Spinoza and Economics

This chapter analyzes Spinoza’s intervention in the debate over luxury – a topic central to early modern debates over the new economy. Spinoza’s position has received scant scholarly attention. It argues that Spinoza’s diagnosis of the problem of luxury and corruption is are important to his political philosophy. And that his attempt to resolve it anticipates key features to the strains of economics known as constitutional political economy and public choice theory. In particular in institutional design one should not just be alert to the incentive structure of the institutions in shaping behavior, but also in the ways these incentives attract people one ought to keep out (or wish to attract).