The mercantilist pamphlets of the 1600s are commonly viewed as the first systematic writings on political economy, at least in the English language. While many of these works were unabashed promotions of merchant rights, historians have come to appreciate their rich array of insights on the topics of money, market forces, and the global economy. Two other important traditions of economic inquiry had emerged by the late seventeenth century, fostered by the rise of political freedom and the growth of a scientific culture. The first stems from John Locke’s Two Treatises of Government (1689–90), which addressed the problems of economic justice and distribution via the fundamental concepts of rights and property. Locke also privileged the economic contract in his state of nature and adumbrated a labor theory of value. The second tradition, exemplified by William Petty’s Political Arithmetic (1690), devised quantitative measures of economic phenomena, such as the national product of Ireland, the velocity and quantity of money, and the population of London. While Petty’s measures were bold and imprecise, they helped draw attention to aggregate phenomena and thus to new empirical relationships.

All three lines of thought spoke to the new capitalist system, which had transformed early modern Europe. As Joseph Schumpeter has rightly observed: “By the end of the fifteenth century most of the phenomena that we are in the habit of associating with that vague word Capitalism had put in their appearance,… [and] even then these phenomena were not all of them new.” He had in mind the prices of commodities and factors of production, such as the interest rate.