On some materials from the ‘Petty Papers’ archive, relevant to the beginnings of the surplus approach*
Tony Aspromourgos
The stature of Piero Sraffa as one of the leading figures in the history of twentieth-century economics rests upon a number of foundations, though his various contributions are quite closely connected. One of these achievements is the rehabilitation of classical economics as an intellectual discipline of more than merely antiquarian interest. A part of this project was the reconstruction of the texts and meaning of Ricardo’s political economy (Sraffa 1951–73). That great work is an enduring inspiration to all those who would seek similarly to recreate meticulously accurate texts from the history of ideas, and place them within an editorial apparatus that enables the reader to come to grips with their meaning and significance. This, it may be said, is one of the most thankless of scholarly tasks — and the original intellectual work involved is perhaps the easiest to plagiarize without detection! Although the beginnings of my own work on the history of what is commonly called ‘pre-Classical’ economics predates any very significant influence from Sraffa, it would be fair to say that there has been no greater single influence upon my own subsequent published work on that subject than Sraffa. From the point of view of Sraffa as historian of economics — in particular, as unflagging searcher of, and for, archives — it may be some small tribute to his memory for me here to outline some findings of my own, arising from searches of the so-called ‘Petty Papers’ archive, now in the British Library. In particular, I would like to draw out the significance of some new discoveries relevant to the surplus approach — and, hence, relevant to the beginning of the surplus approach, to the extent that Petty is the distinct origin of that tradition.1
The archive
This is not the place to enter into a detailed examination of the archive as a whole, or its history (see Aspromourgos 2001). Suffice it to note the following salient points.
The archive is a large collection of documents, running to thousands of pages, which was in private hands until sold to the British Library in 1993. Most of the documents contained within the collection were already there at the time of Petty’s death in December 1687, though there are some important later additions. Access to the documents prior to British Library acquisition was quite restricted. In any case, it is almost certainly true that only two or three people alive today have examined the entire collection at all systematically — myself and the two modern archivists (earlier, Miss M.D. Slatter; and Dr Harris, for the British Library)2— though important use has been made of sections of the archive by some scholars, most notably Sharp (1977) and Barnard (e.g.1979; 1981a; 1981b; 1982). A selection of manuscripts from the collection was published by the sixth Marquis of Lansdowne (1927; 1928) — and also an important discovery by Matsukawa (1977). The latter is the only new document from the archive that has been published since World War II, to the best of my knowledge, though Amati and Aspromourgos (1985) provide an English translation of a Latin manuscript published in Lansdowne (1927).
We may stand back for a moment and ask a question that is not asked often enough of archives: why were all these documents written? That is to say, why did Petty leave behind such a large collection of manuscript materials? Well, a part of the archive is indeed drafts of more or less complete and subsequently published Petty works, but not such a large part. There is also a very large collection of correspondence in the collection, though in the main, not very intellectually interesting. It is also much clearer now than it was previously — thanks to the work of Dr Harris — that there was a great explosion of writing activity in the last two to three years of Petty’s life, connected with the death of Charles II in 1685 and the consequent reign of James II. Two additional pieces of new information may be added. The archive contains many variant manuscripts; that is to say, there are many instances of two, three, or more, copies of the same document. In some cases this reflects Petty’s intention to ‘scribally publish’ (vide Love 1993; Aspromourgos 2001: 59–64). That is to say, rather than putting his ideas into print, Petty had a preference for circulating a small number of manuscript copies, to some influential persons. In other cases, these multiple copies reflect a certain ‘manic’ quality to Petty’s writing practices — at least some parts of the material have an obsessive or ‘driven’ character about them. In another sense, this practice sometimes reflects a more straightforward, and quite sensible, intellectual method, which can be called ‘the Petty two-step’ (and, in some cases, ‘three-step’): Petty does a rough first draft in his own hand; then a fuller second draft is written, usually in the hand of an amanuensis (and sometimes this is then further corrected by Petty).3
Two particular manuscripts
There are two particular manuscripts upon which attention is focused here. The first of these is a 2,050-word document that has no distinct title.4It is in the hand of an amanuensis — which is not unusual in the archive — and consists of five numbered sections of argument on ten numbered pages (five double-sided pages, to be precise). The intention of the paper is to advance one of Petty’s most favoured social objectives: population increase. In particular, the five-step argument is designed to show that a doubling of the population would be both viable and beneficial. The second is a 3,225-word document entitled, ‘How all persons & Things may contribute proporti[onally]5to their Government & defence’.6It is in Petty’s own hand and is in the form of a dialogue between ‘A’ and ‘B’. It consists of thirteen (mostly) numbered pages of more or less continuous text, without any demarcation into sections, and double-sided text save for the last page. The purpose of this paper is to examine appropriate methods of imposing taxation upon consumption. It is clear already from Petty’s published works, most notably the Treatise of 1662, that as a general principle, he favours taxing consumption. This manuscript enters more deeply into the matter.
