Richard Cantillon is rightfully considered the founder of modern economic theory. His works were taken as a basis by Adam Smith in the formation of the theses of the theory of wages. Nevertheless, very few facts about the life of this person have survived to this day. And even what is known is not reliable. What has come down to this day about one of the greatest economists of the XVIII century (the facts of his biography, his contribution to the economy and demography, and other information about Richard Cantillon) is presented in this article.
Biographical facts
Cantillon Richard, whose biography is shrouded in mystery, was supposedly born in 1680, although the biography of A. Fage indicates 1697. According to rumors, he was a descendant of one of the associates of William the Conqueror. Some sources indicate that he was an Irish-born who later moved to England.
In London, Richard Cantillon (photo above) was engaged in commercial activities. In this field, he earned his first fortune. Cantillon later moved to France and changed his line of business, becoming manager of his uncle's bank. In 1717, after the death of a relative, the bank was completely transferred to the disposal of a young banker.
Richard loved to travel. During his short life, he managed to visit the countries of the Far East, Brazil, India. Almost nothing is known about the details of these trips.
Richard Cantillon died in 1734 in his own house during a fire. This fire was not accidental. He was arranged by a servant in retaliation for his dismissal.
commercial activity
While working at the bank, Richard Cantillon is actively interested in the system of John Law, the founder of the stock exchange game in Europe. Thanks to this knowledge, he successfully carries out a number of transactions that helped him increase his capital. At that time, shares of the West India Company were on the rise. Cantillon foresaw that the price of this asset would soon fall, and managed to sell them at a bargain price. He placed his profit on accounts in banks in London and Amsterdam.
After the collapse of the stock price in 1720, a French bank, managed by John Law, went bankrupt. This was only to Cantillon's advantage, since he managed to reorganize his assets on time and was completely unhurt from the fall of West Indian company shares. At the same time, the customers of Cantillon Bank, whose guarantees were depreciated, had to repay their debts to the bank. In litigation, sometimes lasting for years, Richard almost always won.
Contribution to Economic Science
During his life, the economist Richard Cantillon has written many works, most of which have not survived to this day. In economic circles, he gained fame thanks to his Essay on the Nature of Trade in General. This work was published in France 20 years after the death of the author in 1755.
The first part of the book defines wealth. At the same time, its individual elements are distinguished - land and labor. Cantillon claims that land brings three types of income:
- Reimbursement to the farmer.
- Profit of the real owner.
- Profit of the owner.
The economist Richard Cantillon did not see money as wealth. For him, the real property was land. Unlike the agricultural sector, enterprises cannot provide an equivalent to the third type of income, and therefore are less profitable.
Cantillon on wages
Particular attention in the writings of Cantillon is paid to wage issues. The economist gives reasons for differences in wages, among which:
- time spent on work;
- type of work and risk associated with it;
- degree of responsibility;
- abilities necessary for the performance of work, etc.
The work of Cantillon also considered concepts such as market prices, barter, interest rates. He was the first to use the term intrinsic or real value, and showed its connection with the market price.
Contribution to Demographic Science
Richard Cantillon was not only a banker and economist, but also a demographer. In his writings, he mentioned the immense ability of the population to reproduce, which is a source of wealth and power of the state.
Like mercantilists, the Cantillon pointed out barriers to increasing birth rates. However, unlike his predecessors, he highlighted not catastrophic obstacles (war, famine, epidemics of diseases), but social ones - differences in consumption norms, thinking, lifestyle, income level, etc.
Cantillon put forward the theory that for modern man economic interests are more priority than the biological need for reproduction. In the XXI century, this theory, of course, found confirmation. Many families around the world sacrifice procreation, wanting to achieve financial prosperity.
Richard Cantillon - Ahead of Time
The figure of Richard Cantillon is one of the most mysterious figures in the global economy. Neither the date of his birth, nor the circumstances of the death are known for certain. At 23, he became one of the richest people in Europe, thanks to his talent as a stock player. However, this did not save him from an early death.
The main work of Cantillon "Essay on the nature of trade" the world saw only 20 years after his death. The young economist was ahead of his time by decades. His theories of wages and wealth were used in his writings by eminent economists, including the legendary Adam Smith. It was Cantillon who for the first time divided society into three main classes: landowners, entrepreneurs, and wage workers.
The young man loved to travel, but almost nothing is known about his visits to the eastern countries. But it was precisely during his trips to the Far East that the young economist was inspired by ideas that even today are widely used in economics and sociology.
Richard Cantillon, whose works were far from complete, was clearly ahead of his time. Assessing his life, it seems that with an early death he paid for his talent and extraordinary insight, which helped him to make a fortune at a fairly young age. Perhaps if his other works had survived to this day, the modern view of economic science would have been completely different.