus, ‘From Wolff to Justi’, in The Beginning of Political Economy: Johann Heinrich Gottlob von Justi, ed. by Jürgen Georg Backhaus (New York: Springer, 2009), pp. 1-18 (p. 4). 15 that the ultimate purpose of this management should be public happiness. The Vermögen of a nation was also defined as “the means which a nation should use to promote its happiness.”58

Justi’s cameral science had four sub-disciplines: statecraft (Staatskunst), police (Policey), oeconomy (Oeconomie), and proper cameral science (eigentliche Cammeralwissenschaft). Staatskunst taught about how to realise the external security of the nation.59 Oeconomie was about how to manage private wealth. This discipline could be traced back to the tradition of Hausväterliteratur in the German-speaking world since the sixteenth century, which were the guidances for housefathers about the management of agricultural properties of their families. 60 Justi believed that the resources of a nation relied on the resources of its people, so the better the people managed their properties, the better it was for the nation.61 Proper cameral science was about state finance and dealt with how a state should manage its fiscal resources.62

Justi believed that “Policey” originated from the Greek word “polis” (πολις), which means “city (state)”.63 In the early modern German political and economic vocabulary, Policey or Polizei was an important concept and referred to the comprehensive regulations of economic and social affairs issued by imperial or territorial authorities since the late Middle Ages. 64 For example, imperial police ordnances (Reichspolizeiordnungen) of 1530, 1548 and 1577 dealt with issues like religious ceremony, dress code, luxury , tax, usury, travel safety, beggaring, book censorship, and artisanal regulation.65 The early example of territorial Policey was the inclusive territorial ordiances (Landesordnungen) of Elector of Saxony August I (1526-1586), which aimed at comprehensively improving the economy and public welfare of his territory.66 According to Keith Tribe, Policey was the central discipline of cameral science. New cameralism was “a pedagogy addressed to future administrators of domains and enterprises”, and the main function of those future

58 Justi, Grundsätze, p. 5; also Justi, Macht und Glückseeligkeit, p. 10. 59 Justi, Staatswirthschaft, vol.1, p. 50. 60 Tribe, Governing Economy, pp. 19-27; Brückner, Staatswissenschaften, Kameralismus und Naturrecht, pp. 51- 60. 61 Justi, Staatswirthschaft, vol.1, pp. 51-52. 62 Ibid., p. 42. 63 Justi, Grundsätze, p. 3; Justi, Macht und Glückseeligkeit, vol.1, p. 5. 64 Brückner, Staatswissenschaften, Kameralismus und Naturrecht, pp. 4-5. 65 Roscher, National-Oekonomik, pp. 26-27. 66 Ibid., pp. 129-138. 16 administrators was to deliver “gute Polizei [good Policey]”.67 In Justi’s definition, in the broadest sense, Policey was the sum of all policies about internal affairs, through which resources of a nation were preserved, increased and wisely used.68 Under this definition, Policey was therefore affiliated with a “science of commerce” (Commercienwissenschaft) which studied the nature of trade and industries and proposed policies to build and promote them, and in this sense it should be more properly named Staatscommercienwissenschaft.69 Justi also named the Policey in the broadest sense “economic police science” (wirtschaftliche Policeywissenschaft).70 In a narrower sense, Policey was policies to maintain good order and custom among the people and to promote comfortable lives and the development of economy.71 In the narrowest sense, Policey only refered to the management of city: overseeing industries and trade, unifying measures and weights, maintaining good custom and order, insuring against disaster, and cleaning and beautifying cities.72 According to an early twentith century research, Justi was the first to separate a complete Policeywissenschaft from other disciplines of cameral science.73

Justi was a very prolific writer, perhaps the most prolific of any economist in any language.74 Roscher found 48 books authored by Justi and Reinert found 67 books.75 Apart from cameral science, Justi also wrote about many other topics: literary, philosophical, historical, agricultural, about law and contemporary politics, about natural science, and about the progress of technologies and crafts.76 Justi’s research in cameral science started when he was in Vienna.77 His first systematic textbook on cameral science was Staatswirthschaft oder Systematische Abhandlung aller Oeconomischen und Cameral-Wissenschaften (abbr. Staatswirthschaft, 1755). In the preface of Staatswirthschaft, Justi advertised that he intended to publish four further

67 Tribe, Governing Economy, p. 10; pp. 30-54. 68 Justi, Macht und Glückseeligkeit, vol.1, p. 6. 69 Ibid., vol.1, p. 6; Justi, Staatswirthschaft, vol.1, p. 51. 70 Ibid., vol.1, p. 6. 71 Ibid., vol.1 p. 6. 72 Ibid., vol.1, pp. 6-7. 73 Sommer, Die Österreichischen Kameralisten, vol.2, p. 170. 74 Reinert, ‘Johann Heinrich Gottlob von Justi’, p. 33. 75 Roscher, ‘Johann Heinrich Gottlob von Justi’, pp. 82-83; Reinert, ‘Johann Heinrich Gottlob von Justi’, pp. 50- 52; also see, Erik S. Reinert and Hugo Reinert, ‘A Bibliography of J.H.G. von Justi’, in The Beginnings of Political Economy: Johann Heinrich Gottlob von Justi, ed., by Jürgen Georg Backhaus (New York: Springer, 2009), pp. 19- 31. 76 Roscher, ‘Johann Heinrich Gottlob von Justi’, pp. 82-83; Reinert, ‘A Bibliography of J.H.G. von Justi’, pp.19-31. 77 Frensdorff, ‘J.H.G. von Justi’, p. 375; Nokkala, From Natural Law to Political Economy, pp. 31-32. 17 textbooks about four sub-disciplines of cameral science: one about Staatskunst, one about Policey, one about Commercienwissenschaft, and one about oeconomy.78 The promise about textbooks on Staatskunst and oeconomy was never fulfilled. The first edition of his monograph on Policeywissenschaft was Grundsätze der Policeywissenschaft (abbr. Grundsätze, 1756). The plan of the textbook on Commercienwissenschaft was replaced by textbooks on manufacturing, because Justi thought that developing manufacturing was a much more urgent subject for German states than promoting commerce.79 The outcome of this new project was his two- volume monograph about manufacturing (Vollständige Abhandlung von Manufacturen und Fabriken, abbr. Manufacturen und Fabriken, 1758 and 1761). Grundsätze was pamphlet-sized and could not match the importance of its subject so Justi expanded and improved it. 80 This led to his two-volume tomes on Policeywissenschaft, Die Grundfeste zu der Macht und Glückseeligkeit der Staaten (abbr. Macht und Glückseeligkeit, 1760 and 1761). Manufacturen und Fabriken also had a separate but indispensable appendix, titled Abhandlung von denen Manufactur-und Fabriken- Reglements (abbr. Reglements, 1762). These five works constituted the main body of Justi’s research on wirtschaftliche Policeywissenschaft.

It should be noted that Justi’s definitions of wirtschaftliche Policeywissenschaft and öconomischen- und Cameralwissenschaften were very different from today’s definition of “economics”. They were much wider and much more holistic than the later, covering not only “economic” but also political, cultural, social and environmental studies. Then to study the “economic” theories and policy proposals in Justi’s cameral science, namely the theories and proposals dealing with the production and distribution of goods and , demands this thesis to concentrate on Justi’s Policeywissenschaft about “moveable goods” (primary and manufactured goods, excluding service) as its subject of research.81 Therefore not all of Justi’s 67 books will be studied in this thesis, but the focus will be on the management of “moveable goods” within the five works primarily concerning with wirtschaftliche Policeywissenschaft mentioned above.

78 Justi, Staatswirthschaft, vol.1, preface, p. xliv. 79 Johann Heinrich Gottlob von Justi, Vollständige Abhandlung von denen Manufacturen und Fabriken, vol.1 (: Rothenschen Buchhandlung, 1758), preface, page number unspecified. 80 Justi, Macht und Glückseeligkeit, vol.1, preface, page number unspecified. 81 See and , Economics (New York: McGraw-Hill Education, 1998), p. 8. 18

Justi is famous for “self-plagiarism”, in the sense that the same paragraphs and sentences appeared verbatim in his different books. 82 However, there were also dynamics in Justi’s thought. Recent research by Ere Nokkala reveals that Justi experienced a shift in his political thought when he was in Göttingen, where he studied and the German natural law philosophers, and under this influence, his political thought became more liberal and republican than before.83 For example, when referring to the concept of “people”, in Staatswirthschaft and Grundsätze which were pre-Göttingen texts, Justi used the word “subjects” (Unterthanen), but in Manufacturen und Fabriken and Macht und Glückseeligkeit which were post-Göttingen texts, he used the word “citizens” (Bürger). This reflected a toning-down of monarchism. As another example, the general principle of Policey in pre-Göttingen texts was preserving and increasing the resources of a nation.84 However, in Macht und Glückseeligkeit, this general principle was changed to closely connecting the welfare of individuals with public welfare.85 This reflected a respect for private of citizens. This change of Justi’s political thought led to his two most radical and liberal books about politics: Der Grundriß einer guten Regierung (abbr. Guten Regierung, 1759) and Die Natur und das Wesen der Staaten (abbr. Natur und Wesen, 1760), both of which regarded (Freyheit) of citizens as a purpose of state policy. However, it should be noted that in terms of economic theories and policy proposals, this thesis finds that, across his textbooks of Policey, Justi did not experience the same radical shift as his political thought did. This thesis finds that it was a constant proposal of Justi to advocate an economy under the leadership of a strong state.

ii. Historiography of Justi and German Cameralism

As Justi is forgotten nowadays, so is the content of his thought. Therefore, the few scholars studying Justi pay a lot of attention to descriptively introducing different aspects of his economic writings to modern readers.86 As for the interpretive analysis

82 See Tribe, Governing Economy, p. 56. Ulrich Adam listed many “self-plagiarized” paragraphs in Justi's works, see Adam, Political Economy of Justi, pp. 247-252. 83 Nokkala, From Natural Law to Political Economy, pp. 36-37. 84 Justi, Grundsätze, p. 7. 85 Justi, Macht und Glückseeligkeit, vol.1, p. 9. 86 See Roscher, National-Oekonomik, pp. 444-465; Small, Cameralists, pp. 285-480, which summarised Justi’s Staatswirthschaft and Grundsätze paragraph by paragraph; Sommer, Die Österreichischen Kameralisten, vol.2, pp. 19 about Justi’s economic thought, they are generally following three approaches of interpretation, all of which have a long history and can be traced to the nineteenth and early twentieth centuries.

The first approach is to regard Justi, along with other cameralists, as a rent-seeker, who solely cared about his own financial interest and personal career at the cost of public welfare, and to regard Justi’s and other cameralists’ economic writings as an excuse for monarchs’ exploitation of people for fiscal income. This interpretation can be traced to Albion Small. With the intention of introducing German cameralism to American readers, Small interpreted cameralism within the framework of American individual liberalism and , and he concluded that cameralism embodied the “” in German political theory, which was opposed to the American tradition of . And this “collectivism” was reflected in the form that individuals’ welfare was subordinated to people’s welfare, which was subordinated to the state’s welfare, and that ultimately to the monarch’s welfare, which was essentially about fiscal revenue. Small regarded cameralism as an “administrative technology” that maintained this political establishment. 87 Small believed that the only relevant goal behind cameralism was to provide a theory of how to meet monarchs’ need for , so cameralists’ central concern was: “what programme must a wise government adopt, in order first and foremost to be adequately supplied with ready money, and thus able to discharge the duties of the state in their various orders of importance?”88 On this basis, Small coined the name “fiscalists” to label cameralists.89 Small was chiefly interested in introducing the main works of important cameralists to American readers, so he did not sufficiently contextualise those works but only compared them with American democracy. This led Small to claim that in non-democratic polities, such as the early modern German states, monarchs’ welfare and people’s welfare inevitably conflicted.90 Therefore, as advisors of monarchs, cameralists were inevitably monarchs’ servants to attend to their fiscal interests.

170-318; Heinz Rieter, ‘Justis Theorie der Wirtschaftspolitik’, in J.H.G. von Justis Grundsätze der Policey- Wissenschaft, ed. by Bertram Schefold (Düsseldorf: Verlag Wirtschaft und Finanzen, 1993), pp. 45-80; and Backhaus ed., The Beginning of Political Economy. 87 Small, Cameralists, p. xiii. 88 Ibid., p. 6. 89 Ibid., p. 6. 90 For example, see ibid., p. 327; p. 331. 20

Small’s “fiscalist” interpretation is echoed today by a recent work, The Disordered Police State (2009), by Andre Wakefield. This work argues against Marc Raeff’s The Well-Ordered Police State (1975; 1983). Raeff argued that thoughts and practices of German cameralism were an origin of modernity—the modernity embodied as government regulations to comprehensively rationalise economy and society with the objective of promoting modernisation.91 It is worth noting that an essay (1993) shared the similar perspective as Raeff and explicitly named Justi’s Grundsätze a “guidance for the modernisation from above”.92 Wakefield believes the “well-ordered police state” existed only as the imaginings of cameralists. He argues that cameralists firstly appeared as “cameralists of the bureaus” who were fiscal officials of princes and in the most cases corrupted bureaucrats who only cared about their own interests and stole money from princes and people.93 Afterwards, “cameralists of the books” came into being. They wrote textbooks on cameral science and claimed that they were capable of creating well-ordered utopias to fix the destruction caused by the corrupted “cameralists of the bureaus”. Yet, the well-ordered utopias proposed by “cameralists of the books” were unrealistic, because “cameralists of the books” did not truly care about designing flourishing . They wrote textbooks firstly for creating shields for the bloodsucking fiscal policies of German territorial princes and secondly for demostrating to the princes that they were “good cameralists” in order to acquire jobs in government.94 In this way, Wakefield claims that “the cameral sciences served the treasury and not the interests of the people”.95 Wakefield studies Justi’s experience in Göttingen and Prussia, along with some other cameralists’ practices. On the basis of Justi’s unsuccessful careers as the Police Director of Göttingen and the supervisor of the iron mill of Prussia, Wakefield calls Justi a hypocritical “cameralist of the books” who was “either incompetent or dishonest”.96 An interesting point which Wakefield notes is that cameral science was highly related to natural science. He believes that “cameral sciences were natural sciences just as much as they were economic sciences”,

91 Marc Raeff, ‘The Well-Ordered Police State and the Development of Modernity in Seventeenth-and Eighteenth- Century Europe: An Attempt at a Comparative Approach’, The American Historical Review 80.5 (1975), pp. 1221- 1243(pp. 1242-1243); also see Marc Raeff, The Well-Ordered Police State: Social and Institutional Change Through Law in the Germanies and Russia 1600-1800 (London: Yale University Press, 1983). 92 See Josef Wysocki, ‘Über die historische Umwelt’ in J.H.G. von Justis Grundsätze der Policey-Wissenschaft, ed. by Bertram Schefold (Düsseldorf: Verlag Wirtschaft und Finanzen, 1993), pp. 81-105. 93 Wakefield, Disordered Police State, p. 5. 94 Ibid., p. 5; p. 138. 95 Ibid., p. 9. 96 Ibid., p. 9 21 and “cameralists were not early modern analogues of economists or political scientists; they were equally chemists and foresters, mineralogists and technologists”. 97 In Wakefield’s opinion, cameralists were interested in natural science because they wanted to use universities, academies and other science facilities to collect money for princes through “selling” knowledge to wealthy students who studied there, like selling a local specialty to foreign consumers.98 In Wakefield’s words, “because many of the most important cameral sciences were natural sciences, the dishonesty of the kammer has been inscribed into the literature of science and technology as well.”99

Wakefield tries to judge the essence of the textbooks written by cameralists but does not study the content of them. Instead, he focuses on cameralists’ life stories and evaluates their thought based on whether, according to their résumé, the cameralists appeared to be competent and honest or not. Methodologically, this approach inevitably leads to misunderstanding cameralist texts. From the perspective of the history of economic thought, even if those cameralists were as dishonest and corrupt as Wakefield portrays, it is not at all clear that corrupt bureaucrats are unable to identify certain causal relationships between economic phenomena and to write books about them. And it does not follow that those texts were necessarily unimportant to the genealogy of economic knowledge. Whether cameralists were corrupt or not did not necessarily prevent them from understanding and explaining economic phenomena such as why manufacturing promotes the expansion of and why innovation is helpful to economic development. In order to evaluate the economic knowledge acquired by past theorists, this thesis holds that the focus should be on cameralists’ texts rather than their personal histories. Moreover, this thesis also finds that the role of natural science in cameral science as described in Wakefield’s book is incredible. Some cameralists were indeed natural scientists at the same time, such as Becher and Justi. However, they did not intend to mix both careers up in their books of cameral science. Cameral science indeed paid great attention to science, but according to Justi’s writings, its focus was on the influence of the progress of science on economic development and public welfare, not on the idea that science facilities could collect money for princes.

97 Ibid., p. 138. 98 Wakefield uses the examples of the University of Göttingen and the Kameralhoheschule in Lautern and Heidelberg, see Wakefield, Disordered Police State, pp. 49-80; pp. 111-133. 99 Wakefield, Disordered Police State, p. 25. 22

The second approach to understanding Justi’s economic thought is that Justi was an Enlightenment thinker advocating liberalism and his economic thought proposed to construct a free market, so Justi should be regarded as a forgotten founding father of modernity. In the most recent monograph about Justi, Ere Nokkala portrays Justi as an advocate for political and . According to Nokkala, during his radical shift in political thought in Göttingen, Justi accepted the kind of German natural law which recognised and respected the self-interest and passion of humans as the fundamental motivation of human behaviour and the foundation of public administration and proposed to reduce the function of state to avoid proactive interventions.100 Nokkala tries to debunk the belief that Justi proposed an authoritarian state. He believes that Justi “referred explicitly to mild government, civil freedom and freedom of conscience as the preconditions for the growth of the economy of individual householders and of the state.”101 Nokkala believes that the state intervention proposed by Justi aimed at fixing the destructive outcomes of free economic actors acting out of their self-interest instincts.102 Based on this understanding, in his most recent edited volume, Nokkala argues that new cameralism represented German Enlightenment economics paralleling to British political economy and French Physiocracy, contributing to an “economic turn” in Enlightenment Europe as suggested by Steven Kaplan and Sophus Reinert, which would have been an important foundation for modern liberal political economy.103

Another recent monograph about Justi’s economic thought by Ulrich Adam takes a similar line to Nokkala. Adam has two main arguments. Firstly, “Justi’s ultimate aim was to lower state intervention to a minimum”.104 Secondly, Justi wanted to create a modern kingship in the sense that the obligation of monarch was to further general welfare. 105 However, in contrast to Nokkala’s interpretation, Adam regards state intervention in Justi’s proposal as a transitional measure to create a free market to

100 Nokkala, From Natural Law to Political Economy, pp. 50-83. 101 Ibid., p. 100. 102 Ibid., pp. 100-101. 103 See Ere Nokkala and Nicholas B. Miller, ‘Introduction’, in Cameralism and the Enlightenment: Happiness, Governance and Reform in Transnational Perspective, eds., by Ere Nokkala and Nicholas B. Miller (New York: Routledge, 2020), pp. 1-20; Steven L. Kaplan and Sophus A. Reinert, ‘The Economic Turn in Enlightenment Europe’, in The Economic Turn: Recasting Political Economy in Enlightenment Europe, eds., by Steven L. Kaplan and Sophus A. Reinert (London: Anthem Press, 2019), pp. 1-33. 104 Adam, J.H.G. Justi, p. 16. 105 Ibid., pp. 18-19. 23 develop the German economy. This transitional intervention was necessary because the economy of the early modern Germany was too immature to autonomously establish a free economy, so as soon as the economy could stand on its own feet, state intervention should be withdrawn. As Adam writes, “Justi wanted to reduce the role of the state from that of actually guiding economic affairs to that of simply providing a suitable legal and political framework within which economic affairs might safely be left to guide themselves.”106 For example, the government should invest in new industries as the necessary initial but should then implement privatisation and market liberalisation; trade protection should be a temporary policy to give the uncompetitive infant industries the chance to grow; granted to commercial corporations violated commercial freedom but could be justified as a provisional measure because colonial trade was too costly for contemporary German merchants.107

This liberal interpretation of Justi’s economic thought can be traced back at least to (1954). Schumpeter believed that Justi wanted to build a “welfare state (Wohlfahrtsstaat)…that accepts responsibility for the moral and economic conditions of life—just as modern governments do”.108 Schumpeter also found that Justi wanted to build a well-functioning free market. Namely, the state should interfere only if the free market failed to realise public welfare, but as long as the free market functioned well, the state should withdraw. To Schumpeter, Justi “saw the practical argument for laissez-faire not less clearly than did A. Smith”, but Justi’s laissez-faire was “laissez-faire plus watchfulness” therefore “laissez-faire with the nonsense left out.”109

This liberal interpretation of Justi emphasises that Justi’s economic proposals advocated the formation of a national market. This “market formation” interpretation has many similarities with how Gustav Schmoller (1838-1917), the leader of Younger German Historical School of Economics, interpreted the historical significance of mercantilism, which was once popular in the early twentieth century. Schmoller regarded German cameralism as the German variant of mercantilism.110 He regarded mercantilism as a

106 Ibid., p. 188. 107 Ibid., pp. 205-209. 108 Joseph Alois Schumpeter, History of Economic Analysis (New York: , 1954), p. 171. 109 Schumpeter, History of Economic Analysis, p. 172. 110 Gustav von Schmoller, Grundriß, vol.2, pp. 599-600. 24 policy system to create national market. Schmoller believed that every economy throughout time had its “controlling organ”. He wrote that “the idea that economic life has ever been a process mainly dependent on individual action…is mistaken with regard to all stages of human civilization”.111 As an economy developed, its controlling organ, which determined the structure, institutions, and the orientation of the movement of the economy, also evolved through stages of tribe, village, town, territory, state, and confederation of states. 112 The direction of the development of an economy was towards the division of labour within wider geographical boundaries, and the direction of the evolution of its controlling organ was towards controlling economic activities within larger geographical realm. Every controlling organ intended to put native economic actors at an advantage and to put foreign actors at a disadvantage. Therefore, Schmoller found the practice of trade protection could be traced at least to the economic policies of medieval towns.113 When this economic selfishness stopped promoting progress but began to support sloth and rent-seeking, economic development could happen only when smaller were merged into a larger economy under higher- level controlling organ. 114 Mercantilism was the policy aiming at destroying the economic egoism of territorial economies, uniting them on a national basis of division of labour, and creating the national economy. Abolishing and privileges of guilds and territories and deregulating inter-territorial trade in Justi’s and other cameralists’ policy proposals, which are regarded as the evidence of Justi’s by recent literature, were, to Schmoller, measures required in order to create a national economy through replacing local and territorial economic regulations with those of the nation.115 According to Schmoller, “the innermost kernel” of mercantilism was state making and national economy making at the same time.116 Schmoller’s interpretation used to be very influential. Eli Heckscher basically reiterated Schmoller’s opinion in the first volume of his Mercantilism.117 More recently, Stephan Epstein’s Freedom and Growth also highlights the similar function of “national economy making”

111 Gustav von Schmoller, The Mercantile System and Its Historical Significance (London: Macmillan, 1910), pp. 3-4. 112 Ibid., p. 3. 113 Ibid., pp. 6-13. 114 Ibid., p. 12. 115 Ibid., p. 51. 116 Ibid., p. 50. 117 See Eli Heckscher, trans.by Mendel Shapiro, Mercantilism, vol.1 (London: George Allen & Unwin, 1935). 25 in the economic policies of the early modern absolutist monarchs.118 iii The Argument of This Thesis

Are the above interpretations sufficient to understand Justi’s economic thought? This thesis maintains that they are not. Both the liberalism and the rent-seeking interpretations neglect a central topic of Justi’s economic thought: the promotion of manufacturing and, closely related to it, the promotion of national intellectual capital. In this thesis, the focus is on these topics in Justi’s economic thought in light of the recently highlighted “The Other Canon” approach. Compared with , “The Other Canon” economics refers to a rival tradition of economic thinking stretching from mercantilism and cameralism in the early modern period, through Friedrich List, the American system of political economy, and the German Historical School of Economics in the nineteenth century, to , Schumpeterian economics, classical development economics, and in the twentieth and the twenty-first century. 119 According to this perspective, many consistent topics have persisted in European economic discourses since the Renaissance: the fervent preference for manufacturing; the awareness of the significance of the diversity of economic activities within the boundary of national market; and the appreciation of national intellectual capital.120

“The Other Canon” approach forms the third approach to understanding Justi’s economic thought and German cameralism. Understanding German cameralism from the perspective of the preference for manufacturing is especially manifested in recent volumes edited and authored by Philipp Rössner.121 They argue that cameralism was

118 S. R. Epstein, Freedom and Growth: The Rise of States and Markets in Europe, 1300-1750 (London: Routledge, 2000). 119 See Erik S. Reinert and Arno M. Daastøl, ‘The Other Canon: the history of Renaissance economics’, in Globalization, Economic Development and Inequality: An Alternative Perspective, ed. by Erik S. Reinert (Cheltenham: Edward Elgar, 2004), pp. 21-70. 120 See Reinert, How Rich Countries Got Rich…and Why Poor Countries Stay Poor?; Philipp Robinson Rössner, ‘Manufacturing matters: from Giovanni Botero (c.1544-1617) to Friedrich List (1789-1846), or: The history of an old idea’, in The Economic Thought of Friedrich List, eds. by Harald Hagemann, Stephan Seiter and Eugen Wendler (New York: Routledge, 2018), pp. 102-121; Erik Reinert and Sophus Reinert, ‘Mercantilism and Economic Development: Schumpeterian Dynamics, Institution-building and International Benchmarking’, in The Origin of Development Economics: How Schools of Economic Thought Have Addressed Development, eds. by Jomo K.S. and Erik S. Reinert (London: Zed Book, 2005), pp. 1-23; Erik Reinert, “The role of the state in economic growth”. Journal of Economic Studies 26.4/5 (1999), pp. 268-326. 121 See Philipp R. Rössner ed., Economic Growth and the Origins of Modern Political Economy: Economic reasons of state, 1500-2000 (London: Routledge); Philipp Wilhelm Hörnigk, ed. by Philipp R. Rössner, trans. by Keith Tribe, Austria Supreme (if it so wishes) (1684): A Strategy for European Economic Supremacy (London: Anthem Press, 2018), especially pp. 1-120; Philipp Robinson Rössner, Capitalism and Freedom in Early Modern Europe: 26 characterised by the focus on production, especially manufacturing, compared with mainstream economics which focuses on exchange and distribution, and cameralism was part of the genealogy of the origin of modern understanding of economic growth and modern capitalism. This approach could be traced to the German economist Friedrich List (1789-1846). On the basis of studying the history of economic policies of European nations and appraising the policies of Colbert, Maria Theresa and Joseph II, and Prussian rulers after the Thirty Years War, List believed that the central focus of policies of mercantilism and cameralism was developing manufacturing which was the economic activity best employing the “productive powers” of a nation.122 In List’s definition, “productive powers” covered skills of labourers, accumulation of discoveries and inventions, entrepreneurship, diligence and other mentalities compatible to economic development.123 To List, mercantilism and cameralism aimed at promoting economic development through cultivating national manufacturing and national productive powers.

From “The Other Canon” perspective, Erik Reinert summarises some key ideas of Justi’s economic thought: 1) the prefiguration of the theory of economic later known as Thünen’s circles; 2) the uneven development caused by the trade between manufacturing and agricultural nations; 3) the preference for manufacturing in economic policy; 4) treating human knowledge as a national wealth; 5) the synergy between manufacturing and agriculture; 6) population optimism; 7) limiting the privilege of nobilities; 8) the appreciation of mechanisation of production; 9) the essence of colonisation as deindustrialisation; 10) the possibility of excessive monetary wealth destroying national productive powers. 124 Reinert’s reseach of Justi’s econonomic thought aims at introducing Justi and drawing lessons for today’s economics. Therefore, as a short introduction of Justi’s economic thought, Reinert’s essay is too brief to present the comprehensive theories and policy proposals of the preference for manufacturing and the appreciation of national intellectual capital in Justi’s economic thought. In this way, there is a lacuna which this thesis could fill in.

Mercanitlism and the Making of the Modern Economic Mind (London: Palgrave, 2020). 122 Friedrich List, trans., by G.A. Matle, National System of Political Economy (Philadelphia: J.B. Lippincott & Co., 1856), pp. 56-72; pp. 87-93; pp. 178-188. Friedrich List, trans. and ed., by W.O. Henderson, Natural System of Poitical Economy 1837 (London: Frank Cass, 1983), pp. 66-76; pp. 141-162. 123 List, National System, pp. 108-120; List, Natural System, pp. 34-36. 124 Reinert, ‘Johann Heinrich Gottlob von Justi’, pp. 60-67. 27

This thesis seeks to make contribution to deepening our understanding about the theories and policy proposals of manufacturing, innovation, technological progress, science and other national intellectual capital in Justi’s economic thought.

This thesis finds it is negligent to ignore how fervently Justi cherished manufacturing and national intellectual capital. In the aspect of managing moveable goods of a nation, Justi’s Policey textbooks explicitly and consistently expressed a preference for manufacturing. In Grundsätze, Justi wrote: “Manufacturing is the ‘chiefest’ [hauptsächlichste] basis of a prosperous economy; and without it, the natural wealth and the fertility of land will be useless.” 125 In Macht und Glückseeligkeit, the preference for manufacturing is further emphasized. Justi wrote: “The manufactured goods [künstliche Güther] are the genuine basis of economy”. 126 Therefore, “manufacturing and artisanry are the genuine basis of the entire economy, because they engage in producing manufactured goods”. 127 Thus “the chiefest measures of Landespolicey to establish the economy of a country must be targeted at these subjects [manufacturing].”128 In this way, if “economy” is defined as the production, circulation, distribution and consumption of material wealth, then “economic policy” in Justi’s eyes was primarily the manufacturing policy. In fact, apart from systemising existing knowledge of cameral science, the other reason why Justi found it necessary to write the new batch of textbooks for cameral science was that he felt old textbooks were too concerned with agriculture.129 Here Justi mainly referred to the textbook of Simon Peter Gasser, Einleitung zu den Oeconomischen Politischen und Kameral- Wissenschaften, which was solely about the management of royal agricultural properties and state finance.130

Justi’s Policey treated the virtue and capailities of people with the same importance as it treated the material wealth. This management of the virtue and capabilities of people aimed at fostering “good and useful” (gute und nüßliche) citizens capable and moral

125 Justi, Grundsätze, p. 101. The translation of Justi and other Cameralists’ works are made by the author of this thesis. 126 Justi, Macht und Glückseeligkeit, vol.1, p. 440. 127 Ibid., p. 440. 128 Ibid., p. 440. 129 See, Justi, Staatswirthschaft, vol.1, pp. iii-iv. 130 See Simon Peter Gasser, Einleitung zu den Oeconomischen Politischen und Kameral-Wissenschaften (Halle: Wäysenhause, 1729). Also see Brückner, Staatswissenschaften, Kameralismus und Naturarecht, pp. 66-67. 28 enough to shoulder their responsibilities for the realisation of public happiness.131 In this way, if developing manufacturing was the core of Justi’s economic Policey and therefore a crucial component of “public happiness”, then the Policey should also have a primary aim of making citizens “good and useful” to manufacturing. In order to cultivate the capabilities of people, Justi believed that the first priority was to develop science. 132 To Justi, “a knowledgeless [unwissende] nation will never make any advancement in commerce and manufacturing.”133 Justi’s inaugural lecture of his chair of cameral science in the Theresianum in 1750, which essentially forecast the outline of his Staatswirthschaft, was titled Rede von dem unzertrennlich Zusammenhang eines blühenden Zustandes der Wissenschaften mit denjenigen Mitteln, welche einen Staat mächtig und glücklich machen (“On the inseparable connection of the prosperity of science and the means that render a state powerful and happy”).134 In his monograph about state finance, System des Finanzwesens (1766), Justi proposed that society and economy evolved in five stages: first came fishing and hunting society, then herding society, followed by farming society, then manufacturing society, and, finally, commercial society.135 Justi believed that the impetus driving the evolution of economy and society was the accumulation of knowledge and the development of the demand of people according to the progress of knowledge.136 In Justi’s words, “The demand of a nation increases following the development of its knowledge. The more the intelligence of a nation is expanded and enlightened, the more kinds of comforts of lives they will learn, and then they will express desires for what they did not want before.”137 The expansion of knowledge and demand would eventually lead to the development of various manufacturing activities, the formation of a manufacturing society, and finally the emergence of a commercial society based on manufacturing.138 In this way, to Justi, manufacturing and commercial societies were essentially knowledge societies. To Justi,

131 Justi, Grundsätze, pp. 11-12; Justi, Macht und Glückseeligkeit, vol.1, pp. 19-20; Justi, Macht und Glückseeligkeit, vol.2, p. 4. 132 Justi, Grundsätze, p. 210; Justi, Macht und Glückseeligkeit, vol.2, p. 10. 133 Justi, Macht und Glückseeligkeit, vol.2, p. 17. 134 Johann Heinrich Gottlob von Justi, Gesammlete Politische und Finanzschriften über wichtige Gegenstände der Staatskunst, der Kriegswissenschaften und des Cameral-und Finanzwesens, vol.2 (Copenhagen and Leipzig: Rothenschen Buchhandlung, 1761), pp. 128-175. 135 Johann Heinrich Gottlob von Justi., System des Finanzwesens, nach vernünftigen aus dem Endzweck der bürgerlichen Gesellschaften, und aus der Natur aller Quellen der Einkünfte des Staats hergeleiteten Grundsätzen und Regeln (Halle: Rengerischen Buchhandlung, 1766), pp. 48-52. 136 Ibid., p. 48. 137 Ibid., p. 51. 138 Ibid., p. 51. 29 developing manufacturing connoted the accumulation of knowledge in a society and therefore the enlightenment of its citizens. Justi valued natural science because he wanted to push the progress of economy to a knowledge-based manufacturing economy.

On the basis of the awareness that manufacturing and national intellectual capital belonged to the kernel concern of Justi’s economic thought, this thesis will focus on analysing Justi’s definition of “public happiness”, the relationship between Justi’s preference for manufacturing and “public happiness”, the relationship between Justi’s preference for manufacturing and his appreciation of national intellectual capital, and Justi’s policy proposal of what the state should do to develop manufacturing and to cultivate national intellectual capital.

Why is this research interesting? Firstly, if the preference for manufacturing and the appreciation of national intellectual capital were highlighted in Justi’s economic thought, then Justi’s economic policy proposal was not so much a project of “liberalism” in the sense of promoting free market as a goal on its own, but about creating a economy under the leadership of a strong state. The preference for manufacturing and the appreciation of national intellectual capital essentially meant upgrading industrial structure and advancing industrial technology. Erik Reinert has argued that, in order to fulfill these purposes, states in history always have to make comprehensive intervention in the economy focusing on following aspects: 1) creating the most productive industrial structure, because economic activities are different in qualities; 2) creating in new industries; 3) supplying infrastructure; 4) setting standard; 5) supplying skilled labourers and entrepreneurship; 6) creating demand; 7) pushing technological frontier; 8) promoting knowledge and education; 9) maximising national ; 10) protecting property right; 11) acting as the entrepreneur of the last resort.139 In the recent research of Mariana Mazzucato, the state which practices these interventions to promote industrialisation and technological is named as the “entrepreneurial state” in the sense that the state plays the role of “entrepreneur”, which was the protagonist to realise the innovation-driven economic development in Joseph Schumpeter’s theory, to carry out innovations too risky and costly for private enterprises, and to proactively shape the industrial structure of the economy. 140

139 Reinert, ‘The role of the state’, pp. 281-284. 140 See Mariana Mazzucato, The Entrepreneurial State: Debunking Public vs. Private Sector Myths (London: 30

According to Mazzucato, “[m]ost of the radical, revolutionary innovations that have fuelled the dynamics of capitalism–from railroads to Internet, to modern-day nanotechnology and pharmaceuticals–trace the most courageous, early and capital intensive ‘entrepreneurial’ investments back to the State.” 141 According to Neo- Schumpeterian economics, there have been so far five waves of technological and industrial revolution since late eighteenth century. 142 Entrepreneurial state interventions can be seen behind nearly all of them. In the most recent Information Revolution since 1990s, Defense Advanced Research Projects Agency of the US Department of Defense was behind key innovations, as Mazzucato’s research shows.143 In the Fordist mass production revolution in the twentieth century driven by automotive, aeroplane, synthetic materials, and electrical and electronical engineering, we could see Volksprodukte programmes, the Motorisierung programme and the Autobahn project in Germany.144 In the Second Industrial Revolution driven by steel, heavy engineering, and chemical industries during the late nineteenth century, there were projects of railway nationalisation, cartelisation and trade protection of the Bismarckian and Wilhelmian regimes in Germany which were with some state socialistic characteristics.145 In the First Industrial Revolution driven by mechanical engineering, steam power and railroad, there was the Prussian developmental state pillared by industrial secretary Peter Beuth’s industrial research and trainning projects and the pioneering industrial investments of the state corporation Seehandlung.146

Anthem Press, 2013); and Joseph Schumpeter, The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the (Cambridge: Press, 1949), especially pp. 74-94. 141 Mazzucato, Entrepreneurial State, p. 2. 142 See Chris Freeman and Luc Soete, The Economics of Industrial Innovation (London: Routledge, 1997), pp. 65- 70; Chris Freeman and Francisco Louçã, As Time Goes By: From the Industrial Revolution to the Information Revolution (Oxford: Oxford University Press, 2001); and Carlota Perez, Technological and Financial Capital: The Dynamics of Bubbles and Golden Ages (Cheltenham: Edward Elgar, 2002). 143 See Mazzucato, Entrepreneurial State, especially, pp. 50-102. 144 See Steven Tolliday, ‘Enterprise and State in the West German Wirtschaftswunder: Volkswagen and the Automobile Industry, 1939-1962’, The Business History Review 69.3(1995), pp. 273-350; Simon Reich, The Fruits of : Postwar Prosperity in Historical Perspective (London: Cornell University Press, 1990); and Wolfgang König, Volkswagen, Volksempfänger, Volksgemeinschaft: 'Volksprodukte' im Dritten Reich (Munich: Verlag Ferdinand Schöningh, 2004). 145 See William Harbutt Dawson, Bismarck and State (London: Swan Sonnenschein & Co., 1891); Carlota Perez, The Social Shaping of Technological Revolutions--Beyond determinism: The real workings of the market system, forthcoming. 146 See William O. Henderson, The State and the Industrial Revolution in Prussia, 1740-1870 (Liverpool: Liverpool University Press, 1983); Eric Dorn Brose, The Politics of Technological Change in Prussia (Princeton: Princeton University Press, 1992); William O. Henderson, ‘Peter Beuth and the Rise of Prussian Industry, 1810-1845’, The Review, New Series, Vol.8, No.2 (1955), pp. 222-231; Ulrich Peter Ritter, Die Rolle des Staates in den Frühstadien der Industrialisierung: Die preußische Industriebeförderung in der ersten Hälfte des 19. Jahrhunderts (Berlin: Duncker & Humbolt, 1961); Ilja Mieck, Preussische Gewerbepolitik in Berlin, 1806-1844 (Berlin: Walter de Gruyter & Co., 1965). 31

This thesis will highlight that Justi’s economic thought and policy proposal contained the theory and proposal of an entrepreneurial state in the eighteenth-century context. The state in Justi’s policy proposal comprehensively and proactively led the evolution of industrial structure and the progress of industrial technologies. This understanding will refute the rent-seeking interpretation of Justi and cameralism, because it will present that Justi’s economic theories and proposals centered on the concern about how to efficiently create an economy fitting his definition of public happiness. More importantly, this understanding will also in many ways revise the liberal interpretation, which suggests that Justi only wanted the state to make reactive intervention to fix the free market when it malfunctioned. Contrary to Ulrich Adam’s interpretation, this thesis finds that Justi did not want his comprehensive and proactive state intervention in industrial structure and technological progress to be a provisional and transitional measure which could be withdrawn. In his five-stage theory of the evolution of economy and society, Justi explicitly pointed out that, as the economy developed, government regulations and laws became more and more intensive and state fiscal expenditure became larger and larger. In a simple fishing and hunting society, “only few laws and a very simple government was necessary”; similarly, “a herding nation would not have much more laws than the fishing and hunting nation”; in contrast, in a farming society, “people received lands as properties…so many laws and regulations were needed”, and royal properties were needed to support the expenditure of monarchs’ administration; finally in manufacturing and commercial society, “a great number of laws and regulations of government are needed; and servants of the state, the administration of , and other institutions and supervision [Aufsichten] are exceptionally multipled”, and in this society royal properties along would not suffice to sustain the government so the taxation on economic activities was required.147 To Justi, while being the most productive and the most intellectual society, the manufacturing and commercial society was also the most state regulated society.

Further, this is essentially about the definition of Justi’s “liberalism”, namely what should the market be free from? The liberal interpretation suggests that Justi advocated the market to be free from proactive state intervention. However, this thesis finds that Justi explicitly advocated the opposite. In Guten Regierung and Natur und Wesen, Justi

147 Justi, System des Finanzwesens, pp. 49-52. 32 indeed explicitly listed the “freedom of citizens” (Freyheit des Bürgers) as a component of public happiness.148 Justi defined that a citizen was free, “when he can fulfill his will unhinderedly”.149 However, in a commonwealth where citizens united their wills into laws, their fulfillment of wills should obey laws, and in this circumstance, “the citizen is free if he has to endure no other restriction on his will than laws.”150 And laws of commonwealth should have no other aim than public happiness which was naturally the will of every citizen.151 Therefore when citizens’ wills were restricted only by laws, they were “truly free”, because they were restricted by nothing but the rules of their happiness, namely the rules “which must subdue [unterwerfen] every free and thinking being.” 152 In Macht und Glückseeligkeit, Justi explicitly listed the freedom of commerce and industry (Freyheit der Commercien und Gewerbe) as one of the fundamental factors to promote the prosperity of economy.153 Yet just as the true freedom of citizens was defined as being restricted only by laws embodying rules of public happiness, the commercial freedom was also defined as: “the unrestricted license of the people employed in industries to undertake all what they find accordant with their intentions and interests, as long as it is not against the law of public welfare and the welfare of commonwealth.”154 Therefore, Justi believed that commerce and industry were always free, “although people employed in them are subdued by the law and restriction necessary to the public welfare”.155 Justi gave several examples of state intervention which he believed were accordant with commercial freedom: 1) tariff protection; 2) quality regulation and inspection of manufactured products; 3) imposing excise; 4) regulating weights and measures; 5) guaranteeing the sufficient production of grain; 6) state commercial corporation.156 As long as state intervention promoted the prosperity of economy and public welfare, it was not against commercial freedom.157 Especially, Justi pointed out that “the freedom of commerce and industry does not at all exclude the direction of economy and of every single industry [die Direction des

148 Johann Heinrich Gottlob von Justi, Der Grundriß einer Guten Regierung in Fünf Büchern (Frankfurt and Leipzig: Verlag Johann Gottlieb Garbe, 1759), p. 20. 149 Ibid., p. 21. 150 Ibid., p. 21. 151 Ibid., p. 3; p. 21. 152 Ibid., p. 21. 153 Justi, Macht und Glückseeligkeit, vol.1, p. 698. 154 Ibid., p. 699. 155 Ibid., p. 699. 156 Ibid., p. 699. 157 Ibid., p. 699; pp. 700-701. 33

Nahrungsstandes und eines jeden Gewerbes insbesondere].” 158 This “direction” included: prescribing how “every one kind of work” should be operated; defining what private enterprises were allowed to do; regulating where and how private enterprises should buy and sell; rescuing depressed industries; and commanding people to conduct the industries which were important to the entire economy.159 This “direction of the economy and industry” was essentially the state’s shaping of the industrial and technological structure of the economy, which Justi found accordant with and demanded by the commercial freedom.

Moreover, Justi was aware that these state interventions to promote economic development should be “entrepreneurial”, in the sense that the state proposed visionary new initiatives to improve society and was rational and capable enough to carry out its initiatives. In 1761, Justi wrote a pamphlet titled Gedanken von Projecten und Projectmachern.160 Projectmacher were early modern “entrepreneurs”, who proposed bold financial and commercial projects to courts and governments to seek their supports. Some of the Projectmacher were honest and cared about public welfare but some were unrealistic and deceitful. Justi’s pamplet aimed at defending the honest Projectmacher and illustrating, how the government could identify and efficiently utilize them. In this pamphlet, Justi explictly wrote: “not only the king but particularly also the top state officials should be Projectmacher.”161 Their responsibility was to devise all possible measures, “through which the country…could be brought in higher prosperity and the fiscal revenue necessary to the large state expenditure could be raised while providing subjects with more conveniences and comforts”.162 Therefore the state should make all thinkable efforts “to create new enterprises, institutions, and regulations”.163 In order to make these projects successful, Justi believed that the state should carefully study the approaches to implement these projects, rationally select the optimal one, foresee the possible obstacles, and prepare sufficient countermeasures.164

158 Ibid., p. 700. 159 Ibid., p. 700. 160 See Johann Heinrich Gottlob von Justi, Gesammlete Politische und Finanzschriften über wichtige Gegenstände der Staatskunst, der Kriegswissenschaften und des Cameral-und Finanzwesens, vol.1 (Copenhagen and Leipzig: Rothenschen Buchhandlung, 1761), pp. 256-281. 161 Ibid., p. 261. 162 Ibid., p. 261. 163 Ibid., p. 261. 164 Ibid., pp. 261-262. 34

In this way, even in his most “radical” books, citizens and market in Justi’s thought were never free from state intervention, especially the entrepreneurial state intervention. Their freedom was being free from interventions not for public happiness. On this aspect, this thesis finds agreement with Birger Priddat’s argument that, through taking over the power of economic policy from princes, cameralists simultaneously empowered both the market and the state, and the “freedom” in cameralism for them meant free from the abuse of .165 In Guten Regierung, Justi warned that a prince must 1) not hinder the freedom of citizens permited by laws; 2) not violate ; 3) not interfere in judiciary process; 4) not raise tax unless in emergency; and 5) not fight unnecessary and unjust wars.166 In Jutta Brückner’s words, “this [Justi’s] concept of freedom means not the freedom from the state, but the protection and safeguard against the perversion of civil society to a domain of the prince.”167 In Macht und Glückseeligkeit, Justi advocated that state intervention in the economy should not serve the private interest of the prince.168

Secondly, this research is interesting because it provides a new perspective about how Justi was related to the Enlightenment. Scholars have considered the relationship between German cameralism and the Enlightenment for a long time. The representative of previous prevailing viewpoint was that “there was much in common [namely liberalism] in the assumptions and practical recommendations of the writers of , , Spain and Italy. [b]etween this programme and that of the German cameralists there is a marked contrast.”169 The liberal interpretation of Justi provides another perspective by highlighting the liberalism in Justi’s economic thought, therefore classfying Justi as an Enlightenment thinker and regarding new cameralism as an Enlightenment political economy. However, if Justi’s economic thought advocated the strong and entrepreneurial state intervention, then how should one understand Justi’s relationship with the Enlightenment? This thesis believes that it is a matter of how the Enlightenment economics is defined and that Justi’s thought of “entrepreneurial state”

165 Birger P. Priddat, ‘Kameralismus als paradoxe Konzeption der gleichzeitigen Stärkung von Markt und Staat. Komplexe Theorielagen im deutschen 18. Jahrhundert’, Berichte zur Wissenschaftsgeschichte: of Humanities, 31(2008), pp. 249-263. 166 Justi, Guten Regierung, pp. 25-27. 167 Brückner, Staatswissenschaften, Kameralismus und Naturrecht, p. 234. 168 Justi, Macht und Glückseeligkeit, vol.1, pp. 701-704. 169 John Habakkuk, ‘Economic Ideas’, in The New Cambridge Modern History: vol.8 The American and French Revolutions, 1763-93, ed., by Elliot H. Goodwin (Cambridge: Cambridge University Press, 1965), pp. 45-54(p. 50). 35 was still in tune with the Enlightenment economic discourse. The Enlightenment economics was not only about liberalism and laissez-faire. Joel Mokyr accredits the social and institutional reforms that preconditioned the Industrial Revolution in the early modern Europe to some innovations in economic thought achieved during the Enlightenment. To Mokyr, the Enlightenement economic discourses that preconditioned the Industrial Revolution were the proposals of the “Baconian Programme” and the “Industrial Enlightenment” and the economic doctrine against rent-seeking.170

The Baconian programme provided institutions aiming at “expanding the set of useful knowledge and applying natural philosophy to solve technological problems and bring about economic growth”.171 The Baconian programme comprised activities to channel human intelligence into organised scientific research to generate useful knowledge with the practical purpose of improving the performance of national economy. The representative examples of Baconian programmes would be the British Royal Society and the Royal Academy of Sciences.172 The concept of Baconian programme was first proposed by the English philosopher Francis Bacon (1561-1626) after whom this term is named.173 The Industrial Enlightenment was “that part of the Enlightenment which believed that material progress and economic growth could be achieved through increasing the human knowledge of natural phenomena and making this knowledge accessible to those who could make use of it in production”. 174 The Industrial Enlightenment bridged the Scientific Revolution and the Industrial Revolution, spread the knowledge that was useful to improving the of industries, and fuelled industries with the fruit of scientific progress.175 The Baconian programme could be regarded as part of the Industrial Enlightenment. Compared with the Baconian programme which focused on generating useful knowledge, the Industrial Enlightenment focused on spreading useful knowledge in the economy and aimed at

170 Joel Mokyr, The Enlightened Economy: An Economic History of Britain 1700-1850 (London: Yale University Press, 2009), pp. 40-98; Joel Mokyr, The Gifts of Athena: Historical Origins of the (Princeton: Princeton University Press, 2002). 171 Joel Mokyr, ‘The Intellectual Origins of Modern Economic Growth’, The Journal of Economic History, 65.2 (2005), pp. 285-351 (p. 285). 172 Ibid., pp. 291-293. 173 Mokyr, The Enlightened Economy, pp. 40-41. 174 Ibid., p. 40. 175 See Joel Mokyr, The Gifts of Athena: Historical Origins of the Knowledge Economy (Oxford: Princeton University Press, 2002), pp. 28-77. 36 lowering the cost of access to useful knowledge, for example the publication of Encyclopédie and German universities and academies “training bureaucrats in agricultural science, engineering, mining, and forestry”.176 The economic doctrine against rent-seeking, represented by that of Adam Smith (1723-1790) in the United Kingdom, refers to the economic thought that promoted the distribution of economic interest according to productivity and efficiency, dismissed the use of political power to protect outdated industries and techologies, and reallocated people’s creativity and energy from rent-seeking to national wealth creation.177

This thesis finds that all these three aspects were also emphasised in Justi’s thought of “entrepreneurial state”. As later chapters will show, Justi’s “entrepreneurial state” theory and proposal had the aim to promote the generation, spread, and application of the knowledge which was useful to making innovations and raising the productivity of industries. And Justi’s economic thought was explicitly against rent-seeking and advocated free and the distribution of economic interest based on diligence, productivity and innovation capacity of actors. In this sense, Justi’s economic thought, which epitomised the economic thought of German cameralism, accorded with Joel Mokyr’s definition of the Enlightenment economics represented by the thoughts of Francis Bacon and Adam Smith. However, this thesis does not have any intention to claim the practical efficacy of Justi’s policy proposal. It only emphasises that the advocacy of the Baconian programme, the Industrial Enlightenment, and anti rent- seeking were in line with and represented no contradiction to Justi’s economic proposals.

Thirdly, this research is interesting because it provides a new perspective about how Justi related to modernity. If Justi’s economic thought no longer advocated liberalism and embodied the Enlightenment economics in Mokyr’s sense, can he still be regarded as a forgotten forefather of modernity? This thesis will conclude that he can. Justi’s economic thought essentially advocated the state-led spread of economic or industrial rationality: optimising industrial structure by building more productive sectors, applying the force of the progress of science and technology to industries, and reforming institutions to encourage these changes. This rationality would remind people

176 See Mokyr, ‘Intellectual Origins’, pp. 295-322. 177 Mokyr, Enlightened Economy, pp. 63-78. 37 of the “economic rationalism” characterising the modern economy, which is, according to , “the extension of the productivity of labour which has, through the subordination of the process of production to scientific points of view, relieved it from its dependence upon the natural organic limitations of the human individual.”178 In Justi’s policy proposal, it was expected that this rationalisation would be promoted by the state and its Policey. Mokyr argues that “the Enlightenment’s long-term impact on technological practices and through these on economic performance is something that economic historians have neglected at their peril.”179 This argument is reasonable, for when discussing what the Enlightenment brought to the modernisation of economic thought, traditional answers seem to concentrate on the liberalism and laissez-faire of British and French Physiocracy.180 But what is the origin of the economic modernity characterised as the innovation- and manufacturing-centred economy, the thought theorising this economy, and the idea that the state acting as an “entrepreneurial state”? This thesis argues that the modernity of this sense was embodied within the contribution Justi tried to make to the economic reasoning of his time.