Surplus land, surplus labour
In the context of advocating a doubling of the population, the analysis of surplus naturally arises, at least in Petty’s hands. This is so because a (much) higher population naturally raises the question of whether Britain (not his term) is capable of materially supporting such a population — in particular, whether there is sufficient land and labour to provide necessary consumption for the whole. In the first of the five sections of this paper, Petty argues that it is biologically possible to double the population of England, Scotland and Ireland together, in twenty-five years, to about nineteen million. He then proceeds in the second and third sections to argue that there will indeed be sufficient land and labour, respectively, at that population, to enable provision of subsistence.
The analysis proceeds as follows (British Library 2000, Add. MSS 72866: ff. 138v–40v). Petty proposes a set of physical quantities of commodities per capita, required for subsistence, and also posits the quantities of land required to produce those various quantities of consumption, thereby arriving at a figure for the quantity of land per capita required for subsistence.7This is also interesting for offering some concrete content to what Petty actually regarded as ‘necessary’ consumption in the seventeenth century: garden stuff (legumes, roots, herbs), bread and drink (beer, barley, malt, wheat),8hemp and flax, food for necessary horses and cattle (hay, beans, oats), flesh — together with a few other things, to which particular quantities of consumption and particular land quantities are not imputed. The result is that ‘72 Millions of Acres will feed … 19,339ml.9People at the Rate of 3 Acres 3 Quarters to each Head’. With regard to labour, Petty then proceeds in Section 3 by proposing numbers of workers who will be required, in combination with the above quantities of acreage, to produce the agricultural component of the above necessary consumption: husbandmen, gardeners, herdsmen and dairymen (together with a small number of seamen and fishermen) — in all, 6.77 million. He then needs to determine the number of necessary ‘Tradesmen’ (manufacturing workers), along with these agricultural workers (for whom Petty employs the catch-all term, ‘husbandmen’), to arrive at total necessary labour. About this he is much less sure of himself, and solves the difficulty by assuming that all urban labourers and one quarter of rural workers are tradesmen — which he claims would mean that the number of tradesmen is ‘about equall’ to the number of agricultural workers, making 13.54 million. From this figure, 0.54 million are subtracted as ‘Trades of Ornament & pleasure’ — note that the agricultural workforce is treated as entirely necessary labour — so that, of the proposed population of 19.339 million, there would remain 5.8 million (over and above the 540,000 surplus tradesmen) surplus labour or population. These are briefly described as ‘such as live upon theire Estates, as also Divines, Phisitians, Lawyers, officers, Soldiers, Impotents, Beggars, Prisoners, & in Breif. such as doe little corporall Labour’. The central result is that ‘about 2/3 of all the … People working >upon< necessary buisnes not above 12 hours p[er] diem will … maintaine the said increased Number of 19,339ml. …’.
Some of the discussion may be quoted, at some length, to give an indication of its concrete character:
2/16 parts of an Acre, is abundantly sufficient … to every head one with another … for Garden-stuff … ten Bushels of Barley, is sufficient for the Drink of every head, and that … will grow upon a quarter of an Acre of Land … six Bushels of Wheat, will make a Yeares Bread for every head, and that … will Grow upon a Quarter of an Acre of Land … Forasmuch as one Acre of Pasture doth produce 64lb. of flesh, and 2 Acres 3 Quarters doth produce 176 of Flesh, or about half a Pound of Flesh p[er] Head … [and so on] The 2,418ml. acres of Gardinage will bee mannaged by 1,209ml. Gardiners … The 1,209ml. acres for Hemp & Flax, with the 1,209ml. of horse-provender & 9,669ml. acres for Corne, in all 12,087ml. acres of Tillage by 2,416ml. husbandmen … Haveing thus estimated the Number of husbandmen, It seems hard, or at least troublesome, to guess the Number of necessary Tradesmen, meaning by Necessary Tradesmen, such as Worke on Wooll, Hemp & Flax, Hides & Skins, as also Metalls and Timber of all Sorts … Woollen and Linnin Cloath, Lether & Iron into severall Utensills, Garments furniture for Horse & Man &c. … [To resolve this,] 1/3 of the People doe live in Citties & Townes, w[hi]ch for the present wee suppose to bee all TradesMen necessarie & Ornamentall. And of those that live without the Townes, wee will suppose 1/4 to be allso TradesMen … [and so on.]
