A History of Economic Thought in France: Political Economy in the Age of Enlightenment 0367194465, 9780367194468

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A History of Economic Thought in France

Traditionally, there has been a long and sustained interest in studying the history of economic ideas in France. Interest appeared to wane after World War II, but in recent decades, there has been a marked renaissance of interest and research in the contributions of French-speaking authors. Drawing on the flow of recent research, this book presents a new assessment of the history of political economy in France incorporating both novel presentations of some traditional subjects and topics that are not usually studied. This first volume deals with the history of political economy in France in the Age of Enlightenment. After presenting a kind of “review of the troops” and some main developments inherited from preceding centuries, the chapters are devoted to P. de Boisguilbert’s foundation of liberal political economy; J. Law’s monetary theory and policy; the many strands of “commerce politique”; the theoretical developments of F. Quesnay and the physiocratic movement; and A.-R.-J. Turgot’s, J.-J.-L. Graslin’s and M.-J.-A.-N. Caritat de Condorcet’s sensationist political economy. The volume then examines some political critiques of liberal political economy and goes on with a study of the first attempts to quantify economic variables and to formalise the economic discourse. It concludes with a chapter on the importance of translations into French of books published abroad, and with the main institutional and theoretical developments which happened during the French Revolution. A History of Economic Thought in France will be invaluable reading for advanced students and researchers of the history of economic thought, political economy, intellectual history and French history. Gilbert Faccarello is Emeritus Professor at Panthéon-Assas University, France. He is a co-founder of The European Journal of the History of Economic Thought and co-editor of the Routledge Historical Resources site devoted to the History of Economic Thought. Claire Silvant is Associate Professor of Economics at the Université Lumière, France, and a member of the research centre Triangle (Centre National de la Recherche Scientifique). She also was in charge of a research programme on the history of public economics sponsored by the European Society for the History of Economic Thought.

The Routledge History of Economic Thought

A History of Australasian Economic Thought Alex Millmow A History of American Economic Thought Mainstream and Crosscurrents Samuel Barbour, James Cicarelli and J. E. King A History of Czech Economic Thought Antonie Doležalová A History of Slovak Economic Thought Julius Horváth A History of Brazilian Economic Thought From Colonial Times through the Early 21st Century Edited by Ricardo Bielschowsky, Mauro Boianovsky and Mauricio C. Coutinho A History of Colombian Economic Thought The Economic Ideas that Built Modern Colombia Edited by Andrés Álvarez and Jimena Hurtado A History of Economic Thought in France Political Economy in the Age of Enlightenment Edited by Gilbert Faccarello and Claire Silvant A History of Economic Thought in France The Long Nineteenth Century Edited by Gilbert Faccarello and Claire Silvant

For more information about this series, please visit: www.routledge.com/The-Routledge-History-of­ Economic-Thought/book-series/SE0124

A History of Economic Thought in France Political Economy in the Age of Enlightenment

Edited by Gilbert Faccarello and Claire Silvant

First published 2024 by Routledge 4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2024 selection and editorial matter, Gilbert Faccarello and Claire Silvant; individual chapters, the contributors The right of Gilbert Faccarello and Claire Silvant to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ISBN: 978-0-367-19446-8 (hbk) ISBN: 978-1-032-56934-5 (pbk) ISBN: 978-0-429-20241-4 (ebk) DOI: 10.4324/9780429202414 Typeset in Times New Roman by Apex CoVantage, LLC

Contents

1

List of contributors to the two volumes Preface

vi xi

Prelude: from scholasticism to the Enlightenment

1

THIERRY DEMALS AND GILBERT FACCARELLO

2

Pierre de Boisguilbert and the foundations of laissez-faire

31

GILBERT FACCARELLO

3

John Law and the Mississippi System

45

ANTOIN E. MURPHY

4

Science of trade and “commerce politique”

60

THIERRY DEMALS

5

François Quesnay and Physiocracy

86

THIERRY DEMALS AND PHILIPPE STEINER

6

Turgot, Graslin and sensationist political economy

117

GILBERT FACCARELLO

7

Political critiques of political economy

156

ARNAUD ORAIN

8

The spirit of geometry: quantification and formalisation

172

GILBERT FACCARELLO

9

Postlude: intellectual exchanges and last developments

239

GILBERT FACCARELLO

Index

272

Contributors to the two volumes

Alain Béraud is Emeritus Professor at the CY Cergy Paris Université, France, and a member of the research centre THEMA (Centre National de la Recherche Sci­ entifique). His recent publications include “Les ingénieurs économistes français et la Théorie Générale de Keynes (1945–1952)” (Revue d’histoire de la pensée économique, 2022); “Fred Manville Taylor and the Origins of the Term ‘Say’s Law’”, with Guy Numa (History of Political Economy, 2022); “A Rebuttal of James Ahiakport’s Fallacies and Misrepresentations of Jean-Baptiste Say’s Writings and Thinking”, with Guy Numa (Journal of the History of Economic Thought, Virtual Issue, 2021); “Les économistes francophones et les équilibres non-walrasiens (1970–1985)” (Œconomia, 2020); “Léon Walras’s Theory of Public Interest: Toward an Organic View of the State”, with Guy Numa (Journal of the History of Economic Thought, 2019); “Lord Keynes and Mr. Say: A Prox­ imity of Ideas”, with Guy Numa (Journal of Economic Perspectives, 2019); and “Use values and exchange values in Marx’s extended reproduction schemes”, with Carlo Benetti, Edith Klimovsky and Antoine Rebeyrol (The European Journal of the History of Economic Thought, 2018). Vincent Bourdeau is Associate Professor of Philosophy at the University of Franche-Comté (Besançon, France) and a member of the research cen­ tre Logiques de l’Agir (UR 2274). His main research areas concern political philosophy, philosophy of economics, philosophy of law and history of social sciences in relation with socialist and republican ideas. He edited Quand les socialistes inventaient l’avenir. 1825–1860 (La Découverte, 2015, with Th. Bouchet, E. Castleton, L. Frobert and F. Jarrige) and Les encyclopédismes en France à l’ère des révolutions (1789–1850) (Presses Universitaires de Franche-Comté 2019, with J.-L. Chappey and J. Vincent). Pascal Bridel is Emeritus Professor of Economics at the University of Laus­ anne and founder of the Walras-Pareto Centre. His recent publications include “Robertson’s Industrial Fluctuation (1915): An Early Real Business Cycle-like Approach” (Journal of the History of Economic Thought, 2017); J.C.L. Simonde de Sismondi, Œuvres économiques complètes (Economica, six vols, 2012–18, edited with F. Dal Degan and N. Eyguesier); “The part played by general equi­ librium in the liquidity preference vs loanable funds episode (1936–1956)”

Contributors to the two volumes vii (The European Journal of the History of Economic Thought, 2021); “Sismondi’s Price Theory: From a Liberating to a Despotic Market” (History of Political Economy, 2021); and Essais sur l’histoire de la pensée économique. Un nain sur les épaules de géants (in French and English) (Classiques Garnier, 2022). Clément Coste is Associate Professor at Sciences Po Lyon, France, and a member of the research centre Triangle (Centre National de la Recherche Scientifique). His recent publications include “A trilogy of debt: the emancipatory virtue of public debt in Saint-Simonian, liberal and socialist discourses in nineteenth cen­ tury France (1825–1852)” (The European Journal of the History of Economic Thought, 2020); “Inventorier et inventer la société. Constantin Pecqueur (1801– 1887): expertise sociale et processus de socialisation” (L’Année Sociologique, 2017); “ ‘Si je crois à la liberté c’est que je crois à l’égalité’: philosophie pour une république sociale et pratique de l’égalité autour de 1848” (Revue euro­ péenne des sciences sociales, 2018); and “L’économique contre le politique. La dette, son amortissement et son financement chez de jeunes et vieux SaintSimoniens (1825–1880)” (Cahiers d’économie politique, 2016). He also edited De la République de Constantin Pecqueur (Presses Universitaires de FrancheComté, 2017, with L. Frobert and M. Lauricella). Thierry Demals is Associate Professor at the University of Lille, France and a member of the research centre Clersé (CNRS, University of Lille). His recent publications include “Forbonnais, the two balances and the Économistes” (with Alexandra Hyard, The European Journal of the History of Economic Thought, 2015); “Mercantilism and the science of trade” and, with Gilbert Faccarello, “French Enlightenment” (both in G. Faccarello and H.D. Kurz (eds), Handbook on the History of Economic Analysis, Edward Elgar, vol. 2, 2016); “Enlight­ enment in Europe” (Routledge Historical Resources/History of Economic Thought, 2017); and “Pareto and Saint-Simonianism. The History of a Criti­ cism” (with Alexandra Hyard, The European Journal of the History of Eco­ nomic Thought, 2020). Ragıp Ege is Emeritus Professor at the University of Strasbourg and a mem­ ber of the research centre Beta (Centre National de la Recherche Scien­ tifique). His recent publications include “The employment contract with externalized costs: The avatars of Marxian exploitation” (with Rodolphe Dos Santos Ferreira, The European Journal of History of Economic Thought, 2018); “L’aggiornamento des sciences économiques en France: le cas stras­ bourgeois au tournant des années 1970” (with Rodolphe Dos Santos Ferreira and Sylvie Rivot, Œconomia. History, Methodology, Philosophy, 2020); “The net product in the ‘Formule du Tableau Économique’: Lessons from a for­ malism” (with Rodolphe Dos Santos Ferreira, Portuguese Economic Journal, 2022); and “From a Hegelian to a Smithian Reading of Rawls” (with Herrade Igersheim, in Economic Reason and Political Reason. Deliberation and the Construction of Public Space in the Society of Communication, edited by Jean Mercier-Ythier, ISTE/Wiley, 2022).

viii

Contributors to the two volumes

Gilbert Faccarello is Emeritus Professor at Panthéon-Assas University, Paris, France. He is a co-founder of The European Journal of the History of Eco­ nomic Thought published by Routledge and acted as a chairman of the Council of the European Society for the History of Economic Thought. His publica­ tions include books and articles in the history of economic thought. Recently, he published “A Calm investigation into Mr Ricardo’s principles of international trade”, “A dance teacher for paralysed people. Charles de Coux and the dream of a Christian political economy” and “ ‘I profess to have made no discovery’. James Mill on comparative advantage” (The European Journal of the History of Economic Thought, 2015, 2017 and 2022), and he edited The Reception of David Ricardo in Continental Europe and Japan (Routledge, 2014, with Masashi Izumo), Handbook on the History of Economic Analysis (Edward Elgar, 2016, three volumes, with Heinz D. Kurz), Political Economy and Religion (2017, a special issue of The European Journal of the History of Economic Thought), Marx at 200 (2018, a special issue of The European Journal of the History of Economic Thought, with Heinz D. Kurz) and Malthus across Nations. The Reception of Thomas Robert Malthus in Europe, America and Japan (Edward Elgar, 2020, with Masashi Izumo and Hiromi Morishita). Ludovic Frobert is Research Director at the Centre National de la Recherche Scientifique and a member of the research centre Triangle (Lyon, France). He was the director of a national research programme on French utopian socialism between 1830 and 1870 (ANR “Utopies19”). His recent publications include “What is a just society? The answer according to the Socialistes Fraternitaires Louis Blanc, Constantin Pecqueur, and François Vidal” (History of Politi­ cal Economy, 2014), De la République de Constantin Pecqueur (1801–1887) (edited with C. Coste and M. Lauricella, Presses Universitaires de FrancheComté, 2017), “Theology and knowledge of the ‘collective man’ in the writings of Pierre-Simon Ballanche” (in J.L. Cardoso, H.D. Kurz and Ph. Steiner (eds), Economic Analyses in Historical Perspective, Routledge, 2017), Les Canuts, ou la démocratie turbulente: Lyon 1831–1834 (2nd edition, Libel, 2017) and Une imagination républicaine, François-Vincent Raspail (1794–1878) (edited with J. Barbier, Presses Universitaires de Franche-Comté, 2017). Antoin E. Murphy is a retired Professor and Fellow Emeritus of Trinity College Dublin, Ireland and a co-founder of The European Journal of the History of Economic Thought published by Routledge. His publications include Richard Cantillon: Entrepreneur and Economist (Oxford University Press, 1986), John Law: Economic Theorist and Policymaker (Oxford University Press, 1997), Du Tot. Histoire du Système de John Law (1716–1720) (ed., INED, 2000), The Gen­ esis of Macroeconomics (Oxford University Press, 2008) and The Fall of the Celtic Tiger (with Donal Donovan, Oxford University Press, 2013). Guy Numa is Associate Professor and Director of Graduate Studies at Colorado State University, Fort Collins, USA. His recent publications include “The Mon­ etary Economics of Jules Dupuit” (The European Journal of the History of Eco­ nomic Thought, 2016), “Charles Coquelin and Jules Dupuit on Banking and

Contributors to the two volumes ix Credit” (Journal of the History of Economic Thought, 2017), “Jean-Baptiste Say on Free Trade” (History of Political Economy, 2019), “Money as a Store of Value: Jean-Baptiste Say on Hoarding and Idle Balances” (History of Political Economy, 2020) and, with Alain Béraud, “Beyond Say’s Law. The Significance of J.-B. Say’s Monetary Views” (Journal of the History of Economic Thought, 2018) and “Retrospectives: Lord Keynes and Mr. Say: A Proximity of Ideas” (Journal of Economic Perspectives, 2019). Arnaud Orain is Professor at the University of Paris 8 (Saint-Denis, France). He was Davis Fellow of the History Department of Princeton University in 2015–16 and Florence Gould Fellow of Princeton Institute for Advanced Study in 2020–21. His recent publications include Les voies de la richesse? La physi­ ocratie en question (1760–1850) (edited with G. Klotz and Ph. Minard, Presses Universitaires de Rennes, 2017), La politique du merveilleux. Une autre histoire du Système de Law, 1695–1795 (Fayard, “L’épreuve de l’Histoire”, 2018) and Les savoirs perdus de l’économie. Contribution à l’équilibre du vivant (Gal­ limard, “Nrf essais”, 2023). Jean-Pierre Potier is Emeritus Professor at the Université Lumière (Lyon, France) and a member of the research centre Triangle (Centre National de la Recherche Scientifique). He was a co-editor of the Œuvres économiques com­ plètes de Auguste et Léon Walras (Economica) and is presently a co-editor of the Œuvres complètes de Jean-Baptiste Say. His recent publications include Léon Walras, économiste et socialiste libéral. Essais (2019), “Auguste and Léon Walras and Saint-Simonianism” (The European Journal of the History of Eco­ nomic Thought, 2020, with G. Jacoud), “Dialogues Manqués Between Antonio Gramsci and Piero Sraffa on Ricardo, Classical Political Economy and ‘Pure Economics’” (in Maria Cristina Marcuzzo, Ghislain Deleplace and Paolo Paesani (eds), New Perspectives on Political Economy and Its History, Palgrave-Macmillan, 2020) and the critical edition of Léon Walras’s translation of W.S. Jevons’s Theory of Political Economy (2022, with N. Chaigneau). Claire Silvant is Associate Professor at the Université Lumière (Lyon, France) and a member of the research centre Triangle (Centre National de la Recherche Scientifique). She also was in charge of a research programme on the history of public economics sponsored by the European Society for the History of Economic Thought. Her recent publications include “Gustave Fauveau’s contribution to fiscal theory” (The European Journal of the History of Economic Thought, 2010), “Inheritance and property rights in the mid­ 19th century French liberal thought” (The European Journal of the History of Economic Thought, 2015), “Dette publique et financement de l’État chez les économistes français (1840–1900)” (Œconomia. History, Methodology, Philosophy, 2019), “The French financial controversies in the aftermath of the 1848 crisis: an overview of socialist and liberal positions” (with Clément Coste, Research in the History of Economic Thought and Methodology, 2020) and, with François Etner, Histoire de la pensée économique en France depuis 1789 (Economica, 2017).

x

Contributors to the two volumes

Philippe Steiner, trained both in economics and sociology, is Emeritus Professor of Sociology at Sorbonne University (Paris, France) and a former fellow of the Institut Universitaire de France. He published extensively in the history of eco­ nomic thought and in economic sociology. His recent publications include Dur­ kheim and the Birth of Economic Sociology (Princeton University Press, 2011), Donner. Une histoire de l’altruisme (2016, Best Book Award of the European Society of the History of Economic Thought, 2017), Calculation and Morality in the Abolition of Slavery in France (with C. Oudin-Bastide, 2019, Best Book Award of the History of Economics Society, 2021 and Best Book Award of the European Society of the History of Economic Thought, 2022) and Comment ça matche. Une sociologie de l’appariement (Presses de Sciences-Po, 2022, edited with Melchior Simioni).

Preface

Notre héritage n’est précédé d’aucun testament.1 The cultural treasures of the past, believed to be dead, are being made to speak, in the course of which it turns out that they propose things altogether different from the familiar, worn-out trivialities they had been presumed to say.2

Traditionally, there has been a long and sustained interest in studying the history of economic ideas in France. Yet, after World War II, this interest appeared to wane as attention shifted to the study of British and American authors and traditions. How­ ever, in recent decades, there has been a renaissance of interest in the contributions of French-speaking authors. This revival was sometimes propelled by the publication of critical editions of major works such as those of Pierre Le Pesant de Boisguilbert, François Quesnay, Jean-Baptiste Say, Claude-Henri de Saint-Simon, Jean-Charles Léonard Simonde de Sismondi, Jules Dupuit and Léon Walras. It was also helped by the emerging availability on the internet of a sizeable number of scanned original works which would have been otherwise difficult to find. As a result, the field of study has been considerably extended, and novel original research has been made possible. Examples of this new research are eighteenth-century studies highlighting “commerce politique”, sensationist political economy, quantification and formalisa­ tion. Nineteenth-century studies have provided detailed analyses on the different approaches of the liberal economists and the many attempts to propose alternative views, such as Christian political economy or the multifaceted developments pro­ posed by associationist or socialist authors. All these advances necessarily changed the perspective from which the story was usually told. Based on this flow of recent research, the objective of this book is to present a new assessment of the history of political economy in France. Besides novel presentations of some traditional subjects, the reader will find topics that are not usually studied, and which are yet part and parcel of this history and contribute in 1 “Our inheritance was left to us by no testament.” René Char, Feuillets d’Hypnos, Paris: Gallimard, 1946. 2 Hanna Arendt, “Martin Heidegger at eighty”, The New York Review of Books, 21 October 1971.

xii

Preface

an important way to its understanding. The present work focuses on what could be called the “golden age” of French political economy, a period extending from 1695 to 1914. It symbolically starts with Boisguilbert’s foundation of laissez-faire at the end of the seventeenth century and ends with World War I. It is divided into two volumes, reflecting two very distinct phases of the evolution of economic ideas in France, separated by the traumatic events of the French Revolution. The first volume deals with political economy in the Age of Enlightenment, while the second analyses political economy during the long nineteenth century, combin­ ing an assessment of both liberals and their opponents. Additionally, a Prelude, in Volume 1, presents the main features of the Age of Enlightenment and some devel­ opments which happened prior to this period. A substantial Postlude, in Volume 2, deals with the main theoretical developments which took place after World War I. Finally, there are a number of relevant issues here to bring to the attention of the reader. Firstly, the book deals with the history of political economy in France, and not strictly speaking French political economy because it focuses on works originally published in the French language: many important authors – such as John Law, Richard Cantillon, Ferdinando Galiani, Jean-Charles Léonard Simonde de Sismondi, Antoine-Élisée Cherbuliez, Gustave de Molinari or Vilfredo Pareto, for example – while not French but Scottish, Irish, Neapolitan, Swiss, Belgian, Italian – published path-breaking writings in the French language and played a major role in French debates. Secondly, the approaches used in the various chapters may be different, due to the subject discussed. However, aside from the analyti­ cal developments, they also concentrate on the institutional, political and/or philo­ sophical aspects of these subjects. Thirdly, while comprehensiveness is of course out of reach in such an enterprise, the developments are nonetheless substantial and offer the readers a wealth of new analyses and perspectives. Fourthly, throughout the book, and unless otherwise indicated, italics in quotations are always those of the original works. Such a work could not be but a collective venture and the various chapters have been assigned to the relevant specialist(s). The editors are sincerely grateful to the authors who patiently and very professionally accepted the review process. They also would like to thank them – and the publishers – for their patience during the long gestation of this work. Gilbert Faccarello and Claire Silvant

1

Prelude From scholasticism to the

Enlightenment

Thierry Demals and Gilbert Faccarello

As in other European countries, political economy emerged and developed in France with the rise of national and international commercial exchanges and the slow but irreversible transformation of nations into market economies – or “com­ mercial societies” as they were called by eighteenth-century Scottish philosophers. This process accelerated during the Ancien Régime, or more specifically during the Enlightenment period which, sensu lato, lasted more than a century and stretched from the end of the seventeenth century to the 1789 French Revolution and the fall of the Bourbon monarchy. This period saw a progressive but important develop­ ment of books and pamphlets on almost all aspects of economic life. Economic themes apparently left the ground of religious ethics and political treatises where they had been embedded for centuries. But this shift towards an autonomous sci­ ence of economy was largely illusory, because some developments were them­ selves fuelled by political or religious controversies and also because political economy itself turned out to be, albeit in a more or less disguised way, an ethical and political doctrine. Indeed, during the last decades of the eighteenth century, it was included in the new “moral and political sciences”. However, these developments did not emerge out of nothing, and authors were able to draw on debates and ideas expressed during the Middle Ages and the Renais­ sance, especially after the rediscovery of writings dating from Antiquity – those of Aristotle in particular. That is why this introductory chapter,1 after outlining the Enlightenment period in terms of economic thought, briefly states some examples of the legacy that previous ages left to our period of interest. 1.

Sapere Aude!

The Age of Enlightenment was certainly a milestone in the history of modernity, an exciting period first characterised by the exceptional development of sciences and philosophy, which gradually brought about a radical change in all fields of knowledge and thought.2 This was especially true in France, where the number of 1 On the themes outlined in this chapter, see the references at the end of each chapter of this book. 2 Not surprisingly, the intellectual groundswell of the Enlightenment also provoked numerous reac­ tions, both during and after the period: they formed the various Anti- or Counter-Enlightenment DOI: 10.4324/9780429202414-1

2

Thierry Demals and Gilbert Faccarello

first-rank philosophers and scientists – the so-called “philosophes” – was astonish­ ing. The range is wide. It started, for example, with Blaise Pascal (1623–1662), Pierre Bayle (1647–1706) and Bernard Le Bovier de Fontenelle (1657–1757) at the beginning of our period of study. It included Charles-Louis de Secondat de Mon­ tesquieu (1689–1755), François-Marie Arouet (alias Voltaire) (1694–1778), Pierre Louis Moreau de Maupertuis (1698–1759), Georges-Louis Leclerc de Buffon (1707–1788), Jean-Jacques Rousseau (1712–1778), Denis Diderot (1713–1784), Claude-Adrien Helvétius (1715–1771), Gabriel Bonnot de Mably (1709–1785) and his brother Étienne Bonnot de Condillac (1715–1780), Paul-Henri Thiry d’Holbach3 (1723–1789) and the mathematician and first-rank philosopher Jean Le Rond d’Alembert (1717–1783). It finally ended with two main figures: Marie­ Jean-Antoine-Nicolas Caritat de Condorcet (1743–1794), the “last of the philos­ ophes”, and Pierre-Simon Laplace (1749–1827), who marked the transition to the nineteenth century. The celebrated Encyclopédie, ou Dictionnaire raisonné des sci­ ences, des arts et des métiers, designed by Diderot and d’Alembert and published from 1751 to 1772, was the flagship of this multifaceted intellectual movement. Enlightenment was in no way uniform and presented a great diversity of opin­ ions and writings, in which the different national contexts played a role: this led to the distinction between, for example, the Milanese, Scottish and French Enlight­ enments. In the secondary literature, it also gave rise to diverging interpretations, with more recent debates focusing on the distinction between a “radical” and a “moderate” Enlightenment.4 Despite this diversity, however, in France as else­ where, authors broadly shared certain fundamental values of autonomy and free­ dom, universality, toleration and experimentation. During the 1783–84 discussion over the definition of “Aufklärung” in the Berlinische Monatsschrift, Immanuel Kant gave this celebrated answer, which expresses the spirit of the age well:5 Enlightenment is man’s emergence from his self-incurred immaturity. Imma­ turity is man’s inability to use one’s own understanding without the guidance of another. This immaturity is self-incurred if its cause is not lack of under­ standing, but lack of resolution and courage to use it without the guidance of another. The motto of enlightenment is therefore: Sapere aude! “Have cour­ age to use your own understanding!” (Kant [1784] 1991, 54) As regards politics and ethics, reforms were at the centre of the debates, with an ambitious aim: “happiness for humankind”. This explains why the economic

traditions, still active today: see, for example, Monod (1916), Masseau (2000), McMahon (2001) and Sternhell ([2006] 2009). 3 Paul Heinrich Dietrich von Holbach. 4 See Jacob ([1981] 2006), Israel (2001, 2006, 2010) and some related discussions: Bove et al. (2007), La Vopa (2009), De Dijn (2012), Miklaszewska and Tomaszewska (2014), Armenteros et al. (2014) and Lilti (2019, Chapter 7). 5 On this discussion and the uses of the motto “Sapere aude!”, see Venturi (1971, 1–9) and Schmidt (1989, 2011). On the debates about Kant’s definition, see Fleischacker (2013).

Prelude 3 field was not left out and even gradually became a central topic in politics, with, for some authors, an unwavering fight in favour of laissez-faire – first at the end of the seventeenth century, with Pierre Le Pesant de Boisguilbert (1646–1714), and then in the second half of the eighteenth century with the main figures of François Quesnay (1694–1774), Anne-Robert-Jacques Turgot (1727–1781) and Condorcet. It provoked many lively controversies over the grain trade – one of the major debates of the time – taxes, public expenditure, foreign trade, or over money and banking from the collapse of John Law’s (1671–1729) system to Richard Cantillon (c.1680–1734) and the circle of Jacques Claude Marie Vincent de Gournay (1712–1759).6 The number of books and pamphlets on economic matters increased dramatically during the second half of the eighteenth century (Théré 1998), and the Encyclopédie also included contributions in the field from Quesnay, Turgot, François Véron de Forbonnais (1722–1800), Louis de Jaucourt (1704–1779) and many others – Rousseau included, who was asked to write the entry “Économie ou Œconomie (Morale et politique)”. In economic thought as in the other fields of science and philosophy, develop­ ments were of course not homogeneous. Among the wealth of literature of the time, it is, however, possible to distinguish two main currents of thought: “commerce politique” and “philosophie économique”. Both currents aimed at a deep change in French politics. They proposed new political philosophies centred on economic policies for a prosperous economy, mainly in the context of the great economic difficulties during the reign of Louis XIV and the Régence, and then at the time of increasing rivalry with Great Britain, the Seven Years’ War (1756–63) and the loss by France of some parts of its overseas empire – with, over and over, the fun­ damental and nagging questions of the grain trade, the financing of the state and management of the huge public debt. “Commerce politique”

The first current of thought, “commerce politique”, was illustrated by such dif­ ferent authors as Cantillon, Jean-François Melon (1675–1738), Nicolas Dutot (1684–1741),7 Montesquieu and the members of the so-called circle of Vincent de Gournay – Forbonnais, Georges-Marie Bûtel-Dumont (1725–1788), Simon Clic­ quot de Blervache (1723–1796),8 Louis-Joseph Plumard de Dangeul (1722–1777), and even for a time, at the beginning of his career, Turgot. In terms of content, this current of thought was a French adaptation of the Eng­ lish “science of trade” of the late seventeenth and early eighteenth centuries, whose original model, read throughout Europe and translated into several languages, was Josiah Child’s A Discourse Upon Trade (1693) – supplemented by other more political writings such as Charles Davenant’s Essays upon Peace at Home and War Abroad (1704) or The British Merchant or Commerce Preserv’d (1721) edited by Charles King, which found their most accomplished expression in David Hume’s 6 Vincent was his family name and Gournay was the name of an estate he inherited in 1746.

7 Also spelled Du Tot.

8 Also written Clicquot-Blervache.

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Thierry Demals and Gilbert Faccarello

Political Discourses (1752). Many of these writings were translated into French in the 1750s when Gournay was Intendant du commerce (see Chapter 9, this volume). When, during these same years, Forbonnais coined the phrase “commerce poli­ tique” (“political trade”) and titled one of his works Réflexions sur la nécessité de comprendre l’étude du commerce et des finances dans celle de la politique (1755), he was following a path already traced by Cantillon, Dutot and especially Melon. Several French philosophers and essayists also followed this path and dealt with trade – understood as a set of activities leading to a circulation of goods, services or money – in its relation to politics. In his Letters concerning the English Nation (1733, 69),9 Voltaire praised the English model of trade and clearly stated its rela­ tionship to politics: As Trade enriched the Citizens in England, so it contributed to their Free­ dom, and this freedom on the other Side extended their Commerce, whence arose the Grandeur of the State. Trade rais’d by insensible Degrees the naval Power, which gives the English a Superiority over the Seas. Among French philosophers, Montesquieu was perhaps the one who most thought about the interconnection between trade and politics, to the point of distinguishing forms of trade in relation to the constitutional nature of the States. In his Réflexions sur la monarchie universelle en Europe (1734, 8), he wrote, “But today, when all the civilised peoples are, so to speak, members of a great Republic, it is wealth that makes power.” The interconnection is also present in his great work, De l’esprit des loix (1748), in which he stated the following propositions: the world became mercantile; trade is an element of politics, it follows the interests of the State; the interest of the State is possibly not to intervene too much; competition is an ele­ ment of freedom and possibly a nuisance but in no way a war; and the greater or lesser freedom of trade is a decision of the prince. For most of the authors of this current, thinking about trade as an element of pol­ itics meant, from the point of view of States, considering trade as a means of estab­ lishing more peaceful international relations; it meant diverting the most powerful among them from their tendency to behave like a universal monarchy, to aim at conquest rather than conservation and to regulate world affairs by military means. In short, it meant transforming the rivalry of nations into commercial emulation, which Forbonnais (1754, I, 90) summarised by saying that henceforth the balance of trade was truly the political balance of nations (Demals and Hyard 2015). “Commerce politique” aimed to base the power of the prince on the happiness of the citizens or subjects by showing that the softening of mores is preferable to the authoritarianism of the prince, despotism and the deprivation of freedom. Here again, the experience of England prevailed – a trading nation where powers were shared and its wealth was derived from agriculture and foreign trade. According to Montesquieu, the English people were the ones who best knew how to take

9 Published in French in 1734 with the title Lettres écrites de Londres sur les Anglois et autres sujets, also known as Lettres philosophiques or Lettres anglaises.

