Circular Reasoning. The intricate history of circular flow analysis in the 1750s
The entry ‘Especes’ (‘Cash’) in volume 5 of Diderot and d’Alembert’s Encyclopédie, first published in November 1755, contained a long subsection with the title De la circulation, du surhaussement & de l’abaissement des especes. This contribution, written by François Véron Duverger de Forbonnais (1722-1800), forms the most significant discussion of circulation, as an economic phenomenon, in the entire Encyclopédie. It is fascinating to compare its content with that of the two entries ‘Circulation’ and ‘Cash’ in another encyclopedic work, the slightly earlier Universal Dictionary of Trade and Commerce of Malachy Postlethwayt. It is well-known that the contents of Postlethwayt’s entries was plagiarized from Richard Cantillon’s seminal Essay on the Nature of Trade in General. If one compares the two entries in the English and the French Dictionaries one finds a number of strong parallels. The likely explanation, however, is not that passages in the Encyclopédie had been borrowed from Postlethwayt’s Dictionary. Instead, it is more likely that Fobonnais was inspired more directly by the French version of Cantillon’s writings. For this to be possible, however, Forbonnais must have had access to a manuscript of Cantillon’s work, because almost the same content as is found in the Encyclopédie entry had already appeared in 1754 in chapter 9 of Forbonnais’s Elémens du commerce, hence before the publication of the Essai sur la nature du commerce en général in May 1755. This paper considers how Forbonnais, probably the most widely read economic author in continental Europe in the 1750s and 1760s, developed Cantillon's ideas about circular flow in his own way to serve his own purposes. Eventually Forbonnais would also turn into an outspoken critic of a number of ideas of François Quesnay, whose Tableau économique was in turn also partly inspired by Cantillon's conceptions. Hence circular flow analysis in the 1750s developed in an unsuspected intricate manner.
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Keywords: Forbonnais circular flow analysis Quesnay Cantillon Postlethwayt
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