(British Library 2000, Add. MSS 72866: 138v–40v)
Of course, Petty is particularly noteworthy for having introduced into economic analysis the simplifying analytical device of assuming a single, homogeneous ‘basic’ commodity, to put the point in Sraffa’s (1960: 8) terms — a concept particularly pertinent to the conceptualization of surplus. The most elegant version of this construction may be quoted:
suppose there be in a Territory a thousand people, let these people be supposed sufficient to Till this whole Territory as to the Husbandry of Corn, which we will suppose to contain all necessaries for life, as in the Lords Prayer we suppose the word Bread doth … Suppose again that a tenth part of this Land, and tenth of the people, viz. An hundred of them, can produce Corn enough for the whole …
(Petty 1662: 89)
Almost no new light is shed upon how Petty arrived at this device. More broadly, perhaps the most ‘disappointing’ thing about the archive is that it sheds little light in general concerning the development of Petty’s thought up to the beginning of the 1660s.
The point can be put like this. In 1648, the young Petty published an enthusiastic pamphlet inspired by Francis Bacon, on the one hand, and by the young Petty’s experience of Holland, on the other (Petty 1648). In 1662, Petty published the Treatise, which contains the main lines of his theoretical ideas. The main development in his economic thought after 1662 is of course the invention of political arithmetic. Now, when one looks back upon the Advice to Hartlib with the benefit of the hindsight provided by the Treatise in particular, then one can see in the former the seeds of the ideas that emerge in the latter and that emerge also in Petty’s wider writings. However, if, sometime between 1648 and 1660, Petty had been hit by the seventeenth-century equivalent of a bus (if I may put the point so facetiously), then the 1648 Advice would look quite insubstantial, standing alone. Certainly, it would be of little significance, by itself, for the history of classical economics. In other words, it is clear that the decisive development in Petty’s economic thought occurs in this period, 1648–60. The disappointment with regard to the archive is that it contains very little material from this early period (apart from medical manuscripts), and it therefore seems unlikely that it will cast much light on this critical phase of Petty’s intellectual life, at least with regard to economic ideas.
There is, finally, one semantic aspect to this manuscript that is quite striking, if not remarkable. One does not wish to make too much of linguistic novelties or oddities, but the language in which new ideas are articulated is neither unimportant, nor uninteresting. I am referring here to the fact that Petty, in this manuscript, uses a term for surplus labour that, to the best of my knowledge, he does not use anywhere else in his writings. Surplus labour is characterized as otiose labour. Certainly, this term is nowhere used in his published works. The passage occurs at the very end of Section 3 of the manuscript — the section that indeed calculates the ratio of surplus to necessary labour. Having thus determined the number of surplus population, Petty concludes:
Now the greater the Proportion is of these Otiosi & freemen are10in Comparison of them that work from Morning till night, the better the Country and Governm[en]t. is, For some Countries are soe hard & barren That 19 parts of 20, are forced to work hard & fair hard.