Prelude 5 advantage of religion, trade and freedom (1748, II, 8). But what kind of freedom was Montesquieu talking about? He glorified the English monarchy for its mixed constitution promoting civil and political liberty and a relative freedom of trade (1748, II, 12–13). Melon outlined a history of mankind whose final and modern stage is marked by the advent of trade governed by the principle of “freedom and protection” (Melon [1734] 1735, 30). Forbonnais and Gournay recommended that the French monarchy follow the English model and transform itself into a trading nation, as it was a natural process for it to become one. Thus, it was widely stated that the general maxim of trade between nations was “freedom and protection”. The demand for freedom was nothing other than the affirmation of the principle of free competition, understood as free access to markets and the exclusion of all privileges and monopolies whenever possible. The extent of this free trade depended on circumstances: it could only have a real effect if all trading nations applied it unanimously. If this were not the case, more or less permanent restrictions would be necessary. A policy of freedom and protec­ tion would thus aim to ensure a dominant position on the international market, but certainly not a monopoly position. More generally, freedom was measured by what it could bring to the general good, not necessarily to the private good, and, in this sense, it was not a licence. In the tradition of Melon, Gournay (1993, 34) was in favour of the motto “laisser faire et laisser passer”. However, this maxim had the same content as “freedom and protection”: it did not refer to the absolute or com­ plete freedom of trade advocated by Boisguilbert and later by Quesnay and Turgot. “Philosophie économique”

During our period of interest, the second influential current of thought was “philos­ ophie économique”.10 It included those authors who fought in favour of the “liberté du commerce” (free trade), from Boisguilbert and the foundation of “laissez-faire” at the end of the seventeenth century to the developments of Quesnay, Turgot and Condorcet during the second half of the eighteenth century – to whom some inde­ pendent authors such as Jean-Joseph-Louis Graslin (1727–1790) can be added. Why “philosophie économique”? As the physiocrats and their friends were known either as the “économistes”, the “écrivains économistes” or the “philosophes économistes”, the current of thought they represented naturally came to be called “philosophie économique”. The phrase “philosophes économistes” was used, for example, by Diderot, and then by Mably in his 1768 Doutes proposés aux philos­ ophes économistes sur l’ordre naturel et essentiel des sociétés politiques – a book criticising the 1767 political opus magnum of the physiocratic school, Pierre-Paul Le Mercier de la Rivière’s (1719–1801) L’ordre naturel et essentiel des sociétés politiques. It was accepted by his adversaries: one of the foremost members of the school, Nicolas Baudeau (1730–1792), used “philosophie économique” in the title of his 1771 theoretical synthesis, Première introduction à la philosophie économ­ ique, ou analyse des États policés. However, the appellation fits all the authors of 10 See Faccarello (2006), Faccarello and Steiner (2008, 2012, 2021) and Steiner (2018).

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the laissez-faire approach, from Boisguilbert to Jean-Bastiste Say (1767–1832): they all proposed a new political philosophy centred on the working of markets in competitive conditions. This approach was developed along three main lines. The first line was a theory of knowledge based on sensationist philosophy, which originated in John Locke’s Essay Concerning Human Understanding (1690) – translated into French by Pierre Coste (1668–1747) and developed by Condillac. Boisguilbert had no contact with sensationism, but his theological point of departure led to the same conclusions as regards individuals’ behaviour and political economy. Sensationism represented an important development for the traditional discourse on the passions, and especially on interest and self-love. It allowed passions to be harmonised: as they create good or evil, pleasure or pain, they can be dealt with in terms of their positive (good) or negative (evil) outcomes at the individual and collective levels. Moreover, sensationism addressed the ques­ tion of knowledge. The power of human reason, while praised, was also recognised to be imperfect and, consequently, knowledge became problematic. But while it was impossible to know the “essential” nature of things (if any), it was fortunately possible to resort to experience and experimentation and limit oneself to the knowl­ edge of more or less regular phenomena and the relationships they have with each other, both in sciences such as physics and astronomy, and in the new “moral and political sciences”. In this perspective, the development of probability theory and a probabilistic vision of science marked the eighteenth century, and so did sensationism: this approach – stating that our sensations are at the origin of our knowledge and actions – generated the different sensationist approaches of Quesnay, Turgot, Condorcet, Graslin and many political economists of the time. The second line of “philosophie économique” was a theory of self-interested action in society. For our authors, the natural and optimal political order rests upon the harmony that economic activities, based on the actions of selfish agents, spon­ taneously create in a regime of domestic and international free trade. Boisguilbert was the first to state this position at the end of the seventeenth century. His ideas were of particular importance for the development of this approach during the eighteenth century, especially by Quesnay and Turgot: the idea of a maximising behaviour of agents based on self-interest was adopted and considered as natural. But while in Boisguilbert this attitude referred to the theological scheme of the fall of man and was embedded in his Augustinian Jansenist approach, this religious point of departure was subsequently replaced by the sensationist explanation of the behaviour of individuals, the consequences in favour of free trade remaining the same. These developments led to the progressive emergence of a new kind of rationality and cost–benefit calculations. And, contrary to the traditional moral views, the selfish attitude of agents was not considered as disruptive, provided that free competition prevails and allows a system of equilibrium relative prices to be realised. Moreover, the social link between individuals and the equilibrium struc­ ture of the economy was grasped in real terms, leading, at the end of the period, to Turgot and Graslin’s respective theories of value. However, money was not unim­ portant, although in this context it played a very different role to the one attributed to it in “commerce politique” – for example, the quantity of circulating money was not considered to be the cause of economic depression: the impression that an

Prelude 7 economy “lacks money” was said to be fallacious, the effect of a crisis rather than the cause. Finally, the third line was a singular conception of the efficient action of the legislator. How can the new policy be implemented? How can the legislator be influenced if, unlike Turgot in 1774–76, the “philosophes économistes” are not themselves in power? At the time of Boisguilbert, the “philosophe” could only act by gaining access to the king or his ministers, informing them and proposing solu­ tions. By the middle of the eighteenth century, this had changed with the idea of reforming the monarchy. There was a clear movement towards the public sphere and an appeal to “the court of public opinion”. Instead of papers and memoranda addressed to the royal authority, authors turned to printed works and even articles in journals intended for the public and for debate. This was a new way of thinking about politics and the legitimising of political action, seeking to convince the “read­ ing and thinking public”. This pedagogical dimension was associated with various institutional structures, for example, projects for public political assemblies. In this context, what is the specific mission of the legislator as regards markets and the economy? The first task concerns the functioning of markets in a regime of free competition: in this case, the harmonisation of the self-interested behaviours of individuals was supposed to occur without any specific regulation – whether politi­ cal, like the regulation of the grain trade, or religious, like the prohibition of usury. In some cases, however, authors admitted, the legislator and the political authori­ ties would have to intervene whenever the conditions for the smooth working of competition were not fulfilled. In some cases also, the mechanism of competition was considered never to work and the legislator would have to intervene accord­ ingly: this is the theme of market failures and the so-called artificial harmonisation of interests, the main problems dealing with the financing of public goods and taxa­ tion. In addition, the legislator also had to decide on merit goods, such as instruc­ tion and education, and questions related to externalities. The two main currents of thought just depicted, “commerce politique” and “philosophie économique”, almost monopolised attention in the second half of the eighteenth century. They did not, however, obliterate some other important con­ tributions to the development of political economy, such as those of the Scotsman John Law, the Neapolitan Ferdinando Galiani (1728–1787) and the Swiss banker Jacques Necker (1732–1804), who all played a prominent role in French intellec­ tual and political life. Of course, all these currents and authors, while belonging to the reform movement which characterised the French Enlightenment, did not coexist peacefully, and even inside each group authors were far from agreeing on all the issues in question. Lively polemics took place between them, for exam­ ple, between Forbonnais and the physiocrats. One of the most famous debates was launched by Galiani’s attack against “philosophie économique” with his Dialogues sur le commerce des bleds, which provoked a reaction from Turgot and his friends. Furthermore, many onslaughts on the laissez-faire approach came from other cor­ ners, for example, from Mably or Simon-Nicolas-Henri Linguet (1736–1794), who had in mind different models of society. Finally, individual positions sometimes evolved. Diderot, for example, praised the physiocrats before supporting Galiani, and Turgot, one of the most important theoreticians of laissez-faire, was a former

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member of the circle of Vincent de Gournay – his 1759 “In praise of Vincent de Gournay” contributed powerfully to the erroneous image of Gournay as an adept of laissez-faire.11 The evolution of the vocabulary

In this context, the evolution of the vocabulary used to designate the new field of political economy is worth noting. In a nutshell,12 and as is well known, “econ­ omy” comes from the Greek words “oikos” (house, estate) and the radical “nem” which is found in “nomos” (rule, law). Associated in “oikonomia”, in Ancient Greece these terms meant the management sensu lato of the estate of a citizen, including his family and household, where good management complies with eth­ ics and morals. While it has sometimes been translated as “economic science”, “oikonomia” is in fact best translated by “domestic administration”. The term came also to mean (good) organisation, or harmony, for example, when speaking of the economy of a poem or of a building. In Antiquity, the writings devoted to “oikono­ mia” are seemingly very rare: two are well known, by Xenophon and the pseudoAristotle. In France, their respective titles were – and still are – usually translated by L’économique and Les économiques. But a celebrated exception is meaning­ ful. When, during the sixteenth century, the lawyer and philosopher Étienne de la Boétie (1530–1563) – the author of the Discours sur la servitude volontaire – translated into French this work by the pseudo-Aristotle, he gave it the title of La mesnagerie (La Boétie 1571),13 a word derived from the verb “mesnager” (to manage). Significantly, his translation also included two other writings: Plutarch’s essays Les règles du mariage (Conjugal precepts) and Lettre de consolation de Plutarque à sa femme (Consolatory letter to his wife). But the case of Les économiques is interesting for another reason: it gave rise to a first evolution in French economic vocabulary. Ancient Greek authors disagreed on whether the discourse on “oikonomia”, originally applied at the individual level, could also be applied at the collective level of the city/state. Plato answered in the affirmative, while Aristotle stressed that there was an essential difference of nature between the two levels: the head of the family has absolute authority over the members of his estate, while politics concerns free and equal citizens.14 Now, while this distinction is accepted by the peudo-Aristotle (who was not necessarily one single author), his book has three parts, the first and third only concerning domestic 11 On all these points, see, for example, Tsuda (1983), Faccarello (1998), Shovlin (2006), Sonenscher (2006, 2007), Bach (2011), Orain (2015), Klotz et al. (2017), Kaplan (2017), Ando (2018), some contributions published in Kaplan and Reinert (2018) and the chapters of the present book and the further bibliographical guidance supplied there. 12 For more detailed analyses, see Faccarello (1992), Piguet (2002), Salvat (2006), Steiner (1998, 2006, 2011) and Oki (2018). 13 Posthumously published by his friend Michel de Montaigne. 14 The distinction assumed a fundamental importance with the emergence of the nation states, involv­ ing the choice of a kind of political organisation: see, for example, the controversy between Robert Filmer and John Locke in seventeenth-century England. In France, Rousseau still refers to it and Aristotle in his entry “Économie” in the Encyclopédie.

Prelude 9 administration, while the second deals instead with public finance. To solve this discrepancy, Jacques Lefèvre d’Étaples (ca 1450–1536),15 when publishing Latin translations of Greek writings in Paris (Lefèvre d’Étaples 1506), separated Part II from the rest of the book. He gave the title of “Economicorum Duo” to Parts I and III, and “Economiarum publicarum Aristotelis liber unus” to Part II: the term “économie publique” (public economics) was born. Later in the century, another evolution took place with the emergence of the phrase “œconomie politique” (political economy). This happened during the Wars of Religion, in a book written during the early 1590s by Louis Turquet de Mayerne (ca 1550–1618),16 a Huguenot proposing an alternative model for the French mon­ archy: La monarchie aristodémocratique, ou le gouvernement composé et meslé des trois formes de légitimes républiques. Although it was only published in 1611, the manuscript had circulated long before in learned circles. In this work (1611, 558), however, the phrase “œconomie politique” does not yet have the modern meaning it was to acquire later, but rather designates the political organisation of the realm: an “aristo-democratic monarchy”, that is, a form of state harmoni­ ously mixing the three traditional forms usually considered as exclusive of each other – a minority view originating in Polybius’s writings. A few years after this publication, another Huguenot used “œconomie politique” in the title of a book: this was Antoine de Montchrestien (ca 1575–1621), a poet and playwright, who dedicated his Traicté de l’œconomie politique (1615) to the young Louis XIII and the Queen Mother Regent after the assassination of Henri IV in 1610. The meaning of “organisation” is still present but the book deals more with economic matters and problems of policy – on these topics, it was also inspired by Jean Bodin’s Les six livres de la République, which it plagiarises in many places. As publications on economic questions developed, the vocabulary also evolved, although it was mainly specific to the subjects considered: grain trade, taxation and so on. In dictionaries, the word “économie” still referred to good domestic adminis­ tration or to the principle of good organisation in general. To speak of the whole set of questions dealt with in economic matters, authors and commentators for a long time used “commerce” or “commerce en général”, as the titles of three celebrated books show: Cantillon’s Essai sur la nature du commerce en général, written in the late 1720s or early 1730s and only published in 1755, Forbonnais’s Éléments du commerce, 1754, and Condillac’s Le commerce et le gouvernement considérés relativement l’un à l’autre, 1775. But by the time Condillac published his book, the terms “économie publique”, “économie politique”, “science de l’économie politique” or “science économique” were more appropriate to name the new disci­ pline: the 1760s were decisive in this respect. In a nutshell, while in the Encyclo­ pédie, the phrases “économie publique” and “économie politique” were still mainly used to deal with political questions related to the nature of the state and forms of government17 – although Quesnay’s entries “Fermiers” (1756) and “Grains” (1757) 15 Or Jacobus Faber Stapulensis.

16 Also known as Louis de Mayerne-Turquet.

17 There are two entries on political economy in the Encyclopédie: the first, in volume V, 1755, “Écono­ mie, ou Œconomie (Morale et politique)”, was written by Rousseau; the second, “Œconomie politique

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were labelled “Économie politique” – the physiocrats gradually introduced the new meaning of “political economy”. They spoke of “the new science of politi­ cal economy” and, in Philosophie rurale (1763), Quesnay and Victor Riqueti de Mirabeau (1715–1789) used the term “science économique” (probably an abbrevia­ tion of “science du gouvernement économique”, which had appeared before in their correspondence) in public for the first time in its modern sense. But this evolution was not limited to physiocratic circles. In his Essai analytique sur la richesse et sur l’impôt (1767), Graslin, a fierce critic of the physiocrats, used the same words: “science de l’économie politique” and even more frequently “science économique”. In 1755, in his discourse in praise of Montesquieu (who had just passed away), Maupertuis stressed Montesquieu’s interest in “the system of wealth” and remarked that a more appropriate name was necessary for this system, adding: “this science is so novel to us . . . that it does not yet have a name” (Maupertuis [1755] 1768, 416). A decade later, most political economists had the impression that they had definitely founded a new discipline – in 1767, Graslin declared that the science of political economy had just been born and, in 1768, Pierre-Samuel Dupont (1739– 1817),18 a disciple of Quesnay, published De l’origine et des progrès d’une science nouvelle. They also felt that they had found some more appropriate names for it, most of the time used as equivalents. But because the physiocrats were known as the “économistes”, Graslin felt it necessary to warn that the new “science économ­ ique” should not be reduced to physiocracy: it referred to a new field of inquiry and not to a specific doctrine. Use of the term “anti-économiste” to speak of authors who opposed Quesnay and his disciples was thus to be banned. “I tell you that anti-Économiste is not the correct word, and one should say anti-Quénéiste, antiMiraboliste, for one can oppose particular opinions on economic science without becoming an enemy of this science” (Graslin [1767–68] 1777: 29–30). 2.

Before the Enlightenment

Obviously, the economic ideas of the Age of Enlightenment did not emerge out of nothing, and authors, to various degrees and on certain themes, ben­ efited from prior developments made during the medieval period or during the Renaissance with, most of the time, Greek and Latin texts in the background. One example is Turgot, who had studied at the Sorbonne – he was initially des­ tined for an ecclesiastical career – and was well-versed in the scholastic debates, especially on price and usury. While the medieval period is not easy to grasp in a context where what was to become France had not yet stabilised and scholastic (Hist. Pol. Rel. anc. & mod.)”, in volume XI, 1765, was by Diderot. Rousseau – who actually used the term “économie publique” in his entry – dealt with public finance, but only after writing about “executive power”, the “general will”, “virtue” and the education of the citizens. Diderot’s entry was an adaptation of a posthumous book by Nicolas-Antoine Boulanger (1722–1759), Recherches sur l’origine du despotisme oriental, 1761; political economy was defined as “the art and science to main­ tain men in society, and to make them happy”, and the entry dealt with different forms of government. 18 Later known as Du Pont de Nemours, after he was ennobled by Louis XVI in the 1780s (Dupont was split into Du Pont, and Nemours, the name of an estate, was added).

Prelude 11 exchanges were international – things are a lot easier for the so-called “mercan­ tilist” period – it is nevertheless possible to briefly report a few developments as examples of the legacy of the previous periods to the Enlightenment and, beyond, to various critical trends of nineteenth-century political economy. They deal mainly with prices, value, usury, money and the role of merchants and trade in society. The result is a reappraisal of the importance of the scholastic period in the French context, compared with a mercantilist episode that was much less original and significant than in Great Britain, for example. Of course, we only focus here on some main points. Prices in Roman law and canon law

In his book Economics in Medieval Schools. Wealth, Exchange Value, Money and Usury according to the Paris Theological Tradition, Odd Langholm (1992) links the development of scholastic thought in the thirteenth and fourteenth centuries with that of the university, in particular the University of Paris. Established at the beginning of the thirteenth century, this university was renowned for its teaching of theology, philosophy, morals and ethics. It was in these different fields of knowl­ edge that the questions known today as “economic” were dealt with, including those of wealth and poverty, and the relationship between private and public good. To address these questions, the Schoolmen teaching at this university had four sources at their disposal: the writings of the evangelical and patristic tradition; canon law (Corpus iuris canonici) rearranged under the name of Decretum Gra­ tiani (ca 1140); Roman law (Corpus iuris civilis, of which the Digesta and the Codex are the main subdivisions) compiled in the sixth century and revised in the thirteenth century by Bolognese and Florentine jurists (such as Acursius ca 1182­ post 1260); and finally the ethical and political writings of Aristotle recently trans­ lated into Latin: Nicomachean Ethics, translated in 1247 by the Franciscan Robert Grosseteste (ca 1167–1253) and his collaborators, and Politics translated in 1260 by the Dominican William of Moerbeke (1215–1286). The intellectual production of the University of Paris followed three main literary genres: exegetical commen­ taries on evangelical, patristic and Aristotelian texts (sententiae), freely disputed questions on various subjects (quodlibets) and syntheses gathering the elements of doctrine (summae). Overall, for the thirteenth century, Langholm lists 250 writings, and counts 47 theologians who studied or taught in Paris. To this first academic moment, historians of scholastic thought (Langholm 1992; Todeschini [2004] 2008; Kaye 2014; Piron 2018 inter alios) add a second, Franciscan moment at the end of the thirteenth century and during the fourteenth century, which re-examined the questions of wealth and poverty, the place of the merchant in a Christian soci­ ety, and the relationship between the acquisitive mind and the common good.19 In the twelfth century, in his Sententiarum libri (ca 1155), Peter Lombard (ca 1095–1164), who became bishop of Paris in 1159, dealt with phenomena such as buying, selling and lending in a chapter on theft (rapina). In the following century, 19 For a recent overview on scholastic thought, see Chaplygina and Lapidus (2016).

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the Dominican Thomas Aquinas (ca 1225–1274) addressed them in two short questions on fraud (fraudulentia) and the sin of usury (peccatum usurae) in his Summa theologiae. At the end of the same century, the Franciscan Peter of John Olivi (1248–1298)20 examined them in a more extensive work, the Tractatus de contractibus (1293–95), which is considered the first work devoted exclusively to the question of contracts concerning buying and selling, renting or lending, and whose title illustrates well the way in which the Schoolmen apprehended economic phenomena: through contracts of exchange (commutatio) of goods and services between individuals who are both free to contract and subject to rules of justice and equality (aequalitas). The Schoolmen dealt little with production, monetary circulation – with the notable exception of Nicole Oresme – or the means of enrich­ ing the political community (communitas, civitas, res publica). Their essential sub­ ject was the justice of market exchanges. In terms of commercial exchanges, scholastic thought borrowed two problem­ atic notions from Roman law compiled in the Corpus iuris civilis (Baldwin 1959; Kaye 2014; Lenoble 2020): the “just price” (iustum pretium) and the “common estimation” (aestimatio communis). The (just) price was usually based on an adage: “A thing is worth as much as it can be sold for” (res tantum valet quantum vendi potest). Roman law seemed to make very little use of the word valor in the sense of a market or intrinsic value of a good, but used more frequently the verb valere in the sense of “being equivalent to”, but also, more commonly, of “being allowed to”, “having force of law”. As for the word pretium, it meant a common agreement established through bargaining, or the result of a negotiation between the parties, often expressed in money (Benveniste 1969, 140; Piron 2020, 231–2). In Roman law, the validity of a commercial exchange depended on the respect of two rules: (i) the freedom of negotiation and (ii) the agreement of the contracting parties. The free agreement of the contracting parties being sufficient to establish a just price, the words price, just price (iustum pretium) or true price (verum pretium) had a roughly equivalent meaning. Freedom of negotiation could be understood in a rather broad way, since it was permitted for the contracting parties to deceive each other in order to obtain an advantageous price. This was deduced from two attitudes that were considered natural: buying (selling) at the lowest (highest) pos­ sible price. Of course, this legal deception had a limit, abnormal damage (laesio enormis), if the contract was concluded with a price that was too high or too low: this situation could lead to the intervention of a judge empowered to cancel any contract considered as excessive. But how was the judge supposed to know the just price? Through the common estimation. The Roman jurists were aware that prices fluctuate according to circumstances, time and place and agreed on the principle that “prices do not depend on the affects or utilities of individuals [utilitate singulo­ rum], but on what is commonly [communiter] observed” (Digesta 35.2. 63). They did not, however, specify what they meant by communiter (which can mean “in common” or “commonly”).

20 On Olivi and the Franciscan vision of the market, see Todeschini ([2004] 2008, Chapter 3), Piron (in Olivi ([1293–94] 2012, 11–71); Kaye (2014, 106–25) and Evangelisti (2021, 144–61).

Prelude 13 From Roman law, medieval jurists thus retained the idea of a price negotiated in common, accepted in common and considered to be just. This common estimation was a procedure by approximation allowing the judge to identify a fair exchange and to correct any price suspected of laesio enormis. Accurcius envisaged a toler­ able latitude (latitudo) of 50% above or below the common price. For their part, following the evangelical and patristic tradition and the example of Aquinas ([1266–74] 1934, q. 52, art. 2, resp.; q. 58, art. 11, resp.), medieval theologians stated more ostensibly that “justice implies equality”, that the purpose of an exchange is the equality of the contracting parties, or again that “the proper act of justice is nothing but giving to each one his due”, without excess or damage. Initially hostile to the idea of legal deception, which was contrary to Christian pre­ cepts, they finally accepted this notion of latitude, which made it possible to affirm (i) that the price is variable and knowable by approximation and (ii) that there is a moral and legal limit to price variation. They admitted that one can in some circumstances sell for more or buy for less than the supposedly just price, but of course that restitution procedures were required in the case of a manifestly unequal exchange. For Aquinas, however, only a small degree of latitude (without further details) was permissible. Olivi admitted a “certain appropriate latitude”, and Rich­ ard of Mediavilla (ca 1249–1308) a “great latitude”, arguing that not all excesses corrupt the natural right, as did John Duns Scotus (1265–1308).21 As for the common price (pretium commune), it could mean a price established by communities of industrious merchants and tradesmen working for the com­ mon good, or even by free and equal citizens exchanging in a market governed by laws aimed at justice and equality. This is the meaning Olivi ([1293–94] 2012, 94; 110; 122–4) seemed to give through the expressions “civil community” or “com­ munity of sellers and buyers” – Todeschini ([2002] 2017, 158; 275) also points to the expression “community of contractors”. It could also mean the price over which the community has ultimate control in order to eliminate abuse and cupid­ ity and to ensure social justice. In his writings, the Dominican Albert the Great (ca 1200–1280) tended to identify the just price with the estimation of the public place. However, the expression forum commune which he used could mean both marketplace and administrative place, and the Dominican admitted the intervention of the prince to fix a maximum price in the name of the common utility in case of scarcity (Albert 1894, 638, [post 1260] 1891, 355). Similarly, Aquinas wrote that “it belongs to the rulers of the city to determine the just measures of marketable things, taking into account the conditions of places and things. Therefore, it is not permitted to exceed these measures instituted by public authority or custom” (Aquinas [1266–74] 1934, q.77, art.2, ad 2). It is thus an external authority which acts here on the determination of price, rather than the merchants who are known for their industria, that is, their expertise, their knowledge of the market and their judgement made in good faith.

21 See Olivi ([1293–94] 2012, 102–3), Richard of Mediavilla ([ca 1295–96] 2016, 284) and Duns Scotus (2001, 46).

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Thierry Demals and Gilbert Faccarello

Value and price

Translated into Latin, the Nicomachean Ethics and the Politics were the subject of several commentaries. Albert first commented on the Ethics around 1250 and then a second time after 1260 – followed in 1269 by his pupil, Aquinas. The idea was put forth that market activity had a necessary civil function for the community and should be recognised for all ordinary goods, except for spiritual goods. Aquinas presented trade and merchants as a necessary evil: an evil because this activity is morally hazardous – the desire to buy as cheaply as possible and sell at the high­ est possible price is not natural, but vicious – and because the existence of too many merchants would corrupt the city; a necessity because the supply of the city depended on them. Henry of Ghent (1217–1293) – who taught at the University of Paris from 1275 until his death – pointed to the same defect in trade, but he recog­ nised an essential quality of merchants, industria, which can justify a reward and thus the resale of goods at a slightly higher price.22 Although necessary, exchange must remain useful to the community, aiming to satisfy basic needs and not to excite cupidity. Unlike Roman law, the Nicomachean Ethics had the advantage for scholastic theologians of presenting exchange not as an exercise in deception or cupidity but as a rational system aimed at justice and equality, expressible in mathematical terms (Kaye 2014, 88). Indeed, Aristotle argued that all exchange should take place according to the criterion of equality and that a rational procedure should lead the exchangers to a point of equality in their transactions (ἴσοτης), considered not only as the middle ground between two extreme positions (Aristotle 1934, 271; 277) but also as a condition for the cohesion and preservation of the community. He thus distinguished between two forms of justice, called “corrective” and “distributive”. The first made it possible to achieve or restore equality arithmetically, by addi­ tion or subtraction, with a judge taking away the excess received by one party and giving it to the other party who had overpaid, while the second implemented pro­ portional equalisation (κατὰ τὴν ἀναλογὶαν ἴσον, Aristotle 1934, 282), called geo­ metric, by multiplication or division, taking into account the “quality” and “merit” of the persons (ἀξία, Aristotle 1934, 268). To these two forms, Aristotle added a third, which he considered applicable to exchange relations: “reciprocity”, a sort of mixture of the two previous ones. Since the works (εργα) exchanged were by nature different in quantity and quality, and since each had its own unit of measurement, exchange could not consist in equat­ ing one unit of one work with one unit of another work – this would have implied that the works and their producers were of identical quality. Instead, exchange consisted in equalising “different and unequal” arts (Aristotle 1934, 283) by allo­ cating to the producers shares of works in proportion to their quality and merit. The exchange could not take place according to arithmetical equality because the producers were different, and what was needed was a proportion of objects that equalised their situation.

