Publick Stews and the genesis of public economics

In 1724, the anonymous essay A Modest Defence of Publick Stews (brothels) arrived in the bookshops of London. Now the essay is widely believed to be the work of Bernard Mandeville. In true heretical fashion, Mandeville detailed the social problems arising from the market in prostitution of his day. The genius of the work comes from the sophisticated tools, previously thought to be the product of the twentieth century, he utilized to analyse the market. These tools included the market failures of externalities and asymmetric information; government failures due to unintended consequences of public policies; and a proposal for regulating the market designed to alleviate these failings. Included in the proposal was a tax consistent with the principles of a first-best policy.