In this way, this thesis has implications that go beyond the scholarship of Justi and German cameralism. In modern economics, it was not until Joseph Schumpeter (1883- 1950) that “innnovation”, namely, technological progress in processes and products, organisational reform of enterprises, and opening up of new markets and new sources of supply, was officially introduced in modern economics as the decisive factor triggering economic dynamics.181 Yet Schumpeter himself had no intention at all of discussing how innovations and the innovation-driven dynamics could be utilised to realise public purposes, so “from the standpoint of its applicability to the

178 Max Weber, The Protestant Ethic and the Spirit of Captialism (London: Routledge, 2001), p. 36. Also see Stephen Kalberg, ‘Max Weber’s Types of Rationality: Cornerstones for the Analysis of Rationalisation Processes in History’, The American Journal of , 85.5(1980), pp. 1145-1179; Walter L. Wallace, ‘Rationality, Human Nature, and Society in Weber’s Theory’, Theory and Society, 19.2(1990), pp. 199-223; Kieran Allen, Weber: Sociologist of Empire (London: Pluto Press, 2017), pp. 32-46. 179 Mokyr, Enlightened Economy, p. 40. 180 For example, Ulrich Im Hof, The Enlightenment (Paris: Blackwell Publishers, 2000), pp. 191-196; Steven L. Kaplan and Sophus A. Reinert, ‘The Economic Turn in Enlightenment Europe’; T. J. Hochstrasser, ‘Physiocracy and the politics of laissez-faire’, in The Cambridge History of Eighteenth-Century Political Thought, ed. by Mark Goldie and Robert Wokler (Cambridge: Cambridge University Press, 2006), pp. 419-442. 181 Schumpeter, The Theory of Economic Development; Joseph Alois Schumpeter, Business Cycles, 2 vols. (London: McGraw-Hill Book Company, 1939); Joseph Alois Schumpeter, Capitalism, Socialism, and Democracy (London: Routledge, 1994). 38 limitations of the Schumpeterian system are apparent.”182 Especially Schumpeter had no interest in discussing the policy of full employment. As a believer in Walrasian equilibrium, he believed that full employment could automatically be realised by the force of equilibrium.183 A reviewer of Schumpeter’s theory of economic development pointed out that it was “the real weakness” of Schumpeter’s theory that it lacked adequate theory of employment.184 In this way, in the decades between the end of the Second World War and 1980s, Schumpeter lost the contest for the popularity, especially in the aspect of providing the theory to support economic policies, with his rival (1883-1946). Both Schumpeter and Keynes were well acquainted with each other and studied similar topics, but proposed in many ways competing theories. It was only since the decline of Keynesianism that Schumpeter’s theory and its potential applicability to policies have started to gain increasing attention.185 Efforts have been made to merge Schumpeterian innovation dynamics and Keynesian demand management in order to complement both theories and establish a theoretical basis for state intervention in technological progress and industrial structure to solve public economic concerns such as cyclical depressions and .186 This thesis shows that long before today’s interest in innovation policy, German cameralist Justi had provided an early modern version of the theory and policy proposal of “entreprenerial state”. Justi provided a proposal of realising public economic welfare, of which a key component was to provide people with abundant chances to work to earn their comfortable lives, through state-led evolution of industrial structure and technological progress. This thesis does not intend to draw conclusion about the lessons today’s innovation policymakers could learn from Justi. Its intention is to present that Justi’s economic thought, which epitomised German cameralism, embodied a

182 Richard V. Clemence and Francis S. Doody, The Schumpeterian System (Cambridge: Addison-Wesley Press, 1950), p. 101. 183 Joseph Schumpeter, Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Proces, vol.1 (London: McGraw-Hill Book Company, 1939), pp. 160-161. 184 Clemence and Doody, The Schumpeterian System, p. 59. 185 Jakob Edler and Jan Fagerberg, ‘Innovation policy: what, why, and how’, Oxford Review of Economic Policy, 33.1(2017), pp. 2-23. 186 Fo example, see Chris Freeman, Technology Policy and Economic Performance: Lessons from Japan (London: Science Policy Research Unit University of Sussex, 1987), pp. 87-90; Lennart Erixon, ‘Combining Keynes and Schumpeter. Ingvar Svennilson’s contribution to the Swedish growth school and modern economics’, Journal of Evolutionary Economics, 15(2005), pp. 187-210; Giovanni Dosi, Giorgio Fagiolo, Andrea Roventini, ‘Schumpeter meeting Keynes: A policy-friendly model of endogenous growth and business cycles’, Journal of Economic Dynamics & Control, 34(2010), pp. 1748-1767; Giovanni Dosi, Mauro Napoletano, Andrea Roventini, Tania Treibich, ‘Micro and Macro Policies in the Keynes Schumpeter Evolutionary Models’, Journal of Evolutionary Economics, 27(2017), pp. 63-90. The endeavour is also made by Mazzucato in Entrepreneurial State. 39 noteworthy case in the history of the economic thought about industrialisation and innovation policy. The theoretical reasoning behind the “entrepreneurial state” has the root in the remote history of hundreds of years ago.

iv Methodology and Structure

The nature of this thesis is a contribution to the history of economic thought. Ideas, thoughts, and texts are studied. The history of economic thought is a specialised branch of intellectual history and has its special methodological considerations.187 There are two basic approaches to understanding a text, including an economic text: one believing that the text is self-contained and can be understood by the words of itself, whereas the other believing that the meaning of a text is determined by its circumstances and can be understood by reconstructing its context.188 According to Quentin Skinner, the extreme forms of both approaches, namely studying solely the content of a text or solely the context of it, are inadequate.189 According to Skinner, the proper method of intellectual history is to combine both approaches and to give each a proper function: the reading of a text should locate the range of meanings which the text could possibly deliver, and the reconstruction of the context of the text should recover its linguistic context to decode the actual intention of the author.190 To Skinner, the understanding of a text presupposes the grasp of both the meaning which the text intends to provide and the way through which this meaning is intended to be taken. 191 Similar to Skinner’s method of intellectual history, the method of the history of economic thought also requires to combine the study of a text itself with the contextualisation of it. Some scholars believe that the economic thought is a part of the holistic human rationality and thus should be understood historically and contextually. Warren Samuels summarised that the contextual reading of economic thought is necessary because: 1)

187 See Donald R. Kelley, ‘Horizons of Intellectual History: Retrospect, Circumspect, Prospect’, Journal of the History of Ideas, 48.1(1987), pp. 143-169; Warren J. Samuels, ‘The History of Economic Thought as Intellectual History’, History of Political Economy, 6.3(1974), pp. 305-323. 188 Quentin Skinner, ‘Meaning and Understanding in the History of Ideas’, History and Theory, 8.1(1969), pp. 3-53 (p. 3); Samuels, ‘The History of Economic Thought’, p. 319; K. R. Minogue, ‘Method in Intellectual History: Quentin Skinner’s Foundations’, Philosophy, 56.218(1981), pp. 533-552 (pp. 544-549); Mark Blaug, Economic History in Retrospect (Cambridge: Cambridge University Press, 1985), p. 2. 189 See Skinner, ‘Meaning and Understanding’, pp. 4-48. 190 Ibid., pp. 48-49. Also see Felix Gilbert, ‘Intellectual History: Its Aims and Methods’, Daedalus, 100.1(1971), pp. 80-97. 191 Skinner, ‘Meaning and Understanding’, p. 48. 40 economic thought comprises the blend of other kinds of social thought; 2) therefore economic thought contains more than economic rationality but also other types of rationality, such as the political, social, and legal; 3) humans’ construction of economic theory is conditioned by their cognitive systems of certain historical period; 4) economic thought includes both knowledge and speculation and both facts and values.192 In this way, the meaning of an economic text resides in the interaction between the text and other intellectual systems in the society.193

Bertram Schefold summarises this contextual research as the “relativism” approach to studying the history of economic thought.194 According to Schefold, relativist approach takes a holistic view of economic activities and other social activities and believes that the economy is embedded in and contextualised by other domains of the society, so economic texts can only be understood through not only reading them but also investigating ideas and institutions of other aspects of the society to which the texts belong.195 The representative economic thoughts suitable to be subject to the relativist approach include works by who thought that economy was conditioned by modes of production, Max Weber’s Sozialökonomie which considered that economy was conditioned by the political, religious, and ethical principles of society, and ’s Der Moderne Kapitalismus which provided a holistic vision of the development of captialism. A special form of relativism is the “political” approach, which recognises that economic thought is especially conditioned by values and norms governing the relationship between the economy and the state. 196 The political approach highlights that economic thought has the aspect as “an exposition of a comprehensive set of economic policies that its author advocates on the strength of certain unifying [normative] principles such as the principles of economic liberalism, of socialism, and so on”.197 The political approach means that, under different contexts, values and norms about how the state should interact with the economy are different, which shapes contemporary economic theories. For example, the

192 See Samuels, ‘The History of Economic Thought’, pp. 308-318. 193 See ibid., pp. 319-322. 194 Betram Schefold, ‘Economics without Political Economy: Is the Discipline Undergoing Another Revolution?’, Social Research: An International Quarterly 81.3(2014), pp. 613-636 (pp. 618-619). 195 Ibid., pp. 621-624. 196 Betram Schefold, ‘History of Economic Thought and Economic History: Who Will Bring the Past to Life?’, in Economic Thought and History: An Unresolved Relationship, eds. by Monika Poettinger and Gianfranco Tussent (London: Routledge, 2016), pp. 17-42 (p. 31); Schefold, ‘Economics without Political Economy’, pp. 624-625. 197 Schumpeter, History of Economic Analysis, p. 38. 41 made full employment a new norm dominating state economic policy, which influenced and conditioned the orientation of economic thought after the Great Depression.198

However, some scholars maintain that the history of economic thought also has its special method which other branches of intellectual history may find improper. Skinner’s method of intellectual history does not accept the existence of perennial questions which could be used to interrogate different texts of different periods, but suggests that “there are only individual answers to individual questions”.199 Therefore there is no point to concern texts of the past with any question but their own. In this way, “an intellectual historian ought to be an epistemological naif, and the less he thinks he knows in advance, the better.” 200 In comparison, Schefold summarises that, paralleling with the “relativism” approach, there is also the “positivism” approach to studying the history of economic thought.201 The most illustrative examples of the works applying the positivist approach were Joseph Schumpeter’s History of Economic Analysis and Mark Blaug’s Economic Theory in Retrospect.202 To scholars of the positivist approach, their work aims at studying the development or progress of the knowledge of economic analysis. In Schumpeter’s words, it was “the history of the intellectual efforts that men have made in order to understand economic phenomena or…the history of the analytic or scientific aspects of economic thought.”203 In Blaug’s words, “the history of economic thought...is nothing but the history of our efforts to understand the workings of an economy based on market transactions.” 204 The positivist approach accepts the belief that there is “progress” in economic thought, which the relativist approach may find problematic. 205 For example, according to Blaug, Adam Smith grasped the market mechanism of coordinating the independent decisions of buyers and sellers but it took economists of following generations to develop the concepts such as equilibrium and marginal concepts to work out Smith’s

198 Ibid., p. 31. 199 Quentin Skinner, ‘Meaning and Understanding in the History of Ideas’, History and Theory, 8.1(1969), pp. 3-53 (p. 50). 200 Minogue, ‘Method in Intellectual History’, p. 548, 201 Schefold, ‘Economics without Political Economy’, pp. 616-618; pp. 620-621. 202 Ibid., p. 618. 203 Schumpeter, History of Economic Analysis, p. 2. 204 Blaug, Economic Theory in Retrospect, p. 6. Also see Mark Blaug, ‘No History of Ideas, Please, We’re Economists’, Journal of Economic Perspectives, 15.1(2001), pp. 145-164. 205 Samuels, ‘History of Economic Thought’, p. 308. Also see Stephan Boehm, Christian Gehrke, Heinz D. Kurz and Richard Sturn, ‘Introduction’, in Is There Progress in Economics: Knowledge, Truth and the History of Economic Thought, eds., Stephan Boehm, Christian Gehrke, Heinz D. Kurz, Richard Sturn (Cheltenham: Edward Elgar, 2002), pp. xv-xxii. 42 conviction about “the ”.206 According to Blaug, the task of positivist approach of history of economic thought is to show how certain preconceptions lead to certain analyses and to ask if the analyses still stand when freed from their ideological foundation. 207 For example perhaps developed his theory of comparative advantage in the context of strong animus against landed classes, but “this theory survives the removal of his prejudices”.208 Compared with the request to be an epistemological naif in Quentin Skinner’s method of intellectual history, the positivist approach believes that judging past theories in their own terms “is an impossible accomplishment for it implies that we can erase from our minds knowledge of modern economics.”209

This thesis will adopt both the positivist approach and the political approach to study Justi’s theory and proposal of “entrepreneurial state”. Firstly, this thesis aims to uncover Justi’s theories about how manufacturing and national intellectual capital could promote the creation of national wealth. In this way, it studies a group of books that could be called Justi’s “economic analysis”. Therefore, in order to understand why Justi reached his level of knowledge and analysis about manufacturing and national intellectual capital, it is necessary to investigate the knowledge and analysis of previous and contemporary economic thinkers whose influence on Justi could be identified. However, this thesis does not aim to establish whether and how Justi’s analysis represented any “progress” beyond his predecessors and contemporaries. The study of previous and contemporary economic thinkers instead aims at contextualising Justi’s theories about manufacturing and national intellectual capital. Secondly, this thesis will not solely study Justi’s economic analysis. Justi’s theories and policy proposals of “entrepreneurial state” were embedded in his Policeywissenschaft and cameral science, which were dominated by the political norm of “public happiness”. Therefore, Justi’s thought of “entrepreneurial state” was a political economy of public happiness. In this way, contemporary norms and values in state economic policy should be investigated to understand what Justi’s public happiness meant and what his theories and proposals

206 Blaug, Economic Theory in Retrospect, p. 3. Also see Mark Blaug, ‘Is there really progress in economics?’, Is There Progress in Economics: Knowledge, Truth and the History of Economic Thought, eds., Stephan Boehm, Christian Gehrke, Heinz D. Kurz, Richard Sturn (Cheltenham: Edward Elgar, 2002), pp. 21-41. 207 Blaug, Economic Theory in Retrospect, p. 6. 208 Ibid., p. 6. 209 Ibid., p. 1. 43 meant. Moreover, this thesis finds that because previous and contemporary economists had the knowledge that manufacturing and national intellectual capital were powerful impulses of economic development, the preference for manufacturing, the appreication of national intellectual capital and the entrepreneurial function of the state became the norms of state economic policy which contexualised Justi’s thought of “entrepreneurial state”. The “entrepreneurial state” in Justi’s economic thought was from a time when it was popular for the state to promote wealth creation through promoting manufacturing, innovation, technological progress, science, and other national intellectual capital.

Following this methodology, this thesis will consist of the following five chapters. The first chapter is the first part of the contextualisation of Justi’s theory and proposal of the “entrepreneurial state”. It investigates thoughts of the preference for manufacturing and related thoughts about population, primary sectors and foreign trade before Justi with the emphasis on old Austrian cameralists’ thoughts of which the influence on Justi’s thought could be clearly identified. And it shows that these thoughts could be traced to Giovanni Botero’s thought of “the reason of state”. It also shows that these thoughts were governed by the political and economic aims of the early modern absolute monarchy: in order to survive and thrive in the the early modern international military competition, a nation should have a manufacturing-centered and self-sufficient economy. This aim was incorporated in Justi’s definition of public happiness.

The second chapter continues the contextualisation of Justi’s thought of the “entrepreneurial state”. It studies the philosophy and political economy of German enlightened absolutism which contextualised Justi’s thought, especially Christian Wolff’s natural law. It shows that, while the aim of “the reason of state” was still in the air, by the middle of the eighteenth century when Justi built his economic thought, it started to prevail as a political norm that the state should promote public happiness and therefore should comprehensively intervene in the economy. This prevailing political norm about public happiness was the background of Justi’s political economy of public happiness. This chapter also studies a group of theories and proposals from Francis Bacon until Christian Wolff about how innovation and the progress of technology and science could promote economic development and how to build the academy of sciences as the main policy tool to promote national wealth through promoting innovation and the progress of technology and science. This group of thoughts 44 contextualised Justi’s theories and proposals about national intellectual capital. It should be noted that because this thesis only studies Justi’s thought of “entrepreneurial state”, therefore it only contextualises Justi’s “entreprenuerial state” rather than the entirety of Justi’s thought and writings.

The study into Justi’s works will start since the third chapter. The third chapter scrutinises the definition of Justi’s public happiness as an aim of state economic policy and his general economic strategies towards public happiness. This chapter shows that Justi’s public happiness essentially aimed to provide people with abundant opportunities of employment, to produce large output of goods, to realise national economic independence, and to maintain the even wealth distribution among social strata. This chapter shows that Justi’s definition of public happiness was influenced by that of Christian Wolff, but Justi’s natural law tried to reconcile that of Christian Wolff and that of Christian Thomasius. As the result of this eclectic endeavor, Justi proposed his principle of state intervention in the economy. This chapter also argues that Justi preferred the domestic market focused economic strategy to realise the public happiness.

The fourth chapter uncovers the theory of manufacturing and national intellectual capital in Justi’s economic thought, which bridged the goals and the policy proposals of his entrepreneurial state. This chapter finds that Justi’s economic thought contained a theory of economic expansion driven by product innovations, process innovations (mainly mechanisation), and the evoluton of industrial structure in the sense of the emergence of new industries. This chapter displays Justi’s reasons of his preference for manufacturing and his appreciation of national intellectual capital: manufacturing had detailed division of labour, product and process innovations promoted the expansion of demand, manufacturing was innovation intensive, science was the source of innovation, manufacturing was science-based, and manufacturing employed the diligence and skills of people. This chapter argues that Justi could be considered as an early modern theorist of the economic growth driven by innovaton and industrialisation. And this chapter finds that Justi built his theory of manufacturing and national intellectual captial with the reference to not only cameralist and mercantilist thoughts but also the Enlightenment economic ideas up to his date.

The fifth chapter studies Justi’s policy proposals of “entrepreneurial state”. It shows that the state in Justi’s proposal strongly and proactively controlled the direction of 45 economic development through shaping the industrial structure and leading the technological progress. In order to do so, the state in Justi’s proposal fulfilled various functions: planning industrial structure and technological progress, generating new technologies, urging the application of new technologies, acting as the entrepreneur of last resort to invest in new industries, and fostering new enterprises in new industries. This chapter shows that Justi’s economic freedom was the freedom under the framework of these state interventions. This chapter also displays that Justi’s state intervention was proposed not to be a transitional measure but a permanent arrangement and that this proposal of strong state intervention was constant across Justi’s textbooks.

46

Chapter One. The Political Economy of Absolute Monarchy

As Kurt Zielenziger wrote, “cameral science is by its essence an expression of the rising absolutist state, just as the so-called mercantilism.”1 When Justi started his study of cameral science in Vienna, contemporary Austria was one of the centres of economic research in the German-speaking world.2 This centre was built on the work of three old cameralists: Johann Joachim Becher, Philipp Wilhelm von Hörnigk, and Wilhelm von Schröder.3 This “” of cameralism developed in the context of the formation of a centralised Habsburg monarchy facing a series of crises in the late seventeenth century, including the eastward conquests of Louis XIV and the westward expansion of the Ottoman Empire.4 This school of cameralism can be considered an economic theory of absolute monarchy and this was where Justi’s economic thinking began. In Justi’s early works, such as his inaugural lecture in the Theresianum and Staatswirthschaft, the influence from Hörnigk and Schröder can be clearly identified. Justi built his Staatswirthschaft on the basic framework that the wealth of a nation could be increased in three ways: immigration, mining and commerce.5 This framework was proposed by Schröder.6

Apart from Macht und Glückseeligkeit, all of Justi’s main economic works were dedicated to contemporary political leaders promoting absolutism in their domains: Staatswirthschaft to Maria Theresa; Grundsätze to Ernst von Steinberg, the Hanoverian Minister of the personal union of Great Britain and the Electorate; Manufacturen und Fabriken to Danish Prime Minister Johann Hartwig Ernst von Bernstorff; and System des Finanzwesens to Frederick II of Prussia.7 From 1755 when Staatswirthschaft was published to 1762 when Reglements was published, Justi built his economic thought roughly during the period of the Seven Years’ War. Justi was not indifferent to this global-scale war among European great powers. He wrote two pamphlets defending the political and economic aims of England and Prussia in this

1 Zielenziger, Die deutschen Kameralisten, p. 9. 2 Roscher, National-Oekonomik, pp. 237-238. 3 Ibid., pp. 263-304. 4 Ibid., pp. 263-270. 5 Justi, Gesammlete Politische und Finanzschriften, vol.2, pp. 155-160; Justi, Staatswirthschaft, vol.1, p. 28. 6 William von Schröder, Fürstliche Schatz-und Rentkammer (Leipzig: Verlegts Jacobus Gerdesius, 1686), pp. 162- 196. 7 Justi, System des Finanzwesens. 47 war.8 Absolute monarchy, the political system of which intellectual roots can be traced to and before him to Niccolò Machiavelli in The Prince, was a factor that contextualised Justi’s economic thought.

1.1 Absolute Monarchy in the Holy Roman Empire

The structure of absolute monarchy was first discussed by Jean Bodin (1530-1596).9 A defining characteristic of this polity was that the monarch concentrated all of the power in the country. The monarch should hold the sovereignty of state, which was chiefly manifested in the power of legislation. Thereupon the monarch could make laws “without the consent of any superior, equal, or inferior being necessary”.10 Thereupon the monarch should have all administrative, diplomatic, and judicial powers without the reliance on anyone or any estate.11 In general, an absolute monarch was empowered to govern the state as he saw fit, and this power should be exempted from all laws made by the monarch himself and by his predecessors and from the will of any estate.12

Bodin’s model of absolute monarchy is more of an ideal type which European monarchs tried to achieve for centuries rather than what happened in reality. Early modern European monarchs’ power was always restricted by other forces. According to the types of restriction over monarchs’ power, Wilhelm Roscher divided the development of absolute monarchy into three stages.13 The first was the confessional absolutism (konfessioneller Absolutismus), exemplified by Philipp II of Spain and Ferdinand II of the Holy Roman Empire; its principle was “whose realm, his religion” (cuius regio, eius religio). The second stage was the court absolutism (höfischer Absolutismus), represented by Louis XIV of France, Frederick I of Prussia, and August II of Saxony and ; its principle was “I am the State” (l’état c’est moi). The third stage was the enlightened absolutism (aufgeklärter Absolutismus), represented by Frederick II of Prussia and Joseph II of the Holy Roman Empire; its principle was “the king is the

8 See Nokkala, From Natural Law to Political Economy, pp. 170-203. 9 M. J. Tooley, ‘Introduction’, in Jean Bodin, trans. by M. J. Tooley, Six Books of the Commonwealth (Oxford: Basil Blackwell, 1967), pp. xiv-xxxix. 10 Jean Bodin, trans., M. J. Tooley, Six Books of the Commonwealth (Oxford: Basil Blackwell, 1967), p. 43. 11 Bodin, Six Books, pp. 43-49. 12 Ibid., pp. 25-36. 13 Wilhelm Roscher, Politik: Geschichtliche Naturlehre der Monarchie, Aristokratie und Demokratie (: J. G. Cotta'sche Buchhandlung Nachfolger, 1908), pp. 250-251. 48 prime servant of the State” (le roi c’est le premier serviteur de l’état). In confessional absolutism, the monarch’s power was allied with the ecclesiastical power, so it was both promoted as well as restrained by the latter.14 Court absolutism was both supported and restricted by court etiquette, courtiers, and court officials, which were created by the monarch himself but still had influence on his power.15 In enlightened absolutism, the power of monarch was the least constrained, because “in the name of the state, the ‘first servant’ can make unlimited use of wealth and blood of his people as if they are his own.” 16 Roscher summarised that the essence of the absolute monarchy was to eliminate the medieval ecclesiastical and secular aristocrats and to concentrate power from localities and social strata to the monarch, so that he would become the source of all power in the country.17

The political system of the Holy Roman Empire and its territorial states, which provided the background to the formation of the German absolute monarchy, was the estatist state (Ständestaat). The territorial estatist state operated with a political dualist system in which the power was separated between the prince and the territorial diet (Landtag).18 The diet normally consisted of the deputies of three estates in a territory: nobilities, clergies, and towns.19 In the southwestern territories, peasants sometimes formed the fourth estate in diets.20 The diet was not a parliament elected by people but an assembly formed by holders of privileges in the territory, namely local privileged dignitaries “who enjoyed quasi-ruling authority on their noble lands or sat on cooptive town council seats”.21 The members of the diet “did not represent the country but were the country in their collective entirety”.22 When a territory was divided up among heirs of its prince, the diet remained intact; when a territory had a new ruler, the diet remained

14 Ibid., p. 251. 15 Ibid., p. 251. 16 Ibid., p. 251. 17 Ibid., p. 194. 18 R. Mousnier, ‘The Exponents and Critics of Absolutism’, in The New Cambridge Modern History: Vol.IV, The Decline of Spain and The Thirty Years War 1609-48/59, ed., J. P. Cooper (Cambridge: Cambridge University Press, 1971), pp. 104-131 (p. 114). 19 Joachim Whaley, German and the Holy Roman Empire, vol.2, The of Westphalia to the Dissolution of the Reich 1648-1806 (Oxford: Oxford University Press, 2012), p. 241. 20 Ibid., p. 247. 21 Joachim Whaley, Germany and the Holy Roman Empire, vol.1, From Maximilian I to the Peace of Westphalia 1493-1648 (Oxford: Oxford University Press, 2012), p. 518; Carlo M. Rose, ‘Empire and Territories at the End of the Old Reich’, in The Old Reich: Essays on German Political Institutions 1495-1806, eds. by James A. Vann and Steven W. Rowan (Bruxelles: Les Editions de La Librairie Encyclopédique, 1974), pp. 59-76 (p. 68). 22 Rudolf Vierhaus, Germany in the Age of Absolutism (Cambridge: Cambridge University Press, 1988), pp. 87-88. 49 the same; when a prince ruled multiple territories, he faced multiple diets.23 Territorial estates and their diets were an obstacle to German absolutism and the stronghold of early modern German regionalism. The source of the power of the diet was the ability to raise money through taxation.24 Thereupon the diet had legislative power, which was frequently used to protect local privileges and rights against the incursions of new laws.25 Territorial constitutional laws made by diets always restricted princes, and imperial courts protected the rights of diets against princes.26 In this legal environment, in the states with multiple territories, the uniformity of government directives and standardisation of administrative rules were impossible, because “each territory had its own special status, each province its own special constitutional rules”.27

In this context, absolutism in German states took the form of monarchs’ endeavour to unite separate territories and build their uniform and centralised administration independent from estates. Also due to the restriction of the sovereignty of territorial princes imposed by imperial laws, German absolutism manifested itself in Brandenburg-Prussia and Habsburg Austria. 28 Absolutism in Brandenburg-Prussia started with the “Great Elector” Friedrich Wilhelm (reign 1640-1688). He faced the problem of uniting ten territories, every one of which had its consitution against the monarch and cared only about extending local interest, in defence of his realm against intimidating neighbours such as Sweden and France. 29 The key solution was to maintain a standing army to protect his authority and his realm.30 In order to support such an army, at first the Great Elector gained the support of nobilities for a permanent rural property tax in all territories called the Kontribution, at the sacrifice of the interest and freedom of peasants.31 Then following the example of the Netherlands, he imposed the excise on goods in cities firstly in Brandenburg in 1667 and then spread throughout

23 Vierhaus, Age of Absolutism, pp. 87-88; Whaley, Holy Roman Empire, Vol.2, p. 243. 24 Whaley, Holy Roman Empire, vol.2, p. 241. 25 Whaley, Holy Roman Empire, vol.1, p. 518. 26 Rose, ‘Empire and Territories’, pp. 64-69. 27 Ibid., p. 70. 28 Whaley, Holy Roman Empire, vol.2, pp. 187-191. 29 See F. L. Carsten, The Origins of Prussia (Oxford: Clarendon Press, 1954), p. 255; Whaley, Holy Roman Empire, vol.2, p. 216; Rodney Gothelf, ‘Frederick William I and the beginnings of Prussian absolutism, 1713-1740’, in The Rise of Prussia 1700-1830, ed. by Philip G. Dwyer (London: Routledge, 2000), pp. 47-67 (pp. 51-59). 30 W. H. Bruford, ‘The Organisation and Rise of Prussia’, in The New Cambridge Modern History: Vol.VII. The Old Regime 1713-63, ed. by J. O. Lindsay (Cambridge: Cambridge University Press, 1957), pp. 292-317 (p. 294). 31 F. L. Carsten, ‘The Rise of Brandenburg’, in The New Cambridge Modern History: Vol.V. The Ascendancy of France, ed., by F. L. Carsten (Cambridge: Cambridge University Press, 1961), pp. 543-558 (p. 546). 50 all territories by 1720.32 The excise was a permanent tax levied by military officers— commissaries of regiments—appointed by the monarch without the consent of estates being necessary. 33 Collectors of the excise and the Kontribution, namely Urban Commissaries (Städtekommissarien) and Rural Commissioners (Landräte), led by Provincial Commissariats (Provinzialkommissariat) led by the General Commissariat (Generalkommissariat) in Berlin, gradually became the monarch’s personalised, centralised and hierarchical administering urban and rural areas.34 By 1713, this bureaucracy had nearly taken over all administrative functions of territorial diets.35 In this way, the monarch of Brandenburg-Prussia built his own financial system, standing army, and administration independent from the estates. In comparison, the Habsburg absolute monarchy in Austria embodied less personalised governance by the monarch. Instead of being independent from estates, Habsburg monarchs relied on “an alliance between the dynasty and the twin forces of the nobility and the .”36 Habsburg Austria built centralised administrations in Austria and Bohemia only after Maria Theresa’s first reform which happened before the Seven Years’ War and copied the example of Prussia.37 Yet the Habsburg’s territorial estates remained so much more powerful than their Prussian counterparts that the empress’s tax reform had to seek their consent and her provincial administrations had to report to them.38

Thus absolute monarchy in the circumstances of the early modern Holy Roman Empire could provide the foundation for economic development. Firstly, absolute monarchy could enable state intervention in the economy and society thoroughly. The standing army guaranteed the irresistibility of the monarch’s rule against the will of nobilities and towns.39 The monarch’s independent finance and the bureaucracy enabled the implementation of his policies without relying on the administration of the diet controlled by estates, which enabled him to take over the power of intervening in the

32 Whaley, Holy Roman Empire, vol.2, p. 238. 33 Bruford, ‘Rise of Prussia’, p. 297. 34 Otto Hintze, Historische und Politische Aufsätze, vol.1 (Berlin: Verlag Deutsche Bücherei, 1904), pp. 181-184. 35 Bruford, ‘Rise of Prussia’, p. 294. 36 H. M. Scott., ‘Reform in Habsburg Monarchy, 1740-90’, in Enlightened Absolutism ed.by H. M. Scott (London: Macmillan, 1990), pp. 145-187 (p. 153). 37 J. O. Lindsay, ‘Monarchy and Administration: European Practice’, in The New Cambridge Modern History: Vol.VII. The Old Regime 1713-63, ed. by J. O. Lindsay (Cambridge: Cambridge University Press, 1957), pp. 141- 160 (p. 149). 38 C. A. Macartney, ‘The Habsburg Dominions’, in The New Cambridge Modern History: Vol.VII. The Old Regime 1713-63, ed. by J. O. Lindsay (Cambridge: Cambridge University Press, 1957), pp. 391-415 (pp. 413-414). 39 Bruce D. Porter, War and the Rise of the State: The Military Foundations of Modern Politics (New York: The Free Press, 1994), pp. 113-114. 51 economy and society.40 Secondly, as the monarch became able to impose uniform policies and regulations on different territories which previously had their own regulations, absolute monarchy could overcome the “integration crisis” caused by the political and economic disintegration of feudalism in the early modern Europe.41 For example, in Brandenburg-Prussia, there used to be twenty five different measurements for weight and two hundred different measurements for volume. 42 Monarchs’ centralised administration could enable the central government to abolish tolls and tariffs between territories, eliminate the disturbances on trade caused by the antagonism and mistrust among territories, and solve the coordination failure caused by the disintegration of economic regulation, so that the cost of trade could be reduced, the market could be expanded, new division of labour could be promoted, mobility of production factors could be stimulated, and technological diffusion could be facilitated.43 However, these did not necessarily happen in reality. Spain and Portugal were the earliest absolutist states but they became the least-developed European nations. Prussia started to build an absolute monarchy in the seventeenth century, but provincial tolls which hindered the formation of a uniform national market were not abolished until the Stein-Hardenberg reforms. The governance of French absolutist monarchs triggered the Revolution. Thinkers of absolute monarchy should design how to wield the strong tool provided by the absolutist state.

1.2 The Nature of Absolute Monarchy: Niccolò Machiavelli

The idea that absolute monarchy could be a tool to revolutionise a society can be traced back to Niccolò Machiavelli (1469-1527). Machiavelli believed that whether the form of government should be democratic, aristocratic, or monarchic depended on who among people, nobilities and monarch had the “virtue”, which was the mentality mobilising behaviours that promoted the strength, harmony, and sustainability of the

40 About the philosophical, political, economic, and social forces delivering Policey, see Raeff, Well-Ordered Police State, pp. 11-42. 41 About early modern “integration crisis”, see Stephan R. Epstein, ‘The late medieval crisis as an ‘integration crisis’’, in Early Modern Capitalism: Economic and Social Change in Europe, ed.by Maarten Prak (London: Routledge, 2000), pp. 25-50. 42 Gothelf, ‘the beginnings of Prussian absolutism’, p. 53. 43 About the economic benefit of early modern European political unification of territories, see Epstein, Freedom and Growth. 52 nation. When people had the virtue, the state could be democratic. When people were corrupt, namely when “neither private worth nor public authority was respected” and when “everyone lived as he liked, a thousand wrongs were done daily”, the state should be monarchic to restore the virtue of the people.44 The reason was that “when the body of the people is grown so corrupted that the laws are powerless to control it, there must in addition to the laws be introduced a stronger force, to wit, the regal, which by its absolute and unrestricted authority may curb the excessive ambition and corruption of the great.”45 Machiavelli proposed a model of the cycle of six forms of government (monarchy—tyranny—aristocracy—oligarchy—democracy—anarchy—monarchy), and monarchy was regarded as the way out of the chaos and corruption of anarchy.46

In order to restore the virtue of the public, the monarchy should be absolutist, namely “there shall be neither rank, nor condition, nor honour, nor wealth which its possessor can refer to any but to him.”47 Machiavelli wanted to rescue contemporary Italy from chaos, disintegration, and foreign invasion by building absolute monarchy. 48 To Machiavelli, a monarch’s chief means of building his absolutist regime was his army. “Princes who can rule by themselves are those who, in my view, are capable of putting together an army which can do battle with any attacking force, either with money or through access to the necessary manpower.”49 The Machiavellian monarch should chiefly be a military leader and his chief duty to be commander-in-chef. A prince “should have no concern, no thought, or pursue any other art besides the art of war, its organisation and instruction.” 50 The Machiavellian monarch should command the army and go to war in person.51

The militant nature of absolute monarchy led to the warring age of the early modern Europe. As a very recent research shows, “between 1500 to 1750, each European power was at war for over 50% of the time. There were fewer than 10 years of absolute peace

44 Niccolò Machiavelli, trans. by Ninian H. Thomson, Discourses on the First Decade of Titus Livius (London: Kegen Paul, Trench & Co., 1883), p. 15. 45 Ibid., p. 168. 46 Ibid., pp. 13-16. 47 Ibid., p. 91. 48 Niccolò Machiavelli, trans. by Stephen J. Milner, Robin Kirkpatrick eds., The Prince and Other Political Writings (London: Everyman, 1995), pp. 124-128. 49 Ibid., p. 72. 50 Ibid., p. 86. 51 Ibid., pp. 99-100. 53 in the 16th century, only 4 in the following century and 12 in the 18th century.”52 Not only the intensity, but also the cost of wars increased. Paul Kennedy estimates that “the cost of a sixteenth-century war could be measured in millions of pounds; by the late- seventeenth century, it had risen to tens of millions of pounds; and at the close of the Napoleonic War the outgoings of the major combatants occasionally reached a hundred million pounds a year.”53 The loss of manpower and material supply in wars was heavy. The loss of manpower in the battlefields of the Seven Years’ War normally amounted to 15 to 20 percent.54 The war strategy of this period was normally the war of attrition: to exhaust rather than kill the enemy and to strike enemy’s supply line, not his army.55 War was also an obvious factor impacting contemporary : whenever wars arose, international trade tended to shrink.56 Wars among absolute monarchies were not only military but also economic competitions among nations. In this circumstance, monarchs had to consider how to survive and supply wars. This was the central question contextualising the political economy of absolute monarchy, as the recent literature points out.57

1.3 The Political Economy of Absolute Monarchy: Giovanni Botero

Machiavelli despised the importance of economic issues in the agenda of statecraft and “[did] not mention trade, as any way interested in the affairs of state”.58 However, few monarchs could avoid the “vulgar opinion” criticized by Machiavelli that money was “the sinews of war”. 59 The absolute monarchy required a solution to organise its finance and economy. Giovanni Botero (1544-1617), an Italian Jesuit philosopher and diplomat who adapted Machiavelli’s theories to make absolutism acceptable in

52 Silvia A. Conca Messina, A History of States and Economic Policies in Early Modern Europe (London: Routledge, 2019), p. 26. 53 Paul Kennedy, The Rise and Fall of Great Powers: Economic Change and Military Conflict from 1500 to 2000 (London: Unwin Hyman, 1988), p. 77. 54 John Frederick Fuller, The Conduct of War 1789-1961: A Study of the Impact of French, Industrial and Russian Revolutions on War and Its Conduct (London: Routledge, 2015), p. 22. 55 Ibid., p. 23. 56 Jacob M. Price, ‘The Map of Commerce, 1683-1721’, in The New Cambridge Modern History: vol.6 The Rise of Great Britain and Russia, 1688-1715/25, ed. by J. S. Bromley (Cambridge: Cambridge University Press, 1970), pp. 834-874 (pp. 873-874). 57 Messina, A History of States And Economic Policies, pp. 26-33; Bernhard Stier and Wolfgang von Hippel, ‘War, Economy, and Society’, in Germany: A New Social and Economic History, volume 2 1630-1800, ed., by Sheilagh Ogilvie (London: Arnold, 1996), pp. 233-262. 58 Nicholas Barbon, A Discourse of Trade (London: Tho.Milbourn, 1690), p. A.3. 59 Machiavelli, Discourses, pp. 225-232. 54

Christendom, provided a very influential solution to the financial and economic concerns of absolute monarchy, which became “a common platform and point of reference” of both mercantilism and cameralism through the diffusion of his works: Ragion di Stato (The Reason of State, 1589) and Sulla Grandezza delle Città (The Causes of the Greatness of Cities, 1588). 60 Botero’s The Reason of State, which contained The Causes of the Greatness of Cities in its first edition published in 1589, provided the outline of the political economy of absolute monarchy.

“The reason of state” was defined by Botero as the knowledge of the means by which a monarch’s state could be founded, preserved, and extended. 61 The fundamental concern of The Reason of State was the monarch’s military capacity, because the preservation of the state required defensive means and the expansion of the state required offensive means. 62 A monarch’s forces were constituted by his military resource, which consisted of people, money, food, weapon and armour, horse, and raw material to produce weapon and armour.63 Among these resources, Botero specifically emphasised money and people. It was necessary for a monarch, he argued, to accumulate a good sum of money “for the sake of his prestige” and “for the requirements of peace and war”.64 But the monarch should avoid extorting the people, because firstly, extortion would lead to rebellion, and secondly, the lust for money always drove the monarch to behave against the virtue of a ruler.65 Botero regarded people as a monarch’s true strength, because “who has plenty of men will have plenty of everything which the ingenuity and industry of man can provide.” 66 A large population was significant for the monarch in two ways: as the source of soldiers and as the basis of taxation hence the source of money.67 The monarch should accumulate money and increase population in his realm. To Botero, these were basic goals of economic policy of absolute monarchy.

60 Erik S. Reinert and Kenneth E. Carpenter, ‘ Economic Bestsellers Before 1850, Also Introducing Giovanni Botero as a Common Reference Point of Cameralism and Mercantilism’, Economic Growth and the Origins of Modern Political Economy: Economic Reasons of State, 1500-2000, ed. by Philipp R. Rössner (London: Routledge, 2016), pp. 26-53 (pp. 29-36). 61 Giovanni Botero, trans. by P. J. Waley, The Reason of State (London: Routledge & Kegan Paul, 1956), p. 3. 62 Ibid., p. 140. 63 Ibid., pp. 131-132. 64 Ibid., p. 134. 65 Ibid., pp. 132-133. 66 Ibid., pp. 143-144. 67 Ibid., pp. 144-145. 55

Money was supplied by either royal property or taxation on people.68 In order to increase the revenue from royal property, a monarch should manage his domain “like a good husbandman”.69 In order to increase tax revenue, since extortion was harmful, the monarch should expand the total output of the economy to expand the basis of taxation. The monarch should “do all he can to encourage his subjects to cultivate the land and to practice every kind of skill”, because “riches flow to those places where the things necessary to everyday life are in the most abundance.” 70 Monetary fiscal revenue was determined not only by the size of the output of economy but also by the number of coins in the country that could be levied. Thus the monarch should also keep supervising trade balance to adjust taxation.71 And if there was a trade deficit, the monarch “should make no attempt to save”, but instead he should “use every means to encourage his subjects to work hard, in agriculture, in industry and in trade”.72 This task required that the monarch generously expanded the fiscal expenditure to fuel the economy with public money. “Without considerable expenditure it is impossible to draw money for long from a state which does not acquire much money from outside.”73 Botero was against hoarding money, and he saw the benefit of promoting the domestic circulation of money.

The solution to increasing population was also to achieve “an abundance of raw materials and a variety of crafts” so that “everything requisite for daily life” could be produced to sustain “an infinite number of people.”74 In this way, the solution to the economic concerns of absolute monarchy, money and population, was to take all possible measures to promote agriculture, industry, and commerce to increase the total output of economy. Absolute monarchy required the expansion of economy. To Botero, China was in many aspects an ideal case of state governance. According to Botero’s account, Chinese economy was characterised by the following features: vast fertile land, numerous densely populated cities, a great variety of industries, well-constructed and intensive network of roads and canals, a large export surplus, and a generous state fiscal

68 Ibid., p. 135. 69 Ibid., p. 135. 70 Ibid., pp. 136-137. 71 Ibid., pp. 142-143. 72 Ibid., p. 143. 73 Ibid., p. 143. 74 Ibid., p. 145. 56 expenditure policy.75

In order to promote the expansion of economy, Botero expressed an idea of preference for manufacturing. While recognising that agriculture was “the basis of all propagation”, Botero emphasised that manufacturing was more capable of employing dense population and generating wealth.76 “Nothing is of greater importance for increasing the power of a state and gaining for it more inhabitants and wealth of every kind than the industry of its people and the number of crafts they exercise.” 77 To Botero, manufacturing and crafts would cause a conflux of money and people to process, trade, transport, and supply raw materials.78 According to Botero’s observation, the strength of manufacturing lay in two key characteristics.

First, “the products of the manual skill of man are more in number and of greater worth than the produce of nature, for nature provides the material and the object but the infinite variations of form are the result of the ingenuity and skill of man.”79 Here Botero noted three advantages of manufacturing: 1) the “more in number”, namely there were many kinds of different manufacturing sectors; 2) “greater worth”, namely manufacturing created more added than agriculture; 3) “infinite variations”, namely manufacturing provided more employment of “ingenuity and skill” of people than agriculture. Second, “a far greater number of people live by industry than by rents.” To Botero, this advantage was rooted in the fact that manufacturing had detailed division of labour. Manufacturing on one kind of raw material could be differentiated into many different kinds of final products and have many different procedures. Botero gave some examples. Ironworking provided employment to a great number of labourers in excavating, refining, casting, and making iron into innumerable kinds of weapons and instruments; marble-sculpting demanded many labourers to make columns, statues, and many other kinds of goods; and woodworking created numerous in making numberless house furnishings and many kinds of vessels and vehicles for war, trade, and pleasure. 80 In this way a dense population could be employed. These advantages granted manufacturing such a powerful capability to create wealth that “no

75 Ibid., p. 143. 76 Ibid., p. 148; p. 151. 77 Ibid., pp. 150-151. 78 Ibid., p. 151. 79 Ibid., p. 151. 80 Ibid., p. 152 57 mine of silver or gold in New Spain or in Peru can compare with it”, and Botero believed that this was the reason why manufacturing countries without gold or silver mines, like France, , Venice, Florence and Flanders, were rich in money. 81 Compared with exporting primary products, exporting manufactured products provided livelihoods for more people and gained more monetary revenue, so two primary economic concerns of absolute monarchy, money and people, would be solved at the same time in multiplying manufacturing and exporting its products.82

The Reason of State was translated into German in 1596. 83 Its German title was Gründlicher Bericht von Anordnung guter Policeyen und Regiments (“Fundamental report on the arrangement of good police and regulation”).84 The Reason of State was therefore taken in the German-speaking world as good Policey. It became one of the most influential Machiavellian texts in Germany.85 Seven German translations and twelve translations were published in Germany between 1596 and 1670.86 Veit Ludwig von Seckendorff, whom Albion Small labeled the “Adam Smith of cameralism” in the sense that Seckendorff established the basic concepts and theories of cameralism, thought highly of Botero and listed The Reason of State in the reading list of a prince.87 Under Botero’s influence, seventeenth-century German cameralism took shape as the endeavour to rebuild the economy after the Thirty Years’ War. According to Roscher, before 1727 there were three schools of German cameralism: the “practical- conservative” school prevailing in small territorial states in central Germany represented by Seckendorff; the “purely-scientific” school in Northern Germany represented by Hermann Conring (1606-1681) and Johann Heinrich Boecler (1611- 1672); and the “practical-progressive” school represented by Becher, Hörnigk and Schröder in Austria and Samuel Pufendorf (1632-1694) in Prussia.88 In the aspects of multiplying population, building manufacturing, and promoting export surplus, these schools agreed with each other.89 The following analysis will focus only on Hörnigk

81 Ibid., p. 152. 82 Ibid., p. 153. 83 Tribe, Governing Economy, p. 27. 84 Klaus von Beyme, ‘Historical forerunners of policy analysis in Germany’, in Policy Analysis in Germany, eds.by Sonja Blum and Klaus Schubert (Bristol: Policy Press, 2013), pp. 19-28 (p. 21). 85 Mousnier, ‘Absolutism’, p. 116. 86 Hörnigk, Austria Supreme, introduction, p. 8. 87 Small, Cameralists, p. 69; Reinert and Carpenter, ‘German Language Economic Bestsellers’, p. 30. 88 Roscher, National-Oekonomik, pp. 237-238. 89 See ibid., pp. 238-263. 58 and Schröder, because compared with all other schools and figures of old cameralism, Hörnigk and Schröder arguably had the strongest influence on Justi.

Hörnigk’s pamphlet, Oesterreich über Alles, Wann es nur will (“Austria Supreme, If It So Wishes”, 1684), was an economic policy proposal written particularly for the contemporary Habsburg Austria. This work was a best-seller in its time: it was constantly re-published until 1784 and had eighteen known editions.90 Hörnigk’s work provided a common reference for eighteenth-century cameralists. Justi explicitly quoted the principles of economic policy proposed by Hörnigk. 91 Joachim Georg Darjes, an important eigthteenth-century Prussian cameralist and an economic advisor of Frederick II, regarded Hörnigk’s nine principles of economic policy, which consituted the core argument of Oesterreich über Alles, as comprehensive and fundamental principles of managing national economy, “according to which all public arrangements should be measured in the aspect of preserving and increasing the wealth of nation”.92

Oesterreich über Alles was written in the context of a national emergency. At that time, Austria was struggling for survival in the middle of two frontlines. In the west, Louis XIV expanded eastwards and entered the Netherlands and Rhineland.93 In the east, the Ottoman Empire launched the last wave of expeditions in Europe.94 In 1683, the Ottoman army entered Austria and besieged Vienna in July, which forced Emperor Leopold I to flee.95 In September, the Ottoman army retreated, but the Habsburg- Turkish war continued until the very end of the seventeenth century.96 Hörnigk’s work was strongly Machiavellian and Boterian: it fundamentally answered to the urgent as the fiscal resource to support wars. Hörnigk believed that the failure in blocking the Turkish invasion was due to a of money in the economy, and the emergency caused by wars was exactly the right opportunity to completely reform the economy of Habsburg Austria.97

90 Hörnigk, Austria Supreme, introduction, pp. 4-6. 91 For example, Justi, Gründsatze, p. 110. 92 Joachim G. Darjes, Erste Gründe der Cameral-Wissenschaften (Jena: Verlegts Johann Adam Melchiors Wittwe, 1756), p. 523. 93 R. Ernest Dupuy and Trevor N. Dupuy, The Harper Encyclopedia of Military History: From 3400 B.C. to the Present (New York: Harper Collins Publishers, 1993), pp. 616-621. 94 Ibid., p. 636. 95 Ibid., p. 637. 96 Ibid., pp. 637-638. 97 Hörnigk, Austria Supreme, p. 147. 59

Compared to Oesterreich über Alles which primarily concerned with economic problems of a territorial state, Schröder’s work, Fürstliche Schatz und Rent Kammer (1686), started its discussion from how to fill a prince’s treasury.98 Schröder’s work was another common reference for eighteenth-century cameralists. It was directly quoted by Justi and provided the framework of Justi’s early economic textbooks. Georg Heinrich Zincke, who was one of the most important German cameralists and whom Roscher listed as an “old eclecticist of the eighteenth century” along with Justi, admitted that he built his work on those of Becher and Schröder. 99 As its title suggested, Schröder’s book was preoccupied with increasing the amount of money circulating in the country and maximising the monarch’s fiscal revenue. Schröder regarded “a standing army” and “abundant money in the chest” as two ways of achieving the interests of the monarch and the public.100 Schröder regarded it as “one of the greatest virtues of the prince” that “he diligently cares for how his wealth can be improved.”101 To Schröder, except for being the commander-in-chief, the monarch should also be a cameralist-in-chief. Schröder believed that there were two general principles of managing fiscal revenue: “righteous distribution of taxation” and “expanding and increasing taxation”.102 Compared with Hörnigk’s work, Schröder’s work defocused from contemporary wars but aimed to propose general principles of fiscal and economic policies of absolute monarchy.

Both Hörnigk and Schröder saw that the policies of promoting economy followed different principles than managing state finance, so a special government department in charge of administering the economy should be established separate from the department of state finance.103 This reflected that Hörnigk and Schröder understood the differentiation between the wealth of monarch and the wealth of nation and proposed special management of national economy. This was the reason why Gustav von Schmoller argued that the origin of German “(national) economics” (Volkswirtschaftslehre) was in the seventeenth and eighteenth centuries. 104 The

98 Brückner, Staatswissenschaften, Kameralismus und Naturrecht, pp. 47-49. 99 Roscher, National-Oekonomik, pp. 432-441. 100 William Schröder, Fürstliche Schatz und Rent Kammer (Leipzig: Verlegts Jacobus Gerdesius, 1686), preface, p. 17. All Schröder’s quotes are translated by the author of the thesis. 101 Ibid., p. 13. 102 Ibid., p. 16. 103 Hörnigk, Austria Supreme, p. 210; Schröder, Schatz und Rent Kammer, p. 17; pp. 21-25; Brückner, Staatswissenschaften, Kameralismus und Naturrecht, pp. 50-51. 104 Gustav von Schmoller, Grundriß der Allgemeinen Volkswirtschaftslehre, vol.1, (Leipzig: Duncker & Humbolt, 60 following sections will mainly discuss the important aspects of Hörnigk’s and Schröder’s books which contextualised Justi’s thought.

1.4. Manufacturing and the Wealth of Nations: the Preference for Manufacturing

After Botero, it should be noted that Antonio Serra (middle sixteenth century to early seventeenth century) from Naples, who was, in Schumpeter’s words, “the first to compose a scientific treatise…on Economic Principles and Policy”, pushed further progress in understanding the advantage of manufacturing in economic development.105 In his mercantilist pamphlet (1613), Serra’s attention was preoccupied with studying the causes of a nation’s economic prosperity manifested mainly as abundant money circulating in the economy and large trade surplus. Serra found that the most powerful cause was “a multiplicity of manufacturing activities”, namely “when [manufacturing activities] are diverse and produce things necessary or useful or pleasing to people in quantities that exceed the needs of the country”.106 Although exporting agricultural surplus could also increase trade surplus, Serra argued that exporting manufacturing surplus was more powerful in earning trade surplus, because of four advantages of manufacturing.

Firstly, there was a greater certainty in producing and selling manufactured goods than those of agricultural goods, because manufacturing was less affected by natural conditions than agriculture. 107 Secondly, manufacturing had the advantage of “economy of scale”, meaning that the unit cost of production proportionately decreases as the volume of production increases. Serra wrote: “if a given piece of land is only large enough to sow a hundred tomoli of wheat, it is impossible to sow a hundred and fifty there”, but “in manufacturing, by contrast, production can be multiplied not merely twofold but a hundredfold, and at a proportionately lower cost.” 108 Thirdly, manufactured goods could endure long-term storage, whereas agricultural goods easily deteriorated, so manufactured goods were more suitable for trading over long

1908), pp. 85-88. 105 Schumpeter, History of Economic Analysis, p. 195. 106 Antonio Serra, ed. by Sophus Reinert, trans. by Jonathan Hunt, A Short Treatise on the Wealth and of Nations (1613) (London: Anthem Press, 2011), p. 121. 107 Ibid., p. 121. 108 Ibid., p. 121. 61 distances.109 Fourthly, “manufactured goods generally yield much higher earnings than agricultural produce”, namely, manufacturing produced more .110

The knowledge that manufactured goods had more value added than agricultural goods was a commonly accepted understanding about the advantage of manufacturing among the early modern mercantilists and cameralists. According to Erik Reinert, the first to record this phenomenon was probably Luis Ortiz, the Spanish Minister of Finance, who wrote in his memorandum in 1558 to Philipp II that he found the values of finished goods made of silk, iron, and cochenille (a red dye), which were Spanish specialties, would be ten to one hundred times the value of the respective raw materials and that he felt greatly ashamed that Spain exported those raw materials in exchange for the finished goods made of them.111 Reinert summarises mercantilists’ and cameralists’ enthusiasm about the high value added produced by manufacturing as the enthusiasm for the “manufacturing ”. 112 Reinert believes that to cameralists and mercantilists, “manufacturing multiplier” applied to both the value-adding effect and employment creation effect of manufacturing activities, which was regarded by mercantilism and cameralism as the solution to the and the creation of employment.113

In Oesterreich über Alles, Hörnigk proposed nine principles of economic policy. Among them, the second and the seventh were about manufacturing. The second principle advocated not to export raw materials but to manufacture them into finished goods in the country, because the wage of manufacturing normally exceeded the value of raw materials by “two, three, ten, twenty, even one hundred times more”.114 The seventh principle was that all foreign goods should be imported in the form of raw materials and manufactured in the country, in order to earn the wage of manufacturing. 115 For Hörnigk, the main reason of building and developing manufacturing was to enable the people to earn high provided by manufacturing.