22 See Henry of Ghent (1979, q. 40, 228), Todeschini ([2002] 2017, 281–2; 415) and Evangelisti (2021, 119–20).

Prelude 15 Aristotle also insisted on the notion of need as the basis of exchange. Works were made comparable through money, a common measure making exchange possible, assuming of course that it was stable (Aristotle 1934, 287). As money substituted for need as a measure (1934, 286), equality was achieved when both exchangers were satisfied with the proportion of objects obtained.23 Another point, important for later developments, deserves to be stressed. In Book V of the Ethics, Aristotle used a vocabulary that did not express the idea of an essence contained in the goods intended for exchange and which would have made them commensurable. For him, the only idea that mattered was of a ratio or pro­ portion equalising those who exchange. In his first commentary, however, Albert ([1250] 1968, 343) used the expression valet melius (the good is worth more), which is a neologism taken from the vocabulary of civil law, and made frequent use of the word valor. A notable development can thus be seen here: unlike Aristotle, Albert seeks not only to equalise the situations of two people involved in an exchange but also to equalise what we have subsequently agreed to call the value of the exchanged goods. Value appears here as a relation between the goods themselves, a quality inherent in the goods and pre-existing the exchange, and not only a relation between those who exchange that depends on their quality or their social merit. Following Aristotle, Albert defined equality in exchange as a proportional equal­ isation of works, but he made two readings of the Aristotelian exchange. In his first commentary, taking the example of a house builder and a shoemaker exchanging their respective works (the house and the pair of shoes), he wrote, “The house builder surpasses the shoemaker in the labour and expenses [in labore et expensis] that he puts into his work, as much as the house surpasses the shoe” (Albert [1250] 1968, 343). With the word value, Albert thus linked the works to the labour and the expenses incurred to produce them and bring them to market. Since the house builder incurred more labour and expenses than the shoemaker, the exchange is just and the two agents are brought to equality when their goods equalise according to the efforts and expenses. “If the house builder had only received one pair of shoes for the house, he would never have made a house” (Albert ([1250] 1968, 343). In the second commentary, in the 1260s, Albert wrote that an equal exchange is obtained by comparing needs (secundum indigentiam)24 (Albert [post 1260] 1891, 356). The second commentary does not invalidate the first, but makes mutual need the cause of exchange: “For the city is not maintained if the needs of the citizens are not supplied” (Albert [post 1260] 1891, 355). Thus, in these comments, two criteria of justice appear: a correct remuneration of labour and expenses, and an estimation of the goods according to the need for them. Need is itself associated with two notions: usage (usus) and social utility (utilitas). Albert used the expres­ sions “needs of the citizens” and “needs of the city” (Albert [post 1260] 1891, 355; 358), and stressed that works are “appreciable according to whether they come into use and utility to the community” (Albert [1250] 1968, 344). 23 On this point and what follows, see, for example, Berthoud (1981), Campagnolo and Lagueux (2004) and Piron (2020, 239–44). 24 Indigentia means need, in the sense of “lack” or “want”, as distinct from usus which refers to the use one makes of a thing, or utilitas which most often refers to the utility for the community.

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In his commentary on the Nicomachean Ethics written in the years 1269–70, Aquinas, following Albert, adopted the expression in labore et expensis and made need (indigentia) the measure of all things:25 But this unit which measures everything . . . is need. . . . For things are not appreciated according to the dignity of their nature; otherwise a mouse, which is a sentient animal, would be of higher price than a pearl, which is an inanimate thing; but prices are imposed on things according to men’s needs for their use [usum]. (Aquinas [ca 1269] 1969, 294–5) Finally, in his Tractatus de contractibus, Olivi distinguished between “absolute value” and “venal value”. Beginning his treatise by examining the question of value (valor) – the capacity of a commodity to receive a price – he distinguished, like Aquinas, between the natural dignity of things, which he calls “absolute value” (secundum absolutum valorem), and the “venal value” based on social utility (in repectu ad nostrum usum et utilitatem) (Olivi [1293–94] 2012, 108). In exchange, things are not equivalent according to their absolute or natural value, but according to the use made of them and the utility they provide. The market value of a thing is measured according to three criteria: its real properties, which make it more or less useful; the greater or lesser scarcity and difficulty of obtaining it; and the greater or lesser pleasure it gives to the individual consumer and the pleasure of a satisfied will. Usury and interest

Lending was examined in the same way as buying and selling, or renting out: it must result in an equality between the parties. Like his co-religionists, Olivi took as his starting point the adage of Luke the Evangelist (lending without expect­ ing anything in return), which sums up the initial Christian position which led to the condemnation of what was called “usury”. Derived from Roman law (Digesta 16.2.11), the term usury meant successively the use and enjoyment of a property, then the price paid for the use of a property by a person who does not own it, and finally an excess beyond the amount of the property or money lent, claimed by the lender from the borrower. Roman law also distinguished between two types of contract, the foenus, condemned by Christian morality, which included an interest agreement (in the current sense of the term interest), and the mutuum, which was a simple transfer of the ownership of a good, involving the restitution of a good identical in quantity and quality and nothing more. The Church always condemned usury and the merchants who practised it on the grounds that it was a negation of charity. With the development of the mon­ etary economy, the condemnation became more severe. Equated with theft, and therefore a sin, by Peter Lombard in the twelfth century, its prohibition became

25 In question 77 of the second part of the Summa Theologiae, written shortly afterwards (1271–72), the notion of indigentia as a measure of all things is replaced by that of usus.

Prelude 17 universal with the Second Lateran Council (1139) and in the Decretum Gratiani (causa 14, q.3, c.2 and 3): “Everything demanded beyond what is given is usury”, “everything that comes from the capital [sors] is usury.” The official canon was thus set, condemning not only the gain exceeding the initial amount of the loan but also the expectation of such a gain. The grievances were clearly established: the sin of cupidity, the sin of injustice, the theft of time that belongs only to God, the unnatural act of believing that money is fruitful, etc. A change occurred in the thirteenth century: theologians sought to distinguish more clearly between merchants, who were good Christians – professionals in exchange, experts in price, contributing through their activities and investments to the common good – and usurers who diverted their wealth from the common good by hoarding it, withdrawing it from circulation (Todeschini 2005, 155; 180–81). Among the gains demanded in addition to the sum loaned, it was therefore neces­ sary to distinguish between those that were licit or illicit. Theologians, especially Franciscans, had no intention of absolving the sin of usury, nor did they imag­ ine that the usurer serves the common good. On the other hand, they intended to demonstrate the possibility of Christian wealth and a marketplace governed by the criterion of common utility. A double movement took place. While the condemna­ tion of usury was maintained, certain gains paid to lenders in addition to the loaned sums were justified: they were considered as compensation, or penalties, and called by a term taken from Roman law, interesse (that is, reparation of a damage). More­ over, while the usurious loan contract was abhorred, the contract of association between a merchant who invested in the business of another merchant, thus form­ ing a company with risks shared by both, was not, nor was the census between a landowner and a cultivator, or even the currency exchange contract, although the latter was often suspected of concealing usury. In order not to weaken the doctrine of usury, the justification of interest (inter­ esse) as a licit excess over the just price was presented by theologians as an extrin­ sic title to interest which was not part of the contract itself but was caused by external circumstances. Five circumstances were then disputed: damnum emergens (compensation for damage created by delayed repayment); lucrum cessans (com­ pensation for a fund which could have been more profitable if it had been placed in another business); periculum sortis (remuneration for the risk of loss of the fund advanced); ratio incertudinis (provision against the threat of uncertainty) and sti­ pendium laboris (remuneration for an industria, an expertise and labour). The legal payment of interest under these five circumstances shows that the contract between a lender and a borrower has the same characteristics as a purchase/sale contract: it must be established on an equality, not arithmetical, but proportional, and the excess over the sum loaned is considered as a means to recover this equality (Kaye 2014, 33). Finally, it should be noted that, in all this reasoning, only the person of the lender is concerned: the use made by the borrower of the borrowed sum is never taken into account to justify any increment paid to the lender (contrary to what later theorists, such as Turgot, for example, would do). Not all theologians accepted these five derogations. For example, Aquinas did not approve of an indemnity covering a hypothetical loss of gain (lucrum cessans) because it boils down to selling something probable, without real existence. He

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also adopted an argument from the Decretum Gratiani and Aristotle that allowed him to distinguish between a contract of loan and a contract of lease. Unlike the latter where the ownership of the thing is retained by its owner, the owner of the money – which is included in the so-called “fungible and consumable things” (res fungibilis et primo usu consumptibilis)26 – by lending it, transfers his property right to the borrower and thus cannot charge a price for the use of a thing he no longer possesses (Aquinas [1266–74] 1934, I, q.78, art.1, resp.). By comparison, Olivi argued for a reduction in the domain of usury. Thus, to the question: “Can one buy a future good cheaper than a present good?”, the Franciscan answered positively. There is not necessarily usury in this case, because buying a future good that does not yet exist – that is to say, buying a future right to that good – is not buying the good itself and really possessing it. The future good is virtual, unlike the present good, so the certainty of possessing it in the future is less than the certainty of actually possessing it. Its price will be lower depending on the degree of uncertainty and the probability of owning it. To buy in anticipation the future harvest of a field that may be exposed to bad weather is therefore not to buy the time that belongs only to God and is “common to all”, but the “time proper to the thing itself” (Olivi [1293–94] 2012, 204). Moreover, on the question of whether compensation for a shortfall (loss of gain, lucrum cessans) could be claimed, Olivi considered that the renunciation by the lender of a probable gain is a circumstance that can be stipulated in a contract and give rise to legitimate reparation or interest: on the condition, however, that the lender is lending from his “capital” – and not every fund of money or goods is “capital for trade” (capitale ad mercandum, [1293–94] 2012, 222). Olivi clearly used the word capitale27 in the sense of a fund invested by the lender, “immediately” or “mediately”, in a commercial affair aimed at profitability and thus including a probable gain – that is, a fund which must “not only yield its mere value but also this additional value” (Olivi [1293–94] 2012, 232). Unlike Aquinas, Olivi thus admitted that a lender can claim interest (interesse lucri) for the compensation of the probable gain he could have made by investing his capital in a commercial venture.28 This gain, which the lender deprives himself of, is not knowable with certainty, but its probable magnitude can be estimated and measured by a quantity of money, according to the common estimation and within a certain latitude. It can therefore be lawfully bought and sold at this price ([1293–94] 2012, 216). The price of this probable gain is determined by the merchants themselves, because their experience of uncertainty and risk in commercial affairs has taught them to rationally estimate the value of probable things.

26 Consumable things are those which are destroyed at first use. They are also fungible things if it is only the kind or species that matters, and not the individuality – fungibility being the quality of objects which, not being individualised, are designated in contracts only by their species and quan­ tity (so many bushels of wheat, such and such a sum of money, etc.). 27 On the etymology of the word capitale and some other terms related to trade, see Piron (2020, 274–92). The word was used prior to Olivi. It can be found, for example, in Robert de Courçon’s De Usura, although much less frequently than sors, which comes from Roman law. Courçon (ca 1160–1218) became Chancellor of the University of Paris in 1211 and enacted its statutes in 1215. 28 In a sense, Olivi’s was an attempt to conceive a category of contracts that are neither mutuum nor foenus.

Prelude 19 Money

Invented to facilitate exchanges, measure things and make them comparable, money has an eminently political role: it guarantees the life of the city. However, as Olivi pointed out in De usu paupere ([post 1279–prima 1283] 1992), it is not, or should not be, anybody’s property: as soon as it is received, it must circulate. As soon as money leaves its owner, it no longer belongs to him, it is destroyed by the use made of it and is transformed into something else comparable. All men, including those who take a vow of poverty like the Franciscans, can therefore enjoy money for its common use, but they cannot accumulate it, for this would make it “immo­ bile”, give it an owner and attribute an intrinsic value to it. On the contrary, it must be circulated and considered as a conventional measure (Todeschini [2004] 2008, 135–42). Olivi and the Franciscans therefore distinguished the use of money from its ownership and were neither against its (moderate) use nor against the trades that circulated it. If properly controlled, it is conducive to the civil community. Things took on another, more political dimension as time went by and espe­ cially during the Hundred Years’ War, with the intervention of Nicole (or Nicolas) Oresme (ca 1320–1382). Oresme was a theologian, philosopher and mathemati­ cian, and wrote on physics and astronomy. He was a friend and then counsellor of Charles V (Charles the Wise), and in 1377 he became bishop of Lisieux in Nor­ mandy. He reacted against the great number of monetary alterations29 – through

29 In a nutshell, the monetary unit, the “livre” (pound), was a unit of account defined by a weight of precious metal (silver). At the beginning, there was competition between different “livres”, defined, in various places, by a different weight in modern terms (there was no uniformity in weights and measures until the Revolution): the “livre parisis” (pound of Paris), for example, and the “livre tournois” (pound of Tours). Over time, the livre tournois became the only one in use, and was simply referred to as “livre” – or also “franc” after 1360 (the franc was originally a gold coin worth one livre). It was divided into 20 “sous” and subdivided into 240 “deniers” (one sou being worth 12 deniers). The system was in fact a bimetallic one, a fixed exchange rate between gold and silver being defined by the monetary authority. This unit of account was an ideal money, used in contracts. The circulating medium consisted of many metallic coins (“monnaies de règlement”), the most precious of which were made of silver or gold – the “écu”, for example, was first made of gold and then of silver, etc. – and the cheapest ones of very common alloys. These coins did not have any face value but some pictures were printed on them, hence their great variety of names depending on the engraved pictures. In terms of the unit of account, the value of a specific coin depended on the weight of the precious metal it contained. This monetary regime lasted 1000 years approximately, from Charlemagne until the French Revolution, apart from two short periods: (1) from 1578 (monetary reform of 1577), when the unit of account was suppressed, to 1602, when it was re-established, everything was expressed in écus and gold monometallism was experienced; (2) and during a very brief period during the last stage of Law’s System. This monetary system could be manipulated by the Prince in various ways. Some kinds of coins could be recalled for recoinage in order to perceive some seigniorage and/or falsify their metallic content, surreptitiously diminishing the percentage of gold or silver (debasement). The Prince could also – and this was the easiest way – change the definition of the unit of account, defining it with a higher or lower weight of silver. In the first case, the change was called a “diminution” because a given coin was worth a lower number of units of account, and in the second case, an “augmenta­ tion”, a coin being then worth more livres. The latter case was by far the more frequent. It was a convenient way to diminish the burden of the public debt: since all contracts were written in terms

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arbitrary changes in the relative mint prices of gold and silver, for example, or through changes in the definition of the money of account (the “livre tournois”), or else through recoinage – which were made in order to finance the wars. He did this in a text written in Latin around 1360 (the date and precise circumstances are unknown), De moneta. Tractatus de origine, natura, jure, et mutacionibus monetarum – of which some very unreliable French translations and editions (Traité de la première invention des monnaies) were made after Oresme’s death.30 Mainly basing his analysis on Aristotle, De Moneta is a clear statement of a scholastic moral and political doctrine of money. The core of Oresme’s ideas later became part and parcel of monetary orthodoxy, that is, of the widespread view that the political power should not manipulate its value. Oresme’s aim was to prove that alterations of the coinage and of the defini­ tion of the unit of account “is against the king’s honour and injures his poster­ ity” (Oresme [ca 1360] 1956, 47), provokes the ruin of the kingdom and turns the monarchy into a tyranny. An inquiry into the nature of money was thus in order and Oresme – who translated, inter alia, Aristotle’s Nicomachean Ethics and Politics – refers to Aristotle’s developments, and in particular his famous analysis of the invention of money due to the difficulties raised by barter. Money, an arti­ ficial wealth, was established for the common good of the community: it conse­ quently belongs to the community, not to the Prince. Although it is the duty of the prince to put his stamp on the money for the common good, he is not the . . . owner of the money current in his prin­ cipality. For money is a balancing instrument for the exchange of natural wealth. . . . It is therefore the property of those who possess such wealth. For if a man gives bread or bodily labour in exchange for money, the money he receives is as much his as the bread or bodily labour of which he (unless he were a slave) was free to dispose. (Oresme [ca 1360] 1956, 10) This is a natural law: the ownership of money cannot thus “be transferred to the Prince. Neither the community nor anyone else has the right to misuse or unlaw­ fully use his own property” (Oresme [ca 1360] 1956, 37). This is the reason why the Prince cannot make monetary alterations “unless perhaps under eminent neces­ sity or for the obvious advantage of the whole community” – something which is exceptional – because all contracts are denominated in money of account and the latter should be stable. “This is indicated by the fact that pensions and yearly rents are reckoned according to the value of money, i.e. in a certain number of pounds or shillings. From which it is clear that a change in money should never be made” (Oresme [ca 1360] 1956, 13). of units of account, the real value of debts in terms of coins was thus reduced. Some other ways to make monetary alterations were also employed, such as arbitrary official changes in the proportion between the mint values of gold and silver. 30 The version used here is that of Charles Johnson, based on the comparison of five Latin manuscript copies (Oresme [ca 1360] 1956).

Prelude 21 Most monetary changes, however, are not made for the good of the community but only in the Prince’s personal interest. The consequences of these unjustified alterations are dramatic: (i) they bring unlawful profit to the Prince and impoverish the subjects; (ii) they generate unwanted transfers of property, not only between the subjects and the Prince but also between the subjects themselves – the most fre­ quent alterations, the so-called “augmentations”, benefiting debtors to the detriment of creditors; (iii) they increase uncertainty in economic and personal relationships. Most of the time, therefore, monetary alterations constitute grave ethical and politi­ cal misconduct. From an ethical point of view, they are a rebellion against divine laws. The profit made in this “monstrous” way by the Prince is condemned because money, which is a sterile thing, cannot generate money: “Therefore when profit is made from money, not by laying it out in the purchase of natural wealth, its proper and natural use, . . . such profit is vile and unnatural” (Oresme [ca 1360] 1956, 25). This attitude is deemed equivalent to usury, but the (deadly) sin thus committed is actually worse than that of usury because a monetary alteration is (i) unilateral (there is no consent by the members of the community), (ii) without any utility for the subjects, and, moreover, (iii) made on a large scale (the whole community). In so far then as he receives more money than he gives, against and beyond the natural use of money, such gain is equivalent to usury; but is worse than usury because it is less voluntary and more against the will of his subjects, incapable of profiting them, and utterly unnecessary. And since the usurer’s interest is not so excessive, or so generally injurious to the many, as this impost, levied tyrannically and fraudulently, against the interest and against the will of the whole community, I doubt whether it should not rather be termed robbery with violence or fraudulent extortion. (Oresme [ca 1360] 1956, 28) Alterations are also a form of political misconduct because they undermine the social order and transform the Prince into a tyrant. The profit of the Prince is the community’s loss: through repeated money alterations “the Prince would be at length able to draw to himself almost all the money or riches of his subjects and reduce them to slavery. And this would be tyrannical, indeed true and absolute tyr­ anny” (Oresme [ca 1360] 1956, 24–5). With this clear-cut conclusion: “It has thus been proved that a dominion which is turned from a kingdom to a tyranny is bound to have a speedy end” (Oresme [ca 1360] 1956, 46). Controversies on the alleged right of the Prince to define and alter money at any time he sees fit lasted for centuries during the Ancien Régime, and usually set lawyers favourable to the absolute monarchy against those who rather supported the interest of the subjects possibly assembled in the Estates-General of the realm – significantly enough, the Estates-General was not convened by the kings between 1614 and 1789, this last meeting marking the end of the absolute monarchy. But progressively, with the development of monetary theory, the question of money became one of political economy. An important step in this direction was the reflection on the influence of money on prices. It is of course best exemplified by the celebrated controversy between

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Jehan Cherruyt de Malestroict,31 an officer in the Cour des Monnaies established in 1552, and Jean Bodin (ca 1530–1596), a lawyer and political philosopher, in the context of what was called the great inflation of the sixteenth century. The former authored Les Paradoxes du seigneur de Malestroict, conseiller du Roi et maistre ordinaire de ses comptes, sur le fait des monnaies32 in 1566 and, a year later, pre­ sented his lesser known Mémoires sur le faict des monnoye to the Private Council of the king (Malestroict [1567] 1937). The latter published the first edition of his reply, La response de Maistre Iean Bodin advocat en la Cour au paradoxe de mon­ sieur de Malestroict, touchant l’encherissement de toutes choses, & le moyen d’y remedier, in 1568. He included his main ideas in his opus magnum, Les six livres de la République (1576), and finally published a second, revised edition of the Response in 1578. One major concern of the debate was to take seriously the wide­ spread complaints that the prices of all commodities and services had constantly increased in the recent past. The controversy also involved some other authors.33 In a nutshell, if the questions of sovereignty and the nature of the monetary system are left aside, the main theme was a reflection on the respective roles played by the money of account and the circulating medium (coins of all denominations) in the variation of prices. Malestroict presented two “paradoxes”. The first simply denies the reality of inflation: “In France, people wrongfully complain about the rise in the prices of all things, because nothing has become more expensive there for three hundred years” (Malestroict [1566] 1934, 58). The second, rather enigmatically, states that “There is much to lose on one écu or any other gold or silver coin, even though one gives it for the same price as one receives it” (Malestroict [1566] 1934, 58). In fact, in both cases, Malestroict referred to the definition of the unit of account. Taking some examples of commodities – and among them the celebrated example of one ell of velvet – he admitted that over a long period of time their prices increased in terms of livres, that is, units of account. But comparing their prices in terms of the medium of exchange, namely coins (that is, the quantities of precious metals con­ tained in those coins), he stated that nothing was more expensive because, for the same commodities, the same quantities of gold or silver were given in exchange. The widespread belief that everything was more expensive was thus an illusion, based on prices expressed in livres: they were effectively higher, but this was just because the definition of the livre had changed – successive monetary alterations had diminished the definition of the unit of account in terms of precious metals. “So, the claim that the price of everything has nowadays increased is just a vain opinion or an image of account [une image de compte] without any effect or sub­ stance” (Malestroict [1566] 1934, 60). As for the second paradox, it simply states that monetary alterations are not neutral and possess real effects, as Oresme had

31 Also spelled Malestroit. His dates of birth and death are unknown.

32 There was at that time no separate publication of this text in 1566: in both 1568 and 1578, it was

published together with Bodin’s Response. 33 For detailed contextual analyses, see Einaudi (1937), Parsons (2001, 2003), Blanc (2006, 2007) and Lloyd (2017).

Prelude 23 already emphasised. As contracts – whether commercial or specifying wages, feu­ dal dues or any kind of rent – are expressed in terms of livres, any diminution in the metallic definition of the unit of account provokes a transfer of wealth from creditors to debtors. Bodin, in his 1568 Response, mainly dealt with prices expressed in terms of the circulating medium, that is, coins, and stated the reality of inflation. He first criticised Malestroict on the choice of the years chosen for the comparison of prices (for example, the metallic content of coins had not been constant over the years) and of the commodities whose prices were compared over time. In modern terms, he questioned the choice of the reference years and indicators.34 He then listed four causes of inflation. “The first and main cause (that nobody has stressed until now) is the abundance of gold and silver that is greater today in this kingdom than four hundred years ago”, an abundance mainly due to foreign trade. The second cause was “the existence of monopolies” (that is, any kind of coalition made with the view of raising prices), the third was the shortages which could arise in some mar­ kets because of exports and waste, and the fourth was fashion: “the pleasure of the kings and noblemen [grands seigneurs], which increases the price of the things they like” (Bodin [1568] 1578, 84). In the second edition, a fifth cause was added, the debasement of monies, together with a plea in favour of a stable, clear and almost pure metallic content of coins. Bodin’s reasoning was thus twofold. Based on the idea that prices are determined by supply and demand and that precious metals are in this respect commodities like any other, he stressed the rise of all prices in coins, firstly due to the depreciation of the precious metals because of their sudden abun­ dance, and secondly sometimes due to the diminution of the metallic content of the various kinds of circulating medium. He also noted the deformation of the structure of relative prices due to the other causes (export, fashion and so on). Finally, he remarked that the abundance of precious metals also had real positive effects on economic activity. During the entire period of monetary troubles, many reflections on money devel­ oped along Oresme and Bodin’s lines,35 in favour of the stability of money and against all monetary alterations, thus opposing the absolutist views of the monar­ chy. The flow of publications lasted approximately until the monetary stabilisation which followed the collapse of Law’s system. Among these publications were Le denier royal. Traicté curieux de l’or et de l’argent, by Scipion de Gramont (1620), and Traicté des monnaies (1621, republished in 1709), by Henry Poullain,36 which is to be noted especially because he took international trade and the exchange rates between currencies into account. Another notable text of the time was that of Henri

34 For example, velvet was no longer the luxury good it had been 300 years before: thus, if an ell of it was exchanged in 1566 for the same quantity of precious metals as before, this meant that its price had risen. 35 Les six livres de la République remained a fundamental treatise until the publication of Montes­ quieu’s De l’esprit des loix in 1748. 36 The date of birth of Scipion de Gramont (for a time secretary in the Chambre du roi) is unknown, and his date of death is uncertain (1638 or 1645 according to different sources). The dates of birth and death of Henry Poullain (an officer in the Cour des monnaies) are unknown.

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François d’Aguesseau (1668–1751), a leading lawyer, for a time Minister of Jus­ tice during the Regency of Philippe d’Orléans. An opponent of John Law’s pro­ jects, he had to resign and, most probably in 1718, wrote his Considérations sur les monnaies, published posthumously in 1777. Trade and peace

During the late sixteenth century and the first half of the 17th, the literature on trade and manufactures was not very original and conveyed no new ideas in political economy: it dealt essentially with economic policy, as was the case with Barthélemy de Laffemas (1545–1612) and Montchrestien, a so-called “mercan­ tilist” approach that was to be rejected by most authors during the Enlighten­ ment.37 However, one theme is worth noting because, in a different context, it gave rise to the “doux commerce” thesis illustrated particularly by Montesquieu. This was the theme of “perpetual peace”, especially developed during the long periods of war: the Wars of Religion, the Thirty Years’ War and the unceasing wars of Louis XIV, for example. A few writings included economic develop­ ments, in opposition to the bellicose nationalistic rhetoric of the time directed against foreigners and using trade as a weapon in favour of the international political power of the king. An interesting example of such a discourse on peace can be found in Bodin dur­ ing the Wars of Religion. Some people claimed that the country was so rich that it could be self-sufficient and dispense with any foreign exchange: this was not true, Bodin stressed in his Response: But because this cannot enter into the minds of those who are concerned only with gain, even though it is sordid and dishonest, God by his admirable pru­ dence has given good order to it: for he has so distributed his graces that there is no country in the world so fertile [plantureux] that is not lacking in many things. This, God seems to have done in order to keep all the subjects of his republic in friendship, or at least to prevent them from waging war against each other for a long time, having always to do with each other. (Bodin [1568] 1578, 120) And even if it were true, France should continue to trade with foreigners – and even give them goods for free – in order to communicate and establish friendly relation­ ships with them (Bodin [1568] 1578, 118). Another notable intervention was that of Émeric Crucé (ca 1590–1648)38 who, in 1623, during the Thirty Years’ War, published Le nouveau Cynée ou Discours des occasions et moyens d’establir une paix genéralle, & la liberté du

37 See, for example, the classic books by Cole (1931, 1939). More generally, see also Magnusson (2015). The French “mercantilist” literature is poor compared with the British one, and not written by merchants or bankers but mainly by members of the royal administration. 38 Sometimes called Émeric de la Croix in the literature.

Prelude 25 commerce par tout le monde.39 Opposing the doctrine of the balance of powers in Europe – in his view a doctrine leading to war – he proposed that the European and also non-European states should participate in an institution which would be located in a neutral place, Venice, and to which each country would appoint an ambassador. The main aim of this institution would be to arbitrate to settle dis­ putes between countries and thus avoid conflicts. In Crucé’s approach, economic activities were also to be encouraged (they keep men busy and avoid idleness, which is a source of unrests and wars). Free trade, both domestic and interna­ tional, was advocated. Domestic and foreign merchants should be treated in the same way, and foreign trade, establishing a greater interdependence between nations, lessens the occasions for conflict. “What a pleasure it would be, to see men go here and there freely, and mix together without any hindrance of country, ceremonies, or other such like differences, as if the earth were as it really is, a city common to all” ([1623] 1909, 66). The figure of the merchant is opposed to that of the soldier: [T]here is no occupation to compare in utility with that of the merchant who legitimately increases his resources by the expenditure of his labour and often at the peril of his life, without injuring or offending anyone: in which he is more worthy of praise than the soldier whose advancement depends upon the spoil and destruction of others. ([1623] 1909, 58) To finance the State, and also to moderate indirect taxes and duties, the king him­ self could engage in trade and make profits. This was of course a bold idea at a time when noblemen were extremely reluctant to trade because they could lose their status through derogation (“dérogeance”) – a tradition regularly questioned, especially in the eighteenth century during the controversy over the “noblesse com­ merçante” provoked by the publication in 1756 of La noblesse commerçante by Gabriel-François Coyer (1707–1782).40 References Albert the Great. [post 1260] 1891. “Ethica”. In Auguste Borgnet (ed.), Opera Omnia, vol. 7. Paris: Ludovicum Vivès. Albert the Great. 1894. “Commentarii in IV Librum sententiarum”. In Auguste Borgnet (ed.), Opera Omnia, vol. 29. Paris: Ludovicum Vivès. Albert the Great. [1250] 1968. “Super ethica”. In Wilhelm Kübel (ed.), Opera Omnia, vol. 14. Münster: Aschendorff. Ando, Yusuke. 2018. “Opinion, time and institution. Necker’s critique of ‘new science’”. In José Luís Cardoso, Heinz D. Kurz and Philippe Steiner (eds), Economic Analyses in Historical Perspective. Abingdon and New York: Routledge, pp. 37–45.

39 There were two editions in 1623, with slightly different titles. The book was not reprinted until 1909 when Thomas Willing Balch republished the French text together with an English translation (Crucé [1623] 1909). 40 On this complex question, see Depître (1913) and Hecht (1964).

