histofthought1

120 Economic thought before Adam Smiththrough the debasement of copper coinage. He pointed out that this debasementalso added to Spain's chronic price inflation by increasing the quantityof money in the country. Philip had wiped out his public debt by debasing hiscopper coins by two-thirds, thereby tripling the supply of copper money.Mariana noted that debasement and government tampering with the marketvalue of money could only cause grave economic problems:Only a fool would try to separate these values in such a way that the legal priceshould differ from the natural. Foolish, nay, wicked the ruler who orders that athing the common people value, let us say, at five should be sold for ten. Men areguided in this matter by common estimation founded on considerations of thequality of things, and of their abundance or scarcity. It would be vain for a Princeto seek to undermine these principles of commerce. 'Tis best to leave them intactinstead of assailing them by force to the public detriment.Mariana begins De Monetae with a charming and candid apologia forwriting the book reminiscent of the great Swedish economist Knut Wicksellover two and a half centuries later: he knows that his criticism of the kingcourted great unpopularity, but everyone is now groaning under the hardshipsresulting from the debasement, and yet no one has had the courage to criticizethe king's action publicly. Hence, justice requires that at least one man ­Mariana - should move in to express the common grievance publicly. Whena combination of fear and bribery conspire to silence critics, there should beat least one man in the country who knows the truth and has the courage topoint it out to one and all.Mariana then proceeds to demonstrate that debasement is a very heavyhidden tax on the private property of his subjects, and that, pace his politicaltheory, no king has the right to impose taxes without the consent of thepeople. Since political power originated with the people, the king has norights over the private property of his subjects, nor can he appropriate theirwealth by his whim and will. Mariana notes the papal bull Coena Domini,which had decreed the excommunication of any ruler who imposes newtaxes. Mariana reasons that any king who practises debasement should incurthe same punishment, as should any legal monopoly imposed by the statewithout the consent of the people. Under such monopolies, the state itself, orits grantee, can sell a product to the public at a price higher than its marketworth, and this is surely nothing but a tax. 4Mariana also set forth a history of debasement and its unfortunate effects;and he pointed out that governments are supposed to maintain all standardsof weight and measure, not only of money, and that their record in adulteratingthose standards is most disgraceful. Castile, for example, had changed itsmeasures of oil and wine, in order to levy a hidden tax, and this led to greatconfusion and popular unrest.