109 Ibid., p. 121. 110 Ibid., p. 121. 111 Erik Reinert, ‘Increasing Poverty in a Globalised World: Marshall Plans and Morgenthau Plan as Mechanisms of Polarisation of World Incomes’, in Rethinking Development Economics, ed. by Ha-Joon Chang (London: Anthem Press, 2003), pp. 453-478 (p. 471). 112 Reinert, How Rich Countries Got Rich, p. 315. 113 Reinert, ‘German economics as Development Economics’, pp. 22-23 114 Hörnigk, Austria Supreme, p. 155. 115 Ibid., p. 155. 62

How high could the wage of manufacturing be? According to Hörnigk’s calculation, Leiden, the centre of Dutch woollen manufacturing but just one single city, was able to annually generate more than two million taler, or ten million gulden, in wages of labour from its woollen textile, cloth-making, and knitwear.116 What did this sum of money mean? Hörnigk deemed that ten million gulden kept in circulation in Habsburg Austria would “animate and quicken” Austria’s economy and “recover and gather its strength”.117 One prosperous manufacturing city could generate the sum of wages that could revitalise the whole economy of Habsburg Austria, and this was the power of manufacturing witnessed by Hörnigk.

Schröder noted that an infertile country with strong manufacturing was much richer than a fertile country without manufacturing.118 Schröder also cherished manufacturing because of the “manufacturing multiplier”. Schröder wrote: “It is very clear that if a pound of iron is priced in the mine where it is extracted, it will be considered of very low value. But if a watchmaker or a similar artisan takes this pound of iron in his hands and works on it with his crafts, then this pound of iron will value hundreds of times more than its original values, because manufacturing is this highly valued. As for wool, if a piece of cloth is made, the work of spinning, dying, preparing and alike will value much more than the wool itself. Therefore, a country should absorb raw materials from other nations, process them, and sell finished goods back again to where materials come from. Florence buys raw silk mostly from Valencia and Naples; makes taffeta, satin and other silk fabrics from it; sells them back again to Spain; and has more earnings from this manufacturing than the country from which the silk is bought.”119

It should be noted that while Botero and the Austrian cameralists recognised manufacturing as a growth-promoting sector, they never neglected the importance of primary sectors as the foundation of the survival of the economy which provided raw materials to manufacturing and subsistence to the people. Botero wrote that the monarch should promote agriculture by encouraging inventions, building irrigation works and other infrastructure, and introducing new plants and living stocks.120 In

116 Ibid., p. 172. 117 Ibid., p. 179. 118 Schröder, Schatz und Rent Kammer, pp. 433-434. 119 Ibid., pp. 434-435. 120 Botero, The Reason of State, pp. 148-149. 63

Schröder’s book, “surplus natural products” was regarded as one of the sources of the income of trade, but its importance lay not in being directly exported but in improving the competitiveness of the export of manufactured goods. Schröder wrote: “the fertility of the land causes the cheapness of living which is the spirit [Geist] of all ; and as the result of cheap dining and drinking, wages of labour and thus the cost of manufactured goods are made cheap, so they can be sold in lower price than those of other countries and thereupon our market will be preserved but others’ will shrink.”121 Therefore, a prince should pay good attention to “the care of agriculture” (curam rei rusticae).122 In Hörnigk’s thought, the primary sector was promoted mainly because the natural resource was crucial for the self-sufficiency of the nation. Hörnigk thought that a manufacturing nation which lacked natural resources would consequently work on foreign raw materials, and therefore was poorer and weaker than a nation producing raw materials but without manufacturing sector, because the latter could quickly develop “through the proper advancement of its raw materials”, but the former could not survive if the supply of raw material was denied by foreign countries.123 In this way, the first out of his nine principles was about the primary sector: the nature of the country should be thoroughly investigated, all silver and gold mines should be extracted, and all useful plants “under the sun” should be tried to cultivate in the country.124 To these theorists, the primary sector was significant as the crucial supplier to support the subsistence of a competitive manufacturing economy.

These ideas of preference for manufacturing came into being in the context of the expansion of manufacturing and the increase of the significance of manufacturing in European economy.125 “The economic situation of Europe after 1500 was to favour the growth of industrial production more than at any time since the Black Death.”126 Staple manufacturing sectors at that time were textile industries and metalworking industries.127 It was pointed out that there were four kinds of demand for manufactured

121 Schröder, Schatz und Rent Kammer, pp. 297-298. 122 Ibid., p. 299. 123 Ibid., p. 299. 124 Hörnigk, Austria Supreme, p. 155. 125 Hermann Kellenbenz, The Rise of the Europen Economy: An Economic History of Continental Europe from fifteenth to eighteenth century (London: Weidenfeld and Nicolson, 1976), pp. 103-106. 126 Hermann Kellenbenz, ‘The Organisation of Industrial Production’, The Cambridge Economic History of Europe: vol.5 The Economic Organisation of Early Modern Europe ed. by E. E. Rich and C. H. Wilson (Cambridge: Cambridge University Press, 1977), pp. 462-548 (p. 462). 127 Friedrich-Wilhelm Henning, Handbuch der Wirtschafts-und Sozialgeschichte Deutschlands, vol.1 (Paderborn: Ferdinand Schöningh, 1991), p. 832. 64 goods that drove this expansion: overseas colonisation, urbanisation, luxury consumption, and military consumption. 128 And there was steady technological progress which enabled manufacturing sectors to meet these kinds of demand.129 First, the colonisation of the New World spread the contemporary European way of consumption to other continents. This provided a strong demand for the manufactured goods which colonisers were accustomed to having but were unable to produce in the colonies: linen fabrics for sail canvas and clothes in tropical and subtropical places; woollen clothes for colder climates; tools, iron bars, nails and knives; firearms and gun powder; wooden furniture; paper; dyes; silk fabrics and other luxury products; and a large number of ships for ocean navigation.130 Second, the expansion of cities and the migration of rural people into cities increased the demand for housing and public institutions: churches; hospitals; city halls; squares; street lamps and new roads for the expansion of the use of larger carriages and coaches; and the atmosphere of Renaissance and Baroque promoted both the urban and rural architectures to be luxurious, complicated, durable, and splendid, of which the most typical example was the Château de Versailles.131 In this context, the construction industry was regarded as one of the most important sector, as Nicholas Barbon wrote: “building is the chiefest promoter of trade; it employs a greater number of trades and people than feeding or clothing: the artificers that belong to building, such as bricklayers, carpenters, plasterers, etc., employ many hands; those that make the materials for building, such as bricks, lime, tile, etc., employ more; and with those that furnish the houses, such as upholsterers, pewterers, etc., they are almost innumerable.”132 Thirdly, as absolutist monarchs and

128 Domenico Sella, ‘European Industries 1500-1700’, in The Fontana Economic History of Europe: The Sixteenth and Seventeenth Centuries, ed. by Carlo M. Cipolla (Glasgow: Collins/Fontana Books, 1974), pp. 360-384. 129 Hermann Kellenbenz, ‘Technology in the Age of Scientific Revolution 1500-1700’, in The Fontana Economic History of Europe: The Sixteenth and Seventeenth Centuries, ed. by Carlo M. Cipolla (Glasgow: William Collins Sons & Co Ltd, 1974), pp. 177-272. 130 Sella, ‘European Industries 1500-1700’, pp. 360-365. See also John J. McCusker, The Economy of British America, 1607-1789 (London: The University of North Carolina Press, 1991), pp. 277-294, which provided an illustrative example of the export of manufactured goods from England to British America. According to this book, in 1770, English exports to British America accounted for 59.8% of total English export of wrought iron, 76.5% iron nails, 15.7% fustian, 57.2% wrought silk, 58.9% printed cotton and linen, 15.8% long cloths, 36.8% short cloths, and 34.9% men’s stockings, see McCuster, British America, p. 284. 131 Sella, ‘European Industries 1500-1700’, pp. 367-371. About the material landscape of early modern German cities, see Bernd Roeck, Lebenswerlt und Kultur des Bürgertums in der Frühen Neuzeit (Munich: Oldenbourg Verlag, 2011), pp. 5-13. About the early modern German urbanisation, see Heinz Schilling and Stefan Ehrenpreis, Die Stadt in Der Frühen Neuzeit (Oldenbourg: De Gruyter, 2015), pp. 2-17. According to this work, from 1650 to 1800, urban population in the Holy Roman Empire grew almost three times, and so did the number of cities with more than 10,000 population, see Schilling and Ehrenpreis, Die Stadt, pp. 5-6. Also see the examples of baroque city construction in Gary B. Cohen and Franz A. J. Szabo eds., Embodiments of Power: Building Baroque Cities in Europe (Oxford: Berghahn Books, 2008). 132 Barbon, Discourse, p. 68. 65 their courts decorated themselves with sophisticated ceremonies and ornaments to create their images as the head and heart of the state, the fashion of luxury boomed from the courts and spread to the society, which fueled the demand of the upper class for luxurious and sophisticated manufactured goods: sumptuous coaches; velour and satin fabrics; tapestries; carpets; fine furniture; gold and silver ornaments; and ceramic appliances.133 Some of luxuries spread to lower classes and triggered the demand for manufactured goods for comforts in the well-off classes: glass on windows; tiled stoves; beds; table linen; silk clothes; rented coaches and carriages; worsted fabrics; printed books; and mechanical clocks.134 Fourthly, the age of the “military revolution”, namely “a new use of firepower, a new type of fortifications, and an increase in army size”, brought about a strong demand for weaponry manufacturing, uniform textile, and warship building.135 International military competitions greatly enlarged the size of European armies. From 1450 to 1650, the Spanish army quintupled; between 1600 and 1700, the Dutch army sextupled and Sweden army decupled; between 1650 and 1750, French and British armies tripled and Austrian and Prussian armies sextupled.136 Not only did the size of armies expand, but the technology of warfare also progressed. In the sixteenth century, the harquebus replaced the crossbow and became the standard infantry weapon, and the carbine and pistol were invented to equip cavalries; in the seventeenth century, the musket replaced the harquebus; in the eighteenth century the flintlock replaced the musket and the bayonet obsoleted the pike.137

Highlighting luxury and military demands for manufactured goods is reminiscent of the once popular “luxury and capitalism” and “warfare and capitalism” thesis represented by Werner Sombart (1863-1941), the leader of the Youngest German Historical School of Economics. Both kinds of demand were highlighted by Sombart as the important origins of the modern capitalistic mode of production, because Sombart found both

133 Sella, ‘European Industries 1500-1700’, p. 375. Also see examples of luxurious lifestyles of Spanish and Swedish upper classes in Nadia Fernández-de-Pinedo and Corinne Thépaut-Cabasset, ‘A Taste for French Style in Bourbon Spain: Food, Drink and Clothing in 1740s Madrid’, in A Taste for Luxury in Early Modern Europe: Display, Acquisition and Boundaries, eds., by Johanna Ilmakunnas and Jon Stobart (London: Bloomsbury Academic 2017), pp. 219-242; Johanna Ilmakunnas, ‘French Fashions: Aspects of Elite Lifestyle in Eighteenth-Century Sweden’, in A Taste for Luxury in Early Modern Europe: Display, Acquisition and Boundaries, eds., by Johanna Ilmakunnas and Jon Stobart (London: Bloomsbury Academic 2017), pp. 243-264. 134 Sella, ‘European Industries 1500-1700’, pp. 375-384. About urban citizens’ material lives and their range of consumer goods in the early modern Germany, also see Roeck, Lebenswerlt und Kultur des Bürgertums, pp. 14-30. 135 About the definition of the “military revolution”, see Geoffery Parker, The Military Revolution: Military Innovation and the Rise of the West (Cambridge: Cambridge University Press, 1988), p. 43. 136 Messina, History of States and Economic Policies, p. 28. 137 Kellenbenz, ‘Technology in the Age of Scientific Revolution’, pp. 222-223. 66 demands were large in scale, promoted capitalistic pre-factory systems; applied and advanced cutting-edge technologies.138 Sombart found that luxurious textiles, furniture, ornaments and home appliances were the main manufactured goods of long-range international trade and that they were highly valued and large-scaled.139 Sombart also argued that the military expenditure formed the largest share of government expenditure in the early modern European states: 74% of French state spending in 1680 and 66% in 1784; 86% of government expenditure in 1739/1740 and 71% in 1797/1798 in Prussia.140 Sombart found the principles of uniformity and standardisation of firearm and uniform emerged in the sixteenth century.141 He argued that the naval arms race placed strong demand for huge and sophisticated warships: the total tonnage of the English naval fleet multipled 26 times from 1514 to 1749.142 Recent research tends to believe that Sombart overestimated the scale of the early modern luxury and military demands.143 However, the evidence that supports the “war and capitalism” argument is recently found in the case of early modern -Norway.144 Patrick O’Brien’s recent research also helps strengthen this argument with British economic performance during the Napoleonic War.145 On all accounts, luxury and military demands should be regarded at least as important sources of demand for early modern manufacturing. As a recent research points out, “Manufactories and factories, where work took place in centralised plants, primarily satisfied the increased demand by princely courts for luxury items such as furniture, coaches, carpets, tapestries, ornaments, mirrors, and porcelain, as well as military demand for weapons and uniforms.”146

138 Werner Sombart, trans.by W. R. Dittmar, Luxury and Capitalism (Ann Arbor: The University of Michigan Press, 1967); Werner Sombart, Krieg und Kapitalismus (Munich: Duncker & Humblot, 1913). 139 Ibid., pp. 108-129 140 Sombart, Krieg und Kapitalismus, pp. 178-180. 141 Ibid., pp. 83-85; pp. 155-174. 142 Ibid., pp. 46-50; pp. 175-207. 143 For example, see Stier and Hippel, ‘War, Economy, and Society’, pp240-252; Sheilagh Ogilvie, ‘The Beginning of Industrialisation’, in Germany: A New Social and Economic History, volume 2 1630-1800, ed., by Sheilagh Ogilvie (London: Arnold, 1996), pp. 263-308 (pp. 293-296). 144 Gunner Lind, “Early Military Industry in Denmark-Norway, 1500-1814,” Scandinavian Journal of History 38, 4 (2013), 405-421 145 Patrick O’Brien, The Contributions of Warfare with Revolutionary and Napoleonic France to the consolidation and progress of the British industrial revolution. Economic History Working Papers (150/11). Department of Economic History, London School of Economics and Political Science. 146 Paul Münch, ‘The Growth of Modern State’, in Germany: A New Social and Economic History, volume 2 1630- 1800, ed., by Sheilagh Ogilvie (London: Arnold, 1996), pp. 196-232 (p. 218). 67

1.5. and Trade Protection in Old Austrian Cameralism

Botero was not a protectionist. He suggested, however, raising fiscal revenue through imposing import and export tariffs, aiming at placing the burden on foreigners.147 Botero only proposed that the export of raw materials should be prohibited in order to develop manufacturing. 148 In old Austrian cameralism, Hörnigk was a strict protectionist whereas Schröder supported free trade. Schröder did not mention tariff protection. He recognized three main approaches through which money was attracted to a country: gold and silver mining, immigration, and commerce.149 Among them, “the most common approach to bringing money in a country is the commerce with foreign nations.”150 Schröder’s strategy to increase money inflow was to increase the output of agriculture and manufacturing to export their surplus goods. He believed that the reason why a nation was short of money was because of insufficient production and excessive imports.151

Schröder believed that commerce was the most prosperous in places where there was free commerce (freien Commercii).152 The income through commerce originated from “our surplus which others need to purchase from us”.153 There were three sources of surplus: natural fertility of land, human diligence, and human crafts which referred to manufactured goods.154 “Human diligence” was Kauffmanschafft, namely the transit trade and the manufacturing on imported raw materials.155 Schröder suggested building four kinds of commercial centres to promote commerce: marketplaces (Jahrmärckte und Messen) where domestic merchants traded; staple-right (Stapel-Recht) and Niederlage where passing-by foreign merchants were forced to trade their products; and emporia where foreign and domestic merchants shared the same in trading.156 These commercial centres constituted the staples (Stapel), the places where merchandise gathered.157 The commerce in staples would gather the goods which the

147 Botero, The Reason of State, pp. 135-136. 148 Ibid., pp. 153. 149 Schröder, Schatz und Rent Kammer, pp. 165-189. 150 Ibid., p. 189. 151 Ibid., pp. 206-207. 152 Ibid., p. 219. 153 Ibid., p. 296. 154 Ibid., pp. 293-294. 155 Ibid., pp. 317-318. 156 Ibid., pp. 319-322. 157 Ibid., p. 323. 68 nation demanded and created a great surplus of them.158 Schröder’s proposal was about building staples. It included: 1) free trade (ein freies Commercium), which meant prohibiting monopoly and privilege; 2) lowering tax; 3) just arbitration of commercial dispute; 4) lowering capital interest by multiplying capital in the city, such as mobilising nobilities to conduct commerce and building public and private banks; 6) good postal services; 7) other good establishments such as good hotels, safe streets, and inspecting the quality of merchandise; and 8) freedom of foreign merchants. 159 Schröder’s commercial policy was about connecting the nation to the international market and making it an important trading post in international trade routes to concentrate as many kinds of merchandise and transactions in the nation as possible. This was actually a classical economic strategy of medieval towns.160 And it lasted into the early modern mercantilism and cameralism.161 For example, aiming at attracting Mediterranean and North Sea trade to France, Jean Colbert made Dunkirk and Marseilles free ports.162 The competition between Magdeburg and Hamburg over the staple right on Elbe trade lasted from the Middle Ages to the eighteenth century.163

By contrast, Hörnigk’s commercial policy proposal advocated strict protection and isolation from the international market. Hörnigk’s work was contextualised by wars, so his policy proposal was dominated by a strong distrust of foreign trade and the enthusiastic pursuit of self-sufficiency. Undoubtedly Hörnigk’s proposal aimed to promote the prosperity and opulence of the nation, but the consideration of national security was equally important. The economy which Hörnigk wanted to build was prosperous as well as self-sufficient, as he wrote: “the power and excellence of a country consists in its superfluity of gold, silver and all other things requisite for its subsistence and comfort, to as great an extent as possible on its own account without depending for them on others, and also being capable of their proper care, use and

158 Ibid., p. 325. 159 Ibid., pp. 339-412. 160 See Sombart, Der moderne Kaptialismus, vol.1, pp. 184-186; A. B. Hibbert, ‘The Economic Policies of Towns’, in The Cambridge Economic History of Europe: vol.3 Economic Organisation and Policies in the Middle Ages, eds. by M. M. Postan, E. E. Rich, and E. Miller (Cambridge: Cambridge University Press, 1963), pp. 155-229 (pp. 161- 172). 161 Eli Heckscher, trans. by Mendel Schapiro, ed. by E. F. Söderlund, Mercantilism, vol.2 (London: George Allen & Unwin Ltd., 1935), pp. 60-79. 162 , trans. by R. Griffith, The Age of Louis XIV, vol. II (London: Fielding and Walker, 1780), p. 232. 163 See, Gustav von Schmoller, ‘Studien über die wirthschaftliche Politik Friedrichs des Großen und Preußens überhaupt von 1680 bis 1786: VII, Die brandenburgische-preußische Elbschifffahrtspolitik 1666-1740’, Jahrbuch für Gesetzgebung, Verwaltung und Volkswirtschaft im Deutschen Reich 11(1887), pp. 1-58. 69 application without assistance”. 164 This was his definition of the “supremacy” (Uebertrefflichkeit) of a nation. 165 Hörnigk classified all nations into four kinds according to their foreign economic dependency. The first was the nation having only gold and silver. The second had all necessities and comforts but no gold nor silver. The third had neither natural resource for production nor precious metal for money. The fourth had not only all resources and industries but also sufficient gold and silver. Hörnigk evaluated the strength of these four kinds in terms of their capability to endure war. The first and the second nations depended on foreign nations to acquire either the means of living or the means of payment, but the second could last longer than the first during a war.166 The third was the worst. It could have flourishing commerce through importing raw materials and exporting manufactured goods, like the Netherlands, but it relied heavily on other nations and could not endure a war for as long as those nations with much more moderate commerce but much more self-sufficiency in raw materials, and Hörnigk found this observation was supported by the case of the contemporary Anglo-Dutch Wars.167 The fourth was the most self-sufficient, most independent and thus the most enviable, for which Hörnigk believed that contemporary China was the most illustrative case in the world and England was the European nation coming closest to this ideal situation.168

Hörnigk believed that self-sufficiency guaranteed the survival of a nation in wartime, but if the self-sufficient nation could produce and export surplus necessities and comforts, it would have a weapon to subdue other nations. Hörnigk wrote that if a nation relied on foreign products, its accumulation of money would dwindle, then “capital will decline, all coin gradually being withdrawn from circulation, and trade and industry in the land going into decline”, and this was how Hörnigk planned to deal with the “proud and unjust France”. 169 In this way, maximising the output of primary and manufacturing sectors of a nation to satisfy domestic demand and generate surplus for export was not only a tool for the economic purpose of the nation but also a tool to support wars and subdue enemies. Hörnigk’s industrial policy aimed at realising that

164 Hörnigk, Austria Supreme, p. 153. 165 Ibid., p. 145. 166 Ibid., p. 153. 167 Ibid., p. 154. 168 Ibid., p. 154. 169 Ibid., p. 211. 70

“foreign consumption of domestic raw and fabricated goods would in time be brought to the maximum possible”, namely to make other nations economically dependent on Austria.170 Wealth, security, and supremacy were therefore united in the economic strategy of cameralism. The international trade was dispensable in Hörnigk’s model. A nation could and should develop through relying on domestic market; the expansion of foreign trade should be the overflow of the development of domestic market and industries; foreign trade was very lucrative but a nation could and should develop without it. This view that foreign trade was unreliable and therefore dispensable could clearly be seen in Justi’s economic thought, which will be discussed in later chapters.

Of Hörnigk’s nine principles of economic policy, four were about foreign trade.171 The fifth was that inhabitants of the country should be made content with domestically- produced goods, apart from unavoidable necessities of which no alternative could be produced in the country, such as Indian spice.172 The sixth was that in case that imports were indispensable, they should be purchased directly from countries of origin and paid with not gold or silver but national products.173 The eighth was that efforts should be made “night and day” to sell the country’s superfluous products in the form of manufactured goods to foreigners, and the market of national manufactured goods should be extended “at the farthest end of the world”.174 The ninth was the strictest with regard to foreign trade: except for very special cases, foreign goods, no matter whether produced by allies or enemies, should never be permitted to be imported to the country, if similar goods could be produced domestically in sufficient volume and at the same quality; and this should remain the same even if national products had inferior quality and higher price, because “it would be better…to spend two talers that stay in the country, than only one, but which goes abroad.”175

Hörnigk regarded all his nine principles (two will be discussed) as a system, and the fifth principle, namely making people content with domestic goods, was the igniter to start the system.176 If people were content with domestic goods, then imports of foreign

170 Ibid., p. 179. 171 Ibid., p. 155. 172 Ibid., p. 155. 173 Ibid., p. 155. 174 Ibid., p. 155. 175 Ibid., p. 155. 176 Ibid., p. 177. 71 manufactured goods naturally ceased (ninth principle); then people were compelled to work more in manufacturing to satisfy their demands, then manufacturing expanded (second principle); meanwhile foreign artisans who lost their markets and material supplies due to our policies had to immigrate to continue their trades, so the population employed in manufacturing increased (third principle); in this process, money outflow was stopped and circulated in the country (fourth principle); expanded manufacturing enabled the nation to exchange foreign necessities with not money but goods (sixth principle); then due to the expansion of manufacturing, the immigration of foreign artisans, and the increase of population, domestic market for manufactured good expanded (eighth principle); with the expansion of exports, the money inflow increased, so the capital increased and more investment was possible to cultivate more land, extract more mines, and expand manufacturing further to process more foreign raw materials (first and seventh principle); then with expanded agriculture and manufacturing, more money flowed in, and the whole system would further be enhanced.177

Making people content with domestic goods and ceasing to import was the goal of Hörnigk’s commercial policy, and the method, suggested by Hörnigk, was the strict prohibition of imports of foreign manufactured goods. Hörnigk believed that milder methods, such as high tariffs, were ineffective because it took a long time to take effect and the concomitant trickery, conspiracy, and chicanery would take the chance to undermine the effect of policy and impair the reputation of national products.178 In comparison, complete prohibition was the simplest to execute, left the least chance for evasion, and took effect the fastest: the increase of money would quickly be sensed by the monarch’s chest and the people’s purses in just one year according to Hörnigk’s estimate.179 Prohibition should not be imposed on imports of all kinds of foreign goods in the beginning but should start with four kinds of manufactured goods first: wool, linen, silk, and the fine textiles known as “French products”.180 According to Hörnigk, these four goods led to the largest outflow of money.181 Hörnigk regarded building manufacturing and trade protection as a method for national . He

177 Ibid., pp. 176-177. 178 Ibid., p. 180. 179 Ibid., pp. 180-181. 180 Ibid., p. 179. 181 Ibid., pp. 177-179; p. 204. 72 assumed that the import substitution and prohibition on these four kinds of manufactured products would prevent the outflow of ten million talers annually, which would accumulate a large sum of capital in the country, so the government should arrange the investment of this capital in projects that strengthened the nation: introducing new plants and livestock; extracting unused mines; building new manufacturing; financing schools, academies and colleges; promoting national shipping industry for exporting national products, collecting foreign raw materials, and taking over the control of maritime trade from the Netherlands; and improving the navigability of inland rivers.182 Similar to Botero, Hörnigk advocated for generous government spending, as he wrote: “the Treasury would find that for every taler foregone ten would be gained, and the lands would gain one hundred or more.”183

1.6 Conclusion

When Justi commenced his economic research in Vienna, he found himself located in a tradition of economic thought built by the old Austrian cameralists. Justi absorbed the following ideas and values from these economic thinkers of absolute monarchy. Firstly, the preference for manufacturing. Botero, Serra, and the old Austrian cameralists had already placed manufacturing in the central place of their economic strategy. The first reason was that manufacturing produced higher value added than the primary sector. Later chapters will show that this understanding was also emphasised by Justi. The second reason was that manufacturing provided abundant employment which supported a dense population. Botero’s explanation to this correlationship was that manufacturing featured the highest degree of division of labour. Both reasons were absorbed by Justi. Botero and the old Austrian cameralists also emphasised the synergy between manufacturing and primary sectors. In their models, primary sectors supplied raw materials and sustenance, so they maintained the survival of the economy and helped the competitiveness of manufacturing.

Secondly, the idea of indispensable foreign trade. In the textbooks published after Staatswirthschaft and Grundsätze, Justi firmly stood on the side of Hörnigk regarding

182 Ibid., pp. 204-209. 183 Ibid., p. 209. 73 foreign trade. Like Hörnigk, in those textbooks, Justi believed that foreign trade was unreliable and the reliance on it weakened a nation’s strength. Since Manufacturen und Fabriken, like Hörnigk, Justi did not think highly of the success of the Netherlands, believing it was not sustainable. Like Hörnigk, Justi believed that foreign trade was lucrative but dispensable and that the nation should rely on domestic markets to develop. Instead of making the nation a bustling trading post on international trading routes like Schröder wanted, Justi wanted the nation to be a self-sufficient little world with the maximised diversity and volume of economic activities and the minimised necessity to import from outside, akin to Hörnigk.

Thirdly, the militant nature of absolutist state. The value governing the economic thought of Botero and the old Austrian cameralists was that the national economy should be able to support and endure wars. Their economic strategies advocated the central importance of production and the necessity to expand the economy to multiply population and increase fiscal revenue. Although centering on public happiness, Justi’s economic thought also had this wartime mindset. After all, as later chapters will show, external security was a component of Justi’s public happiness. In this way, Justi also advocated the expansion of economy and population. He argued that the nation should be self sufficient as much as possible. And under the domination of this military value, Justi believed that promoting primary sector was important to national security, just as Hörnigk believed.

74

Chapter Two. The Political Economy of the Enlightenment

Justi’s economic thought was not only contextualised by the political economy of absolute monarchy. In the seventeenth and eighteenth centuries, when absolute monarchies competed with each other militarily and economically, the Enlightenment was also striding forwards. Justi’s résumé showed that after leaving Vienna he made closer contact with the the Enlightenment. As discussed in the Introduction, most of the recent literature has established that Justi should be understood as a figure of the Enlightenment. 1 Meanwhile, by doing this, recent literature tends to deny the traditional viewpoint that Justi was an thinker of enlightened absolutism and regards enlightened absolutism as something alien to the Enlightenment.2 However, there is another group of literature regarding enlightened absolutism as part of the Enlightenment for it embodied monarchs’ awareness and practice of the ideas generated in the Enlightenment in their internal policies.3 Enlightened monarchs launched a wide range of reforms “to translate enlightened ideals into practice in a systematic attempt to rationalise government and improve conditions for their subjects”.4 This thesis will follow this perspective and regard enlightened absolutism as a form of practice of the Enlightenment. Justi’s economic thought was also contextualised by the political economy of enlightened absolutism.

German enlightened absolutism and Justi’s political and economic thoughts shared the same philosophical foundation: German natural law. Through his work of systemisation, Justi rebuilt cameral science on the basis of German natural law, which made German cameralism a component of Continental Enlightenment.5 German natural law was “an integral part of the Enlightenment in Germany”, and it was institutionalised as a university faculty and the framework to systematise social science knowledge since the

1 See Nokkala, From Natural Law to Political Economy; Nokkala and Miller eds., Cameralism and The Enlightenment; Adam, J.H.G. Justi; also Susan Richter, ‘German “Minor” Thinkers? The Perception of Moser’s and Justi’s Works in an Enlightened European Context’, Administrative Theory & Praxis, 36.1(2014), pp. 51-72. 2 See Hans-Erich Bödeker, ‘Reconciling Private Interests and the Common Good: An Essay on Cameralist Discourse’, in Cameralism and the Enlightenment: Happiness, Governance and Reform in Transnational Perspective, eds., by Ere Nokkala and Nicholas B. Miller (New York: Routledge, 2020) pp. 47-79; Nokkala, From Natural Law to Political Economy. About the viewpoint regarding Justi as a thinker of the enlightened absolutism, see Sommer, Die Österreichischen Kameralisten, vol.2. 3 For example, see John G. Gagliardo, Enlightened Despotism (London: Rotledge, 1968); H.M. Scott ed., Enlightened Absolutism: Reform and Reformers in Later Eighteenth-Century Europe (London: Macmillan, 1990); Peter H. Wilson, Absolutism in Central Europe (London: Routledge, 2000); Paschalis M. Kiromilides, Enligntenment and Revolution (London: Harvard University Press, 2013), pp. 117-155. 4 Wilson, Absolutism in Central Europe, p. 108. 5 See Nokkala, From Natural Law to Political Economy, pp. 50-83. 75

1660s in nearly all universities in the German-speaking world.6 German natural law was characterised by “its usefulness to the state governments”, which was intensively manifested in the of Christian Wolff (1679-1754). 7 German natural law, particularly that of Christian Wolff, formed the philosophical foundation and context of eighteenth century German cameralism, including that of Justi. 8 Traditionally it was believed that Justi’s cameral science was based on Wolff’s philosophy.9 Yet recent research also highlights the influence of the philosophy of Christian Thomasius (1655-1728), another protagonist of eighteenth-century German natural law, in Justi’s political thought.10 German natural law supported enlightened absolutism. The natural law philosophy of Wolff and Thomasius was regarded as the philosophy of enlightened absolutism.11 To German territorial princes, German natural law was the means to defend their autonomous rules against Roman law which supported the idea of empire; and to monarchies like Prussia, Austria, Denmark and Sweden, German natural law was the fundamental ideology in codifying their legal systems and educating rulers and bureaucrats.12

2.1 Enlightened Absolutism in Continental Europe, especially in Prussia

Enlightenment “was at its peak exactly when the policies of enlightened absolutism were being pursued.”13 Enlightened absolutism was widely shared and practiced by continental monarchs and prime ministers, including Frederick II in Prussia (reign 1740-1786), Joseph II in Austria (1765-1790), Leopold II in Tuscany (1756-1790) and Austria (1790-1792), Charles III in Spain (1759-1788), Gustav III in Sweden (1771- 1792), Catherine II in Russia (1762-1796), prime minister Marquis of Pombal in

6 Knud Haakonssen,‘German Natural Law’, in Cambridge History of Eighteenth Century Political Thought, eds. by Mark Goldie and Robert Wokler (Cambridge: Cambridge University Press, 2006), pp. 251-290 (pp. 258-259). 7 Haakonssen, ‘German Natural Law’, pp. 258-260. 8 Axel Nielsen, Die Entstehung der deutschen Kameralwissenschaft im 17.Jahrhundert (Jena: Gustav Fischer, 1911), pp. 117-125; Tribe, Governing Economy, pp. 28-34. 9 Frensdorff, ‘J.H.G. von Justi’, p. 465; Backhaus, ‘From Wolff to Justi’, pp. 8-9; also see Nielsen, Die Entstehung der deutschen Kameralwissenschaft; Gustav Marchet, Studien über die Entwicklung der Verwaltungslehre in Deutschland von der zweiten Hälfte des 17. bis zum Ende des 18. Jahrunderts (Munich and Leipzig: Oldenbourg, 1885). 10 See Nokkala, From Natural Law to Political Economy, pp. 53-66. 11 See Werner Schneiders, ‘Die Philosophie des Aufgeklärten Absolutismus: Zum Verhältnis von Philosophie und Politik, nicht nur im 18. Jahrhundert’, Der Staat 24.3(1985), pp. 383-406. 12 Haakonssen, ‘German Natural Law’, p. 257. 13 H.M. Scott, ‘Introduction: The Problem of Enlightened Absolutism’, in Enlightened Absolutism: Reform and Reformers in Later Eighteenth-Century Europe, ed. by H. M. Scott (London: Macmillan, 1990), pp. 1-35(p. 2). 76

Portugal (in power 1750-1777), prime minister in the Two Sicilies (1754-1777), minister Guillaume du Tillot in (1759-1771), prime minister Johann Frederick Struensee (1770-1772) and Andreas Peter Bernstorff (1784-1797) in Denmark, and small German states including Baden, Bavaria, Saxony, Palatinate, Saxony-Weimar, Schaumburg-Lippe, , Münster, Mainz, Fulda, Würzburg, and Salzburg.14 In comparison, contemporary France, under the rule of two weak kings after Louis XIV, bucked the trend of enlightened absolutism, which probably contributed to the outbreak of French Revolution.15 As a Prussian minister observed in 1799, “the revolution being introduced violently from below in France was proceeding peacefully from above in the Hohenzollern monarchy.”16 Compared with the forms of absolutism of the past, enlightened absolutism was distinguished by the following characteristics: 1) the idea of constitutional government “where the law was superior to the monarch”; 2) the idea of “the prince as the state’s servant rather than master”; 3) the extension of the concept of “common good” from passively maintaining order and security to positively promoting public happiness, which was based on the transition from the pessimistic Hobbesian natural law to the optimistic Wolffian natural law.17

When Justi’s economic thought developed in 1750s, most of the practice of enlightened absolutism had not yet happened, with the exceptions of Frederick William I (reign 1713-1740) and Frederick II in Prussia. Roscher, who was the first to propose the concept of “enlightened absolutism” (aufgeklärte Absolutismus), believed that “enlightened absolutism had its highest cultivation and most important effect in Prussia.”18 Prussian enlightened absolutism was founded by Frederick William I, the first Prussian king who “complied perfectly with enlightened absolutism”, and in his governance, there had already existed the principle that his successor expressed as: “the king is the prime servant of the state” (le roi c’est le premier serviteur de l’état).19 Frederick II has always been regarded as the ideal type of enlightened absolutist monarch, but “all the policies pursued by Frederick turn out to have been initiated by

14 Eberhard Weis, ‘Enlightenment and Absolutism in the Holy Roman Empire: Thoughts on Enlightened Absolutism in Germany’, The Journal of Modern History 58(1986), pp. 181-197 (pp. 182-183); Scott, ‘Introduction’, p. 1. 15 Ibid., pp. 181-182. 16 Quoted in Wilson, Absolutism, p. 111. 17 Wilson, Absolutism, pp. 112-113. 18 Roscher, Politik, p. 280. 19 Ibid., p. 281-282 77 his predecessors”.20 Before Justi published all his major economic textbooks, Prussian enlightened absolutism had been manifested at least in the following aspects.

Rationalising state administration. Until 1723 Prussia had two sets of government. The General Commissariat directed Provincial Commissariats which directed Urban Commissaries and Rural Commissioners who managed taxes in cities and villages; the General Finance Directory (Generalfinanzdirektorium) supervised Chambers (Amtskammern) in provinces which supervised royal offices (Ämter) which managed all non-tax revenues: forests, salt monopoly, postal services, tariffs, and royal domains.21 The General Commissariat was responsible for collecting money to support the army, whereas the General Finance Directory was responsible for covering administrative expenditure and the royal coffer.22 Both agencies were urged to increase revenues. The General Commissariat fulfilled its task through increasing the excise collected from cities, because the rate of Kontribution was fixed and could not be raised until 1786.23 Whereas the General Finance Directory relied on agricultural revenue from the royal domains, which were vast in Prussia and employed 1/4 to 1/3 of peasants in the country.24 Both agencies, which respectively represented the interest of cities and villages, always conflicted and tried to increase their respect revenues at the cost of the other.25 In order to settle the conflict, in 1723, Frederick William I merged both agencies and created the General Directory (Generaldirektorium) as the sole central government in charge of all civil affairs except justice and culture. War and Domains Chambers (Kriegs- und Domänenkammern) served as subordinate provincial governments.26

Rationalising justice administration. Frederick William I intended to make law administration more efficient and just, but his reform was thwarted by its fiscal cost.27

20 T.C.W. Blanning, ‘Frederick the Great and Enlightened Absolutism’, in Enlightened Absolutism: Reform and Reformers in Later Eighteenth-Century Europe, ed. by H. M. Scott (London: Macmillan, 1990), pp. 265-288 (p. 268). 21 Bruford, ‘Organisation and Rise of Prussia’, p. 304; Brückner, Staatswissenschaften, Kameralismus, und Naturrecht, p. 61. 22 Brückner, Staatswissenschaften, Kameralismus, und Naturrecht, p. 62. 23 Ibid., p. 61. 24 Ibid., p. 61; Bruford, ‘Organisation and Rise of Prussia’, p. 296. 25 Brückner, Staatswissenschaften, Kameralismus, und Naturrecht, p. 62; Gothelf, ‘the beginnings of Prussian absolutism’, p. 57. 26 Bruford, ‘Organisation and Rise of Prussia’, p. 304; Brückner, Staatswissenschaften, Kameralismus, und Naturrecht, p. 62. 27 Leopold Ranke; trans. by Sir Alex Gordon and Lady Duff Gordon, Memoirs of the House of Brandenburg, and History of Prussia during the Seventeenth and Eighteenth Centuries, vol.3 (London: John Murray, 1849), pp. 362- 78

Frederick II continued the reform. In 1746 he approved Samuel Cocceji (1679-1755)’s legal reform plan, which aimed at establishing a uniform judicial system operating under new procedures to increase efficiency, improving the salary and training of personnel, and codifying the law uniformly applied to the whole country.28 Before the reform, Prussian law administration was leased out; magistrates used laws tools of their own interests; councillors in high courts were underpaid and accepted bribes to compensate their income; and legal officials were undertrained.29 Creating a unified nation also required the codification of law that was universally applied.30 In general, “the reforms gave the ordinary citizen greatly increased security in his civil rights, especially in regard to property, and a firm basis was laid for capitalistic development.”31

Religious tolerance. Frederick William I, a Calvinist, regarded it as his duty to set an example of complete toleration of Lutheran and Catholicism. 32 In his political testament (1722) he enjoined his successor to treat and Lutheranism equally and to tolerate Catholicism but to not let priests interfere in worldly affairs.33 Frederick II followed this instruction. His principle of religious policy was “each of his subjects should be at liberty to worship God in the way he held most conductive to his salvation.”34 He even said: “even if Turks and heathens came and wanted to populate this country, then we would build mosques and temples for them.”35

Abolishing Serfdom. East-Elbian German states had intended to abolish serfdom since the late seventeenth century as the endeavour to recover the loss of population caused by the series wars since the Thirty Years’ War.36 Frederick William I tried to abolish the feudal prerogative of nobles to reduce them to a tax-paying class, just like citizens

364. 28 Bruford, ‘Organisation and Rise of Prussia’, p. 317; Ranke, Memoirs, vol.3, pp. 366-367. 29 Ranke, Memoirs, vol.3, pp. 360-361 30 Gagliardo, Enlightened Despotism, p. 51. 31 Bruford, ‘Organisation and Rise of Prussia’, p. 317. 32 Ranke, Leopold, trans. by Sir Alex Gordon and Lady Duff Gordon, Memoirs of the House of Brandenburg, and History of Prussia during the Seventeenth and Eighteenth Centuries, vol.1 (London: John Murray, 1849), pp. 463- 464. 33 Georg Küntzel and Hass Martin, Die Politischen Testamente der Hohenzollern, vol.1 (Leipzig and Berlin: Druck und B. G. Teubner, 1911), pp. 84-85. 34 Ranke, Mermoirs, vol.3, p. 407. 35 Christopher Clark, Iron Kingdom: The Rise and Downfall of Prussia, 1600-1947 (London: Penguin Books, 2006), pp. 252-253. 36 Marten Seppel, ‘Cameralist Population Policy and the Problem of Serfdom, 1680-1720’, in Cameralism in Practice: State Administration and Economy in Early Modern Europe, eds.by Marten Seppel and Keith Tribe (Woodbridge: The Boydell Press, 2017), pp. 91-110 (p. 94). 79 and peasants.37 He issued the order to abolish serfdom in royal domains in Eastern Prussia and Pomerania, and in 1724 he expressed the intention to extend the abolition of serfdom to all other territories.38 Frederick II was softer towards nobilities than his father. His principle was “to take care that no one estate should interfere with the privileges of the others”, so peasants were not allowed to purchase properties of nobles, nor were nobles allowed to confiscate properties of peasants.39 He eased peasants’ labour service to landlords.40 In 1763 he wrote: “all serfdom in royal domains, noble properties, as well as urban and village properties, should be abolished absolutely without any question.”41

Improving social welfare. Enlightened absolutist monarchs’ reforms also included “a variety of foundations for the care of widows, orphans, invalids and the sick”.42 As an old tradition claimed, Bismarckian state socialism was rooted in the economic and social policies of early modern Prussia.43 In his instruction to the General Directory in 1722, Frederick William I ordered: “The General Directory should pay attention to preserving all our subjects with the greatest diligence and work, therefore maintain them in good flourishing and welfare all the time.”44 Frederick II kept this principle in his instruction to the General Directory in 1748.45 In his youth, he once said: “when I am the king, I am a king of the poor” (Quand je serai roi, je serai un vrai roi des gueux).46 The General State Laws for the Prussian States (Allgemeines Landrecht für die Preußischen Staaten), the code promulgated in 1794 as the outcome of Frederick II’s legal reform, had 89 clauses designating poverty relief as the responsibility of the state, which “discourages idleness, recognizes the right of every citizen to work, and proclaims the State to be the natural protector of the poorer classes”.47

37 Ranke, Memoirs, vol.1, pp. 429-437. 38 Anto Zottmann, Die Wirtschaftspolitik Fredericks Des Großen (Leipzig and Vienna: Franz Deuticke, 1937), pp. 47-48; Seppel, ‘Cameralist Population Policy’, pp. 96-97. 39 Ranke, Memoirs, vol.3, p. 383; Eric Robson, ‘The Armed Forces and the Art of War’, in The New Cambridge Modern History: vol.7 The Old Regime, 1713-1763 (Cambridge: Cambridge University Press, 1957), pp. 163-190 (pp. 179-180). 40 Ranke, Memoirs, vol.3, p. 381. 41 Zottmann, Wirtschaftspolitik, pp. 51-52. 42 Gagliardo, Enlightened Despotism, p. 59. 43 Dawson, Bismarck and State Socialism, pp. 14-22. 44 G. Schmoller, D. Krauske, and D. Loewe, Die Behördenorganisation und die allgemeine Staatsverwaltung Preußens im 18. Jahrhundert, vol. 3 (Berlin: Paul Parey, 1901), pp. 589-590. 45 G. Schmoller and O. Hintze, Die Behördenorganisation und die allgemeine Staatsverwaltung Preußens im 18. Jahrhundert, vol.7 (Berlin: Paul Parey, 1904), p. 558. 46 Annie Ashley, The Social Policy of Bismarck (New York: Longmans, Green and Co., 1912), p. 40. 47 Dawson, State Socialism, pp. 18-19; unspecified author, Allgemeines Landrecht für die Preussischen Staaten 80

2.2 The Nature of Enlightened Absolutism: Anti-Machiavel of Frederick II

The “state” in Justi’s economic thought was an enlightened absolutist monarchy, with which the nature of his economic theories and proposals stayed in accordance. The nature of enlightened absolutism was primarily manifested in Anti-Machiavel or The Refutation of Machiavelli’s Prince (Anti-Machiavel ou Essai de Critique sur le Prince de Machiavel), written by Frederick II when he was the crown prince and firstly published in the name of Voltaire in 1740. 48 This was a work written under the influence of the Enlightenment. It was written in the autumn and winter of 1739/1740.49 By then, the crown prince had already been educated in Enlightenment thoughts by his Huguenot tutor, read Montesquieu, experienced the famous conflict with his father, maintained the friendship through correspondence with Voltaire, and became an advocate of Christian Wolff’s philosophy.50 Anti-Machiavel was a text which Justi found resonant with his thought. In Staatswirthschaft, a text dedicated to the Austrian empress and not written to please any Prussian ruler, Justi wrote that he thought Machiavelli’s The Prince was written “as a satire”, and that the best refutation of it “is unquestionably completed in Anti-Machiavel which was written by a great prince”.51 In System des Finanzwesens, a work dedicated to Frederick II, he explicitly wrote: “my system is based on the foundation of the common welfare shared by both the prince and the subjects, a principle, which Anti-Machiavel has retrieved long ago and made amiable against a corrupted system, which regards the subjects as the subservient tools for the passion of the ruler”.52

Anti-Machiavel was an expression of Frederick II’s enlightened theory of state. The text started from the question “what might have engaged free men to give themselves masters?”53 Friedrick II believed that when people found it necessary to unite and to have a judge to settle disputes, a protector against enemies, and a leader to unite different interests into a single common interest, the people would choose among them

(Berlin: Gottfried Carl Nauck, 1804), pp. 476-488. 48 Frederick II of Prussia, trans. by Paul Sonnino, Anti-Machiavel (Athens: Ohio University Press, 1981), p. 14. 49 Ibid., p. 14. 50 Ibid., pp. 9-14. 51 Justi, Staatswirthschaft, vol.1, p. 44. 52 Justi, System des Finanzwesens, inscription, page number unmarked. 53 Frederick, Anti-Machiavel, p. 34. 81

“the most wise, equitable, disinterested, humane, and valiant” to govern them. 54 Therefore justice should be the principal object of a ruler, the welfare of people should be his paramount concern, and the ruler should procure and augment the happiness and felicity of the people.55 In this way, “the sovereign, far from being the absolute master of the people under his dominion, is nothing else but their first servant and must be the instrument of their felicity as they are of his glory”.56 This was the between monarch and people in enlightened absolutism. Thus as long as the monarch kept serving as the tool of public happiness, usurpers were “atrocious”, because they broke this social contract and came into power against the will of the people. 57 Legitimate approaches to becoming a ruler were: by succession, by election by the people, and by conquest of provinces from the enemy “in a just war”.58

This origin of commonwealth and thereupon the natural duty of monarch changed the monarch’s behaviour pattern. The legitimacy and the basis of power of an enlightened monarch was to make people happy, because happy people would not revolt and fear losing their monarch who benefited them.59 If a monarch could not make his people happy, war would be his punishment. Conquering a badly governed country was easy because in that country people always hope to be liberated.60 Therefore in enlightened absolutism, in addition to his duty as the commander-in-chief, the monarch should also be the chief promoter of people’s happiness. Thus there were two approaches of “self- aggrandizement” for a monarch: firstly, by expanding his territory through war, which was the Machiavellian reason of state; secondly, “by activity, as when a hard working prince makes the arts and sciences flourish in his states, rendering them more powerful and civilized”.61 The latter could be named the “enlightened reason of state”.

Frederick II believed that the Machiavellian reason of state was less important and less beneficial to the monarch. Firstly, conquering new land did not necessarily make people in old territories happy or rich.62 Secondly, if the monarch conquered so vast a territory

54 Ibid., p. 34. 55 Ibid., p. 34. 56 Ibid., pp. 34-35. 57 Ibid., p. 35. 58 Ibid., p. 35. 59 Ibid., p. 37. 60 Ibid., p. 37. 61 Ibid., p. 133. 62 Ibid., p. 40. 82 that he was unable to govern, then however vast territory he ruled, he was nothing but “a miserable individual, hardly noticeable as he crawls upon this globe”.63 Thirdly, the strength of a nation lay not in “vast wilderness” or “immense desert” but in “the wealth and number of its inhabitants (dans la richesse des habitans & dans leur nombre)”.64 Yet Frederick II was not a pacifist. Conquering new territory was after all recognised as a “reason of state”, as long as the monarch had “just reasons for waging war”.65 Anti- Machiavel discussed how to govern the newly conquered territory: either controlling it with armies and garrisons or “letting the people enjoy their full liberty”.66 It seemed that Anti-Machiavel justified the author’s conquest of Silesia. Frederick II regarded annexing Silesia, which was a piece of rich and resourceful manufacturing territory, as the means to enrich Prussian economy. 67 The militant nature of Machiavellian absolutism was not completely replaced by enlightened absolutism, but only the conquest was motivated by careful considerations of economic interest.

As for the “enlightened reason of state”, Frederick II thought it was “more innocent”, “more just”, and “as useful as” conquering new territory.68 The enlightened reason of state was to make “arts and sciences” flourish in the country. By “arts” Frederick II referred to agriculture, manufacturing, and commerce; by “sciences” he meant “geometry, philosophy, astronomy, eloquence, poetry, and everything that goes under the name of fine arts”.69 This enlightened reason of state was nothing but promoting economy, science and art. Friedrick II regarded the economic, scientific and artistic achievements as “the surest mark of a well governed and affluent country”.70 In order to promote the economy, the monarch should study the condition of the country to see “which arts would be most likely to flourish there with some encouragement”, because different nations had different natural gifts suitable for different economic activities.71 The agricultural nation should pay attention to two issues: exploiting all lands to use

63 Ibid., p. 40. 64 Ibid., p. 51; Voltaire, Anti-Machiavel ou Essai de Critique sur le Prince de Machiavel (Amsterdam: Jaques la Caze, 1741), p. 39. 65 Frederick, Anti-Machiavel, p. 52. 66 Ibid., p. 52. 67 John A. Lynn, ‘States in Conflict 1661-1763’, in Cambridge Illustrated History of Warfare, ed. by Geoffrey Parker (Cambridge: Cambridge University Press, 1995), pp. 164-186 (p. 146). W. O. Henderson, Studies in the Economic Policy of Frederick the Great (London: Frank Cass & Co.LTD., 1963), pp. 141-142. 68 Frederick, Anti-Machiavel, p. 133. 69 Ibid., pp. 133-134. 70 Ibid., p. 135. 71 Ibid., p. 134. 83 every inch of soil and finding new markets, new means of transport, and other ways to lower the price of products.72

The preference for manufacturing was also an outstanding characteristic of the economic strategy of enlightened absolutism. To Frederick II, “manufacturing of all kinds…may be what is the most useful and profitable to a state”, because firstly manufacturing supplied necessities and comforts to people, secondly, if a nation had manufacturing, its neighbours would “pay a tribute” to its manufacturing, and thirdly manufacturing brought money into the country and kept the money circulated in the domestic markets.73 Frederick II also noted that manufacturing productively employed a dense population. He believed that due to the lack of manufacturing, Nordic peoples had to raid the south in ancient time and the Middle Ages, but they stopped and became much more populous in the early modern time, because “luxury has wisely multiplied our needs” which “has given rise to manufacturing and to all those arts that provide subsistence to entire peoples who would otherwise be obliged to seek it elsewhere”.74 In another words, luxury multipled demands which fueled manufacturing which provided employment. It should be noted that Prussian enlightend absolutist monarchs considered manufacturing to be their central concern. In his political testament, Frederick William I instructed his successor: “The most important aim and basis of a country and a ruler is manufacturing, so my successor must seek to build manufacturing, especially woollen manufacturing, in Prussia and in all other provinces where there is no manufacturing…and my successor must protect manufacturing in all provinces, then you will see your revenue increase and your land and people flourish.”75 His reform to merge the General Finance Directory into the General Commissariat was understood by an older German political economic historian Otto Hintze (1861-1940) as an endeavour to promote manufacturing, because the General Finance Directory aimed at increasing fiscal revenues through agriculture and free trade at the sacrifice of urban industries, whereas the General Commissariat represented the interest of newly emerged mercantilist policies aiming to build manufacturing through trade protection

72 Ibid., p. 134. 73 Ibid., p. 134. 74 Ibid., pp. 134-135. 75 Küntzel and Martin, Politischen Testamente, vol.1, pp. 76-77. 84 and industrial policies.76

As for promoting science and art, Frederick II noted that a great regime always generated great intellectual achievements: the age of Pericles was the age of Phidias and Praxiteles; the age of Augustus was the age of , Ovid, Horace and Virgil; the age of Louis XIV was also the age of Corneille, Racine, Molière, Boileaus, Descartes, Coypels, Le Brun and Ramondon.77 Therefore Frederick II advocated state subsidies for science and art by rewarding those “who work at perfecting our knowledge”, “who devote themselves to the cult of truth”, and “who neglect material comforts in order to develop the art of thinking”. 78 In his essay titled “About the Benefit of Arts and Sciences in the State” (Über den Nutzen der Künste und Wissenschaften im Staate, 1772), Frederick II wrote “the real welfare, interest and glory of the state demands that its people are as educated and enlightened as possible” so that the state could have many skilful people in every profession and sufficient capable officials could work in government for public welfare.79 Frederick II believed that humans had “developable qualities” (entwicklungsfähige Anlagen) which required the education to fully exert, so “one’s knowledge must be increased so that his idea can expand”, “his memory must be expanded so that his imagination can be supplied with materials which he can process”, and “his judgment must be sharpened so that he can learn to assess his achievement”.80 Thus if people were uneducated, that would be a loss to society.81 Frederick II regarded science and art as forces of perfection (Vervollkommnung) to a lot of economic activities: hydropower, physics, and botany to agriculture; chemistry to medicine; anatomy to surgery; mechanics to mining and manufacturing; and geography and astronomy to maritime trade and transport.82

In general, the Anti-Machiavel of Frederick II displayed that beyond the militant Machiavellian reason of state, enlightend absolutism recognised another enlightened reason of state. According to this enlightened reason of state, the expansion of the interest of a monarch should be sought in the expansion of happiness, felicity, richness,

76 Hintze, Aufsätze, p. 185. 77 Frederick, Anti-Machiavel, p. 135. 78 Ibid., p. 135. 79 Frederick II of Prussia, ‘Über den Nußen der Künste und Wissenschaften im Staate’, in Die Werke Friedrichs des Großen, volume 8, ed. by Gustav Berthold Volz (Berlin: Reimar Hobbing, 1913) pp. 54-61 (p. 55). 80 Ibid., p. 54. 81 Ibid., p. 55. 82 Ibid., p. 56. 85 and comforts of the people. The economic strategy according to this enlightened reason of state was developing manufacturing and promoting the progress of the sciences and arts.

