Ferdinando Galiani (1728–1787), Italian economist, was born in Chieti. He received a classical education and took religious orders. Entering gov ernment service, he became secretary of the Neapolitan embassy in Paris in 1759 and served there for a decade. During this period he also visited England. The remainder of his life was spent in the service of the kingdom of Naples, where he directed a variety of government offices, for the most part engaging in the formulation and administration of national economic policy.
His published works embrace the humanities as well as the social sciences (a bibliography may be found in Nicolini 1909). He also left a large number of letters that are not only of biographical in terest but are also important for the light they cast on the social, economic, and political characteristics of eighteenth-century Europe. Galiani’s wide circle of personal contacts—his intellectual correspondents and associates included Voltaire, Diderot, Genovesi, Turgot, Vico, Friedrich M. von Grimm, and others, as well as many highly placed diplomatic colleagues—make his letters invaluable documents.
His ideas as an economist had considerable originality. His economic thinking was influenced by Aristotle as well as by more modern theorists such as Bernardo Davanzati (1529–1606), John Locke (1632–1704), and Geminiano Montanari (1633–1687). He read Vico at an early age, and it was because of Vico’s influence that Galiani always placed his economic ideas in a social context. De spite his basic rejection of most of physiocracy, his ideas were close to those current in France, and for a time he had a close intellectual relationship with Turgot and André Morellet. Like the works of other eighteenth-century economists (for example, Cantillon) Galiani’s reveal a body of thought that is thoroughly eclectic. It is systematically related to no particular body of ideas, showing traces of scholasticism, of qualified mercantilism (especially where money and wealth are concerned), as well as of the natural-law ideas of the time. A free-thinking rationalist, Galiani appears nevertheless to have retained from mercantilism a protectionist international trade policy, if only with respect to grain.
The theoretical core of Galiani’s work is found in Delia moneta (1750); his policy prescriptions (clothed, incidentally, in a polished polemical literary style) are in Dialogues sur le commerce desblés (1770). His originality lies primarily in the fields of value theory, interest theory, and economic policy.
Value theory. Galiani’s value theory was based on the dichotomy between utility and scarcity that had been at the core of value theory from the time of Aristotle. This dichotomy was fundamental to the theories of his predecessors, Davanzati and Montanari (Gordon 1964, pp. 115-116), and of his contemporaries, Quesnay and Adam Smith. But Galiani’s value theory departed from that of his contemporaries: it foreshadowed the subjective de mand theory that was so highly developed in the 1870s by Menger, Jevons, and Walras (Einaudi 1953, pp. 272-273; Kauder 1953, p. 638; Schumpeter 1954, p. 300 and passim). Moreover, his concept of relative scarcity foreshadowed the theory of diminishing marginal utility, another advance of economics in the last quarter of the nineteenth century. (The theory had, in fact, been clearly stated by Herman Gossen in 1854 but did not become widely known until its rediscovery by Jevons.)
Galiani understood the quantity of a commodity demanded as varying inversely with price, prob ably in a schedule sense rather than in the stock sense common in his day. The idea of price elasticity of demand is present in Delia moneta (Einaudi 1953), although not in the mathematical terms developed by Alfred Marshall in 1890.
He did not discuss cost in general, but only the factor of labor in cost. For although he believed value to be subjectively determined and to vary from individual to individual, he did not believe that its source or its measurement is subjective. Rather, he believed that labor is not only the source of value but part of its objective measurement.
Interest theory. In economic writing before the seventeenth century, interest theory is rarely discussed, and when it is, the discussion is largely confined to theories of loan interest. This is also true of Galian’s interest theory. Nevertheless, his is one of the first discussions that considers why interest is paid instead of whether interest payments are legal or moral. Using a probability model, Galiani explained that interest is in principle paid to compensate the lender for the risk entailed in parting with his money (here and now)—money that is to be recovered from the borrower sometime in the future (or from a distant shore). Like his subjective value theory, Galiani’s interest theory is based on a psychological assumption: men in general prefer present money over money at a future time or at some distant place. This theory has come to be known as the “time preference theory of interest,” and Galiani’s formulation of it anticipates that of Böhm-Bawerk by more than a century.