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Aquinas, Thomas. [1266–74] 1934. Summa Theologiae. IIa IIae, questions 67 to 79. Latin text and French translation by Ceslas Spicq. Paris: Desclée. Aquinas, Thomas. [ca 1269] 1969. “Sententia libri ethicorum”. In Opera Omnia, t. 47, 2 vol. Rome: Sanctae Sabinae. Aristotle. 1934. Nichomachean Ethics. Greek text and translation by Harris Rackham. Cam­ bridge, MA and London: Harvard University Press. Armenteros, Carolina, Keith Baker, Harvey Chisick, Jonathan Israel, and Johnson Kent Wright. 2014. Special issue on radical Enlightenment. H-France Forum, 9 (1). https://h­ france.net/h-france-forum-volume-9–2014 (accessed 15 December 2020). Bach, Reinhard. 2011. Rousseau et le discours de la Révolution. Au piège des mots. Les physiocrates, Sieyès, les Idéologues. Uzès: Inclinaison. Baldwin, John W. 1959. “The medieval theories of the just price”. Transactions of the Amer­ ican Philosophical Society, New Series, 49 (Part 4), 3–92. Benveniste, Émile. 1969. Le vocabulaire des institutions indo-européennes, vol. 1. Paris: Éditions de Minuit. Berthoud, Arnaud. 1981. Aristote et l’argent. Paris: François Maspero. Blanc, Jérôme. 2006. “Les monnaies de la République. Un retour sur les idées monétaires de Jean Bodin”. Cahiers d’économie politique, (50), 167–92. Blanc, Jérôme. 2007. “Beyond the quantity theory. A reappraisal of Jean Bodin’s monetary ideas”. In Alberto Giacomin and Maria Cristina Marcuzzo (eds), Money and Markets. A Doctrinal Approach. Abingdon: Routledge, pp. 135–49. Bodin, Jean. 1576. Les six livres de la République de Iean Bodin Angevin. Paris: Chez Iacques du Puys. Bodin, Jean. [1568] 1578. La response de Maistre Iean Bodin advocat en la Cour au para­ doxe de monsieur de Malestroict, touchant l’encherissement de toutes choses, & le moyen d’y remedier. In Jean-Yves Le Branchu (ed.), Écrits notables sur les monnaies. XVIe siècle. De Copernic à Davanzati, vol. I. Paris: Librairie Félix Alcan, 1934, pp. 69–177. Bove, Laurent, Tristan Dagron, and Catherine Secrétan (eds). 2007. Qu’est-ce que les Lumi­ ères radicales? Libertinage, athéisme et spinozisme dans le tournant philosophique de l’âge classique. Paris: Éditions Amsterdam. Campagnolo, Gilles, and Maurice Lagueux (2004). “Les rapports d’échange selon Aristote. Éthique à Nicomaque, V, VIII-IX”. Dialogue, 43 (3), 443–69. Chaplygina, Irina, and André Lapidus. 2016. “Economic thought in scholasticism”. In Gil­ bert Faccarello and Heinz D. Kurz (eds), Handbook on the History of Economic Thought, vol. II. Schools of Thought in Economics. Cheltenham: Edward Elgar, pp. 20–42. Cherruyt de Malestroict, Jehan. [1566] 1934. Les Paradoxes du seigneur de Malestroict, conseiller du Roi et maistre ordinaire de ses comptes, sur le fait des monnaies, présentez à sa Majesté, au mois de mars, MDLXVI. In Jean-Yves Le Branchu (ed.), Écrits notables sur les monnaies. XVIe siècle. De Copernic à Davanzati, vol. I. Paris: Librairie Félix Alcan, pp. 49–68. Cherruyt de Malestroict, Jehan. [1567] 1937. Mémoires sur le faict des monnoyes proposez et leus par le Maistre des Comptes de Malestroit au Privé Conseil du Roy tenu a Sainct Maur des Fossez le 16 jour de may 1567. In Luigi Einaudi (ed.), Paradoxes inédits du sei­ gneur de Malestroit touchant les monnoyes, avec la response du Président de la Tourette. Turin: Giulio Einaudi, pp. 99–130. Cole, Charles Woolsey. 1931. French Mercantilist Doctrines before Colbert. New York: Richard R. Smith. Cole, Charles Woolsey. 1939. Colbert and a Century of French Mercantilism. New York: Columbia University Press.

Prelude 27 Crucé, Émeric. [1623] 1909. Le nouveau Cynée ou Discours des occasions et moyens d’establir une paix genéralle, & la liberté du commerce par tout le monde. Paris: Jacques Villery. English translation by Thomas Willing Balch. The New Cyneas of Émeric Crucé. Philadelphia, PA: Allen, Lane and Scott. Decretum Gratiani, or Concordia discordantium canonum (ca 1140). https://geschichte. digitale-sammlungen.de/decretum-gratiani/online/angebot (accessed 15 November 2021). De Dijn, Annelien. 2012. “The politics of Enlightenment: From Peter Gay to Jonathan Israel”. The Historical Journal, 55 (3), 785–805. Demals, Thierry, and Alexandra Hyard. 2015. “Forbonnais, the two balances and the Écono­ mistes”. The European Journal of the History of Economic Thought, 22 (3), 445–72. Depître, Edgard. 1913. “Le système et la querelle de la Noblesse Commerçante (1756-1759)”. Revue d’histoire économique et sociale, 6 (2), 137–76. [Digesta] Digestorum seu Pandectarum. 530. In Imperatoris Iustiniani Opera: www. thelatinlibrary.com/justinian.html (accessed 15 November 2021). Duns Scotus, John. 2001. Political and Economic Philosophy. Latin text and English trans­ lation by Allan B. Wolter. New York: The Franciscan Institute. Einaudi, Luigi. 1937. “Introduzione”. In Luigi Einaudi (ed.), Paradoxes inédits du seigneur de Malestroit touchant les monnoyes, avec la response du Président de la Tourette. Turin: Giulio Einaudi, pp. 13–86. Evangelisti, Paolo. 2021. La pensée économique au Moyen Âge. Richesse, pauvreté, mar­ chés et monnaie. Paris: Classiques Garnier. Faccarello, Gilbert. 1992. “L’économie entre la religion, le droit et la morale du XIIe au XVIIe siècle. Introduction”. In Alain Béraud and Gilbert Faccarello (eds), Nouvelle his­ toire de la pensée économique, vol. I, Des scolastiques aux classiques. Paris: La Décou­ verte, pp. 16–23. Faccarello, Gilbert. 1998. “Galiani, Necker and Turgot: A debate on economic reform and policy in 18th century France”. In Gilbert Faccarello (ed.), Studies in the History of French Political Economy. From Bodin to Walras. London: Routledge, pp. 120–95. Faccarello, Gilbert. 2006. “La ‘liberté du commerce’ et la naissance de l’idée de marché comme lien social”. In Philippe Nemo et Jean Petitot (eds), Histoire du libéralisme en Europe. Paris: Presses Universitaires de France, pp. 205–53. Faccarello, Gilbert, and Philippe Steiner. 2008. “Interests, sensationism and the science of the legislator: French ‘Philosophie économique’, 1695–1830”. The European Journal of the History of Economic Thought, 15 (1), 1–23. Faccarello, Gilbert, and Philippe Steiner. 2012. “ ‘Philosophie économique’ and money in France, 1750–1776: The stakes of a transformation”. The European Journal of the History of Economic Thought, 19 (3), 325–53. Faccarello, Gilbert, and Philippe Steiner. 2021. “Self-interest and French ‘Philosophie économ­ ique’, 1695–1830”. In Susumu Egashira, Masanori Taishido, D. Wade Hands, and Uskali Mäki (eds), A Genealogy of Self-Interest in Economics. Singapore: Springer, pp. 11–30. Fleischacker, Samuel. 2013. What Is Enlightenment? Abingdon: Routledge. Forbonnais: see Véron de Forbonnais. Gournay: see Vincent de Gournay. Graslin, Jean-Joseph-Louis. [1767–68] 1777. Correspondance entre M. Graslin, de l’Académie économique de St. Pétersbourg, auteur de l’Essai analytique sur la richesse et sur l’impôt, et M. l’abbé Baudeau, auteur des Éphémérides du citoyen, sur un des princi­ pes fondamentaux de la doctrine des soi-disant Philosophes économistes. London: Onfroy. Hecht, Jacqueline. 1964. “Un problème de population active au XVIIIe siècle, en France: la querelle de la noblesse commerçante”. Population, 19 (2), 267–90.

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Henry of Ghent. 1979. “Quodlibet I”. In R. Macken et al. (eds), Opera Omnia, vol. 5. Leu­ ven: Peeters. Israel, Jonathan. 2001. Radical Enlightenment: Philosophy and the Making of Modernity, 1650–1750. Oxford: Oxford University Press. Israel, Jonathan. 2006. Enlightenment Contested: Philosophy, Modernity, and the Emanci­ pation of Man, 1670–1752. Oxford: Oxford University Press. Israel, Jonathan. 2010. A Revolution of the Mind: Radical Enlightenment and the Intellectual Origins of Modern Democracy. Princeton, NJ: Princeton University Press. Jacob, Margaret C. [1981] 2006. The Radical Enlightenment: Pantheists, Freemasons and Republicans. Baltimore, MD: Johns Hopkins University Press. Revised ed. Lafayette: Cornerstone, 2006. Kant, Immanuel. [1784] 1991. “Beantwortung der Frage, Was ist Aufklarung?”. English translation in I. Kant, Political Writings, Hans S. Reiss (ed.). Cambridge: Cambridge University Press, pp. 54–60. Kaplan, Steven L. 2017. Raisonner sur les blés. Essai sur les Lumières économiques. Paris: Fayard. Kaplan, Steven L., and Sophus A. Reinert (eds). 2018. The Economic Turn. Recasting Politi­ cal Economy in Enlightenment Europe. London and New York: Anthem Press. Kaye, Joel. 2014. A History of Balance, 1250–1375. The Emergence of a New Model of Equilibrium and Its Impact on Thought. Cambridge: Cambridge University Press. Klotz, Gérard, Philippe Minard, and Arnaud Orain (eds). 2017. Les voies de la richesse? La physiocratie en question (1760–1850). Rennes: Presses Universitaires de Rennes. La Boétie, Étienne de (ed.). 1571. La Mesnagerie de Xenophon. Les règles du mariage, de Plutarque. Lettre de consolation de Plutarque à sa femme. Le tout traduit du Grec en Français par Estienne de la Boetie. Paris: De l’imprimerie de Frédéric Morel. Langholm, Odd. 1992. Economics in Medieval Schools. Wealth, Exchange Value, Money and Usury According to the Paris Theological Tradition, 1200–1250. New York and Cologne: Brill. La Vopa, Anthony J. 2009. “A new intellectual history? Jonathan Israel’s Enlightenment”. The Historical Journal, 52 (3), 717–38. Lefèvre d’Étaples, Jacques (ed.). 1506. Contenta: Politicorum [Aristotelis] libri octo. Commentarii [Jacobi Fabri Stapulensis in eosdem]. Economicorum duo; Commentarii [Fabri]. Hecatonomiarum septem. Economiarum publicarum, unus. Explanationis Leon­ ardi [Aretini] in oeconomica duo. Paris: Henri Estienne. Lenoble, Clément. 2020. “Iustum Pretium, justice sociale, lois du marché et croissance: histoire de sous-entendus”. In Véronique Chankowski, Clément Lenoble, et Jérôme Mau­ courant (eds), Les Infortunes du juste prix. Marchés, justice sociale et bien commun de l’antiquité à nos jours. Lormont: Le Bord de l’Eau, pp. 60–102. Lilti, Antoine. 2019. L’héritage des Lumières. Ambivalences de la modernité. Paris: EHESS, Gallimard and Seuil. Lloyd, Howell A. 2017. Jean Bodin, “This Pre-Eminent Man of France”. An Intellectual Biography. Oxford: Oxford University Press. Magnusson, Lars. 2015. The Political Economy of Mercantilism. Abingdon: Routledge. Malestroict: see Cherruyt de Malestroict. Masseau, Didier. 2000. Les ennemis des philosophes. L’antiphilosophie au temps des Lumi­ ères. Paris: Albin Michel. Maupertuis: see Moreau de Maupertuis. McMahon, Darrin M. 2001. Enemies of the Enlightenment. The French Counter-Enlightenment and the Making of Modernity. Oxford: Oxford University Press.

Prelude 29 Melon, Jean-François. [1734] 1735. Essai politique sur le commerce, 2nd ed. Amsterdam: François Changuion. Miklaszewska, Justyna, and Anna Tomaszewska (eds). 2014. The radical Enlightenment. Diametros: An Online Journal of Philosophy, 40. Monod, Albert. 1916. De Pascal à Chateaubriand. Les défenseurs français du Christian­ isme de 1670 à 1802. Paris: Librairie Félix Alcan. Montchrestien, Antoine de. 1615. Traicté l’œconomie politique. [No place nor name of publisher]. Montesquieu: see Secondat de Montesquieu. Moreau de Maupertuis, Pierre-Louis. [1755] 1768. “Éloge de M. de Montesquieu”. In P.-L. Moreau de Maupertuis, Œuvres de Maupertuis, nouvelle édition corrigée et augmentée, vol. III. Lyon: Bruyset, pp. 386–433. Oki, Sayaka. 2018. “Œ/Économie and science in France during the age of social reform (1760–1790): agronomy, natural history and political arithmetic”. In Ryuzo Kuroki and Yusuke Ando (eds), The Foundations of Political Economy and Social Reform. Economy and Society in Eighteenth Century France. Abingdon: Routledge, pp. 155–78. Olivi, Pierre de Jean. [post 1279 – prima 1283] 1992. De usu paupere, D. Burr (ed.). Flor­ ence: Olschki and Perth: University of Australia Press. Olivi, Pierre de Jean. [1293–94] 2012. Tractatus de contractibus/Traité des contrats. Latin text and French translation by Sylvain Piron. Paris: Les Belles Lettres. Orain, Arnaud (ed.). 2015. Antiphysiocratic perspectives in eighteenth-century France. Spe­ cial issue of The European Journal of the History of Economic Thougth, 22 (3). Oresme, Nicole. [ca 1360] 1956. De moneta. Tractatus de origine, natura, jure, et mutacion­ ibus monetarum. In The De Moneta of Nicholas Oresme and English Mint Documents. Translated from the Latin with introduction and notes by Charles Johnson. London: Thomas Nelson and Sons. Parsons, Jotham. 2001. “Money and sovereignty in early Modern France”. Journal of the History of Ideas, 62 (1), 59–79. Parsons, Jotham. 2003. “Governing sixteenth-century France: The monetary reform of 1577”. French Historical Studies, 26 (1), 59–79. Piguet, Marie-France. 2002. “Œconomie/Économie (politique) dans le texte informatisé de l’Encyclopédie”. Recherches sur Diderot et sur l’Encyclopédie, no. 31\32, 123–37. Piron, Sylvain. 2018. L’occupation du monde. Bruxelles: Zones Sensibles. Piron, Sylvain. 2020. Généalogie de la morale économique. Bruxelles: Zones Sensibles. Richard of Mediavilla. [ca 1295–96] 2016. Deuxième quodlibet. Latin text and French trans­ lation by A. Boureau. Paris: Les Belles Lettres. Salvat, Christophe (2006). “Les articles ‘Œ/Économie et leurs désignants”. Recherches sur Diderot et sur l’Encyclopédie, no. 40\41. Schmidt, James. 1989. “The question of Enlightenment: Kant, Mendelssohn, and the Mit­ twochsgesellschaft”. Journal of the History of Ideas, 50 (2), 269–91. Schmidt, James. 2011. “Misunderstanding the question: ‘What is Enlightenment?’ Venturi, Habermas, and Foucault”. History of European Ideas, 37 (1), 43–52. Secondat de Montesquieu, Charles Louis de. 1734. Réflexions sur la monarchie universelle en Europe. Amsterdam: Jacques Desbordes. Secondat de Montesquieu, Charles Louis de. 1748. De l’Esprit des loix. Geneva: Barrillot & Fils. Shovlin, John. 2006. The Political Economy of Virtue. Luxury, Patriotism, and the Origins of the French Revolution. Ithaca, NY: Cornell University Press.

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Sonenscher, Michael. 2006. “Property, community, and citizenship”. In Mark Goldie and Robert Wokler (eds), The Cambridge History of Eighteenth-Century Political Thought, Cambridge: Cambridge University Press, pp. 465–94. Sonenscher, Michael. 2007. Before the Deluge. Public Debt, Inequality, and the Intellectual Origins of the French Revolution. Princeton, NJ and Oxford: Princeton University Press. Steiner, Philippe. 1998. La “science nouvelle” de l’économie politique. Paris: Presses Uni­ versitaires de France. Steiner, Philippe. 2006. “La science de l’économie politique et les sciences sociales en France, 1750–1830)”. Revue d’histoire des sciences humaines, no. 15, 15–42. Steiner, Philippe. 2011. “Commerce. Commerce politique”. In Loïc Charles, Frédéric Lefèb­ vre, and Christine Théré (eds), Le cercle de Vincent de Gournay. Savoirs économiques et pratiques administratives en France au milieu du XVIIIe siècle. Paris: INED, pp. 179–200. Steiner, Philippe. 2018. “Philosophie économique. The case of the physiocrats”. In Ryuzo Kuroki and Yusuke Ando (eds), The Foundations of Political Economy and Social Reform. Economy and Society in Eighteenth Century France. Abingdon: Routledge, pp. 63–78. Sternhell, Zeev. [2006] 2009. Les Anti-Lumières. Du XVIIIe siècle à la Guerre froide, Paris: Fayard. English translation by David Maisel. The Anti-Enlightenment Tradition. New Haven, CT: Yale University Press. Théré, Christine. 1998. “Economic publishing and authors: 1566–1789”. In Gilbert Fac­ carello (ed.), Studies in the History of French Political Economy. From Bodin to Walras. London: Routledge, pp. 1–56. Todeschini, Giacomo. 2005. “La riflessione etica sulle attività economiche”. In Roberto Greci, Giuliano Pinto, and Giacomo Todeschini (eds), Economie urbane ed etica eco­ nomica nell’Italia medievale. Rome and Bari: Laterza, pp. 151–228. Todeschini, Giacomo. [2004] 2008. Richezza francescana. Dalla povertà volontaria alla società di mercato. Bologna: Il Mulino. French translation by Nathalie Gailius and Rob­ erto Nigro. Richesse franciscaine. De la pauvreté volontaire à la société de marché. Paris: Verdier. Todeschini, Giacomo. [2002] 2017. I mercanti e il tempio. La società christiana e il cir­ colo virtuoso della richezza fra Medioevo ed Età Moderna. Bologna: Il Mulino. French translation by Ida Giordano and Mathieu Arnoux. Les marchands et le temple. La société chrétienne et le cercle vertueux de la richesse du moyen-âge à l’époque moderne. Paris: Albin Michel. Tsuda, Takumi. 1983. “Un économiste trahi, Vincent de Gournay (1712–1759)”. In Takumi Tsuda (ed.), Traités sur le commerce de Josiah Child et remarques inédites de Vincent de Gournay. Tokyo: Kinokuniya, pp. 445–85. Turquet de Mayerne, Louis. 1611. La monarchie aristodémocratique, ou le gouvernement composé et meslé des trois formes de légitimes républiques. Paris: Jean Berjon and Jean Le Bouc. Venturi, Franco. 1971. Utopia and Reform in the Enlightenment. Cambridge: Cambridge University Press. Véron de Forbonnais, François. 1754. Elémens du commerce, 1st ed. Paris: Briasson, David, Le Breton and Durand. Vincent de Gournay, Jacques Claude Marie. 1993. Mémoires et lettres, Takumi Tsuda (ed.). Tokyo: Kinokuniya. Voltaire (François Marie Arouet, said). 1733. Letters Concerning the English Nation. Lon­ don: Davis and Lyon.

2

Pierre de Boisguilbert and the foundations of laissez-faire Gilbert Faccarello

“Philosophie économique”, which was to radically change the way of thinking about economic matters during the French Enlightenment and give rise to modern political economy, was born at the end of the seventeenth century, in France, in the writings of Pierre Le Pesant de Boisguilbert. This happened in a very specific context dominated by continuous religious controversies, following the sixteenthcentury Wars of Religion, and recurrent periods of political unrest which lasted until the reign of Louis XIV. Pierre de Boisguilbert (1646–1714) was a contemporary of Louis XIV (1638– 1715) and a member of an aristocratic family which obtained its rank from holding certain judicial or administrative positions. First educated by the Jesuits in Rouen, he then attended the Jansenist Petites Écoles at Port-Royal near Paris. A lawyer, he held various positions in Normandy in the Ancien Régime administration of justice and police where he acquired the well-deserved reputation of being a passionate and bad-tempered person. Like many contemporaries, he was struck by the lasting economic and social distress characterising the second half of the reign of Louis XIV and, like so many pamphleteers of the age, he tried to remedy the situation and proposed his solutions to various finance ministers (Hecht 1966). However, his attempts were unsuccessful, as were those, for example, of Charles Hurault de l’Hôpital de Belesbat (d. 1706) – whose Mémoires présentés au Roi towards the end of the seventeenth century circulated as manuscripts (Schatz and Caillemer 1906) – or Marshal Sébastien Le Prestre de Vauban (1633–1707), whose Projet d’une Dixme royale (1707) caused his disgrace and eventually his death. The precise dating of Boisguilbert’s writings is uncertain. While his Détail de la France was published anonymously in 1695 but probably composed some years earlier, his other main works – the Dissertation de la nature des richesses, de l’argent et des tributs, the Traité de la nature, culture, commerce et intérêt des grains, the first and the second Factum de la France – were published together in 1707 with a reprint of the Détail. To escape royal censorship, this two-volume edition was also published anonymously under various titles, one of which being particularly misleading: Testament politique de Monsieur de Vauban – thus gen­ erating a lasting confusion between his ideas and those of Vauban published the same year. Some important unpublished manuscripts and correspondence were dis­ covered later and included in the only reliable collection of Boisguilbert’s works DOI: 10.4324/9780429202414-2

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(Boisguilbert 1691–1714) edited by Jacqueline Hecht. However, Boisguilbert’s style and language do not facilitate the reader’s task and gave rise to divergent interpretations (Faccarello 1986). 1.

The context: Jansenism and the discourse on the passions

From the second half of the sixteenth century, the Wars of Religion and episodes of political unrest provoked important discussions over the nature and role of the passions in society and how to neutralise them. The main fields of knowledge were concerned by these developments: religion, morals, philosophy, politics, but also physics, medicine and even art with Charles Le Brun’s Expression des passions de l’âme.1 Many publications ensued like De l’usage des passions (1641) by the Oratorian Jean-François Senault (1599–1672), some of them being still considered today as important philosophical works: such is Les passions de l’âme (1649) by René Descartes (1596–1650). Jansenism and the “siècle du Moi Soleil”

Towards the middle of the seventeenth century, one line of thought was to prove of utmost importance for the development of economic thought: the Jansenist theology and its moral and political philosophy. The substantive “Jansenism” is derived from the name of the Flemish theologian Cornelius Jansen (1585–1638) – Jansenius in Latin – a Catholic bishop of Ypres, whose magnum opus, Augusti­ nus seu doctrina sancti, was published posthumously in 1641. Jansenius and his disciples developed a dark theological vision based on the fundamental “fact” of Original Sin. It was a very pessimistic version of Augustinian thought, which, on some points, looked close to some Protestant doctrine, and which, for this reason, was persecuted by the French monarchy and condemned by Rome. The Jansenist approach to morals and society nevertheless greatly influenced the intellectual life of the Grand Siècle.2 What are some of the main points at issue? In a nutshell, the main assertion is that, as a result of “Adam’s sin” and the Fall, the nature of men is totally cor­ rupted. In their hearts, men replaced the love of God with an exclusive love for themselves – that is, with “amour-propre” (“self-love”) or selfishness. Conse­ quently, they are obliged to act in a hostile environment and to cope with other men’s self-love in an everlasting fight. In this context, three fundamental questions were raised: theological, moral and political. (1) If, in their hearts, men substituted their own self-love for the love of God, how could they be saved? This is the theological but also very practical problem of grace, which deeply worried, for example, the scientist and philosopher Blaise Pascal (1623–1662). 1 2

A famous lecture made in 1668 at the Académie Royale de Peinture et de Sculpture. Le Brun (1619– 1690) was the “First Painter” of Louis XIV and director of the Académie. A classic on this topic is Bénichou (1948).

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(2) If men act selfishly in all circumstances, no morality can ever exist. When­ ever an action or a thought looks charitable, altruistic or benevolent from the outside, it is considered actually to conceal strict egoistic motivations, as pow­ erfully illustrated in Réflexions ou sentences et maximes morales (1665) by François de la Rochefoucauld (1613–1680) or La fausseté des vertus humaines (1678) by Jacques Esprit (1611–1677). The “siècle du Roi-Soleil” is also the “siècle du Moi Soleil”. (3) The problem of social cohesion is also raised, and this is the most important point for our subject: if the actions of men are only directed at meeting their own selfish desires, how could society ever be maintained in this context? A war of all against all necessarily ensues. Nicole’s moment

Two friends of Blaise Pascal, the Jansenist theologian Pierre Nicole (1625–1695), in the first volumes of his Essais de morale (published between 1670 and 1675),3 and after him the lawyer Jean Domat (1625–1696) in his Traitté des loix (1689), tried to answer these questions, focusing especially on the third one. “For a society to be maintained, men must love and respect each other”, Nicole wrote, but “others’ self-love stands in the way of all the desires of our own”: all men are thus “at battle with one another” (Nicole 1675, III, 116). The situation seems desperate. Man’s reason is very weak after the Fall and his depravity is too potent to allow anything other than destructive passions to direct his behaviour. But there is a hope: the rem­ edy lies in the ill itself. “From so evil a cause as our self-love, and from a poison so contrary to the mutual love which ought to be the foundation of society, God created one of the remedies which enables it to survive” (Domat 1689, xxxix). People real­ ise that they cannot achieve their selfish aims if they attempt to use coercion. This is the reason why, unable to “domesticate” their passions through reason, men instead use their reason to follow their passions: they are thus willing to submit to other men’s wishes and self-interest, but only in order to fulfil their own desires. Nicole calls this type of conduct “amour-propre éclairé” (“enlightened self-love”), and the best example he gives thereof is that of market activities, driven by “cupidity”. This is the image of the innkeeper, to be found again later in Boisguilbert and Smith: For example, when travelling in the country, we find men ready to serve those who pass by and who have lodgings ready to receive them almost eve­ rywhere. We dispose of their services as we wish. We command them; they obey. . . . They never excuse themselves from rendering us the assistance we ask from them. What could be more admirable than these people if they were acting from charity? It is cupidity which induces them to act. (Nicole 1670, 204)

3 Nicole’s Essais de morale is relatively forgotten today, but it was published in numerous editions and were widely appreciated during the Ancien Régime and even at the beginning of the nineteenth century.

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Thanks to this intelligent self-love, a society seems to be able to endure and develop. Oddly enough, this society, which is absolutely deprived of love, appears to be full of charity. Passions are no longer destructive and generate strong posi­ tive social results. As regards the production of material wealth, they are even incomparably more efficient than charity: cupidity achieves things that ordinary charity cannot (Nicole 1670, 204). All these themes are fundamental. They were later to be picked up and developed in various ways by Boisguilbert and, to a lesser extent, by the Protestant theologian Pierre Bayle (1647–1706) and Bernard de Mandeville (1670–1733). Bayle, for example, wrote in his Continuation des pensées diverses, in a chapter titled “In what sense is Christianity able or unable to maintain societies?”: Would you like that a nation be strong enough to resist her neighbours? Leave the maxims of Christianity to the preachers: keep all this for the theory and bring back the practice to the laws of Nature . . . which incite us . . . to become richer and of a better condition than our fathers.4 Preserve the vivacity of greediness and ambition, and just forbid them robbery and fraud. . . . Neither the cold nor the heat, nothing should stop the passion of growing rich. (Bayle 1705, 600) While necessary, however, enlightened behaviour is still not a sufficient condi­ tion for a peaceful social life. Nicole and Domat stress that this attitude and an enduring social order cannot be achieved without the help of bonds of a different kind, the most important of which are the rules of propriety and honour, religion and above all the “political order”, that is, a very strong political organisation of society involving differentiated and stratified estates (the traditional three estates of the realm) and inequality between men (on all these points, see, for example, Taveneaux 1965; Viner 1978; Faccarello 1986). In Nicole and Domat, the basic social link is still political and moral. 2.

Boisguilbert’s approach

Boisguilbert picked up the main Jansenist themes and particularly the theologi­ cal hypothesis of the Fall and the ensuing corrupted and selfish nature of men. However, focusing on economic activities, he radicalised Nicole’s line of thought: somewhat downplaying the necessity for self-love to be enlightened, he also removed the necessity for a strong moral and political order and brought free mar­ ket relationships to the fore. His approach combines a theoretical view of the evo­ lution of societies, based on a distinction between a natural and a developed state of social organisation, and two levels of analysis: (1) the first emphasises the market structure of society, allowing him to state the conditions for an optimal economic

4 Smith also was to mention repeatedly men’s “universal, continual, and uninterrupted effort to better their own condition” (Smith 1776, II.iii.6).