(British Library 2000, Add. MSS 72866: f. 140v)
Cost of production of human beings
Another characteristic notion found in many places in Petty’s writings is the concept of ‘the value of the People’ (see Aspromourgos 1996: 94–5) — a concept that generally involves capitalizing a stream of wage income (as if it were, in effect, earned in perpetuity) and treating the resulting valuation as a kind of capital asset price. In my view, Petty put this notion to no very good use, deploying it in sophistic ways, most notably to advance the cause of population growth. This is precisely why the concept arises here. Its inner logic is unproblematic — arising by way of analogy with land valuation in terms of capitalization of the stream of rents, earned in perpetuity, at a discount rate governed by the rate of interest together with a risk premium. This approach to pricing land was already quite well known when Petty began to write about economics. Given annual money rents (R) and an appropriately chosen discount rate (i), the price of land (P) is given by:
P = R/i
If one substitutes wages for rents and a rate of discount appropriate to labour (which may be different to that for land), the same pricing principle determines the value of the people, or the workforce, according to Petty.11
Having sought to show, in Sections 2 and 3 of ‘Doubling the people’ that such population growth in twenty-five years is viable, Petty turns in the penultimate section, Section 4, to a demonstration that human beings (at least in Britain) are worth £70 each, on average. If one had happened upon this manuscript without any knowledge of Petty’s other writings or economic thought, this might appear as an inexplicable digression — no indication is given of its relevance, and its relevance would probably not be obvious. In fact, when advocating population growth elsewhere, Petty had sought to advance its merits by noting the increase in national wealth that would result — in terms of the capitalized value of the additional population (along with other things). This, in fact, amounts to nothing more than an assertion that extra population is valuable to a nation, with the formulation providing also a definite number to attach to that assertion. In any case, that is why the section is here, even though this is not explained. However, in this particular treatment of the matter, a novel dimension appears. In particular, the notion of valuing labour in terms of its cost of production (as distinct from its kind of ‘asset value’, as indicated directly above) — which Petty generally endorses, in the classical manner — here takes on a ‘radical’ character, unprecedented in his other treatments of the issue.
The point of departure is the proposition that £70 is the appropriate average (asset) value for human beings because this is the mean between zero and £140. This seems to be based upon tacit assumptions — that a newborn child is worth nothing, and that, at twenty years old (and a value of £140), a human being is at the peak of its value, over the life cycle. A child of one year old is valued by Petty at £4, this being the cost of care for the mother and nursing for a year. Then, the value of the same child at ten years old will be £24, 5 shillings — based upon the £4 charge at one year plus interest of £2, 5 shillings on that sum over nine years (a rate of 6.25 per cent, uncompounded), and £2 per annum for the cost of consumption over nine years. From the ages of ten to fifteen years, this child will earn 104 shillings per annum, from which Petty subtracts 29 shillings for interest on the previous £24, 5 shillings (implying a rate just under 6 per cent), leaving 75 shillings ‘for the victualls & Cloathes of the Child’. From fifteen to twenty, the child may earn £15 per year, from which must be deducted a sum to recoup the previous cost of £24, 5 shillings, as well as the interest over five years on that sum, leaving £18, 8 shillings for consumption per annum;12so that the person ‘will be absolutely free at 20 Yeares old, haveing paid for his keeping all that while with the Interest of the same’. Finally, this person from twenty will earn £26 per annum, with £12 required for consumption, leaving ‘an Overplus of 14lb. w[hi]ch is worth ten Yeares purchase13in a Person but of 20 Years old, or 140lb. as was propounded’ (British Library 2000, Add. MSS 72866: ff. 140v–41r).
What is one to make of this conceptualization? It is certainly an intriguing exercise in human capital theory. But it is hard to take the actual arithmetic very seriously, in my opinion. The numbers are all too convenient to Petty’s (pre-conceived) conclusion. In particular, the discount rate that delivers the desired conclusion (10 per cent) is offered with no justification whatsoever. Elsewhere, Petty discusses the question of appropriate discount rate (for land), from the perspective of intergenerational sentiment as a guide to ‘time preference’, if I may put it that way — though arriving at a figure of approximately 5 per cent (see Aspromourgos 1996: 91). The common span of life of three generations becomes a guide to discounting the future. (Put bluntly, people care about their grand children but not about their great-grandchildren.) The exercise here, in ‘Doubling the People’, is more significant for its conceptual character than its concrete empirical content. From that point of view, it is revealing of just how seriously Petty took the notion of valuing labour at its cost of production. The other striking aspect of the exercise is the insertion of interest charges into the costing of ‘capital’ invested in the infant. Of this, there are no traces in Petty’s other writings on this subject. Earlier, I have had no hesitation in concluding that Petty’s economics was essentially pre-capitalist (Aspromourgos 1996: 124–5). However, the imputation of an interest component to cost seems to open up a dimension of opportunity cost, which implies capitalist calculation. The critical issue here is whether interest is accounted for in cost only when actually paid, or also when foregone. The former device is nothing more than accounting for actual costs; the latter implies profit maximization and all that proceeds from it (for example, arbitrage).
