In their Outline of the History of Economic Thought, Screpanti and Zamagni, however, describe Graunt as a "follower" of Petty. In books and articles on history of economic thought, Petty is mentioned ten times as often as Graunt (JSTOR, Google Scholar). Graunt is more frequently thought of as a pioneer of population studies and vital statistics. Regarding that latter capacity, Philip Kreager has written extensively and wonderfully on Graunt's truly innovative methodology.
It is convenient at this point to recall that to produce, to consume and to trade are actions first, as are supply, demand, value and price – before they can be treated as things and aggregated. People perform those actions and they do them in proportion to their numbers, abilities and appetites.
Proportion, by the way, is central to Graunt's methodology. Did I mention the word appears no fewer than 68 times in Graunt's Observations? Kreager's article, "New Light on Graunt" contains 48 occurrences of the word. The methodological significance of this word for Graunt cannot be overstated. I am therefore quoting in full Kreager's explanation of the analytical role of proportional checks in bookkeeping and Graunt's Observations:
A population, like a commercial enterprise, must achieve at least an equilibrium of income and expenditure over time, if it is to survive. Graunt noticed that the bills, like a merchant's day-book, provided a continuous record of additions and subtractions in a constantly changing numerical whole. The diversity of transactions in people and trade, however, make such a simple running account difficult to interpret. The 'method of double-entry' bookkeeping, widely promoted in Graunt's time, claimed to provide a solution to this problem by revealing the inherent order and regularity of trade. The procedure may be summarized as follows. On the basis of his daily journal of transactions, a merchant was supposed to classify and tabulate every entry according to a few major types of account. Successive transactions pertaining to an account were then entered twice in a ledger, in parallel columns, one entry showing the changing balance of debt, and the other of credit. The comparison or proportion of the two columns relative to starting and subsequent balances provided the merchant with an immediate evaluation of the current and past status of the account, relative to others. This made it possible to spot accounting errors, to isolate losses, and to distinguish real profits from diverse fluctuations in income.Therefore, when Graunt wrote, "…if there be but a certain proportion of work to be done; and that the same be already done by the not-Beggars; then to employ the Beggars about it, will but transfer the want from one hand to another…" it is virtually certain that he was not referring to a "fixed amount" of work. Instead he was referring to a regularity. Change happens but disproportionate change may be cause for concern.
It is difficult to think of a economically-significant fact that doesn't involve "a certain proportion" of something to something else. GDP per capita gauges a certain proportion between economic output and population. Productivity measures a certain proportion between economic output and hours of work. Economic growth reflects a certain proportion between one year's output and the next's. The unemployment rate considers a certain proportion between the labor force and the number of people who are looking for work. It is certain proportions all the way down.
Compare, though, Dorning Rasbotham's lament, 118 years after Graunt, about people who say there is a "certain quantity" of labor to be performed:
There is, say they, a certain quantity of labour to be performed. This used to be performed by hands, without machines, or with very little help from them. But if now machines perform a larger share than before, suppose one fourth part, so many hands as are necessary to work that fourth part, will be thrown out of work, or suffer in their wages. The principle itself is false. There is not a precise limited quantity of labour, beyond which there is no demand.Does the absence of a "precise, limited demand for labor" mean the introduction of machines that produce 25 percent more output can have no disproportionate effect whatsoever on the demand for labor? Rasbotham's rant didn't address that question but his disdainful tone insinuates that to even inquire about such things is tantamount to economic illiteracy. The legacy of that anticipatory polemic against the yet-to-be-born Luddites has been an echo chamber of disdain.
For a while I had been thinking that Sir Josiah Child's rebuke, as a vulgar error -- so commonly held as to have become "almost proverbial" -- of the supposition that "we have people enough, and more than we can employ" was directed at Graunt's suggestion that there may be but a certain proportion of work to be done. But I have found an earlier text that corresponds almost word for word with the supposition that Child scorned. It is from a 1630 pamphlet, The Planter's Plea, by the Puritan divine, John White, promoting colonization in Massachusetts:
It is a fearfull condition, whereby men are in a sort enforced to perish, or to become meanes and instruments of evill. So that the conclusion must stand firme, we have more men then wee can imploy to any profitable or usefull labour.The same year White published his pamphlet, his pilgrims founded a colony in Massachusetts and named it Dorchester, after the Dorset, England town where White preached. It is now the largest neighbourhood in Boston. Ironically, Josiah Child's pamphlet also contained propaganda for English emigration – to the slave sugar plantations in the Caribbean.
Graunt's Observations had a large and immediate impact. The Royal Society made him a charter member. Mathematicians and natural scientists such as Huygens, Leibniz and Halley were impressed by Graunt's practical application of quantitative reasoning. John Locke owned a copy and paid homage to Graunt's method by keeping a record of mortality statistics in his notebooks during the time he was exiled on the continent.
Perhaps the influence of Graunt's Observations was much greater than has previously been acknowledged. Much, much, much greater. In "The scientific method of Sir William Petty" Ullmer pointed out that "the only data available to Petty" in his pioneering accounting of national income came from Graunt's National and Political Observations -- the rest was conjecture. In John Locke and Agrarian Capitalism, Wood credited Graunt with having "had the advantage of being able to use parish records in his examination of the city of London mortality rates" while Petty and Locke had to rely on "commonsensical estimates."
Referring to Locke's pivotal 1668 memorandum on interest, Some of the consequences that are like to follow upon lessening of interest to 4 percent, Wood observed that "Locke's memorandum abounds with such speculative calculations, which serve as points of departure for chains of numerical deductions."