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equilibrium – which he calls “équilibre”, “harmonie” or “état d’opulence” (“equi­ librium”, “harmony” or “state of plenty”) – and lay down the foundations of laissez-faire and (2) the second focuses on the class structure of society and espe­ cially the gap between the productive class and the leisure class of rentiers, which allows him to analyse the causes and the propagation of economic crises. The distinction between a “natural state” of society – or “state of innocence” – and a developed state of society – “état poli et magnifique” (“polished and magnifi­ cent state”) – opened the way to the methodology of analysing the characteristics of a developed market society, comparing it to other types of social organisation: the latter can be purely fictitious, as in Boisguilbert, Anne-Robert-Jacques Turgot (two men on an isolated island), Adam Smith or David Ricardo (the “primitive” state of society supposed to precede private ownership of land and capital accumulation), but also real, even if idealised, as in Richard Cantillon (the big agricultural estate), François Quesnay (the Incas) or Karl Marx (pre-capitalist societies). Boisguilbert’s natural state of society is characterised by a simple state of divi­ sion of labour: a very low number of needs and professions prevails – farmers and cattle breeders, for example – and producers exchange their products through barter. However, violence put an end to this peaceful state of things, with the result that society found itself split into two distinct classes: the productive class and the leisure class of landowners and rentiers of all denominations. In turn, this funda­ mental social change provoked three major consequences: (1) In the first place, needs multiplied among the leisure class, and so also, as a consequence, did the number of professions among the productive class. (2) In the second place, barter becoming more and more difficult, money was invented to facilitate exchanges: Boisguilbert simply took up the legend of the invention of the circulating medium that authors have repeatedly proposed since Aristotle. (3) Finally, in this “polished and magnificent” state of society, it is necessary to distinguish two kinds of inter­ twined economic flows: that of the professions and that of incomes. These consequences are far-reaching. Let us first focus on the last point. The flow of professions depicts the progressive emergence of the different trades, from the most necessary (farmers) to the most superfluous (actors). This emergence is historical, it happened only once but, Boisguilbert stressed, once a profession appears, its maintenance becomes necessary to the economy because all the other trades are negatively affected whenever it suffers some damage – any attack on any trade inevitably induces, through the diminution of incomes and expenses, a depressing effect on all the other trades. This kind of ratchet effect is likely to generate a progressive decline in the number of professions, starting from the most superfluous, and plays an important role in the propagation of crises (below). The two hundred professions which are nowadays found in the composi­ tion of a polished and opulent state, starting with bakers and finishing with actors, for the most part, are initially only called upon one after the other by voluptuous desires; but since no sooner have they been introduced and taken root than they are then part of the substance of a state, they cannot be discon­ nected or separated without immediately altering the entire body. They are

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Gilbert Faccarello all necessary, right down . . . to the very least, like the Emperor Augustus, of whom it was said very correctly that he ought never to have been born, or ought never to die. (Boisguilbert 1691–1714, 986)

The flows of incomes refer to the relationships between the two social classes and the fact that the income of the rentiers does not result from an exchange, contrary to the various incomes within the productive class: this is a one-way flow received by the leisure class from the productive class, and a flow that must constantly be renewed: it is thus necessary, Boisguilbert states, that the rentiers spend their income in order to maintain the level of activity of the productive class. This neces­ sity to spend rents was to be powerfully stressed later by Quesnay and the physi­ ocrats but questioned and qualified by Turgot. As for money, for Boisguilbert, it has the three usual functions of being a meas­ ure of value, a medium of circulation and a store of value. But Boisguilbert went beyond the traditional analysis. (1) Firstly, he stressed that, even if money is made of precious metals, the function of circulating medium can also be implemented by “paper”, that is, bills of exchange, which, with the developments of exchanges, can even do most of the job. (2) Second, he noted, as other authors from Quesnay to Marx would also note later, that the function of store of value could be dangerous, because it could induce people to keep money instead of spending it, interrupting the flows of exchanges and thus disrupting the economic equilibrium. In modern language, this led him to state that, as regards circulation, the money supply is made up of two components: coins and bills of exchange. But money demand is also composed of two components: money is required for transac­ tions, but it can also be held for precautionary motives. When economic activi­ ties are flourishing and people are confident in the future and in the solvability of merchants, Boisguilbert affirmed, almost all the circulation is made by means of “paper”, more convenient to use than coins, and the demand for precautionary motives is low. In time of crisis, on the contrary, people no longer trust “paper”, almost all the burden of circulation falls on the precious metals and the demand for precautionary money stocks dramatically increases. As we will see, Boisguilbert uses this original approach in his analysis of economic crises, to criticise the eco­ nomic policies of his time. 3.

Optimal equilibrium and laissez-faire

The conditions for an optimal equilibrium result from what happens in the daily activities of the productive class. There, we are faced with an intricate network of purchases and sales in markets. Beyond the apparent disorder, it is possible to discover an order by concentrating on the motivations of the agents. In the Jansenist tradition, Boisguilbert asserts that they are only driven by selfishness and adopt a maximising economic behaviour: “each man thinks of achieving the greatest degree of individual interest with the greatest ease possible” (Boisguilbert 1691–1714, 749).

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The condition for an optimal equilibrium

What is the main characteristic of the “harmony”? Transposing here some notions derived from Cartesian physics,5 Boisguilbert defines this equilibrium as a situation in which economic agents are allowed to realise freely their natural inclinations, that is, to buy and sell, trying to get the most they can out of the various situations they encounter. Each agent being only connected with the other agents by means of markets and prices, Boisguilbert defines a state of equilibrium as a situation in which a specific relative price system occurs: the “prix de proportion” (“proportion prices”) defined as those prices which generate a “reciprocal utility” or a “shared profit” – in seventeenth-century French language, “utility” and “profit” are quite synonymous and are understood in a general way. This system of relative prices makes each producer “hors de perte” (“out of loss”). “It is . . . proportions which cause all wealth, because it is through them that exchange, and consequently trade, occur” (Boisguilbert 1691–1714, 891). The principle is simple: “each occupation must feed its master” (992), that is, allow him to survive and to produce again in the following period. Trade must take place at a “necessary price . . . in other words at a rate which keeps the merchant out of loss, such that he can continue his occupa­ tion profitably” (986): “all things and commodities must be in constant equilibrium and preserve a proportional price in relation to themselves and the costs involved in producing them” (993). This condition is also expressed in another way: in each market, demand must equal supply. This results from the recurrent passages in which Boisguilbert refers to what can be called the “tacit condition of exchanges”. To keep the economy in equilibrium, each member of the productive class only buys someone else’s com­ modity under the implicit assumption that someone else, directly or indirectly, buys the commodity s/he sells: nobody buys his neighbour’s product or the fruit of his work except under the necessary condition, though it is tacit and not openly expressed, that the seller will do likewise with the buyer’s product, either immediately, as some­ times happens, or through the circulation of several hands or intervening professions, which always amounts to the same. (Boisguilbert 1691–1714, 986) A dilemma

The main question, however, lies in the possibility of achieving such a structure of equilibrium relative prices, because of the destabilising action of self-love. In some striking passages, Boisguilbert seems to admit the necessity for each agent to be aware of the flimsiness of the state of equilibrium. Each person, he writes, can only

5 Many Jansenists were close to scientists and Cartesian circles. Nicole himself used Descartes’s image of whirlpools to depict society.

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obtain his or her own wealth from the implementation of the “état d’opulence”; they ought not to forget the necessity of fairness and justice in trade, they must think of the common good; but, in fact, under the pressure of self-love, they act every day in precisely the opposite way. Boisguilbert eventually poses the question of reaching and maintaining equilibrium in very similar terms to those employed by Nicole when he raised the question of the social order: while each individual works towards his own particular interest, he must never lose sight of equity and the general good. This is because he owes his subsistence to it, and by destroying it for a moment in relation to a merchant with whom he trades, whether by common error or through corruption of the heart, while he believes that he has won everything, in fact he should expect that, were this conduct to become general, . . . he would pay dearly through the total destruction he builds for himself in the future. . . . However, the work of men, from morning until night, involves following the opposite practice. So greatly does self-interest blind men that in buying another man’s good all would be happy not only to obtain it at a loss for the seller, but also to have everything valuable in addition. (Boisguilbert 1691–1714, 830–31) Nevertheless, despite all this, Boisguilbert is convinced that an equilibrium can be reached in such a context. And he insists on the role of “Providence”, which, he notes, keeps a watchful eye on the working of markets. He also mentions a “superior and general authority”, a “powerful authority” which ensures that the economy is working properly and maintains equilibrium “at the tip of a sword”, “not having a single moment or a single market where it does not need to act” (986). And finally, he mentions “the harmony of the Republic, that a superior power governs invisibly” (Boisguilbert 1691–1714, 621). Is all this only wish­ ful thinking? All this may sound strange today, but the reader should not be misled by this kind of vocabulary. Evoking a “superior and general authority” does not mean a regulatory intervention of the State: Boisguilbert was explicitly against this kind of policy. Nor does the word “Providence” mean “miracle” or represent a ration­ ally unexplainable state of affairs: in seventeenth-century French language, “Provi­ dence” refers primarily to “secondary causes”, that is, to the objective laws God established when creating the world, and which can be discovered through scien­ tific investigation. Is there a remedy? Free trade!

In Boisguilbert’s writings, “Providence” simply refers to the rules of free competi­ tion. Competition is the “coercive power” – as K. Marx was to put it later – the “general authority” which governs markets. Each seller, Boisguilbert stresses, wants to be free to sell everywhere, to everyone, and to face the greatest possible number of buyers. As for the buyers, it is in their interest to be able to buy from everyone,

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everywhere, and to face a great number of sellers. As maximising agents wish to sell a commodity at the highest price, or to obtain it “for nothing”, then free competition must prevail throughout the economy in order to balance the opposite forces and to oblige people to be reasonable. What happens, for example, in the corn market? [T]he process . . . occurs between the buyers and sellers of corn. Now, just as in the exchange of all other sorts of products, one would like the commodity for free, while the other wants to sell it at four times the ordinary price, and it is only the merchant’s certainty that his neighbour, whose shop is filled with sim­ ilar items, will be more reasonable, that makes him reasonable. (Boisguilbert 1691–1714, 848) [I]t is in the interest of any buyer that there be a number of merchants and many commodities, so that the competition causes them reciprocally to give a reduction on the item in order to receive the preference in the sale . . . on the other hand, the merchant never sells better than when, on account of the scarcity of the item, he is assured that he does not have many competitors, and that the buyer is virtually obliged to pay the price he asks. (849) The conclusion is then straightforward: “laissez-faire”. The government should stop intervening in the economy and trying to regulate it: “it is simply necessary to stop acting with the very great violence we impose on nature, which itself always tends towards liberty and perfection” (1005). To illustrate his conviction, Boisguilbert reported the answer a merchant gave to a minister who had asked him how to get out of the depression and “re-establish trade”: the merchant said that there was a very certain and easy method to put into practice, which was that if he [the minister] and his ilk stop interfering in it [in trade] then everything would go perfectly well because the desire to earn is so natural that no motive other than personal interest is needed to induce action. (795) Also, restating Nicole’s example of the innkeeper, Boisguilbert noted, All the commerce of the land, both wholesale and retail . . . [is] governed by nothing other than the self-interest of the entrepreneurs, who have never con­ sidered rendering service . . . and any innkeeper who sells wine to passers-by never intended to be useful to them, nor did the passers-by who stop with him ever travel for fear that his provisions would be wasted. (748–9)6

6 “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages” (Smith 1776 [1976], I.ii.2).

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This is the greatest innovative feature: the basic proposition of liberal political econ­ omy unambiguously emerges from it. Most of the Jansenist social theory of Nicole and Domat appears obsolete. Men – at least if they are members of the productive class – do not even have to be enlightened; self-love is not destabilising if embedded in an economic environment of free competition. Society is conceived as marketbased, and economic transactions form the basic indirect social link between inde­ pendent economic agents. In Boisguilbert’s words, the realm is just a “general market of all sorts of commodities” (683). But if Nicole’s and Domat’s political order disap­ pears, this is not to say that the State has no part to play: its role is to make sure that the rules of free competition prevail and, in this perspective, it must “ensure protec­ tion and prevent violence” (892) – its tasks are police, justice and defence. 4.

Destabilising shocks and crises

To know the conditions for an optimal equilibrium is not enough: Boisguilbert had to explain the depressed economic situation in France and thus deal with the various possible destabilising shocks which can trigger a crisis – this also forms an a contrario proof of the necessity of free trade. Basically, destabilising shocks originate in the class structure of society and more precisely in the behaviour of the members of the leisure class – be they simple rentiers or members of the admin­ istration of the realm: the rentiers are not involved in trade, their behaviour is not checked by competition but by some other rules dictated by the “société de cour”. They do not know anything about the conditions of economic life, their action must be enlightened – and to enlighten them is precisely Boisguilbert’s task. He presents himself as “a new interpreter and extraordinary ambassador of this unknown coun­ try of the people” (Boisguilbert 1691–1714, 769). The very existence of a leisure class thus potentially transforms the economic structure from a stable to an unsta­ ble one. Boisguilbert’s aim is thus to show how the destabilising shocks are caused by the behaviour of those who “only receive” – and particularly the government through the institution of bad forms of taxation and any regulation of economic activities. His analysis is multifaceted (Faccarello 1986). Let us deal here with the main destabilising shocks caused by trade regulations. The emergence of crises and the role of expectations

During the Ancien Régime, the market for agricultural products was basic for two reasons. (1) It had to satisfy the important needs and consumption habits of the population, and agriculture was by far the main source of income of the leisure class – this is why agricultural crises lead directly to general depressions through significant spill-over effects in different markets. (2) However, and this is the main point, agricultural crises are due neither to climatic conditions nor to the mere behaviour of the members of the productive class: prosperity and depression, Boisguilbert asserts, depend on the environment of activities. The role of expec­ tations is crucial: the same climatic conditions and the same basic behaviour of agents in markets can generate either stabilising or destabilising consequences, depending on whether trade is free or regulated.

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Suppose first a strong corn trade regulation such as that which prevailed during the Ancien Régime – it was forbidden to export corn, not only from the country but also from province to province, all corn brought to a marketplace had to be sold there, tolls had to be paid on roads, etc. What happens in times of bad harvest or even when future harvests are simply predicted to be meagre? (1) On the one hand, referring to past experience, buyers expect rising prices and demand larger amounts of corn. A crop failure, real or only predicted, Boisguilbert stresses, is suf­ ficient to induce strong precautionary behaviour: buyers form precautionary stocks. (2) On the other hand, the sellers amplify the movement – to greatly benefit from the situation, they can even say that harvests are going to be very bad, even if it is not true, thus generating an asymmetry of information. And, as they expect a rising corn price, they do not bring the usual quantities of corn to the market – they keep back speculative stocks and the price movement gains momentum. Thus, with a higher demand and a reduced supply, Boisguilbert notes, the price of corn increases to seven or even ten times its previous value. Consumers are the losers; they are greatly impoverished in real terms. The point to note is the stock/flow mechanism on both sides of the market, which is linked to the expectations of the agents. Of course, the opposite occurs in the case of a good harvest, when the agents’ expectations induce reverse attitudes in the market. Buyers expect a lower price and thus demand smaller quantities of corn than usual, while the sellers, who can­ not keep the corn in stock and also anticipate lower prices, increase their supply. With a reduced demand and an increased supply, the price falls and farmers are led to ruin. In a regulated system, plentiful years are therefore just as catastrophic as years of shortage, the only difference being the more or less immediately apparent or dramatic effects: “if one [a high price] stabs, the other [a low price] poisons” (Boisguilbert 1691–1714, 847); a low price “produces less noise and commotion than that caused by extreme sterility; but while it is apparently less violent, its effects are more pernicious; it is like the dagger and poison used to kill men” (846). Not only are the two situations damaging for the economy, but they are inter­ linked, and the one necessarily generates the other in an everlasting cycle. In a regulated context, there is a direct relationship between plenty and shortage of corn, between periods of very low and very high prices. Plenty generates shortage. When prices are low, farmers no longer cultivate poor-quality land. Agricultural production decreases, causing a shortage after the slightest climatic variation. On the other hand, shortage generates plenty because, owing to the high price of corn, more land is cultivated during the following period. Agricultural crises are thus inevitably cyclical and violent, causing ruin on each side of the market in turn. But whenever free trade prevails, Boisguilbert stresses, the price of corn never fluctuates greatly and there are no crises. The proof is again based on the information available to agents. When bad crops occur, for example, the mere possibility of buy­ ing from other places restrains the purchasers from increasing their demand for corn and building up precautionary stocks; the same possibility also restrains the sellers from bringing less corn to the market and speculating. As a result, the price does not fluctuate so much, and proportion prices are roughly maintained. In this case also, Boisguilbert emphasises the role of expectations; prices are stabilised, he says, even if no corn, or only a small quantity of it, is imported from other provinces or from

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abroad. An analogous development is made in the case of an overproduction of corn. In case of plenty, buyers do not delay their purchases because they know that the farmers have the possibility to export their corn – and farmers do not overload the market but prefer to sell part of their production elsewhere. Prices are thus stabilised. The propagation and deepening of crises

A final question is also material: why do agricultural crises turn into general depressions? In the context of regulated trade, the stock/flow mechanism linked to expectations in agricultural markets amplifies price and quantity movements considerably. A similar stock/flow mechanism, now linked to financial expecta­ tions, causes the propagation of the crisis from agriculture to other markets. As a matter of fact, the agricultural crisis directly affects the income of the leisure class. The rentier is faced with a diminished income flow.7 His reaction is twofold: he spends less money because of his lower income; but he also spends less because, due to the depressed state of affairs, he expects a lower income in the future and he accordingly adopts a precautionary attitude – hoarding. As a result, the cri­ sis is propagated more rapidly and economic movements are amplified. What Boisguilbert depicts here is a kind of negative multiplier, by which the most super­ fluous professions, which were the last to appear, are the first to decline. But all the professions are attacked, he asserts, and the regression is general, because people working in the more superfluous trades, facing a lower income, are also progres­ sively obliged to stop buying from other more fundamental trades. A man who used to go to the theatre every day during his prosperous period, in other words while his farmers, through the sale of their produce to the actors, paid him regularly, experiencing a decrease in his prosperity through some violent cause . . . restricts himself to frequenting it just three times a week, compensating the diminution in his receipts through a decrease in his spending. As for the actor, who is affected by the same ill-fortune, he does likewise; while he used to eat meat or even poultry every day, he too restricts his ordinary fare, reducing it to only half the time. Hence, apart from the reducing of the grain price, the farmer of the man who used to go to the theatre, and who is a livestock merchant suffers an increased difficulty in paying his master, who in his turn has difficulty in supporting the actor. . . . This process continues until reciprocally they have both taken leave of one another, which is the absolute destruction of the state. (Boisguilbert 1691–1714, 990) Finally, the propagation and deepening of the crisis also takes place in a differ­ ent and noticeable way: through price rigidities, for example, in the market for 7 This happens of course in the event of a low corn price, when the farmers risk going bankrupt and cannot pay rents, but also in the event of a very high price: owing to the general distress of the peo­ ple, farmers claim they also meet difficulties in order not to pay the landowners.

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non-agricultural products where downwardly rigid prices prevail; or in the labour market where Boisguilbert puts a particular emphasis on the role of worker coali­ tions and downwardly rigid money wages. Back to money and foreign trade

These developments allow us to understand Boisguilbert’s ideas on the usual eco­ nomic policies of the time concerning money and foreign trade. As regards money, Boisguilbert’s twofold regime has already been noted. In addition, his ideas on the attainment of the “state of plenty” through a system of equilibrium relative prices, the “proportion prices”, imply that absolute prices do not matter, and neither, therefore, does the quantity of circulating medium: thanks to “paper”, at least when expectations are positive, circulation naturally generates the circulating medium it needs. Criticising the many and persistent complaints about a “lack of money” as the origin of the economic difficulties of the realm, Boisguilbert insisted that this alleged want of circulating medium is only the consequence of the crisis – through the constitution of precautionary stocks of money by the agents and the destruction of a great part of the commercial paper which circulated before – and by no means the cause. The usual policies of trying to introduce more money into the economy in order to increase the level of activity and get out of stagnation are thus bound to fail: the additional money will simply be hoarded. As regards foreign trade, its role is essential, but in a way totally opposed to the common wisdom of the doctrine of the balance of trade. Its importance is not quan­ titative, that is, it does not lie in a positive balance because, as just stated, it is use­ less to attract more precious metals to the country. Its importance is qualitative, as it greatly influences the expectations of agents in the grain market. Free domestic trade without free foreign trade would not be totally efficient. It is thanks to perfect freedom of trade, both domestic and foreign, that expectations end up being fully stabilising and crises are avoided. The size of the flows of imports or exports is of very little significance in this context. References Bayle, Pierre. 1705. Continuation des pensées diverses, Écrites à un Docteur de Sorbonne, à l’occasion de la Comète qui parut au mois de Décembre 1680. Ou Réponse à plusieurs dificultez que Monsieur *** a proposées à l’Auteur. Rotterdam: Chez Reinier Leers. Bénichou, Paul. 1948. Morales du grand siècle. Paris: Gallimard. Boisguilbert: see Le Pesant de Boisguilbert. Domat, Jean. 1689. Traitté des loix. In Jean Domat (ed.), Les loix civiles dans leur ordre naturel, vol. I. Paris: Jean-Baptiste Coignard, pp. i–cxii. Faccarello, Gilbert. 1986. Aux origines de l’économie politique libérale: Pierre de Boisguil­ bert. Paris: Anthropos [Revised ed. The Foundations of Laissez-faire. The Economics of Pierre de Boisguilbert. London: Routledge, 1999]. Hecht, Jacqueline. 1966. “La vie de Pierre Le Pesant, seigneur de Boisguilbert”. In Jacque­ line Hecht (ed.), Pierre de Boisguilbert ou la naissance de l’économie politique. Paris: INED, pp. 121–244.

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Gilbert Faccarello

Le Pesant de Boisguilbert, Pierre. 1691–714. Pierre de Boisguilbert ou la naissance de l’économie politique, Jacqueline Hecht (ed.). Paris: INED, 1966 [2 volumes with continu­ ous pagination]. Nicole, Pierre. 1670. De l’éducation d’un Prince, divisée en trois parties dont la dernière contient divers traitez utiles à tout le monde (volume II of Essais de morale from 1671 onwards). Revised ed. Paris: Chez la veuve Charles Savreux, 1677. Nicole, Pierre. 1675. Essais de morale, contenus en divers traitez, sur plusieurs devoirs importans, volume III. Revised ed. The Hague: Adrian Moetjens, 1700. Schatz, Albert, and Robert Caillemer. 1906. “Le mercantilisme libéral à la fin du XVIIe siè­ cle: les idées économiques et politiques de M. de Belesbat”. Revue d’économie politique, 20, 29–70, 387–96, 559–74, 630–42, 791–816. Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. Oxford: Clarendon Press, 1976. Taveneaux, René. 1965. Jansénisme et politique. Paris: Armand Colin. Viner, Jacob. 1978. “Religious thought and economic society: Four chapters of an unfin­ ished work”, Jacques Melitz and Donald Winch (eds). History of Political Economy, 10 (1, special issue).

3

John Law and the Mississippi System Antoin E. Murphy

Three hundred years after the rise and collapse of the world’s first financial market bubble, that of the Mississippi System in France, it may be appropriate to charac­ terise John Law (1671–1729) not only as the first great macroeconomic choreog­ rapher but also as the spiritual father of the modern policy of quantitative easing. Every choreographer formulates his work in two parts: (1) the design stage and (2) the implementation phase. John Law came to macroeconomics, initially as a theorist, when he designed theoretical structures to solve the macroeconomic prob­ lems caused by monetary shortages and excessively high interest rates in econo­ mies ranging from Britain to Scotland to France. His macroeconomic designs were presented in a remarkably modern style which distanced him from contemporary writers. Whilst his initial designs for Britain and Scotland were rejected, he eventu­ ally evoked a positive response from Philippe duc d’Orléans, the Regent of France during the minority of Louis XV, enabling him to move from the design stage to the implementation phase on the French economy between 1716 and 1720, a phase that produced a significant amount of quantitative easing by the newly created Banque Royale (Royal Bank). 1.

Setting the stage

The French economy had been shattered by Louis XIV’s long reign, characterised by excessive belligerence and over-indulgent expenditure of which the building of Versailles was a prime example. Law restructured the French economy by (1) substituting paper money for gold and silver specie and (2) converting the French national debt into shares of the Compagnie du Mississippi (Mississippi Company). He succeeded to such an extent that he was made Controller General of Finances in January 1720, at a time when the British copied Law’s debt management approach by giving the South Sea Company a charter to take over the British national debt. If imitation is the sincerest form of flattery then this was it, because Law was still a convicted murderer on the run from British justice. In France, one of his contem­ poraries Nicolas Du Tot would later write of Law’s performance: In this state, this construction was admired by everyone in France and was the envy of our neighbours who were alarmed by it. Its beauty even surpassed all DOI: 10.4324/9780429202414-3

46 Antoin E. Murphy the hopes that had been placed in it since it made people despise and refuse gold and silver. It was a type of miracle which posterity will not believe. (Du Tot [1738] 1935, I, 106) However, no one likes failure. After the collapse of his System, Law was exco­ riated by his contemporaries, lampooned by the Dutch in The Great Mirror of Folly (1720), and then, over time systematically criticised by some of the great economic theorists. Cantillon, Hume, Smith, Marx and Marshall condemned Law for his unrealistic and “visionary” theories. These economists found it difficult to grasp Law’s vision of an economy operating in an environment without intrinsi­ cally valuable metallic money such as gold and silver. It was not until the fall of the gold standard in 1931 that Law’s vision of a specie less monetary habitat was realised and economists could start to reappraise the extraordinary modernity of Law’s conceptualisation of a monetary economy in the early eighteenth century. More recently, the use of quantitative easing by the world’s major central banks to counter the financial collapse of 2008 could be interpreted as a very Lawian type of operation. Indeed, Law has claims to be the spiritual father of quantitative easing. Contrastingly with the above-named economists, Joseph Schumpeter (1954) rated Law very highly: “John Law (1671–1729) I have always felt is in a class by himself. . . . He worked out the economics of his projects with a brilliance and yes, profundity which places him in the front ranks of monetary theorists of all time” (Schumpeter 1954, 295). This was significant praise for Schumpeter who was not particularly generous to economists prior to Léon Walras. So, should Law be placed amongst the great economists or was he just a charlatan who destroyed a good part of the French economy in 1720? Law’s background

John Law was born in Edinburgh in 1671. His father was a goldsmith. Edgar Faure, in his biography on Law, raised a type of Freudian issue in observing that “the enemy of gold was born in a goldsmith’s house” (Faure 1977, 3). But this was to misunderstand the role of the goldsmiths at this time for the Scottish goldsmiths were becoming embryonic bankers by lending money against the deposits that they obtained for safe keeping. At his Scottish school, besides showing that he was a good tennis player, Law was noted for his agile mind and his mathematical abili­ ties. Law travelled to London in the 1690s and whilst there acquired the reputation of a dandy, philanderer and rake. Further important details on Law’s early life may be found in Murphy (1997) and Buchan (2018). Known as “Beau” Law, he killed another “Beau”, Edward Wilson, in a duel in Bloomsbury Square in 1694. The cause of this duel has been disputed. Some commentators believe that the duel arose, as many did at the time, over a lady’s affection. Others believe (Norton 1992) that Law was used by Charles Spencer, the 3rd Earl of Sunderland, to rid him of his unwanted lover because he was having a homosexual love affair with

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Wilson. Law was sentenced to death for Wilson’s murder but escaped from prison with the assistance of leading British politicians of the day. He travelled to the Continent where he changed from his hitherto dilettante gambler role to that of the equivalent of an eighteenth-century bookmaker, using his mathematical skills to make a fortune at the gambling tables in France and Italy. More importantly, influenced by the Italian and Dutch banking models that he had witnessed in his travels, Law turned his mind to money and banking writ­ ing a paper “Essay on a Land Bank” – now published as John Law’s Essay on a Land Bank (Law 1994) – which he sent to Lord Godolphin in the hope that the English authorities would be interested in his proposal. Rejected by the English, he returned from the Continent to Edinburgh where he wrote Money and Trade Con­ sidered with a Proposal for Supplying the Nation with Money (1705). This book contained his recommendations to the Scottish Parliament for the establishment of a land bank issuing paper money in Scotland. However, the Scottish Parliament was more interested in discussions on the Act of Union which was passed into law in 1707. Law, still a convicted murderer on the run from British justice, was forced to leave Scotland after the Act of Union. He travelled back to the Continent where he attempted over the next nine years to encourage various European monarchs and states to implement his monetary proposals. 2.

