David Hume on Public Credit

History of Economic Ideas, 20.1: 31-43, 2012

20 Pages Posted: 7 Sep 2012

Date Written: 2012

Abstract

In his essay Of Public Credit, David Hume argues against the institutionalization of public credit. Contrary to what is commonly believed, I claim Hume’s analysis of public credit is sound and it is an example of his worst-case thinking. Through textual and contextual analysis, I show for Hume public credit brings catastrophic results because men are knaves, systematically biased, and unlucky. Public credit is an appropriate institution to stimulate the economy only if men are perfect and perfectly predictable. But they are not. For Hume, considering the worst-case rather than the best-case helps prevent potential disasters. Public credit should therefore be avoided.

Keywords: David Hume, Public Credit

Suggested Citation

Paganelli, Maria Pia, David Hume on Public Credit (2012). History of Economic Ideas, 20.1: 31-43, 2012, Available at SSRN: https://ssrn.com/abstract=2142520

Maria Pia Paganelli (Contact Author)

Trinity University ( email )

Dept. of Economics
One Trinity Place
San Antonio, TX 78212
United States

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