Ferdinando Galiani, an Italian Precursor to the Austrians
[From the Austrian Economics Newsletter, Spring 1987]
The Austrian School of economics did not develop out of thin air. It built upon the work of a number of other economists and philosophers going back as far as Aristotle. Among the precursors of the Austrian School were a number of Spanish and Italian scholastic economists.
Several early Italian economists influenced the development of continental European economic thought in the centuries before Carl Menger.
Gian Francesco Lottini (1512–1572) had a rough idea that people value present wants higher than future wants — the basis of time-preference theory. Bernardo Davanzati (1529–1606) applied subjective-value theory to money, and solved the “paradox of value.” He also pointed out that the price increases of his time were caused by the influx of gold from America, thus anticipating the quantity theory of money. Geminiano Montanari (1633–1687) had a fairly well developed quantity theory of money, and realized that there is a subjective factor involved in the valuation of money.
The Italian economist who had perhaps the most influence on the Austrian School was Ferdinando Galiani (1728–1787). Born in Chieti, he became a leader of the Italian Neopolitan School. His economic thinking was influenced by Aristotle, Davanzati, Locke, and Montanari, among others.
Galiani is most noted for his contributions to value theory, interest theory, and economic policy, topics that were explored a century later by Menger, Böhm-Bawerk, Jevons, Walras, Marshall and the German Historical School.
He recognized that there was a dichotomy between utility and scarcity, a concept that had been kicked around by philosophers since Aristotle. His most notable work, On Money, was written when he was in his early 20s, but was not widely read then because it was available only in Italian. It is in that treatise that his interest and subjective-value theories were included.
In the mid-19th century, Francesco Ferrara, another Italian, expanded on the subjective val
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