Law’s macroeconomics and monetary economics

The core of Law’s theoretical economics is to be found in John Law’s Essay on a Land Bank (1994) and Money and Trade (1705). His theories may be further sup­ plemented by consulting the many memoirs that he wrote to the French authorities outlining his policy proposals and which are to be found in Paul Harsin’s edited Œuvres de John Law (1934). Harsin included in the Œuvres a very long memoir, of some 200 pages, the “Restablissement du Commerce”, occupying nearly twothirds of volume II. This work had been located in the Bibliothèque Municipale de Chartres. Acting on the advice of Jacob Price, Lionel Rothkrug in his Opposi­ tion to Louis XIV. The Political and Social Origins of the French Enlightenment (1965) examined the works of Jean Pottier de la Hestroye and showed that at least 40% of the Chartres manuscript emanated verbatim from the pen of Pottier. My own research (Murphy 1997) leads me to believe that Law did not write a sec­ ond long memoir, the “Histoire des Finances”, which occupies a substantial part (pp. 282–430) of volume III of the Œuvres. As a result, considerable care needs to be exercised when using the Harsin edition of Law’s works. In the Essay on a Land Bank, which he wrote around 1704, Law was the first writer to introduce supply and demand analysis to his theorising using it to solve the water/diamonds paradox of value. Using demand as his base, he progressed this analysis into monetary economics establishing the concept of the demand for money which he contended was related to “people, land or product” (the equivalent of economic activity). He then argued that prices would rise when the quantity of money increased out of line with the demand for money. In explaining inflation in a demand for money/supply of money framework, Law may be regarded as the first

48 Antoin E. Murphy monetarist, long before Milton Friedman (1956) attempted to analyse the quantity theory of money in this format. Law wrote very clearly on this issue: “If the quan­ tity of money is greater than the demand for it the money’d man is wronged for money being less valuable 100 £ will not buy him the same quantity of goods 100 £ bought before” (Law [1704] 1994, 76–7). He would stress this, a year later, in Money and Trade where he wrote, “If money were given to a people in greater quantity than there was a demand for, money would fall in its value; but if only given equal to the demand it will not fall in value” (Law 1934, I, 160). In Money and Trade, Law continued to show the importance of the money supply/money demand framework for examining infla­ tion when he outlined how the global inflation rate would be influenced by changes in the money supply relative to the money demand: “As the quantity of money has increased . . . much more than the demand for it; and as the same quantity of silver has received a higher denomination, so of consequence money is of lesser value” (Law 1934, I, 190). Law’s conceptualisation of the demand for money, his linking of money supply and money demand analysis to show how inflation might arise, along with his pres­ entation of the law of one price to show how the prices of traded goods in Scotland were determined by international prices, could suggest that Law be interpreted as the first monetarist. Law’s vision, however, extended far beyond an early form of monetarism. Law wanted to examine first and foremost the nature of money. Once he had accomplished this, he set out to show that money had a real role to play in generating economic activity. As to the nature of money, Law looked at the traditional medium of exchange definition of money that it was “the value for which money is exchanged” and dismissed it contending that this definition implied that money needed to be intrin­ sically valuable. By one deft change in the preposition in that definition, he trans­ formed the conceptualisation of money from an intrinsically valuable medium of exchange “the value for which money is exchanged” (my italics) to one that held that money did not need to be intrinsically valuable. He defined money as follows: “Money is used as the measure by which goods are valued, as the value by which goods are exchanged and in which contracts are made payable” (Law 1994, 55). He thereby changed the definition of money to one that stated that money was “the value by which goods are exchanged” (my italics). In this way, Law produced a new vista for the monetary economy, one that was not reliant on an intrinsically valuable commodity money. His detractors from Cantillon to Marshall, all metallists at heart, did not grasp the extent to which Law had revolutionised the concep­ tualisation of the monetary system, a conceptualisation now familiar to all since the abandonment of the gold standard in 1931. This decoupling of money from intrinsic value produced an alternative conceptualisation to the metallist view of money. It involved a significant liberation in that instead of waiting for the supply of money to be changed by the vagaries of metallic discoveries it was possible to create a variety of money substitutes to specie. Law’s new conceptualisation of money permitted the inclusion not only of paper money but also bank credit and a wide range of near-money substitutes in

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the definition of money, including bills of exchange, shares of the Bank of England and the East India Company, Irish debentures, etc. The substitution of paper money for metallic money involved a transformation in monetary theorising and policy. At a theoretical level, Law wanted to show that economic writers who relied on the price mechanism to solve the issue of monetary shortage were incorrect. The approach of these writers was that the exact quantity of metallic money in a country did not matter. If a shortage of money developed, then prices could be expected to fall until the real quantity of money was brought into equilibrium with the quantity of money demanded – a view that would be later outlined by David Hume in the Political Discourses (1752). Law was prepared to acknowledge that at a theoreti­ cal level price flexibility had the potential to restore equilibrium. But theory and reality may differ. In an important memoir that he wrote to the French authorities in 1707, Law raised the issue as to why employment was not increased when money was rare, unemployment was common and employees were willing to work at low wage rates: It will be asked if countries are well governed why they do not process their wools and other raw materials themselves, since, where money is rare, labourers work at cheap rates. The answer is that work cannot be made with­ out money; and that where there is little, it scarcely meets the other needs of the country and one cannot employ the same coin in different places at the same time. (Archives Nationales, Paris, G7, 1468, Ms. 113, f. 7, my italics and my translation) In this extract, it is evident that Law was prepared to accept that, in an unem­ ployment environment, wages could be flexible. However, he was unprepared to accept that such flexibility was sufficient to solve the unemployment problem. He believed money was needed to put the buyers of labour into contact with the sell­ ers of labour. In this way, he was presciently anticipating Robert Clower’s cash in advance requirement which shows that potential demand for goods and services can only be translated into effective demand through the use of money. Without money, Law saw little possibility of a solution to the unemployment problem. In Money and Trade, Law continued to advance many of the arguments of the John Law’s Essay on a Land Bank, but the emphasis of his approach changed because in Money and Trade he needed to address the problems of a stagnant Scottish economy facing considerable unemployment and underemployment. In Scotland, it was not a question of too much money in circulation but too little. Law, build­ ing on the work of Sir William Petty (1691), developed a circular flow of income analysis and then showed the importance that money had in transforming an econ­ omy from a primitive agricultural state to that of a broader economy, embracing manufacturing and other sectors. The title of his book said it all, Money and Trade. He saw money as driving trade, a synonym for economic activity. Unemployment and underemployment were signs that there was an insufficient amount of money in the economy.

50 Antoin E. Murphy To show the beneficial effects of increasing the money supply, Law elaborated, in the penultimate chapter of Money and Trade, a rudimentary circular flow of income, a theory which his rival Richard Cantillon later developed in the Essai sur la nature du commerce en général (1755) and which would be put, still later, into diagrammatic format by François Quesnay in the Tableau économique. In this chapter, Law abstracted away from the Scottish economy to present a hypothetical model of an island economy which was controlled by a single landlord/proprietor and in which barter prevailed. It is proposed to the landlord/proprietor that money be introduced on the island so as to encourage the employment of the unemployed and the more intensive use of the underemployed. The catalyst for the increas­ ing employment is the creation of money. The circular process is initiated by the landlord/proprietor paying the labourers in the newly created manufacturing sector with paper money for their goods and services. The labourers use the paper money to purchase corn and other agricultural goods from the tenant farmers who, in turn, use the paper money to pay the landlord/proprietor his rent. Thus, the money flows between the three groups financing the payment of goods and services as well as the payment of the rent, with the money returning to the landlord at the end of this process, thereby enabling him to start a further round of economic activ­ ity. For Law, the introduction of money into the economy facilitates the establish­ ment and development of a manufacturing sector which may be grafted on to the economy enabling activity and employment to be greatly increased. It is impor­ tant to stress this development for in its initial barter state the island economy is deemed to be incapable of producing a manufacturing sector. It is the introduction of money to the island economy which permits the creation of the manufactur­ ing sector. The shift to a monetary economy permitted the transformation of the island economy from a primitive agricultural barter system to a more progressive manufacturing-cum-agricultural sector. In a strong pre-Keynesian approach in Money and Trade, Law urged the author­ ities to expand the money supply and to reduce the rate of interest. For him, the way to increase the money supply was to replace the gold and silver metallic system with a new paper credit system. Unlike most monetary theorists, Law’s recommen­ dations were soon to be implemented as monetary policy. 3.

Law’s Mississippi System

Following the British model?

It was not till the death of Louis XIV and the arrival of Philippe, duc d’Orléans, as regent of France during the minority of the future Louis XV, that Law’s monetary proposals were accepted. Though Law’s monetary theory was highly original, the financial template that he drafted when given the opportunity in France was very much influenced by British developments, most particularly by the Bank of Eng­ land and the trading companies – the East India Company, the Royal African Com­ pany and the South Sea Company. The Bank of England, founded in 1694, had shown the way in which a mutuality of interests between the government and the

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financial community could be developed. In return for the government providing monopoly banking privileges to the Bank, the latter institution lent money to the government at advantageous interest rates thereby facilitating the government’s management of the national debt. The big British trading companies were run on similar lines. They lent money to the government in return for the acquisition of monopoly trading concessions. So prior to the implementation of his System in France, many of the financial elements that Law would introduce were already in operation in Great Britain. The Bank of England was already a credit-creating financial institution capable of expanding the money supply and assisting the gov­ ernment in its debt management operations. The trading companies had been able to acquire monopoly trading privileges in return for lending money to the govern­ ment. The shares of the Bank and the trading companies were highly marketable in Exchange Alley in London. In 1715, France faced two crises, a monetary crisis and a financial crisis – see Faure (1977), Murphy (1997), Velde (2014) and Buat (2015). The first crisis, the monetary crisis, was due to the acute shortage of money. The second crisis, the financial crisis, was due to the excessive burden of the Crown’s indebtedness and the high rates of interest associated with government borrowing. Both needed to be addressed, and, when given the opportunity, Law attempted to produce solu­ tions for them. Initially, between 1716 and 1718, he did so by copying the Bank of England and the British trading company models. Then, in 1719–20, as his System gained its own momentum, it started to differ markedly from the British models. Law centralised all the French trading companies, the tax system, the mint, the tobacco farm, etc. under one giant conglomerate, the Mississippi Company. He then merged this company with the Royal Bank. The success of Law’s operations forced the British to start copying his System, a process that gave rise to the South Sea Bubble of 1720. The question as to how a Scotsman with a dubious reputation was able to move towards the centre of financial power in France is an intriguing one and may be explained by historical circumstances in the form of the Chamber of Justice, established in 1716. This Chamber was set up as a tribunal to judge and penalise the hitherto powerful financiers and others deemed to have exploited the Crown through their financial and trade manipulation. The Chamber of Justice produced two beneficial outcomes for John Law. First of all, it forced the financiers to adopt a low public profile. This meant that they could not be vocal in their opposition to Law when he started to introduce elements of his System to the Regent, then despairing of improving France’s economic situ­ ation. Their enforced silence provided Law with a good opportunity to present his ideas aimed at addressing both the monetary crisis and the financial crisis without meeting any real opposition from them. This initial lack of opposition from the financiers was important particularly as the adoption of Law’s ideas involved the dismantling of the established financial system and the removal of the financiers from their central role in it. The activities of the Chamber of Justice in suppressing the financiers between 1716 and 1719 thereby gave Law both the opportunity and the time to implement his plans without their vocal opposition.

52 Antoin E. Murphy The second beneficial outcome of the Chamber of Justice for John Law was that it forced one of the wealthiest financiers, Antoine Crozat, to abandon his plans for the development of French Louisiana. Crozat, described by Ménard as “le Fran­ çais qui possédait l’amérique” (Ménard 2017), was forced to give up his trading rights over the French colony of Louisiana as part payment of a fine of 6.6 million livres levied on him by the Chamber of Justice. Crozat’s ceding of these trading rights presented Law with the ideal opportunity to take over these trading rights and launch a further part of his plan aimed at addressing the second crisis, the financial crisis. In August 1717, Law was given permission to launch the Compagnie d’Occident (Company of the West). It had two major objectives. The first was the development of the trading concession of French Louisiana, a land mass stretching from Canada to the Gulf of Mexico, bounded by the British in the Carolinas and by the Span­ ish in Texas. French Louisiana covered almost half of the land mass of the United States (excluding Alaska). The trading concession to such a vast territory created the possibility of a strong income stream from trade there for the Company. The second objective was to use the Company to reduce the burden of the Crown’s debt. This was met by the stipulation that the first issue of shares in the Company could only be acquired with short-term government debt instruments, the billets d’état. The Company, in return for the Louisiana trading concession, agreed to accept a lower interest payment from the government on the “billets d’état”. This had the dual advantages for the government of reducing the interest cost on the short-term debt and, secondly, reducing the overhang of this short-term debt on the financial market. The development of the system

At this stage, Law had closely followed the British models. His Banque Générale (General Bank), established on 2 May 1716, which had been converted into the Royal Bank (Banque Royale) on 1 January 1719, had been influenced in many respects by the Bank of England and the new Company of the West had parallels with trading companies such as the East India and South Sea Companies. Law would soon distance his Company from its British counterparts through his expansionist policies for the Company. In 1717, on its establishment, the Company was permitted to issue 200,000 shares with a nominal issue price of 500 livres per share. However, as the “billets d’état” were standing at a very significant discount of 68 to 72%, the real cost of acquiring shares worked out between 140 and 160 livres per share for the initial subscribers. For nearly two years, the progress of the Company was very moderate. This was the result of an initial lack of public enthusiasm for the shares and may also have been due to the fact that Law was busy expanding the business of the Royal Bank. Furthermore, by an arrêt of 8 July 1719, it was stipulated that the Royal Bank’s banknotes would no longer be guaranteed in terms of “écus de banque” (that is, redeemable in coins of the same weight and fineness as they were when they were issued), which had been the case for those notes issued by the former General Bank. By this measure, all the banknotes issued

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by the General Bank were withdrawn from circulation and presumably converted into banknotes of the Royal Bank which had no metallic content guarantee as to their value. This decoupling of the link between the banknotes and a stipulated value of silver meant that there was no guaranteed conversion rate for banknotes into silver, a development consistent with Law’s idea that money should not be intrinsically valuable. This move also gave the Bank carte blanche to issue bank­ notes as it wished. Additional to these monetary developments, the banknotes were made legal tender and tax payments had to be made using them. By the early Summer of 1719, Law needed to generate some momentum in the Compagnie d’Occident whose shares were still at a discount, that is, below their nominal issue price of 500 livres per share. The first action he took was to merge two trading companies, the Compagnie des Indes Orientales (Company of the East Indies) and the Compangie de Chine (China Company), with the Com­ pagnie d’Occident. The newly merged group was named the Compagnie des Indes (Company of the Indies). Another trading company, the Compagnie d’Afrique (Company of Africa), was taken over on 4 June 1719. These operations required financing, for both the Compagnie des Indes Orientales and the Compagnie de Chine were heavily in debt. Additionally, fresh funds were required to re-equip existing ships and build up a new fleet to exploit the colonial trade which, as a result of the merger, was now almost completely under the control of the Com­ pagnie des Indes. To finance such ventures, the Company proposed on 15 May 1719 a second issue of shares, known as the filles (daughters) consisting of 50,000 shares at 550 livres per share, the nominal value of the share remaining at 500 livres. The shares were kept, so to speak, in the family in that they were issued as a rights issue stipu­ lating that purchasers needed to be holders of four mères in order to acquire one fille. This measure reinforced the value of the mères and ensured that the shares remained under the control of the first subscribers which included the Regent and his circle. To encourage their uptake, soft payment terms were offered. Subscribers paid 50 livres in down payment and then faced 20 monthly payments of 25 livres. Unlike the first issue, which had been totally subscribed in billets d’état, all pay­ ments were to be made in cash. On making the first payment, subscribers were given a certificate authenticating their purchase of the share. As each future pay­ ment was made, the certificate was to be stamped to this effect. Cochrane (2001) has suggested that because of this payment procedure the certificates effectively acted as options with transactors having the option to discard purchasing the share by not making future payments. Two months later, on 26 July, Law tapped the market again issuing 50,000 shares at a price of 1,000 livres per share payable in 20 monthly instalments of 50 livres. These shares were known as the petites filles (granddaughters). Again, this was a rights issue aimed at keeping the shares closely held amongst the first subscribers because each purchaser had to have four mères and one fille in order to purchase a petite fille. Again, they could also have been regarded as options in that subscribers could decide to abandon purchasing the shares at any stage during the prescribed payment schedule.

54 Antoin E. Murphy By August 1719, Law had made four share issues. The first involved the Gen­ eral Bank, whose shares had been bought back from the original shareholders prior to its transformation into the Royal Bank in December 1718. The other three share issues involved the Company of the West, later called the Company of the Indies, which will now be referred to as the Mississippi Company. In all, the Company had issued 200,000 mères, 50,000 filles and 50,000 petites filles, a grand total of 300,000 shares. These share issues had been used to acquire 100 million livres of “billets d’état”, to purchase capital assets for the trading companies, and to acquire the rights to the Mint. Thus, Law could contend that he had mopped up a large part of the floating debt and in the process pushed the remaining “billets d’état” back to par, that he had injected much-needed funds in the trading companies and that he had added an important revenue-earning source to the Company, namely the Mint. At the same time, the Royal Bank had expanded the money supply, a process which had produced further reductions in the interest rate. While some extolled the great progress that Law had made, the debt manage­ ment issue was still dominating his thought: the deepest wounds of the State were still not cured and it was necessary to apply even stronger remedies. What had been seen up to this point was more a preparation for the cure rather than a radical cure. (Law 1934, III, 343–4) What did this radical cure involve? I believe that the author of the above was refer­ ring to Law’s attempt, starting in August 1719, to address in a comprehensive man­ ner the problem of France’s national debt. On Saturday, 26 August 1719, Law produced his master plan which was unveiled by the arrêt of 27 August. He proposed that the Company would lend 1.2 billion livres at an interest rate of 3% to the King – this sum was later raised to 1.5 billion by an arrêt of 12 October 1719. This money would be used to repay the long-term state debts, the annuities (“rentes”), the remaining short-term float­ ing debt (“billets d’état”), the cost of offices (“charges”) that had been or would be suppressed, and the shares of the United Tax Farms (la Ferme Générale) that had been taken over by the Company. In this way, Law proposed “the radical cure” for the French economy, namely the conversion of most of the national debt into equity of the Company. Through these operations, Law transformed the Company from a trading company to a trading-cum-financial conglomerate, controlling the State’s finances most notably tax collection and debt management. On 13 September 1719, there was a new issue of 100,000 shares which were priced at 5,000 livres a share. Within two weeks, on 26 September, a further issue of another 100,000 shares at the same price was made. In the text of the latter arrêt, it specifically pointed out that the public wanted to use the proceeds of the repay­ ment of their annuities and offices to purchase shares. A further issue of 100,000 shares at the same price was authorised on 2 October. There was also a smaller issue of just 24,000 shares on 4 October, though this latter issue was never actually sold to the public. Thus, within a three-week period, the Company issued 324,000

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shares, of which 300,000 were sold to the public at 5,000 livres a share, amounting in all to 1.5 billion livres when fully paid up. Purchasers of the September/October soumissions, the cinq-cents as they were called, had only to put up 500 livres to acquire their rights to the shares and then to repay the rest in nine monthly instal­ ments. The issue of the extra 324,000 shares between September and early October of 1719 meant that the Company had issued 624,000 shares, not all of which were fully paid up. This means that a variety of shares ranging from those that were fully paid up to the partially paid filles, petites filles and cinq cents were quoted by trad­ ers in the frenetic trading that took place in the rue Quincampoix in Paris. The rapid movements in the share price in the late Summer of 1719 had created the favourable environment for Law to introduce his plan for the overall conversion of the government’s debt into equity of the Company. On 1 August, the original shares, the mères, which, as has been shown, could have been bought for between 160 and 180 livres in 1717 stood at 2,750 livres. By 30 August, they had risen to 4,100 and by 4 September they were at 5,000 livres, with the filles and petites filles, rising pari-passu. The debt holders recognising the prospect of a capital gain were quite happy to transfer their debt into shares. Their difficulty in fact became one of converting quickly enough into the shares of the Company as the price of the shares rose very sharply during September. To activate further interest in the new issues, Law provided further soft instalment payment terms giving subscrib­ ers nine months to complete the payment of the shares. Such instalment payment terms were one of Law’s favourite marketing ploys to increase the marketability of the shares to the general populace. Even when the approaching monthly payment dates caused problems for investors, and perhaps, more importantly, for the price of shares, Law softened the repayment terms by changing them from monthly to quarterly repayments. Small down payments and an ever-increasing demand for shares pushed the price of fully paid-up shares to over 9,000 livres in the Autumn of 1719. On 2 December, the share price peaked at 10,025 for the year. These monetary and debt management innovations in France that initially had been modelled in part on the Bank of England and the East India Company were perceived to be so successful that the British, belatedly, attempted to copy part of them with the South Sea Company in 1720. In Britain, there was a further develop­ ment in that the debt management initiative of the South Sea Company spawned a wide range of new issues by fledgling “bubble” companies, some with serious objectives such as insurance and others the creation of confidence tricksters. All of these new companies formed part of the phenomenon that came to be known as the South Sea Bubble. In France, there were no bubble companies. The Mississippi Company/Royal Bank centralised all the trading companies under its control and reigned supreme. News coming through from France in the first weeks of January 1720 would have greatly encouraged the directors of the South Sea Company for, as the New Year started, the Mississippi-dominated stock market boom gathered further momentum and went to a new high in the second week of January. This second week produced one of the most intense bouts of speculative purchases during the System charac­ terised by a huge upsurge in demand for newly created options, called “les primes”.

56 Antoin E. Murphy Law, in an effort to destroy the private derivatives markets that had been set up in Mississippi shares, proposed a scheme whereby subscribers by paying 1,000 livres would have an option to purchase Mississippi shares at a guaranteed price of 10,000 livres over the next six months. Some members of the public believ­ ing that the share price would move even higher sold their old shares to purchase the “primes”. By selling a share for 10,000 livres, it was possible to acquire ten “primes” worth 10,000 livres each when all the future payments would be made on them. In the early days of the issue of these “primes”, they sold at a premium. The quantity of them sold in the second week of January indicates that this was the period that the Mississippi share price peaked. Ironically, Law’s attempt to dampen the future price of the Mississippi shares led to the most intensive bout of specu­ lation in them through these sizeable sales of the “primes”. According to Law, 300 million livres of “primes” were sold to the public indicating a commitment by transactors to purchase another 300,000 shares. The collapse of the system

The objective of the narrative up to this point is to show the extent to which Law initially succeeded in addressing France’s dual crises, those relating to the mon­ etary shortage and debt management. His initial choreography of the French econ­ omy, between 1716 and the first half of 1720, seemed to have been almost perfect. He appeared to have solved the monetary crisis by substituting banknotes for spe­ cie and he had addressed the financial crisis through the conversion of France’s state debt into equity of the Mississippi Company. Both policies were deemed ini­ tially to be highly successful so much so that Law was made Controller General of Finances on 5 January 1720 and the British authorities, imitating Law, decided to use the South Sea Company to convert government debt into equity. So, Law had both the ideas and the opportunities to implement a financial revo­ lution. For a brief period, he had introduced one, but it was not to last. Why did he fail? At a political level, the maintenance of his financial revolution would always prove difficult once the financiers, bereft of their control of the finances, regrouped and waited for an opportunity, like that of 21 May 1720, to attack Law. Du Tot, a man at the centre of the Royal Bank’s operations continually criticised the financi­ ers for their opposition to Law. At an economic level, Law made the mistake of too closely interlinking the activities of the Royal Bank with those of the Company. He had already won two important battles in substituting banknotes for silver and shares for government debt. These were highly significant achievements in such a short space of time. But then he used the printing presses of the Royal Bank to prop up the Company’s share price at an artificially high level. Nicolas Du Tot was the under-treasurer of the Royal Bank for most of 1720 and his detailed analysis of the System (2000) provides a fascinating insight into the tensions created by Law’s policy of using the Royal Bank’s note issue to support the Mississippi Company’s share price. Du Tot showed that Law used the Royal Bank’s note issue to support the price of shares from as early as 6 October 1719 when the Company provided money to those

John Law and the Mississippi System

57

shareholders who needed it by purchasing their old shares at 5,000 livres each. Du Tot explained that this strategy was implemented to ensure that the share price did not fall and expressed surprise that the Company, at the very time that it was issu­ ing 300,000 new shares, was also buying back its own shares. His wry comment on this was “A merchant who buys and sells at the same price does not gain the public’s confidence” (Du Tot 2000, f. 231). The share support operation had been further accentuated by the provision of soft loans to existing shareholders. Du Tot explained that one of the reasons for the success of the Company in the closing months of 1719 was its policy of lending 2,500 livres per share at an interest rate of 2% to shareholders (Du Tot 2000, f.252). Soft loans of this nature enabled shareholders to leverage up their holdings of new shares by making down payments of 500 livres. It is quite clear from Du Tot’s account that Law was using the Bank – expanding the banknote issue – to provide loans to shareholders who wished to acquire more of the Company’s shares. The share support operation became a more important element of the Com­ pany’s strategy in 1720. At the AGM of the Company on 30 December 1719, two agencies (“les bureaux d’achat et de vente”) were established, one to purchase shares and the other to sell them. Du Tot expressed considerable reservations about the wisdom of the Company purchasing its own shares though he admitted that the sale of shares by the Company might be regarded as useful in that it reduced the quantity of banknotes in circulation – “this was the good aspect of this operation” (Du Tot 2000, f.304). Between 30 December 1719, when the bureaux were established, and 22 Feb­ ruary 1720, the Company bought back 800 million livres of its shares. Taking an average price for the stock during this period as 9,300 livres, Du Tot estimated that this involved the “bureaux d’achat et de vente” purchasing around 85,000 shares (Du Tot 2000, f. 347). These statistics show that the “bureaux” had been exten­ sively used to prop up the share price at a high level. As a result, the printing presses of the Royal Bank had been working overtime. Belatedly, Law realised that he had over-expanded excessively the financial circuit, comprising banknotes and shares, relative to the real capacity of the economy. Perhaps, if he had been able to introduce the intended deflationary 21 May measures at an earlier stage in late Feb­ ruary 1720, he might have been successful in dampening the excessive optimism in the System. The Regent’s reluctance to allow him to do so meant that the attempted resuscitation came too late in May of 1720. One also suspects that Law’s Achilles Heel was his excessive confidence in his improvisational skills to buttress the System rather than asking questions as to whether such improvisation was covering up a deeper issue. For example, in January 1720, when some pressures emerged as the public attempted to cash in their Mississippi gains by purchasing specie and bullion, Law counter-attacked by prohibiting the use of specie for all but very small transactions and by criminalising the holding of specie and bullion above a stipulated amount. In a further effort to increase the attractiveness of banknotes, he produced a demonetisation of gold and a phased devaluation of silver. These were attempts to keep transactors within the financial circuit, trading shares for banknotes and vice versa, thereby preventing

58 Antoin E. Murphy them from moving outside this financial circuit. If Law had analysed this desire to exit the financial circuit, instead of designing ways to keep transactors within it, he would have realised that there was a fundamental flaw in his System namely an over-issue of paper money in the form of banknotes and monetised shares. That realisation would have provided an early warning of the need to deflate the Sys­ tem. Instead, his improvisations diverted his attention from the main issue to be addressed. Then, when he eventually realised the inevitable necessity of deflating the Sys­ tem in March 1720, political factors prevented him from doing so in that the Regent and his circle were not prepared to see the value of their paper holdings of shares and banknotes reduced in value. Eventually, when he succeeded in having an arrêt introduced on 21 May stipulating phased reductions in the value of both banknotes and shares, confidence in the System abruptly collapsed. For a short period, Law’s life was in danger as he was put under house arrest. He was sacked as Controller General of Finances but quickly reinstated to run the Company when the Regent realised that Law was probably the only man capable of managing it. However, the public’s confidence system had been badly eroded and despite some Herculean efforts to resuscitate the System it collapsed in the latter months of 1720. Law’s enemies, the powerful Pâris brothers, were brought in to restructure the Company and return France to the old financial system. With the assistance of the Regent, Law fled from France, and, after a stay in Brussels moved to London where he was pardoned for his crime of killing Wilson by George 1. During his stay in London, the Regent attempted to entice Law back to Paris – an indication of the esteem that the Regent had for Law. Law prepared for this return but then the news came through that the Regent had died and that the new Regent, the Duc de Bourbon, for­ bade Law’s return. Notwithstanding the failure of Law’s System, there were other leaders such as the Serbian finance minister and Czar Peter the Great who were keen to invite Law to address their financial problems. In both cases, he refused these invitations. He moved from London to Venice and died in that city in 1729. 4.

Conclusion

Law’s legacy is an enduring one. As a macroeconomic choreographer, he produced some outstanding ideas – demand and supply theory, the conceptualisation of infla­ tion analysis in a money demand/money supply framework, the law of one price for internationally traded goods, the analysis of the circular flow of income, the definition of money freed from the anchor of intrinsically valuable metals, and the emphasis on money having a real impact on economic activity. His theory led him to a policy recommendation that paper money and credit be used to replace spe­ cie and that the governments of the time, faced with depressed economic activity should increase the money supply and reduce the rate of interest. The overhang of a sizeable public sector debt made it difficult to lower the rate of interest and so he introduced a debt management policy enabling the substitution of equity for gov­ ernment debt in an effort to alleviate this problem. Ultimately, some economists will say that he failed and economists do not like to be associated with failures.

John Law and the Mississippi System

59

From his grave, Law might say that he tried and for a period, as Du Tot testified, he produced some stunning successes. There is therefore a case for Law to be regarded as the spiritual father of quantitative easing, a monetary policy that recently helped re-balance the global economy after the financial crash of 2008. As an addendum, Law, with all the accumulated wisdom of his experience from the collapse of the Mississippi System, might advise a policy of “hasten slowly” to governments and central banks applying quantitative easing. References Buat, Nicolas. 2015. John Law: La dette ou comment s’en débarrasser. Paris: Les Belles Lettres. Buchan, James. 2018. John Law. A Scottish Adventurer of the Eighteenth Century. London: Maclehose Press. Cantillon, Richard. 1755. Essai sur la nature du commerce en général. Paris: Guillyn. Cochrane, John H. 2001. “Review of Famous First Bubbles. The Fundamentals of Early Manias, by Peter M. Garber”. Journal of Political Economy, 109 (October), 1150–54. Du Tot, Nicolas. [1738] 1935. Réflexions politiques sur les finances et le commerce. The Hague: Les Frères Vaillant et Nicolas Prevost. New ed., Paul Harsin (ed.). Paris: E. Droz. Du Tot, Nicolas. 2000. Histoire du Systême de John Law, Antoin E. Murphy (ed.). Paris: INED. Faure, Edgar. 1977. La Banqueroute de Law. Paris: Gallimard. Friedman, Milton. 1956. Studies in the Quantity Theory of Money. Chicago, IL: University of Chicago Press. Hume, David. 1752. Political Discourses. Edinburgh: A. Kincaid and A. Donaldson. Law, John. 1705. Money and Trade Consider’d with a Proposal for Suppllying the Nation with Money. Edinburgh: The Heirs and Successors of Andrew Anderson. Law, John. 1934. John Law. Œuvres complètes, Paul Harsin (ed.). Paris: Recueil Sirey. Law, John. [1704] 1994. John Law’s Essay on a Land Bank, Antoin E. Murphy (ed.). Dublin: Aeon Publishing. Ménard, Pierre. 2017. Le Français qui possédait l’Amérique. La vie extraordinaire d’Antoine Crozat, milliardaire sous Louis XIV. Paris: Le Cherche-Midi. Murphy, Antoin E. 1997. John Law, Economic Theorist and Policy-Maker. Oxford: Oxford University Press. Norton, Rictor. 1992. Mother Clap’s Molly House: The Gay Subculture in England 1700– 1830. London: GMP Books. Petty, Sir William. 1691. Verbum Sapienti. In W. Petty, The Political Anatomy of Ireland. London: D. Brown and W. Rogers. Rothkrug, Lionel. 1965. Opposition to Louis XIV. The Political and Social Origins of the French Enlightenment. Princeton, NJ: Princeton University Press. Schumpeter, Joseph. 1954. A History of Economic Analysis. New York: Oxford University Press. Velde, François. 2014. Government Equity and Money: John Law’s System in 1720 France. Chicago, IL: Federal Reserve Bank of Chicago.

