David Hume As an economistScottish philosopher

born May 7 [April 26, Old Style], 1711, Edinburgh, Scot. died Aug. 25, 1776, Edinburgh

Hume steps forward as an economist in the Political Discourses incorporated in Essays and Treatises as part 2 of Essays Moral and Political. How far he influenced his friend Adam Smith, 12 years his junior, remains uncertain: they had broadly similar principles, and both had the excellent habit of illustrating and supporting these from history. He did not formulate a complete system of economic theory, as did Adam Smith in his Wealth of Nations, but Hume introduced several of the new ideas around which the “classical economics” of the 18th century was built. His level of insight can be gathered from his main contentions: that wealth consists not of money but of commodities; that the amount of money in circulation should be kept related to the amount of goods in the market (two points made by Berkeley); that a low rate of interest is a symptom not of superabundance of money but of booming trade; that no nation can go on exporting only for bullion; that each nation has special advantages of raw materials, climate, and skill, so that a free interchange of products (with some exceptions) is mutually beneficial; and that poor nations impoverish the rest just because they do not produce enough to be able to take much part in that exchange. He welcomed advance beyond an agricultural to an industrial economy as a precondition of any but the barer forms of civilization.