The Concerns and Economic Thought of Sir William Petty and Sir Thomas Smith - Essay Example

Sir Thomas Smith (23rd December 1513 – 12th August 1577) was a bitter critic of debasement and due to this, he became a renowned vocal opponent of Lord Somerset, his mentor, on his policy of repeated debasement for attaining wealth for the crown. He is known for his works which include: A Discourse on the Commonwealth of this Realm of England (1549). 

He came up with several ways to optimize the collection and generation of taxes while being fair to every individual. He believed and recommended that the taxes collected should be just equal to the nation’s expenditure. Petty was against poll taxes and the unequal taxation of the poor excessively (Petty p30). He came up with strategies to raise taxes fairly. He suggested that imports should be taxed, but only in a way that they would be at the same level as the locally produced products. He also began turning his concerns towards income distribution and the relative value created by the contributions; He was talking of diminishing returns on land relative to their distance from the market (Petty p84). This was a result of the initiation of the idea that rent on land was a surplus above wage payments. He also initiated the “labor theory of value”. This stated that the value of goods produced should have been determined by the number amount of times the labor went into it.

The Basic theme of The Discourse on the Commonwealth of this Realm of England was an attack on debasement which Sir Thomas Smith was openly against; this even led to his exile. He claimed that debasement was responsible for social unrest, high prices and inflation, and the biggest losers were fixed income earners. In his works he claimed that the King was one of the biggest losers from the high prices caused by debasement since it adds immediately to the king’s revenue and before the rise of prices comes, contrarily the king is the prime beneficiary of monetary measures of inflation and debasement (Rothbard p67).  

Smith was a mercantilist as seen by his attempt to manufacture wool in London and trying to thwart the export of raw wool to be processed abroad. He saw economic incentives as a resource that governments should work with because they are always working to move economic resources to more profitable uses and out of less profitable ones. Smith pointed out that a self-interest is a powerful tool in business and it should be driven to constructive policies rather than being inhibited by the government’s and the governments taking all the rewards. He suggested that governments should use this as an incentive to move towards a common goal.