4

Science of trade and “commerce politique” Thierry Demals

Voltaire wrote in 1738, For the last twenty years we have understood commerce in France better than we have from Pharamond to Louis XIV. . . . [T]he principles of commerce are now known to all; we are starting to have good books on the subject. ([1738] 1836, 385–6) What Voltaire was describing was the beginnings of a French-language “sci­ ence of trade” launched by l’Essai politique sur le commerce by Jean-François Melon (1675–1738) and Réflexions politiques sur les finances et le commerce by Nicolas Du Tot (1684–1741), which was continued by the works of Richard Cantillon (post 1680–1734), Charles Louis de Secondat de Montesquieu (1689– 1755), Jacques Claude Marie Vincent de Gournay (1712–1759) and François Véron Duverger de Forbonnais (1722–1800). These authors, and a few others, dealt explicitly with “commerce en général”, not with commerce in particular, which Forbonnais (1754 I, 6) summarised under the expression “commerce poli­ tique” or “in its relation to a political body”.1 The expression confirmed a clear demarcation: “Knowing how to run a trade or knowing how to conduct trade are two very different things. . . . The science of the trader is that of the details with which he deals. The science of politics is the advantage that can be drawn from these details” (1754 I, 84–5). Drawing inspiration from the English science of trade, these authors sought to establish, not so much a practical knowledge leading to pleas in favour of a par­ ticular trade or a particular separate interest, as a science whose conclusions were applicable to different sectors and to different nations and which were likely to be placed in the service of a government. Most of the propagators of this science concluded, more or less convincingly, that there were good and bad trades from the point of view of the interest of the nation, or that the particular interests of the traders did not contribute to the interest of the nation equally. Thus, they called on these traders to be educated and to train themselves in the knowledge of the 1

For an analysis of this expression, see in particular Larrère (2011) and Steiner (2011).

DOI: 10.4324/9780429202414-4

Science of trade and “commerce politique” 61 aforementioned national interest, just as they urged the sovereign or the legislator to be better acquainted with the principles of “commerce in general”, because it was in the knowledge of these principles that their power lay. 1.

Melon: the superiority of power through commerce

The Essai by Jean-François Melon (1736) is a remarkable work, if only for the number of its editions and translations.2 Its purpose is clearly expressed: “It does not relate to the commerce of particular Peoples between themselves; but the way in which the Legislator can procure for his Nation the means to use advantageously all the productions of its Land” (Melon 1736, 13). More ambitious than the usual practical writings on trade, the book is peppered with political considerations. However, this is not a reflection on the best constitutional regime, but rather on commerce as a means of the power of a nation. This reflection on “commerce in general” is intended for a particular person, the legislator, whose function is to make wise laws. Military government and commercial government

Melon uses this commonplace that every government is driven by a desire for power that it expresses through two opposing logics. The first, dominant in the early days of the history of societies, is the “spirit of conquest”, justifying both territorial expansion, appropriation of the wealth of conquered territories, and what Melon calls the “military government”. The second, called the “spirit of preser­ vation”, seeks less to conquer than to preserve what has been acquired. Melon combines this spirit of preservation with a third spirit, that of commerce, aimed at acquiring power and wealth through the more peaceful means of exchange with other territories. In ancient times, military governments had some success. In the modern era, things are different, at least in Europe. Two empires were formed, but one, the Spanish Empire, was weakened for not having been able to transform its spirit of conquest into a spirit of preservation, while the other, the Russian Empire, was strengthened, not by gaining new lands, but by seeking to develop its navy and its trade. The modern era also reveals a fourth spirit, that of peace, characterised by the quest for more balanced international relations. Here, Melon borrows from diplomatic literature and the law of nations3 the idea of a “just balance” between countries which “will always prevent a power from rising through its conquests, enough to be feared” (1736, 88). Melon draws several lessons from his historical description. First, conquest sooner or later turns into its opposite, subjugation, every conquering nation ceasing to be one someday. Second, in the modern era, the idea of conquest has certainly not 2 3

See the census carried out by Nicastro and Perone in Melon (1983).

The law of nations or the law of people indicates the rules of law which govern relations between

the political communities or States that share the world.

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disappeared, but territorial expansion has a limit in Europe, expressed by the “bal­ ance of powers”: nations still seek power and wealth, but they cancel each other out or balance each other. This situation is made possible by commerce, which conveys a form of rivalry of nations free from the idea of war. Third, the spirit of conquest – what contemporaries have called “universal monarchy” or “empire on land”, that is, a nation ruling all others thanks to its military power – is an inappropriate solu­ tion for modern times. Fourth, to achieve its good effects, the spirit of commerce should be combined with the spirit of preservation, seeking “less to extend its Bor­ ders, than to build Fortresses for its tranquillity”, rather than to form a “universal trade” subject to the “greed” of merchants (1736, 80; 357; 106), namely to govern the trade of the world thanks to the establishment of a maritime empire. From original trade to the trade of competing nations

It is within this framework that Melon places his parable of the islands.4 First of all, he considers an original situation of equality: three islands, each specialised in the production of a commodity (corn, wool and drinks), with the same number of inhabitants and workers and the same area of territory exchange their commodities and distribute them exactly according to the needs of their population. The “bal­ ance of trade” between them is therefore assumed to be “equal”. Then Melon introduces an imbalance leading to a second situation: one island, that of corn, is in the situation of being able to produce its own commodity in overabundance, but also those produced by the other islands, in sufficient quantity for its domestic consumption. The original equality is therefore broken. Having become self-sufficient, this island no longer has to trade with its neighbours, while the latter are deprived of the commodity most necessary for life. Melon then con­ siders two consequences. The first is an exodus of the population from the two neighbouring islands to the island of corn to work and to obtain the means of sub­ sistence that they lack. The second is that, to stop this migration and to return to the original balance, the two neighbouring islands form a league aiming at forcing the island of corn to stop producing their commodities. If this league is victorious, it enforces the law of nations, legitimately superior to the law of a particular nation. If it is defeated, because it is too costly or its population is weakened by a dearth of corn, it submits to the “superiority of power” of the island of corn (1736, 9). Finally, Melon imagines a third situation in which several islands, all produc­ ing necessaries of life, dominate others producing commodities of lesser necessity or luxuries. It appears that the more numerous the former, the more difficult it becomes to determine which will be the most powerful, because no dominant posi­ tion will be permanently guaranteed. Melon draws three lessons from his parable: (i) corn, the basis of trade and State power, is the first object of the legislator (1736, 4, 343); (ii) the population is the second object of the legislator (1736, 5), because any progress in agriculture or in 4

Melon is not the first author to use this rhetorical device. In Money and Trade Considered ([1705] 1934, 133–41), John Law (1671–1729) assumed an agricultural island belonging to a single owner to whom it was suggested to introduce money in order to promote manufacturing and trade.

Science of trade and “commerce politique” 63 manufacturing, allowing the same quantity to be produced with fewer men, frees up supernumeraries for new activities, of which the commodities sold abroad will strengthen the nation’s power; (iii) the more trade expands, the more there must be a means that measures, facilitates exchange, and circulates in sufficient quantity: money, the third object of the legislator (1736, 7). Three criteria therefore ensure power: fertile land and sufficiently productive agriculture freeing up manpower for manufacturing; manufacturing capable of creating and responding to new needs and employing a growing workforce; and sufficient money circulation. Consequently, if an island has these three advantages, which is the case with France, it will achieve superior power, not without provok­ ing hostile reactions. The important thing is that this island is no longer driven by the spirit of conquest, but ruled by “new political interests”. It should not end trade, but continue to attract foreign labour to employ it in the most diverse manufactures, support “the trade of islands of which it will have nothing to fear” and “destroy the trade of the islands, whose competition may alarm it: thus, its tranquillity will become equal to its power” (1736, 11). Liberty in a commerce of rivalry

Melon points out that trade is based on two issues: increasing maritime trade and naval power, and the fluidity of domestic trade. One of the lingering questions is that of “free trade”. From the second chapter onwards, he states that “trade requires only liberty and protection” and that “in the alternative between liberty and protec­ tion, it would be much less harmful to take away protection than liberty; because with liberty, the force of commerce alone can hold the place of protection” (1736, 26–7). “The word liberty”, he notes, “which has caused so many disputations in religions, and so much disorder in the States, is not better understood in commerce” (1736, 150–51). His use of this word refers to vague Republican themes5 – liberty associated with the independence of the nation, liberty protected by the law, the primacy of the common good over private good, etc. – but also, in a more prag­ matic way, the present state of commerce: to advocates of the “general liberty of commerce”, he responds that, in order to establish this, “it would be necessary for the whole of Europe to contribute to it through general views, difficult to reconcile with the narrow interests with which most men are occupied” (1736, 131). The liberty/protection relationship is illustrated by several examples – such as those companies which, by their privileges, infringe the liberty of their competitors – showing that liberty is not an absolute notion and that it has a limit: Liberty in Commerce should not consist in the imprudent licence to Traders to freely send and to receive all kinds of commodities, but only commodities whose Export or Import can provide each citizen with the ability to exchange his superfluous for the necessary that it lacks. (1736, 151)

5

The word “Republican” does not refer to a particular constitution.

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The extent of liberty is judged according to whether it is “in favour of the citizen”, or, more exactly, in favour, simultaneously, of “the utility of the individual” and of “public utility” (1736, 152, 159). Good laws or good regulations are those which go in this direction, and it is up to the legislator to judge this. So there is no liberty without regulation, just as there is no economic activity without “measures and cali­ brated weights . . . which subject workmen and prevent the fraudulent greed of the merchant” (1736, 152). Thus, the English Navigation Act, which appears to be a restriction on liberty to trade, since it forbids foreign ships “from bringing into Eng­ land commodities other than those growing out of the soil of the nation which brings them or manufactured therein” (1736, 153), is not a restriction in the sense of the definition of liberty which has just been provided. This Act has enriched England, expanded its trade and increased its navy. It also has given it a superior power at the expense of the Dutch, until then “universal carriers for the world” (1736, 135). Rules are therefore needed, and these are known: “Forbid all Export of raw materials necessary to make the manufactures [of the country] work” (1736, 131), for example, wool in England to favour domestic production and the export of sheets, or silk in France; and prohibit the import of wool and silk articles and, more generally, the import of luxury articles, because the nation would, at its own expense, pay for the labour of foreign luxury workers. Here, luxury should be understood, not as a passion that would be morally reprehensible, but as “a neces­ sary continuation of any well-polished Society” (1736, 106), corresponding to a higher stage in the development of manufacturing – a stage that can only occur after labour has been freed from the production of first and secondary necessaries of life (1736, 121). For Child and against Petty

The superiority of power, caused by a favourable trade balance, results in “an increase in the quantity of Gold and Silver”. From this increase in the amount of precious metals – which, other things being equal, causes a fall in the interest rate – follows an easier and more extensive trade, Melon writes (1736, 283–5), taking the four rules set out by Josiah Child (1630–1699) in A New Discourse of Trade (Child [1693] 1698, 168–9): (i) “Encrease Hands in Trade”, which involves putting the poor to work, restricting emigration and facilitating the free admission of the for­ eign population; (ii) “Encrease stock in Trade”, which will increase the amount of manufactured goods; (iii) “Make Trade easie and necessary, i.e. make it our Interest to Trade” by relaxing regulations and (iv) “Make it the Interest of other Nations to Trade with us”, by establishing trade treaties and, more generally, by making the commerce of nations reciprocal and fair. Melon also endorses Child’s plea for a low-interest rate to thwart usurious practices and facilitate trading activity. Melon logically associates Child’s fourth maxim with the second and third situ­ ations of the parable of the islands, the pursuit of a superiority of power that does not abolish reciprocity of trade. Conversely, he rejects the conclusion of William Petty (1623–1687), by which England’s superiority is such that it can “take posses­ sion of the universal trade of all traffickers” (1736, 356). The quest for power does

Science of trade and “commerce politique” 65 not imply an exacerbation of the spirit of trade to the point of confusing it with the spirit of conquest. Such is not, Melon assures (1736, 357), the aim of France to claim this universal trade: Far from this vague and crazy ambition, it always wants to contain itself within the limits assigned to each trading Nation; it will send its superfluous commodities to Nations which so desire, to receive from them what their lands produce for the use of its Inhabitants, and This reciprocal commerce will also contribute to the felicity of all. Behind this peaceful and calm description of French trade is the thesis of the natu­ ral superiority of the island of corn (1736, 4): the cumulative dynamic of trade only begins because an island has a sufficiently fertile territory to produce an overabun­ dance of agricultural goods, and the productivity gains that it achieves allow it to develop, depending on the degree of civilisation, manufactures of first or second necessity, then luxury, and to increase its navy: “This progress of industry has no bounds . . . new needs will always arise, on which a new industry can be exerted” (1736, 89). Recognising the need for a sizeable navy, Melon (1736, 95), however, disputes an English author’s calculation that “a Sailor is of as great value to his nation as three Ploughmen.” He points out that “the Ploughman has another kind of value, in that his product is the commodity of absolute necessity; he is even preferable to the Sailor who would go and bring corn from abroad, because he only transports with­ out producing it” (1736, 95–6). It is better to say: “The Sailor, the Ploughman, the Workman, are all necessary; and the States only become great through the quantity of workers, who are increasing in each profession” (1736, 97). Likewise, if, despite his greed, the trader contributes to the national interest, this does not mean that any commercial enterprise is useful for the nation: “often a Trade which is not very advantageous to each Trader, is very advantageous for the Nation” 1736, 147). In contrast, “the Manufacturer deserves all the attention of the Legislator” (1736, 97). The legislator should, finally, ensure another balance, this one domestic, between capital and provinces, namely to find a balance between capital – which sees the flow of wealth, taxes and affluent incomes, and which consumes products coming from the provinces – and the provinces, which live off the consumption of the capital and pay taxes (1736, 285–6). The legislator should maintain this reciprocal flow of wealth and prevent the provinces from becoming impoverished. Good regulation should also apply to public works (through privileges granted to public utility companies) and to domestic trade (through the abolition of internal customs which hamper freedom of transport). 2.

Cantillon: enrichment and “decadence”

Sometime before Melon delivered his work to the public, Richard Cantillon had dealt with “commerce in general” in a manuscript probably written between 1728

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and 17306 but only printed in 1755. In his Essai sur la nature du commerce en général, and unlike Melon, Cantillon does not offer a conjectural history of com­ merce based explicitly on the distinction between the spirit of conquest and the spirit of commerce. The commercial society is not presented as a particular stage instilling a climate of liberty into economic activity. The spirit of conquest only appears surreptitiously as a justification for original land ownership, without any judgement being made on this mode of acquisition, and in a passage where Cantillon points out that one of the means of increasing the amount of money in a country is “Violence and Arms” (Cantillon [1755] 1931, 195). Land, labour and dependence

Cantillon provides another conjectural construction, explaining the development of commerce and the organisation of societies from the unequal distribution of land amongst men. Societies are all founded on this inequality, which justifies the superiority of landowners and the dependence of other orders. History shows how this dependence is perpetuated over time with the emergence of villages and, consequently, of the first markets, then towns, cities and capitals. This territorial hierarchisation is concomitant with the formation of large landholdings owned by “princes” and “noblemen” spending more of their income on conveniences of life and luxuries, and consecutively the growth of professions satisfying this consumption. To analyse this process, Cantillon imagines a first pyramidal model of the economy: at the upper level the landowners, at the intermediate level the “overse­ ers” (“inspecteurs”), namely the stewards or managers of estates of the former, at the lower level, labourers and artisans, whether “Slaves or free men” ([1755] 1931, 33). Then he sketches a second model, more suited to the development of urban markets, at the top of which are always the landowners, now dominating the “entrepreneurs” and hired workmen of all activities. The entrepreneurs have therefore replaced the overseers. The primary characteristic of their activity is risk. They invest funds in some activity with no certainty of the benefits that they will derive from it: “They pay a certain price . . . to resell wholesale or retail at an uncertain price”, “working at a risk [‘au hazard’], some get rich and gain more than a double subsistence, others are ruined and become bankrupt” ([1755] 1931, 51; 41). These entrepreneurs are possibly deceivers ([1755] 1931, 55), but not necessarily greedy, unlike traders in Melon’s Essay. Nor are they like those labourers and artisans who live from day to day without changing “their mode of living”: as soon as they get rich, they imitate the behaviour of the landowners ([1755] 1931, 63). These two models are built on the same rule of evaluation of the wealth of a territory: “the amount of Land and Labour which enters into Production” ([1755] 1931, 107) determines the “real or intrinsic value” of commodities, including that

6 See Murphy (1986).

Science of trade and “commerce politique” 67 of gold or silver ([1755] 1931, 97). It is around this value that market prices fluc­ tuate. These models also convey a rule of distribution of the product of land and labour in what Cantillon calls the three “Rents”: that which goes to the landowner, that which goes to the maintenance of men and livestock and reconstitutes the costs of production, finally that which should remain with the entrepreneur “to make his undertaking profitable” ([1755] 1931, 121). Cantillon first turns to farmer entrepreneurs and traders in agricultural products and examines the city/country or capital/province relationship. The economy forms a circle connecting production, income and expenditure. It is mainly considered as a circulation of expenditure in which landowners and farmer entrepreneurs play a determining role. The expenditure of the three “rents” is “the mainspring of circu­ lation in the State” ([1755] 1931, 123). The farmer entrepreneurs circulate these rents, some of which are paid in money and others in kind. Agricultural production is consumed in the countryside and in the cities. Thus the rents, in particular those of the landowners and farmers, are spent on commodities coming partly from cities and partly from the countryside. Their expenditure forms the income of the inhabit­ ants of cities, which they in turn spend on agricultural products. In this description of the economy, Cantillon maintains his central idea that all members of society live off the product of the land and therefore at the expense of the landowners: I will then lay it down as a principle that the Proprietors of Land alone are naturally independent in a State: that all the other Classes are dependent whether Undertakers of hired, and that all the exchange [“troc”] and circula­ tion of the State is conducted by the medium of these Undertakers. ([1755] 1931, 57) The circle of enrichment and “decadence”

The inequality of landownership that characterises any society is transmuted into an inequality of circulation. Cantillon talks of a “constant balance” ([1755] 1931, 149–51; 157) between the capital and the provinces. By this expression, he means a balance that is constantly favourable to the capital, which reveals a continuous debt of the provinces towards it – by the rent that it must pay and the manufactured goods that it buys – settled by the sending of agricultural goods. This expression is also used to describe the inequality of circulation between the States, itself con­ sidered as an inequality of power: “The inequality of the circulation of Money in the different States constitutes the inequality of their respective power, other things being equal; and this inequality of circulation is always respective to the balance of Foreign Trade” ([1755] 1931, 159). Everything therefore appears as if international relations were the extension of the national capital/province relationship and as if the latter were the extension of the relationship of the landowner to his dependents, each of these relationships resulting in a debt. Everything in a State depends on the landowners. The larger the State, the greater the influence of the large landowners, the more their way of living and

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their expenditure are felt ([1755] 1931, 47; 81; 93); the smaller it is, the leaner the production of its land, the more it has to survive through its trade at the expense of the foreign landowners ([1755] 1931, 133; 233). However, the purpose of trade between these States, large and small, is the same: to capture a part of the product of the land and the labour from abroad in actual money (“argent effectif”). The powerful State is that which “gives less Land and Labour than it receives” ([1755] 1931, 189). A State benefits from its foreign trade (i) when it “exchange a small product of Land for a larger in Foreign Trade”; (ii) when it “exchanges its Labour for the produce of foreign land” and (iii) when it “exchange its Produce conjointly with its Labour, for a larger Produce of the Foreigner conjointly with equal or greater labour” ([1755] 1931, 225). Trade is therefore not always beneficial, nor equal for all participating States. What to export? Cantillon adopted a few commonplaces of the science of com­ merce. For example, “It will always be found . . . that the exportation of all Manu­ factured articles is advantageous to the State, because in this case the Foreigner always pays and support Workmen useful to the State” ([1755] 1931, 233; 91). Any State, then, should export its manufactures or the products of its land “in exchange so far at it may be for gold and silver in kind” ([1755] 1931, 233) and not against foreign manufactures because this would weaken its own strength. Finally, a large maritime State should not encourage seafaring by foreigners, nor allow the Dutch to be the “only sea-carriers in Europe” ([1755] 1931, 241): by enacting their Navi­ gation Act, the English made their traders entrepreneurs, not “Agents or Clerks of foreign merchants” ([1755] 1931, 243; 171). Cantillon then tackles a certain number of themes that later literature will bring together under the expressions “quantity theory of money” or “price-specie-flow mechanism”. “Everybody, he writes, agrees that the abundance of money or its increase in exchange, raises the price of everything” ([1755] 1931, 161). But what is the link between the variation in the quantity of money in circulation and the vari­ ation in domestic prices? John Locke (1632–1704) assumed strict proportionality (Locke [1692] 1991, 242–5). Cantillon qualifies this assumption according to which “the value of all things is proportionable to their abundance or scarcity, and the abun­ dance or scarcity of the silver for which they are exchanged” ([1755] 1931, 117). First of all, prices can vary without this proportionate effect, for example, according to the fancy and moods of the landowners who urge them to increase their luxury expenditure ([1755] 1931, 29, 59). Distance from the markets also plays a role: prices can vary for the same product sold in the town or the country, in the capital or in the provinces, and even from one State to another ([1755] 1931, 121; 153; 161). Second, if the proportionate effect is particularly felt in a closed economy, it is much less the case in an open economy. Taking the example of England, which authorises the importation of corn, but not that of beef meat, Cantillon notes that the price of corn in this country tends to align with the international price and does not vary proportion­ ally with the quantity of money that circulates in the country, whatever this quantity, and that, conversely, the price of beef meat is sensitive to the effects of an inflow of money ([1755] 1931, 179–81) – in other words, wheat is, here, what the theory of international trade today calls a “traded good” and beef a “non-traded good”.

Science of trade and “commerce politique” 69 Finally, the origin of the variations in the quantity of precious metals in cir­ culation also has a differential effect on prices – of necessaries, conveniences, luxuries or investment goods – depending on the channels of transmission of these monetary impulses, and, thereby, also on economic activity cycles through changes in the balance of trade. So prices do not all increase at the same time and those which do increase do not do so in the same proportion, it all depends on who benefits from this increase in the quantity of money and how he spends this new money.7 Locke, Cantillon comments, “has clearly seen that the abundance of money makes everything dear, but he has not considered how it does so” ([1755] 1931, 160). Indeed, new coins can spread throughout the State through three different chan­ nels.8 The first is that of an extraction of precious metals ([1755] 1931, 164–6). The increased amount of money augments consumption spending, rather that of luxury spending, of all those who took part in this increase, which in its turn increases prices and employment. The rise in prices reduces the purchasing power of work­ men and artisans – some of whom are forced to emigrate – and makes domestic products less competitive than their foreign competitors. Imports increase, exports decrease, the balance of trade goes into deficit and monetary circulation reduces. If precious metals are extracted in considerable quantities and continuously, imports of foreign articles that maintain the lifestyle of landowners increase and the coun­ try is inexorably impoverished. Spain and Portugal, unable to retain gold and silver extracted from the mines of America, fell into decay (“décadence”, to use Cantillon’s word [1755] 1931, 193). The second channel is the inflow of specie resulting from favourable foreign trade ([1755] 1931, 166–70). This inflow is initially beneficial insofar as the increase in price takes place gradually and allows the State to “maintain a small balance of trade against the foreigner or at least keep the balance level [‘au pair’] for many years” ([1755] 1931, 169; 183). The idea of gradation or non-immediacy is important here: money is concentrated in the hands of entrepreneurs preferring to accumulate and invest it rather than immediately spending it on articles and manu­ factures. This expense will come later, when they have made their fortune; there will then follow an ineluctable bidding up of all things. The decay of a State can also be slowed down thanks to thriving navigation, low transport costs and tech­ nological superiority for which its manufacturing is renowned ([1755] 1931, 169; 183) and which partly compensate the price increase. The balance will certainly be less favourable, but positive for a few more years. But, even if it is generally through this second route that a State “grows more substantially” ([1755] 1931, 181), the decay will nevertheless occur in the long term, always caused by two 7 8

Posterity has perceived in these passages of the Essay a “Cantillon effect”; see Blaug ([1962] 1968, 22) for the first occurrence; see more generally Bordo (1983), Murphy (1986), Gillard (2011) and Le Maux (2014). Here, we only describe the three main channels, the others being the subsidies paid by foreign pow­ ers, the expenses by foreign ambassadors, the transport of goods and private fortunes, and military conquest ([1755] 1931, 171, 195).

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concomitant phenomena: (i) a less competitive manufacturing due to rising domes­ tic prices; (ii) and, as before but in a delayed manner, too much consumption of luxuries by the landowners – gradually imitated by the subordinate ranks ([1755] 1931, 93) – satisfied by cheaper imports. So, When a State has arrived at the highest point of wealth . . . it will inevitably fall into poverty by the ordinary course of things. The too great abundance of money, which so long as it lasts forms the power of States, throws them back imperceptibly but naturally into poverty. ([1755] 1931, 185) The third way of increasing the quantity of precious metals in the country, finally, is the inflow of capital, in the form of loans made abroad by the State or by private entrepreneurs ([1755] 1931, 191–5). If this inflow affects prices and the economic activity cycle less, it is nonetheless pernicious: foreign borrowing is “a present ease [which] comes to a bad end” ([1755] 1931, 193). It certainly allows entrepreneurs “to set people on work and to establish Manufactories in the hope of profit” ([1755] 1931, 191), but it is expensive because “the interest paid to the Foreigner is always much more considerable than the increase of public revenue which his money occasions” ([1755] 1931, 193), and dangerous because this capital can suddenly be withdrawn, putting the State “at the mercy of the Foreigners” ([1755] 1931, 191). Cantillon’s vision is cyclical, especially in the case of the second channel, the enrichment of a country through foreign trade. Falling into decline, a State will have no means of recovering other than by cheaper exports, ultimately once again causing a positive balance of trade and an inflow of precious metals. But then the traders will start to make their fortune again, the princes and lords will once more get richer, and “Luxury will install itself” plunging the State into a new decline ([1755] 1931, 193). “Such is approximately the circle which may be run by a considerable state which has both capital [‘fonds’] and industrious inhabitants” ([1755] 1931, 195). Poorly endowed with land and labour, the small republics can prosper through trade only accidentally, never sustainably. Only the large territorial nations, “however low they may be fallen . . . are always capable of being raised by good administration to a high degree of power by trade alone” ([1755] 1931, 195). Although it results from a quantitative mechanism, the circle of enrichment and decay has a deeper origin, inherent in political societies. It applies just as much to trading nations as to conquering nations, as the history of ancient Rome shows, and the cause is the same: the luxury of the landowners and the decrease in the circulation of money. 3.

Montesquieu: commerce and the constitution

In Réflexions sur la monarchie universelle en Europe (1734), Montesquieu (1964, 193) challenges the idea of a large Monarchy governing the affairs of Europe and the world through military power and argues, on the contrary, that, thanks to trade

Science of trade and “commerce politique” 71 and navigation, the universe is almost like one nation and “the peoples all polished are, so to speak, members of a great Republic.” In De l’esprit des lois (1748), he notes that, unlike the politicians of ancient Greece who spoke of virtue, those of today “only talk to us of manufacturing, trade, finance, wealth and even luxury” (1964, 537). The trade in question is that of nations, in very rare cases domestic trade.9 Wealth “consists either in land funds or in moveable effects” and if land belongs to each State in particular, moveable effects, such as money, notes, bills of exchange, shares in com­ panies, vessels, all merchandises, belong to the whole world, which, in this respect, is composed of only one State, of which all societies are members: the people who possess most of these moveable effects in the universe are the richest. (1964, 655–8) A world that has become commercial

To describe this transformation of modern Europe, Montesquieu appeals, like Melon, to the spirit of conquest and the spirit of commerce, but he does not make such a decisive criterion of separation between Antiquity and the modern world. Rather, he perceives a permanence of the spirit of commerce – which “carries with it that of frugality, economy, moderation, labour, wisdom, tranquillity, order and rule” (1964, 546) – from ancient republics to modern ones. On this first distinc­ tion between conquest and commerce, he superimposes a second one, between the empire of the land and the empire of the sea (1964, 649; 662).10 Noting that governments that are wholly or partially republican, both ancient and modern, have sought to establish empires of the sea, he emphasises that commerce is compatible with a certain form of power and the use of military force when it concerns preserv­ ing the wealth acquired. Melon gave a rather general definition of the spirit of commerce. Montesquieu links it from the outset to the republican government11 assuring its compatibility with this government, whatever its principle – democratic or aristocratic – provided that the accumulation of private wealth that it generates is moderate (1964, 546). Commerce does not corrupt the mores of the republics. These are not condemned to live on what is necessary: they can be rich. What corrupts them is “the excess of wealth” and the excess of luxury, since then “the mind turns towards particular interest” (1964, 546; 565). Since luxury is “always in proportion to the inequality of fortunes” (1964, 564), it follows (i) that the wealth obtained through commerce 9 On this point and on Montesquieu’s thoughts on commerce, see Larrère (2003–2004, 2019). 10 The distinction is old. Montesquieu reads it in Pseudo-Xenophon; Grotius and Barbon used it in the seventeenth century (Demals 2016). 11 For Montesquieu, a republican government is that which grants sovereign power, either entirely to the people (democracy) or in part (aristocracy).