Recent Locke scholars have argued that Locke's famous chapter five, "Of Property," of his Second Treatise of Government can only properly be understood in the context of explicit arguments from the 1668 memorandum and in his Essays on the Law of Nature, which appear to have been written in 1664. Recall that Graunt's Observations was published in 1662 and was an immediate sensation.
Proportion is the central analytical concept of Locke's 1668 memorandum. The word occurs in the text sixty times. Even "certain proportion" occurs twice:
For there being a certain proportion of money necessary for driving such a proportion of trade, so much of this money as lies still lessens so much of the trade.
That in a country open to the commerce of the world and that uses money made of the same materials with their neighbours, any quantity of that money will not serve to drive any quantity of trade, but that there must be a certain proportion between money and trade.Proportionality is also a key concept in Locke's final essay/question on the law of nature. Locke composed the essays in Latin but two recent translations agree in their translations:
The human race has only one patrimony and this is always the same and it is not increased in proportion to the number of births.
In point of fact, the inheritance of the whole of mankind is always one and the same, and it does not grow in proportion to the number of people born.The question Locke was addressing in this essay was whether the law of nature could be based on self interest. His answer was "no" and the reason was that the bounty of nature did not increase in proportion to the number of people, therefore "no gain falls to you which does not involve somebody else's loss." Or, to put it another way:
…when any man snatches for himself as much as he can, he takes away from another man’s heap the amount he adds to his own, and it is impossible for anyone to grow rich except at the expense of someone else.In Locke's view, then, the law of nature is a zero-sum game – but only if every person acts in their own self interest. The qualification is crucial. Locke suggested instead that obedience to the law of nature generates utility in the form of "peace, harmonious relations, friendship, freedom from punishment, security, possession of property, and – to sum it all up in one word – happiness." Paradoxically, then, food, clothing and other goods are limited but possession of property -- being a socially-generated utility -- is not. The dilemma is abated by generosity, "a great number of virtues, and the best of them, consist only in this: that we do good to others at our own loss."
It is not my intention to defend or criticize Locke's argument but simply to point out the light that it shines on his canonical justification of private property in the Second Treatise on Civil Government. Locke concluded his essay on the law of nature with the observation that "the rightness of an action does not depend on its utility; on the contrary, its utility is a result of its rightness."
In his "Treatise of Taxes & Contributions" (1662) William Petty made the same point about the proportion between money and trade that Locke emphasized six years later in his memorandum on interest:
…there is a certain measure, and proportion of money requisite to drive the trade of a Nation, more or less than which would prejudice the same.Compare Locke's text:
For there being a certain proportion of money necessary for driving such a proportion of trade, so much of this money as lies still lessens so much of the trade.Yet another parallel between the texts of Graunt, Petty and Locke appears in their discussions of "intrinsic value." Graunt's distinction between intrinsic and accidental, or extrinsic, value comes in his conclusion, in which he stressed that the purpose of "all this laborious buzzling and groping" was to inform the "art of governing and the true politics… how to preserve the subject in peace and plenty," the foundation of which "is to understand the land, and the hands of the territory to be governed, according to all their intrinsic and accidental differences…":
It were good to know, how much hay an acre of every sort of meadow will bear? how many cattle the same weight of each sort of hay will feed and fatten?… It is no less necessary to know how many people there be of each sex, state, age, religion, trade, rank, or degree, etc. by the knowledge whereof trade and Government may be made more certain and regular; for, if men knew the people as aforesaid, they might know the consumption they would make, so as trade might not be hoped for where it is impossible.For his part, Petty contrasted intrinsic and extrinsic value in the course of his discussion of usury, where he proposed "a survey of the figures, quantities and situations of all the lands," which would compare the suitability of lands for various crops and of those crops for feeding livestock:
As for example; ¡f there be ten acres of Land, I would have it judged whether they be better for Hay or Corn; if for Hay, whether the said ten Acres will bear more or less of Hay then ten other Acres; and whether an hundredweight of the said Hay will feed or fatten more or less, then the same weight of other Hay… This I call a Survey or Inquisition into the intrinsick Values of Land, the extrinsick or accidentall follows.In what followed, Petty outlined the rudiments of a labor theory of value: "If a man can bring to London an ounce of Silver out of the Earth in Peru, in the same time that he can produce a bushel of Corn, then one is the natural price of the other…"
Locke took a radically different approach to intrinsic value, arguing that the intrinsic natural worth of any commodity was due to its serviceability to the necessities of life but "that there is no intrinsic natural settled value in anything as to make any assigned quantity of it constantly worth any assigned quantity of another commodity." According to Locke, intrinsic value is conferred by consent on gold and silver money by virtue of its scarcity and durability. This intrinsic value is not natural, "yet being universal has generally but not always... the same effect as if it were natural."
The necessity therefore of a proportion of money to trade depends on money not as counters but on money as a pledge… First, because a law cannot give to bills that intrinsic value which universal consent has annexed to silver and gold.Locke didn't complete the thought with a second reason why trade depends on money as a pledge but instead elaborated on the first, pointing out that bills "are liable to unavoidable doubt, dispute, and counterfeiting and require other proofs to assure us that they are good and true security."
To what purpose, then (mimicking the wording of Graunt's conclusion) tends all my laborious buzzling and groping? My contention is that Graunt's "if there be but a certain proportion of work to be done" was far from a "vulgar error," "false principle" or "populist fallacy" to be ridiculed by subsequent legendary generations of anonymous but disdainful textbook economists. It was instead a provocative statement of a thesis -- qualified by the conditional phrase, "if there be" -- that good government depends on conscientious attention to the due proportionality between trade, population, land, labor, consumption and social trust "so as trade might not be hoped for where it is impossible." The thesis was supported by data, at a time when data was scarce.
John Graunt invented economics.