ABSTRACT OF PAPER
Title: The balance of payments and the money supply. Two early controversies in the English ‘Realme’ and in the Kingdom of Naples.
Author: Costabile Lilia
Real and financial flows link together open economies in the web of international relationships. These flows are economic in nature, as they stem from the structural relations between the productive and the financial sectors of the economy; but, reflecting the underlying balance of power among these sectors and among leading and peripheral nations, they also are intrinsically political. Of these truths were aware the protagonists of two controversies, which flared up at the beginning of the XVII century in England and in the Kingdom of Naples. Malynes, Misselden and Mun in the English “Realme” have their counterparts in De Santis, Serra and Turbolo in Naples. This paper presents a comparative study of their arguments concerning the causes and consequences of external imbalances, and the respective role played by finance and production in shaping the international hierarchies of power. Revisiting these early debates is particularly appropriate at a time, like ours, when international political economy is again focusing on the respective role of production and finance and, differently from the past couple of centuries, the supremacy of the former is no longer taken for granted. The different international positions of the two countries profoundly affected our authors’analyses of international flows, and their optimism or pessimism concerning the external constraint. Naples, being part of the system of Spanish Vice-Royalties, was experiencing the hard realities of economic and political dependency, while Britain was moving towards imperial expansion via both military and economic warfare. This difference impresses a different flavour on their analyses.Consequently we may talk of a Neapolitan “defensive”, and an English “aggressive”, mercantilism. But, in spite of these differences, the similarities between the two controversies are striking: firstly, because all these the writers adopted a common macroeconomic, monetary framework for international accounting and analysis; secondly, because alternative theoretical positions cut across nationalities. De Santis and Malynes described in similar terms the complex technology of international exchanges operating in Europe, and its distorting effects on exchange rates, the terms of trade, cash flows and the money stock. Serra, Mun and -to a lesser extent- Misselden underlined the lack of competitiveness of the “real” economy instead. Thus the first two economists would have been on the same side of an hypothetical supranational controversy, with the other three sharing the opposite position, and wise Turbolo occupying the middle-ground between them. These two controversies present an interesting example of multiple discovery and, most intriguingly, show how international analysis in the early stages of its development waved the economic and the political elements together.
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