Sir William Petty (May 27 1623 – December 16 1687) was an English economist, scientist and philosopher. He first became prominent serving Oliver Cromwell and Commonwealth in Ireland. He developed efficient methods to survey the land that was to be confiscated and given to Cromwell's soldiers. He also managed to remain prominent under King Charles II and King James II, as did many others who had served Cromwell.
He was Member of the Parliament of England briefly and was also a scientist, inventor, and entrepreneur, and was a charter member of the Royal Society. It is for his theories on economics and his methods of political arithmetic that he is best remembered, however, and he is attributed as having started the philosophy of 'laissez-faire' in relation to government activity. He was knighted in 1661. He was the great-grandfather of William Petty Fitzmaurice, 2nd Earl of Shelburne & 1st Marquess of Landsdowne.
William Petty was born in Romsey on 27 May 1623 to a family of middle income, his father being a Hampshire clothier, as was his grandfather. A precocious and intelligent youngster, he became a cabin boy in 1637, but was set ashore in Normandy after breaking his leg on board. After this setback, he applied in Latin to study with the Jesuits in Caen, supporting himself by teaching English. After a year, he returned to England and had by now a thorough knowledge of Latin, Greek, French, mathematics and astronomy.
After an uneventful period in the Navy, he left to study in Holland in 1643, where he developed an interest in anatomy. Through an English professor in Amsterdam, he became the personal secretary to Hobbes allowing him contact with Descartes, Gassendi and Mersenne. In 1646, he returned to England and, after developing a double-writing instrument with little success in sales, he studied medicine at Oxford University. He befriended Hartlib and Boyle, and he became a member of the London Philosophical Society, and possibly met John Milton. By 1651, he had risen to Professor of Anatomy at Brasenose College, Oxford and was also Professor of Music in London.
In 1652, he left on a leave of absence and travelled with Oliver Cromwell's army in Ireland, as physician-general. His opposition to conventional universities, being committed to ‘new science’ as inspired by Francis Bacon and imparted by his afore-mentioned acquaintances, perhaps pushed him from Oxford. He was pulled to Ireland perhaps by sense of ambition and desire for wealth and power. His breadth of interests was such that he successfully secured the contract for charting Ireland in 1654, so that those who had lent funds to Cromwell's army might be repaid in land - a means of ensuring the army was self-financing. This enormous task he completed in 1656 and became known as the Down Survey, later published (1685) as Hiberniae Delineatio. As his reward, he acquired approximately 30 000 acres (120 km²) in Kenmare, in southwest Ireland, and £9 000. This enormous personal advantage to Petty led to persistent court cases on charges of bribery and breach of trust until his death. None were ever proven.
Now back in England, as a Cromwellian supporter, he ran unsuccessfully for Parliament in 1659 for West Looe. Despite his political alliegances, he was well-treated at the Restoration, although he lost some of his Irish lands. In 1662, he was invited to join the 'Invisible College', a club of intellectuals and was a charter member of the Royal Society of the same year. This year also saw him write his first work on economics, his Treatise of Taxes and Contributions. Petty counted among his many scientific interests naval architecture: he had become convinced of the superiority of double-hulled boats, although they were not always successful; the Experiment reached Porto on 1664, but sank on the way back. He was knighted by Charles II and returned to Ireland in 1666, where he remained for most of the next twenty years.
The events that took him from Oxford to Ireland marked a shift from medicine and the physical sciences to the social sciences, and Petty lost all his Oxford offices. The social sciences became the area that he studied for the rest of his life. His primary interest became Ireland’s prosperity and his works describe that country and propose many remedies for its then backward condition. He helped found the Dublin Society in 1682. Returning ultimately to London in 1685, he died in 1687.
He regarded his life in bittersweet terms. He had risen from humble origins to mix with the intellectual elite and was by 35 a considerably wealthy man and leading member of the 'progressive sciences'. Nonetheless, he was insecure about his land holdings and his ambitions of obtaining important political posts remained frustrated. Perhaps he expected the astronomical rise he experienced in his early years to continue throughout his life. Contemporaries described him, nonetheless, as humorous, good-natured and rational.
He is most well known for economic history and statistic writings, pre-Adam Smith. Of particular interest were Petty's forays into statistical analysis. Petty's work in political arithmetic, along with the work of John Graunt, laid the foundation for modern census techniques. Moreover, this work in statistical analysis, when further expanded by writers like Josiah Child, documented some of the first expositions of modern insurance. Vernon Louis Parrington notes him as an early expositor of the labor theory of value as discussed in Treatise of Taxes in 1692.
Secondly, the influence of Francis Bacon was profound. Bacon, and indeed Hobbes, held the conviction that mathematics and the senses must be the basis of all rational sciences. This passion for accuracy led Petty to famously declare that his form of science would only use measurable phenomena and would seek quantitative precision, rather than rely on comparatives or superlatives, yielding a new subject that he named political arithmetic. Petty thus carved a niche for himself as the first dedicated economic scientist, amidst the merchant-pamphleteers, such as Thomas Mun or Josiah Child, and philosopher-scientists occasionally discussing economics, such as Locke.
