The birth of economic thought in Italy Antonio Serra79

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The economic vitality of municipal Italy, the financial activity of Florentine bankers and the role of maritime republics - particularly sector is in principle on the same level as any other sector, as Adam Smith stressed in opposition to the physiocrats. However, when confronted with the 'dynamical' problem of the development of the wealth of nations over time, the use of hierarchies between productive sectors may provide interesting pointers; mercantile analyses, in particular, had the distinctive merit from this point of view of preparing the ground for the Smithian distinction between productive and unproductive labour (cf. Perrotta 1988).

78 As a matter of fact, at the beginning of the eighteenth century the thesis of mutual advantage for countries participating in international trade largely prevailed (cf. Wiles 1987, pp. 157-60, for some examples).

79 This section utilises material from Roncaglia 1994, which contains a fuller treatment of Serra, his thought and fortune.

Venice - in international trade were accompanied by a flourishing of mercantile tracts and writings that incidentally touched on economic issues. However, there were very few authors of any interest for a history of economics. Among them, let us recall Gaspare Scaruffi from the Emilia region (1515-84; his Alitinolfo dates from 1582), and especially the Florentine Bernardo Davanzati (1529-1606), author of a Notizia dei cambi (1582) and of Lezione delle monete (1588). In the first of these two tracts, Davanzati illustrated the mechanisms of international finance of the time, while in the second he considered money as a social convention and stressed the possibility that its intrinsic value may be inferior, even far inferior, to its exchange value. A quantity theory of money, only vaguely sketched out, associated the exchange value (hence the level of commodity prices) with the quantity of money: a thesis which was not new, having been proposed by various authors particularly in France and Spain, but which, in the absence of a notion of the velocity of circulation, remained devoid of a sufficiently well-defined analytical structure.80

A contribution far more relevant to economic science, which we will now consider, emerged from a different environment, characterised by economic decline. This notwithstanding, it is a systematic and very perceptive analysis of the economy, touching on a broad range of economic issues: far superior to later mercantilist literature (including Mun 1621, 1664), and possibly disregarded in English histories of economic thought because of the language barrier. Hence our choice to provide a rather detailed account of his contribution.

On 10 July 1613, a prisoner in the Neapolitan prison of Vicaria, Doctor Antonio Serra from Cosenza, signed the dedication of his book, Il breve trattato delle cause che possono far abbondare li regni d'oro e d'argento dove non sono miniere con applicazione alRegno diNapoli. The book offered economic policy advice aimed at improving the conditions of the Neapolitan kingdom, seen to be lagging far behind other parts of Italy in development.

Of Antonio Serra himself we know hardly anything even today - in practice, only what can be gleaned from his book, namely that he was

80 More or less rudimentary formulations of the quantity theory of money were already present in the literature before Davanzati: in Spain, in the famous Salamanca school the Dominican monk Navarro (Martin de Azpilcueta, 1493-1586) in 1556, and subsequently Tomas de Mercado in 1569; in France, Jean Bodin (1530?-96) in 1568. In a report to the Prussian parliament of 1522, which remained unpublished until the nineteenth century, Copernicus had also referred to the relationship between quantity of money and prices. Cf. Spiegel 1971, pp. 86-92, and Chafuen 1986, pp. 67-80. Copernicus' insight was truly notable, since the influx into Europe of gold and silver from the Spanish colonies in America, which drew attention to the relationship between quantity of money and prices, came some decades later: cf. Vilar 1960; Cipolla 1976. These formulations did not constitute a theory in the strict sense of the term, but went well beyond the vague references we find in previous literature, for instance in Pliny the Younger.

from Cosenza and that he was in prison in 1613. The reason for his imprisonment is uncertain; equally uncertain is his profession, unknown the dates of his birth and death.

His work surfaced from oblivion only a century after its publication, thanks to Galiani, who had words of high praise for it in his Della moneta.81 The true artificer of the resurrection of the Breve trattato was Baron Pietro Custodi, who declared that he considered Serra 'the first writer of political economy' (Custodi 1803, p. xxvii), and assigned him the first place, violating the chronological order, in his famous collection of Scrittori classici italiani di economia politica (Classical Italian writers of political economy, in fifty volumes, 1803-16).

Let us first of all consider the structure and content of the book. After the dedication and the preface, the Breve trattato is divided into three parts. The first, and for us the most interesting, discusses 'the causes for which kingdoms may abound with gold and silver', as the title of chapter 1 went: that is, in substance, the causes - even if not the nature - of the economic prosperity of nations in the broadest sense of the term, also through comparison of conditions prevailing in the Kingdom of Naples with those prevailing in other parts of Italy, particularly Venice. The second part is substantially concerned with refuting the proposals advanced a few years earlier by Marco Antonio De Santis (1605a, 1605b) with the aim of reducing the exchange rate to attract money into the kingdom from outside. The third part presented systematic discussion of the different policy measures adopted or proposed 'in order to make money abundant within the Kingdom'.

