William Petty - Summary and Legacy

Summary and Legacy

The above shows the contribution Petty made to theoretical issues that have dominated the later subject of economics ever since. He covered such a wide range of topics according to his political arithmetic method, i.e. like modern economists, he set out to prove his claims by finding data and statistics, rather than relying on anecdotal evidence. He wrote rigorously, but also with concision and humour. The issues that Petty thought about and wrote are major topics that have plagued the minds of economic theorists ever since.

He influenced not only immediate successors such as Richard Cantillon but also some of the greatest minds in economics, including Adam Smith, Karl Marx and John Maynard Keynes. With Adam Smith, he shared a world view that believed in a harmonious natural world. The parallels in their canons of taxation epitomise their joint belief in natural liberty and equality. They both saw the benefits of specialisation and the division of labour. Furthermore, Smith and Petty developed labour theories of value, as did David Ricardo, Henry George, and Karl Marx in the 19th century.

Smith says nothing about Petty in The Wealth Of Nations. In his published writings, there is nothing apart for a reference in a letter to Lord Shelburne, one of Petty's aristocratic descendants (Correspondence Of Adam Smith, Letter No. 30, Glasgow Edition).

Petty continued to exercise influence. Karl Marx believed, as did Petty, that the total effort put in by the aggregate of ordinary workers represented a far greater contribution to the economy than contemporary thought recognised. This belief led Petty to conclude in his estimates that labour ranked as the greatest source of wealth in the kingdom. Marx’s conclusions were that surplus labour was the source of all profit, and that the labourer was alienated from his surplus and thus from society. Marx's low esteem of Adam Smith is mirrored in his high consideration of Petty's analysis, as witnessed by countless quotations in his major work Das Kapital. John Maynard Keynes also wrote at a time of mass discord, as unemployment was rampant and economies stagnant during the 1930s. He showed how governments could manage aggregate demand to stimulate output and employment, much as Petty had done with simpler examples in the 17th century. Petty’s simple £100-through-100-hands multiplier was refined by Keynes and incorporated into his model.