Taxation, quantification
The novel elements in the other previously undisclosed manuscript (‘Proportion’), pertaining to consumption tax and quantification, do not relate so directly to the surplus approach as the core of classicism — though the thoughts on quantification are expressive of Petty’s methodological objectivism, which Sraffa evidently endorsed. Some brief comments will suffice here.
With regard to consumption tax, it is already clear from Petty’s published works that he favours taxation of final consumption, and it is virtually certain that the impetus for this view came from Thomas Hobbes (Aspromourgos 1996: 30–1, 69). However, in the context of Petty’s more substantial conceptual apparatus of economic thought, this general proposition acquires also a deeper and more substantial meaning, lacking in Hobbes’s political theory. In Petty it becomes, in effect, taxation of surplus consumption and thereby favours saving or a certain kind of accumulation. In ‘Proportion’, he deepens his analysis of this issue further by enquiring into the technical means of concretely implementing this principle and, in the process, comes very close to a value-added resolution of the problem: taxing value added as a means of taxing all (surplus) consumption, but taxing each element of consumption once and only once (British Library 2000, Add. MSS 72865: ff. 6r–11r; Aspromourgos 2000: 63–6).
With regard to quantification, there is a remarkable passage of argument in the ‘Proportion’, concerning limits to rational quantification (British Library 2000, Add. MSS 72865: ff. 7r–8v; Aspromourgos 2000: 66–7). Nothing resembling this is found anywhere else in Petty’s writings, to the best of my knowledge. This is particularly striking because there has been a strand of interpretation in the literature on Petty that has understood him as overreaching reason or common sense, so to speak, in his own quest for a quantitative policy science. This of course proceeds largely from the interpretation of Petty’s political arithmetic project. This strand of opinion does not think Petty’ project foolish; rather, he is seen as a kind of over-zealous, perhaps slightly crazy genius (Aspromourgos 1996: 20–1, 48, 59). In fact, this kind of attitude towards Petty can even be traced back to a notable contemporaneous source, Charles II (Lansdowne 1928: 281). In light of all this, to now have from Petty an explicit argument that there is a limit beyond which further or finer quantification would be undesirable is very telling in supporting the view — which I believe (in any case) could have been adequately justified without this new evidence — that Petty’s understanding of the quantification project was far more sober than that. In addition, the limits to quantification argument here — and the associated distinction between precise quantification and estimate — have an important kinship with his objective approach to the theory of value and the associated distinction between natural price and market price (vide Aspromourgos 2000: 67).
Conclusion
It should perhaps be stressed in conclusion that the Petty Papers archive covers a very considerable terrain of subject matters. Our focus here has been upon just those particularly interesting or novel aspects that relate to economic theory in the classical tradition. Apart from wider politico-economic issues (including in this, what may be called ‘social accounting’), the archive also has much to offer with regard to subjects as diverse as: colonization; (Irish) geography; history of science (in particular, medicine, technology and the Royal Society); Ireland itself, during a particularly catastrophic period in that country’s history; political thought in an English epoch of great political and intellectual upheaval; religion (most notably, the relation between religious authority and political power); as well as a very large family and business correspondence, which may have much to offer for the study of the social and economic history of the period. The previously un-disclosed manuscripts examined here cast some new light on just Petty’s economic thought, while in some measure confirming and clarifying what could already previously be known about the character and content of his thought.
A final comment may added: although Petty had some definite ideas on the determination of exchange value, he did not make much use of a theory of value — other than for deliberating upon measurement issues (issues in social accounting). In a deeper sense, however, the theory of surplus is a theory of cost. Though he did not quite put it this way, Petty might well have said — it is consistent with his actual words — that the cost of England, Ireland and Scotland, together having a population of nineteen million, is the labour required to produce the necessary consumption of that population, together with the utilization of the necessary land. And, of course, only the difference between the total workforce and land (or the total product) and this cost (alternatively expressed as the necessary consumption itself) — the surplus — would be available for appropriation by government via taxation, Petty’s preferred option being to uniformly excise surplus consumption. The exercise in surplus analysis in ‘Doubling the people’ is an empirical determination of just those necessary quantities, and Petty’s conclusion is that it is viable (and in his view, desirable) for the three peoples to pay that price. This cost in terms of labour and land, of course, could just as well be expressed in terms of the quantities of necessary consumption goods, but labour and land as the primary agents of production are more fundamental to Petty.
