Antonio Serra, c.1580-?

The Neapolitan writer Antonio Serra was an obscure late 16th-17th C. century philosopher and progenitor of mature Mercantilism.  Antonio Serra is often hailed as "the first economist".

Practically nothing is known about Antonio Serra himself - neither his vital statistics, his profession, his origins nor his fate.  All we know is gleaned from his one and only published tract.  From this, we can deduce that Antonio Serra was a native of Cosenza (in Calabria, part of the Kingdom of Naples), probably had a good Jesuit education, a doctor degree and some familiarity with business, that he was accused of participating in the 1599 conspiracy of the philosopher Tommaso Campanella against the Spanish government of Naples, and wound up in the Vicaria prison in Naples for many years. 

Serra was in prison when he wrote his masterpiece, the Breve Trattato (1613), dedicated to the Spanish vice-roy of Naples, Fernando Ruiz de Castro, Count of Lemos.  It was published in 1613 by the printer Lazzaro Scorriggio in Naples, in an evidently small printing run.  Serra's work remained virtually unknown until nearly a century-and-half later, when it was rediscovered and popularized by Ferdinando Galiani. (Galiani, 1750, p.409)   

In the Breve Tratatto, Antonio Serra addresses the economic condition of the Kingdom of Naples, in particular the causes of the shortage of coin and the policies to address it.  Serra's tract is written as an antidote to Marc' Antonio di Santis, a contemporary pamphleteer, who had been promoting Bullionist" theories and policies (prohibiting the export of bullion, regulation of exchange, etc.), which Serra regarded as obsolete and wrong-headed.

In the first part of the treatise, Serra explains the causes of the wealth of nations. He notes that certain factors - like the abundance of natural resources, fertility of land and geographical location - are accidents of Divine Providence.  But he identifies four factors critical for prosperity that are not accidental and can be modified - the industrial manufacturing capacity, the skill of the population, the extent of trade, and the wisdom of the government.  So while Naples may be blessed with accidental causes, it is much poorer than competitors like Venice due to these other four factors. 

In the second part, Serra considers Di Santis's proposals in more detail. Di Santis believes precious metal had been flowing from Naples to Venice due to the excessively high exchange rate in Naples relative to other financial centers, that, as a result, foreign traders used bills of exchange to make payments to Neapolitans, but demanded coin for payments abroad.  If Naples lowered its exchange rate, Di Santis argued, then it could reverse the situation and lead to an inflow of precious metal.  Serra denounced these ideas as obsolete and wrong-headed.  The flow of precious metal, Serra noted, is due to the balance of trade, and had little to do with the mechanics of how individual traders got paid.   Presciently, Serra includes "invisible" elements, notably profit and interest payments abroad, as part of his balance of trade.   He notes that Naples may have a positive trade balance in its exports of agricultural goods, but this was outweighed by the flow of payments to foreigners in the form of interest on Neapolitan public debt and profits from foreign-owned enterprises inside the Neapolitan kingdom.  While Serra is sometimes credited as the first to articulate the balance of payments, it is a bit of an overstatement.  He did not make his calculations for the whole accounts of Naples, but just for specific sectors.

In the third part of his treatise, Serra treats economic policy head-on, reviewing the efficacy of various exchange controls, debasement and other policies that have been pursued.  Although not necessarily averse to Bullionist-type administrative restrictions in principle, he sees them as largely ineffectual, and that they only touch the surface of the problem, and do not deal with the underlying real problem of an unfavorable balance of trade.  The main focus of policy, Serra insists, should be in improving the four critical factors - in particular manufacturing.  Serra was arguably the first economist to posit that there are increasing returns (diminishing costs) to the scale of manufacturing and diminishing returns (increasing costs) to the expansion of agriculture. He believes the promotion of of the production and export of high-value manufactured goods will be the key to improving the terms of trade and reversing the outflow of money.

Serra was thus one of the first to analyze and fully understand  fully understand the concept of balance of trade for both visible goods and invisible services and capital movements. He explained how the shortage of coin in the Kingdom of Naples was due to balance of payments deficit. Using his findings he was able to reject the popular idea at the time that the scarcity in money was due to the exchange rate. The solution to the problem was found in the active encouragement of exports.

While an exception performance for the time, Antonio Serra's work has been perhaps over-hailed with superlatives.  Ferdinand Galiani crowned him the "earliest and most ancient writer on the science of political economy" (1750: p.410), which others have frequently re-iterated, e.g. the count Pietro Custodi calls him "the first writer of political economy" (1803: p.xxvii).  Travers Twiss called him the "founder of economical science" (Twiss, 1847: p.8).  Even Schumpeter would write that "this man must, I think, be credited with having been the first to compose a scientific treatise, though an unsystematic one, on economic principles and policy" (1954: p.195) and that there was anything unlike it for decades, until the appearance of the mature Mercantilist. literature in England in the latter half of the 17th Century 

However, these garlands should be moderated by remembering Serra's treatise did not, in fact, have any perceptible impact on contemporaries, not even inside Naples.  Serra remained largely unknown until Galiani re-discovered him in 1750, and made use of it in his 1770 Dialogues.  Galiani believed he had the only extant copy in existence (more have been discovered since the late 19th Century - there are, at last count, ten surviving copies of Serra's original treatise).  The solitary copy seen by Galiani was originally held by the Neapolitan official Bartolomeo Intieri, and later passed successively through the hands of Antonio Genovesi, Giuseppe Palmieri (Marchese de Martignano) and Francesco Salfi, before baron Pietro Custodi received it, and published a copy in his Scrittori classici italiani collection of 1803, finally making Serra's treatise available to the general public.  Significantly, violating chronological order, Custodi placed Serra as the first tract of the collection (leapfrogging over earlier Italian writers like Davanzati and Scaruffi).

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