David Hume (1711–1776) and James Steuart (1712–1780)

David Hume is best known for his work on political philosophy. However, he wrote a series of essays on money, population and international trade which must rank among the major economic writings of the 18th century. Certainly they influenced Adam Smith and have a sparkling quality that still makes them worth reading today. His statement of the so-called ‘specie-flow mechanism’ constituted his answer to the mercantilist concern with the maintenance of a chronic surplus in the balance of payments. He also put forward what is now known as the ‘theory of creeping inflation’ and advocated the notion that political freedom flows from economic freedom.