ABSTRACT
This chapter examines the emerging economic theories of mercantilism and physiocracy in order to trace some of the intellectual contributions of this illustrious work, a book that is usually hailed as a masterpiece for entirely different reasons. Mercantilism was marked not just by tremendous amounts of wealth, but was further demarcated by very particular government policies. The connections between John Locke and Keynes are well known; this chapter proposes a connection between Don Quixote and John Locke, and thus implicitly also between Don Quixote and Keynes. The ideas of democratic government and of a modern capitalist economy with limited, but some decided, government intervention are put forward 75 years before Locke published his in 1690. Sancho shows that a good ruler is aware of both appearance and reality, thus blending rationality and common sense.
