CHYDENIUS, AN EARLY PIONEER ON ECONOMIC EXCHANGE BEFORE ADAM SMITH

“Before Adam Smith There Was Chydenius” by Gary Galles, professor of economics at Pepperdine University, posts in Ludwig von Mises Institute HERE 

"On my first day back in the classroom this fall, I was reminded that entrepreneurial alertness applies to ideas and insights as well as profits.

“Since the opening chapter of the course’s economics principles text calls Adam Smith the father of economic science, I told my class that he actually had multiple precursors in the study of economics. I mentioned the Spanish scholastics as an example. And having his precursors in mind primed me to discover another one I had been completely unaware of.

“After my class, I stopped by to visit a colleague I hadn’t seen all summer. Outside his office were copies of a pre-Euro 1,000 Finnish mark note and a pre-Euro 100 Austrian schilling note that I hadn’t noticed before … on the 1,000 Finnish mark note was Anders Chydenius (1729–1803). I said, “Who is that? I never heard of him.”

"My colleague told me just enough about Chydenius (1729–1803) to make me curious, particularly in mentioning that he wrote some very Smithian things before Smith. So I took a moment to check him out. What did I find? One article described him as “Scandinavia’s Adam Smith.” A review of his 1765 The National Gain (originally written in Swedish) stated that “Chydenius published this system of economic thought about ten years previous to the publication of Adam Smith’s epoch-making work. It is peculiar to note how well the ideas of this simple Finnish country parson coincide with those of the great Scottish economist.” Another article I found said “One of the most remarkable aspects of Chydenius’ analysis is how relevant many of his conclusions are to today’s political and economic debates.” My curiosity aroused, I had to look further.

"Chydenius was a country churchman in an outlying area of Finland (then part of Sweden). He did not read English or French (and the vast majority of his work was not translated into English until recently), and so he was unaware of the enlightenment discussions taking place in those tongues. He did not found a school, nor did he attract a group of followers. He was self-taught in economic matters and had no systematic methodological approach beyond common sense. He did not seek involvement in politics or look for power, but as Carl Uhr wrote, “when, on three separate occasions, he was a member of the Swedish-Finnish Parliament, it was the demands of his conscience which drove him to publish his opposition to a number of legislative proposals which seemed to him harmful and/or inequitable.” Briefly stated, it was his response to the inequities and waste of mercantilism that motivated his interest in economics.

"In Bruno Suviranta’s review of Chydenius’s best-known work, The National Gain, he described what tied together Chydenius’s writings on political economy as “all founded on the same constant idea of freedom.” Charles Evans wrote that “he expressed a classical liberalism as radical as any penned by familiar [contemporary] liberals.” Chydenius “pointed out repeatedly that individuals engaged in voluntary exchange would be rewarded for doing only those things that their neighbors wanted them to do. If each individual is doing only what his or her neighbors want, then the commonweal is served.” In other words, “peasants left to their own devices could run the economic activity of the nation better than the nation’s best and brightest in positions of authority.”

"So what did Chydenius write that Eli Heckscher could describe as reflecting a “simple exposition of the fundamental tenets of economic liberalism,” which “might readily have achieved international fame if at that time it had been published in one of the world languages”?

"For example, we see in The National Gain (1765) some of Chydenius’s insight in his critique of government efforts to “improve” the national economy by favoring some industries over others. Of course, it is impossible for the government planners to know which industries provide the greatest good for society.

[I]t is quite unnecessary for the Government to draw workmen from one trade to another by means of laws. Nevertheless, how many Statesmen are there that have busied themselves with this … either by force or by granting them privileges. … No statesman is yet found capable of stating positively which trade will give us the greatest National Gain. … [Economic freedom] relieves the Government from thousands of uneasy worries, Statutes and supervisions, when private and National gain merge into one interest, and the harmful selfishness, which always tries to cloak itself beneath the Statutes, can then most surely be controlled by mutual competition. …

… In Rural Trade (1777), Chydenius examines the problems of government-favors bestowed on certain industries, and the resulting distortions:

Why, then, do rulers take unto themselves a power which is not theirs?… petty princes busy themselves with dabbling in matters they do not understand in order to satisfy their own or someone else’s prejudices, or in blindly following some minister’s advice.

They gather together a great many of their subjects in separate flocks and bestow favors on them at the cost of the others, and these favors they elevate into fixed privileges.

"And on the matter of the relationship between labor and private property, Chydenius notes in Thoughts about the Natural Rights of Masters and Servants (1778) that “[T]he property of the poor is hardly anything else than … freedom to labor and earn their daily bread. If this right be denied a person or be curtailed … by force … then it is clear that his freedom voluntarily to seek work and thus earn his living has been impaired, and then his constitutional guarantee of freedom loses its meaning and value …”

“I especially resonated with Carl Uhr’s description of Chydenius as “imbued … by the vision that man, in seeking his own gain by specialization of labor and by exchange under an impersonal discipline of competition, would realize … the welfare and progress of society as a whole.” As a result, he was a “predecessor [of Adam Smith] who arrived independently at a conception of the essential nature and the virtues of an economic order based on freely functioning markets.” I only wish that, a quarter millennia later, more people shared Chydenius’s insight that, in Eli Heckscher’s words, “the only path to social harmony … was by free competition … all governmental intervention in the production and distribution of goods and services redounded sooner or later to the disadvantage of the great majority of the people.”

Comment

John, a friend of mine, a professor of chemistry at Oxford (Balliol) with a keen interest in Adam Smith, drew my attention to the writings of Chydenius a few years back (apologies, unforgivingly, I have forgotten his surname).   On his prompting, I obtained a copy of the ‘National Gain’ and read it enthusiastically.  Cheydenius presents a ‘Smithian' account of an economy (market and state, before Adam Smith HERE

Typically, chattering epigones resort to hyperbole in respect of Adam Smith, making him out to be the “the first” modern economist and “founder”, “inventor”, “designer”   (etc.) of “capitalism” (a word first used in English in the 19th century by Thackeray, in his novel, ‘The Newcomes’).  Yet markets relations existed for thousands of years before Smith wrote his magnum opus, Wealth Of Nations, mainly as a critique of exisitng market relations.  North Americans love heroes, scholars should love the facts. Smith’s important role in developing the ideas of exchange relationships in human societies was more than enough to establish his historic significance without resort to Hollywood’s tinsel glitter.