ABSTRACT
Adam Smith’s Wealth of Nations shaped classical political economy into a discipline very different from political arithmetic, the primitive quantitative economics of the preceding century. Smith was deeply concerned with the empirical relevance of his political economy, confronting predictions with observation (see West 1990, Chapter 2 on testable propositions from Smith). He engaged in extensive historical and empirical explorations, such as his discussion of the herring bounty or the pioneering sketch of the economic history of Western Europe that constitutes Book III of the Wealth of Nations. This interest in evidence did not, however, lead him to approve of the elaborate quantitative reasoning of political arithmeticians from Sir William Petty, John Graunt and Gregory King in the late seventeenth century to Smith’s younger contemporaries George Chalmers, Sir John Sinclair and Arthur Young. Smith regarded the products of this tradition with a skepticism equal to that which J.M.Keynes and Milton Friedman displayed toward Jan Tinbergen’s macroeconometric modeling. Smith’s choice of topics had as large a role in shaping classical political economy as his critical comments on other approaches. Just as the decline in attention to modeling the circular flow of income and spending owed something to Smith’s decision to devote but a single sentence to the Tableau Economique in his chapter on the Physiocrats, so classical inattention to political arithmetic reflected Smith’s selective silences. Arthur Young’s Political Arithmetic (1774, 1779) is largely forgotten as part of the context of the Wealth of Nations (1776).