2.3 The Philosophy of Enlightened Absolutism: Christian Wolff

Anti-Machiavel was based on the philosophy of Christian Wolff. “Frederick II was steeped in Wolff’s philosophy and he retained a basically Wolffian pattern of thought in his political ideas”.83 Frederick II discovered Wolff’s philosophy in 1734.84 His first letter to Voltaire was to introduce Wolff, whom he regarded as “the most celebrated philosopher of our time”, and was attached with his French translation of some of Wolff’s works.85 Frederick II wrote to Wolff one week before his enthronement about Wolff’s latest work of natural law and said “every man who thinks and loves truth must take an interest in your book; every man of integrity and every good citizen must regard it as a jewel”.86 One of the first things Frederick II did after he became king was to invite Wolff, who was exiled by his father, to return to Prussia.87

Eighteenth-century German natural law generally had two broad streams: one developing from Pufendorf’s and one from Leibniz’s thought, and Christian Wolff represented the second stream, while Christian Thomasius represented the first.88 For Leibniz and Wolff, “law and politics were essentially concerned with the perfectibility of human nature as part of the general system of the world”, so the aim of politics should be to proactively maximise people’s happiness; whereas for Pufendorf and Thomasius, “law and politics were concerned with restraining and pacifying a human nature that was inherently passionate and tended to be ungovernable”, and therefore the state should be confined to maintaining peace and order. 89 In Jutta Brückner’s words, Thomasius was the forerunner of liberalism and Wolff was the philosopher of the

83 Haakonssen, ‘German Natural Law’, p. 257. 84 Frederick, Anti-Machiavel, p. 12. 85 Frederick II of Prussia, trans., by Thomas Holcroft, Posthumous Works of Frederick the Great, vol.6 (London: G. G. J. and J. Robinson, 1789), p. 2. 86 T.C.W. Blanning, ‘Frederick the Great’, p. 274. 87 Wolfgang Drechsler, Wolfgang Drechsler, ‘Chrsitian Wolff (1679-1754), A Biographical Essay’, European Journal of 4 (1997), pp. 111-128(p. 117). 88 Haakonssen, ‘German Natural Law’, p. 259. 89 Ibid., p. 260. 86 interventionist state.90 In Wolff’s philosophy, the state was absolute and limitless, and thorough and comprehensive state intervention in society was advocated. As Haakonssen put it, “Wolffian philosophy aspired to, and in considerable measure achieved, the status of a civic religion for the governing classes, especially in Prussia, where Wolff’s natural law theory provided…the ruling bureaucracy’s value scheme”.91 Therefore Wolffian philosophy wanted philosophical faculties of universities to compete with traditional faculties of law and theology in training bureaucrats.92

According to Wolff, humans’ “happiness” (Glückseligkeit) originates from “persistent felicity” (beständige Freude), and “durable felicity” (fortdauernde Freude) originates from “supreme happiness” (Seligkeit). 93 “Supreme happiness” is a synonym for “supreme good” (höchstes Gut), which is realised “when humans arrange their action and will according to the law of nature”.94 Humans’ free action, namely the action out of will not necessity, is oriented towards either their internal condition, which is their souls and bodies, or their external condition, which is their wealth and esteem.95 The “perfection” of humans’ conditons is when conditions accord with the nature of human beings.96 What brings perfection of humans’ internal and external conditions is “good” (gut) and what brings imperfection of them is “bad” (böse).97 It is human nature to do the good and to avoid the bad.98 Therefore it is a law of nature that “do what makes you and your conditions perfect, and avoid what makes you and your conditions imperfect.” 99 Perfecting humans’ conditions is therefore their “natural obligation” (natürliche Pflicht) bound by natural law.100 Humans are obliged to obey their natural obligation because firstly, humans’ will “is irresistibly drawn to perfection” and natural obligation is the only approach towards perfection; secondly, the ability to realise and practice natural obligation is the divine uniqueness of humans’ mind and rationality; and finally, obedience to natural obligation brings natural reward (namely, “good”)

90 Brückner, Staatswissenschaften, Kameralismus und Naturrecht, p. 216. 91 Haakonssen, ‘German Natural Law’, p. 260. 92 Ibid., p. 260. 93 Christian Wolff, Vernünfftigen Gedancken von der Menschen Thun und Lassen (abbr. Deutsche Ethik) (Frankfurt and Leipzig: mit Königl.Poln und Chur-Fürstl. Sächs. allergnädigsten Privilegio, 1736) p. 35. All Wolff’s quotes are translated by the author of the thesis. 94 Ibid., p. 32. 95 Ibid., pp. 2-3. 96 Ibid., p. 5. 97 Ibid., p. 6. 98 Ibid., pp. 7-8. 99 Ibid., p. 16. 100 Ibid., p. 144. 87 whereas disobedience causes punishment (namely, “bad”). 101 “Good” is humans’ motivation to perfect their conditions, so “better” (Besser) is the stronger motivation to pursue greater perfection, because “it is the nature of things that some action brings more perfection in humans’ conditions than other action.102 In this way, “when they arranges their action and will according to the law of nature, humans always progress to greater perfection.” 103 Therefore the definition of “supreme happiness” and “supreme good” is “an unhindered progress to greater perfection”.104 In summary, Wolff’s happiness means the perfection of humans’ internal and external conditions and their unhindered progress towards greater prefection.

Wolff’s natural law provided a system of moral principles based on the rationality and the happiness of people and independent from God or monarch. Wolff wrote: “the law of nature has been built up by nature, and will exist if the people have no authority [Obere] which can bind them, and it will exist if there is no God”.105 To build the basis of morality independent from any confession is “of utmost importance” to German philosophers like Leibniz and Wolff after the disaster of the Thirty Years’ War, which was incited by religious conflicts.106 In 1723, Wolff, a professor at the University of Halle and a councillor of Prussian court, was expelled by Frederick William I for giving a public speech about his admiration of which was a moral and political system supporting that morality could be reached through the rationality of humans without God’s help. 107

Wolff’s definition of happiness is clear. The perfection of soul consists of the perfection of intelligence (Verstand) and will (Willen). 108 The perfection of intelligence is composed of 1) knowledge, which is realised through receiving education, advancing science, and discovering new knowledge, and 2) qualities based on knowledge, such as wisdom, cleverness, cautiousness, judgement and rationality.109 The perfection of will

101 Haakonssen, ‘German Natural Law’, pp. 270-271; Wolff, Deutsche Ethik, pp. 16-31. 102 Wolff, Deutsche Ethik, p. 10. 103 Ibid., p. 32. 104 Ibid., p. 32. 105 Ibid., pp. 16-17; p. 21. 106 Erik S. Reinert and Arno Mong Daastøl, ‘Exploring the Genesis of Economic Innovations: The Religious Gestalt- Switch and the Duty to Invent as Preconditions for Economic Growth’, European Journal of Law and Economics 4 (1997), pp. 233-283 (p. 236). 107 Drechsler, ‘Chrsitian Wolff’, p. 113. 108 Wolff, Deutsche Ethik, p. 164. 109 Ibid., pp. 165-245. 88 originates from the perfection of intelligence and consists of the judgment between goodness and evil based on knowledge.110 The perfection of body consists of skill and health of all body parts.111 Skill relates to the perfection of soul and is realised by training and educating.112 Health is realised by sufficient healthy food and drink, abstinence, sobriety, diet, sufficient rest, avoiding over-work, warm and comfortable clothing, protection of body, protection of perception, comfortable housing, curing disease and easing fatigue.113 The perfection of the external condition consists of wealth and esteem. 114 Wolff’s happiness required people to live comfortable and affluent material lives. As he wrote, “humans should make sure they have food and clothing, not only necessities but also amusement [Vergnügen] according to the requirements of affluence [Wohlstand].”115

Humans are obliged to perfect not only their own internal and external conditions but also those of others, which is bound by natural law, because when the realisation of happiness is beyond one person’s capability, his happiness thus relies on the help from others. 116 In this way a person’s natural obligation to himself is the same as his obligation to others, so all humans are obliged to help each other promote each other’s happiness.117 Thus in the condition of natural freedom, namely when humans’ action is not dependent on nor restricted by others, all humans still have sociability to promote the welfare of each other, so in Wolff’s philosophy commonwealth (gemeine Wesen) is not the abolishment of natural freedom but only the “convenient way to maintain what is hard to maintain in natural freedom”.118 A commonwealth should only be the form of how natural freedom manifests itself. Natural freedom is the guiding principle (Richtschnur) of commonwealth to judge good and evil.119 Wolff saw the hope of good ordered society in human nature, and the state of nature was not “wolf against wolf”, but the unity based on rationality.120

110 Ibid., p. 246-249; p. 258. 111 Ibid., p. 303. 112 Ibid., p. 302; p. 304-305. 113 Ibid., pp. 304-305; 319; 221-222; 328-329; 332-333; 336-338; 339; 341; 347; 349. 114 Ibid., p. 380. 115 Ibid., p. 350. 116 Ibid., pp. 540-545. 117 Ibid., p. 540; p. 545-546. 118 Ibid., pp. 601-602. 119 Ibid., p. 602. 120 Jürgen Backhaus, ‘Christian Wolff on Subsidiarity, the Division of Labour, and Social Welfare’, European Journal of Law and Economics 4(1997), pp. 129-146 (p. 130). 89

The commonwealth originates from humans’ natural obligation to each other. In order to realise the perfection of a person’s internal and external conditions, “many kinds of work, which is therein demanded, must be divided among many people”, and “the amount and diversity of work show how multifarious livelihoods [Leben-Arten] and labour [Handtierungen] are demanded”.121 Therefore “a single family cannot provide itself with sufficient necessities, comforts, and pleasure [Vergnügen]”.122 And “a single family is unable to defend against all offences”.123 In general, the satisfaction (Genüge) of humans’ demands can never be realised in their solitude (Einsamkeit).124 Since humans are obliged to help others when their happiness is beyond their capabilities, therefore “it is necessary that many families unite together and promote their welfare with united forces, so that they can supply themselves with all comforts of lives, progress from one perfection of their conditions to another unrestrictedly according to their natural obligation, and protect themselves against all offence”, and this society is the commonwealth. 125 The commonwealth is thus formed for two purposes: to guarantee public security and to promote the welfare of society with united forces.126 The welfare of society (Wohlfahrt der Gesellschaft) is “the unhindered progress to the greater perfection”. 127 Wolff’s happiness on both the personal level and the commonwealth level is not statically maintaining good internal and external conditions of the people but endlessly forwarding the progress of their conditions.

Commonwealth, or any human community and society, is essentially a contract among humans to promote their welfare with united forces.128 The content of the contract and every party of the contract must be subject to and accord with the commands of natural law, and the contract is invalid if anyone harms the interest of the society or the interest of others; the victim should then be allowed to break the contract.129 Here Wolff recognised that the people have the right to resist tyranny.130 Bound by the contract,

121 Christian Wolff, Vernünfftige Gedancken von dem Gesellschafftlichen Leben der Menschen (abbr. Deutsche Politik) (Frankfurt and Leipzig: mit Königl.Poln und Chur-Fürstl. Sächs. allergnädigsten Privilegio, 1736), p. 156. 122 Christian Wolff, Grundsäße des Natur-und Völkerrechts (Hallen/Saale: Rengerischen Buchhandlung, 1769), p. 685. 123 Wolff, Deutsche Politik, p. 161. 124 Ibid., pp. 1-2. 125 Ibid., p. 162. 126 Ibid., p. 162. 127 Ibid., p. 3. 128 Ibid., p. 3. 129 Ibid., pp. 3-6. 130 Hartmuth Becker, ‘Justi’s Concrete Utopia’, in The State as Utopia: Continental Approaches, ed., by Jürgen Georg Backhaus (London: Springer, 2010), pp. 41-56 (p. 44). 90 people are obliged to orient their action to promoting public welfare, and none can place his special interest above the public welfare.131 Natural law is perfect and permanent, so the laws of commonwealth (bürgerliche Gesetze) should emanate from natural law to clarify people’s natural obligation and interpret natural law in different scenarios.132 In order to facilitate those who observe natural law and to prevent those who neglect their natural obligation, the commonwealth should be governed; the people who are entrusted with the task of governance is the authority (Obrigkeiten).133 The authority has three basic forms: monarchy, aristocracy and democracy. The best commonwealth is the one where the highest number of people live together happily and securely.134 The best form of government is the one which realises public welfare and security most efficiently and firmly.135

2.4. The Political Economy of Enlightened Absolutism: Policeystaat

Wolff admitted the existence of natural freedom, namely “the condition where one depends his action on nobody else, or nobody is entitled to restrict other people’s freedom at his will”.136 Yet Wolff’s natural freedom is not free from the binding force of natural law and natural obligation.137 In order to fulfill natural obligation, namely to realise public happiness and security, people must accept the leadership of authority, because firstly people are not always able to judge what is important to public welfare since they lack sufficient knowledge about the entire commonwealth, secondly people only judge whether orders of authority benefit themselves, but it always happens that the interest of some people is contrary to public welfare, and thirdly people do not always fully understand their natural obligation.138 The social contract between the authority and the people is that the authority has the liberty to order the people to do whatever promotes public welfare and security, and the people must obey its orders except when orders are against natural law.139 Yet the power of authority is not limitless:

131 Wolff, Deutsche Politik, pp. 163-164. 132 Ibid., pp. 415-419. 133 Ibid., pp. 171-173. 134 Ibid., p. 166. 135 ibid., pp. 178-179. 136 Wolff, Deutsche Ethik, p. 601. 137 Wolff, Deutsche Ethik, p. 600. 138 Wolff, Deutsche Politik, pp. 460-461. 139 Ibid., pp. 459-463. 91 it is “no wider than the behaviours of citizens belonging to the promotion of public welfare,” so only in these aspects is the natural freedom of an individual restricted.140 But in the domains of promoting public happiness and security, the authority has unlimited power.141 And the task of the authority is that “such institutions (Anstalten) should be made that everyone may find all necessary chances and means to realise their natural obligation”.142 Namely, the state should be a welfare and interventionist state. In Wolff’s philosophy, an interventionist state does not violate natural freedom. The commonwealth with an interventionist state is not the abolishment of natural freedom but to maintain natural freedom.143 Natural freedom is still bound by natural obligation and an interventionist state is necessary for people to fulfill natural obligation. Freedom in Wolff’s philosophy is not the freedom from state intervention and the obligation to progress the perfection of each others’ internal and external conditions, but the freedom from the intervention beyond the necessity of the realisation of public happiness and security. In Wolff’s philosophy, human’s natrual right is not “licence” or “moral indifference” but “a power granted by the law of nature to pursue the goals set by that law”.144 Wolff’s natural right is essentially the right to perfecting humans’ conditons unhinderedly.

In comparison, (1632-1704), roughly contemporary to Christian Wolff and arguably the founding father of , also proposed the natural law which placed the hope of creating a well-ordered society in the nature and rationality of human beings.145 In Locke’s theory, the commonwealth originates from people’s desire to preserve their property.146 In the state of nature, humans enjoy their natural right, which is fundamentally the “right of self-ownership”. 147 This natural right is “an uncontrollable liberty to dispose of his person or possessions,” but this does not include the liberty to destroy them.148 Humans’ obligation in the state of nature is that “no one

140 Wolff, Natur-und Völkerrechts, p. 690. 141 Wolff, Deutsche Politik, p. 464. 142 Ibid., p. 208. 143 Wolff, Deutsche Ethik, pp. 601-602. 144 Haakonssen, ‘German Natural Law’, p. 271. 145 About Locke’s liberalism, see Ruth W. Grant, John Locke’s Liberalism (London: The Press, 1987); Alan Ryan, The Making of Modern Liberalism (Oxford: Princetion University Press, 2012). 146 John Locke, Two Treaties on Civil Government (London: J. M. Dent & Sons Ltd., 1949) p. 180. 147 D. A. Lloyd Thomas, Routledge philosophy guidebook to Locke on government (London: Routledge, 1995), p. 18. 148 Locke, Two Treaties, p. 119. 92 ought to harm another in his life, health, liberty or possessions”. 149 Government originates from people’s resignation of their power to protect their self-ownership and to punish the transgressors.150 Therefore, in Locke’s philosophy, political power is the power to make laws to preserve the right of property, execute laws, and defend against offences.151 The state in Locke’s philosophy is essentially the juridical and defensive state. 152 Locke assumed that the free enjoyment of self-ownership would make a society happy, but Wolff stipulated a range of natural obligation needed to be fulfilled in order to achieve happiness. In general, there is no room for the Wolffian interventionism in the Lockean state. This philosophical difference from seventeenth and eighteenth centuries could perhaps explain the different understandings of liberalism and state intervention from Anglo-American tradition and German tradition, which is manifested in modern times as the difference between Anglo-American capitalism and Rhine capitalism.153 This difference was already perceived in the early modern period. In the eigteenth century German-speaking world, Locke’s philosophy “encountered an almost insurmountable obstacle in the Leibniz-Wolff school”.154

In general, in Wolff’s philosophy, “there is no theoretical limit to the state’s pursuit of the welfare of its citizens”.155 Roscher named Wolff’s model of state intervention “police absolutism” (polizeiliche Absolutismus).156 It was a model of Policeystaat— not “police state” in modern sense but the state utilising Policey to comprehensively interfere in the economy and society to facilitate public welfare in the early modern German context. It is believed that “Wolff’s Polizeistaat somewhat belongs to the time of Frederick William I”.157 Wolff wrote his first book of political philosophy, Deutsche Politik, which was “a handbook for princes and their councillors”, when he was in Prussia under the rule of Frederick William I.158 In its full practice, the administration of Frederick William I qualified as a “well-ordered police state” in Marc Raeff’s

149 Ibid., p. 119. 150 Ibid., pp. 179-182. 151 Ibid., p. 118. 152 Ibid., p. 159. 153 See Michel Albert, trans. by Paul Haviland, Capitalism against Capitalism (London: Whurr Publishers, 1993), pp. 117-122. 154 Klaus P. Fischer, ‘John Locke in the German Enlightenment: An Interpretation’, Journal of the History of Ideas 36.3 (1975), pp. 431-446 (p. 431). 155 Haakonssen, ‘German Natural Law’, p. 273. 156 Roscher, National-Oekonomik, p. 353. 157 Werner Frauendienst, Christian Wolff als Staatsdenker (Berlin: Emil Ebering, 1927) p. 83. 158 Frauendienst, Christian Wolff, pp. 17-35. 93 sense.159 Through his administration reform, Frederick William I created a team of “economic bureaucrats” (wirtschaftliche Behörden) to comprehensively implement Policey.160 Excise collectors in cities, Kontribution collectors in villages, and managers of royal domains, namely Urban Commissaries, Rural Commissioners, and Royal Officials, formed the lowest level of Prussian state intervention in the economy and society. 161 This team of administration was the origin of Prussian bureaucracy. 162 Infantries and cavalries of the Prussian army were stationed in cities and accommodated in private houses, which in some places made up for more than half of the urban population.163 Military commanders and Urban Commissaries formed the irresistible intervention in urban society and economy from the state.164 The city management of burgomasters and city councils was supervised by Urban Commissaries.165 An Urban Commissary administered several small cities or one large city.166 He was responsible for initiating schemes for the improvement of cities; he lived in his district of administration and visited every part of it regularly to receive complaints and suggestions; he took charge of Policey which included unifying weights and measures, controling food quality and price, licensing the sale of liquor, putting the able-bodied beggars to work and the sick to hospitals, checking antisocial behaviours such as drunkenness and idleness, regulating industries and trades, inspecting quality of goods, and supervising guilds.167 His most important duty was to maximise the collection of excise; and in order to make the collection economical and honest, he maintained book- keeping and reported monthly statistics to his superiors.168 In the simmilar way, Rural Comminssioners, who were elected by rural gentlemen and approved by the king, implemented Policey in villages, and Royal Officials did the same in royal domains.169

According to Wolff, the commonwealth required a sufficiently large population to promote public welfare and security.170 And in order to promote the population, the

159 Raeff, ‘Police State’, p. 1235. 160 Roscher, National-Oekonomik, pp. 363-364 161 Brückner, Staatswissenschaften, Kameralismus, und Naturrecht, p. 63. 162 See Walter, L. Dorn, ‘The Prussian Bureaucracy in the Eighteenth Century’, Political Science Quarterly 46.3 (1931), pp. 403-423. 163 Bruford, “Organisation and Rise of Prussia”, p. 296; 298. 164 C. Hubert Johnson, Frederick the Great and His Officials (London: Yale University Press, 1975), p. 13. 165 Bruford, "Organisation and Rise of Prussia", p. 299; Dorn, ‘Prussian Bureaucracy’, p. 408. 166 Hintze, Aufsätze, vol.1, p. 183. Bruford, “Organisation and Rise of Prussia”, p. 299. 167 Bruford, “Organisation and Rise of Prussia”, pp. 299-300. 168 Ibid., p. 300. 169 Ibid., p. 303. 170 Wolff, Deutsche Politik, p. 209. 94 economy should be promoted, because “the population can be no more than the necessary incomes [Auskommen] that can be found in the country”.171 In order to promote the economy, one must study what the land could grow, what the people could manufacture, and what should be imported from other nations.172 The nation should absorb money by maintaining an export surplus and circulate money in the country; in this way, the state could meet its fiscal demands and the people could be enriched.173 Prohibiting imports was not necessary to maintain an export surplus as long as exports could be increased.174 Exporting manufactured goods should be promoted, because it brought more money inflow than exporting raw materials.175 Therefore exporting raw materials should be prohibited.176 The export competitiveness of manufactured goods lay in their good quality and cheap price.177 No one thus should be allowed to produce low-quality goods.178 The mechanisation of production process should be promoted because it increased productivity and kept down.179 A cheap price was also promoted by the development of primary sectors, which lowered the prices of raw materials and sustenance.180 Exports should not be taxed, and “it is in the interest of merchants that trade is prosperous, so they will be driven by their interests to maintain trade in prosperity”.181 There was not much new in Wolff’s economic policy proposal, compared with other early and contemporary cameralists.

It should be noticed that Wolff highlighted the policies promoting the domestic circulation of money. On the one hand, Wolff recognised that money, soldiers, and public servants were the force (Macht) of the state which was indispensable to promoting public welfare and security.182 On the other hand, Wolff explicitly regarded the circulation of money as a tool to enrich the people. Wolff believed that the money should “distribute itself in good proportion among residents of the country, which is…that money circulates [das Geld roulire].”183 A vigorous circulation of money and

171 Ibid., p. 212. 172 Ibid., p. 212. 173 Ibid., pp. 475-476; p. 579; p. 585. 174 Ibid., pp. 551-553. 175 Ibid., p. 553. 176 Ibid., p. 260. 177 Ibid., p. 581. 178 Ibid., p. 260. 179 Ibid., pp. 582-583. 180 Ibid., p. 583. 181 Ibid., pp. 584-585. 182 Ibid., pp. 475-477. 183 Ibid., p. 491; p. 585. 95 the prevention against money hoarding had been advocated since the Middle Ages and emphasised by .184 In sixteenth and seventeenth centuries, promoting circulation had already been advocated by economic thinkers. Botero proposed that the money collected by the monarch should be generously spent back into the economy, especially when the economy was depressed.185 Hörnigk’s fourth policy principle was that gold or silver, once brought in the country through mining or export surplus, should not be brought outside the country in any case; and gold and silver should not be “buried in caskets” but “always kept in circulation”; nor should it be destroyed.186 William Petty had incorporated the velocity of circulation in his calculation of the amount of money required for English monarchy, and this was the first known economic analysis to deal with the velocity of circulation.187 John Locke also regarded the supply and circulation of sufficient money as the condition to expand domestic trade and employment.188

Wolff proposed detailed policies concerning money circulation. In order to stimulate circulation, 1) rich people should be encouraged to spend on food, drink, housing and other goods, in this way the rich people would give livelihoods to the unemployed, and government should recycle the collected money back to the economy; 2) agriculture and manufacturing should be developed so that the money would not be exported and “everyone can seek to feed themselves”; 3) “every work should be set a suitable [geziemenden] price, through which the poor are motivated to work”. 189 Besides, interest rates should be kept low so that none could live on interest.190 In Justi’s economic thought, the importance of money circulation was much highlighted, as will be discussed in the next chapter.

Economic policies were but a small part of Wolff’s Policeystaat proposal, which aimed to provide means for the people to perfect their internal and external conditions. This

184 Philipp Rössner, ‘Burying Money? Monetary Origins and Afterlives of Luther's Reformation’, History of Political Economy 48.2 (2016), pp. 225-263 (pp. 233-234). 185 Botero, Reason of State, p. 143. 186 Hörnigk, Austria Supreme, p. 155. 187 William Petty, Political Arithmetick (London: Robert Clavel & Hen. Mortlock, 1690) pp. 110-111; M. W. Holtrop, ‘Theories of the Velocity of Circulation of Money in Earlier Economic Literature’, The Economic Journal 39.1 (1929), pp. 503–524 (p. 503). 188 C. B. Macpherson, ‘Locke on Capitalist Appropriation’, The Western Political Quarterly 4.4(1951), pp. 550-566 (pp. 556-559). 189 Wolff, Deutsche Politik, pp. 588-590. 190 Ibid., pp. 280-282. 96 comprehensive policy system made Wolff’s natural law “an extraordinary theory of the total welfare state”.191 Policy proposals to perfect people’s souls included: 1) building academies of science, academies of crafts, and craft schools to advance and spread knowledge and skills; 2) building primary schools and churches to spread virtue and literacy; 3) publishing good books to spread virtue and knowledge; 4) punishing crimes in public to alert people; 5) building churches and regulating religious activities; 6) producing good comedies and tragedies to cultivate people’s souls.192 Policy proposals to perfect people’s bodies included: 1) prohibiting duels, revenge, alcohol, and suicide; 2) setting maximum length and minimum wage of labour to prevent over-working; 3) building public granaries to guarantee the supply of food and maintain food price; 4) controlling food quality; 5) building hospitals for the poor, training doctors, and researching good medicines to prevent human diseases; 6) curing animal diseases; 7) building stadiums for sport and exercise; 8) regulating the price and quality of clothing; 9) building work houses (Zucht-und Arbeitshäuser) to employ the poor; 10) building orphanages; 11) building beautiful and comfortable public buildings, roads, and landscapes to beautifying living space; 12) regulating the design and quality of private housing for fire safety; 13) producing good plays and music to amuse the people.193

It should be noted that Wolff was not the first to propose the model of the Policeystaat. Wolff actually continued a tradition in German cameralism. In the seventeenth century, in his Teutscher Fürsten-Stat (1656), which was a textbook for educating princes and ministers and had been used in German universities until the middle eighteenth century, Seckendorff, the “Adam Smith of cameralism”, proposed that the government should have four kinds of activities: preserving the power of the prince, making good laws and ordinances, administering justice, and enforcing laws and policies.194 In making good laws and ordinances, Seckendorff proposed the good Policey to promote the welfare of the country, including industrialising the economy, protecting infant industries, reforming guilds and towns, supplying people with necessities, educating the people to cultivate , training doctors and pharmacists, building hospitals, inspecting food quality, purifying air and water, and curing begging and idleness.195 Through this

191 Haakonssen, ‘German Natural Law’, p. 273. 192 Wolff, Deutsche Politik, pp. 241-278. 193 Ibid., pp. 337-415. 194 Brückner, Staatswissenschaften, Kameralismus und Naturrecht, pp. 11-32. 195 Ibid., pp. 24-26. Also see Erik Reinert, ‘A Brief Introduction to Veit Ludwig von Seckendorff (1626-1692)’, 97 system, Seckendorff represented an early modern intellectual shift to convert the legitimacy of princes’ rule from the the “right to rule” into the “duty to develop”.196 Seckendorff wrote a poem describing that the old ideal kings were good hunters, riders, and fencers, but the new ideal kings of his time should be measured by “the justice and welfare found in his state”.197

Wolff was arguably the most important German philosopher of the first half of eighteenth century. “The centre of scientific life in Germany during the eighteenth century was formed by the teaching and school of Christian Wolff.” 198 Wolff’s philosophy had a profound political influence. It shaped the value of Prussian bureaucracy and the codification of Prussian law.199 The 1794 Prussian General State Laws stipulated a Wolffian state. The responsibility of the state was defined as “to preserve external and internal peace and security” and “to provide institutions through which people are given means and chances to develop their capabilities and strengths and to use them to promote their prosperity”, and only in order to achieve these ends did the authority of the state (Oberhaupte im Staate) acquire all necessary privileges and rights (Vorzüge und Rechte).200 These clauses almost reproduced the thesis of Wolff’s Deutsche Politik.

Wolff’s philosophy also laid the foundation for the further development of German political economy by bringing new elements into German cameralism.201 The duty of Frederick Wiliam I’s bureaucrats, which covered the comprehensive management and improvement of the economy and society, was wide; their ultimate aim, namely to make Prussia a European land big power with a strong army, was high; but the resource they could use, namely a piece of scatteredly located, sparsely populated, easily salinized, and underdeveloped territory, was scarce.202 As the result, Prussian bureaucrats needed

European Journal of Law and Economics 19(2005), pp. 221-230; Sophus A. Reinert, ‘Cameralism and Commercial : Nationbuilding through Economic in Seckendorff’s 1665 Additiones’, European Journal of Law and Economics, 19 (2005), pp. 271-286. 196 Reinert, ‘Seckendorff’, p. 228. 197 Ibid., pp. 228-229. 198 W. Windelband, A History of Philosophy (New York: The Macmillan Company, 1907), p. 444. 199 Haakonssen, ‘German Natural Law’, p. 277. 200 Unspecified author, Allgemeines Landrecht, p. 208. 201 Backhaus, ‘Christian Wolff’, pp. 130-135. 202 Dorn, ‘Prussian Bureaucracy’, p. 405; Bruford, “Organisation and Rise of Prussia”, pp. 292-294; Gothelf, ‘the beginnings of Prussian absolutism’, pp. 59-66; H.M.Scott, ‘Prussia’s emergence as a European great power, 1740- 1763’, in The Rise of Prussia 1700-1830, ed. by Philip G. Dwyer (London: Routledge, 2000), pp. 154-176; Dennis Showalter, ‘Prussia’s Army: continuity and change, 1713-1830’, in The Rise of Prussia 1700-1830, ed. by Philip G. Dwyer (London: Routledge, 2000), pp. 220-236. 98 to be educated about how to fulfill their duty efficiently. 203 As a result, in 1727 Frederick William I of Prussia, the ideal monarch of the Policeystaat, set up chairs of cameral science at the University of Halle (the chair of Oeconomie, Polizey und Cammersachen) and the University of Frankfurt/Oder (the chair of Kameral-Ökonomie und Polizeiwissenschaft) and appointed Gasser and Dithmar to these chairs.204 These were the earliest university chairs in political economy in the world.205 Their purpose was to train future economic bureaucrats.206 Both chairs were influenced by Wolff’s theory of Policystaat and public happiness. Contextualised by the situation that royal domains accounted for a large share in Prussian agriculture, Gasser’s work was preoccupied with agriculture and addressed the issues of farm management. 207 Dithmar’s work studied “how the promotion of secular happiness [zeitliche Glückseeligkeit] is realised through the lawful urban and rural industries”. 208 His Policeywissenschaft studied “how to preserve the internal and external conditions of a nation in public happiness [allgemeine Glückseeligkeit] through good laws and ordinances”.209 Since this point forward, German cameralism started to exist in the form of a state science studied at university and aimed at training future bureaucrats. This process is commonly regarded as the watershed between the “old cameralists” and “new cameralists”.210

2.5 Science, Academy of Sciences, and the Wealth of Nations

Theorists of enlightened absolutism, such as Frederick II and Christian Wolff, put the promotion of sciences, crafts and education as part of the center of their policy proposals. And they treated these policies largely as economic policies and expected to promote economic development through the progress of sciences and crafts. The Scientific Revolution and the rise of people’s interest in exploring and applying

203 Brückner, Staatswissenschaften, Kameralismus und Naturrecht, pp. 63-65. 204 Tribe, Governing Economy, pp. 42-44; 205 Backhaus, ‘Christian Wolff’, p. 132. 206 See Tribe, Strategy of Economy, pp. 8-31. 207 Brückner, Staatsiwssenschaften, Kameralismus und Naturrecht, pp. 65-67. 208 Justus Christoph Dithmar, Einleitung in Oeconomische Policei-und Cameral-Wissenschaften (Frankfurt at Oder: Verlegts Johann Joachim Friedel, 1745), p. 2. 209 Dithmar, Einleitung, p. 6. 210 See Zielenziger, Die alten deutschen Kameralisten, pp. 98-104; Dittrich, Die Deutschen und Österreichischen Kameralisten, pp. 89-90. 99 scientific knowledge was an important component of the Enlightenment. 211 Justi himself participated this trend. From 1762 to 1765, aiming at spreading economically useful knowledge in German industries, Justi translated and annotated four volumes of Descriptions des Arts et Métiers (German: Schauplatz der Künste und Handwerke) in German.212 Descriptions was a compilation of essays recording the latest progress of crafts in manufacturing, artisanry and some primary sectors, annually published by the Paris Royal Academy of Sciences from 1761 to 1788, and a typical project of Industrial Enlightenment.213

Erik Reinert and Arno Daastøl believe that modern economic growth is pre-conditioned by a philosophical “gestalt-switch” which was the change of people’s attitudes towards the creation of new knowledge and their understanding of the economic significance of new knowledge.214 Reinert and Daastøl believe that “Leibniz and Wolff were to be the philosophers of the gestalt-switch in Germany.”215 This “gestalt-switch” concept is similar to Joel Mokyr’s “Industrial Enlightenment”. Reinert, Daastøl, and Mokyr share the consensus that the philosophical “gestalt-switch” or “Industrial Enlightenment” happened earlier in England than in most continental nations, and that Francis Bacon was the key thinker who catalysed this change in England.216

Bacon’s main contribution to this “gestalt-switch” or “Industrial Enlightenment” was manifested in his design of New Atlantis, a utopian society organised around the centre of scientific research and industrial innovation; central to this utopia was a fictional institution called “Salomon’s House”.217 New Atlantis was ruled by King Solamona, an enlightened monarch who “was wholly bent to make his kingdom and people happy”.218 The most preeminent policy of this enlightened monarch was “Salomon’s House”, which was an order or society “dedicated to the study of the works and creatures of God”.219 The aim of Salomon’s House was to study “the knowledge of

211 See Dorinda Outram, The Enlightenment (Cambridge: Cambridge University Press, 1995), pp. 47-62. 212 See Philipp Robinson Rössner, Managing the Wealth of Nations (Bristol: Bristol University Press, 2021 forthcoming). 213 See George B. Watts, ‘The Encyclopédie and the Descriptions des arts et métiers’, The French Review 25.6 (1952), pp. 444-454; Mokyr, The Gifts of Athena, pp. 70-71. 214 Reinert and Daastøl, ‘Gestalt-Switch’, p. 236. 215 Ibid., p. 252. 216 Ibid., ‘Gestalt-Switch’, pp. 252-253; Mokyr, ‘The Intellectual Origins’, pp. 291-292. 217 Mokyr, ‘The Intellectual Origins’, p. 292. 218 Francis Bacon, Advancement of Learning and The New Atlantis (London: Oxford University Press, 1906), P. 253. 219 Ibid., p. 255. 100 causes, the secret motions of things; and the enlarging of the bounds of human empire, to the effecting of all things possible”.220 Salomon’s House was essentially a national innovation system as well as a knowledge-centred which united scientific research, innovation, and wealth creation. It consisted of the laboratories and facilities which simulated the natural condition to experiment and research mineralogy, astronomy, meteorology, botany, zoology, mechanics, crafts, , acoustics, optics, , chemistry, , and tricks (such as juggling, false apparitions, impostures and illusions); meanwhile these laboratories and facilities were also wealth production facilities and crafts improvement facilities: mines, gardens, fishponds, animal farms, manufactories, hospitals, and medicine shops, in order to produce all kinds of raw materials, foods, drinks, manufactured goods, medicines, and medical treatments and improve the crafts of their production.221 The core staff of Salomon’s House were “explorers” searching knowledge and inventions overseas, “collectors” gathering existing experiments and crafts, “experimenters” conducting new experiments, “compilers” sorting the results of new experiments, “theorisers” systemising the knowledge, and “benefactors” who were inventors to “cast about how to draw out of them [results of new experiments and new knowledge] things of use and practice for man’s life”. 222 Salomon’s House was an ideal type of what Mokyr described as the “Baconian programme”, which operated following three principles: 1) “research should expand humanity’s knowledge and understanding of the universe”; 2) “research agenda should be directed to areas where there was a high chance of solving practical problems”; 3) “the access costs to this knowledge should be made as low as possible”.223 It should be noted that, according to Bacon’s design, the research of Salomon’s House aimed not at simply satisfying intellectual curiosity and expanding the accumulation of knowledge but at generating product and process innovations to promote the economic welfare of the commonwealth. Salomon’s House was a government-run to produce new wealth of all kinds as well as a public research organisation to generate new crafts and technologies. The proposal of Salomon’s House embodied the advocacy of the economic rationalism to improve economic performance through increasing and applying scientific knowledge. It

220 Ibid., p. 256. 221 Ibid., pp. 265-273. 222 Ibid., pp. 273-274. 223 Mokyr, Enlightened Economy, p. 40. 101 embodied a very early version of the “entreprenerial state”.

“The Royal Society appears to have developed from an informal association of adherents of Francis Bacon’s experimental philosophy”.224 In 1645 this association developed into an “invisible college” in London, which gathered for discussion every week; in 1662, Charles II chartered the establishment of the Royal Society.225 “In its early stages the Royal Society did not keep aloof from the economic ferment of the seventeenth century”.226 The constitution of the Royal Society stated that its “principal care and study” was “the advancement of natural experimental philosophy, especially those parts of it which concern the increase of commerce, by the addition of useful inventions tending to the ease, , or health of our subjects”.227 The Royal Society assigned research to individual members or groups of members who were required to regularly report their progress to the Society, and committees were set up to direct different branches of researches.228 The Royal Society “had organised the compilation of a history of trades”, “had discussed the best ways to improve specific craft processes”, and “had begun to collect information about the agricultural practice of different parts of the country, with a view to transplanting those that seemed best”.229 However, very soon after its establishment, members of the Royal Society became bored of improving industries and started to be interested in pure science, so “in the long run its contribution to the perfection of agriculture and industry were almost negligible”.230 It “became less a pure ‘Baconian’ institution than the French Académie Royale”.231

The Paris Royal Academy of Sciences was established by Jean-Baptiste Colbert (1619- 1683), who was popularly known as the epitome of mercantilism, in 1666.232 It was inspired by Bacon’s design of Salomon’s House and the example of the Royal Society.233 Compared to the Royal Society, the Paris Royal Academy manifested strong

224 A. Wolf, A History of Science, Technology, and Philosophy in the 16th & 17th Centuries (London: George Allen & Unwin Ltd., 1950), p. 59. 225 Wolf, Science, Technology, and Philosophy, pp. 59-60. 226 E. Lipson, The Economic History of England, vol.2 (London: Adam and Charles Black, 1943), xliii. 227 J. D. Bernal, The Social Function of Science (London: George Routledge & Sons Ltd., 1946), p. 22. 228 Wolf, Science, Technology, and Philosophy, pp. 60-61. 229 A. Rubert Hall, ‘Scientific Method and the Progress of Techniques’, in The Cambridge Economic History of Europe: vol. 4, The Economy of Expanding Europe in the Sixteenth and Seventeenth Centuries, eds. by E. E. Rich and C. H. Wilson (Cambridge: Cambridge University Press, 1967), pp. 96-154 (p. 119). 230 Hall, ‘Progress of Techniques’, p. 119. 231 Mokyr, ‘The Intellectual Origins’, p. 293. 232 Wolf, Science, Technology, and Philosophy, p. 64. 233 Maurice Crosland, Science Under Control: The French Academy of Sciences 1795-1914 (Cambridge: Cambridge University Press, 1992), pp. 14-15. 102 state intervention in science and technology. “The Society was a private body, entirely self-governing, controlling the election of its Fellows, embracing amateurs as well as professionals; it had no financial support or physical accommodation from public sources, no obligation to undertake work for the Crown”; whereas in the Academy, “members were all professional scientists appointed by the State, well paid and accommodated, provided with adequate funds for research; in return they were expected to carry out any projects, usually with some technological application, requested by government”.234 In the context of the French mercantilist state, the aim of the Paris Academy, besides researching pure science, also included promoting French industries through scientific research, which included “to promote useful inventions and expose idle fancies, to survey the natural resources of the country and explore the means of rendering them useful, and generally, by helping to raise the level of technical proficiency, to increase both its [French] exports and its independence of foreign supplies”.235 Compared with the Royal Society, which had no restriction in its number of members, the constitution of the Paris Academy stipulated seventy members in six departments: mathematics, astronomy, mechanics, anatomy, chemistry and botany.236 The Academy was entrusted by the Ministry of Commerce to test new industrial processes and products every year in order to gather and spread useful innovations, and in the eighteenth century an outcome of this work was the publication of Descriptions des Arts et Métiers, a compilation of the records of industrial crafts translated and introduced to Germany initially by Justi and later by others such as the Leipzig cameral science professor Daniel Gottfried Schreber (1708-1777). 237 It was the belief of contemporary French government that “the application of science to agriculture and industry would increase national prosperity”.238 In France, it was the first time for the state to realise that an academy of sciences could serve as a department of scientific and industrial research in the government.239

Most European nations followed the example of the Paris Academy to build their own

234 A. C. Crombie and Michael Hoskin, ‘The scientific movement and the diffusion of scientific ideas, 1688-1751’, in The New Cambridge Modern History: volume 6, eds. by J.S. Bromley (Cambridge: Cambridge University Press, 1970), pp. 37-71 (p. 38). 235 Hall, ‘Progress of Techniques’, p. 120. 236 Crosland, Science Under Control, p. 16; Crombie and Hoskin, ‘The scientific movement’, p. 41. 237 Crosland, Science Under Control, p. 17; Hall, ‘Progress of Techniques’, p. 121. 238 Crosland, Science Under Control, p. 17. 239 Hall, ‘Progress of Techniques’, p. 120. 103 academies of sciences. 240 Gottfried Wilhelm Leibniz (1646-1716) and the Berlin Academy were typical examples. In his youth, Leibniz was invited to Paris by Christian Huygens (1629-1695), Colbert’s head of the Paris Academy, and there Leibniz spent enough time to observe the combination of organised scientific research and Colbertism, “a system which systematically promoted and protected the new knowledge which was continually being created in the manufacturing sector”.241 The Berlin Academy, the first academy of sciences in the German-speaking world, was the outcome of Leibniz’s persistent endeavour, and its constitution was drafted by Leibniz himself.242 Leibniz believed that in order to honour God, the ruler of the state should “endeavour to imitate in their domain what God has done in the world”, namely creating and inventing.243 In order to imitate God’s deeds, the ruler should “apply the discovered wonders of nature and art to medicine, to mechanics, to the comfort of life, to materials for work and sustenance of the poor, to keeping people from idleness and vice, to the operation of justice, and to reward and punishment, to preservation of the common peace, to the increase and welfare of the fatherland, to the elimination of times of shortage, disease, and war (insofar as it is in our power and is our responsibility), to the propagation of true religion and fear of God, indeed, to the happiness of human race”.244

One of “the easiest and most important” approaches to applying “the discovered wonders of nature and art” to improving public happiness was to be “the establishment of a society or academy”. 245 According to Leibniz, the academy should perform following functions: 1) facilitating the communication of skilled people to stimulate useful thoughts and inventions; 2) increasing useful resources; 3) combining theories and experiments; 4) acting as the school of inventors and the laboratory to test inventions; 5) supplying means to “maintain the nourishment of the people, to establish manufacturing and consequently draw in commerce”; 6) building warehouses “filled with necessities for emergencies”; 7) forming companies and associations of people; 8) encouraging maritime commerce; 9) improving schools to educate the youth; 10) promoting crafts through improvements and tools; 11) testing and building chemical

240 Crombie and Hoskin, ‘The scientific movement’, p. 38. 241 Reinert and Daastøl, ‘Gestalt-Switch’, p. 250. 242 Wolf, Science, Technology, and Philosophy, pp. 68-69. 243 Gottfried Wilhelm Leibniz, John Chambless trans., ‘Outline of A Memorandum on the Establishment of a Society in Germany for the Promotion of the Arts and Sciences (1671)’, Fidlio, 1, 2 (1992), pp. 63-69 (p. 68). 244 Ibid., p. 68. 245 Ibid., p. 68. 104 and mechanical works, such as telescopes, machines, water devices, clocks, lathes, painting studios, presses, paint companies, weaving factories, steel and iron manufactories, “which when done in a small way without organisation are unfruitful”; 12) making laws regarding inventions; 13) establishing facilities for research and learning, like “a theatre of nature”, “a chamber of arts, rarities and anatomy”, libraries and herbal gardens; 14) compiling useful knowledge from scattered books, manuscripts, experiments, and letters; 15) educating poor students and making them useful for the society; 16) supporting “impoverished eccentrics”; and 17) supporting and nourishing useful people and preventing them from leaving the country.246 Leibniz’s proposal of the academy of sciences reproduced Bacon’s proposal of Salomon’s House which combined useful knowledge creation and national wealth production, and added much more functions, which Bacon’s proposal and the practice of the Paris Academy did not have. Apart from the conventional functions of researching and discovering new knowledge, applying useful knowledge to industries to improve economic performance, and compling and spreading useful knowledge, the academy in Leibniz’s design was also responsible for building manufacturing and commerce, building large industrial and scientific projects which the private sector was unable to efficiently operate, educating the youth, and delivering social welfare. It seems that Leibniz put the most of the hope of reviving the post-Thirty Years War Germany on the academy of sciences.

As a follower of Leibniz, Wolff inherited Leibniz’s enthusiastism of academy of sciences. Wolff’s definition of happiness was the perfection of humans’ knowledge, will, skill, health and wealth and also the “unhindered progress” of these conditions to the “greater perfection”. 247 Clearly, this definition connoted the advocacy of the “unhindered progress” of people’s knowledge, skill and materials lives. Wolff’s happiness and natural obligation required people to “pursue as much knowledge as our capabilities and circumstances permit”. 248 But as it was impossible to acquire all knowledge at the same time, one should “prioritise the knowledge helpful to the affairs that he have to undertake according to his way of life”. 249 However, in case of unexpected change of the way of life, one should learn the knowledge which was not

246 Ibid., 68-69. 247 Wolff, Deutsche Ethik, p. 32; Deutsche Politik, p. 3. 248 Wolff, Deutsche Ethik, p. 165. 249 Ibid., pp. 165-166. 105 directly beneficial to his current way of life, if that learning did not impair the learning of indispensable knowledge.250 In order to accumulate as much knowledge as possible, the art of invention (Kunst zu erfinden), which was “the capability to bring out unknown truth from the known”, should be pursued by the people, because this capability could generate more knowledge.251 New knowledge could be discovered in two ways: by experience, which was observation and experiment, and by reasoning.252 In order to discover new knowledge, people had to accumulate a lot of knowledge. As Wolff wrote, “new truths can be invented from nothing but those already known, so he who wants to have the art of invention must be familiar with as many known truths as possible. When one has the skill to invent, the more truths one knows, the more one can invent. The known truths are like raw materials which supply one’s work.”253 Moreover, through accumulating knowledge about previous inventions, inventors could also learn the “rules of inventive art” (Regeln der Erfindungs-Kunst), namely the skill to invent.254 This was Wolff’s theory of the progress of knowledge, which supported his advocacy that the society should accumulate and discover as much knowledge as possible. The more knowledge was accumulated, the more new knowledge could be discovered; the more knowledge the people had, the more they were close to the public happiness.

Influenced by Leibniz’s design of academy, Wolff proposed the establishment of the academy of sciences as an economic policy, aiming to “support the progress of all economic sectors with science”.255 It was not possible for the people who made living by other professions to research sciences and crafts, so “in a well-ordered country, special people must be selected, whose professions subsist in that they increase sciences and crafts through new inventions and take care of the prosperity of sciences and crafts.”256 The society where specialised people promoted sciences and crafts with united forces was the academy or the society of sciences.257 The academy of sciences had two aims: to progress sciences and crafts and to increase new inventions.258 In order to progress sciences and crafts, the academy should collect all truths from reading

250 Ibid., pp. 166-168. 251 Ibid., p. 191. 252 Ibid., p. 192. 253 Ibid., pp. 201-202. 254 Ibid., p. 202. 255 Roscher, National-Oekonomik, p. 354. 256 Wolff, Deutsche Politik, p. 241. 257 Ibid., pp. 241-242. 258 Ibid., p. 242. 106 published texts or visiting people from all estates and professions, conducting experiments, and systemising the results of experiments.259 In order to increase new inventions, the academy should reflect on the known truths to discover new truths and make new inventions to fix the defects in sciences and crafts.260 Wolff specifically pointed out that the academy should research all agricultural activities and all crafts and artisanries, especially those which had synergy with mathematics and the knowledge of nature.261 In researching crafts and artisanries, “not only the academy have to make precise description of all crafts and processes but also to research and to reason the causes for which every craft and process can be improved and therefore to incorporate crafts and processes in science”.262 In order to fulfill this task, “it should subordinate crafts and artisanries of all kinds, so that its members…can have chances to participate their processes and observe all in their workshops, and the academy can experiment the improvements and directly practice and control those experiments, so that nothing will be overlooked.” 263 Wolff’s academy of sciences was clearly a research center of manufacturing: it closely interacted with industries and researched to improve them. Cooperating the academy of sciences, the academy of crafts (Academie der Künste) should also be set up. The academy of sciences concerned with incorporating the knowledge of crafts and artisanries in science and improving them but not spreading useful knowledge, whereas the academy of crafts would teach crafts to artisans.264 The academy of crafts was a facility to cultivate masters of crafts, so that they could be sent to other places to train more artisans.265 Because it was impossible for everyone to attend the academy of crafts, craft schools (Handwercksschulen) should be built in large cities to educate the youth with the crafts and sciences.266

2.6 Conclusion

When Justi developed his economic thought, he had been familiar with Anti-Machiavel,

259 Ibid., p. 242. 260 Ibid., p. 242. 261 Ibid., p. 248. 262 Ibid., p. 248. 263 Ibid., pp. 248-249. 264 Ibid., p. 254. 265 Ibid., p. 255. 266 Ibid., p. 257. 107

Christian Wolff’s natural law, and the function and significance of the work of Paris Academy of Sciences through his translation of Descriptions. He was located in an atmosphere where it was popular to discuss how to make people happy, how to develop the economy, how to educate the people, how to develop sciences and arts, and how to apply the progress of sciences to the improvement of economy. In general, Justi’s economic thought reflects following influences from the political economy of enlightened absolutism.

Firstly, Wolff’s definition of public happiness and his proposal of Policeystaat. In the next chapter, it will be argued that Justi’s definition of public happiness was very similar to that of Wolff’s. Both definitions were inclusive, covering people’s knowledge, virtue, capabilities, health, and material lives. Like other new cameralists, Justi accepted Wolff’s idea of the Policeystaat and proposed to realise public happiness through comprehensive Policey. The “state” in Justi’s economic thought was a Policeystaat. Jutta Brückner pointed out that Frederick William I’s bureaucracy was a model of administration to Justi.267 In doing so, Justi largely accepted Wolff’s ideas of freedom, which was the freedom not from state intervention but from the interventions irrelevant to public happiness.