Economic policy. In matters of policy, Galiani adopted a position of historicogeographical relativism. Even the best-constructed economic models must be adjusted for circumstances of time and place before being applied to specific problems. This became a basic principle of the German historical school of Friedrich List and Wilhelm Roscher, but unlike that school, Galiani did not reject abstract theory.
It is surely remarkable that Galiani’s early ideas in the areas of value and monetary theory anticipated corresponding notions of the neoclassical and Austrian schools, respectively. His later writings clearly foreshadow the views of the German historical school on economic policy.
Peter R. toscano
[For the historical context of Galiani’s work, seeEconomic Thought; and the biographies ofLocke; Quesnay; Smith, Adam. For discussion of the subsequent development of his ideas, seeUtilityand the biographies ofBÖhm-Bawerk; List; Roscher.]
(1750) 1915 Delia moneta. Edited by Fausto Nicolini. Bari: Laterza.
(1770) 1803 Dialogues sur le commerce des bles. Scrittorl classicl italiani di economia politica, Vols. 12–13. Milan: Destefanis.
(1818) 1889-1890 Correspondance avec Madame d’Epinay … 3d ed. 2 vols. Paris: Levy. → Especially useful as a source of information on Galiani’s social activities in Paris.
1880 Lettere di Ferdinando Galiani al marchese Bernardo T. Tanucci. Edited by Augusto Bazzoni. Florence: Vieusseux.→ An excellent source for students of eight eenth-century diplomatic history.
Arias, Gino 1922 Ferdinando Galiani et les physio-crates. Revue des sciences politiques 45:346–366.
Arias, Gino 1925 II pensiero economico di Ferdinando Galiani. Politica 21:193–210.
BÖhm-Bawerk, Eugen (1884) 1959 Capital and Inter est. Volume 1: History and Critique of Interest Theories. South Holland, 111.: Libertarian Press. → First published in German.
Einaudi, Luigi (1936) 1953 The Theory of Imaginary Money From Charlemagne to the French Revolution. Pages 229–261 in Frederic C. Lane and Jelle C. Rie-mersma (editors), Enterprise and Secular Change: Readings in Economic History. Homewood, 111.: Irwin. → First published in Italian in Volume 1 of Rivista di storia economica.
Einaudi, Luigi 1953 Saggi bibliografici e storici intorno alle dottrine economiche. Rome: Edizioni di Storia e Letteratura. → See especially pages 267-305 on “Gali ani economista.”
Gordon, Barry J. 1964 Aristotle and the Development of Value Theory. Quarterly Journal of Economics 78: 115–128. → A skillful critique of Kauder 1953.
Kauder, Emil 1953 Genesis of the Marginal Utility Theory From Aristotle to the End of the Eighteenth Century. Economic Journal 63:638–650. → Reprinted in Joseph J. Spengler and William R. Allen (editors), Essays in Economic Thought: Aristotle to Marshall.
Nicolini, Fausto 1909 Saggio bibliografico. Pages 405-431 in Ferdinando Galiani, II pensiero dell’abate Gali ani: Antologia dei suoi scritti editi e inediti. Bari: Laterza.
Nicolini, Fausto 1918 Giambattista Vico e Ferdinando Galiani: Ricerca storica. Giornale storico della lette ratura italiana 71:137–207.
Nicolini, Fausto 1931 Ferdinando Galiani. Volume 6, pages 546-547 in Encyclopaedia of the Social Sciences. New York: Macmillan.
Rossi, Joseph 1930 The Abbe” Galiani in France. New York: Institute of French Studies.
Schumpeter, Joseph A. (1954) 1960 History of Economic Analysis. Edited by E. B. Schumpeter. New York: Oxford Univ. Press.
Tagliacozzo, Giorgio (editor) 1937 Economisti napole-tani dei sec. XVII e XVIII. Bologna: Cappelli. → Contains portions of Galiani 1750 and Galiani 1770, prefaced by the editor’s comments.
Vico, Giovanni Battista (1725) 1948 The New Science. Translated by Thomas G. Bergin and Max Harold Fisch. Ithaca, N.Y.: Cornell Univ. Press. → First published in Italian. A paperback edition was published in 1961 by Doubleday.