The whole of Paley's contribution to economics is contained in a single chapter of Moral and Political Philosophy (1785). The object of ‘rational politics’ is to maximize ‘happiness’, and Paley argued that this is achieved by maximizing population. Population is determined by the total supply of ‘provisions’ produced by the agricultural sector. The demand (and hence supply) for ‘provisions’ and for ‘luxuries’ are reciprocally determined. As in Mandeville, the taste for ‘luxuries’ stimulates production. But it also acts in the opposite direction because it deters population. Paley explicitly recognised the optimization problem and was the first economist to do so.
|This chapter was published in: Steven N. Durlauf & Lawrence E. Blume (ed.) , , pages , 2011, 1st quarter update.|
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