Secondly, public happiness required economic development. The political economy of absolute monarchy required the expansion of economy because of the demand of war. In the time of enlightened absolutism, economic development was also advocated. Promoting the efficiency of national economy was one intention of continental monarchs to welcome enlightened absolutism. “While the philosophers thought the kings served them, the reverse was true, as monarchs exploited enlightened ideas to stabilise royal rule and maximise military and economic efficiency.” 268 Therefore enlightened absolutism would be the best fit for the nations that required strengthening the most, so “enlightened absolutism applies only in the ‘underdeveloped’ eastern half of the continent”, and it “represented a continuation of earlier attempts to close the gap with more advanced Western states”.269 As for the specific economic thought and policy proposals, enlightend aboslutism had many similarities with previous

267 Brückner, Staatswissenschaften, Kameralismus und Naturrecht, p. 251. 268 Wilson, Absolutism, p. 110. 269 Ibid., p. 110. 108

Machiavellian monarchy. The preference for manufacturing, the prohibition of exproting raw materials, population optimism, and the synergy between manufacturing and primary sectors, all could be seen in the policy proposals of Frederick II and Wolff. Later chapters will show that Justi maintained the essence of all those policy proposals shared by Machiavellian monarchy and enlightened absolutism, and greatly concerned with promoting circulation of money in the country, which was highlighted in Wolff’s economic strategy.

Thirdly, science and economic development. Promoting the progress of science was a central topic of the political economy of Enlightenment. Enlightened aboslutist state also placed the promotion of science in the center of its policy. The “Baconian programme”, started by Francis Bacon, copied by Colbert’s mercantilist France, then brought to the German-speaking world by Leibniz, and incorporated in the “handbook for princes and their councillors” by Wolff, combined together the state industrial policies and research policies. Promoting science and technological progress therefore had become an “enlightened reason of state”. The academy of sciences was the main policy proposal to practice this enlightened reason of state. And the primary aim of early modern proposal of academy of sciences was to expand sciences and utilize such expansion to promote economic development. To promote the national economic welfare was a crucial function of early modern propoal of the academy of sciences. It will be shown in later chapters that the academy of sciences played a crucial role in Justi’s proposal of “entreprenuerial state”.

109

Chapter Three. Public Happiness in Justi’s Political Economy

During the late nineteenth and early twentieth centuries, when different schools of economic theory quarrelled, the diversity of types of economic theory attracted much attention.1 In this context Werner Sombart classified economic theories into three types: ordered (ordnende) economics represented by classical economics, understanding (verstehende) economics represented by German Historical School of Economics, and normative (richtende) economics.2 According to Sombart, instead of studying “what is”, aims at studying “what should be”.3 Normative economics has two aims: “it must find the ultimate value and its compatible form of economy and then it must calibrate reality according to that righteous value and show the deviation of reality from the ideal.” 4 Accordingly, normative economics consists of three components: 1) the insight into the ultimate value; 2) the knowledge of the right means to realise the ultimate value; and 3) the proposal of doing what is right.5 According to Sombart, mercantilist writings “contain a good part of normative economics”.6

Justi’s economic thought embodied as his cameral science was very much in line with the definition of “normative economics”. Justi’s cameral science was built on a set of general principles which “derive from the ultimate aim of every commonwealth”, and “this ultimate aim is public happiness (gemeinschaftliche Glückseligkeit)”.7 Therefore the first axiom of Justi’s cameral science was “that all government affairs of a commonwealth must be arranged in such a way that the happiness is promoted through them”. 8 To Justi, economic policies and the principles guiding them should be governed by the ultimate value of public happiness. In this way, this thesis will organise following chapters by treating Justi’s economic thought as a normative economics of public happiness. This chapter studies Justi’s insight into public happiness as an aim of

1 See John Neville Keynes, The Scope and Method of Political Economy (London: Macmillan and Co., 1891); , trans by Eden Paul and Cedar Paul, Types of Economic Theory (London: George Allen & Unwin, 1930); Werner Sombart, Die Drei Nationalökonomien (München and Leipzig: Duncker & Humbolt, 1930). 2 Sombart, Die Drei Nationalökonomien. 3 Ibid., p. 21. 4 Ibid., p. 23. The original words is “Sie muß die absoluten Werte und die ihnen entsprechende Gestaltung der Wirtschaft auffinden und muß dann die Wirklichkeit an diesem erkannten Richtig-Wertvollen ausrichten und die Abweichungen der Wirklichkeit vom Ideal feststellen.” 5 Ibid., p. 77. 6 Ibid., p. 98. 7 Johann Heinrich Gottlob von Justi, Systematischer Grundriß aller Oeconomischen und Cameral-Wissenschaften (Frankfurt and Leipzig: publisher unspecified, 1759), p. 2. 8 Justi, Staatswirthschaft, vol.1, p. 31. 110 economic policy. The next chapter will uncover Justi’s theory about why manufacturing and national intellectual capital should be developed in order to build an economy of public happiness. Chapter Five will study Justi’s policy proposal of the “entrepreneurial state” as a crucial component of the approach towards the economy of public happiness. From this chapter onwards, this thesis will focus on Justi’s texts, and readers are advised to combine the following three chapters with the prevoius two chapters for contextualisation.

3.1 Justi’s Public Happiness, Natural Law, and the Principle of State Intervention

“Happiness” as a public purpose for society has a long history which traces back to , , and . 9 Justi’s definition of public happiness was mainly based on that of Christian Wolff.10 His definition of public happiness evolved across his writings. In Staatswirthschaft, “happiness of subjects [Unterthanen]” was concerned more with “the external condition of subjects”, but “as long as the perfection of their moral condition is possible for a wise government to take care of, it should not be excluded.”11 “Happiness of subjects” was “such a good establishment and nature of a commonwealth that through his diligence everyone [jedermann] is capable to earn the moral and secular goods, which he finds necessary to have an enjoyable [vergnügt] life according to his estate [Stand].”12 Justi believed this “happiness of subjects” essentially consisted of “the perfect security and sufficient wealth”. 13 Justi made further explanations of the “happiness of subjects” in his Systematischer Grundriss aller Oeconomischen und Cameral-wissenschaft (1759, henthforth Systematischer Grundriss). In this work, “perfect security” was defined as “everyone can be free from all violence.”14 “Sufficient wealth” was defined as “everyone can live comfortably according to his estate and quality and can be capable to afford government expenditure through paying tax and tribute without suffering from the lack of his most pressing

9 See Darrin M. McMahon, Happiness: A History (New York: Grove Press, 2006) 10 See Ulrich Engelhardt, ‘Zum Begriff der Glückseligkeit in der Kameralistischen Staatslehre des 18. Jahrhunderts (J. H. G. v. Justi)’, Zeitschrift für Historische Forshung, 8 1(1981), pp. 37-79. 11 Justi, Staatswirthschaft, vol.1, p. 56. 12 Ibid., p. 56. 13 Ibid., vol.1, p. 59. 14 Justi, Systematischer Grundriß, p. 9. 111 necessities”.15 In Guten Regierung and Natur und Wesen, the “happiness of subjects” was changed to “public happiness” with an extension of definition. “Public happiness” consisted of three components: freedom, which included independence of the nation and rational freedom (vernünftige Freyheit) of citizens; the internal strength of the nation (innerliche Stärke des Staats), which relied on population and prosperous economy (blühender Nahrungsstand); and external and internal security. 16 In the definitions of both “happiness of subjects” and “public happiness”, the Wolff’s definition of public happiness, namely public security and welfare of society which consisted of the perfection of people’s souls, bodies and external conditions, could be clearly recognised.

Since studying the philosophy of Christian Thomasius in Göttingen, Justi developed his natural law theory, which was most succinctly expressed in Guten Regierung and Natur und Wesen.17 According to Jutta Brückner, “Justi’s thinking of natural law was not original”, and “clearly he tried to reconcile the natural law thinking of Wolff and Thomasius.”18 Thomasius and Wolff were rivals in the eighteenth century German natural law. Their differences included the following aspects. 1) Although both recognised happiness as the aim of politics, contrary to Wolff’s inclusive definition of public happiness, Thomasius defined happiness merely as internal and external peace.19 2) Although both recognised that humans were incapable to identify and practice happiness, contrary to Wolff’s Policeystaat, Thomasius believed that the state should only maintain peace and order and entrusted the control of humans’ passion to themselves.20 3) Therefore and contrary to Wolff’s ambition to make natural law the practical philosopy and the civic religion to direct bureaucrats, Thomasius “was much more concerned with a public ethos of delimiting religion, morals, law, and politics, and with the professional training of lawyers and administrators as the guardians of

15 Ibid., p. 9. 16 Justi, Guten Regierung, pp. 65-66. In Brother Grimm‘s German wordbook, Nahrungsstand means “the condition of substance, livelihood, income or industry” (Zustand der Nahrung, des Lebensunterhaltes, Verdienstes oder Gewerbes), see Jacob Grimm and Wilhelm Grimm, Deutsches Wörterbuch, vol.7, (Leipzig: S.Hirzel, 1889), pp. 317- 318. Justi himself defined Nahrungsstand as “all kinds of labour and work, through which the movable goods are produced”, see Justi, Macht und Glückseeligkeit, vol.1, p. 439. Therefore Nahrungsstand will be translated as “economy”, in the sense of where the production and distribution of wealth happens, as is the modern definition of an economic system, see Samuelson and Nordhaus, Economics, p. 8. 17 See Nokkala, From Natural Law to Political Economy, pp. 50-66. 18 Brückner, Staatswissenschaften, Kameralismus und Naturrecht, p. 229; p. 232. 19 Schneiders, ‘Aufgeklärten Absolutismus’, p. 388. 20 Haakonssen, ‘German Natural Law’, p. 260; Brückner, Staatswissenschaften, Kameralismus und Naturrecht, p. 227. 112 these boundaries”.21 It seems that Justi tried to reconcile Wolff and Thomasius by providing a new philosophical foundation to Wolff’s Policeystaat and thereupon making a more precise definition of the jurisdiction of the Policeystaat than Wolff’s definition, which was essentially limitless and completely ignored private initiative of the people.

To Justi, human nature was not the rationality in Wolff’s philosophy but passion and self-love. This understanding was clearly under the influence of Thomasius who believed that “the passions totally determin man’s life”.22 To Justi, “self-preservation is the highest of all laws—as a law from which all other natural laws stem.”23 In Justi’s natural law theory, happiness was not natural obligation bound by natural law but the welfare for people to enjoy. Justi believed that pursuing his happiness originated from one’s natural desire for self-preservation (Selbsterhaltung) and self-love (Eigenliebe).24 The reason why humans decide to live together to form a society is not because of the natural obligation of helping others but because “they understand that the participation in the great force of society makes every person incomparably stronger than he is by himself”. 25 Understanding the benefit of cooperation presupposes intelligence (Verstand), and understanding the just distribution of the fruits earned by cooperation presupposes the concept of fairness (Begriff von der Billigkeit).26 Intelligence and fairness are the result of rationality (Vernunft), so rationality, instead of natural law, is “the true reason” to keep society united.27 If people have “the perfect intelligence” and “the highest knowledge”, there will be no evil in the society; but this is impossible because people’s knowledge and intelligence can only increase “step by step” (stufenweise), whereas their demands and self-love are always ample.28 Therefore people would not be perfectly rational but be made greedy and evil by their desire and passion.29 Therefore they will try not to work hard to benefit each others but to seek to

21 Haakonssen, ‘German Natural Law’, p. 260; Brückner, Staatswissenschaften, Kameralismus und Naturrecht, p. 211. 22 Haakonssen, ‘German Natural Law’, p. 264. 23 Ere Nokkala, ‘Passion as the Foundation of Natural Law in the German enlightenment: Johann Jacob Schmauss and J.H.G. v Justi’, European Review of History 17.1(2010), pp. 113-123 (p. 118). 24 Johann Heinrich Gottlob von Justi, Die Natur und das Wesen der Staaten (Berlin: Verlag Johann Heinrich Rüdigers, 1760), p. 46. 25 Justi, Guten Regierung, p. 52. 26 Justi, Natur und Wesen, p. 11. 27 Ibid., p. 10. 28 Ibid., p. 18. 29 Justi, Guten Regierung, p. 52. 113 dominate others and to reap others’ fruits of labour.30 In general, “self-love demands a very rational direction if humans want to realise their happiness”.31 Self-love should be directed by rationality to become “the foundation of all moral actions of humankind”, through which public happiness is realised.32

According to Justi, rationality is embodied in the law of commonwealth made by the state. In this way, state law should aim at directing people’s self-interest to the realisation of public happiness. Policey, as a kind of state’s law, should aim at directing “the relationship of citizens against each other and their connection with the public welfare (gemeinschaftliches Bestes)”.33 And the general principle of Justi’s Policey was that “in all internal affairs of the country [Landesangelegenheiten] one must seek to set the welfare of single families in the closest link and connection with the public welfare or the happiness of the entire commonwealth”.34 According to Justi, if the state only focuses on public welfare and ignores the interests of private individuals, then “all mainsprings [Triebfedern] and encouragement [Anreizungen] to industriousness [Arbeitsamkeit], diligence, and skills will cease”, namely private individuals will not find interests in the realisation of public welfare and their self-interest will not motivate the actions promoting public welfare; yet if private individuals only pursue their own interests and ignore the public welfare, they “will enrich themselves extraordinarily” but their private welfare “can be of no long duration”.35 In general, Justi’s Policey aimed to create an order of society, within which people could realise their own private interests through the approach of promoting public welfare. This principle of Policey was maintained in all of Justi’s post-Göttingen works: Guten Regierung, Natur und Wesen, Manufakturen und Fabriken, and Macht und Glückseeligkeit. In comparison, before his philosophical shift happened in Göttingen, Justi’s general principle of Policey, as mentioned in Grundsätze, was that “one must establish the internal constitution of the commonwealth in such a form, through which the general resources of nation are preserved and increased, and the public happiness is always promoted.”36 This definition did not highlight the private initiative of the people and regarded the

30 Ibid., pp. 52-53. 31 Ibid., p. 10. 32 Ibid., pp. 10-11. 33 Justi, Natur und Wesen, p. 466. 34 Justi, Macht und Glückseeligkeit, vol.1, p. 9. 35 Justi, Natur und Wesen, p. 473; Justi, Macht und Glückseeligkeit, vol.1, p. 7. 36 Justi, Grundsätze, p. 7. 114 realisation of public happiness solely as the duty of state’s Policey.

In Wolff’s natural law theory, human nature was rational, so the natural law was rationality. Bound by natural law, people’s intentions were to perfect their conditions. Perfecting conditions required state intervention, so state intervention embodied natural law which embodied rationality. In this way, there was no room for private initiative in Wolff’s natural law theory, or in other words, private initiative and state intervention were believed essentially the same. In Wolff’s theory, “The realm of the initiative of citizens’ actions…disappeared in the duty of obedience of subjects in the protestant- cameralist Polizeistaat, which demanded individuals’ complete dedication to the service for the welfare and security of the nation.”37 In this way, Gustav Schmoller found that the interventionism of the Wolffian state was “likely to hinder the proper functioning of markets and might even prevent markets from coming into existence”.38

In comparison, Justi recognised that the private initiative motivated by self-interest was the motivation of industriousness, diligence, skills and other actions which created public welfare. In this aspect, Justi reached a similar understanding to Adam Smith.39 Smith found that rationality and public welfare could be realised by the sympathy embedded in human nature.40 On the contrary, Justi did not see rationality in human nature. The self-interest of humans should be directed by state laws and regulations which embodied rationality. In Justi’s thought, a self-organised market did not naturally accord with public welfare. An interventionist state was still needed. Wolff’s state made no distinction between law and morality, public and private, and had “only prudential, not principled” limits of intervention.41 Wolff’s Policey was to supply all means and facilities to the people to fulfill natural obligation. 42 Justi, however, believed that Policey should not replace private initiative but only aim to direct people to act along the approach of promoting both public and private welfare. To Justi, both state intervention and private initiative were equally important: the state should build the direction and order but leave the space for the private initiative to act, and the private

37 Brückner, Staatswissenschaften, Kameralismus und Naturrecht, p. 227. 38 Backhaus, ‘Wolff to Justi’, pp. 1-2. 39 See Stefano Fiori, ‘Individual and Self-Interest in Adam Smith's Wealth of Nations’, Cahiers d'économie politique / Papers in Political Economy 49(2005), pp. 19-30. 40 See Pratap Bhanu Mehta, ‘Self-Interest and Other Interests’, in The Cambridge Companion to Adam Smith ed. by Knud Haakonssen (Cambridge: Cambridge University Press, 2006), pp. 246-269. 41 Haakonssen, ‘German Natural Law’, p. 273. 42 Wolff, Deutsch Politik, p. 208. 115 initiative had to motivate people to work for their own interests and public welfare.

3.2 Public Happiness as the Aim of Economic Policy (I): National Internal Strength

The “internal strength of the nation” as a component of public happiness was determined by four factors: the location (Lage) of the territory, the scale of the population, goods at people’s disposal, and capability and moral quality of the people.43 Among them, “population” and “goods” directly posed aims of state economic policy.

Like other economic thinkers of absolute monarchy and enlightened absolutism, Justi regarded the dense population as one of the most important aims for economic policy. In Staatswirthschaft, Justi found that the larger the population, the more goods could be produced, the more money could be absorbed through export, and the more the circulation of money could be promoted.44 Besides, humans were vessels of skills and capabilities, so the larger the population, the greater the accumulation of skills and capabilities of the nation.45 Justi believed that there should be no maximum limitation of population. 46 In Macht und Glückseeligkeit, he recognised the problem of overpopulation but believed it was avoidable.47 Against Marquis de Mirabeau, who was “an exponent of Physiocracy” and proposed that population was solely determined by the volume of grain production, in Macht und Glückseeligkeit, Justi argued that even if a lot of grain was grown in the country, poor people still needed money to buy it, so if people did not have money, it made no difference if the grain was grown or not.48 Justi found that Mirabeau’s theory could not explain why both Poland and England exported considerable amounts of grain, but England was densely populated and Poland was not.49 The true reason of the growth of population, Justi wrote, “relies on the fact that in the country there are many occupations [Stellen] through which people can feed themselves and supply themselves with a livelihood [Unterhalt]”.50 Justi believed that when people found abundant chances to work, they would decide to get married and

43 Justi, Guten Regierung, p. 84. 44 Justi, Staatswirthschaft, vol.1, p. 138. 45 Ibid., pp. 138-139. 46 Justi, Macht und Glückseeligkeit, vol.1, pp. 174-175. 47 Ibid., p. 174. 48 About Marquis de Mirabeau, see Henry Higgs, Six Lectures on the French Économistes of the 18th Century (London: Macmillan and Co., Ltd, 1897), p. 51; Justi, Macht und Glückseeligkeit, vol.1, p. 176. 49 Justi, Macht und Glückseeligkeit, vol.1, p. 176. 50 Ibid., p. 177. 116 have children, and foreigners would also be attracted to the country.51 In this way, “the main effect of all government policies to promote the growth of population must be to seek to set the economy in such a condition that it supplies sufficient occupations to many people to feed themselves well”.52 This economy, which could provide abundant employment, was characterised by Justi as: “there must be a great concentration [Zusammenfluß] of goods and a very vigorous circulation [lebhafter Umlauf] of them”.53 To Justi, the greater the concentration of goods was and the more rapidly goods circulated, the more people could find chances to work.54

The “internal strength of the nation” also demanded the concentration or a great number of all kinds of necessities (Notdurft) and comforts (Bequemlichkeit) of human life.55 To Justi, from Staatswirthschaft to Macht und Glückseeligkeit, the real wealth of the nation had always been defined as “the great concentration” or “sufficient amount of” necessities and comforts of life, and he clearly said in Macht und Glückseeligkeit that “it would be an extreme error to regard the wealth of the nation as the amount of gold and silver located in the country”. 56 In order to have the great concentration of necessities and comforts, “a great number of people should produce the great number, the concentration, and the affluence of goods through diligence and industriousness”.57 Therefore, Justi believed that people’s capabilities and skills of producing all kinds of necessities and comforts also belonged to “internal strength of the nation”.58 And he proposed that “these skills of producing all kinds of goods should be closely connected with…the prosperity of science.” 59 In general, the economy of the nation should produce a great output, and the economy should have great productive powers, especially a lot of highly productive labourers.

As Justi wrote in Staatswirthschaft, it was not enough that the goods were produced, but they should “be constantly circulated in industries and go from one pair of hands to another.”60 Since Staatswirthschaft, promoting the circulation of wealth had been a

51 Ibid., p. 177. 52 Ibid., p. 177. 53 Ibid., p. 177. 54 Ibid., p. 177. 55 Justi, Guten Regierung, p. 87; Justi, Natur und Wesen, p. 69. 56 Justi, Staatswirthschaft, vol.1, p. 130; Justi, Macht und Glückseeligkeit, vol.1, p. 428. 57 Justi, Guten Regierung, p. 87. 58 Ibid., p. 90. 59 Ibid., p. 90. 60 Justi, Staatswirthschaft, vol.1, p. 224. 117 constant topic focused by Justi.61 This circulation was believed to be essentially the circulation of goods, not money. In the second volume of Manufacturen und Fabriken, he explicitly wrote that “the circulation should not be understood as the circulation of money but of goods”.62 In Macht und Glückseeligkeit, Justi wrote: “Movable goods are always the main body on which all parts of the circulation rely; and if they are not present or are detained out of the circulation by distrust and inhibition, it is not possible to imagine a circulation. On the contrary, the circulation of goods can happen by itself alone without the money, although with greater difficulty.”63 In this way, “a country, of which the land is made of gold, will have few or no circulation, if it produces no goods.” 64 To Justi, the essence of the “propserity of economy” (Flohr des Nahrungsstandes), was “the mass of goods which are absorbed in circulation, and the continuous vigorousness with which the circulation happens”.65 And this prosperous economy could provide dense population with abundant employment.66 Justi believed that if the circulation was ideally but impossibly frictionless, namely when money circulated among all sectors (Zweige) of the economy without interruption and decrease, and “everyone, as well as government, spends all which has been earned”, then “nobody will be found in the country who does not work”.67

Justi wrote his monetary theory mainly in Macht und Glückseeligkeit. According to his theory, gold and silver were merely “symbols of goods” (Zeichen der Güter) and “general means of payment” (allegemeines Vergütungsmittel). 68 Money originated from the difficulty of barter. 69 If a nation was isolated from international market therefore did not have to accept internationally recognised materials of , it would have the liberty to define any material as its currency: shell, leaf, hide, stone, or others.70 However, if the nation had an open economy, it must adopt international currency, which in Justi’s time was gold and silver.71 And in this economy, a sufficient

61 Justi, Staatswirthschaft, vo.1, pp. 224; Justi, Systematischer Grundriß, p. 18; also see Philipp R. Rössner, ‘Kameralismus, Kapitalismus und die Ursprünge des modernen Wirtschaftswachstums-aus Sicht der Geldtheorie’, VSWG: Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, 102.4(2015), pp. 437-471. 62 Justi, Manufacturen und Fabriken, vol.2, p. 214. 63 Justi, Macht und Glückseeligkeit, vol.1, p. 614. 64 Ibid., p. 614. 65 Ibid., p. 595. 66 Ibid., p. 267. 67 Ibid., pp. 636-637. 68 Ibid., p. 428; p. 599. 69 Ibid., pp. 596-597. 70 Justi, Staatswirthshcaft, vol.1, pp. 130-131; Justi, Macht und Glückseeligkeit, vol.1, pp. 597-599. 71 Justi, Macht und Glückseeligkeit, vol.1, pp. 598-599. 118 supply of gold and silver was the means to guarantee circulation and therefore sufficient employment of people. In Grundsätze, Justi had already found that if the amount of money in circulation decreased, prices of goods would fall, labourers earned less than before, goods found no outlet, circulation was restricted, and “labourers will be partially put outside their livelihoods”.72

It is apparent that providing people with sufficient employment was a very important component of Justi’s economy of public happiness. According to Schumpeter, the problem of unemployment constituted an important context of early modern economic thought. Schumpeter found that in the early modern period, the problem of involuntary unemployment emerged as a serious social problem, as the medieval society, of which the design was to provide every member of society a berth to live, collapsed. 73 Schumpeter found that since the beginning of the sixteenth century, European governments became confronted with the problem that “everywhere the swelling numbers of destitute beggars and vagrants outgrew the possibilities of private charity and everywhere public organisation of relief had to take its place”.74 And one of the chiefest remedies for the unemployment at that time was “to foster manufacturing industry”, which Schumpeter believed was a context of mercantilist manufacturing policies. 75 Schumpeter believed that German cameralism was particularly contextualised by the problem of unemployment. “In Germany, das Armenwesen [the poverty] naturally became a standard subject within the ‘cameralist’ literature. German governments accepted the state’s responsibility for employment and maintenance as a matter of course.”76

3.3 Public Happiness as the Aim of Economic Policy (II): Security

Justi’s public happiness also required maintaining internal and external security. Since Staatswirthschaft, Justi had insisted that in order to maintain internal security, the state should preserve a just (gerecht) relation and balance (Gleichgewicht) among all estates

72 Justi, Grundsätze, pp. 151-152. 73 Schumpeter, History of Economic Analysis, p. 270. 74 Ibid., p. 271. 75 Ibid., p. 272. 76 Ibid., p. 272. 119 and classes (Klassen).77 The polarisation of wealth distribution, namely “the richness of one estate and the complete poverty of the rest”, would cause the overweight (Uebergewicht) of the power of the rich, therefore would be harmful to internal security, growth of population, industriousness of people, and domestic and foreign trade.78 The vigilance that the polarisation of wealth distribution would harm domestic security had been held since the thinkers of absolute monarchy. Jean Bodin had proposed that the monarch should try to build an economy of “middle income” in the sense that there was neither excessive wealthiness nor excessive poverty in the country, because both were equally harmful to the commonwealth.79 Botero suggested that the monarch should not engage in industries and trade but also pointed out three exceptions. One of them was that “when the trade is so important that a private citizen would acquire excessive wealth by it”.80

Yet Justi was not an egalitarian. In Die Chimäre des Gleichgewichts der Handlung und Schiffahrt (1759, abbr. Handlung und Schiffahrt), a pamphlet written during the Seven Years War, he wrote that the absolutely equalised distribution of wealth was harmful, because people did not have equal diligence and skills nor did they make equal efforts in work, but he still believed that the state was able to make laws and policies to absolutely equalise the distribution regardless the harmful impact.81 It seemed that Justi believed that the state had the function of redistribution, but how its use needed to be limited by prudence. The most important principle to prevent the polarisation of distribution to Justi was that “the ruler favours preferentially no estate or class nor grants anyone too great a power by which he can harm others”.82 In the context of Wolff’s Policeystaat, Justi also believed that the state should have the function of taking care of the poor and the weak and should provide “the institutions for the livelihood of those people who are extremely poor and cannot make their livings because of old age, weakness, invalidity, and illness”.83

According to these principles, Justi proposed that no estate or class should suppress

77 Justi, Guten Regierung, p. 102; also Justi, Staatswirthschaft, vol.1, pp. 93-95. 78 Justi, Guten Regierung, p. 102. 79 Bodin, Six Books, pp. 158-161. 80 Botero, Reason of State, p. 165. 81 Johann Heinrich Gottlob von Justi, Die Chimäre des Gleichgewichts der Handlung und Schiffahrt (Altona: David Iversen, 1759), p. 41. 82 Justi, Guten Regierung, pp. 102-103. 83 Justi, Macht und Glückseeligkeit, vol.1, p. 267. 120 others nor monopolise wealth. 84 Therefore, “serfdom [Leibeigenschaft] cannot be restricted narrowly enough”.85 Restricting and abolishing serfdom had been Justi’s constant topic since Staatswirthschaft. Justi believed that the country “where an estate or class is related to others in the way of subjection [Untertänigkeit] or serfdom” was “monstrous” and “barbarian” and did not accord with “the civilised and rational age”.86 Justi proposed that the best form of agricultural enterprise was landholding peasantry, because those peasants who owned land and tilled by themselves would be much more diligent in improving and cultivating their land than tenant farmers or serfs. 87 Nowadays scholars believe that that the advocacy for free peasantry by Justi and other new cameralists pushed Maria Theresa and Joseph II’s reforms of abolishing serfdom in Habsburg Austria.88

“Freedom of the nation” was another component of public happiness and meant that the nation should neither recognise the dominance of others nor was threatened by others.89 This advocated the economic independence of the nation. Justi emphasized its importance since Manufacturen und Fabriken. As Justi put it, “In short, none can deny the truth that the nation, which demands the least help of other nations, is the strongest; and it is a principle of every wise government to take all imaginable policies to produce all possible goods in the country by itself, in order to rely on other nations as little as possible.”90 Here Hörnigk’s influence on Justi can be clearly identified. Economic independence also required a great concentration of goods.91 Especially this principle highlighted the significance of primary sectors. Justi believed that if the manufacturing of a nation relied on the import of food and materials, “the smallest conflict between other nations will hamper its manufacturing, if other nations detain its food and materials and if its enemies interrupt its shipping.”92 In Macht und Glückseeligkeit, Justi refuted the idea that a nation could follow the case of the Netherlands to build prosperous manufacturing based on the import of foreign materials. Reasons were firstly that manufacturing of the Netherlands was based on the “simplicity and idleness

84 Justi, Guten Regierung, p. 102; similar proposal could also be seen in Justi, Staatswirthchaft, vol.1, pp. 94-95. 85 Justi, Staatswirthschaft, vol.1, p. 99. 86 Justi, Macht und Glückseeligkeit, vol.1, p. 150. 87 Ibid., p. 149. 88 Scott, ‘Habsburg Monarchy’, p. 181; Seppel, ‘Cameralist Population Policy’. 89 Justi, Guten Regierung, p. 71. 90 Justi, Manufacturen und Fabriken, vol.1, p. 44. 91 Justi, Macht und Glückseeligkeit, vol.1, p. 428; Guten Regierung, pp. 87-88. 92 Justi, Manufacturen und Fabriken, vol.1, p. 43. 121 of other nations”; so as long as other nations learned the benefit of processing their own raw materials, they would stop exporting them; secondly although its European territory was insignificant, the Netherlands had vast colonies in East India and monopolised East Indian spice trades.93 In this way, it was concluded that “the well-founded and durable happiness of a nation is very much based on the good quality of its land and its climate”.94 This led to the principle of economic policy that a nation should fully cultivate its land and minimise the demand for foreign food and materials.95 Like Hörnigk, Justi also expected to dominate other nations through self-sufficiency and strong exports. As he wrote, “if the concentration of movable goods is so great that the nation does not only possess its own necessities and comforts, but also can supply the surplus to other nations, it will not only draw wealth from other nations, but also make them dependent on it.”96

In summary, according to Justi, the economy of public happiness should produce a large output of necessities and comforts of people’s lives, have vigorous circulation of those goods, and have strong productive powers especially a large number of skilful and capable labourers, and this economy could supply the nation with its real wealth, namely all kinds of goods, provide the people with abundant employment to earn their comfortable lives, and enable the nation to minimise its demand for foreign goods. To construct this economy was the aim of state economic policy demanded by public happiness. And in this economy, the state should prevent the polarisation of wealth distribution.

Justi built his cameral science with an expectation that it could be universially applicable to all nations—at least to all European nations, so he did not confine his cameral science to be only applicable in contemporary Germany, which he called Teutschland or Teutsches Reich. Justi was interested in establishing a system of state science universially applicable to all nations, which naturally included but did not specifically aim for providing solutions to contemporary German economic problems. Therefore, although Justi mentioned economic problems of contemporary Germany measured by the standard of “public happiness”, these discussions were not done in

93 Justi, Macht und Glückseeligkeit, vol.1, p. 30. 94 Ibid., p. 31. 95 Ibid., p. 31. 96 Ibid., p. 428. 122 much length, systemisation, or detail. In most cases they showed up only in scattered sentences appearing in the places where the discussion about general principles of cameral science happened to fit German problems. In fact, among Justi’s textbooks investigated by this thesis, only one whole paragraph about contemporary German economic problems was found. In Macht und Glückseeligkeit, a textbook written after he roamed many places in the German-speaking world, in the section about money circulaton, Justi wrote that he observed a land far from “public happiness”:

“Very few states of our fatherland can say for themselves that they have prosperous economy and sufficient money in the economy. Although the natural fertility of most states is sufficiently well-known, although the fertile land can feed twice or three times the population than they have now, and although many German states have beneficial locations along the sea and navigable rivers, they are still very depressed in most of the trades. Their economies are so poor that they generally live merely on hard working on agriculture and animal farming, conducting the most necessary artisanries, and then buying foreign goods for which they send their money outside the country; in this way more and more blood is drawn from us, we get weaker and weaker, so that a prosperous economy, as well as the vigorous power of all parts of the body of the nation, will gradually fall too feeble to be recovered.”97

3.4 Strategies towards Happiness: Self-Sufficiency and Commercial Supremacy

Justi found two general strategies towards public happiness: isolation from other nations or interaction with them.98 Justi learned about the public happiness through isolation from the description of eastern empires, especially Japan. Engelbert Kaempfer (1651-1716), a Westphalian botanist and physician, visited Japan in 1690 as a crew member of the Dutch East India Company to explore that country which was very unknown to contemporary Europeans. 99 The outcome of this exploration was Kaempfer’s History of Japan (1727), which was an encyclopaedic account of Japan and “remained the single most authoritative source of information on the land and its people

97 Ibid., p. 620. 98 Justi, Handlung und Schiffahrt, p. 23. 99 Max Meulendijks, ‘Kaempfers Lessons from Japan—Using Tokugawa Regulation for Educating Europe’, in Encountering the Other: Travel Books on North-America, Japan and China from the Maastricht Jesuit Library, 1500-1900, eds. by E. Homburg and A. Klijin (Maastricht: Maastricht University, 2014), pp. 135-154 (pp. 137-138). 123 well into the nineteenth century”.100 It was the source of knowledge about Japan used by Montesquieu, Rousseau, Kant and even Commodore Matthew Perry’s expedition in 1853.101 In this work, Kaempfer praised Japan’s isolation policy, because he found that through that policy, “the Japanese people lived peacefully and richly although the country had only very much limited foreign trade”. 102 Kaempfer’s work probably contextualised Justi’s idea of the public happiness through isolation. Justi firstly confirmed his appreciation of public happiness through isolation in the first volume of Manufacturen und Fabriken. Justi explicitly wrote “foreign trade is beneficial to a nation, but it is not necessary at all.”103 He wrote that when a country was densely populated and produced all necessities and comforts, and when its manufacturing was prosperous and its inland consumption of goods and inter-provincial trade were large enough to employ all the people, “the foreign trade will become useless” and “Japan is such a nation that is without foreign trade but crowded with people who enjoy all necessities, comforts and enjoyments [Annehmlichkeit] of lives.”104 Justi was famous for his Sinophilism for Chinese political system.105 However Justi did not regard contemporary China as the model of happiness through isolation. Justi suggested that China, as well as India, should learn from contemporary Japan to shut down all harmful trade with the West.106

An isolated nation should seek its happiness within its own borders; public happiness through isolation might not be splendid, but it was real and durable; this nation should have a suitable geographical location for isolation, like an isle or a peninsula, or its people had the temperament of isolation; the nation should not conduct foreign trade, but if it demanded foreign goods or wished to export surplus goods, the foreign trade should be conducted by special magistrates, or only permitted through a special harbour like contemporary China which only traded with westerners in Guangzhou, or only conducted with one specific nation like contemporary Japan which only traded with the

100 David Mervart, ‘A closed country in open seas—Engelbert Kaempfer's Japanese solution for European Modernity's predicament’, History of European Ideas 35.3 (2009), pp. 321-329 (p. 322). 101 Ibid., p. 322. 102 Shigenari Kanamori, ‘Justi and Japan’, in The Beginning of Political Economy, ed. by Jürgen Backhaus (Erfurt: Springer, 2009), pp. 111-116 (p. 112). 103 Justi, Manufacturen und Fabriken, vol.1, p. 13. 104 Ibid., p. 14. 105 See Johanna M. Menzel, ‘The Sinophilism of J. H. G. Justi’, Journal of History of Ideas, 17.3 (1956), 300-310; Johann Heinrich Gottlob von Justi, Vergleichungen der Europäischen mit den Asiatischen und andern vermeintlich Barbarischen Regierung (Berlin, Stettin und Leipzig: Johann Heinrich Rüdiger, 1762), pp. 3-162. 106 Justi, Manufacturen und Fabriken, vol.1, p. 14. 124

Netherlands; the government had two main tasks, “to encourage the industriousness and skills of people through which a great number of all necessities and comforts are produced”, which included spreading “crafts and sciences”, and to cultivate people’s militant spirit to defend the nation.107 The public happiness through isolation was realised when all kinds of necessities and comforts were produced, the population was multiplied, and “laws of virtue and honour lead to peace, security and all lawful pleasure of life”.108

Public happiness through interaction meant the pursuit of supremacy in the international market, which was a common aim of contemporary European nations. Public happiness through interaction was realised through earning profits from other nations; it could be splendid but it was restless and less durable; happiness through interaction relied on trade and shipping; the nation should have a geographic location feasible for shipping; happiness was realised through exporting surplus goods to other nations, so the nation should try to grow all kinds of raw materials in the country and those which could not be grown at home should be obtained by establishing colonies; colonies should be dependent on the mother nation and not be allowed to have foreign trade or manufacturing; the people should possess the genius to pursue foreign trade and the industriousness and skills to grow sufficient natural products and produce a great concentration of manufactured goods; thus the government should “encourage the genius, industriousness and skills”; the consumption of luxury should be restricted to that of domestic products; all laws and policies should aim at making citizens find their interests in being industrious and skillful and in conducting their enterprises; the nation should try to stretch its commerce to all parts of the world; the demands of foreign consumers should be satisfied, commercial treaties with friends should be signed, and rivalries should be subdued; navies should be built to protect trade and colonies.109

As exports expanded, so did the circulation of money, which would encourage more industriousness and skills of the nation and larger concentration of all kinds of goods; “with the vigorousness of circulation everyone can provide himself with the comforts of life through diligence”; then opportunities of employment would attract foreigners;

107 Justi, Handlung und Schiffahrt, pp. 23-28. 108 Ibid., pp. 29. 109 Ibid., pp. 29-32. 125 the increase of the circulated money would lead to a fall of the , and the low interest rate would promote investment and production; a low interest rate would also lead to cheaper prices of national products and higher profits of trades compared with nations having higher interest rates, which naturally encouraged the expansion of exports; “because the interest rate is so low, the people who accumulate a great sum of wealth will not be able to live on rent and interest without working”; thus people had to conduct manufacturing and trade; all these effects would expand foreign trade further and increase circulated money, which enhanced the prosperity.110 This was how public happiness through foreign trade was realised, but there was an upper limit to this process. The more money flowed into the nation, the more the prices would rise. At the beginning the rise would be disguised by competition and the low interest rate; then, as the inflow of money continued and the amount of circulated money increased, the rise of price would be noticed and the competitiveness in foreign trade would be lost; this was the highest point (höchste Punkt) of happiness of the commercial nation, at which point “all residents are in the condition to perfectly supply themselves with the comforts of lives through their industriousness”; if the nation could prevent the money from flowing out, it could preserve the highest happiness.111 Wilhelm Roscher believed that Justi’s economic thought was based on three economic doctrines: the “old mercantilists, new populationists, and Hume’s school”.112 Justi’s idea of “the highest happiness” through foreign trade could also be found in the writings of (1711-1776), which saw the relationship between quantity theory of money, “full employment”, and the upper limit of commercial advantage of a nation. Hume believed that “the dearness of everything from plenty of money” was the disadvantage of a nation with developed commerce, but it was “a happy concurrence of causes of human affairs” because it kept one nation from forever monopolising the benefit of commerce.113

According to Justi, there were two kinds of foreign trade which created trade surplus: oeconomical trade (öconomischer Handel), namely transit trade, and exports of national products.114 Oeconomical trade could increase the wealth of the nation and provide

110 Ibid., pp. 32-33. 111 Ibid., pp. 35-36. 112 Roscher, National-Oekonomik, p. 453. 113 David Hume, Political Discourses (Edinburgh: R. Fleming, 1752), p. 43. 114 Justi, Macht und Glückseeligkeit, vol.1, p. 513. 126 people with good-quality employment in shipping and other related industries. 115 However, in Staatswirthschaft, Justi did not recommend oeconomical trade because it required special geographical location of the nation. 116 Whereas in Macht und Glückseeligkeit, it was believed as an unsustainable trade, because oeconomical trade relied on the ignorance of other nations, so as soon as the nations, between which the oeconomical trade was conducted, were aware of the benefit to shipping their products by themselves, this trade disappeared.117 Justi had always regarded exporting national products as the foundation of prosperous and durable foreign trade.118 The national products exported should only be manufactured goods, because exporting raw materials or unfinished products would be the loss of value added and employment.119 He wrote: “the raw materials can give many people employment and livelihoods if they are processed in the country”. 120 Justi also noted the phenomenon of “manufacturing multiplier”. In the second volume of Manufacturen und Fabriken, by his calculation, Justi found that the value of raw materials to the value of manufactured products was 1:4-15 in the cotton textile industry, 1:2-4 in the silk textile industry, 1:2-3 in the gold- and silver-working industry; 1:3 in the copper- and brass-working industry; and 1:3-10 in the iron- and steel-working industry.121 Justi’s general principle of promoting foreign trade was that “government should let all products in the country be exported in a perfectly manufactured form, not their raw or unfinished form.”122

Which strategy did Justi prefer? By focusing on Justi’s specific suggestion to Prussia, the most recent research pointed out that Justi preferred happiness through commercial supremacy.123 However, this thesis found that, since Manufacturen und Fabriken, in principle Justi thought that public happiness through isolution was more advantageous, and that at least Justi favoured the path of development relying on domestic market. Firstly, as discussed above, the independence of the nation, which was a component of

115 Ibid., p. 557. 116 Justi, Staatswirthschaft, vol.1, pp. 156-157. 117 Justi, Macht und Glückseeligkeit, vol.1, p. 514. 118 Justi, Staatswirthschaft, vol.1, pp. 174-180; Macht und Glückseeligkeit, vol.1, p. 558. 119 Justi, Staatswirthschaft, vol.1, p. 156; Grundsätz, pp. 101-102; Manufacturen und Fabriken, pp. 26-27; Macht und Glückseeligkeit, vol.1, pp. 515-516. 120 Justi, Macht und Glückseeligkeit, vol.1, p. 558. 121 See Johann Heinrich Gottlob von Justi, Vollständigen Abhandlung von denen Manufacturen und Fabriken, vol.2 (Copenhagen: Rothenschen Buchhandlung, 1761), p. 110; p. 155; p. 215; p. 254; p. 322. 122 Justi, Grundsätze, pp. 101-102. 123 See Ere Nokkala, ‘A Transnational German: JHG von Justi on International Trade’, in Cameralism and the Enlightenment: Happiness, Governance and Reform in Transnational Perspective, eds., by Ere Nokkala and Nicholas B. Miller (New York: Routledge, 2020), pp. 80-98. 127 public happiness, explicitly required the state “to take all imaginable policies to produce all possible goods in the country by itself, in order to rely on other nations as little as possible.”124 Secondly, in Handlung und Schiffahrt, Justi found foreign trade unreliable. He clearly wrote “it simply depends on the free will of a nation if it wants to conduct foreign trade or not”.125 If a nation was densely populated and its inland trade was prosperous, the nation could thrive without foreign trade and could realise happiness through inland trade alone.126 Justi believed that every nation was the “perfect master and lord” of its trade and able to determine what goods were exported or imported.127 Thirdly, Justi believed that when the commercial nation reached its highest point of happiness through exports, it should adjust its strategy and seek happiness through isolation, because further pursuit of trade surplus would only cause the rise of price and weaken its competitiveness.128 Fourthly, happiness through foreign trade could easily incur jealousy and obstruction from other nations, but happiness through isolation could resist foreign interference.129 Fifthly, Justi did not mention anything about happiness through isolation in Staatswirthschaft and the significance of national economic independence appeared only since the first volume of Manufacturen und Fabriken. Staatswirthschaft only discussed how to realise public happiness through foreign trade, whereas the happiness through isolation was mentioned firstly in Manufacturen und Fabriken and kept discussed in Justi’s books afterwards. Clearly Justi discovered it in the time after finishing Staatswirthschaft. Why did he contribute so many writings without criticism but only with praise to the newly discovered idea, if he believed it was impracticable or disagree with it? Justi indeed said in Staatswirthschaft that no contemporary European nation could be self-sufficient.130 Yet this assertion was not reiterated in later works which, on the contrary, discussed the happiness through isolation. The explanation could be that, as mentioned above, Justi’s cameral science was intended to be applicable for all nations, so Justi should be open to every nation choosing its own path. Yet this thesis believes that Justi’s tendency after Manufacturen und Fabriken was clear: every nation should try the best to rely on its domestic market.

124 Justi, Manufacturen und Fabriken, vol.1, p. 44. 125 Justi, Handlung und Schiffahrt, p. 12. 126 Ibid., p. 12. 127 Ibid., pp. 12-13. 128 Ibid., pp. 36-37. 129 Ibid., pp. 38-39. 130 Justi, Staatswirthschaft, vol.1, p. 131. 128

Since Manufacturen und Fabriken, Justi’s attitude towards foreign trade was remarkably similar to Hörnigk’s: foreign trade was very lucrative but not indispensable, and a nation could and should develop without relying on it.

3.5 Conclusion

It was obvious that Justi’s definition of public happiness was influenced by that of Wolff. Elements like knowledge, skills, virtue, wealth, internal and external security were components of both Wolff’s and Justi’s definitions of public happiness. Moreover, Justi developed “public happiness” into a set of aims of state economic policy. In summary, the economy compatible with public happiness was characterised by the production of a great number of all kinds of necessities and comforts of human life and the vigorous circulation of them in domestic market. In this economy, Justi expected to realise a kind of “full employment”, in the sense that everyone who wanted to work could be employed, and a kind of national economic independence in the sense of a maximised degree of self-sufficiency. Justi’s economy of public happiness connoted a form of “knowledge-based economy”, because, as discussed above, the production of a great number of all kinds of goods required people’s diligence and productive capabilities, and Justi suggested that people’s productive capabilities should be connected to the progress of science to maximise their efficiency. The large output of the economy of public happiness required highly productive labourers. While creating this economy of public happiness, Justi advocated that the state should prevent the polarisation of wealth distribution and provide welfare services to weak and poor citizens.

Justi’s natural law synthesised Wolff’s and Thomasius’s natural law theories and believed that human nature was not rational but self-interest. Therefore, public happiness was not a natural obilgation which people were naturally bound to fulfill, but a welfare which needed to be created for people to enjoy. Human action was motivated by self-interest not natural obligation, so they needed to be directed by rationality to creating public happiness. The state should respect the private initative motivated by self-interest, because if the creation of public happiness did not resort to rousing private initiative, people would not be motived to wield their capabilities and diligence, and the public happiness would not be realised. Therefore, the state should direct people’s self-

129 interest by creating an order of society, within which people could realise their own private interests through the state promoting public welfare. This was the principle of state intervention in Justi’s economic thought.

The public happiness could be realised either by domestic-market-focused strategy or by international-market-focused strategy. No matter how different two strategies were, both implied a preference for manufacturing and the promotion of national intellectual capital, both thus advocated to build a manufacturing-centered and knowledge-based economy. Justi was essentially open to nations to choose either strategy. Yet his preference since Manufacturen und Fabriken seemed to be the development through relying on domestic market. Justi’s preference for domestic market seemed to be influenced by Hörnigk’s thought and inspired by the account of the self-sufficient economies in Asia, especially Japan.

“Full employment” was a highly concerned component of Justi’s economy of public happiness. The definition of “Happiness of subjects” in Staatswirthschaft and Systematischer Grundriss was almost equal to “full employment” plus public security. Justi’s concern with public happiness and “full employment” was believed to be accepted by Scottish economist James Steuart (1713-1780). Due to supporting Bonnie Prince Charlie and the Jacobite rebellion, Steuart spent seventeen years (1746-1763) in exile in continental Europe, and this experience and the extensive knowledge about the continent was “one of the most important features of Steuart’s life”.131 Steuart started his study of political economy in 1749 and spent the happiest years in his exile in Tubingen (1757-1761) where he encountered cameralism, particularly the thought of Justi.132 Steuart himself admitted his political economy was the outcome of “many years spent in travelling”.133 It is believed that Steuart’s theory of the role of state was borrowed from cameralism and his definition of welfare was influenced by Justi’s “happiness of subjects”.134 The ultimate concern of Steuart’s political economy was “full employment for a population able to work and multiply”, and for this aim

131 A. S. Skinner, ‘Sir James Steuart: Author of a System’, Scottish Journal of Political Economy, 28.1(1981), pp. 20-40 (p. 21). 132 Deborah Redman, ‘Sir James Steuart's Statesman Revisited in Light of the Continental Influence’, Scottish Journal of Political Economy, 43.1(1996), pp. 48-68 (p. 59). 133 James Steuart, An Inquiry into the Principles of Political Oeconomy, vol.1 (London: Published for A. Millar, and T. Cadell, 1767), p. vi. 134 Redman, ‘Continental Influence’, p. 59. 130 government should make a plan for the economy.135 According to Steuart, the main objective of his political economy was “to employ the inhabitants (supposing them to be freemen) in such a manner as naturally to create reciprocal relations and dependencies between them, for as to make their several interests lead them to supply one another with their reciprocal wants”, namely to create the domestic market to employ all the people. 136 Money was important to Steuart because it was the materialisation of demand and therefore a key factor to influence the condition of employment in the economy.137 Like Justi, Steuart regarded promoting the circulation of money as the key to realising “full employment”.138 Steuart’s Inquiry into the Principles of Political Oeconomy proposed his solution to expanding employment, and his solution was preoccupied with monetary theory and policy. As Friedrich List commented, Steuart’s Inquiry was concerned with “money, banks, the circulation of paper, commercial revulsions, the and population”, but the topic of “productive powers” in List’s sense was “superficially treated or wholly omitted”.139 In comparison, Justi’s solution to expanding employment was preoccupied with those factors composing “productive powers”, manufacturing, innovation, progress of science and technology, which will be shown in the next two chapters.

135 Jean-Jacques Gislain, ‘James Steuart: Economy and Population’, in The Economics of James Steuart, ed. by Ramón Tortajada (London: Routledge, 1999), pp. 169-185 (p. 169). 136 James Steuart, An Inquiry into the Principles of Political Oeconomy, vol.1 (London: Published for A. Millar, and T. Cadell, 1767), pp. 2-3. 137 Ibid., p. 33. 138 Ibid., p. 34. 139 Friedrich List, trans. by G. A. Matle, National System of Political Economy (Philadelphia: J. B. Lippincott & Co., 1856), pp. 413-414. 131

Chapter Four. Justi’s Theory of Manufacturing and National Intellectual Capital

Justi’s economy of public happiness was characterised by the large supply of all kinds of necessities and comforts and the large demand of them which was embodied in the vigorous circulation of those products. In Justi’s economic thought, these two features were synergetic. Without the supply of products, the circulation would not exist, as clearly discussed in the previous chapter. Without the demand of products, as Justi noticed, “without demand [Absatz] people will neither cultivate land nor produce goods.”1 In this way, in Justi’s economic thought, building the economy of public happiness was essentially a process of economic expansion promoted by the synergetic expansion of the in the economy. Already in the first volume of Manufacturen und Fabriken, Justi had recorded the phenomenon of economic expansion. Justi found that manufacturing was “something going on [im Gange]”, so government should be attentive to its “expansion [Erweiterung] and improvement [Verbesserung].”2 Expansions and improvements in manufacturing were manifested either as that “the established works…increase plants, workshops, and labourers”, or that “more artisans and manufacturers are attracted in the country”, or that “entirely new manufacturing sectors are set up”.3 As discussed in Chapters One and Two, the awareness that the economy could and should be expanded could be traced to the economic thinkers of absolute monarchy and enlightened absolutism. This chapter will uncover Justi’s theory about the functions of manufacturing and national intellectual capital in this process of economic expansion which would lead to the economy compatible to public happiness.

