John Locke is generally referred to as be a prominent physician and philosopher. Nevertheless, his contribution to the international economic environment cannot be underestimated. Locke’s “Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money” is one of his principal papers devoted to the analysis of the most actual economic issues of the relevant period (Locke, 1692). In this work, John Locke applies the established mercantilists’ ideas about the economic policy of the government; meanwhile, he transforms them into utterly new and authentic concepts. The paper can be regarded as Locke’s effort to persuade the authorities to give up its plans to lower the set interest from six to four per cents.
The date of Locke’s work issue referred to the period when the financial regulating was set based on the key mercantile principals. John Locke assumes that the cost of the hire of money should not be fixed by the legislative system. The tries to illustrate his opinion by the supposition that the price of hire can be considered as a subtype of the general concept of cost; hence, it is to be fixed by the law of nature which fails to pursue the will of particular politicians and parties. Therefore, the author concludes that the adoption of such a law that is targeted at the lowering of interest will not potentially lead to the aimed outcomes. The social reluctance to deprive oneself of the profit will search for the probable means of circumventing the set interest restrictions that, in its turn, is likely to result in the considerable rise of the profit margin’s interest. According to the philosopher, such a rise, will, consequently, prompt the deficit of loan funds and the discriminatory wealth redistribution.
Locke expresses a concern that it might likewise do large harm to the general commerce field. One should necessarily note that Locke’s attitude to the issue coincides with the spirit of the relevant period. Even though his ideas corresponded, to a certain extent, to materialists’ commitments, they still possessed a more profound and progressive implication. For this very reason, John Locke is now regarded as the originator of the new approach to the economy; he actively supported such social layers as manufactures, merchants, and plutocracy expressing more sympathy for them than for the old-fashioned money lenders. Contrary to materialists, Locke supposed that land was the basis of profit. His views were shared by numerous economists and received a further development by Dudley North. Meanwhile, his considerations were too sophisticated and theoretic to have an impact on the decision-making process in parliament.
John Locke’s economic speculations are of particular interest due to the author’s original perspectives on the nature of money. The philosopher assumes that the principal significance in the field of the economic exchange stands by the relative values. Locke does not believe in the presence of any internal values that could allow one to exchange the set volume of one kind of amenities into the set volume of the others. According to the author, the value of the object of exchange is dependable only on the proportion between the quantity of the amenities and the quantity demand. These concept Locke equally applies to the money issue. Basing on the previous assumption, money can be regarded as a certain type of goods that possesses both consumptive and exchange values. The consumptive value of money implies its pecuniary capital function the price of which is determined by the rate of interest.
The latter, in its turn, relies not on the law, but on the investment advantage as well as on the accessible means of money used by people. The exchange value of money, though, is a certain case of value, as, whereas the sales outlet normally stays sufficient, the quantity of money is in the process of a constant transformation. Locke presumed that society could accept the idea of possessing any amount of money as long as it was in permanent conversion. Therefore, John Locke attempted to show that money presented no value in itself but operated as calculating units in the process of commodity circulation, and, therefore, the growth of its quantity lead to the rise of its price. Moreover, on the contrary to any other goods, certain units of which could be either any moment exchanged for money, or disappear from the market, or be replaced with other units, monetary units were apt to continue participating in an endless turnover the pace of which was equal to the rise of the money supply. Thus, the nature of money, according to Locke’s idea, as determined by the quantitative indexes of sales (Locke, 1692).
The social and moral implication of Locke’s paper represents another important part of Locke’s treatises that is to be analyzed. The philosopher’s moral views that can be noticed in his considerations throughout the paper vividly depict Locke’s principal difference from mercantilists who were commonly known for approving of exports in the interests of personal enrichment (Spiegel, 1991). Unlike his opponents, the author does not encourage any expression of the injustice of wealth redistribution. Furthermore, the considerations depict his fears about the potential economic exuberance. The philosopher assumes that the adoption of the law of the lowering of interest can do considerable damage to the national trade.
This series of events will lead, as the philosopher presumes, to the disappearance of riches’ social class that is crucial for the national economy. The author puts a particular emphasis on the role of having the biggest amount of such resources like gold and silver that allow society to receive all the conveniences they want. The moral implication is expressed by Locke’s concerns about the preservation of the class of merchants which he presumes to be of the key importance to the national wealth (Brennan & Lomasky, 2006). The philosopher points out the significant role of commerce in his country that is unlucky to be deprived of excessive natural resources. He refers to the case of a successful trading policy employed by the Chinese. Locke estimates this policy as a highly well-though and efficient. Hence, one might suggest that Locke’s attempts to convince the authorities to reject the plan to the lower the interests were significantly based on his sincere concern about the benefits of the economic policy his country was about to pursue.
In conclusion, one is to note that John Lock performed a priceless contribution to the history of the economic environment. His two-part considerations had a strong influence on the minds of philosophers belonging to succeeding generations – one can easily find the reflection of his ideas numerous papers of his successors. Even though mercantilists’ principals were taken as the basis of his speculations, the philosopher managed to introduce his vision of the value and the exceeding power of natural law. Moreover, Locke offered a completely authentic concept of the money’s value that revealed the assumption that the value of money was determined by the quantity of the latter in circulation. Nowadays, one can claim that his theories possess the traits of a classically liberal character. The paper under discussion depicts John Locke as a keen patriot of his motherland who does not want to remain passive when the future of the national economy is at stake; therefore, he does his best to contribute to the prosperous future.
Reference List
Brennan, G., & Lomasky, L. (2006). Against Reviving Republicanism. Politics, Philosophy & Economics, 5(2), 221-252.
Locke, J. (1692). Some considerations of the consequences of the lowering of interest, and raising the value of money. London, United Kingdom: Awnsham and John Churchill.
Spiegel, H. W. (1991). The Growth of Economic Thought. London, United Kingdom: Duke University Press.