In a deeper sense, labour itself may be reduced to the consumption necessary for its (re)production — as Petty understood and illustrates in a novel manner here — so that land is left as the uniquely irreducible primary agent of production. This notion becomes analytically clearer in Cantillon, and leads to his so-called land theory of value (vide Aspromourgos 1996: 95–8; 1997: 443). That theory of value was special not general, but a core of truth that remains is that, if not land alone then, more properly, natural resources in all their variety are the irreducible means of production — though in a wide domain, reproducible. From this point of view, the magnitude of the surplus to necessary labour ratio could be read as a measure of humanity’s mastery of, or emancipation from, nature (Aspromourgos 1996: 71) — a fundamental aspiration in the construction of modernity.
Appendix: transcription principles
The transcription of the Petty manuscripts quoted above involves a small set of ‘translation rules’, which are all noted here. For further discussion of the issues involved in this, see Hunter (1995). The word ‘ye’ is translated as ‘the’; similarly, ‘ym’ becomes ‘them’, and ‘yt’ becomes ‘that’. In fact, virtually all superscripting used in the texts has been removed: e.g., ‘19,339ml.’ is translated as ‘19,339ml.’. The use of the tilde has been replaced with ‘ti’, in the modern manner. Where appropriate, the letters i and j, and u and v have been distinguished in a similarly modern manner. There is also a shorthand that Petty uses for ‘shilling’ — like a lower case gamma — which here has been replaced with ‘sh.’. (This is consistent with the style of other currency abbreviations used in the manuscripts.) Diamond brackets (> <) are an editorial intervention indicating that the words enclosed have been inserted by Petty. It may be added that upper versus lower cases at the beginnings of words are commonly difficult to determine with certainty. Every effort has been made to preserve cases as Petty intended, but, where doubts exist as to the intention, these have not been noted.
Notes
* The author is indebted to Dr F. Harris of the British Library, and has also benefited greatly from her paper on the archive (Harris 1998). The permission of the Board of the British Library to quote from British Library documents is gratefully acknowledged. Permission of Oxford University Press to reprint material from Aspromourgos (2000) is also gratefully acknowledged.
1 What follows may be read as a condensed version of Aspromourgos (2000), though the version here was primarily written prior to it.
2 See Slatter (1980). The new British Library (2000) catalogue is by Frances Harris.
3 Petty probably used the first drafts as texts from which he then dictated orally to amanuenses, thereby creating the second and fuller versions, which he then might work further upon.
4 British Library Additional Manuscripts 72866, document 30, folios 138recto–142verso. In the Slatter catalogue, it is Box E, item 63. We shall call it ‘Doubling the people’.
5 This word runs up into the right margin of the page. For the transcription principles employed in rendering these texts, see the Appendix above.
6 British Library Additional Manuscripts 72865, document 2, ff. 6r–12r. In the Slatter catalogue, it is Box G, item 25. We shall call it ‘Proportion’.
7 It is typical of Petty to treat land as essentially homogeneous, so that differential fertility is ignored.
8 The coupling of bread and beer points to the fact that the notion of corn as a generic term, or metaphor, for subsistence has as much to do with the latter as it does with the former.
9 The abbreviation ‘ml.’ denotes thousands.
10 Petty evidently has inadvertently placed a superfluous verb into the sentence.
11 For a detailed examination of these and related matters, see Aspromourgos (1996: Chapter 6).
12 Petty makes some arithmetical errors here. He has the adolescent earning a shilling a day or £15 per year (implying six days by fifty weeks). He then proposes that five years’ interest is £7, 10 shillings (implying a rate somewhat higher than that applying from ages ten to fifteen — approximately 6.2 per cent — but close enough to 6 per cent), which together with the principal is quoted at £32, 10 shillings (it should be £31, 15 shillings). He then takes a fifth of this to annualize the charge, and quotes £6, 2 shillings (it should be £6, 10 shillings or £6, 7 shillings). With all errors removed, the residual for consumption would be £8, 13 shillings, rather than £8, 18 shillings. Such errors occur also elsewhere in Petty’s political arithmetic.
13 The concept of ‘years purchase’ is commonly used in the seventeenth century, as a way of quoting land values. It may be described as the ‘rent commanded’ value of land: the money price of land divided by the annual money rent (and, hence, the reciprocal of the annual yield). Here, in effect, Petty is capitalizing surplus wages at a discount rate of 10 per cent. In his other formulations of the notion, Petty capitalizes actual wages, not surplus wages.
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