David Hume
Contributions to economic thought

Hume expressed his economic views in his Political Discourses, which were incorporated in Essays and Treatises as Part II of Essays, Moral and Political. To what extent he was influenced by Adam Smith is difficult to assess; however, both of them had similar principles supported from historical events. At the same time Hume did not demonstrate concrete system of economic theory which could be observed in Smith's Wealth of Nations. However, he introduced several new ideas around which the "classical economics" of the 18th century was built. Through his discussions on politics, Hume developed many ideas that are prevalent in the field of economics. This includes ideas on private property, inflation, and foreign trade. Referring to his essay " Of the Balance of Trade ", economist Paul Krugman (2012) has remarked that "David Hume created what I consider the first true economic model."

In contrast to Locke, Hume believes that private property is not a natural right. Hume argues it is justified, because resources are limited. Private property would be an unjustified, "idle ceremonial," if all goods were unlimited and available freely. Hume also believed in an unequal distribution of property, because perfect equality would destroy the ideas of thrift and industry. Perfect equality would thus lead to impoverishment.

David Hume anticipated modern monetarism. First, Hume contributed to the theory of quantity and of interest rate. Hume has been credited with being the first to prove that, on an abstract level, there is no quantifiable amount of nominal money that a country needs to thrive. He understood that there was a difference between nominal and real money.

Second, Hume has a theory of causation which fits in with the Chicago-school " black box " approach. According to Hume, cause and effect are related only through correlation. Hume shared the belief with modern monetarists that changes in the supply of money can affect consumption and investment.

Lastly, Hume was a vocal advocate of a stable private sector, though also having some non-monetarist aspects to his economic philosophy. Having a stated preference for rising prices, for instance, Hume considered government debt to be a sort of substitute for actual money, referring to such debt as "a kind of paper credit." He also believed in heavy taxation, believing that it increases effort. Hume's economic approach evidently resembles his other philosophies, in that he does not choose one side indefinitely, but sees gray in the situation
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