Addendum (3 Oct 2010):
In classical, neoclassical and Austrian economics, Crusoe is regularly used to illustrate the theory of production and choice in the absence of trade, money and prices. Crusoe must allocate effort between production and leisure, and must choose between alternative production possibilities to meet his needs. The arrival of Friday is then used to illustrate the possibility of, and gains from, trade.
The classical treatment of the Crusoe economy has been discussed and criticised from a variety of perspectives.
Daniel Defoe’s fictional hero, Robinson Crusoe, is often used by economics teachers as the pure example of ‘rational economic man’, the hero of neo-liberal free-market economics. They claim that, even though he lives alone, Crusoe has to make ‘economic’ decisions all the time. He has to decide how much to work in order to satisfy his desire for material consumption and leisure. Being a rational man, he puts in precisely the minumum of amount of work to achieve the goal.
Or is the twofaced Defoe really a double agent engaging in doublespeak, and preaching something different from what he is really practicing?
As a double agent spying first for the Tory government, and later for the Whig government of the Walpole administration, Defoe wrote something else which was much less well-known than his Robinson Crusoe fiction. In Defoe’s main economic work, A Plan of the English Commerce (1728),
Defoe describes how the Tudor monarchs, especially Henry VII and Elizabeth I, used protectionism, subsidies, distribution of monopoly rights, government-sponsored industrial espionage and other means of government intervention to develop England’s woollen manufacturing industry, England’s high-tech industry at the time.