Why did Hume formulate the specie-flow mechanism?

The context in which the theory was developed was a desire to stop continue warring between the nations of Europe. The problem that had to be handled was this: Instead of trying to achieve dominance through war, in Hume's commercial society, would not one nation eventually simply crush all the others through trade, so that it wound up with all the wealth in the world, leaving nothing for other nations?

The development of the specie flow mechanism was an attempt to address that concern, showing that as a nation began to accumulate specie the price of its goods would rise and they would become less competitive, thereby reversing the flow of specie.

This point is from a lecture today by Carl Wennerlind.


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