4.1 The Configuration of Market: Division of Labour and Diversity of Industries

In Macht und Glückseeligkeit, Justi wrote that the market originated from the division of labour. Because “people have invented thousands of kinds of necessities and comforts”, a single person could not produce all goods which he needed, so a producer

1 Justi, Macht und Glückseeligkeit, vol.1, p. 684. 2 Justi, Manufacturen und Fabriken, vol.1, p. 126. 3 Ibid., p. 126. 132 should exchange with others by giving away what he found superfluous and acquire what he found necessary, therefore Justi defined that trade was “a mutual transference or exchange of the surplus or the dispensable for the necessary”.4 The exchange among citizens of a nation was domestic trade, and the exchange among nations was the foreign trade.5 Here Justi reached an understanding similar to Adam Smith’s, that the division of labour would make everyone live by exchanging and the society would become a commercial society.6

In Macht und Glückseeligkeit, Justi clearly found that manufacturing had very detailed division of labour. “Often many kinds of processing are needed for the [manufactured] products, and they must go through many procedures and processes, before they reach the point of perfection, at which point they can be sold.”7 This led to the geographical specialisation of manufacturing, namely a place which was so advantageous that it could produce a certain kind of goods for the entire country.8 In the first volume of Manufacturen und Fabriken, Justi also noted in a way similar to Botero that the detailed division of labour in manufacturing and thereupon the exchange among manufacturers supported the power of manufacturing in employing a dense population. He wrote: “apart from the great number of people who find livelihoods in manufacturing, these labourers demand again thousands of other necessities, which naturally draws an increase of all artisans and industries; and therefore these artisans increase the consumption of products of other manufacturing and other necessities; so the increase of population goes on constantly.”9 On this basis, in Macht und Glückseeligkeit, Justi believed that manufactuirng had the tendency to geographically cluster. A location where manufacturers worked on raw materials and exchanged with peasants “incurs a concentration of people there, which promotes that more and more sectors of manufacturing concentrate, because they see that their work is demanded and bought there”.10 This effect of linkage and clustering of manufacturing generated cities.11 Regarding the linkage and clustering of manufacturing as the origin of cities could be

4 Justi, Macht und Glückseeligkeit, vol.1, p. 596. 5 Ibid., p. 512; p. 538. 6 Adam Smith, ed. by Andrew Skinner, Wealth of Nations, vol.1 (London: Penguin Books, 1999), p. 126. 7 Justi, Macht und Glückseeligkeit, vol.1, p. 441. 8 Ibid., p. 441. 9 Justi, Manufacturen und Fabriken, vol.1, p. 18. 10 Justi, Macht und Glückseeligkeit, vol.1, p. 296. 11 Ibid., pp. 295-296. 133 traced back to Botero.12 The detailed division of labour in manufacturing and its power to employ the dense population had already been discussed by Giovanni Botero, as mentioned in Chapter One. And with examples of woollen coats, ships, machines, and tools and home appliances, Adam Smith also came to a similar conclusion: “observe the accommodation of the most common artificer or day-labour in a civilised and thriving country, and you will perceive that the number of people of whose industry a part, though but a small part, has been employed in procuring him this accommodation, exceeds all computation.” 13 In comparison, Justi found that villages employed a smaller population because agricultural activities could not be subdivided to the same degree as manufacturing. Justi found that in “a country, which had only agriculture and animal farming”, very few kinds of professions were demanded: it only needed landowners, farming labourers, supervisors of labourers, soldiers and public servants, and very basic artisanries which supplied others with necessities. 14 Justi wrote: “Therefore one can calculate the number of labourers demanded in such country, and the population will be very moderate. Even if the population is fertile, it will not be helpful. The surplus population cannot find employment and livelihoods there, so they will have to flee from their homeland and find chances to work in foreign countries.”15 Here in the first volume of Manufacturen und Fabriken, Justi described the problem of surplus population in agricultural society.

Since the market originated from division of labour, products in circulation should be diversified. The origin of exchange of products was that a person is unable to satisfy his demand for diversified products (“thousands of kinds of necessaries and comforts”), so by its nature the configuration of market required the diversity of products in circulation. In this way, a nation with an undiversified industrial structure would not have a sufficiently large domestic market. In Macht und Glückseeligkeit, Justi used this to explain the poverty of Poland and Spain. Justi wrote: “The real wealth of the nation subsists in necessities and comforts…and one cannot say that a nation possessing only one kind of comforts is rich [this referred to Spain’s great possession of gold and silver]. This kind of product will be exported in exchange for many other necessities without

12 Giovanni Botero, trans. by Robert Peterson, The Greatness of Cities (New Haven: Yale University Press, 1956), p. 254. 13 Smith, Wealth of Nations, vol.1, pp. 115-116. 14 Justi, Manufacturen und Fabriken, vol.1, p. 15. 15 Ibid., p. 15. 134 making the nation rich. This will also happen when a nation possesses only one kind of necessities in the greatest amount and neglects others. For example, a nation possesses grain in the greatest amount. If it neglects manufacturing and the production of all other necessities and comforts, it will not be rich. The nation must export its surplus grain and set itself in poverty, to which Poland serves as an example. The wealth of a nation relies on a concentration of all kinds of indispensable products and on that it relies on other nations as little as possible.” 16 Justi did not explain why an undiversified industrial structure would cause poverty, but this paragraph appeared in the chapter illustraing that circulation was essentially the circulation of products, so to Justi the reason of Poland’s and Spain’s poverty was probably because their undiversified industrial structures hindered the formation of a prosperous domestic circulation of products. In Montesquieu’s The Spirit of Laws, there was a very similar discussion about the poverty of Poland: “[Poland] has scarcely any of those things which we call the movable effects of the universe, except corn, the produce of its lands. Some of the lords possess entire provinces; they oppress the husbandmen, in order to have greater quantities of corn, which they send to strangers, to procure the superfluous demands of luxury.”17 And Montesquieu’s solution for Poland was to give up foreign trade and develop the domestic market through cultivating diversified industries. Montesquieu wrote that Polish nobles should supply corn to Polish peasants and divide their extensive land property among peasants; Polish people should use wool and hides harvested from their flocks to create cloth-making industry, so “the great, who are ever fond of luxury, not being able to find it but in their own country, would encourage the labour of the poor.”18 When he wrote Macht und Glückseeligkeit, Justi had already read The Spirit of Laws in details.19 Therefore he had probably known Montesquieu’s analysis of the of Poland. In this way, in order to promote the domestic market and circulation of products, Justi advocated the diversity of industries and repeatedly emphasised that the real wealth of a nation is “the concentration, the great number, and the abundance of all kinds of necessities and comforts”.20 And the

16 Justi, Macht und Glückseeligkeit, vol.1, pp. 610-611. 17 Baron de Montesquieu, trans. by Thomas Nugent, The Spirit of Laws, vol. II, (London: J. Nourse, and P. Vaillant, 1773), p. 22. 18 Montesquieu, Spirit of Laws, p. 22. 19 See Nokkala, From Natural Law to Political Economy, p. 27. 20 Justi, Guten Regierung, p. 87. 135 emphasis should be on “all kinds”.

The significance of the division of labour and the diversity of industries for the configuration of domestic market led to the issue of “the connection of entire economy” (der Zusammenhange des gesamten Nahrungsstandes) as a factor preconditioning circulation in Justi’s thought since Staatswirthschaft until Macht und Glückseeligkeit.21 “The connection of the entire economy” essentially meant the coordination and balance of diversified industries. A good connection of the economy was achieved through the prosperous domestic market building on the system of national industries, namely, that “an industry always promotes others, so the wealth will be in constant circulation”.22 In order to form the well-connected domestic market, “every main industry and sector [Nahrungsart] must be preserved in the correct balance and relation against each other”. 23 In Macht und Glückseeligkeit, Justi compared the system of national industries connected by the domestic trade to a machine. Justi wrote that the state was like a great machine, the economy was its mainspring, industries were like “wheels and springs” of the mainspring, every industry contributed to the prosperity of the entire economy “as every component to the function of the machine”, so “every industry must take its necessary position in the economy”, and “nothing is as necessary as the connection of economy, and every industry and every sector must consistently serve to promote and support others and never harmfully influence others.”24 Justi asked: “Can we imagine how the mainspring would generate all the movements and forces, if industries have no cooperation with others as wheels or springs do not fit each other?”25 To Justi, all industries formed a mutually supported entirety, so the depression of one sector would leave a void (Leere) in the entirety and harm the domestic circulation.26

The division of labour, the diversity of industries, and the connection of them formed the market, so Justi proposed building manufacturing, which was characterised by detailed division of labour, as the means to configure the domestic market. In Staatswirthschaft, Justi listed the establishment of manufacturing as one of the four methods to promote the circulation of money in the country (the other three being good

21 Justi, Staatswirthschaft, vo.1, pp. 225-237; Justi, Macht und Glückseeligkeit, vo.1, pp. 555-561. 22 Justi, Staatswirthschaft, vol.1, p. 226. 23 Justi, Macht und Glückseeligkeit, vol.1, p. 547. 24 Ibid., p. 557. 25 Ibid., p. 557. 26 Ibid., p. 581. 136 connection of economy, maintaining good credit in financial market, and prohibiting idleness and begging). 27 Justi wrote: “manufacturing produces most of national necessities, and the more national necessities are produced, the less money will go outside the country, and the more the money circulates in the country and goes from one industry to another.”28 In Grundsätze and Macht und Glückseeligkeit, promoting the production of national products (Landesproducte), primarily manufactured products, should proceed before promoting the domestic and foreign trade.29 In Systematischer Grundriß, establishing manufacturing was explictly regarded as a synonym for configuring the domestic market and thus the solution to providing employment to the people. Justi wrote: “The circulation of money is promoted through the good establishment of domestic commerce or manufacturing, so that thereupon everyone is able to find work for their hands and therein a comfortable means of living. In this aspect the first principle to practice is that it must be pursued to produce all that can be grown and manufactured in the country and to make policies correspondingly.”30 In this way, in Grundsätze, it was listed as the first principle of industrial policy that “the nation should seek to manufacture all the necessities and comforts demanded by the people in the country as far as it can be manufactured according to the quality of the land and climate”. 31 Despite claiming this and despite the awareness of the geographical division of labour, Justi in fact advocated building and promoting nearly all manufacturing sectors in a country. The lack of raw materials, namely the limitation of “the quality of the land and climate”, was not regarded as a barrier for a nation to have as many manufacturing sectors as possible. In the second volume of Manufacturen und Fabriken, Justi studied the raw materials, production crafts, and the quality of main finished products in the manufacturing of wool, linen, cotton, silk, fur, gold, silver, copper, brass, iron, steel, porcelain, glass, mirror, mineral salts, dye and leather, and he concluded that all these manufacturing sectors could and should be built in Germany, and if certain raw materials could not be produced domestically, especially those needed for textile industries, they should be imported and paid for by export surplus.32

27 Justi, Staatswirthschaft, vol.1, p. 225. 28 Ibid., p. 250. 29 Justi, Gründsätze, p. 10; Justi, Macht und Glückseeligkeit, vol.1, pp. 433-434. 30 Justi, Systematischer Grundriß, p. 26. 31 Justi, Grundsätze, p. 101. 32 For example, the import of cotton, Johann Heinrich Gottlob von Justi, Vollständigen Abhandlung von denen Manufacturen und Fabriken, vol.2 (Copenhagen: Rothensche Buchhandlung, 1761), p. 109; raw silk, Justi, 137

4.2 Maximising the Diversity of Manufacturing in Mercantilism and Cameralism

According to Erik Reinert, “for several hundred years Europe’s trade policy was based on the principle of maximising the industrial sectors of each country”.33 In mainstream economics, the pursuit of the diversity of manufacturing has been understood as violating the principle of comparative advantage and diverting resources from the most productive employment, and therefore will reduce the total output of the economy.34 Therefore, standard economics textbooks do not give the diversity of economic activities a proper place in understanding economic development. However, some heterdox economic theories believe that probably it was this “emulation” of the poor nations to have the same industrial structure of rich nations instead of being satisfied with the comparative advantage in international division of labour that created the wealth of the West.35 Here, Justi provided an explanation of how the emulation in industrial structure could promote economic development: the diversity of industries would configure the domestic market, and the more diverse the industrial structure is, the larger the market could be.

Mercantilists and cameralists before Justi had already seen the connection between the diversity of industries and the size of domestic market, and Justi probably was one of the first ones to provide a detailed and systemised explanation of how this mechanism worked instead of merely writing it down as a general principle. Botero had already advocated building a diversified industrial structure to provide employment for a dense population. As discussed in Chapter One, Botero advised the monarch to do all he could to encourage the people “to practice every kind of skill”, because “riches flow to those places where the things necessary to everyday life are in most abundance.”36 In order to promote the growth of population, the country should have “an abundance of raw materials and a variety of crafts”, so “everything requisite for daily life” could be

Manufacturen und Fabriken, vol.2, pp. 154-155. 33 Reinert, How Rich Countries Got Rich, p. 81. 34 Adam Smith, ed. by Andrew Skinner, The Wealth of Nations, vol.2 (London: Penguin Books, 1999), p. 34; David Ricardo, On the Principles of Political Economy and Taxation (London: John Murray, 1821), p. 309. 35 Reinert, How Rich Countries Got Rich, p. 11; Sophus Reinert, Translating Empire: Emulation and the Origins of Political Economy (London: Harvard University Press, 2011), especially pp. 13-72. 36 Botero, The Reason of State, pp. 136-137. 138 produced to sustain “an infinite number of people.”37 And Botero explicitly said that the wealth of a nation was determined by the number of industries it had. As he wrote, “Nothing is of greater importance for increasing the power of a state and gaining for it more inhabitants and wealth of every kind than the industry of its people and the number of crafts they exercise.”38 Therefore he suggested that the monarch, who wanted to “make his cities populous”, should “introduce every kind of industry and craft”.39 In Erik Reinert’s words, it was as if Botero was saying “if you wish to estimate the wealth of a city, count the number of professions found within its walls” and the more the number of professions, the wealthier the city.40

The diversity of manufacturing was also highlighted in Antonio Serra’s system. Serra regarded the diversity of manufacturing (La quantità dell’artificij, “multiplicity of manufacturing activities” by Jonathan Hunt, “quantity of industry” by Arthur Monroe) as the most important characteristic of a prosperous economy.41 The “multiplicity” or “quantity” of manufacturing of a country was “when they are diverse and produce things necessary or useful or pleasing to people in quantities that exceed the needs of the country” (quando in quelli si essercitano più e diversi arteficij necessarij o commode o dilettevoli all’uso humano in quantità grande, che soprabondi al bisogno del paese).42 Venice was the example Serra thought his homeland Naples should learn from, and according to Serra’s observation, Venice was where the diversity of manufacturing, the employment of dense population, and the expansion of foreign trade supported each other. In Venice, “the number of people attracted by the extensive trade and the geographical position is increased still further by the number of businesses, and the number of businesses is increased by the extensive trade, which is itself increased by the number of people who come to the city”.43 Serra wrote: “extensive trade helps and improves the accident of a multiplicity of manufacturing activities, by multiplying the number of manufacturing activities; and the multiplication and improvement of the manufacturing activities helps and improves the trade”.44 In Erik Reinert’s words, “In

37 Ibid., p. 145. 38 Ibid., pp. 150-151. 39 Ibid., p. 153. 40 Reinert, How Rich Countries Got Rich, p. 95. 41 Serra, Short Treatise, pp. 120-121; Arthur Eli Monroe ed., Early Economic Thought: Selection From Economic Literature Prior to Adam Smith (Cambridge: Harvard University Press, 1930), p. 147. 42 Serra, Short Treatise, pp. 120-121. 43 Ibid., p. 127. 44 Ibid., p. 141. 139

Serra’s view, the key to economic development was to have a large number of different economic activities, all subject to the falling costs of increasing return.”45

In Hörnigk’s nine principles of economic policy, import substitution through maximising the number of manufacturing was linked closely with vigorous domestic circulation and capital accumulation, as discussed in Chapter One. Maximising the diversity of manufacturing was a common goal of the economic policy proposal of German cameralists. This goal was so fervently pursued that Jakob Bielefeld (1717- 1770) wrote: “It must not be believed that it is possible to build all manufacturing sectors in one country. It is a mistake which many cameralists commit and which must be corrected.”46 Bielefeld was one of the four most important German Enlightenment economists, with the other three being Justi, Zincke, and the Prussian anti-Physiocrat Johann Friedrich von Pfeiffer (1718-1787).47 Bielefeld was a friend and advisor to Frederick II as well as a Prussian diplomat stationed in France, and his main cameralist work, Institutions Politiques (1760, translated into German as Lehrbegriff der Staatskunst), which Justi read and quoted, was one of the economic bestsellers before 1850.48 Bielefeld illustrated the cameralists’ mistake of extreme pursuit of maximising the diversity of manufacturing with regard to five aspects. Firstly, manufacturing sectors working on raw materials imported from remote parts of the world was hardly profitable due to high cost of transport.49 Secondly, different nations were competitive in different industries.50 Thirdly, “not all manufacturing is equally beneficial to the nation”.51 Fourthly, reducing imports from foreign nations would also reduce exports to them.52 Fifthly, a nation could hardly have sufficient labourers to produce every kind of manufactured goods at a scale large enough to satisfy both domestic and foreign demands.53 Despite these arguments, Bielefeld still did not abandon the pursuit of the diversity of manufacturing as the means to promote the domestic market, but he only

45 Reinert, How Rich Countries Got Rich, p. 7. 46 Jakob Bielefeld, Lehrbegriff der Staatskunst, vol.1 (Leipzig: Johann Friedrich Korn, dem Aeltern, 1761) p. 428. 47 Erik Reinert, ‘Jacob Bielfeld’s “On the Decline of States” (1760) and Its Relevance for Today’, in Visionary Realism of German Economics: From the Thirty Years' War to the Cold War, ed. by Rainer Kattel (London: Anthem Press, 2019), pp. 203-242 (p. 205). 48 Reinert, ‘Jacob Bielfeld’, pp. 205-210. Justi mentioned Bielefeld's book in Macht und Glückseeligkeit, vol.1, preface, pp. a3-b. 49 Bielefeld, Lehrbegriff der Staatskunst, vol.1, pp. 428-429. 50 Ibid., p. 429. 51 Ibid., p. 430. 52 Ibid., pp. 431-432. 53 Ibid., pp. 432-434. 140 made the pursuit more reasonable and practical. He wrote: “without forcing the nature, the more manufacturing the nation can have, the more people can be employed in skilful labour, and the more the nation can prosper and enrich itself”.54 Since a nation could not have all kinds of manufacturing, the selection of manufacturing to develop became a concern of economic policy, and Bielefeld believed that the most rational selection was made by Jean Colbert, who was “the greatest financer” (der Größter Finanzier).55 Yet Colbert’s industrial policy had been famous for centring on self-sufficiency.56 Probably Bielefeld tried to express the same idea as Justi: the pursuit of diversity of manufacturing should not be as extreme as autarky, but the more diversified, the better.

4.3 The Expansion of Market: The Force of Increasing Returns and Mechanisation

Justi believed that the expansion of market was fundamentally promoted by the force of increasing returns, namely the rise of the productivity of industries to increase the goods in circulation. In Grundsätze, he defined that the perfect domestic trade was realised “through the great concentration of products on the one hand and on the other hand through the smoothness with which the products go from one pair of hands to another”.57 In this way, “the state policy [Landes-Policey] must make all imaginable institutions which contribute to promoting the concentration and circulation of products.”58 Therefore the more products there were, the larger was the volume of circulation and the larger was the size of the domestic market.

In Macht und Glückseeligkeit, Justi listed three ways to promote the domestic and foreign demands of national products. Besides the good quality and cheap price of products, “the concentration of a great number of products of every kind is the third general method to promote the demand of products.”59 When every kind of products were produced in large scale, “everyone will have interest in sale and will be satisfied with a low profit [of a single piece of product], so he seeks his interest in expanding his

54 Ibid., vol.1, p. 435. 55 Ibid., p. 434. 56 Lars Magnusson, The Political Economy of Mercantilism (London: Routledge, 2015), pp. 69-78. 57 Justi, Macht und Glückseeligkeit, vol.1, pp. 548-549. 58 Justi, Grundsätze, p. 133. 59 Justi, Macht und Glückseeligkeit, vol.1, p. 567; similar conclusion could be seen in Justi, Manufacturen und Fabriken, vol.1, p. 148. 141 industries and the size of his sale.” 60 Here Justi expressed the awareness of the economy of scale in manufacturing, because he wrote that the large-scale production of products arouse from two origins: “firstly from the great industriousness of the nation”, and, secondly and more importantly, “from the [Erspahrung] of human hands, which means using the work of machines and other artificial effects instead of human hands”.61 In this way, under the condition of maximising the diversity of manufacturing, by “the concentration of a great number of products of every kind”, Justi proposed that the domestic market was expanded through the mechanisation of every sector of manufacturing. The mechanisation of all industries enlarged the market for every individual industry.

According to Schumpeter, the seventeenth and eighteenth centuries were a time when the phenomenon of increasing returns started to be recorded in economic writings. The early modern populationists and protectionists noted “increasing returns with reference to a national economy as a whole”, and most of their discussions were “hazy” and “irrespective” of the reason of increasing returns and of whether it was physical returns or monetary returns, but there were some exceptions where precise observations were made.62 The earliest was probably Antonio Serra and his record of the economy of scale, which has been discussed in Chapter One. According to Schumpeter, “A general law of increasing returns in manufacturing industry, also in the form of a law of decreasing unit cost, had been stated explicitly and in full awareness of its importance by Antonio Serra, much as it was to be stated in the nineteenth-century textbook.”63 William Petty also noted the clustering of manufacturing, just as what Justi discussed as the reason why manufacturing employed dense population and contributed to the origin of city, and illustrated the relationship among division of labour, specialisation, and increasing returns with the case of a watch manufactory. Petty wrote: “The gain which is made by manufactures, will be greater, as the manufacture itself is greater and better. For in so vast a city, manufactures will beget one another, and each manufacture will be divided into as many parts as possible, whereby the work of each artisan will be simple and easy: as for example, in the making of a watch, if one man shall make the

60 Justi, Macht und Glückseeligkeit, vol.1, p. 567. 61 Ibid., p. 567. 62 Schumpeter, History of Economic Analysis, p. 258. 63 Ibid., pp. 258-259. 142 wheels, another the spring, another shall engrave the dial-plate, and another shall make the cases, then the watch will be better and cheaper, than if the whole work be put upon any one man.”64 According to Erik Reinert, an unknown precedent of the discussion about increasing returns from division of labour before Adam Smith was that of German economist Ernst Ludwig Carl (1682-1742) who described the division of labour by the example of a pin factory more than 50 years before Adam Smith.65 Increasing returns from division of labour was by no means Adam Smith’s original discovery.

Increasing returns and the economy of scale from division of labour, mechanisation, and standardisation were well known to Justi since the first volume of Manufacturen und Fabriken, a work embodying his comprehensive investigation of contemporary manufacturing.66 In Justi’s translation of the first volume of Descriptions des Arts et Métiers (1762), he translated and annotated a chapter about needle making written originally by “du Hamel”.67 The author of this chapter explained why needles were so mass-produced and inexpensive, and the author found that the reason was the detailed division of labour in needle making and recorded all 17 different procedures required to make a needle.68 The author found that the productivity of labourers became so high in this division of labour as he counted that within two hours, a needle sharpener could sharpen 72,000 needles and a worker could make 7-12,000 heads of needles.69 It was as if that what Adam Smith observed in a needle factory was equally known to Justi, only that in Smith’s account, the needle factory had 18 instead of 17 procedures.

In the second volume of Manufacturen und Fabriken, Justi himself found this form of increasing returns most prominently manifested in the manufacturing of rifles (Gewehrfabriken). As he wrote, “If it is ever necessary to build the manufactory in the large-scale and concentrated form, it is the most necessary to the manufacturing of rifles. Rifles consist of many components and must be processed by many labourers. The experience of long time has shown that the work, specifically in metalworking and chemical industries, is finished much more speedily and skilfully, if an individual

64 William Petty, Several Essays in Political Arithmetick (London: J. Schuckburgh and J. Whiston and B. White, 1755), pp. 28-29. 65 Reinert, ‘Johann Heinrich Gottlob von Justi’, pp. 55-56. 66 See Justi, Manufacturen und Fabriken, vol.1, pp. 146-148. 67 Members of Paris Academy of Science, trans. and noted. by Johann Heinrich Gottlob von Justi, Schauplatz der Künste und Handwerke (Berlin, Stettin and Leipzig: Johann Heinrich Rüdigern, 1762), pp. 193-294. 68 Ibid., pp. 193-195. 69 Ibid., p. 196. 143 labourer works on only one single procedure, others work on other specific procedures, and then all of their work is combined together. Moreover, labourers in firearm manufactory can be greatly relieved by machines and other devices which a single artisan cannot afford to use. The state can also be more ensured with the good quality and uniformity of weapons of its army, if all firarms are manufactured under a single supervision. We also have seen that firearm manufactories are built in great scale everywhere.”70 Adam Smith probably would have agreed with Justi, should he read these words, because Smith similarly believed that increasing returns from division of labour and mechanisation was the most intensive in metalworking industries, as he wrote: “There are perhaps no manufactures in which the division of labour can be carried further, or in which the machinery employed admits of a greater variety of improvements, than those of which the materials are the coarse metals.”71 And it is an interesting coincidence that the “American system of manufacturing” in the early nineteenth century, the mode of manufacturing production characterised by standardisation, division of labour, interchangeable parts, and mechanisation, firstly appeared in the firearm factory Springfield Armory.72

According to Justi, the main benefit of mechanisation was to keep products inexpensive regardless of the price of means of living of labourers, because machines could greatly raise productivity, as he wrote: “one machine can finish the work which one hundred labourers cannot.”73 Schumpeter found that in the Wealth of Nations Adam Smith discussed the phenomenon of increasing returns in two places. The first is the famous first chapter of book one, and the second is the eleventh chapter of book one about the “effects of the progress of improvement upon the real price of manufactures”.74 In the second place, Smith wrote: “in consequence of better machinery, of greater dexterity, and of a more proper division and distribution of work, all of which are the natural effects of improvement, a much smaller quantity of labour becomes requisite for executing any particular piece of work”. 75 In general, all of the phenomena of increasing returns which Smith discussed had already been noted by Justi since

70 Justi, Manufacturen und Fabriken, vol.2, p. 371. 71 Smith, Wealth of Nation, vol.1, p. 352. 72 See Michael S. Raber, ‘Conservative Innovators, Military Small Arms, and Industrial History at Springfield Armory’, The Journal of the Society for Industrial Archeology, 14.1(1988), pp. 1-22. 73 Justi, Manufacturen und Fabriken, vol.1, p. 146. 74 Schumpeter, History of Economic Analysis, p. 259. 75 Smith, Wealth of Nation, vol.1, p. 350 144

Manufacturen und Fabriken.

Facing the objection against mechanisation that “the livelihoods of hundreds of people are taken away by machines”, in Manufacturen und Fabriken and Macht und Glückseeligkeit, Justi defended mechanisation from the following three aspects. Firstly, it was an important principle for managing both state finance and national economy to always improve efficiency and productivity: “never using redundant force where less force could suffice”. 76 Secondly, government should not prohibit the progress of technology under the pressure of old industries, because “those who have already conducted an industry have no right to demand that nothing can be changed in the fashion or in the old custom so that they can continue their livelihoods along old steps”.77 Thirdly, mechanisation promoted the increase of production and lowered the price, which would promote exports, and with increased trade surplus, “a wise government can always find sufficient chances to employ those spared labourers in other lucrative industries”.78 As discussed in Chapter Two, the economic thought of the Enlightenment favoured mechanisation. In the thoughts of Leibniz and Wolff, there was the advocacy to encourage mechanisation to increase productivity. In his defence of mechanisation, Justi quoted the French Enlightenment economist Jean François Melon (1675-1738)’s essay De l’Industrie (“Von der Arbeitsamkeit”, “Of Industry”).79 In this essay, Melon highlighted that the progress of instruments promoted the infinite progress of economy. He wrote that “This progress of industry has no bounds” and “it will always increase, and that new wants will still arise, about which new skill and industry may be employed”.80 Melon believed that the unemployment caused by the progress of instruments was solvable, because there were always unmechanised positions which could employ the skills of labourers relieved by machines.81

Justi was aware that he lived in a time when mechanisation was prominently promoting the development of manufacturing, and this technological revolution, which embodied the combination of science and manufacturing, was an unstoppable trend. In

76 Justi, Manufacturen und Fabriken, vo.1, p. 147. 77 Justi, Macht und Glückseeligkeit, vol.1, pp. 568-569. 78 Ibid., pp. 568-569. 79 Ibid., pp. 568. 80 Jean François Melon, trans. by David Bindon, A Political Essay upon Commerce (Dublin: Philip Crampton: 1738), p. 145. 81 Ibid., pp. 148-149. 145

Reglements, a book written after Manufacturen und Fabriken and the translation of the first volume of Descriptions when he had already known the increasing returns in needle manufactory and firearm manufactory, he wrote: “It is certain that many kinds of work in manufacturing can be reduced, and much time and human labour can be saved, if we decide to devote ourselves more to inventing more convenient machines. This has been proved by the experience of this century when a lot of previously unknown machines have been invented for serving manufacturing; and it will happen more and more once the science is more acquainted with crafts and manufacturing”.82

Justi’s thought of mechanisation and the thoughts contextualising his ideas were made in the context where mechanisation was one of the most important forms of technological progress in contemporary manufacturing sectors. A group of modern scholars believe that the waterpowered mechanisation, especially that applied in cotton textile industry and ironworking industry, was one of the key innovations which triggered the economc expansion in England since the late eighteenth century until the early nineteenth century and preluded the steam-powered mechanisation.83 Werner Sombart defined the seventeenth and eighteenth centuries as “the classical age of mills [das klassische Zeitalter der Mühle]” in the sense that the emergence of mills was the main form of technological progress, and defined “mill” as “a facility which makes waterpower (in some circumstances also the power of wind, animal, and man) useful through the transformation into the rotation of the wheels for different works”. 84 Sombart mentioned the following mills appearing during the seventeenth and eighteenth centuries: the mill for grinding grain and extracting oil; for sawing timber; for lathing, drilling, stamping, grinding, wiredrawing, and blasting the furnace in metalworking industry; for reeling silk, weaving ribbon, weaving stocking, weaving cloth (mechanische Webstuhl), cutting fibre and cloth, carding, mangling, cloth printing, and dyeing in textile industry.85 Many of these inventions were advocated by Justi himself.86 According to Carlo Cipolla, the use of water mill in manufacturing activities

82 Johann Heinrich Gottlob von Justi, Abhandlung von denen Manufactur-und Fabriken-Reglements (Berlin: Verlag des Buchladens der Real-Schule, 1762) pp. 55-56. 83 See Freeman and Soete, The Economics of Industrial Innovation, pp. 35-54; Freeman and Louçã, As Time Goes By, pp. 153-187. 84 Sombart, Moderne Kapitalismus, vol.1, p. 485. 85 Ibid., vol.1, pp. 485-487; also pp. 495-500. 86 For example, about stocking weaving machine, see Justi, Manufacturen und Fabriken, vol.2, p. 24; cotton cloth pressing mill, pp. 128-130; mechanical gold and silver wiredrawing and stamping mill, pp. 234-238. 146 in Europe could be traced to the eleventh century, and by the middle of sixteenth century the following types of water mills had emerged: for making beer, paper, mortar, and pigment; for processing iron, hemp, mustard, poppy, oil, and sugar; and for fulling, ore- stamping, tanning, grinding and polishing cutlery, sawing, mine-pumping, blasting furnance, boring pipe, rolling and slitting, wiring, polishing gem, turning lathes, and operating mechanical bellows.87 However, it should be noted that these just record the emergence of these machines. It does not represent any assertion that the seventeenth and eighteenth centuries were a rapidly mechanising age or that these machines were widely applied and caused significant economic dynamics. In fact, more recent research showed that “really imposing technological development [in the manufacturing sector] in continental Europe had to wait until the end of the eighteenth century, although many innovations date back to the seventeenth century.”88 Cipolla also highlighted that the early modern technological innovations did not spread evenly, from the twelfth to the fifteenth century innovations concentrated in Italy then in the sixteenth and seventeenth century they concentrated in England and the Netherlands.89 The emergence of mills also firstly concentrated in Northern Italy, then spread to sourthern France, but appeared much less in more Northern Europe.90 Here, Justi, who was familiar with contemporary technological progress as the author of Manufacturen und Fabriken and the translator of the German version of Descriptions des Arts et Métiers, mainly expressed a vision and an advocacy of a commencing mechanised manufacturing economy.

4.4 The Expansion of Market: Product Innovation and Luxuries

Since Grundsätze, Justi had regarded introducing innovations as a factor of expanding the market.91 Justi observed that product innovations led to the expansion of market by increasing the propensity to consume, because “all humans love novelty and changes, and sellers seldom fail if they introduce new inventions to their customers”.92 The new inventions subsisted in “new beautiful colours”, “new designs and fashions”, “new

87 Carlo M. Cipolla, Before the Industrial Revolution: European Society and Economy, 1000-1700 (London: Routledge, 2003), p. 110. 88 Kellenbenz, The Rise of the Europen Economy, p. 248. 89 Cipolla, Before the Industrial Revolution, p. 120. 90 Ibid., pp. 109-111. 91 Justi, Grundsätze, p. 116. 92 Justi, Macht und Glückseeligkeit, vol.1, p. 572. 147 ways of making”, “new machines”, and “completely new products”.93 In the first volume of Manufacturen und Fabriken, Justi wrote that by introducing product innovations in the international market, the nation as a whole would acquire a monopoly over the new products, and could “raise the price of its invention and craft refinements as highly as possible”, until other nations knew how to produce them. 94 Since Staatswirthschaft, Justi highlighted that acquiring a commercial advantage through introducing product innovations as the way for backward nations, such as contemporary German states, to earn their share in international manufacturing market.95 “The fear”, Justi wrote, “which people notice from time to time, that it is very hard or entirely impossible for a late-coming nation in manufacturing [ein in denen Manufacturen und Fabriken späther anfangendes Volk] to acquire a foreign market for its labour, must be regarded unreasonable.”96 Justi believed the hope for latecomers was to introduce innovations. As he wrote in Manufacturen und Fabriken about competing for the share in international textile market, “the difficulty [for late-coming nations to find market] is not unconquerable…it is certain that a nation can promise the foreign market to its textile products as long as it can bring new and welcomed inventions.”97

According to Justi, the proposal of this strategy was stimulated by his observation of the success of contemporary French textile industry and the invention of Saxon blue.98 In Manufacturen und Fabriken, Justi explained that French cloth had no advantage in quality compared with English and Dutch cloth except in the aspect of dye and finishing, but “its beautiful and durable dye has created a great foreign market”, and “the French have to thank this excellent quality of beautiful and durable dye to the untiring care of Mr. Colbert who asked two academies in Paris to make constant experiment about it, and compiled the outcomes of research in the manufacturing regulation [Reglements].”99 Justi also wrote a chemical treatise specifically about the invention of Saxon blue.100 In Staatswirthschaft, he noted that the average-quality cloth dyed in newly-invented Saxon blue was exported to foreign countries for a much higher price,

93 Justi, Manufacturen und Fabriken, vol.1, p. 222; Justi, Macht und Glückseelgiketi, vol.1, p. 572. 94 Justi, Manufacturen und Fabriken, vol.1, p. 4; pp. 7-8. 95 See Justi, Staatswirthschaft, vol.1, pp. 175-176. 96 Justi, Manufacturen und Fabriken, vol.1, p. 4. 97 Ibid., pp. 27-28; Justi, Staatswirthschaft, vol.1, pp. 175-176. 98 Justi, Manufacturen und Fabriken, vol.1, pp. 27-28. 99 Justi, Manufacturen und Fabriken, vol.2, p. 36. 100 See Johann Heinrich Gottlob von Justi, Das Entdeckte Geheimniß der neuen Sächischen Farben (Vienna: Kaußischen Buchladen, 1761). 148 and that there was a flannel printing mill in Planitz (in Saxony) which attracted many pieces of cloth from other countries for its special process and novelty.101

In Justi’s economic thought, product innovation was treated largely as the synonym for luxury (Ueppigkeit) and fashion (Moden). Justi believed that a nation could have “no more clever and beneficial invention” than the fashion.102 Justi’s defence of luxury was in an intellectual context where contemporary thinkers linked “luxury” to the progress of science and the introduction of new consumer products. To these thinkers, “luxury was an engine of…the progress of arts and sciences”.103 Rousseau’s Discourse on the Arts and Sciences (1750) was translated into German in 1752 and was a “hugely influential” text in Germany. 104 In this text which condemned luxury, Rousseau’s argument was “to equate luxury and the fine arts” and to define “the arts and sciences in their entirety as luxury” for “they are characteristic of societies that have progressed beyond the fulfillment of ‘natural’ needs.”105 In his defence of luxury and fashion in Macht und Glückseeligkeit, Justi quoted David Hume’s Of Luxury. 106 Hume later changed the title Of Luxury to Of Refinement in the Arts, through which he wanted to replace a pejorative word with a more neutral term.107 But this also reflected that Hume treated “luxury” as a synonym for “the refinement in arts”. “Hume identified ‘luxury’ with the invention and production of manufactured goods designed for the ‘gratification of the senses’, and hence with ‘art and industry’.”108 In Melon’s De l’Industrie, the change of fashion was regarded as waves of introduction of new products. As he wrote: “When the use of ribbands was laid aside, furballas were made; afterwards, some other fashion took place, and now hoop-pettycoats, which will soon give way to some other invention.”109 ’s idea was a new element that was introduced into German cameralism in the eighteenth century.110 Mandeville also believed that the

101 Justi, Staatswirthschaft, vol.1, p. 176. 102 Justi, Macht und Glückseeligkeit, vol,1 pp. 544-545. 103 Istvan Hont, ‘The early Enlightenment debate on commerce and luxury’, Cambridge History of Eighteenth- Century Political Thought, eds. by Mark Goldie and Robert Wokler (Cambridge: Cambridge University Press, 2006), pp. 379-418 (p. 380). 104 Matt Erlin, Necessary Luxuries: Books, Literature, and the Culture of Consumption in Germany 1770-1815 (New York: Cornell University Press, 2014), p. 46. 105 Erlin, Necessary Luxuries, p. 47. 106 Justi, Macht und Glückseeligkeit, vol.1, p. 544. 107 J. Martin Stafford, ‘Hume on Luxury: A Response to John Dennis’, History of Political Thought, 20.4 (1999), pp. 646-648 (p. 646). 108 Anthony Brewer, ‘Luxury and Economic Development: David Hume and Adam Smith’, Scottish Journal of Political Economy, 45.1(1998), pp. 78-98 (p. 80). 109 Melon, Political Essay, p. 148. 110 Reinert, ‘Johann Heinrich Gottlob von Justi’, pp. 57-58. 149 consumption of luxury would promote the progress of science. To Mandeville, “‘Luxury’ developed in tandem with the arts and sciences.”111 Mandeville wrote “our pride, sloth, sensuality and fickleness are the great patrons that promote all arts and sciences, trades, handicrafts and callings”.112 In 1774, Diderot wrote that there were two types of luxury: “bad luxury” was “bad work” made by a lot of toil and only affordable to the rich, and led “the decline of the sciences and of the liberal and mechanical arts”; but “good luxury” was “good work” made by modest labour and affordable to everyone, and make “the sciences and mechanical arts flourish”.113

Some of these Enlightenment thinkers held that luxury industries should be regarded as necessary industries, because the product innovations in the form of luxury would be outdated and become basic necessities or comforts, as the wealth of the nation increased. Mandeville believed that “nothing is ever completely superfluous”, including the luxury which used to be only enjoyed by kings.114 Mandeville wrote that “many things, which were once looked upon as the invention of luxury, are now allowed even to those that are so miserably poor as to become the objects of public charity”.115 Melon also wrote: “what was luxury in the days of our fathers, is now very common; and what is luxury among us, will not be so, to our posterity.”116 Justi held a similar view. In Grundsätze, Justi wrote that luxuries, which subsisted in “comforts and enjoyments”, were “merely a relative concept”, because “luxury” was the name given by the poor who could not afford those comforts and enjoyments therefore regarded them as superfluous products.117 Thus a very poor nation would regard the necessities of a rich nation, say “the use of wallpaper”, as luxury serving only the rich, but if such a nation was enriched, luxuries like wallpaper would become “a common decoration in the rooms of moderate well-off citizens”, which would become “the most necessary comforts of lives”.118 Meanwhile, in this enriched country, rich people would “use their knowledge to invent new and more expensive decoration of their rooms”, such as porcelain and gilded

111 Hont, ‘Commerce and luxury’, p. 392. 112 Bernard Mandeville; ed. by Douglas Garman, The Fable of the Bees or Private Vices, Public Benefits (London: Wishart & Company, 1934), p. 228. 113 Jeremy Jennings, ‘The Debate about Luxury in Eighteenth- and Nineteenth-Century French Political Thought’, Journal of the History of Ideas, 68.1(2007), pp. 79-105 (p. 87). 114 Hont, ‘Commerce and luxury’, p. 391. 115 Mandeville, The Fable of the Bees, p. 134. 116 Melon, Political Essay, p. 174. 117 Justi, Grundsätze, pp. 219-220; also Justi, Gesammlete, vol.2, p. 38. 118 Justi, Grundsätze, pp. 220-221; Justi, Gesammlete, vol.2, p. 39. 150 decorations.119 These Enlightenment thinkers had a dynamic view about economic expansion and people’s consumption, and believed that people’s consumption could be upgraded and new consumer goods always firstly appeared as luxuries.

Justi started his defence of the consumption of luxuries since Grundsätze, and he found that luxury or product innovation was important to economic development in two ways. Firstly, if the consumption of luxury was forbidden, “people will produce no more than the necessities and permited comforts”, so “the economy will be confined only in agriculture and the most basic and indispensable artisanries”, and the result was that the economy could only employ about a half of the population which the economy with luxury industries could employ.120 The similar idea could be found in Melon’s writings. Melon wrote that when a nation had people employed in agriculture and basic manufacturing, the rest population “should employ themselves in works of luxury”, because “there remains only this employment for them”. 121 Secondly, Justi found luxury stimulated the increase of people’s propensity to consume. As Justi wrote, “If the circulation of money is like blood of the body of the nation, then the luxury is like the warmth which the blood requires to maintain flowing and to finish the vigorous circulation.” 122 In Macht und Glückseeligkeit, Justi wrote that there were two principles making a nation prosperous: the great diligence and the great consumption of national products (großer Verbrauch der Landeswaaren), which was greatly promoted by the consumption of domestically produced luxurious and fashion products. 123 Considering that Justi and his contemporaries regarded luxury as the synonym for product innovation, the increase of propensity to consume and the expansion of employment discussed here should be understood as the effects caused by product innovation. In this way, in the first volume of Manufacturen und Fabriken, Justi concluded that luxuries were “also always necessities” to a nation.124 And it should be a principle of economic policy that “all manufactured products, no matter whether they are demanded as necessities, comforts, or merely pleasures, should be produced in the country as much as possible”.125 On the contrary to Adam Smith’s interpretation of

119 Justi, Grundsätze, p. 221; Justi, Gesammlete, vol.2, pp. 39-40. 120 Justi, Grundsätze, pp. 222-223; Justi, Gesammlete, vol.2, p. 41. 121 Melon, Political Essay, p. 175. 122 Justi, Grundsätze, p. 224. 123 Justi, Macht und Glückseeligkeit, vol.1, p. 540. 124 Justi, Manufacturen und Fabriken, vol.1, p. 8. 125 Ibid., p. 10. 151 mercantilism which believed that it protected only the interests of producers and sacrificed those of consumers, Justi explicitly advocated that consumers should live in comfortable even luxurious material lives.126

Justi’s and other Enlightenment thinkers’ defence of luxury appeared in a time when luxuries, especially mechnical and textile luxuries, to a certain degree embodied product innovations and technological progress. Recent researches about product innovations in eighteenth century England provide evidences to support the impression that a lot of the early modern product innovations as the result of technological progress were introduced to the market in the form of luxuries.127 These product innovations in the form of luxuries in eighteenth century Europe, primarily in England, were so intensive that British historian Maxine Berg creates the phrase “product revolution” to summarise this movement, and believes that “[i]nventing, producing, and consuming new European and especially British goods provoked changes in technologies, new uses for recently discovered materials and sources of energy, and the reorganisation of labor that became Industrial Revolution.”128 In his “luxury and capitalism” thesis, Werner Sombart believed that during the seventeenth and eighteenth centuries, many kinds of new manufacturing, which embodied the application of new materials, the introduction of new consumer goods, and the new organisation of production processes, emerged in Europe, and the representatives of them were the manufacturing of stocking, lace lingerie, piano, carriage, umbrella, lamp, mirror, porcelain, and wallpaper.129

In general, in Justi’s opinion, in the national market configured by diversified manufacturing sectors, the market would be expanded by the application of more productive machines to raise productivity of industries and increase products in circulation, and by the introduction of new consumer goods in the form of luxuries to increase people’s propensity to consume and increase the diversity of industries. In summary, Justi believed that the market would be expanded by product and process innovations. In this way, in Reglements, Justi clearly asserted that “a main condition of

126 See Smith, Wealth of Nations, vol.2, pp. 246-247. 127 See John Styles, ‘Product Innovation in Early Modern London’, Past & Present, 168(2000), pp. 124-169; Maxine Berg, ‘From Imitation to Invention: Creating Commodities in Eighteenth-Century Britian’, The Economic History Review, 55.1(2002), pp. 1-30. 128 See Maxine Berg, ‘The British Product Revolution of the Eighteenth Century’, in Reconceputalizing the Industrial Revolution, eds. by Jeff Horn, Leonard N. Rosenband, and Merritt Roe Smith (London: The MIT Press, 2010), pp. 47-64. 129 Sombart, Moderne Kapitalismus, vol.1, pp. 501-503. 152 the good progress of manufacturing, which its prosperity relies on, is to always search to give it new perfection”.130 Justi also proposed in the first volume of Manufacturen und Fabriken that continuous product and process innovations in manufacturing and constant evolution of industrial structure were the chiefest method of preventing the manufacturing of a nation from collapse. Justi believed it was “a natural course of the thing” that the manufacturing of a nation would emerge, then prosper, and eventually decline, but countermeasures could be taken to prevent this course.131 He found many causes would lead to the decline of manufacturing: the deterioration in financial credit and mintage, the rise of , the interruption of wars, the difficulty of acquiring raw materials, and the competition of foreign competitors and imitators.132 In general, Justi summarised that if the manufacturing of a nation stood still, the most prosperous would deteriorate and collapse. 133 Therefore, the general principle of the countermeasure was that “it should be achieved to increase and expand all parts of manufacturing”.134 According to this principle, the first thing that should be done was that “it should be continuously realised to have something new in the expansion of manufacturing”.135 And “this consists of not only the new inventions in colour, design and machine which we have discussed now and then, but also the entirely new kinds of manufacturing which have not been introduced in the country ever.”136 Justi found this principle was the best practiced by the English who “are making constant effort to introduce new kinds of manufacturing, despite that their industries have already been very prosperous.” 137 In this way, since Staatswirthschaft, Justi had constantly advocated that the state should promote innovations. As he wrote, “a wise government must seek to promote and to evoke the new inventions with all methods”, and “an intelligent nation will bring the spirit of invention to the full function”.138

These understandings supported Justi’s second reason of building and developing manufacturing, namely that manufacturing was innovation-intensive. Justi wrote: “It is probable that there are new inventions in no other things than in manufacturing.

130 Justi, Reglements, p. 24 131 Justi, Manufacturen und Fabriken, vol.1, p. 221. 132 Ibid., p. 221. 133 Ibid., pp. 221-222. 134 Ibid., p. 222. 135 Ibid., p. 222. 136 Ibid., p. 222. 137 Ibid., p. 222. 138 Justi, Staatswirthschaft, vol.1, p. 176; Justi, Manufacturen und Fabriken, vol.1, p. 135. 153

Metalworking and chemical industries are so inexhaustible of new inventions as their source chemistry itself; and thousands of variations, thousands of new designs, and thousands of new processes can be found in textile industries…indeed it can be said that the spirit of invention [Erfindungsgeist] is the soul of manufacturing.”139 To Justi, the reason why manufacturing was innovation-intensive was: “The process of natural products can happen in so many ways that almost countless differences can be made, so it is clear that an industrious and thoughtful nation can make thousands of inventions in manufacturing which other nations do not have.”140 This understanding that the manufacturing process on raw materials was highly diversified and therefore employed human creativity and novelty could be traced to Botero. Botero wrote: “nature gives a form to the raw materials and human industry imposes upon this natural composition an infinite variety of artificial form”.141

In this way, in Justi’s opinion, building manufacturing could configure the market, because manufacturing had linkage and clustering effects due to its detailed division of labour, and promoting product and process innovations in manufacuring could enlarge the market through increasing the productivity of industries, increasing the volume of goods in circulation, increasing the diversity of industries, and stimulating consumers’ propensity to consume. The system of national manufacturing sectors therefore was like an engine of the dynamics of expansion and improvement. In this way, cities, where manufacturing concentrated, were the centres of production and circulation in the economy. In Macht und Glückseeligkeit, Justi wrote that if the nation was like a living body, cities of which the purpose was “to absorb the products of peasants, to process them, and to make finished products” were “major arteries”, and “the money or rather movable goods, are like the blood, which circulate in arteries”.142 As the result of trading with manufacturing in cities, Justi believed that villages also received the energy of expansion and improvement. Justi firstly wrote the synergy between urban industries and rural industries in Grundsätze, where he wrote “the larger and more prosperous the cities in the country are, the better-off are the surrounding fields”.143 In the first volume of Manufacturen und Fabriken, Justi gave more detailed discussion about the synergy

139 Justi, Manufacturen und Fabriken, vol.1, p. 135. 140 Ibid., p. 4. 141 Botero, Reason of State, p. 153. 142 Justi, Macht und Glückseeligkeit, vol.1, p. 302; p. 305. 143 Justi, Grundsätze, pp. 30-31. 154 between cities and villages. He wrote that if labourers of manufacturing increased and if farmers could sell products to them at good price, “the diligence of farmers will be so awakened that they will try to cultivate their lands in the best ways and to produce in large scale”, and the sufficient supply of agricultural products would lower the cost of manufacturing.144 According to Erik Reinert, this understanding of the synergy beween manufacturing and agriculture was “originally attributable to Leibniz” and was developed in later German cameralists as well.145 Reinert believes that both eighteenth- century French Physiocracy and German cameralism tried to rectify the mistake in the seventeenth-century French Colbertism, which solely promoted manufacturing and neglected agriculture, but physiocracy went to the other extreme to claim that agriculture was the only productive sector, whereas cameralism saw the synergy between the two sectors. 146 It should be noted that Justi also believed that the productivity of agriculture could be also raised by introducing innovations. As he wrote in Staatswirthschaft, “If we want to learn how the land of a country could be improved correctly, we must learn from China, where a number of people have been given the inventions which could turn the highest peak of the mountain and the steepest rocks to fertile fields.”147

4.5 The Economic Significance of Science

Since it became a university science in 1727, German cameralism had been built on the philosophy of the Leibniz-Wolff school. New cameralists therefore played the role as the inheritors of Leibniz and Wolff to advocate the Industrial Enlightenment in Germany. Since Staatswirthschaft, Justi had been advocating that the state should promote science. In Staatswirthschaft, science was believed to be able to improve the moral conditions of subjects, amuse their intelligence, and provide the means to promote public welfare.148 This was a very general statement, and the discussion about promoting science was placed in the section about improving public moral condition. This was greatly changed in Grundsätze where Justi explicitly listed the promotion of sciences

144 Justi, Manufacturen und Fabriken, vol.1, pp. 41-42. 145 Reinert, ‘Johann Heinrich Gottlob von Justi’, p. 58. 146 Ibid., pp. 58-59. 147 Justi, Staatswirthschaft, vol.1, p. 140, also in Justi, Grundsätze, p. 85. 148 Justi, Staatswirthschaft, p. 107. 155 and crafts as one of the factors promoting the development of economy (other factors being: the maintainance of good social order, low price level, and low interest rate).149 And Justi gave more detailed explanation why sciences and crafts were improtant to the economy: “Sciences and crafts give artisans and workers the required capabilities and skills to make thousands of new inventions for the necessities and comforts of humans and to conduct the work of their trades with all perfection.”150 Here science was regarded as the source of innovation. In the first volume of Maufacturen und Fabriken, Justi regarded science, which he defined as “mechanics, metrology, chemistry, and natural history”, as a necessary input in production as well as the main force of improvement in manufacturing. 151 In Guten Regierung and Natur und Wesen, as capabilities and skills of citizens were listed as a component of internal strength of the nation, science was regarded as a crucial component of capabilities of citizens, and Justi explicitly pointed out that without people’s capabilities and skills there would not be any prosperous economy. 152 In Macht und Glückseeligkeit, Justi expanded his explanation about the economic significance of science, as he wrote, “there are very few industries which do not build on knowledge and could realise their perfection not through knowledge.”153 Justi found that chemistry provided the knowledge of “almost all skilful labour in the economy”, mathematics was indispensable to some industries, mechanics was inseparable to the whole economy, and without magnet and shipbuilding crafts, there would not be cross-ocean navigation.154

Justi also noted that manufacturing was particularly closely related to science. As he wrote in Manufacturen und Fabriken: “Manufacturing industries have an undoubtedly strong connection with science; and the progress of these industries probably relies more on the condition of knowledge of the nation than people generally think…It is Mr. Hume who says it cannot be imagined that a nation which is completely ignorant in astronomy could make a piece of perfect cloth. It seems that astronomy has very limited influence on making a piece of cloth, but it is certain that the complete ignorance in science mainly indicates a very bad condition of knowledge of the nation, and therefore

149 Justi, Grundsätze, pp. 169-177. 150 Ibid., p. 176. 151 Justi, Manufacturen und Fabriken, vol.1, p. 40. 152 Justi, Guten Regierung, p. 90. 153 Justi, Macht und Glückseeligkeit, vol.2, p. 54. 154 Ibid., pp. 54-55. 156 the nation has not entirely broken away from barbarism. It is science that cultivates and enlightens the genius [Genie] and intelligence of a nation; and the prosperous condition of science also has its influence on the rationality of those who are not engaged in science. A nation which has prosperous science will always have more insightfulness, genius, capability, and power of invention [Erfindungskraft] than the others of which science is in bad condition; and the former nation will be able to bring its manufacturing to the perfection more than the others.”155 Hume’s Of Luxury was quoted again here. In that essay Hume wrote that one of the advantages of “industry and refinements in mechanical arts” was “that they commonly produce some refinements in the liberal arts” and both “indusry” and “liberal arts” could not be perfected without the perfection of the other. 156 Also in this essay, Hume explicitly attributed the improvement of productivity of the economy to the progress of science and industries, as he wrote that the boundaries of European countries were as they had been hundreds years ago, yet the “power and grandeur” of European countries greatly increased, and the reason was “nothing but the increase of art and industry.”157

The synergy between manufacturing and science had been a commonly shared idea among new cameralists since the birth of this school of thought. Dithmar wrote that in order to cultivate skilful artisans in the country, “those youth in schools should not stop their learning at writing and computing skills but should continue to learn instruments, materials, and all crafts” and in order to facilitate this industrial education, the nation should build “artisanal schools, manufacturing houses, mechanical work schools, and manufacturing academies with skilful masters and experts in chemistry, mechanics, and natural sciences [natürlichen Wissenschafften]”.158

The Industrial Enlightenment had the central importance in Georg Heinrich Zincke’s cameral science. Zincke defined his cameral science as “the scholarly and practical science” to understand all industries, to apply this knowledge to good Policey, and “to make the economy of the country always progress”, with the aim to preserve and increase the wealth of the prince and the nation.159 Zincke generally classified all

155 Justi, Manufacturen und Fabriken, vol.1, p. 39. 156 Hume, Political Discourse, p. 26. 157 Ibid., p. 29. 158 Dithmar, Einleitung, pp. 199-200. 159 Georg Heinrich Zincke, Anfangsgründe der Cameralwissenschaft, vol.1, prt.1 (Leipzig: Carl Ludwig Jacobi, 1755) p. 7. 157 industries into urban and rural industries. 160 Urban industries consisted of “the guidance, education, and practice of sciences, crafts, artisanries, manufactories, factories as well as all kinds of commerce and trade”.161 Among them all, “the specific activity of educating and training others and the specific practice of sciences and crafts make the main industry in cities.”162 To Zincke, urban industries were primarily about spreading useful knowledge. The reason for this was that Zincke found that sciences and crafts provided the skills “which underlie other industries especially the urban industries.”163 For Zincke, the significance of the activities of sciences and crafts lay in: 1) cultivating skilful people; 2) producing good books to spread knowledge; 3) producing “new inventions in all sciences, crafts, artisanries, urban and rural industries”; 4) promoting the industries relevant to book printing, binding, and selling; 5) cultivating good public servants; 6) maintaining good mintage, credit, public security and social harmony; 7) making cities populous and prosperous through building education facilities.164 To Zincke, the primary function of cities was generating and spreading useful knowledge and skills. However, Justi was against Zincke’s opinion and believed that manufacturing was the primary urban industry and researching and teaching sciences came into being because of the demand of manufacturing but not vice versa.165

In Bielefeld’s system of Policey, “the first principle of statecraft is that a nation must be made civilised, and this means that their knowledge and intelligence must be expanded and their hearts must be cultivated by the gentle custom”.166 The civilised nation would have “diversified demands”, and “these demands are the source of diligence and in turn the mother of decent crafts, sciences, mechanical crafts and commerce”.167 According to this principle, the state should primarily spread useful knowledge in society. As Bielefeld wrote, “It is fatuous if one wants to teach farmers or in small schools the philosophical matters, foreign languages, or abstract sciences. But every citizen can righteously demand that he can be taught about his duty against the highest being, against himself, and against the civil society, and about certain,

160 Ibid., p. 32. 161 Ibid., p. 34. 162 Georg Heinrich Zincke, Anfangesgründe der Cameralwissenschaft, vol.1, prt.2 (Leipzig: Carl Ludwig Jacobi, 1755), p. 1774. 163 Ibid., p. 1778. 164 Ibid., pp. 1793-1794. 165 Justi, Macht und Glückseeligkeit, vol.1, p. 306. 166 Bielefeld, Lehrbegriff der Staatskunst, vol.1, p. 63. 167 Ibid., p. 62. 158 though imperfect, crafts which he cannot live without in public life.”168 Bielefeld’s hero of civilising a nation was Czar Peter I, who modernised Russia according to the patterns of Western European economy and society.169

In general, there seemed to be a consensus among Justi and his contemporary German new cameralists that skills and sciences were regarded as an important input to the improvement of economy, especially that of manufacturing, and they all proposed a system of policies and institutions to research and spread useful scientific knowledge in order to improve the economy. German new cameralists were the advocates of the German Industrial Enlightenment.

