This chapter presents an investigation on the availability of the current development theory, in the writings of the 18th century. The theory of economic development established itself in Britain in the century and a half running from about 1650 to Adam Smith's The Wealth of Nations. The chapter concentrates on the writings of the three superstars of the eighteenth century, Hume, Steuart, and Adam Smith. The eighteenth century economists did not find the precise distinction between tradeable and non-tradeable goods and services. They were also conscious of the difficulties of exporting imposed constraints on the growth of the economy. If they were obsessed with the balance of payments, it may also be said that mid-twentieth-century economists underestimated the importance of this constraint, and paid the penalty in almost continual international currency crises from 1913 to the time of writing (1985). The Quantity Theory of money was well known to economists throughout the eighteenth century, because of its formulation by John Locke. About the short-term effects on wages of an increase in the demand for labor, the long-run effects were disputed by at least three groups: those who believed in increasing returns, those who saw an infinitely elastic supply of labor, and a third group that expected diminishing returns. Economic institutions were different then from now, and this is reflected in the shape of development theory. The eighteenth century could not contribute spectacularly to the monetary theory of the twentieth century, because the institutional background differed so greatly as between the two periods. This is an age of paper moneybanknotes checks and so onwhereas theirs was still an age of precious metals circulating as money.
