37
See also: The circular flow of the economy 40–45 ■ Testing economic theories 170 ■
The economics of happiness 216–19 ■ Gender and economics 310–11
LET TRADING BEGIN
measure.” This approach helped
form the basis of the discipline that
would become known as economics.
In his 1690 book Political
Arithmetick, Petty used real data
to show that, contrary to popular
belief, England was wealthier than
ever. One of his groundbreaking
decisions was to include the value
of labor as well as land and
capital. Although Petty’s figures
are open to dispute, there is no
doubting the effectiveness of his
basic idea. His calculations
included population size, personal
spending, wages per person, the
value of rents, and others. He then
multiplied these figures to give a
total figure for the nation’s total
wealth, creating accounts for an
entire nation.
Similar methods were
developed in France by Pierre de
Boisguilbert (p.334) and Sébastien
le Prestre (1633–1707). In England
Gregory King (1648–1712) analyzed
William Petty
Born in 1623 to a humble
family in Hampshire, England,
William Petty lived through
the English Civil War and rose
to high positions in both the
Commonwealth government
and then the restored
monarchy. As a young man
he worked for the English
political economist Thomas
Hobbes in Holland. After
returning to England, he
taught anatomy at Oxford
University. A great believer
in the new science, he found
universities uninspiring, so
left for Ireland, where he made
a monumental land survey of
the entire country.
In the 1660s he returned
to England and began the
work on economics for which
he is now known. For the
remainder of his life he moved
between Ireland and England,
both physically and in the
focus of his work. Petty is
regarded as one of the first
great political economists.
He died in 1687, aged 64.Key works1662 Treatise of Taxes
and Contributions
1690 Political Arithmetick
1695 Quantulumcunque
Concerning MoneyThe Battle of La Hogue was fought
in 1692 during the Nine Years’ War.
English statistician Gregory King
calculated how long each country
involved could afford to fight.
the economies and populations
of England, Holland, and France.
He calculated that none had the
finances to continue the war they
were then engaged in—the Nine
Years’ War—beyond 1698. His
figures might have been correct,
because the war ended in 1697.Measures of progress
Statistics are now at the heart
of economics. Today, economists
generally measure gross domestic
product (GDP)—the total value
of all the goods and services
exchanged for money within a
country in a particular period
(usually a year). However, there
is still no definitive way of
calculating national accounts,
although efforts have been made
to standardize methods.
Economists have now begun
to broaden the measurement of
prosperity. They have formulated
new measures such as the genuine
progress indicator (GPI), which
includes adjustments for income
distribution, crime, pollution, and
the happy planet index (HPI), a
measure of human well-being and
environmental impact. ■