4.6 Directing the Private Initiative for Economic Development

In Macht und Glückseeligkeit, Justi believed that “the most important [wichtigste]” factor to promote the economy was “the genius of nation towards industriousness and skills in manufacturing, tillage, and commerce” (das Genie der Nation zur Arbeitsamkeit und Geschicklichkeit in denen Manufacturen, in dem Ackerbau und Commercien).170 The importance of this industrial spirit of the nation consisted of the following aspects. Firstly, the real wealth of the nation was the great amount of all kinds of products, and this could not happen without the industriousness and skills of the people.171 Secondly, the international competitiveness of national products relied on “enjoyable inventions” and the “diversity of labour” which were realized through industriousness and skills of labourers.172 Thirdly, generating innovations required the genius of industriousness and skills, without which people would satisfy themselves with “traditional industries and traditional ways of production”, nobody would contemplate “inventing new and advantageous ways of production”, and nobody would make the effort to learn skills.173

Because Justi believed human nature was self-interest, he thus believed there were two “mainsprings” from which the industrial spirit originated: people’s desire for

168 Ibid., p. 64. 169 Ibid., p. 61. 170 Justi, Macht und Glückseeligkeit, vol.1, pp. 685-686. 171 Ibid., p. 687. 172 Ibid., p. 688. 173 Ibid., p. 687. 159 comfortable and enjoyable lives and their desire for advantage (Vorzug).174 However, Justi did not believe desires alone would generate industriousness and skills. As he wrote, “He would know humans very little who claims that they have the desire to work. All they have is the natural desire to make their lives comfortable and enjoyable.”175 In this way, human desire should be led to the direction through which the industrial spirit was stimulated and comfortable lives could only be acquired by industriousness and skills. As Justi wrote, “If there is no other way available in the country for people to provide themselves with wealth, the means of comforts, and enjoyments of lives than through skills and labour, skills and industriousness will arise as the result of people’s natural desire for their comforts and enjoyments of lives.”176 However, “as long as people see more profit in other livelihoods than conducting commerce and industries, they will always prefer those easeful livelihoods, and will steal their diligence and money from industries.”177

And this demanded state intervention. Justi wrote: “It relies on the government to lead the desire of people for advantages in such ways that a motivation to skills and industriousness is generated”, and “nothing is more necessary than that there should be no other way available in the country to earn advantages other than through skills and industriousness.”178 In this way, it was obvious that Justi was absolutely against rent- seeking and wanted to direct people’s attention, capabilities, and resources to the development of national productive endeavours and to eliminate all economic activities which made profit not through skills and industriousness. In this way, in Macht und Glückseeligkeit, Justi suggested that the state should neither grant monopoly to anyone nor monopolise any industry.179 In Manufacturen und Fabriken, he also advocated that the state should promote the competition among producers. He wrote: “Where many single factories [einzelne Fabrikanten] compete with each other, this jealousy and hatred against each other have no harmful effect…their hatred has many good effects, namely they seek to surpass each other through their diligence, power of invention [Erfindungskraft], and better products, in order to acquire the market, and this is what

174 Ibid., p. 689. 175 Ibid., p. 689. 176 Ibid., pp. 689-690. 177 Justi, Grundsätze, p. 155. 178 Justi, Macht und Glückseeligkeit, vol.1, p. 690. 179 Ibid., pp. 752-758. 160 the state wants.”180

Justi believed that as long as human desire was directed to the correct channels of wealth creation, the state should let the private initiatives do as it pleased, and in this circumstance it was only necessary for the state to “remove the obstacles which hinder the free function of those mainsprings”.181 This was a concretisation of his general principle of Policey, as discussed in the last chapter, in the field of industrial policy. Here Justi proposed a division of labour between state intervention and private initiative: the state was responsible for directing private initiative to the channels of earning wealth, namely the economic activities, through which wealth could only be earned through industriousness and skills; and private initiative was responsible for operating within these channels of earning wealth for private individuals themselves as well as creating wealth for the nation. According to this logic, the primary function of state intervention in Justi’s economic thought was to construct the correct channels of earning wealth, namely to construct the industrial structure which stimulated and employed people’s industriousness, skills, and power of invention. And building and developing manufacturing was the method of directing people’s desire to the correct channels of earning wealth, because “if manufacturing should reach its perfection, the genius, desire, diligence, and mindfulness are needed.”182 Justi wrote: “It should not be ignored that people are employed through manufacturing in a nutritious way. A country which has no manufacturing will only have sleepy, sluggish, and inactive people. They are driven by agriculture, animal farming, and indispensable artisanries along the old, slow, and careless way so negligently that fields and villages will be in poverty and misery”.183

On the aspect of regarding manufacturing as the correct channel to direct people’s desire, Justi was probably also influenced by Hume and other Enlightenment economists. Hume wrote: “laws, order, police, discipline; these can never be carried to any degree of perfection, before human reaction has refined itself by exercise, and by an application to the more vulgar arts, at least, of commerce and manufactures.”184 In an economic

180 Justi, Manufacturen und Fabriken, vol.1, p. 150. 181 Justi, Macht und Glückseeligkeit, vol.1, p. 690. 182 Justi, Manufacturen und Fabriken, vol.1, p. 38. 183 Ibid., p. 21. 184 Hume, Political Discourses, p. 30. 161 work published in 1770, the German scientist Johann Jacob Meyen (1731-1797) wrote “it is known that a primitive people does not improve their customs and habits later to find useful industries, but the other way around”.185 For these economists, “the change of mentality occurs with the change of mode of production.”186 To improve people’s mentality, the industrial structure should be improved first, and in these thinkers’ mind, a manufacturing economy was the aim of the improvement of industrial structures.

4.7 Conclusion

It should be noted that Justi’s economic thought unfolded on the premise that the country was an “empty land” where there was neither city nor village, no economic activity, no market, no order of society, no institution, but only wilderness in its natural state. Therefore Justi’s textbooks of Policey all started from draining lakes and swamps, clearing thick forests, cultivating lands, then building cities and villages, breeding and attracting population, establishing property ownership, then building primary and manufacturing industries to produce goods, facilitating the circulation of goods, then promoting the prosperity of this economy, and finally preventing it from declining. Grundsätze established two elements of economic Policey: building industries to produce goods and promoting the prosperity of industries. Macht und Glückseeligkeit classified four elements: building industries, organising (Zusammenhang) the whole economy, promoting the economy, and preventing the decline.

Although Justi’s thoughts changed from Staatswirthschaft to Macht und Glückseeligkeit, the mainbody of his theory of manufacturing and national intellectual capital was constant. In this theory, the significance of manufacturing and national intellectual capital could be identified in all the links of Justi’s economic Policey. Manufacturing had the detailed division of labour and strong linkage and clustering effects, so building diverisfied manufacturing sectors would configure the national market. The national system of manufacturing industries would form a coordinated entirety and synergise with primary sectors, which would be the basis of the good connection of the entire

185 Erik Reinert, ‘Full Circle: Economics From Through Innovation and Back into Mathematical Scholasticism: Reflections on a 1769 Price Essay: “Why is it that economics so far has gained so few advantages from physics and mathematics”’, in The Visionary Realism of German Economics: From the Thirty Years’ War to the Cold War, ed. by Rainer Kattel (London: Anthem Press, 2019), pp. 555-568 (p. 562). 186 Reinert, How Rich Countries Got Rich, p. 290. 162 economy and the vigorous circulation. In Grundsätze, sciences and crafts were proposed as a crucial factor of promoting the ecnomy. In Macht und Glückseeligkeit, the industrial spirit of industriousness and skills was placed as the chiefest means to promote the economy. Both essentially expressed that the national intellectual capital was the fundamental impetus of economic development. Industrial spirit would promote sciences, invention, and other productive capabilities of the people. From the development of sciences, innovations originated. Process innovation increased the productivity of industries and enlarged the volume of circulated goods, which enlarged the demand for every industry because the circulation was essentially the circulation of goods. Product innovation in the form of luxuries would stimuate consumers’ propensity to buy and increase the diversity of industries. As the economy expands, luxuries would become plain necessities and comforts, but new luxuries would emerge. This economy would be full of dynamics. New products, new crafts, new machines, and whole new industries would constantly appear, so the economy would be far from the risk of decline. This was Justi’s model of economy of public happiness with a focus on manufacturing driven by innovations. This model essentially envisaged the economic expansion realised by the evolution of industrial structures, products and processes innovations and technological progress.

A recent chapter about Justi’s manufacturing theory summarises that manufacturing was advocated for producing necessities and comforts and crystallising high added value. 187 Yet this thesis finds that Justi’s manufacturing theory was much more complex. Justi identified four reasons for building manufacturing: 1) manufacturing had very detailed division of labour so it had strong linkage and clustering effects; 2) manufacturing was innovation-intensive; 3) manufacturing was science-based; 4) manufacturing employed people’s skills and industriousness. Justi’s theory of manufacturing went beyond the advocacy of “manufacturing multiplier”.

Through writing Manufacturen und Fabirken and translating Descriptions des Arts et Métiers, Justi became familiar with contemporary technological progress in manufacturing. He was well aware of the power of manufacturing, innovation, and

187 Guillaume Garner, ‘Cameralist Theoretical Writings on Manufacturing and Administrative Practice in the German Principalities: Conflict and Coherence’, in Cameralism in Practice: State Administration and Economy in Early Modern Europe, eds.by Marten Seppel and Keith Tribe (Woodbridge: The Boydell Press, 2017), pp. 133-154 (pp. 135-138). 163 science, even though these areas were mostly in embryonic forms at his time. Based on this awareness he proposed a vision of how a manufacturing and innovative economy could be the basis of public happiness. According to Mokyr, economic growth between 1450 and 1750 was primarily driven by the expansion of commerce and markets, the reduction of cost of transaction, and the improvements of the allocation of resources, with “technology providing the auxiliary source of power”.188 However since around 1750, the economic growth driven by technological progress started to become noticeable.189 Justi, who stood at the forefront of contemporary technological progress, seemed to have noted and theorised the pattern of economic growth driven by industrialisation, product and process innovation and technological progress. It is pointed out that an important characteristic of mercantilism and cameralism was the vision and rationalised planning for a better future of the economy. 190 And Justi envisaged the economy of public happiness to be realised by the commencing manufacturing-centered and innovation-driven economy.

188 Mokyr, The Enlightened Economy, p. 5. 189 Ibid., p. 5; pp. 42-43 190 See C. H. Wilson, ‘Trade, Society and the State’, in The Cambridge Economic History of Europe from the Decline of the Roman Empire: Vol.IV The Economy of Expanding Europe in the Sixteenth and Seventeenth Centuries, eds., by E.E. Richt and C.H. Wilson (Cambridge: Cambridge University Press, 1967), pp. 487-576; Philipp R. Rössner, ‘Capitalism, Cameralism and the Discovery of the Future, 1300s-2000s: Europe’s Road to Wealth’, History of Political Economy, forthcoming. 164

Chapter Five. Justi’s Proposals for Manufacturing and Innovation Policies

For Justi, the key to realising the economy of public happiness was to build diversified manufacturing sectors and to promote product and process innovations in manufacturing. This chapter will study Justi’s proposals of manufacturing and innovation policies. In this chapter, readers will find that some older scholars of the German Historical School of Economics are quoted. By doing this, this thesis does not have any intention to revive or justify or rely on any outdated tradition. The reason for doing so is because in those scholar’s works, this thesis finds sound interpretations of Justi’s policy proposals from the perspective of highlighting the entrepreneurial function of the state, and this thesis finds that this kind of interpretation is very rare, if not completely extinct, in more recent literature. In this way, this thesis finds it is worthy to mention these interpretations to present that there once was such a way of understanding of Justi’s policy proposals.

Based on Justi’s own words, it seemed that his manufacturing and innovation policy proposals were built on the basis of his knowledge about the policies of Jean-Baptiste Colbert (1619-1683) in France and those of Frederick William I in Prussia, both of whom were the most frequently mentioned examples of good economic policies in Justi’s textbooks. In general, Justi’s proposals inherited some of their policies, rejected some, modified some, and added some of his own. In Staatswirthschaft, Justi believed Colbert was “the greatest minister of finance ever known” and “a true cameralist”, and Frederick William I was “a very great householder”.1 These judgements continued in his other textbooks. A once popular economist, Ernst Klein, even believed that Justi’s economic policy proposals summarised Prussian economic policies and his textbooks had the intention to spread the Prussian model of economic policy.2

It is known today that Colbert’s industrial policies aimed at maximising the number of manufacturing and primary sectors, making them technologically advanced and internationally competitive, and forming a national market based on the exchange among those sectors. 3 Colbert’s industrial policies covered at least the following

1 Justi, Staatswirthschaft, vol.1, p. 18; pp. 20-21. 2 About this viewpoint see Ernst Klein, ‘Johann Heinrich Gottlob Justi und die preußische Staatswirthschaft’, Vierteljahrschrift für Sozial-und Wirtschaftsgeschichte, 48.2(1961), pp. 145-202. 3 About Colbert’s economic policies, especially industrial policies, see, A. J. Sargent, The Economic Policy of Colbert (New York: Longmans, Green, and Co., 1899), especially pp. 44-64; Charles Woolsey Cole, Colbert and A 165 aspects: 1) attracting skilful manufacturers and artisans from foreign countries to transplant manufacturing in France and prohibiting them from emigrating; 2) granting privileges, such as temporary monopoly over certain industries in certain regions, to entrepreneurs who proved to be able to introduce new products and new crafts, encouraging them to build large-scale manufactories, and granting their manufactories the title “manufacture royale”; 3) establishing guilds led by the state to organise all manufacturers and supervise the order of manufacturing processes and the quality of products; 4) promulgating manufacturing regulations to uniform the quality of products, spread efficient technologies, and build discipline among workers; 5) giving preferential treatment to infant manufacturing, such as temporary subsidies, tax exemptions, temporary tariff protection, and interest-free loans; and 6) abolishing or lowering domestic tolls, investing in building roads and canals. Colbert’s industrial policies reflected French economic thinkers’ constant proposals to develop a self- sufficient manufacturing economy since Barthélemy Laffemas (1545-1611), Duke of Sully (1560-1641), and Antoine de Montchrétien (1575-1621). 4 Before Colbert, England had already applied strategies which were similar in many ways in the sixteenth century. These strategies, known as the “Tudor Plan”, were practiced since Henry VII (reign 1485-1509), and intended to build woollen textile industry through policies like tariffs on the export of wool, temporary monopoly and tax exemption of infant woollen manufactories, and attracting manufacturers from the Netherlands and North Italy.5

The rise of French manufacturing and the decline of that of Germany provoked German old cameralists, among whom Hörnigk was the most obvious example.6 Colbert’s policy system also spread to Germany. In 1685, two years after Colbert died, the Edict of Nantes was revoked, which prohibited Protestantism in France, and the Edict of Potsdam, which encouraged French Protestants to relocate in Brandenburg-Prussia,

Century of French Mercantilism, vol.II (New York, Columbia University Press, 1939), especially, pp. 132-548; John Henry Bridges, France under Richelieu and Colbert (London: Macmillan and Co., Limited, 1912); Gustav Heinrich Hecht, Colbert's Politische und Volkswirtschaftliche Grundanschauungen (Tübingen: J. C. B. Mohr, 1898); Pierre Clément ed., Lettres, Instructions et Mémoires de Colbert, vol.2, Industrie, Commerce (Paris: Imprimerie Impériale, 1863); Ines Murat, Jean-Baptiste Colbert (Charlottesville: University Press of Virginia, 1984). 4 Magnusson, Political Economy of Mercantilism, pp. 69-78. 5 Daniel Defoe, A Plan of the English Commerce (London: Printed for Charles Rivington, 1728); W.J. Ashley, ‘The Early History of the English Woollen Industry’, Publications of the American Economic Association, 2.4(1887), pp. 13-85; Susan Rose, The Wealth of England: The Medieval Wool Trade and its Political Importance, 1100-1600 (Oxford: Oxbow, 2018). 6 See Hörnigk, Austria Supreme, pp. 151-153. 166 followed. The result was that 20,000 Calvinists from France and Palatinate settled in Brandenburg and Magdeburg by the end of the seventeenth century, and transferred manufacturing to the Great Elector’s territories.7 His grandson, Frederick William I, who insisted that a monarch should personally control the army and state finance, implemented the industrial policies in many ways similar to those of Colbert in order to promote Brandenburg woollen cloth-making industry.8 First, leveraging the demand of the Prussian army as the basic market for national cloth, Frederick William I ordered that every Prussian soldier should be supplied with two sets of uniforms; and people were encouraged to follow the example of the army to purchase only the national cloth, so that no foreign cloth was allowed to be consumed in the country. Second, the export of raw wool was prohibited. Third, technical regulations and tight inspections on woollen products were established to instruct cloth makers about the best processes of production to improve the quality of woollen products. Fourth, a large-scale state-run woollen manufactory, the Royal Lagerhaus (das Kgl. Lagerhaus), was built in Berlin, which Sombart believed employed “thousands of industrious hands” and was the largest cloth-making manufactory in contemporary Germany.9 Fifth, urban commissaries were ordered to report monthly statistical tables to monitor the flow of all kinds of goods and conditions of manufacturing and trade, in order to provide reference for government’s policy of industrial production and commerce.10

According to Justi, a Collegium of Manufacturing (Manufacturcollegium) should be established in the central government of a state to take charge of manufacturing and innovation policies and responsible for “the establishment and direction of manufacturing”.11 This proposal continued the advocacy of Hörnigk and Schröder to establish the special department of economic affairs independent from the fiscal department. The Collegium of Manufacturing should have Manufacturing Inspectors

7 Carsten, ‘Rise of Brandenburg’, p. 551. 8 Ranke, Memoirs, vol.1, pp. 145-147; pp. 439-442; about Frederick William I’s instruction to General Directory on manufacture and commerce policy, see Schmoller, Krauske, and Loewe, die allgemeine Staatsverwaltung, vol.3, pp. 595-599; also see Carl Hinrichs, Die Wollindustrie in Preußen unter Friedrich Wilhelm I (Berlin: Verlag Paul Parey, 1933) and Hugo Rachel, Die Handels-, Zoll-, und Akzisepolitik Preußens 1713-1740 (Berlin: Verlag Paul Parey, 1922); also Gothelf, ‘the beginnings of Prussian Absolutism’, p. 51. 9 Werner Sombart, Der moderne Kapitalismus, vol.2 (Munich: Duncker & Humblot, 1919), p. 771; Ranke, Memoirs, vol.1, p. 146. 10 With reference to Frederick William I’s policy, Justi recommended the similar statistical work to be done in order to rationalise the administration of manufacturing and trade, see Justi, Grundsätze, pp. 102-104; Manufacturen und Fabriken, vol.1, pp. 72-74. Also see, Bruford, ‘Rise of Prussia’, p. 300. 11 Justi, Staatswirthschaft, vol.1, p. 274; Justi, Grundsätze, pp. 117-118; Justi, Manufacturen und Fabriken, vol.1, p. 120; Justi, Macht und Glückseeligkeit, vol.1, pp. 458-459. 167

(Manufacturinspector) to supervise manufacturing affairs in the cities where there were considerable concentration of manufacturing activities. 12 Colbert set up an administrative team having the same title, inspecteurs des manufactures, to oversee guilds on behalf of the state.13 In every city, a Manufacturing Court should also be established to arbitrate all disputes related to manufacturing, and the court should be constituted by Manufacturing Inspector, jurists, and owners of manufactories (Manufacturherren). 14 In Justi’s proposal, the toolbox of the Collegium of Manufacturing included state-run manufacturing enterprises, Manufacturing Houses (Manufacturhäuser), Manufacturing Regulations (Manufactur-und Fabriken- Reglements) and corresponding inspection agencies (Beschauanstalten), and a Manufacturing Academy.

5.1 Building manufacturing: Industrial Plan and Enterprise Policy

As discussed in last chapter, Justi’s Policey unfolded on the premise of “empty land”. In this way, Justi’s proposal of manufacturing policies worked on the premise that “a nation has little or no manufacturing”.15 His manufacturing policy proposal started from building entirely new manufacturing sectors in the country. Although “all and every kind of manufacturing which is possible” should be built in the country, in practice the state had to start by considering “which one sector of manufacturing deserves priority above others”.16 The first task of the Collegium of Manufacturing was therefore to make an industrial plan.

In Manufacturen und Fabriken, Justi proposed the following principles for making the industrial plan. Firstly, the most demanded manufacturing sectors should be built. The degree of being demanded was measured by the trade deficit if those sectors did not exist.17 By this standard, Justi believed that silk textile industry required particular

12 Justi, Staatswirthschaft, vol.1, p. 269; Grundsätze, p. 117; Justi, Macht und Glückseeligkeit, vol.1, p. 13 Heckscher, Mercantilism, vol.1, pp. 153-155. 14 Justi, Grundsätze, pp. 117-118. According to the statistical table Justi designed for the survey of manufacturing, the organisation of large manufacturing enterprises consisted of “owners” (Manufacturherren, Entrepreneur, Gesellschaften), labourers who worked “within the workshops” including supervisors, masters, journeymen, apprentices, side-labourers, and helpers. See Justi, Macht und Glückseeligkeit, vol.1, the table between page 490 and 491. 15 Justi, Manufacturen und Fabriken, vol.1, pp. 74-75. 16 Ibid., p. 71. 17 Ibid., pp. 71-72. 168 attention, because Justi found it was the contemporary fashion for “people of all classes and estates” to wear silk wares.18 Silk textile industry was in many ways an early modern “strategic industry” in the sense that silk wares were the most important luxurious textile, the supply of their raw materials was by nature very low, yet its demand was high, it crystallised high value-added, and its production was labour- intensive and highly skill-demanded, so that many people could be employed in good- quality occupations in silk textile industry, and the tax base of the state could be greatly enlarged.19 Measured by the degree of necessity and the size of demand, apart from silk textile industry, Justi found that woollen textile industry, especially worsted industry which supplied fine clothings, and iron- and steel-working industry, which supplied tools and equipment (Geräthschaften) to all economic activities, should be particularly promoted. 20 Secondly, manufacturing providing the largest volume of employment should be built. According to Justi, “Occupations and livelihoods of the people is what deserves chief attention after the outflow of money.”21 Justi believed it was beneficial and indispensable to build those manufacturing sectors which had no foreign market, because “a strong domestic consumption, without a single product going in foreign trade, has a very strong benefits for population and the prosperity of economy.”22 Thirdly, manufacturing sectors supporting high wages should be built. Justi wrote: “The higher the wages of labour in a manufacturing sector could rise, the more labourers could find livelihoods in that industry, the more this sector deserves the attention of government to be built in the country”.23 By this standard, Justi found that metal-framed mirror industry, where “the greatest part of the price of mirror is the wages of labour”, should be built.24 Justi believed it was unwise to import those manufactured products which “are so expensive but their raw materials cost so little that nearly all of the value of products subsists in that of labour.”25

18 Justi, Staatswirthschaft, vol.1, p. 256; Justi, Grundsätze, p. 119; Justi, Manufacturen und Fabirken, vol.2, pp. 141-143. 19 See Karolina Hutková, The English East India Company’s Silk Enterprise in Bengal, 1750-1850: Economy, Empire and Business (Suffolk: Boydell Press, 2019), pp. 17-40; Schmoller, Mercantile System, pp. 84-85; also see Otto Hintze, Die Preussische Seidenindustrie im 18. Jahrhundert und ihre Begründung durch Friedrich den Großen, vol.1-3 (Berlin: Paul Parey, 1892). 20 Justi, Staatswirtschaft, vol.1, p. 261, p. 263; Justi, Grundsätze, pp. 119-120, p. 121; Justi, Macht und Glückseeligkeit, vol.1, pp. 431-432. 21 Justi, Manufacturen und Fabriken, vol.1, pp. 71-72. 22 Justi, Manufacturen und Fabriken, vol.2, p. 123. 23 Ibid., p. 397. 24 Ibid., p. 397. 25 Ibid., p. 435. 169

After selecting manufacturing, the state should also plan where to place them. Justi believed that manufacturing should be planted near the supply of raw materials and mass of labourers and the convenient shipping.26 Justi believed that the capital city should be avoided as the basis of manufacturing, because the capital city had expensive cost of living.27 Justi favoured urban industries and urbanisation, but he was vigilant about the size of cities. In Grundsätze, he wrote that the unlimited expansion of urban population would put pressure on housing, then rents rose, and so would the cost level.28 Justi’s ideal size of city should have no more than 30,000 residents.29 For context, in 1750, a city of this size would be quite large but far from the largest in central Europe.30 In 1750, in the Holy Roman Empire, there were 40 cities out of more than three thousands of cities and towns with more than 10,000 inhabitants, and half of them had more than 20,000 inhabitants but only seven (Vienna, Berlin, Hamburg, Dresden, Prague, Breslau and Königsberg) had more than 50,000. 31 In the first volume of Manufacturen und Fabriken, Justi expressed that the balanced regional development was important. He believed it should be a principle of economic policy to spread livelihoods and circulation of money evenly everywhere in the country. 32 It was believed that a nation was like human body, if the blood stuck in one part of the body, the body would be unhealthy; similarly if some parts of the country lacked circulation and livelihoods, the nation was also unhealthy.33 Justi warned that manufacturing had a tendency to concentrate in large cities, but a wise government should resist it.34

Since Staatswirthschaft, Justi had started to propose an industrial plan for contemporary Germany.35 Firstly, Justi believed Germany should be a manufacturing rather than a commercial nation, because most parts of Germany were not well-placed for maritime trade and had no industry as the basis of foreign trade.36 Secondly, between two contemporary staple manufacturing sectors, textile and metalworking, Justi believed

26 Justi, Manufacturen und Fabriken, vol.1, p. 80. 27 Ibid., pp. 81-82. 28 Justi, Macht und Glückseeligkeit, vol.1, p. 341. 29 Ibid., p. 341. 30 See Jan de Vries, European Urbanization 1500-1800 (London: Methuen & Co. Ltd, 1984), pp. 28-48; Peter Clark, European Cities and Towns: 400-2000 (Oxford: Oxford University Press, 2009), p. 8, pp. 120-125; 31 Schilling and Ehrenpreis, Die Stadt, pp. 4-9. 32 Justi, Manufacturen und Fabriken, vol.1, pp. 82-83. 33 Ibid., pp. 82-83. 34 Ibid., p. 83. 35 Justi, Staatswirthschaft, vol.1, pp. 256-265; Justi, Grundsätze, pp. 119-121; Justi, Manufacturen und Fabriken, vol.2. 36 Justi, Manufacturen und Fabriken, vol.1, preface, page number unspecified. 170

Germany should be a metalworking nation rather than a textile nation, because all European nations were busy developing textile sectors but many nations lacked mineral resources which Germany was rich of, so metal products should be “the source of our national products for export”.37 Justi believed that Germany should build and protect basic textile sectors (fabricated wares of wool, linen, cotton and silk) to reduce money outflow, but fully develop and export metal and chemical sectors (gold and silver working; brass working and forging; iron and steel working; porcelain; glass working; gunpowder; alums; and dye) to earn trade surplus. 38 Among metalworking and chemical sectors, iron and steel working industries (Eisen- und Stahlfabriken) were “the most necessary”, because iron and steel had the widest range of usage, and the most important and the most necessary sectors of iron and steel working were iron smelting and forging, wrought iron making, steelmaking, firearms and cold arms making, and steel tools and equipment making. 39 Erik Reinert summarises that the economic strategy of the early modern European nations commonly aimed to achieve a combination of three forces: “large and diversified manufacturing and craft sectors”, “profitable overseas trade”, and the control of “an important market for a raw material” (for example, Venice controlled salt, the Netherlands controlled herring, and England controlled wool). 40 In Justi’s industrial plan for Germany, he advocated a manufacturing system based on Germany’s control over mineral, especially iron, resources.

After making the industrial plan, the government should consider which kind of entrepreneurs should operate manufacturing enterprises. Justi observed that in many German states of his time, the ruler was “large merchant, owner of manufactories, pharmacist, wine brewer, brandy distiller, shepherd, and so on” in his realm.41 Justi

37 Justi, Manufacturen und Fabriken, vol.1, preface, page number unspecified; Justi, Manufacturen und Fabriken, vol.2, p. 206. 38 See Justi, Manufacturen und Fabriken, vol.2, pp. 206-209. Justi referred manufacuring sectors as “Manufacturen und Fabriken”. By Manufacturen, Justi meant “those processes which operate merely with hand without fire or hammer”; Fabriken were “those processes to which fire and hammer, or similar tools, are applied”. To Justi these two words were “generally the same and used indifferently”, see Justi, Manufacturen und Fabriken, vol.1, pp. 5-6. In the second volume of Manufacturen und Fabriken, only textile sectors were listed under Manufacturen, and Fabriken included metalworking and chemical sectors. This differentiation between Manufacturen and Fabriken was typical in eighteenth-century German economic linguistics, see Sombart, Der moderne Kapitalismus, vol.2, pp. 731-732. In Justi's books, he always used “Manufacturen und Fabriken” to represent the whole manufacturing sectors. 39 Justi, Manufacturen und Fabriken, vol.2, pp. 307-324. 40 Reinert, How Rich Countries Got Rich, pp. 78-79. 41 Justi, Manufacturen und Fabriken, vol.1, p. 85. 171 found this situation problematic. Firstly, princes often raised the price of the products of their enterprises and left people poor and miserable.42 Secondly, managers and labourers in state enterprises cared about only their own interests and were not motivated to operate state enterprises as diligently as they would do with their own enterprises.43 Justi claimed that he had witnessed many cases of the failure of state enterprises.44 In this way, he concluded that “the ruler should promote rather than participate” in industries.45 However, Justi never intended to completely exclude the state from participating in manufacturing. In Staatswirthschaft and Manufacturen und Fabriken, he listed three exceptions where the state should directly operate manufacturing enterprises. 46 Firstly, the state should run armament enterprises, because it would always be cheaper and have less corruption for the state to produce its own military supplies than to purchase from private vendors.47 Secondly, the state could run enterprises producing gold and silver luxuries for the consumption of the court.48 Thirdly, which was the most important to economic development, the state should act as “entrepreneur of last resort” to invest and operate enterprises in new manufacturing when no private entrepreneurship could be found. According to Justi: “A wise ruler needs to build certain manufacturing sectors at his own cost, when nobody wants to do the same” and “this is a laudable measure and enterprise, especially when it is hard to find entrepreneurs in the country”, however “as long as those enterprises are brought in progress and can sustain themselves, the ruler should transfer them to private enterpreneurs if he wants to act according to good principles.”49

The first two kinds of state enterprises in the early modern monarchy were commonly recognised and studied as the state’s fiscal tools.50 However, the third kind of state-run manufacturing enterprises represented a function of state which has been long forgotten or neglected in mainstream economics but used to be popular and important in older German economics, namely the state-run manufactories or factories as the

42 Ibid., p. 86. 43 Ibid., p. 86. 44 Ibid., p. 87. 45 Ibid., p. 85. 46 Justi, Staatswirthschaft, vol.1, p. 227; Justi, Manufacturen und Fabriken, vol.1, pp. 87-89. 47 Justi, Manufacturen und Fabriken, vol.1, pp. 87-89. 48 Justi, Manufacturen und Fabriken, vol.2, p. 227. 49 Justi, Staatswirthschaft, vol.1, p. 227; Justi, Manufacturen und Fabriken, vol.1, p. 87. 50 Herbert Obinger, Carina Schmitt, and Stefan Traub, The Political Economy of Privatization in Rich (Oxford: Oxford University Press, 2016), pp. 6-7. 172

Musteranstalten (“model factories”).

Werner Sombart regarded state-run manufacturing enterprises as an indispensable factor in the early modern European economic development and an important origin of modern capitalistic industry. Sombart wrote: “The importance [of state-run manufacturing enterprises] to the creation of modern industry cannot be overestimated. They served to set not only prototype examples of modern industry, but also the pace and pattern of the new form of organisation. It was the state-run enterprises which, due to the demands they created, often served as catalysts for the development of capitalistic industries. These enterprises are so essential that they cannot be left out of an account of the development of capitalism which…they promoted in thousands of ways.”51 Sombart identified four reasons of the early modern state to run its own enterprises: for administration, such as state-run gold and silver mines; for the demand of the ruler, such as royal manufactories producing luxuries; for national defence, such as armament manufactories; and finally for promoting the economy and cultivating new industries, like silk manufactories in many countries.52 Sombart found that for promoting the economy and cultivating new industries, the early modern state-run enterprises always played the role of “state-run model factories to stimulate private entrepreneurship (Unternehmungsgeist) by making examples”. 53 These enterprises aimed to be the places of learning for not only technical knowledge but also social capabilities. 54 Sombart believed the most obvious example of these “model factories” was the French royal manufactory in Gobelins initiated by Henry IV and finished by Colbert.55 In this manufactory, artists and artisans were employed to work under the king’s will to produce royal luxuries. “Their work went to embellish Versailles, Saint-Germain and Marly; tapestries, carvings, sculptures, bronzes, trophies and that wonderful chased silverwork which was sent to the Mint in the dark days of the reign [of Louis XIV].”56 To the best knowledge of the author of this thesis, in modern economic theories, the only one which theorised the state-run manufacturing enterprises as Musteranstalten,

51 Sombart, Der moderne Kapitalismus, vol.2, p. 847; translated by Erik Reinert, see Erik Reinert, ‘The role of the state’, p. 76. 52 Sombart, Der moderne Kapitalismus, vol.2, pp. 848-850; for modern interpretation of these four reasons, see Reinert, ‘The role of the state’, pp. 76-77. 53 Sombart, Der moderne Kaptialismus, vol.1, p. 847. 54 Reinert, ‘The role of the state’, p. 77. 55 Sombart, modern Kaptialismus, vol.1, p. 847 56 Paul Mantoux, The Industrial Revolution in the Eighteenth Century (London: Jonathan Cape, 1935), p. 30. 173 was the Staatssozialismus raised by the German economist Adolph Wagner (1835- 1917). Without referring to Justi or any others, Wagner proposed that in his late nineteenth century context, there should be three kinds of state-run factories (state-run Gewerksanlagen or Staatsfabriken): 1) those for pure fiscal aim of the state, such as the monopoly of tobacco; 2) those for supplying the state’s demand such as weapons and royal luxuries; and 3) “the factories should have a national-economic purpose, namely for the interest of production, so they should introduce new industries and act as Musteranstalten.”57 Wagner also mentioned that state-own farms should also act as “agricultural model enterprises” (landwirthschaftlichen Musterbetriebsanstalten).58

As for private enterprise, Justi found three ways of organisation: 1) an individual entrepreneur operating a large manufactory or factory and commanding many labourers; 2) a society operating a large manufactory or factory; 3) “many individual artisans, who buy raw materials and sell products by themselves…without relying on an individual entrepreneur or a society”.59 Justi noted that many countries in his time entrusted single entrepreneurs to build manufacturing.60 It seemed that here Justi referred to Colbert’s and his followers’ policies to grant the privilege to single entrepreneurs to build large- scale manufactories. For example, “the earliest, the most successful, and the most famous of the cloth manufactures founded through Colbert’s intervention” was the manufactory of the entrepreneur Van Robais.61 Van Robais used to be a Dutch cloth manufacturer, was attracted by Colbert to France in 1665 to build a fine cloth manufactory of 50 workers and 30 looms, was granted a twenty-year monopoly around the area of Abbéville, and ultimately developed to a giant manufactory of 80 looms and 1,690 workers by 1680.62 However, these large and privileged manufactories, probably should not be taken as the forerunners of factory system, because their large-scale production was not based on large-scale indivisible investment in fixed capital but on the concentration of labourers created by government’s chartered monopoly. As Paul Mantoux pointed out, “these undertakings only lived on protection and privilege”, and

57 Adolph Wagner, Finanzwissenschaft, vol.1 (Leipzig: C. F. Winter, 1883), pp. 622-624; also see Adolph Wagner, Theoretische Sozialökonomik, vol.1 (Leipzig: C.F. Winter, 1907), p. 179. 58 Wagner, Finanzwissenschaft, vol.1, p. 529. 59 Justi, Manufacturen und Fabriken, vol.1, pp. 89-90. 60 Ibid., p. 90. 61 See Cole, Colbert, vol.2, p. 142. 62 See ibid., pp. 142-147. 174 when the protection and privilege disappeared, they would quickly fail.63 Justi did not recommend such form of large-scale manufactory operated by the individual entrepreneur, because 1) if the capability of operating manufacturing enterprises was monopolised by single entrepreneurs, the manufacturing was not sufficiently built; 2) entrepreneurs’ personalised management made their manufactories unsustainable; 3) it was essentially a monopoly hindering other factories and manufactories; 4) wages of artisans and labourers tended to be suppressed by entrepreneurs.64 Justi believed that the large-scale and concentrated form of enterprise was not suitable for silk, woollen and linen textile industries, but could be applied to Fabriken in the narrow sense, namely metalworking and chemical industries which, as mentioned in last chapter, had strong potential of economy of scale; in other words, it could be applied to the industries “where a single great factory is large enough to supply the country as well as foreign trade”, such as cotton textile factory and firearm factory.65 Yet Justi believed that these metalworking and chemical factories should be managed by a society of 6 to 8 people instead of a single entrepreneur to avoid the problem of personalised management.66

Justi noted that in most textile industries, “it is entirely the same if it is a hundred cloth makers producing 4,000 pieces of cloth annually or these pieces are produced in a single concentrated facility. In neither case labourers can work with greater profit, comfort, and relief.”67 In textile industries like silk, wool and linen, Justi believed that the best form of enterprise was “single masters and manufacturers” who sold products and bought raw materials by themselves, because “a hundred cloth makers form a much more durable basis of the manufacturing than a single great cloth-making factory” and it was much more beneficial to the economy that a hundred artisans had good livelihoods than they worked for one or six to eight persons. 68 Based on these arguments, Roscher concluded that “he [Justi] was no friend of the very large factory”.69 This interpretation was not accurate. Firstly, it has been shown in the last chapter that Justi advocated large-scale production and mechanisation. Secondly, Justi explicitly

63 Mantoux, Industrial Revolution, p. 31. 64 Justi, Manufacturen und Fabriken, vol.1, pp. 90-91. 65 Ibid., pp. 93-94; cotton textile is the only textile manufacturing which Justi recommended to be organized in the form of large manufactory, see Justi, Manufacturen und Fabriken, vol.2, pp. 128-129. 66 Justi, Manufacturen und Fabriken, vol.1, pp. 92-94. 67 Ibid., p. 95. 68 Ibid., p. 95. 69 Roscher, National-oekonomik, p. 458. 175 wrote: “All these three kinds of manufacturing [silk, wool and linen] demand the same that they are operated in large facilities as many metalworking and chemical factories, which worked with fire, always demand, if they aim for profit.”70 Thirdly, Justi did not agree with the restriction over the number of journeymen and apprentices a single master or manufacturer could employ, and believed it made no difference to him if five or twelve journeymen worked for a single master.71 Fourthly, the forerunner of factory system did not have to be as large as Van Robais’ manufactory which hired thousands of workers. The mechanised pin manufactory of which the daily output was 48,000 pins in Adam Smith’s description had merely ten to eighteen workers.72 What Justi wanted to promote seemed to be “mills” (Mühle), the mechanised workshops and the true predecessor of the modern factory system in the eighteenth century.73 To Justi, large and concentrated industrial enterprises should be the result of the natural course of technological progress, not the monopolistic organisation chartered by government.

5.2 Building Manufacturing: Manufacturing Houses and Industrial Regulations

Since Manufacturen und Fabriken, Justi believed that the first step to build the manufacturing sectors which were entirely new to a nation and for which nobody had skills or experience would be to facilitate the transfer of technology and useful knowledge, which was realised by recruiting skilled labourers and entrepreneurs from countries where those sectors were prosperous.74 Justi believed that instead of directly

70 Justi, Manufacturen und Fabriken, vol.1, p. 93. Original words are “Alle diese drey Arten von Manufacturen erfordern nichts weniger, als daß sie in weitläuftigen Anstalten getrieben werden, so wie viele Fabriken, die in Feuer arbeiten, allerdings notwendig machen, wenn sie mit Vorteil getrieben werden sollen.” Justi explicitly distinguished “manufacturing” (Manufacturen und Fabriken) from “handicraft” (Handwerke). Justi believed “manufacturing” was a newly emerged form of production and operated outside the guild system, but “handicraft” was an older form of production which had existed in the ancient time and was organized in guilds, see Justi, Manufacturen und Fabriken, vol.1, p. 3. In Justi’s thought, the single masters and manufacturers, who sold products and bought raw materials by themselves, did not belong to the domestic system and required special places for workshops, because in his discussion of building new manufacturing including those single masters and manufacturers, Justi specifically discussed the issue of providing buildings for workshop to manufacturers, and he suggested using discarded fortresses and palaces as workshops, see Justi, Manufacturen und Fabriken, vol.1, pp. 78-80. The structure of the workshops operated by single masters consisted of the master, journeymen, apprentices, side-labourers and helpers, see Justi, Macht und Glückseeligkeit, vol.1, the table between page 490 and 491. Both large manufactories and factories and smaller enterprises of single masters and manufacturers accorded with Max Weber's definition of “workshop” which broke down medieval handicrafts and preluded factory system, see Max Weber, trans. by Frank H. Knight, General Economic History (Glencoe: The Free Press, 1950), pp. 115-121. 71 Justi, Reglements, p. 51. 72 Smith, Wealth of Nation, vol.1, p. 110. 73 About “mill” and factory system, see Mantoux, Industrial Revolution, pp. 36-42. 74 Justi, Manufacturen und Fabriken, vol.1, pp. 74-75. 176 operating manufacturing, the function of immigrant labourers and entrepreneurs should be primarily to spread their knowledge and skills among native people, so new manufacturing would not depend on foreign labourers and entrepreneuers. 75 Justi believed that technology transfer would always be blocked by foreign governments, but the block would be hardly efficient as long as the treatment of foreign labourers and entrepreneurs was good and the reputation of the nation was high.76 The migration of skilled labourers and entrepreneurs in the early modern period embodied the main form of international transfer of technology, and the international competition over industrial technologies was embodied in the form of the compeition over skilled labourers and entrepreneurs.77 The third of Hörnigk’s nine principles of economic policy was that, in order to develop manufacturing and primary sectors of a nation, foreign “teachers” should be brought in to teach the people “all kinds of inventions, skills, and craft techniques”.78

For manufacturing organised in the form of large factories, Justi suggested that foreign technical experts should act as directors of factories and the government should pay annual pensions to them.79 Besides, foreign directors should be allowed to become shareholders of factories with their knowledge and skills, so that these people would become an interested party of the factories and would be motivated to fully exert their diligence and skills.80 For the manufacturing organised in individual workshops, in order to facilitate the technology transfer and to support new manufacturing enterprises, in Manufacturen und Fabriken and Macht und Glückseeligkeit, Justi proposed that in the same city where new manufacturing sectors were built there should be a Manufacturing House (Manufacturhaus).81 Manufacturing Houses were as crucial as “the first institution to be built”, in order to build new manufacturing in the country.82 Manufacturing Houses should have the following functions.

Manufacturing Houses “should firstly have the purpose that the education in all and

75 Ibid., pp. 76-77. 76 Ibid., p. 213. 77 David S. Landes, The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (London: W. W. Norton & Company, 1998), pp. 276-288; Cipolla, Before the Industrial Revolution, pp. 120-124. 78 Hörnigk, Austria Supreme, p. 155. 79 Justi, Manufacturen und Fabriken, vol.1, p. 102. 80 Ibid., pp. 102-103. 81 Justi, Manufacturen und Fabriken, vol.1, p. 107; also Justi, Macht und Glückseeligkeit, vol.1, pp. 450-456. 82 Justi, Manufacturen und Fabriken, vol.1, p. 107. 177 every kind of manufacturing is provided there”, and for this purpose, the Houses should be organized according to all kinds of manufacturing sectors and concentrate the skilful foreign artisans of every manufacturing sector, “who do nothing but give lessons to spread skills in that manufacturing”.83 According to Justi, training courses should be freely offered to whoever wants to learn, and the Manufacturing Inspector should supervise courses and occasionally examine what apprentices had learned.84 Secondly, Manufacturing Houses were also a set of model workshops for foreign artisans to practice their crafts and to spread their knowledge. Foreign artisans should be supplied with tools and materials by the Houses in order to deliver their courses and to operate their trades, and the Houses should not seek profit from their work.85 Yet the Houses should exam the quality of their work to see whether they were honest and skilful enough to deserve the support from the Houses.86

Manufacturing Houses were also regarded as incubators of new manufacturing enterprises. According to Justi, firstly, the Houses should provide all kinds of advanced mechanical equipment which was too expensive for individual artisans to afford, and the Houses should charge no more than the cost of maintenance for artisans’ use of the machines.87 Secondly, “one of the chiefest purposes” of the Houses was to provide new manufacturing enterprises with necessary raw materials, so that new enterprises would not have to depend on entrepreneurs or merchants and could gradually sell products and buy raw materials by themselves.88 In this way, the Houses should purchase and store all kinds of raw materials, and then sell them to manufacturers at moderate prices; new enterprises were allowed to purchase on credit from Houses as many materials as they needed to continue production.89 Finally, the Houses should build warehouses to which new enterprises could sell their products, and, from which merchants could purchase their goods, so manufacturers would not be suppressed by merchants in trade; the price of the products should be set equal to the price of similar foreign products, so that an impression would be built that national products were of the same price and quality as

83 Ibid., p. 107. 84 Ibid., pp. 107-108. 85 Ibid., p. 108. 86 Ibid., p. 108. 87 Ibid., pp. 108-109. 88 Ibid., pp. 109-110; Justi, Macht und Glückseeligkeit, vol.1, p. 452. 89 Justi, Macht und Glückseeligkeit, vol.1, p. 452. 178 the foreign products.90 Justi claimed that this kind of warehouses was inspired by similar warehouses built by Colbert, which purchased all manufactured products meeting quality regulations and then sold them.91 All these above services of the Houses aimed not at making profit but supporting new manufacturing enterprises. All these policies aimed not to put new manufacturing enterprises in a greenhouse but to help them finally self-sustain “to put these people [manufacturers] in the situation that they can sell products and buy raw materials by themselves”.92 Justi concluded that: “As long as manufacturers become stronger so that they do not only satisfy domestic consumption but also produce for foreign trade, the Manufacturing Houses will become gradually dispensable”.

Manufacturing House had been a constant policy proposal in German cameralism. Becher and Schröder particularly cared about this institution. In his book, Becher proposed a Work- and Discipline-House (Werck-und Zucht-Hauß), which was essentially a state-run manufactory to provide employment to young apprentices and healthy beggars to make them useful and self-sustained.93 Schröder’s Manufacturhaus was an industrial training facility to provide industrial education outside guilds and cultivate artisans.94 Compared with these proposals which emphasised providing a skill-learning space outside guilds to spread industrial knowledge which had already existed in the country to multiply artisans, Justi’s proposal of Manufacturing House highlighted the function of spreading the knowledge which was new to the country and thus would help build new manufacturing.

The Manufacturhaus was also an institution practiced in reality. The Manufacturing House in Vienna (Das Manufacturhaus auf dem Tabor in Wien) was built in 1686 Becher’s proposal between 1674 and 1675.95 This Manufacturing House in practice was essentailly a Musteranstalt in the style of Colbert’s royal manufactory of Gobelins.96 According to a nineteenth-century study, the House had the following

90 Justi, Manufacturen und Fabriken, vol.1, pp. 111-113. 91 Ibid., p. 112. 92 Ibid., p. 105. 93 Johann Joachim Becher, Politischer Discurs (Frankfurt: Verlegung Johann David Zunners, 1668), pp. 244-248. 94 Schröder, Schatz-und Rent-Kammer, pp. 522-531. 95 Hans J. Hatschek, Das Manufacturhaus auf dem Tabor in Wien (Leipzig: Duncker & Humblot, 1886), p. 29. 96 Sombart, Der moderne Kaptialismus, vol.1, p. 848; about the Manufacturhaus in Tabor and Becher’s relevant activity, see Pamela H. Smith, The Business of Alchemy: Science and Culture in the Holy Roman Empire (Oxford: Princeton University Press, 2016), especially pp. 173-246. 179 facilities: 1) a chemical laboratory to distil mineral salt and ethanol and produce metallic dye; 2) a workshop to produce majolica wares; 3) a pharmaceutical workshop; 4) a workshop to produce metal kitchen appliances; 5) a silk manufactory with three band mills to produce silk band and floret; 6) a woollen manufactory to produce woollen wares and to teach young people the skills of woollen sorting, carding, spinning and weaving; 7) a metal smelter; and 8) a manufactory to produce Venetian glass.97 This Manufacturing House was designed to perform functions: “a state factory [Staatsfabrik] but also a training workshop [Lehrwerkstätte]”. 98 According to Hatschek, Becher wished the Manufacturing House to be a great industrial complex (grossindustriell) and “the trainning school for the entire industries in the country”, so it was designed to be “a perfect factory, namely, a great enterprise with sufficient materials, the most perfect machines of the time, and the most skilful artisans.” 99 Becher named this Manufacturing House “a school for the introduction of manufacturing”. 100 Justi’s proposal of Manufacturing Houses had many functions similar to this Manufacturing House in practice, but Justi’s Manufacturing Houses emphasised on spreading knowledge and financially supporting new enterprises rather than acting as a state-run factory.

