Toward an Economic Concept

Abstract

From the nineteenth century onwards, credit – the cornerstone of growth – was no longer a subject of heated theological debate. It became a subject of study and of controversy for the principal schools of economy, each one trying to a greater or lesser extent to answer the question: what is the effect of a change in purchasing power on the real national revenue? Of course, consumer credit, as such, would not claim the serious attention of economists until the twentieth century, and almost exclusively in the United States. However, throughout the nineteenth century, economic thought was sensitive to the negative image resulting from the classical model. This image, which still persisted at the beginning of the twentieth century, is well illustrated or rather, caricatured, by the German Professor Taussig. In 1911, he wrote that a loan to a spendthrift ‘causes labor to be directed to producing truffles and champagne, not factory and machinary’! (p. 81). Nevertheless, the majority of economic theorists and practitioners already believed in the usefulness of interest-bearing loans. Claude Frédéric Bastiat hammered the message home in the following phrase: ‘giving credit is giving time, it is giving up time to another, it is giving up something precious for him; consequently, he must pay for the exchange of something present for something yet to come’.