Richard Cantillon, 1680?-1734.

Richard Cantillon, acknowledged by many historians as the first great economic "theorist", is an obscure character. This much is known: he was a British subject, an Irishman, who carved out a career in banking in France during the 1710s 

Although there have been many attempts to reconstruct the story of his background from various sources, it has proven contradictory and elusive.  It has been said his family were originally landlords from County Kerry dispossessed of their lands during the confiscations of the 17th C., although they remained well-connected and probably Jacobite.  Young Cantillon is said to have taken French nationality in 1709 and in 1711 might been in the service of James Brydges, Paymaster-General, as financial agent to the British forces in Spain. It only becomes more certain that he moved to Paris in 1714 to launch a career as a merchant banker in the house of a relative (also named Richard Cantillon).  By 1716, Cantillon had either bought his relative out, or launched his own banking house (possibly with financial help from Brydges).  Cantillon got involved early in John Law's schemes, but had little confidence in their success. Cantillon reputedly made a fortune of some twenty million livres by speculating on the collapse of shares in Law's companies in 1720-21, actions which led to multiple lawsuits and even brief arrest by Paris authorities.  Cantillon moved to England thereafter, taking up residence in London.  Cantillon died in 1734 in a fire in his London home - allegedly set by his discharged cook (although there remains speculation that Cantillon set the fire himself, staging his death to escape his lawsuits, and fled abroad - in at least one account, to Surinam).

Cantillon's entire reputation rests on his one remarkable treatise, Essai Sur la Nature du Commerce en Général.  Apparently, the Essai was originally written  circa 1732, probably in English and containing a statistical supplement, but this version has since been lost.  It was translated (probably by Cantillon himself) into French for circulation in manuscript form among his friends.  This French version was published anonymously in England in 1755, some twenty years after his death (publication was probably undertaken by his second cousin, Philip Cantillon).  Two other published versions of this essay exist -  a reprint appended to the 1755 French translation of David Hume's Discours Politiques, and a smaller pamphlet version published by another press in 1756.  Prior to these, excerpts (possibly from the missing English original) were liberally plagiarized by Malachy Postlethwayt in his 1749 Universal Dictionary of Trade and Commerce.

Cantillon's Essai was well-known in Enlightenment France, admired by Vicent de Gournay, cited by the Physiocrats (e.g. Mirabeau, Quesnay and Turgot) and one of the few works referenced by Adam Smith.  It continued to be read in the 19th C. French school.  However, Cantillon's work fell into relative obscurity in the English-speaking world until resurrected and popularized by William Stanley Jevons in the 1880s.

Cantillon was perhaps the first to define long-run equilibrium as the balance of flows of income, thus setting the foundations both for Physiocracy as well as Classical Political Economy. Cantillon's system was is clear and simple and absolutely path-breaking. He developed a two-sector general equilibrium system from which he obtained a theory of price (determined by costs of production) and a theory of output (determined by factor inputs and technology).    He followed up on Petty's conjecture about the par of labor and land, thereby enabling him  to reduce labor to the amount of necessities needed to sustain it and thus making both labor supply and output a function of the land absorption necessary to produce the necessities to feed labor and the luxuries to feed landlords.   By demonstrating that relative prices are reducible to land-absorption rates, Cantillon can be said to have derived a fully-working "land theory of value". [click here for a review of Cantillon's system.]

In determining the natural wage for his model, Cantillon lays out the wage-fertility dynamics ("men multiply like mice in a barn if they have unlimited means of subsistence"), anticipating the theory developed by Malthus in 1798.

Cantillon's careful description of a supply-and-demand mechanism for the determination of short-run market price (albeit not long-run natural price) also stand him as a progenitor of the Marginalist Revolution.  In particular, his insightful notes on entrepreneurship (as a type of arbitrage) have made him a darling of the modern Austrian School. Cantillon was also one of the first (and among the clearest) articulators of the Quantity Theory of Money and attempted to provide much of the reasoning behind it.  

Finally, one of the consequences of his theory was that he arrived at a quasi-Mercantilist policy conclusion for a favorable balance of trade but with a twist: Cantillon recommended the importation of "land-based products" and the exporting of "non-land-based" products as a way of increasing national wealth.

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