He was indeed writing before the true development of political economy. As such, many of his claims for precision are of imperfect quality. Nonetheless, Petty wrote three main works on economics, Treatise of Taxes and Contributions (written in 1662), Verbum Sapienti (1665) and Quantulumcunque concerning money (1682), all refreshingly concise. These works, which received great attention in the 1690s, show his theories on major areas of what would later become economics. What follows is an analysis of his most important theories, those on fiscal contributions, national wealth, the money supply and circulation velocity, value, the interest rate, international trade and government investment.
On the issue of raising taxes, Petty was a definite proponent of consumption taxes. He recommended that in general taxes should be just sufficient to meet the various types of public charges that he listed. They should also be horizontally equitable, regular and proportionate. He condemned poll taxes as very unequal and excise on beer as taxing the poor excessively. He recommended a much higher quality of statistical information, in order to raise taxes more fairly. Imports should be taxed, but only in such a way that would put them on a level playing field with domestic produce. A vital aspect of economies at this time was that they were transforming from barter economies to money economies. Linked to this, and aware of the scarcity of money, Petty recommends that taxes be payable in forms other than gold or silver, which he estimated to be less than 1% of national wealth. To him, too much importance was placed on money, 'which is to the whole effect of the Kingdom… not [even] one to 100'.
The answer for Petty lay in the velocity of money’s circulation. Anticipating the quantity theory of money often said to be initiated by John Locke, whereby Y*p=MS*v, Petty stated that if Y was to be increased for a given money supply, 'revolutions' must occur in smaller circles (i.e. higher v). This could be done through the establishment of a bank. He explicitly states in Verbum Sapienti "nor is money wanting to answer all the ends of a well policied state, notwithstanding the great decreases thereof which have happened within these Twenty years (p. 113)" and that higher velocity is the answer. He also mentions that there is nothing unique about gold and silver in fulfilling the functions of money and that money is the means to an end, not the end itself:
Nor were it hard to substitute in the place of Money [gold and silver] (were a comptency of it wanting) what should be equivalent unto it. For Money is but the Fat of the Body-Politick, whereof too much doth often hinder its agility, as too little makes it sick... so doth Money in the State quicken its Action, feeds from abroad in the time of Dearth at home.' (Hull 1899: p.113)What is striking about these passages is his intellectual rigour, which put him far ahead of the mercantilist writers of earlier in the century. It is also interesting to note the use of biological analogies to illustrate his point, a trend continued by the physiocrats in France early in the 18th century.
On prohibiting imports, for example from Holland, such restrictions did little other than drive up prices, and were only useful if imports vastly exceeded exports. Petty saw far more use in going to Holland and learning whatever skills they have than trying to resist nature. Epitomising his viewpoint, he thought it preferable to sell cloth for 'debauching' foreign wines, rather than leave the clothiers unemployed.
Petty also applied the principle to his survey of Ireland. His breakthrough was to divide up the work so that large parts of it could be done by people with no extensive training.
Now, if the city double its people in 40 years, and the present number be 670,000, and if the whole territory be 7,400,000, and double in 360 years, as aforesaid, then by the underwritten table it appears that A.D. 1840 the people of the city will be 10,718,880, and those of the whole country but 10,917,389, which is but inconsiderably more. Wherefore it is certain and necessary that the growth of the city must stop before the said year 1840, and will be at its utmost height in the next preceding period, A.D. 1800, when the number of the city will be eight times its present number, 5,359,000. And when (besides the said number) there will be 4,466,000 to perform the tillage, pasturage, and other rural works necessary to be done without the said city". (OF THE GROWTH OF THE CITY OF LONDON - among the essays downloadable at the Gutenberg link.)
He imagined a future in which "the city of London is seven times bigger than now, and that the inhabitants of it are 4,690,000 people, and that in all the other cities, ports, towns, and villages, there are but 2,710,000 more." He expected this some time round 1800, extrapolating existing trends. Long before Malthus, he noticed the potential of human population to increase. But he also saw no reason why such a society should not be prosperous.
He influenced not only immediate successors such as Richard Cantillon but also some of the greatest minds in economics, including Adam Smith, Karl Marx and John Maynard Keynes. With Adam Smith, he shared a Weltanschauung that believed in a harmonious natural world. The parallels in their canons of taxation epitomise their joint belief in natural liberty and equality. They both saw the benefits of specialisation and the division of labour. Furthermore, Smith and Petty developed labour theories of value, as did David Ricardo and Karl Marx in the 19th century.
Smith says nothing about Petty in The Wealth Of Nations. In his published writings, there is nothing apart for a reference in a letter to Lord Shelburne, one of Petty's aristocratic descendants (Correspondence Of Adam Smith, Letter No. 30, Glasgow Edition).
Petty continued to exercise influence. Karl Marx believed, as did Petty, that the total effort put in by the aggregate of ordinary workers represented a far greater contribution to the economy than contemporary thought recognised. This belief led Petty to conclude in his estimates that labour ranked as the greatest source of wealth in the kingdom. Marx’s conclusions were that surplus labour was the source of all profit, and that the labourer was alienated from his surplus and thus from society. John Maynard Keynes also wrote at a time of mass discord, as unemployment was rampant and economies stagnant during the 1930s. He showed how governments could manage aggregate demand to stimulate output and employment, much as Petty had done with simpler examples in the 17th century. Petty’s simple £100-through-100-hands multiplier was refined by Keynes and incorporated into his model.
For information on his family.
The National Portrait Gallery has five portraits of Sir William Petty
A criticism of William Petty's defense of religious intolerance