The economic prosperity of a country, Serra explained, depends on 'own accidents', i.e. original characteristics specific to each country, and 'common accidents', or in other words more or less favourable circumstances that may be reproduced anywhere. Among the former, Serra mentioned 'abundance of materials', i.e. endowment of natural wealth, particularly fertile lands (Serra commonly utilised the term 'robbe', materials, for agricultural products), and 'the site', namely localisation 'with respect of other kingdoms and other parts of the world'. There are four 'common accidents': 'quantity of manufactures, quality of people, large amount of trade and capability of those in power'. In other terms: manufacturing production, moral qualities and professional skills of the population, extent of trade (especially international transit trade), and politico-institutional system, the latter being the most important of the

81 Galiani 1751, pp. 339-40; the passage quoted is in the author's notes to the second edition, dated 1780.

four elements, 'since it may be said to be the efficient cause and the superior agent for all the other accidents' (Serra 1613, p. 21).

Having analysed these elements in the first seven chapters of the first part, Serra noted that, as far as the 'own accidents' were concerned, the Kingdom of Naples was at an advantage (except for the site), particularly in comparison with Venice: if Naples was so much poorer than Venice, this could only depend on 'common accidents'. In showing how this happened, and for what reasons gold and silver flowed out ofthe Kingdom of Naples, Serra reconstructed with great ingenuity the situation of the country's balance of trade, although without systematic treatment of this notion.

The second part of the Breve trattato was the longest of the three, and the least clear in exposition. Half of it (the first five chapters) was dedicated to confutation of De Santis' thesis that 'the high rate of exchange in Naples compared with other places in Italy is the only cause that made the Kingdom poor in money', since it caused letters of exchange to be used for payments from outside the Kingdom, while money was used for payments to outside the Kingdom.82 Serra denied that the asymmetry could derive from the mechanism of the letters of exchange; the paucity of money in the Kingdom depended on the underlying imbalance in what we would now call the balance of payments. As a matter of fact, if we translate into our terminology what Serra maintained in his chapter 10, the influx of currency corresponding to exports of agricultural products was much more than offset by outflows for interest remittances on public debt and profit remittances on productive activities under the control of 'foreigners', especially Genoese and Florentine merchant-bankers. The remaining chapters of the second part of the Breve trattato, from the sixth to the twelfth, lined up the points against De Santis' proposal to fix a low exchange between Naples and other financial centres.83

Finally, part three discussed economic policies that could be applied to improve the situation of the Kingdom: administrative regulations on financial and currency markets, some already tried out (such as a ban on exports of money and precious metals, reduction of the exchange rate, use of foreign currency as internal means of payment, overvaluation of foreign currency and/or obligation to consign it to the national mint) and others -our author prudently said - that had only been proposed (increase in the face value of national money, reduction of its gold or silver content). The fifth chapter briefly discussed 'the right proportion between gold and

82 'The level of the exchange' is the price in national currency of a letter of exchange denominated in foreign currency.

83 On Serra's contribution to the theory of exchanges, cf. Rosselli 1995.

silver'. Although not in principle opposed to administrative measures, Serra advanced some fairly drastic criticism of such interventions: when not actually counter-productive, they were at any rate ineffective, since -as we have seen - the real problem concerned the passive balance of payments.

In the final chapters, Serra stressed how difficult it was to tackle such basic problems, pointing as the main objective to development of productive activity in the Kingdom.

Thus, Serra considered the unbalance in the currency market to stem from a negative balance of payments, inclusive of so-called invisible items. In turn, this situation was seen to derive from a feeble productive structure and the scant entrepreneurial spirit of the subjects of the Kingdom of Naples: the theme that Serra chose to open his Breve trattato. There was, then, a decisive connection between scarcity of money in the Kingdom and its feeble productive structure, and it is precisely this connection that constitutes an answer to imputations that Serra identified wealth with money and precious metals:84 a thesis which has no textual foundation in his work, where the problem of what constitutes what Adam Smith was later to call 'the wealth of nations' was not tackled directly, and which was in fact contradicted by the primary role attributed to productive activity.

As frequently happens in the historiography of economic thought, the contrasting evaluations of Serra's contribution to the development of economic science depended on the various positions of the participants in the theoretical debate. In this respect we can distinguish two extreme, conflicting theses already present in the historical literature of the nineteenth century. On the one hand we have the extreme laissez-faire approach of Francesco Ferrara, who condemned Serra out of hand together with any other authors who did not in principle reject any kind of public intervention in the economy.85 On the other hand, we find the nationalism and empirical reformism of authors such as Custodi and Pecchio, and also

84 Cf. Say 1803, p. 30; McCulloch 1845, p. 189; Ferrara 1852, p. xlix. The opposite opinion was held by Einaudi 1938, pp. 132-3, and Schumpeter 1954, pp. 353-4. We should recall that Einaudi was a staunch critic of bullionist views, going so far as to date the birth of economic science precisely at the stage when (with Botero, Petty and Cantillon) identification between precious metals and wealth was rejected (Einaudi 1932, pp. 219-25).