The next step to build new manufacturing should be “the regulations and ordinances…about how it should be to produce manufactured products”. 101 These regulations and ordinances were Manufacturing Regulations (Manufactur- und Fabriken-Reglements). As Justi defined, Manufacturing Regulations were designed by the Collegium of Manufacturing and included “the detailed ordinances and instructions about what manufacturers have to observe regarding producing their products as well as preparing their raw materials”, of which the purpose was “to realise the perfection [Tüchtigkeit], good quality [Güte] and beauty [Schönheit] of manufactured products, to promote their domestic and foreign sale, and therein to bring these industries in prosperity.”102 Roscher called the state regulations of this kind “technical industrial

97 Hatschek, Manufacturhaus, pp. 35-39. 98 Ibid., p. 40. 99 Ibid., p. 39. 100 Ibid., p. 40. 101 Justi, Manufacturen und Fabriken, vol.1, p. 120. 102 Justi, Reglements, p. 3. 180 regulation” (Technische Gewerberegulative).103

Technical regulations for manufacturing embodied the state’s intervention in the production process of manufacturing enterprises, and Justi realised the importance of this micro-level intervention since Grundsätze. 104 Justi considered technical regulations necessary because of the following reasons. Firstly, the perfection, good quality and beauty of manufactured products constituted the first factor determining the domestic and foreign sale of national products, in the context of the severe competition among the manufacturers of different countries.105 Justi did not agree with the policy to force people to consume low-quality national products by prohibting imports. He found this policy “very wrong” because “the worse the inland products are, the greater the desire for foreign products will be, and even the strictest restriction cannot prevent the illicit trade.”106 Justi essentially believed that the way for national manufacturers to win domestic or foreign market was improving the quality of products which was realised by state’s enforcement of well-designed technical regulations.107 Secondly, technical regulations were considered necessary to uniform the quality of products to make them “circulable” (gangbar) in large-scale commerce (Großhandel).108 Justi wrote that in large-scale commerce, consumers and merchants would not be able to take time to detailedly exam every piece of product, so merchants and consumers should be ensured that every piece of product stamped by state quality inspection agencies had uniform good quality.109 Justi found that Lower Saxony produced fine canvas, but just because of the lack of technical regulation, the length and width of those textiles were not uniform, so they could never be sold as merchandise but only as homespun canvas; whereas Austrian canvas became merchandise because Austria enforced a technical regulation to uniform the quality of its products. 110 Thirdly, technical regulations prevented vicious competition among manufacturers. Justi found that when many manufacturers engaged in producing the same kind of product, at the beginning, they

103 Wilhelm Roscher, System der Volkswirtschaft: vol.3 die Nationalökonomik des Handels und Gewerbfleißes (Stuttgart: J. G. Cotta'sche Buchhandlung Nachfolger Gmbh., 1899), pp. 889-897. 104 Justi, Grundsätze, pp. 113-114; Justi, Manufacturen und Fabriken, vol.1, pp. 120-123; Justi, Macht und Glückseeligkeit, vol.1, pp. 459-462; and see Justi, Reglements, the whole book was about technical regulation. 105 Justi, Macht und Glückseeligkeit, vol.1, pp. 564-565. Justi, Reglements, p. 4; Justi, Macht und Glückseeligkeit, vol.1, pp. 564-565. 106 Justi, Macht und Glückseeligkeit, vol.1, pp. 564-565. 107 Ibid., p. 565. 108 Justi, Reglements, pp. 5-6. 109 Justi, Manufacturen und Fabriken, vol.1, p. 121. 110 Ibid., p. 122. 181 would try to compete with each other to make better and cheaper products, but when lowering the price and improving the quality could not be achieved simultaneously, some manufacturers would try to lower their price by lowering the quality of their products, and others had to do the same to keep their prices competitive, in the end the quality of the whole industry would be ruined. 111 Here by proposing technical regulations Justi noted and tried to fix the “Lemons Problem”, namely the information asymmetry between producers and consumers about product quality, in an early modern context.112 Justi understood that some manufacturers would complain about technical regulations for being coercive and sometimes difficult to achieve.113 He responded that truly rational manufacturers would not find technical regulations inconvenient because they wanted the same as the regulations did, but “there are so many people who do not sufficiently understand their true interests”. 114 To Justi, technical regulations for manufacturing were the practice of his general principle of economic Policey that state should direct people’s self-interest to the channels leading to public welfare. As Justi wrote, “a wise government must try to lead the great mass of the injudicious [Unverständigen] to their true interests”.115

Justi believed that technical regulations should be designed according to following principles. Firstly, the regulations should be as detailed and comprehensive as possible to cover all details that make products perfect, “so that manufacturers have no room to avoid the regulations.” 116 Secondly, in order to prevent the “Lemon Problem”, technical regulations should seek “to prohibit and to oppose to all behaviours which could counterfeit the products and deceive the customers.”117 Thirdly, “the regulations should stipulate all imaginable and effective measures through which the prosperity of manufacturing can be promoted.”118 This was the “final purpose” (endliche Endzweck) of technical regulations.119 Fourthly, technical regulations should “see to abolish and prohibit all acts through which manufacturers can make their industries retrogress

111 Justi, Reglements, pp. 8-9. 112 See George A. Akerlof, ‘The Market for “Lemons”: Quality and Market Mechanism’, The Quarterly Journal of Economics 84.3(1970), pp. 488-500. 113 Justi, Reglements, p. 12. 114 Ibid., pp. 12-13. 115 Ibid., p. 13. 116 Ibid., p. 16. 117 Ibid., p. 18. 118 Ibid., p. 19. 119 Ibid., p. 19. 182

[zurücksetzen] and bring harm and shortcomings to the industries.”120 Justi noted that most German states did not have technical regulations, apart from Prussia where he found the most detailed and advanced technical regulations in all kinds of textile industries, and he recommended other governments to use Prussian technical regulations as references to make their own regulations.121 After technical regulations were made, there should also be inspection agencies to enforce the regulations to see if manufactured products met the regulations.122 If the products were found with serious defects they should not be allowed to sell; if they only had minor defects, defects should be marked and stamped, and they should not be allowed to be exported.123

Wilhelm Roscher believed that technical regulations used to be the policies of medieval guilds to control the quality of raw materials and manufactured products, and were adopted by the early modern mercanitlist states to promote foreign trade.124 According to Roscher, in early modern Europe when small industries worked for remote international markets, technical regulations were the government’s way of addressing the information asymmetry between manufacturers and the front of the progress of production technology as well as the demand of international consumers. 125 It is recognised today that technical regulations provided a solution to the “Lemons Problem” in the early modern markets: “pre-modern markets were seriously hampered by a lack of information about both producers and their products, and this problem could ultimately lead to a complete standstill of the trade in products, when customers became too suspicious about their quality.”126 According to Eli Heckscher, the early modern Europe had two paradigms of technical regulations: the French paradigm where manufacturing was regulated through guilds, and the English paradigm where manufacturing was regulated directly by the central government.127 Clearly Justi’s proposal followed the English paradigm.

120 Justi, Reglements, p. 19. 121 Justi, Manufacturen und Fabriken, vol.1, p. 122. 122 Ibid., p. 124. 123 Ibid., p. 124. 124 Roscher, System der Volkswirtschaft, vol.3, p. 889. 125 Roscher, National-Oekonomik, pp. 408-409. 126 S. R. Epstein and Maarten Prak, ‘Introduction: Guilds, Innovation, and the European Economy, 1400-1800’, Guilds, Innovation, and the European Economy, 1400-1800, eds. by S. R. Epstein and Maarten Prak (Cambridge: Cambridge University Press, 2008), pp. 1-24 (p. 13); also see Sheilagh Ogilvie, The European Guilds: An Economic Analysis (Oxford: Princeton University Press, 2019), pp. 308. 127 Heckscher, Mercantilism, vol.1, pp. 137-325. 183

Roscher also found that, except for technical industrial regulations, state regulations of manufacturing also included a social industrial regulation (Sociale Gewerberegulative) which regulated conditions of labourers and the relationship between employers and labourers.128 Justi also paid attention to state regulations of labourers’ conditions. He believed that the Collegium of Manufacturing should not stipulate labour wages unless it was really necessary.129 Yet if it was really necessary, wage regulations should be formulated according to the price of sustenance, and regulations should be altered frequently according to the fluctuations in food price and mintage.130 However, Justi believed that “in general the benefit from such ordinances of wage will not be very great”.131 Justi believed that the efficient price of labour should be realised by the development of agriculture instead of government regulations.132 In Justi’s opinion, manufacturing should not be organised in guilds.133 Therefore, mainly in Grundsätze, he proposed that the state should fill the gap left by the absence of guilds to regulate the social condition of manufacturing, namely the state should regulate the relationship among owners of manufactories, factors (Verleger), masters, journeymen, and other labourers.134 Especially, Justi’s proposal of social regulations aimed to protect the interests of manufacturers and labourers and dismissed that of the factors. Justi wrote: “One of the greatest attentions of the regulations to promote manufacturing must be paid to putting manufacturing in security against the suppression of the Verleger. The prosperity of these industries relies so little on Verleger but very much on labourers; and manufacturing would never be prosperous in a country where labourers live in extreme misery and poverty.”135 It seemed that Justi expected the state to interfere in and promote the condition of manufacturing labourers mainly through adjusting productive relations in enterprises intead of directly commanding the level of wages of labour.

128 Roscher, System der Volkswirtschaft, vol.3, pp. 904-916. 129 Justi, Manufacturen und Fabriken, vol.1, p. 126. 130 Ibid., p. 126. 131 Ibid., p. 126. 132 Ibid., p. 146. 133 Ibid., pp. 4-5. 134 Justi, Grundsätze, p. 118. 135 Justi, Reglements, p. 49. 184

5.3 Promoting Innovations: Patenting Inventions and Manufacturing Academy

According to Justi, the “final purpose” of industrial technical regulations was to stipulate “all imaginable and effective measures” which promoted manufacturing.136 In this way, technical regulations provided an entrypoint for the state to interfere in industrial products and technologies. Therefore, in prescribing technical regulations, knowledge about “what can promote the perfection of manufactured products” and “the condition of all kinds of manufacturing in other European nations” was necessary.137 More importantly, Justi believed that what made manufactured products perfect and the chief cause of the progress of manufacturing was “that one tries to always give them new perfection”. 138 According to Justi, in order to give “new perfection” to manufacturing, “we must not only stimulate clever minds through rewarding new inventions but also make continuous experiment for the improvement of manufacturing and their greater perfection.” 139 Here Justi essentially believed that the constant technological progress in manufacturing was the primary cause of its perfection and the industrial technical regulations should always promote technological progress.

By “stimulating clever minds”, Justi proposed to provide patents for inventions and he believed that the English practice of patenting inventions should be emulated. In Manufacturen und Fabriken, Justi wrote that the most powerful way to stimulate inventions was rewarding inventors.140 According to Justi, all nations which wanted to build manufacturing should follow the example of English invention patent law which rewarded inventors with a great sum of prize under the condition that inventions should be publicised, or rewarded inventors with an exclusive privilege under the condition that inventors should share inventions with those who paid patent fees.141 Justi noted that not all governments were able to provide as much money as the English parliament could offer, but the government should at least set prizes “for those inventions which promote the progress of manufacturing and the economy.” 142 The patenting of invention was actually an old economic policy in Europe, which could be traced at least

136 Ibid., p. 19. 137 Ibid., pp. 22-23. 138 Ibid., p. 24. 139 Ibid., p. 25. 140 Justi, Manufacturen und Fabriken, vol.1, p. 136. 141 Ibid., p. 136. 142 Ibid., p. 136. 185 to Venice in the late fifteenth century as the means to attract skilful artisans.143

As for “making continuous experiments” to generate technological progress, Justi emphasised the organised scientific research of manufacturing led by the state, and this task “should be the real main purpose of all academies of sciences.”144 Justi proposed two kinds of academies across his textbooks. The first was mentioned in Grundsätze and Macht und Glückseeligkeit, and it was the academy to promote “the expansion and development of human knowledge”.145 The second was the academy discussed here, proposed in Reglements, of which the main purpose was to foster innovations in manufacturing. Therefore, the academy of the second kind should be better named the “Manufacturing Academy”. 146 Justi’s Manufacturing Academy was a typical “Baconian programme” proposal. Justi expected the Manufacturing Academy to conduct scientific research particularly for the purpose of promoting innovations in manufacturing. Therefore the Academy should not conduct the research in “speculative sciences” (speculativischen Wissenschaften) but only in “practical sciences” (practischen Wissenschaften).147 Justi believed that: “If specific academies and learned societies are established for improving and perfecting manufacturing, crafts, and artisanries, they should not engage in speculative sciences but only in practical ones and must contribute the acquired knowledge directly for the benefit of civil society. Meanwhile the members of such academy, who are honest and great scholars, must be skilful at researching the nature of raw materials with the help of their knowledge, at investigating all manufacturing processes according to the right principles, and at making new inventions thereupon.”148 Those inventions “must be so characterised that thereby the prosperity of the economy and the welfare of the commonwealth are promoted”.149

According to Justi’s design, the President of the Manufacturing Academy should be

143 Petra Moser, ‘Patents and Innovation: Evidence from Economic History’, Journal of Economic Perspectives, 27.1(2013), pp. 23-44 (p. 25). 144 Justi, Reglements, p. 25. 145 Justi, Grundsätze, p. 211-212; Justi, Macht und Glückseeligkeit, vol.2, pp. 82-86. 146 Justi did not differentiated two kinds of academies by their names and named both kinds “Akademie der Wissenschaften”. However, in the writings of German cameralists, like Dithmar, a facility named “Manufactur- Academie” was frequently mentioned, see Dithmar, Einleitung, p. 200. Yet those cameralists did not provide detailed explanation about what this facility actually was. This thesis borrows this title to name Justi’s academy specifically set up for promoting manufacturing. 147 Justi, Reglements, pp. 26-27. 148 Ibid., p. 27. 149 Justi, Grundsätze, p. 212. 186 also the Minister of the Collegium of Manufacturing, and the presiding secretary (vorsitzender Rath) of the Collegium should be the Vice President of the Academy.150 The leadership of the Collegium of Manufacturing overlapped with the leadership of the Academy, because “they [leadership of the Collegium] know and have the insight about the existing shortcomings and defects in manufacturing the best, so they can lead the Academy the best to work on what are the most indispensable to the prosperity of manufacturing and the entire economy.”151 The Academy should conduct “experiments and inventions which are related to the economy” in four disciplines: “chemistry, botany, mechanics, and husbandry.”152 Every discipline should have two members and two assistants who should be recruited by the members, except the discipline of chemistry, to which Justi believed nearly all of the work in manufacturing and artisanries belonged, should have at least four members and four assistants.153 One of the members of every discipline should be the director of the discipline, and one of the directors, who was the most knowledgeable in all research subjects of the Academy, should be the Standing Secretary (beständige Secretair) of the Academy.154 The members should be the best experts in their fields.155 In order to fulfill the duty of the Academy, all members should be employed fully and solely by the Academy and could not engage in other businesses, so it was necessary to emancipate all members from the worry about their livelihoods and to make them able to live comfortable lives, therefore they should enjoy high salaries.156

The research agenda and the research subjects of the Academy should not be decided by the will of the members. Instead, “the President, Vice-President and the Standing Secretary of the Academy should in every quarter of a year determine what research subjects every member should be assigned, in the absence of all of the members”.157 The President and Vice-President would determine the most necessary and the most urgent research subjects, and the Standing Secretary, who should know the capabilities and strengths of all members and the difficulties of the research projects, determined to

150 Justi, Reglements, p. 28. 151 Ibid., p. 29. 152 Ibid., p. 28. 153 Ibid., p. 28. 154 Ibid., p. 28. 155 Ibid., p. 30. 156 Ibid., p. 31. 157 Ibid., p. 29. 187 whom the research subjects should be assigned.158 Every research project should be assigned to one member and one assistant.159 Every member should deliver a report to the plenary sessions of the Academy on how the research progressed and what difficulties in the research were. 160 Private enterprises should be encouraged to participate in the research of the inventions for the perfection of manufacturing which required the test in practice. 161 The Academy was a state-led industrial research organisation to generate technological progress especially for manufacturing. It would solely and firmly execute the will of the state to shape the direction of technological progress in the economy. In the first volume of Manufacturen und Fabriken, Justi wrote that scholars tended to make the mistake to focus more on “speculative sciences” rather than on practical sciences, so the state should direct scholars’ efforts to promote manufacturing and the whole economy. 162 The Manufacturing Academy was an example of how the state should direct scientific research to promote manufacturing.

“If such an Academy is at hand, a number of beneficial improvements to the perfection of manufactured products can be provided.” 163 After an invention was made and approved by most members of the Academy, the invention should be experimentally practiced by a few selected manufacturers who should be the most skilful and the cleverest in their trades, and those manufacturers should report feedback about the invention to the Collegium. 164 Regarding this feedback, the Collegium should be careful about distinguishing the factual outcome of the invention from the inclinations of manufacturers; if the manufacturers complained about the invention, the Collegium should ask the Academy to judge whether the complaints were based on facts and whether problems could be fixable, or whether the complaints were merely the hostility against the new invention.165 If the invention passed the experimental practice, the invention then could “be compiled in the Manufacturing Regulations for the manufacturers to compulsorily comply with”.166

158 Ibid., p. 29. 159 Ibid., p. 29. 160 Ibid., pp. 29-30. 161 Ibid., p. 30. 162 Justi, Manufacturen und Fabriken, vol.1, pp. 40-41. 163 Justi, Reglements, p. 33. 164 Ibid., pp. 33-34. 165 Ibid., p. 34. 166 Ibid., p. 33. 188

In compiling the new invention into technical regulations, the government should consider the cost of applying the invention. The government should be aware of the fact that “manufacturers possess very uneven capital, and not all of them can afford costly invention”.167 If the cost of invention was not so high that manufacturers could easily carry it out and if the cost did not exceed the benefit, the government should command the manufacturers to apply the invention coercively. 168 But if the new invention “demands the costly machines and other expensive equipment”, government should build machines and equipment in Manufacturing Houses at its own cost and offer the manufacturers to use at a moderate charge.169 Moreover, the Academy should research existing production processes of manufacturing, so that government could forbid “all unnecessary, slow, and time-splintering [zeitversplitternd] methods of production” and replace them with more productive methods through technical regulations. 170 Especially, “the Collegium of Manufacturing should not overlook to use the help of sciences and to promote manufacturers to use convenient machines and better methods of process.”171 Justi found the Prussian technical regulations of textile industries were comprehensive and detailed, which could be the reference for other governments.172 However, Justi found that by its technical nature, the production process of metalworking industries was much harder to regulate and inspect than that of textile industries, and he did not find any country had the technical regulations of metalworking which were perfect enough as a reference for others. 173 Yet Justi believed that metalworking industries demanded the improvement and uniformity of quality of products brought by state technical regulations in no lesser degree than textile industries.174 And Justi believed it was the task of Manufacturing Academy to research and prescribe perfect technical regulations for metalworking industries, especially about steelworking and steel tool and equipment making, which were crucial sectors to every nation and, as discussed above, major industries Justi planned for Germany to develop.175

167 Ibid., p. 35. 168 Ibid., p. 35 169 Ibid., p. 36 170 Ibid., pp. 54-55. 171 Ibid., p. 56. 172 See ibid., pp. 57-60. 173 Ibid., pp. 85-86. 174 Ibid., pp. 87-94. 175 Ibid., pp. 94-95. 189

In this way, technical regulations proposed by Justi did not simply represent the endeavour to uniform economic regulations. This uniformity did not simply accept industrial technologies as they were, but aimed at upgrading them. Justi’s technical regulations aimed not simply at solving the information asymmetry between producers and consumers, but also the information asymmetry between producers and inventors. The industrial technical regulations were essentially intended as tools for technology planning and urging technological progress. Sombart summarised that there were two types of technical regulations in the early modern period. The first were the regulations of guilds which aimed at protecting handicrafts from the progress of early capitalism.176 According to Sheilagh Ogilvie, technical regulations of the early modern guilds aimed at not improving the quality of products but protecting the rent-seeking of guilds.177 The second were the regulations from the state “of which their main attention was paid to the capitalistic industries”. 178 Colbert was enthusiastic about making technical regulations to eliminate defects in the manufacturing, to uniform the quality of products, to protect consumers, and to promote domestic and foreign sale. 179 Technical regulations were commonly shared by the early modern European nations.180 Sombart wrote: “There were an abundance of regulations [of the mercantilist state] which took in consideration the capitalistic character of industry and trade and represented a complete breakthrough, reforming, or improving the handicraft ordinances”.181

Justi proposed that technical regulations compiled for new technologies should be used as the standard to grant state subsidies to new manufacturing enterprises. According to Justi, “The first establishment of manufacturing needs great cost. The entrepreneurs have an entirely unpaved way before them. Most labourers must be firstly educated. Most of crafts and processes must be taught first, because people are not accustomed to them. One must pay higher wages to labourers at the beginning, through which the people are stimulated by the hope of more income. If the entrepreneurs have to pay these great costs with their money, they will either refuse to invest or have to sell their

176 Werner Sombart, Der Moderne Kapitalismus, vol.1 (München und Leipzig: Duncker & Humblot, 1919), vol.1, p. 388. 177 See Ogilvie, The European Guilds, pp. 307-353. 178 Sombart, Der moderne Kapitalismus, vol.1, p. 388. 179 Ibid., pp. 388-389. 180 Ibid., p. 389. 181 Ibid., p. 390. 190 products more dearly.”182 In this way, Justi had been advocating the subsidy of new manufacturing since Staatswirthschaft. 183 In Manufacturen und Fabriken, Justi claimed that his proposal of subsidy followed how “Great Colbert” subsidised French woollen and silk textile industries. According to Justi, Colbert published the regulations about the length, width, weight, and other qualities of silk and woollen wares, and awarded prizes on those textile wares which were made according to regulations.184 In this way, Justi essentially regarded state subsidies on new manufacturing sectors as the tuition fee paid by the state for enterprises to learn new technologies.

Compared with proposals of the academy of sciences of Bacon, Leibniz, and Wolff discussed in Chapter Two, Justi’s Manufacturing Academy had at least two prominent characteristics. Firstly, his Manufacturing Academy was completely incorporated into the manufacturing policy system as the tool of the state’s plan of technology progress in manufacturing. Through cooperating with industrial technical regulations, Justi’s Manufacturing Academy was under strong state leadership to generate and spread innovations in manufacturing coercively. Secondly, Justi’s Manufacturing Academy specialised in promoting the manufacturing sector, whereas Bacon’s, Leibniz’s, and Wolff’s academies aimed at promoting the whole economy. In Reglements, Justi claimed that his Manufacturing Academy was inspired by Colbert’s academy and how it cooperated with French technical regulations of manufacturing. Justi believed that the Paris Academy of Sciences continuously conducted the experiments to improve “all crafts and industries” and French Ministry of Manufacturing had never hesitated to compile those improvements in technical regulations “to urge the application of these improvements through compulsory method”, and Justi thought “it can be claimed that the great prosperity of French manufacturing originated from these sources.”185 Justi’s observation seemed to be reasonable. It is pointed out that in the age of Colbert: “the Academy appointed several of its members to study the tools and machines in common industrial use, with a view to elucidating their working principles, and improving or simplifying their construction. In addition, many ingenious mechanical devices were designed by the Academicians and were published in an illustrated catalogue. Especial

182 Justi, Manufacturen und Fabriken, vol.1, p. 96. 183 Justi, Staatswirthschaft, vol.1, p. 265; Justi, Grundsätze, pp. 115-116; Justi, Manufacturen und Fabriken, vol.1, pp. 96-106; Justi, Macht und Glückseeligkeit, vol.1, pp. 447-449. 184 Justi, Manufacturen und Fabriken, vol.1, p. 97. 185 Justi, Reglements, pp. 25-26. 191 attention was given to frictionless pulley combinations, pumps, and automatic saws.”186 On Colbert’s policy to force spread of innovation, Friedrich List commented: “If, contrary to the principle of enlightened policy, he [Colbert] prescribed new processes and compelled manufacturers to adopt them, it should be remembered that they were, after all, the best and most advantageous of his time, and that he had to do with a people in a state of apathy, superinduced by long endurance of despotism, repelling every novelty even when it promised great advantage.” 187 In one of his letters, Colbert likewise noted: “In the kingdom, I have always found the manufacturers stubborn in continuing the errors and abuses which they commit in their manufacturing. But when authority is used to make them carry out new regulations, both for width and length and for sound manufacture and dyeing, they have seen their manufacturing increase notably, and foreigners come to buy their products in the kingdom a great deal more than before; so it is necessary to be ready to use firmness and authority to overcome the stubbornness of manufacturers.”188

5.4 Promoting Innovations: Industrial Education

In Manufacturen und Fabriken, Justi explicitly wrote: “If new inventions in manufacturing should be constantly made, if it is necessary to entertain the taste of foreign customers, and chiefly, if our national products should be good enough to maintain the constant prosperity of manufacturing, then one of the most important measures should be that labourers acquire great amount of skills and constantly maintain those skills.”189 Industrial education of labourers was therefore one of the most important components of Justi’s innovation policies. Justi considered industrial education for young people crucial to the formation of skills of the nation.190 However, he was unsatisfied with contemporary industrial education institutions, because “all artisans abuse their apprentices more in their housework rather than teach them properly”

186 Wolf, Science, Technology and Philosophy in 16th & 17th Centuries, p. 66. 187 List, National System, pp. 142-143. 188 Cole, Colbert, p. 364. 189 Justi, Manufacturen und Fabriken, vol.1, pp. 225-226. 190 Justi, Staatswirthschaft, vol.1, pp. 273-274; Justi, Grundsätze, p. 216; Justi, Macht und Glückseeligkeit, vol.1, p. 696. 192 and public schools did not provide enough industrial education to young people.191 In this way Justi proposed to establish a school system where students who wanted to engage in crafts and artisanries could receive education. 192 Justi proposed that industrial education schools should be named mechanical secondary schools (mechanische Real-Schulen) or artisanal and craft schools (Handwerks- und Kunst- Schulen); they should have as many disciplines as the kinds of materials used in manufacturing, such as silk, wool, cotton, linen, leather, wood, iron, copper, gold, and silver; all students should be taught about the nature and quality of materials, their production, ways to judge their quality, their places of origin, ways to purchase them, their prices, their usage, ways to process them, and the final products made from them; students should practice the crafts and be assessed regularly. 193 This industrial education school system should be affiliated with the Manufacturing Houses. 194 According to Joel Mokyr, this kind of the early modern industrial education system consituted a crucial component of the “Industrial Enlightenment”.195 Justi’s industrial education system was embedded in his proposal of a comprehensive national education system. Justi proposed to establish universities, “the most important institution to learn sciences”.196 Universities should be managed according to the principle of “rational freedom” (vernünftige Freiheit) which should be the freedom from tyranny and superstition but not the licence to be mischievous or unrestrained.197 High schools and town schools (Stadtschulen) for the preparation of entering universities and the education of children for cultivating their virtue and intelligence should also be built.198

Only in the first volume of Manufacturen und Fabriken, Justi also proposed to reform the apprenticeship of the old guild system to cultivate manufacturing labourers’ skills. In order to encourage industrial skills, Justi advocated that “skilful manufacturers and labourers should always enjoy the privilege and that they can earn wealth through their skills”, and in order to facilitate this privilege of skilful manufacturers and labourers,

191 Justi, Macht und Glückseeligkeit, vol.2, p. 119; Justi, Staatswirthschaft, vol.1, p. 274. 192 Justi, Macht und Glückseeligkeit, vol.2, p. 119. 193 Ibid., pp. 119-120, in footnote. 194 Justi, Grundsätze, p. 216. 195 Mokyr, ‘Intellectual Origins’, pp. 311-317. 196 Justi, Staatswirthschaft, vol.1, p. 107; Justi, Grundsätze, pp. 212- 235; Justi, Macht und Glückseeligkeit, vol.2, p. 79. 197 Justi, Macht und Glückseeligkeit, vol.2, p. 79; p. 67; Justi, Grundsätze, p. 211. 198 Justi, Grundsätze, p. 215; Macht und Glückseeligkeit, vol.2, p. 107, p. 111, pp. 116-117. 193 government should pay attention to “the apprenticeship and the master-cultivation”.199 Justi did not want to revive the guild system in manufacturing, but he wanted to borrow the apprenticeship from guild regulations to urge the improvement of manufacturers’ skills. He believed that the guild law that only skilful masters were allowed to set up their businesses was “so necessary to promoting skills of labourers and so essential that they can by no means be neglected in manufacturing regulations.”200 Manufacturing regulations should stipulate that an apprenticeship in “light [leichte] manufacturing” should be one year long and an apprenticeship in “heavy [schwere] manufacturing” should be two years; and during the apprenticeship the master should responsibly teach apprentices and should not use them for his personal aims.201 When the apprenticeship ended, the apprentice should pass a strict examination held by the Manufacturing Inspector, the High Master (Obermeister), and other masters instead of his own; in examination, the apprentice should practice his crafts and complete an oral examination.202 If the apprentice did not pass the examniation, he should be transferred to another master for half a year, and the previous master would lose his claim to the tuition fee.203 If the apprentice passed examination, he would receive a certificate, and he could choose to pay the tuition fee or to work for his master for two years in light manufacturing or three or four years in heavy manufacturing.204 Those who wanted to set up a business as manufacturers should also pass the examination of their skills and knowledge, but this examination should be stricter.205 Besides the examination of skills, no other restriction should be set in setting up new enterprises. Justi wrote: “Nothing is more stupid than to make setting up new enterprises hard and to take from new enterprises the money which is indispensable for the beginning of new manufacturing.”206 This reformed apprenticeship aimed at guaranteeing the skilfulness of manufacturers and labourers, providing people with equal opportunities to earn wealth, and eliminating the basis for rent-seeking in old guilds. According to Justi, this reformed apprenticeship embodied the principle that “nothing but the skills should

199 Justi, Manufacturen und Fabriken, vol.1, p. 226. 200 Ibid., p. 226. 201 Ibid., p. 227. 202 Ibid., p. 227. 203 Ibid., p. 227. 204 Ibid., p. 227. 205 Ibid., p. 228. 206 Ibid., p. 228. 194 constitute the right to engage in manufacturing”.207 Through this system, Justi expected to realise that the poorest person had the same chance to start his enterprises as the wealthiest.208 Justi believed that it was a natural justice that “the poor and the rich are all members of the nation of equal nature”.209

Guilds were institutions directed at promoting and advancing industrial skills and had existed since the Middle Ages.210 By extending the training and examining system of guilds to the whole national economy, Justi desgined a national innovation and training policy through proposing what ninteenth-century German economic historians summarized as the formation of the national economy: to extend the efficient regulations of previous city and territorial economies nation wide.211 As discussed above, Justi was against organizing manufactories and factories in guilds, but he believed that these sectors should not be left out of organization and order, and that the state should replace the guilds to provide such organization and order through its Policey. 212 Meanwhile, as for traditional artisanries, Justi supported guilds as an efficient way to organize these sectors in order to provide order and organization and cultivate skills and innovation.213 In Staatswirtschaft, Justi explictly wrote: “I cannot completely agree with the enemies of guilds [in artisanries] who urge their complete destruction.”214 In Macht und Glückseeligkeit, Justi only agreed to abolish the guilds which were clearly corrupted and blocked the development of industries.215 In general, Justi held a revisionist attitude towards guilds: he endorsed their function of promoting economic development in the newly emerged national economy but emphasized the necessity to eliminate their corruption.

5.5 Tariff Policy, Configuring National Market, and Other Miscellaneous Policies

Ulrich Adam interpretes Justi’s tariff policy proposal as a temporary method aiming at

207 Ibid., p. 228. 208 Ibid., p. 229. 209 Ibid., p. 229. 210 See S. R. Epstein, ‘Craft Guilds, Apprenticeship, and Technological Change in Pre-industrial Europe’, in Guilds, Innovation, and the European Economy, eds. by S. R. Epstein and Maarten Prak (Cambridge: Cambridge University Press, 2008), pp. 52-80. 211 See Schmoller, Mercantile System; Karl Bücher, Die Entstehung der Volkswirtschaft (Tübingen, Verlag der H.Lauppschen Buchhandlung, 1901). 212 Justi, Staatswirtschaft, vol.1, p. 255; Justi, Grundsätze, p. 118. 213 Justi, Staatswirtschaft, vol.1, p. 253; Justi, Grundsätze, p. 122-123; Justi, Macht und Glückseeligkeit, vol.1, p. 505-511. 214 Justi, Staatswirtschaft, vol.1, p.253. 215 Justi, Macht und Glückseelgiketi, vol.1, p.505. 195 the protection of infant industry.216 However, Justi’s tariff policy proposal was not as such, and it was designed not as a transitional method but as a permanent policy. In the first volume of Manufacturen und Fabriken, Justi expressed his disagreement with the strict prohibition of imports, a policy which he found commonly used in contemporary Europe, because the prohibition of imports was a brutal policy which restricted the natural freedom and convenience of people, and it would incur the retaliation of foreign nations, which in turn would restrict the exports of national products.217 Justi believed that trade surplus should be based on expanding exports, and the restriction of imports should be a special policy only used in extreme conditions.218 However in the rest of his textbooks, Justi suggested the combination of both the promotion of exports and restriction of imports to realise trade surplus.219 The principle of Justi’s tariff proposal had always been that the export of national products and the import of raw materials and unfinished goods should be tariff-free, and tariffs on the import of manufactured goods should be determined according to the degree of necessity of those goods: the more indispensable they were to the people, the lower the tariff.220 A heavy import tariff should be imposed only on the products which the nation could produce with the same quality and price.221 The reason was that the import of products with the same quality and price would hinder the sale of national products, and Justi noted that there was a “the love of foreign products” in the propensity of consumers in his time.222 By imposing heavy tariffs, the tariff rate Justi suggested in Macht und Glückseeligkeit was merely ten percent.223 He believed that if a manufacturer suggested a import tariff rate of fifteen percent, then either he wanted to make “illegal profit harmful to the nation” or his enterprise was badly managed.224 An import tariff of ten and fifteen percent was much lower than the protective tariff of contemporary European nations. Adam Smith noted that in 1692 Great Britain imposed a tariff of twenty five percent on French products, in 1696 another twenty-five percent was added, and while he was writing

216 Adam, Political Economy, pp. 205-209. 217 Justi, Manufacturen und Fabriken, vol.1, p. 11-12. 218 Ibid., p. 12. 219 Justi, Staatswirthschaft, vol.1, pp. 172-174; Justi, Grundsätze, pp. 112-113; Justi, Macht und Glückseeligkeit, vol.1, pp. 519-521. 220 Justi, Staatswirthschaft, vol.1, pp. 196-201; Justi, Grundsätze, p. 113; Justi, Manufacturen und Fabriken, vol.1, pp. 158-159; Justi, Macht und Glückseeligkeit, vol.1, pp. 524-527. 221 Justi, Manufacturen und Fabriken, vol.1, pp. 157-158; Justi, Macht und Glückseeligkeit, vol.1, pp. 527-529. 222 Justi, Manufacturen und Fabriken, vol.1, p. 182. 223 Ibid., p. 571. 224 Ibid., p. 571. 196

Wealth of Nations British tariff on French products was seventy-five percent, and the French retaliated with the same severity.225 In general, Justi was not interested in protective tariffs on infant industries.

Justi’s proposals of manufacturing and innovation policies were embedded in a system of ecnomic policy proposals. According to Justi, the state should configure the national market to faciliate the circulation of goods. The territory should be modified. Lakes and rivers should be tamed, irrigation and flood-defense projects should be built, moors should be drained, land should be reclaimed, and the forest must be administered to supply fuels to manufacturing.226 Then infrastructures like roads, postal services, mail coach services, canals and water wells should be built. 227 Projects for securing, cleaning, and beautifying cities, such as street lanterns, hotels, bell towers, and parks, should be furnished. 228 In Macht und Glückseeligkeit, Justi mentioned that infrastructures facilitated innovation by promoting the population density. He wrote: “When a lot of people live around each other and are devoted to industries, they will notice all kinds of inventions to assist the concentration of their industries and their community”. 229 Institutions to facilitate trade should also be built, such as marketplaces, exchange banks and loan banks.230 Justi also highlighted the significance of curing the “deflationary gap”. He wrote: “If the country has a lot of wealth but a great part of it locates outside circulation” and “there is too little money circulating in cities”, the solutions could be: expanding the army, stationing soldiers near cities to purchase supplies, building infrastructures, canalising rivers, digging canals, and building other beneficial constructions, building fortresses, building manufacturing, relieving tax, attracting wealthy immigrants, utilising public money to provide loans to beneficial industries at the annual interest rate of 2 to 3 percent.231 In order to promote manufacturing, Justi always advocated that primary sectors should be also promoted. A prosperous agriculture would feed the dense population and prevent the rise of prices.232 Justi wrote: “It is completely impossible that manufacturing can be prosperous, if

225 Smith, Wealth of Nation, vol.2, pp. 50-51. 226 Justi, Grundsätze, pp. 19-29; Justi, Macht und Glückseeligkeit, vol.1, pp. 41-98. 227 Justi, Grundsätze, pp. 46-50; Justi, Macht und Glückseeligkeit, vol.1, pp. 367-415. 228 Justi, Grundsätze, pp. 50-55; Justi, Macht und Glückseeligkeit, vol.1, pp. 424. 229 Justi, Macht und Glückseeligkeit, vol.1, p. 367. 230 Justi, Grundsätze, pp. 76-77; p. 167; Justi, Macht und Glückseeligkeit, vol.1, pp. 573-579; p. 629. 231 Justi, Grundsätze, p. 160; Justi, Macht und Glückseeligkeit, vol.1, pp. 337-340. 232 Justi, Staatswirthschaft, vol.1, p. 229; Justi, Grundsätze, pp. 82-83; Justi, Manufacturen und Fabriken, vol.1, pp. 41-42; Justi, Macht und Glückseeligkeit, vol.1, p. 269; pp. 272-275. 197 agriculture is not promoted as perfectly as possible.”233 In order to promote agriculture, Justi advocated to encourage farmers’ diligence, introduce inventions, and establish Oeconomical Inspectors (Oeconomie-Inspectoren) as the counterpart of Manufacturing Inspector.234 Mining was significant as the source of raw materials of manufacturing.235 Justi wrote: “The main function of the mining relies not on extracting gold and silver from the earth, but on excavating materials such as base metals, mineral salt and dye, and other metal and chemical materials which promote foreign trade and inland economy”.236 Even gold and silver mines should be primarily used as sources of materials for manufacturing rather than sources of money.237 Base metal and mineral salt “may provide ten times more wealth than gold and silver mines”, because they were raw materials of manufacturing of which the export was “inexhaustible sources of wealth of the nation.”238 In promoting mining, stimulating inventions through mining sciences was also emphasised. 239 To Justi, science and invention also promoted primary sectors.

5.6 Conclusion

Justi’s proposals on manufacturing and innovation policies provided a blueprint for the “entrepreneurial state”. In this blueprint, the state was in charge of upgrading industrial structure, building the crucial manufacturing sectors which employed the most labourers and provided the highest wages, and generating and spreading new industrial technologies. In order to fulfill these duties, the state had Manufacturing Inspectors, state-owned manufactories and factories, Manufacturing Academy, industrial technical and social regulations, Manufacturing Houses, and industrial schools as its apparatuses. Centering on these entrepreneurial functions, the state was also responsible for providing infrastructure, configuring national market, cultivating primary sectors, and curing the .

This blueprint of “entrepreneurial state” implemented Justi’s general principle of

233 Justi, Manufacturen und Fabriken, vol.1, p. 42. 234 Justi, Grundsätze, pp. 87-91. 235 Justi, Grundsätze, pp. 97-99; Justi, Macht und Glückseelikgeit, vol.1, pp. 473-478. 236 Justi, Grundsätze, pp. 98-99. 237 Justi, Manufacturen und Fabriken, vol.2, pp. 212-219. 238 Ibid., p. 250; p. 251. 239 Justi, Staatswirthschaft, vol.1, pp. 220-222; Justi, Grundsätze, pp. 97-98. 198

Policey, namely that the state should combine the private interests with public welfare. Apart from all interventions which Justi’s “entrepreneurial state” made, there were a lot of affairs which the state was refrained from. The state did not operate the majority of industries, command prices and wages, limit enterprises in legitimate industries, interfere in competition, nor build tariff barrier to curb foreign competition. In these fields, private enterprises were free to do what pleased them. Whereas private enterprises had to obey the state in some circumstances. And this chapter highlights that a crucial one of them was state’s upgrade of industrial structure and technological progress. This was how Justi’s “entrepreneurial state” directed the self-interest of people to the channels through which people could earn wealth by promoting public welfare. Justi’s theory of economic expansion illustrated that the wealth of a nation depended on its industrial structure and technological progress, so encouraging private enterprise to make profit through upgrading industrial structures and promoting technological progress would promote public welfare. However, Justi found that private enterprises were not always willing to take this path. They could be unable or unwilling to operate new industries, resistant to technological progress, and degenerate their skills in severe compeition. In this way, the state should create the productive industrial structure and set a high standard of technologies. Then as long as private enteprises were active within this industrial structure and above this standard of technologies, the expansion of their businesses and the improvement of their technologies would be the expansion of public welfare. In this way, the private interest was directed to the close combination with public welfare.

199

Conclusion

This thesis has illustrated Justi’s definition of public happiness as an aim of state economic policy; the importance of manufacturing and national intellectual capital to the realisation of the economy of public happiness; Justi’s four reasons for building and developing manufacturing; his theories about why product and process innovations would promote economic development, why science and people’s industrial spirit were important to economic development, and why national intellectual capital would be promoted by industrialisation; his general principle of economic policy; and his policy proposals to promote manufacturing, innovation, science, and people’s industrial spirit. In general, this thesis has uncovered Justi’s theories and policy proposals regarding the “entrepreneurial state”. Moreover, this thesis also shows the contexts where Justi developed his theories and policy proposals of the “entrepreneurial state”, and the influence on his theories and policy proposals of “entrepreneurial state” casted by the political economy of absolute monarchy represented by Botero and the old Austrian cameralists, the political economy of enlightened monarchy represented by Wolff, the Industrial Enlightenment thinkers, and the Enlightenment thinkers like Hume and Melon. In this way, this thesis reaches following conclusions.

Firstly, this thesis refutes the rent-seeking interpretation of Justi. This thesis finds that the problems concerning Justi were far more complicated than merely acquiring money for the monarch. Justi was well-aware that the welfare of the prince and the welfare of the people were inseparable and that the aim of the state was to create public happiness. And Justi was not the only one who was aware of this. He stood in the context where major economic thinkers, such as were all aware of these. Justi’s economic theories and policy proposals were not concerned with how to exploit the people and how to hide rent-seeking. His economic thought was organised around the pivot of people’s happiness. The pattern of society advocated in Justi’s economic theories and policy proposals did not aim to shelter rent-seeking, but fitted the pattern of “growth-and- development society” defined by David Landes. This is a kind of society which knows how to push its technological frontier, is able to educate the youth with the respective required knowledge, selects people for jobs based on competence and merit, encourages

200 initiative and competition, and allows people to enjoy the fruits of their labour.1 This society is the opposite of the rent-seeking society governed by bloodsucking monarchs and their corrupt servants as portrayed, for example, in the study by Andre Wakefield.

Secondly, this thesis revises the liberal interpretation of Justi. The economy Justi advocated was not a market free from state intervention or only subject to the transitional and reactive state intervention. In Justi’s economic thought, the market which embodied the passion of self-interest of private actors should always be directed by the state, which ought to embody the rationality required to achieve public happiness. Justi’s “commercial freedom” should be more properly understood as the division of labour between state intervention and private initiative. It demanded state intervention to direct private initiative to certain channels of earning wealth, in another word, to certain economic activities, and therefore the state was naturally given the task to shape the industrial and technological structure of the economy. Justi’s economic thought empowered both the state and the market. On the aspect of promoting technological progress and building new industries, private enteprises should follow the leadership of the state; on the aspect of operating within the established industrial structure and technological standard, the state should retreat and respect the private initiative. In this way, in the realm of industrialisation and technological revolution, Justi advocated an economy under the leadership of a strong, capable, and visionary state. Unlike his political thought which went through a radical shift, Justi’s theories and policy proposals of state intervention in industrial structure and technological progress largely remained unchanged across his textbooks.

And this kind of state intervention advocated by Justi was much in line with the definition of being “entrepreneurial” in Joseph Schumpeter’s sense. The essence of this state intervention was to overcome the stubbornness of private enterprises and to pave the way for new enterprises of new industries in the established old custom of doing business: the state should generate innovations and coercively spread them, set examples by directly operating new enterprises, supply new private enterprises with raw materials, labourers trained with new skills and advanced machinery equipment, and find markets for them. The stubbornness of enterprises and the difficulty of paving

1 David S. Landes, The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (New York: W. W. Norton & Company, 1998), p. 217. 201 paths for new enterprises of new industries were exactly why the role of “entrepreneur” was necessary in Schumpeter’s theory of economic development, and overcoming these problems was the essence of “entrepreneurship”.2 According to Schumpeter, without this contradiction between entrepreneurs’ innovations and the resistance of the public against them, there would be an “obsolescence of the entrepreneurial function”, as Schumpeter witnessed in the twentith century when the high technology and research- intensive industries rose, when the public started to welcome innovation, and when innovating became routine and organised affairs in industrial enterprises.3 In this sense, Justi’s theories and proposals of manufacturing and innovations policies deserved to be named “the eighteenth-century entrepreneurial state”.

Thirdly, this thesis finds that Justi’s theory of manufacturing and national intellectual capital envisaged an economic development mechanism which has existed as a “consensus of development” in Western economics for centuries. Here this thesis has no intention to conclude any genealogical linkage between Justi and later economists. What is displayed here is merely that some of Justi’s “economic analysis” grasped the economic development mechanism, which the “economic analysis” of later important economists also grasped and emphasised. No matter whether those later economists knew Justi or not is little known and not the concern of this thesis. This thesis applies the positivist approach of the history of economic thought and traces the existence of a piece of “economic analysis” of industrialisation and economic development in the theories of different economists.

Justi’s theory of economic expansion consisted of following principles. 1) The diversity of economic activities, especially manufacturing activities, is the basis of development. The trade among diversified economic activities configures the market. Trade is essentially the circulation of goods. 2) When demands for invented products are far from being santurated, the application of process innovations which increases productivity of economic activities and the volume of goods in circulation will enlarge the size of market, and the enlarged market will then drive the futher increase of output of industries. 3) Product innovations which increases the propensity to consume will also enlarge the size of market and increase the diversity of economic activities. 4)

2 Joseph A. Schumpeter, Capitalism, Socialism, and Democracy (London: Routledge, 1994), p. 132. 3 Ibid., pp. 131-134. 202

Manufacturing is innovation-intensive activity, the source of innovation is the progress of science, so manufacturing and science deserve particular promotion.

Justi’s model of economic development contained the principles remarkably similar to “Say’s Law”, which stipulates that supply creates demand and market is configured by the diversity of industries and promoted by the increase of productivity of them. According to Say, circulation is the circulation of goods, not money. 4 This understanding led Say to propose that “in every community the more numerous are the producers, and the more various their productions, the more prompt, numerous, and extensive are the markets for those productions” and “each individual is interested in the general prosperity of all, and that the success of one branch of industry promotes that of others”.5 Say pushed his understanding to the extreme and believed that the amount of money had no influence on the circulation and therefore neglected the problem of deflationary gap. 6 Say’s theory did not lead to a set of national industrial strategies because he trusted international market.7 Say also regarded science and knowledge as the elements belonging to the production factor “industry” (other two factors being “capital” and “natural agents”).8 Therefore, scientists also participated the production of wealth just as entrepreneurs, managers, and labourers.9

Fredrich List’s theory of productive powers was developed in the context of the popularity of Say’s doctrine, and List found that Say sensed the significance of an independent theory of productive powers.10 List regarded “productive powers”, which included science, technological progress, entrepreneurialship, and innovations, as the fundamental cause of economic development.11 Manufacturing was the activity which employed the productive powers the most. According to List, “manufactures are the daughters of science and the fine arts, which are, in their turn, supported and maintained by the industrial arts.”12 List also proposed the principle of “the association of the

4 Jean-Baptiste Say, A Treatise on Political Economy (New York: Augustus M. Kelley Publishers, 1971), p. 134. 5 Say, Treatise, p. 137. 6 This is Keynes’ refutation of Say’s Law, Keynes was not against that Say took the synergy between diversified industries as the cause of the configuration of the market, see John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace and Company, 1936), pp. 18-21. 7 Say, Treatise, p. 138. 8 Ibid., p. 80; p. 328. 9 Ibid., pp. 328-329. 10 Friedrich List, ed. and trans. by W. O. Henderson, The Natural System of Political Economy (London: Frank Cass 1983), p. 34, footnote. 11 List, National System, pp. 208-227. 12 Ibid., pp. 285-286. 203 productive powers” in compensation to the principle of division of labour.13 According to this principle, “to make a manufactory of machinery prosperous, it is necessary that mines and metallic works furnish the material they use, and that hundreds of manufactories employ or use the machinery it manufactures”, so “the force of manufacture of a nation forms an entirety and the profit and loss of every specific branch of industry is influenced by all others”. 14 List found international market unreliable.15 Therefore, he believed that “the internal trade is ten times more important than the foreign” and “the national division of labour caused by internal trade is ten times more important than the international division of labour caused by the foreign trade”.16

The similar understanding of economic development also existed in ’s political economy. In Mill’s system, innovations, or “the labour of the inventors of industrial processes” were part of the production factor belonging to “labour”. 17 Scientific research also belonged to the factor “labour”, and science was regarded as the source of innovations, because many inventions were “indirect consequences of theoretic discoveries”.18 Skills and knowledge promoted the productivity of labour.19 In this way, as the source of skills and knowledge, the increase of knowledge in the society, namely the progress of science, also promoted the productivity of labour.20 The most important factor promoting the productivity of industries was “co-operation”, which included the division of labour.21 The significance of the division of labour, especially the national division of labour, lay in forming the market for individual industries and stimulating their improvements. As Mill wrote, “Nevertheless, we see of what supreme importance to the productiveness of the labour of producers, is the existence of other producers within reach, employed in a different kind of industry.”22

In the twentieth century, similar understandings could be found in the thoughts of Allyn

13 Ibid., p. 231. 14 Ibid., p. 232; Friedrich List, Das Wesen und der Wert einer nationalen Gewerbsproduktivkraft (Berlin: Weltgeist- Bücher Verlags-Gesellschaft m.b.H, 1839) p. 42. 15 List, National System, p. 242. 16 List, Wesen und Wert, p. 40. 17 John Stuart Mill, Principles of Political Economy, vol.1 (London: Parker, Son, and Bourn, 1862), p. 51. 18 Ibid., p. 52. 19 Ibid., p. 130. 20 Ibid., pp. 131-136. 21 Ibid., p. 143. 22 Ibid., pp. 147-148. 204

Young and the classical development economics represented by Paul Rosenstein-Rodan and Ragnar Nurkse. Young regarded increasing returns and the economy of scale in the economy as the result of the improvements, such as innovation and technological progress, of diversified and synergetic industries. Young summarised that, in the system of diversified manufacturing industries which were subject to the phenomenon of increasing returns and under the condition of the of the demand for every industrial product, there would be reciprocal demands among industries: “an increase in the supply of one commodity is an increase in the demand for other commodities, and…every increase in demand will evoke an increase in supply.”23 Therefore Young wrote: “The rate at which any one industry grows is conditioned by the rate at which other industries grow”.24

Classical development economics was largely based on Say’s Law and Young’s theory. Rosenstein-Rodan’s Big Push theory was built on the recognition of the complementarity of different industries, namely, wage goods industries were essentially complementary in the consumption of people, which provided the market and to every industry involved in this complementarity, so industrialisation was realised by the investment in a series of complementary industries. 25 Ragnar Nurkse’s Balanced Growth theory believed that the rise of productivity of an individual industry was confined by the rise of productivities of other industries because the increased output of a single industry required the increase of the output of other industries to consume, so industrialisation was realised by the simultaneous investment in the rise of productivity of a number of mutually demanded industries to increase the market of every involved industry. 26 Nurkse compared this synergetic development among manufacturing sectors to the synergy between manufacturing and agriculture recorded by the eighteenth-century economic thinkers. 27 According to Nurkse, among manufacturing sectors, the synergy always happened between the high-technology, innovation-intensive, and high-productivity industries and the low-technology,

23 Allyn Young, ‘Increasing Returns and Economic Progress’, The Economic Journal, 38 152 (1928), pp. 527-542 (p. 534). 24 Ibid., p. 534 25 See Paul Rosenstein-Rodan, ‘Problems of Industrialization of Eastern and South-Eastern Europe’, The Economic Journal, 53.210/211 (1943), pp. 202-211. 26 See Ragnar Nurkse, Problems of Capital Formation in Underdeveloped Countries (Oxford: Basil Blackwell, 1953), pp. 4-17. 27 Ragnar Nurkse, ‘Patterns of Trade and Development’, in Ragnar Nurkse: Trade and Development, eds. by Rainer Kattel, Jan A. Kregel, and Erik S. Reiner (London: Anthem Press, 2009), pp. 397-434 (p. 420). 205 innovation-stagnant, and low-productivity industries.28

In general, from Say, List, Mill, then Young and classical development economics, it can be clearly seen that the economic development mechanism theorised by Justi’s theory of manufacturing and national intellectual capital as the basis of his proposal of “entrepreneurial state” would prove to be a common theorisation of the mechanism of industrialisation and economic development in Western economic theories accorss centuries. Justi seems to have been an early modern theorist who grasped the phenomenon of the manufacturing-based and innovation-driven economic expansion, theorised the economic significance of the diversified industrial structure, innovation, technologic progress, science, and the evolution of industrial structure, and transformed these theories into the basis of a set of economic policy proposals to achieve public happiness. On these bases, it seems that Justi would be qualified to be regarded as a forefather of the economic modernity characterised as the innovation- and manufacturing-centred economy with the state acting as an “entrepreneurial state” to spread the economic rationalism in the sense of increasing the productivity of economy through combining industries with the progress of sciences.

28 Nurkse, ‘Patterns of Trade and Development’, pp. 416-418. 206

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