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Gulphs in Mankind's Career of Prosperity: A Critique of Adam Smith on Interest Rate Restrictions


  • Jeremy Bentham


This a selection from Jeremy Bentham’s Defence of Usury (1787), a classic critique of Adam Smith’s endorsement of legal maximum rate of interest. Bentham’s main point against the restriction is that “projectors†generate positive externalities. The extract offers economic argumentation involving social embeddedness, asymmetric interpretation, imagination, error and correction, discovery, local knowledge, learning by doing, experimentation and selection, human folly and delusion, critical discussion as a means of testing commercial interpretations and selecting judgments, distinction and demonstration of genius and courage, as opposed to profits, being a motivator of commercial success, the distinction between voluntary and coercive action, and the moral and cultural merits of liberty.

Suggested Citation

  • Jeremy Bentham, 2008. "Gulphs in Mankind's Career of Prosperity: A Critique of Adam Smith on Interest Rate Restrictions," Econ Journal Watch, Econ Journal Watch, vol. 5(1), pages 66-77, January.
  • Handle: RePEc:ejw:journl:v:5:y:2008:i:1:p:66-77

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    References listed on IDEAS

    1. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 605-637.
    2. Scholz, John Karl, 1996. "In-Work Benefits in the United States: The Earned Income Tax Credit," Economic Journal, Royal Economic Society, vol. 106(434), pages 156-169, January.
    3. Paul Trampe, 2007. "The EITC Disincentive: The Effects on Hours Worked from the Phase-out of the Earned Income Tax Credit," Econ Journal Watch, Econ Journal Watch, vol. 4(3), pages 308-320, September.
    4. Hilary Hoynes, 2007. "The EITC Disincentive: A Reply to Paul Trampe," Econ Journal Watch, Econ Journal Watch, vol. 4(3), pages 321-325, September.
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    More about this item


    usury; interest; projectors; prodigals; Adam Smith; Jeremy Bentham;

    JEL classification:

    • K2 - Law and Economics - - Regulation and Business Law
    • B1 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925
    • B3 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals
    • D2 - Microeconomics - - Production and Organizations


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