85 Ferrara had been criticised for not having included Serra and other Italians in the first two volumes of his Biblioteca dell'economista (first series), dedicated instead to the physiocrats and Smith. Answering to this criticism in the preface to the third volume of the first series of the Biblioteca (dedicated to the 'Italian tracts of the XVIII century': Genovesi, Verri, Beccaria, Filangieri, Ortes), Ferrara 1852, pp. xliii-lvii, expressed a decidedly negative judgement of Serra's qualities as an economist, classifying him as a bullionist ('gold and silver were for him the only and supreme possible wealth', ibid., p. xlix) but saving him (ibid., pp. lv-lvi) as a patriot inspired with civic passion, maintaining that Serra's work actually aimed at insinuating into the reader, through comparison between Naples

List, who maintained the crucial importance of Serra's work as the first manifestation of a new science, precisely because of the reference made to the real economy and the role of industry, in its original sense of spirit of initiative, for the well-being of the nation.86

It is, indeed, a mistake to undervalue Serra, classifying him as one among the many mercantilist authors of the time responsible for such errors in representation of the economic system as can no longer be accepted after Adam Smith's critique. As we have seen, in fact, Serra attributed a central role to national productive activity, and thus could hardly be associated with the characterisation ofmercantilism that has the wealth of nations stemming (mainly, if not solely) from foreign trade -a characterisation which, moreover, was also faulted by various other authors of the time.87 However, it is also difficult to accept the opposite interpretative position, which went so far as to consider Serra the founder of economic science. To this end the importance attributed to real phenomena, in particular to manufacturing production, is certainly not sufficient, since in his work we would look in vain for a sufficiently clear exposition of the notion of surplus that constituted in the following two centuries the basis for the development of classical political economy; equally in vain would we look for even the slightest trace of any theory of value and distribution.88

It is, however, clear that Serra can have had scant influence if any at all on the initial stages in the development of political economy, given the minimal circulation of his work before it was reprinted in Custodi's series. Serra was not a mercantilist in the disparaging sense attributed to the label by the followers of Adam Smith, who had in fact created it, in book IV of the Wealth of nations, as a scapegoat for his animadversions on the feudal obstacles to economic initiative. Serra was an author as immune from sectarian interventionist ideas as he was from extreme laissez-faire views, and Venice, the idea that the republic was a form of government superior to absolute monarchy, and considering it 'likely that Galiani had intended, by extolling the merits of the economist, to refer to the politician' (ibid., p. lvi). (The legend, widespread in the nineteenth century, of Serra as a patriot, imprisoned because of his political position, has no factual support whatsoever.)

86 Cf. Custodi 1803; Pecchio 1832, pp. 45-50; List 1841, pp. 265-7, 271.

87 Cf. Perrotta 1991.

88 Serra's references to the 'quantity of manufactures [. . .] that exceeds the needs of the country' or to the 'surplus materials' (Serra 1613, p. 11) are insufficient in this respect. Moreover, it is not difficult to find precursors of Serra on specific points that drew praise from the commentators. For instance, Serra was preceded by the anonymous Genoese critic of De Santis (Anonymous 1605) in the importance attributed to invisible items in the balance of payments. Again, he was preceded by authors such as Botero 1589 for the importance attributed to 'man's industry', and by Scaruffi 1582 for the hostility to measures forbidding the export of money and precious metals.

who admitted public intervention in the economy when directed not at containing the interests ofindividual agents but rather at providing them with the right system to operate in. He was an author who did not identify wealth with money and precious metals, but who, unlike the most schematic among the classical authors of the eighteenth-nineteenth centuries, put his finger - almost intuitively, we might say - on the relationship of interdependence between financial and real aspects of the economy. He was an author not yet constrained by the classical notion of homo oeco-nomicus, who found it natural to connect political, social and economic aspects. Serra was an author of commendable mentality: 'favourable to activism, open to recognise the role of free will, idealistic, in contrast to the fatalistic, mechanical and materialistic [mentality] ... of the classical economists'.89 Serra, to sum up, well represented the potentialities of the formative stage of economic science, displaying openness to a variety of possible lines of theoretical development. Re-reading his Breve trattato serves to remind us that constructing well-defined conceptual and analytical structures may incur the cost of neglecting certain elements that play an important role in our understanding of reality.

89 Tagliacozzo 1937, p. xxxiv.

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