Contemporary economists deem virtually every piece of reasoning and argumentation in economics a model, forgetting that there may well be other conceptual tools at hand. This article demonstrates that David Hume used thought experiments to make some remarkable breakthroughs in monetary economics, and that this resolves a longstanding debate about an apparent inconsistency in Hume, between the neutrality and non-neutrality of money. In the actual world, money is never neutral for Hume; only in thought experiments does a sudden growth in (...) the money stock result in an identical and hence neutral increase in the price level. Thought experiments isolate tendencies but do not lend themselves to direct confirmation. Moreover, Hume’s dislike for the French model builders, Melon and Quesnay, captures an important juncture in mid eighteenth-century economic discourse regarding the warranted level of abstraction and of idealization. (shrink)

David Hume wrote prolifically and influentially on economics and was an enthusiast for the modern commercial era of manufacturing and global trade. As a vocal critic of the Church, and possibly a nonbeliever, Hume positioned commerce at the vanguard of secularism. I here argue that Hume broached ideas that gesture toward those offered by Max Weber in his famous Protestant Ethic and the Spirit of Capitalism (1904-5). Hume discerned a strong correlation between economic flourishing and Protestantism, and he pointed to (...) a “spirit of the age” that was built on modern commerce and fueled by religious tolerance. The Roman Catholic Church, by contrast, came under considerable attack by Hume, for fostering intolerance and draining and diverting funds. Hume recognized several of the dispositions that later appealed to Weber: an increased work ethic and tendency to frugality, enterprise, and investment in Protestant regions. A neo-Weberian literature now points to additional factors, the spread of literacy and the fostering of a network of trust among strangers, both of which Hume noted. Insofar as modern commerce both feeds upon and fosters more liberties and representative government, Hume also linked these with the advent and spread of Protestantism. My aim is not to suggest that these arguments have merit—there is good reason to question each and every assertion under the historical microscope—but rather to highlight the broader religious and cultural context in which Hume’s economics was broached. (shrink)

This paper traces missing links in the history of economic thought. In outlining Hume's concept of 'the reflexive mind' it shows that this opened frontiers between philosophy and psychology which Bertrand Russell denied and which logical positivism in philosophy and positive economics displaced. It relates this to Hume's influence not only on Smith, but also on Schopenhauer and the later Wittgenstein, with parallels in Gestalt psychology and recent findings from neural research and cognitive psychology. It critiques Kant's reaction to Hume's (...) claim that one may assume but cannot prove cause and effect and how Samuelson's Foundations of Economic Analysis has been Kantian but wrong in claims for axioms that are universal truths. It illustrates how Samuelson's presumption that language and mathematics are 'identical' was as mistaken as the logical atomism of Russell and the early Wittgenstein, relates this to Kleinian splitting, denial and projective identification and suggests that recovery of greater realism in economics needs to regain links with such philosophy and psychology. (shrink)