Chapter 4: Twentieth-Century Economic Methodology

Peter J. Boettke

Twentieth-century economic methodology The birth of the discipline of political economy is often dated to the eighteenth-century Scottish Enlightenment philosophers such as David Hume and Adam Smith. Of course, there were recognized antecedents dating back to Aristotle, the Spanish Schoolmen of Salamanca, and the French Physiocrats. Even the core idea of how private interest can be reconciled with public benefit through competition had a predecessor in Bernard Mandeville. But it was the Scottish philosophers who provided the foundation of classical political economy in the eighteenth century. The systematic study of political economy begins with the recognition of two seemingly contradictory observations about commercial life. The first observation is that individuals pursue their self-interest and do so as effectively as they are capable of doing. The second observation is that commercial society exhibits a strong tendency to produce outcomes that enhance the public welfare in terms of material progress and betterment ...

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