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must be based on rules and behaviour that control the acquisitive passion; (ii) that luxury is generally scarce in democratic republics where wealth is equally shared, that it should be moderated in aristocratic republics, and that it is above all “singu­ larly proper to monarchies” (1964, 566). Montesquieu (1964, 566) distinguishes “absolute luxury” from “relative lux­ ury”, also called “relative frugality”. Absolute luxury is that which is accompanied by appalling misery, relative luxury is determined by comparing the quantity of needs that a nation would satisfy with foreign commodities that it would import at a very high price and the quantity of needs of which it should deprive itself by exporting its own commodities in compensation. Montesquieu (1964, 649) also mentions a “solid luxury, founded, not on the refinement of vanity, but on that of real wants”. This acceptable luxury is the result of an inevitable spiral: “The effect of commerce is wealth; the continuation of wealth, luxury; that of luxury, the per­ fection of the arts” (1964, 660). What are the effects of the civilising effects of commerce? It all depends on the constitution. Commerce softens the mores of monarchical governments and mili­ tary republics, without corrupting the principle of each of these governments, and it moderates relations between nations because it naturally leads to peace: it brings together nations with different cultures which can henceforth compare each other and takes the best of each of them – the “doux commerce”, as this was to be called later. On the other hand, its effect on individuals is more nuanced: “In countries where people are only affected by the spirit of commerce, they make traffic of all human actions and all moral virtues” (1964, 651). The beneficial effects of com­ merce fade when the acquisition of wealth becomes unrestrained and its distribu­ tion too unequal, namely when there is an excess of luxury. Two trades, two constitutions

Montesquieu distinguishes the “luxury trade” (“commerce de luxe”) and the “œco­ nomical trade” (“commerce d’œconomie”), that is the carrying trade. The first, common to ancient empires and barbarian nations, is rather terrestrial and aims to satisfy the pride and fancies of rulers (1964, 651–2, 660). The second is originally practised on the fringes of these empires by peoples who took refuge in small infer­ tile coastal territories fleeing “violence and vexation” (1964, 652). This second trade is of more interest to Montesquieu, who attributes several characteristics to it: (i) it is the fact of peoples who, not being able to live from their territory, have had to draw their subsistence and wealth from the territory of others; (ii) these peoples escaped territorial empires and built their own empires through seafaring by tak­ ing goods from one country to sell them in another; (iii) this commerce involves ordinary goods satisfying “real needs” on which little is earned, which requires continuous selling (1964, 651–2). The luxury trade is more suited to the monarchical principle and the œconomical trade more appropriate to the republican principle. The moral virtues that accom­ pany the spirit of commerce correspond quite well to the œconomical trade of ancient democratic republics, and also to ancient and modern aristocratic republics.

Science of trade and “commerce politique” 73 The latter are compatible with “large trading enterprises that are always necessarily involved in public affairs” (1964, 652), made possible because property is ensured there and the accumulation of riches legitimised, as are banks and credit (1964, 652, 653).12 Melon, Cantillon or Du Tot essentially understood commerce in its relation to the power of the State. Montesquieu (1964, 653) does not reject this vision, but he adds a constitutional dimension to it, for example, when he maintains that it is against the spirit of the monarchy that the nobles trade – an assertion that can be read as an objection to Du Tot’s plea in favour of an engagement by the nobility in wholesale and maritime trade. A distinction must be made here between nobility in a monarchy and aristocracy in a republic. An aristocratic trading republic allows the accumulation of wealth and a degree of inequality in its distribution, which are compatible with the values of relative frugality, moderation, industry and tranquil­ lity. The nobility in a monarchy is the “most natural, intermediate and subordinate power” tied to the land and the military (1964, 535). Allowing such a mighty power to trade would harm both the spirit of commerce and the spirit of the monarchy. Liberty and freedom of trade

Liberty, according to Montesquieu, depends on constitutions and circumstances. “Political liberty is not about doing what you want”, it is “the right to do what the laws allow” (1964, 586). As with Melon, it is, then, liberty within the limits of the law: it consists of doing what is not against the interests of the nation. Likewise, “freedom of trade is not a power granted to traders to do what they want . . . what hinders the trader does not therefore hinder trade” (1964, 653). To say that the interests of traders are not necessarily those of the nation and that the interests of the nation are not necessarily those of other nations is to recognise that trade involves regulations, prohibitions, customs and, more generally, that it is an ele­ ment of the politics of States. If these States do not intervene arbitrarily, “then people enjoy a free trade” (1964, 653–4). Making England one of the models of “doux commerce” that best combines religion, commerce and liberty (1964, 652), Montesquieu is not unaware that the foreign trade of this nation is, as with that of other nations, a trade of rivalry. Equipped with a powerful fleet, this free nation abandons neither its maritime empire nor its colonial conquests, which it transformed into “objects of trade” (1964, 673). In addition, it protects its domestic trade by a Navigation Act that has become more moderate with time. Following Melon, Montesquieu sees no incompatibility between this Act and free trade. But while Melon foresaw the pos­ sibility of peaceful commerce in which all nations, having renounced universal monarchy and universal trade, would be interested in participating, Montesquieu

12 On the other hand, credit banks, free ports and large companies with exclusive privileges are not compatible with the monarchy, because this would be to put money and the means of procuring everything in the hands of the one who holds the power (1964, 653).

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observes that not all have the same interest in trade: “It is not the nations that do not need anything that lose by trading; it is those which need everything” (1964, 658). The “doux commerce” also does not exclude the rivalry and competition with nations that are not all in the same situation. This commerce is free in the sense that States which necessarily intervene refrain from doing so arbitrarily, by placing the fewest obstacles possible, which Montesquieu expresses in the form of a maxim: “do not exclude any nation from trade without great reasons” (1964, 653). Finally, the “doux commerce” is a response to a political problem: it is a way of avoiding despotism, what Montesquieu calls the “coups d’autorité” of govern­ ments. Rulers must act, but as little as possible; they do decide, but they cannot decide everything. Fortunately, part of commerce escapes them. Three processes govern the world of commerce and put it beyond the reach of these acts of authority. First, the bill of exchange that the Jews invented in the Middle Ages to avoid the confiscation of their wealth. By this means, their funds that had become “invisible” (1964, 672) found themselves beyond the reach of rulers who were now unable to block their circulation. Then, there are the spontaneous forces that act on international markets for com­ modities. One cannot govern an international market ruled by competition despoti­ cally, for it is competition “which gives a just price to commodities, and which establishes true relations between them” (1964, 653). By a rather simple quantita­ tive reasoning, Montesquieu considers that one can compare “the mass of gold and silver that is in the world with the sum of the goods that are there” and that the international market determines parity between these quantities: “the establish­ ment of the price of things always depends fundamentally on the proportion of the total of things to the total of signs” (1964, 678). A price is “just” because of the play of market forces, without referring to the labour and land required to produce these goods. Free trade makes it possible to avoid two excessive situations, the lack of competition between sellers leading to prices that are artificially too high and the lack of competition between buyers leading to prices that are artificially too low. However, competition does not prevent States, depending on their situation, from having their own interests which can justify protectionist measures such as the Navigation Act or colonial monopolies. Finally, the exchange rate. While the currency adjusts itself to commodities, it also adjusts itself to other currencies. It is the exchange rate that regulates this adjustment, places currencies at their just value and prevents acts of author­ ity (1964, 678; 683). The ruler certainly intervenes by setting the weight and the standard of the currency, but his intervention, although it is not arbitrary, remains limited: it does not determine its value. Despotism haunts the work of Montesquieu. While Melon and Du Tot advocated a uniformity of the rules, Montesquieu wondered about the demand to have “the same weight in the police, the same measures in trade, the same laws in the State, the same religion in all its parts” (1964, 755). Uniformity can lead to despotism. It is also a kind of despotism that he saw creep into the System of Law, a system

Science of trade and “commerce politique” 75 that, in his view, one had sought to establish from above, through brutal reforms ignoring the remonstrances of the Paris Parliament and restricting liberties, such as the prohibition on keeping coins at home; a system that threatened with extinction the intermediate orders and the political communities in the monarchy and which allowed the greatest monetary manipulations (1964, 535–6; 750). 4.

Gournay: “sovereigns need traders”

What is commonly called the circle of Gournay is a network of traders, civil serv­ ants and men of letters, formed in the early 1750s at the instigation of Jacques Vincent de Gournay,13 newly appointed intendant of commerce. The circle is known for its activity of disseminating the English “science of trade” and pro­ moting some of its principles amongst educated circles and the French high-level administration.14 A trader from Saint-Malo, the son of shipowners, in 1751, Gournay bought the office of intendant of commerce with a clearly stated objective: to bring together two interests, that of the State and that of maritime trade, and to instil the idea that France could catch up with England and the Netherlands in trade. He wrote in 1758, When I wanted the position of intendant of commerce, I was prompted by the hope of bringing together trade and traders with the influential people a little more. I hoped that if this state could be seen more clearly and be better known by superiors, it would acquire in France the same degree of favour and consideration that it enjoys amongst our neighbours. (to Daniel-Charles Trudaine,15 in Gournay 1993, 106) Gournay’s economic work consists mainly of the memoirs written between 1751 and 1757, a translation of Child’s book titled Traités sur le commerce et sur les avantages qui résultent de la réduction de l’intérest de l’argent (1754) and Remarques left handwritten (c.1752). The influence of the English author here is obvious, Gournay ([c.1752] 1983, 437) repeats verbatim the principles of trade laid down by this author in his book; that of Melon is plausible, he takes from him the slogan “liberty and protection” ([c.1752] 1983, 421).16 Indeed, he does not claim to have brought to light new principles in the field of commerce (Gournay 1993, 105). He sums up the science of commerce as follows: it is “nothing other than knowing how to take the most of the advantages of one’s country, to put money and people into action, and to develop the land” ([c.1752] 1983, 285). 13 Vincent is his family name, and Gournay is the name of an estate he inherited in 1746.

14 See Murphy (1987) and Charles et al. (2011).

15 Daniel-Charles Trudaine (1703–1769), intendant of finances (1749–69) was Gournay’s immediate

superior. 16 For Tsuda (in Gournay [c.1752] 1983, 480–81), Gournay scarcely seems influenced by Cantillon; see also van den Berg (2019, 1121).

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In a memoir written towards the end of the Austrian War of Succession (c. 1747–48), Gournay expresses, in a Melonian manner, the idea that, once peace has been established, it will be the nation that is able to obtain . . . the most advantages from its commerce, which will become the richest nation and therefore superior to others. . . . We shall have to contest these advantages of commerce with two nations (the English and the Dutch), which know no other interest than this, and which never separate it from that of their State. (Gournay 1993, 3) The memoir contains several assertions that are reminiscent of Melon, namely: (i) in a situation of peace, nations do not give up their quest for power, but transpose their rivalry into commerce; (ii) France, whose productions are abundant and varied, and whose inhabitants are industrious, can acquire a superiority of power; (iii) this superiority is gained by a substantial navy and a moderate Navigation Act compat­ ible with freedom of trade (1993, 4).17 Gournay sees an advantage in this Act, that of establishing direct trade with Russia without going through the Dutch entrepôt, which enriches itself by selling French products in Russia and Russian products to France. Direct trade could also herald prospects for French manufacturing which would compete with that of England already present in the Russian market. The trade policy advocated by Gournay in this memoir also proposes the fol­ lowing measures: create a fishing company in Bayonne to challenge Dutch control over whaling; protect the French slave trade by fighting against English slave trad­ ing companies; plant tobacco in the French colonies in America to avoid buying that of Virginia and Maryland from the English; establish a trade treaty including a reduction in customs duties with Spain, which is the most advantageous coun­ try for French trade; reduce interest on money; associate nobles with commerce, because nothing “would encourage the nation more to go into trade than to see the greatest lords of the Kingdom learn about it and to sometimes risk part of the sur­ plus of their property with it” (1993, 12). The science of commerce is also a reflection on greater freedom in the organisa­ tion of the domestic economy. This is expressed in the Mémoire sur les communau­ tés (1753) concerning the Lyon silk trade. Here, Gournay pleads for “liberty and competition”, arguing that this industry would be more competitive if it employed more workers with fewer regulations and removed two harmful monopolies – that of manufacturers and that of workers – preventing it from competing with the free English and Dutch silk trade (1993, 23–4). The subject is generalised in the Mémoire sur la contrebande (1753): We do not find gold and silver like the Spaniards by digging into the earth. So we can only attract it through labour; or we will enrich ourselves whenever 17 See also Gournay ([c. 1752] 1983, 425).

Science of trade and “commerce politique” 77 we are put in a position to work more easily and more cheaply than any other nation in Europe. (Gournay 1993, 33) It is in this memoir that he concludes with a phrase that has become famous, “lais­ ser faire, laisser passer”. “These few words, laisser faire and laisser passer, being two continual sources of actions, would therefore be for us two continual sources of wealth” (in Gournay 1993, 34). As the preceding pages show, this phrase has, however, a less radical significance than in Pierre de Boisguilbert or, later, in A.R.J. Turgot, whatever the latter suggested in the eulogy he wrote on the death of Gournay. It should be noted that nowhere does Gournay make major developments in the economy and domestic circulation. He endorses the idea that greater circulation requires a reduction in domestic customs duties: the corn trade, he notes, is free in England and hampered in France, even from one province to another (1993, 61). He acknowledges, without dwelling on it, that “agriculture and trade [are] the only two sources of wealth in any State whatsoever” (1993, 44) and that two classes of men, labourers and people from industry and trade must be encouraged. Unlike Melon, who pointed to the fraudulent greed of traders, he complains that their merit is not sufficiently recognised: their interest is hardly different from that of the nation. “Europe is becoming a commercial area, sovereigns need traders”, he wrote to Trudaine. This is why the former must do “to attract men to trade and to keep them there what they have done to attract men to the military state and to keep them there” (10 April 1754, in Gournay 1993, 192). The best way to promote trade is to involve “the high nobility and the most dis­ tinguished men of the robe” (1993, 12). The idea of a “trading nobility” (“noblesse commerçante”), contrary to Montesquieu’s position, shows Gournay that com­ merce has no constitutional definition and no corrupting effect on the monarchy. And if, he concedes, monarchies are less sensitive to the spirit and the principles of commerce than republics, once initiated by traders, monarchs will have a much easier time than republics to extend and support their commerce, “because it is easier for them to remove the obstacles that delay its progress and destroy false maxims” (Gournay c.1752 [1983], 353). 5.

Forbonnais and “commerce politique”

In Un extrait chapitre par chapitre du livre de L’Esprit des Loix (1753, 21), Fran­ çois Véron de Forbonnais addresses a similar criticism to Montesquieu: circum­ stances, not the constitutions, explain the rise of the œconomical trade in the Dutch Republic and its weak development in the French monarchy. In his Élémens du commerce (1754),18 he groups together under the term “political commerce” any

18 The book partly consists in a republication of texts published in Diderot and d’Alembert’s Encyclo­ pédie ou dictionnaire raisonné des sciences, des arts et des métiers.

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activity giving rise to a circulation primarily of goods, but also of money, observed from the point of view of the nation and contributing to the political interests of that nation. Trade and the inequality of nations

Forbonnais’s reflection on commerce begins with a historical overview aiming at showing that this essential activity is not unequal by nature but made so by the course of events. According to the tradition also borrowed by Boisguilbert, Forbonnais goes back to biblical times. The first era of commerce was consubstan­ tial with the specialisation of occupations: Cain was a cultivator, Abel a shepherd and Tubalcain a blacksmith. Exchanges were made in kind, “all men were equal, and each, through his labour, obtained the equivalent of the help that he expected from others” (Forbonnais 1754 I, 8). This first era of “innocence and peace” disap­ peared under the effect of the increase in the population, which made exchange in kind impracticable, and the appearance of private property, which created inequal­ ity amongst men, differentiation of their needs and their consumption. Moreover, this era had become incompatible with “the weakness and the corruption of their nature”, in particular their “greed” (1754 I, 225–6, 10). The second era opened with the birth of the States and the establishment of legislation, whose purpose was to confirm the actual inequality of men and simul­ taneously to limit its excesses. Two forms of wealth appeared: real wealth – natural (agricultural products) or artificial (manufactures) – and relative or conventional wealth (coined metals). As with Cantillon and Montesquieu, this second era was characterised by the confrontation of large States practising a very extended domestic trade of their productions, including luxury, and small infertile States, turned towards the sea, engaging in the œconomical trade (1754 I, 13). This second era was followed by several others, in which the small States found themselves alternately subject to the large ones, then emancipated from these. This explains the formation of ancient empires (Assyria, Babylonia and Persia) and, at their margins, that of trading cities (Phoenicia, Carthage and Greece) open to the outside and tending, through their œconomical trade, to gradually free themselves from their tutelage. The third era was characterised by the establishment of new empires (Macedonian, Roman and Byzantine), again subjugating the trading cities. The fourth era saw the fall of these empires and the rise of new trading cities (Italy, Flanders and Hansa) competing for control of the sea. On the other hand, the fifth era showed the return of territorial empires (Spain and Portugal) with the discovery of West Indies, then the liberation of the Netherlands, enriched by its œconomical trade, and the rise in power of England, thanks to the export of its manufacturing, its fishing, and to its powerful navy. The sixth and final era is that of the accession of a great trading State, France. In this new situation, “each State in Europe has been aware of the interests of commerce, and seeks to extend them, respectively to its strengths or those of its neighbours” (1754 I, 42). The final two eras are noticeable: they illustrate a change in the pendulum swing between mercenarisation and the emancipation of trading States. The fifth era does indeed present an anomaly insofar as England is not, like the Netherlands, a small

Science of trade and “commerce politique” 79 and infertile State forced to engage in the carriage trade, but, on the contrary, a powerful, populous, industrious and commercial state, competing with the latter for the empire of the sea. The sixth era confirms the decline of territorial empires in Europe and shows that a great monarchical State can become a trading state. The lessons of the English science of trade

Forbonnais takes from the English science of trade the list of principles for a favourable balance of trade (1754, I, 51–2): export the superfluities; manufacture the superfluous products of the land; only import foreign raw materials to rework and resell them abroad; do not import any foreign manufacture that harms those of the country; do not import any pure luxuries; import foreign goods for re-export; and freight foreign goods on the country’s ships. By accepting these principles, he is thus led to think that each State should encourage its people to consume less foreign manufacturing and, to this end, establish import duties or prohibitions. But, if commerce is a means by which a nation seeks to acquire superiority over other nations, it also requires that other nations, despite their disadvantage, continue to trade with the advantaged nation and not retaliate (1754, I, 252). Forbonnais, fol­ lowing Melon, finds that this ambivalence of commerce is summed up in two of the four fundamental points of commerce set out by Child: “make it our interest to trade” and “make it the interest of other Nations to trade with us” (1754, II, 249). Forbonnais admits that England increased its power through the Navigation Act, but he immediately remarks that, if all trading nations had applied the same meas­ ure, the English nation would have “lost many useful branches of its commerce”. Today, he wrote (1754, I, 325), “the people are too enlightened on the interests of commerce for any of them to dare to undertake such a vigorous operation.” Competition is a more efficient way of acquiring superiority in seafaring and trade, as in the domestic corn trade: “Competition produces abundance, and this cheap food, raw materials, artisans, money. Competition is one of the important princi­ ples of commerce, and a considerable part of liberty” (1754, I, 63; 131). Liberty, understood here as free access, does not prevent moderate restrictions: it “consists only in easily carrying out the trade which the well understood general interest of society allows” (1754, I, 79). Here, we find a distinction common to Melon and Montesquieu between liberty and licence. These well-understood notions of competition and liberty should lead nations to conceive that their interest is not to interrupt trade, which is the means of their power and that, henceforth, “the balance of trade is truly the balance of power” (1754, I, 90).19 Economic superiority and decadence

When Forbonnais writes that “the real wealth of a nation is at its highest degree when it has no recourse to others for its needs” (1754, I, 54), he does not mean that this high degree of wealth leads to a withdrawal into self-sufficiency, but rather 19 See Demals and Hyard (2015). See also Alimento (2007, 2019).

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to a situation where the nation can do without others without them being able to do without it. He insists on the necessity for a prosperous nation not to give up its foreign trade if it is profitable. The wealth which it enjoys can certainly place it in a situation where it no longer needs to import, but it remains vital for it to continu­ ously support its agriculture and its manufacturing in order to export products and, in return, to obtain relative wealth (1754, I, 59–60). Equipped with a productive agriculture, this nation must continuously make manufactures giving new forms to raw materials, maintain a growing population thanks to these, and create desires for these new forms by considering luxury, not as a vice but as an increase in public wealth, in order to generate new trades on these and “to continually attract new money” (1754, II, 115; 121). Taking up an old tradition, Forbonnais assumes that there is a “natural order” and a “natural circulation” of money specific to each nation, that each nation should try to maintain or regain. Natural circulation20 is a situation in which the sole func­ tion of the money is to represent and circulate goods (unit of account, medium of exchange): the quantities of goods and money are in “perfect competition” or in an “exact balance”, and no one is a borrower or a lender, but merely a worker, a trader or a landowner. As long as this circulation lasts, adds Forbonnais, men will be “happy” and their nation “very flourishing”, whatever the quantity of money (1754, II, 92–3). In a description very close to that of Cantillon, Forbonnais places at the pinnacle of this circulation the landowner, who is in a way the work provider and the owner of the work of those who consume the products of his land: he is the “creditor of all” (1754, II, 234). Next comes the trader, also a work provider, and then all kinds of workers. Natural circulation is interrupted when money departs from trade – that is, it is held for itself, with its function as a store of value then prevailing – because of the “mistrust” or the “greed” of the owners of money (1754, II, 97; 103). As the quantity of money in circulation tightens, compared to the quantities of exist­ ing commodities, the balance leans in favour of money, circulation diverts from its natural order, and slows down. The increasing scarcity of money is therefore harmful. To compensate for this, money can return to circulation by means of loans, but then the owners of money, who have become lenders, will claim inter­ est or profit, the amount of which will be “in proportion to the borrower’s need, the benefit that can be made from the money, the risk incurred by the lender” (1754, II, 95). This practice can lead to abuses – prohibitive rates – that the leg­ islator must prevent. Conversely, an increased amount of money from a favourable trade balance is beneficial if it spreads imperceptibly and continuously to all parts of the body of the nation. It then means that “circulation is brought closer to its natural order” (1754, II, 113, 110), that there is less mistrust, fewer borrowers and more traders: money, spreading imperceptibly in the country, causes a fall in the interest rate and an increase in domestic prices that can be tempered, if there is greater competition, 20 On this concept, see in particular van den Berg (2019, 1125–32).

Science of trade and “commerce politique” 81 including in labour, through an increase in production. Foreign trade thus reinvig­ orates the whole political body by the “shock” that the new money gives to circula­ tion. But this trade should continue (otherwise circulation would slow down) and money should not depart from this (which would increase the interest rate). Forbonnais is then confronted by the hypothesis of foreign trade destroying itself by seeking to continuously attract precious metals (1754, II, 121), which he probably draws from reading two essays by David Hume (1711–1776), “Of Money” and “Of the Balance of Trade” (published in 1753 and translated into French the following year), and which he explicitly attributes to this author in a memoir dated 1755.21 According to this hypothesis, if a new amount of money introduced massively into circulation raised the prices of national commodities too much relative to foreign prices, then foreign trade would diminish, no longer reinvigorate the political body, and would even cause a reversal of the balance of trade and an outflow of specie. But, objects Forbonnais, supposing that foreign trade diminishes, or even that it dies out, that the country has a high degree of wealth and is self-sufficient, its circula­ tion would certainly not increase, but it would nevertheless not be weakened (1754, II, 122). This country would be “happy” without foreign trade, it would no longer suffer the cyclical effects, as long as its population “did not exceed the propor­ tion of land”, “the objective of the legislator would be fulfilled” – but, Forbonnais adds (1754, II, 123), “men have not yet been innocent enough to deserve such a profound peace from heaven and such a constant concatenation of prosperity.” In the 1755 memoir (1755a), he disputes another of Hume’s points of reasoning, that of proportionality – a deflation proportional to the amount of money flowing back abroad and inflation proportional to the amount of money flowing into the country – which the Scottish philosopher associates with a cyclical vision of trade alternating the phases of expansion and decline. Forbonnais retorts that the effects are not necessarily proportional: an outflow of money can be offset by the circu­ lation of credit papers and the inflation caused by an inflow of money, occurring gradually, can easily be moderated. Hume’s hypothesis is not plausible. It may be assumed that a country that has reached a high level of wealth does not abruptly interrupt its foreign trade and still finds an advantage to attract money by lending at interest to foreign nations (1754, II, 125) – not to mention the political advantage that can be drawn from it: “it is interesting to deprive one’s rivals from the means to become powerful, since this is to gain relative strength” (1754, II, 125). Forbonnais continues this debate in Principes et observations économiques (1767). In particular, he confirms the asser­ tion by which a nation that has reached its highest degree of prosperity can do with­ out the labour of others as much as possible without, however, breaking off trade (1767, I, 55): a rich and self-sufficient nation can, indeed, do without the trade of goods with its neighbours without provoking their right of reciprocity, while at the same time benefiting from a trade in money, namely by lending the capital that it 21 See Sonenscher (2007, 181–6), Charles (2008, 192–3), Hont (2008, 269–70) and Demals (2018).

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would have sufficiently amassed to poorer nations in return for the interests that it would subsequently bring into its own internal circulation. This nation would thus continue to grow richer, without engaging in foreign trade in goods and without depending on the labour of others. It would make borrowing nations its “slaves”, having an infallible means of disrupting their circulation by suddenly withdrawing its capital (1754, II, 129–30, 1767, I, 137, 146). 6.

Concluding remarks

The expression “political commerce” used by Forbonnais suggests a dual impera­ tive: that, for a State which has in mind the general interest, to base its power on its foreign trade and that, for the legislator of this State, to have an enlightened knowl­ edge of this unstable and uncertain field, if it wants to achieve a high degree of power and, above all, to keep it. Indeed, Melon (1736, 394–6) notes that, although the legislator possesses knowledge of domestic trade – he can in particular rem­ edy food shortages by freeing the corn market, preventing the depopulation of the countryside, facilitating the circulation of commodities in the nation, etc. – he does not necessarily have that of foreign trade: in this field “the Legislator can never, with the greatest lights, ensure success.” Melon (1736, 75) sees the instability and uncertainty of foreign trade as an effect of the “jealousy of nations”. Forbonnais (1754, II, 123, 1755b, 4) interprets these as a consequence of “human vices” and the “passions” which divide individuals as well as nations, while Cantillon ([1755] 1931, 47–51; 29) relates them to the activities of entrepreneurs who behave “at a risk”, without knowing if they will derive a profit from their undertaking, but mainly to the “Humours and Fancies of men”, particularly those of the prince and landowners. Melon distinguishes three subjects of the legislation on trade: the land that must be made more productive; the population that must be employed, in proportion to the progress of agriculture, to make constantly new manufactured goods; finally, the money that must be adjusted to the circulation of goods. Cantillon ([1755] 1931, 201) also recognises that land is productive “according to the fertility of the soil and the industry of the inhabitants” and makes the product of land and labour the source of the wealth of a nation. It is even this product or its equivalent in pre­ cious metals that, through its trade in works and in manufactures, a nation seeks to obtain from abroad. Forbonnais (1755b, 14) also observes that “a fertile country will be all the less cultivated and populated as it will sell less of the products of its land to Foreigners.” The amount of fertile land, the amount of workers and the amount of money which flows in make it possible to distinguish two types of States in their power relations: on the one hand, the large territorial States, such as the island of corn described by Melon, or England which, according to Forbonnais, has been the most successful in turning its agriculture and its industry towards foreign trade; on the other hand, small States which also seek power without possessing sufficient land and the necessary population.

Science of trade and “commerce politique” 83 Can all nations benefit from foreign trade? Montesquieu gives a negative response: those who lack everything are too poor and too dependent to enter this trade. Melon argues that large, populous and fertile States naturally claim superior power, because they are the masters of the subsistence of small States, on condition, of course, that they are well administered. However, Cantillon ([1755] 1931, 85; 233) observes that the naval superiority of the small Dutch State, its fishing and its manufacturing, gave it a commercial advantage and allowed a larger population to live comfortably “at the expense of Foreigners”, namely, large States. However, no position is taken for granted. As power relations are unstable, any State must know with which State to trade and how to avoid being “the dupe of another in Trade” (Cantillon [1755] 1931, 233). In the same way, Forbonnais (1754, I, 252) empha­ sised the necessary political acumen of the legislator consisting in seeking superi­ ority of power without attracting reprisals from these rivals. Although all agree on the more favourable situation of a large State, Montesquieu’s position is specific. By associating the luxury trade with the large monarchical States and the œconomical trade with the small republics, the philosopher is led to argue that monarchical France has a vested interest in obtaining supplies from the Dutch “general store”, rather than going to find what it needs itself in distant countries (Montesquieu 1964, 889). Melon, Cantillon, Gournay and Forbonnais were opposed to this policy, which, according to them, made France dependent on foreign shipping. Does the superiority of power last? All authors have in mind the decadence of the Roman Empire, that of the Spanish Empire, and that of the trading republics in the modern era. All are aware, to varying degrees, of the difficulty of sustainably maintaining the high level of power acquired by foreign trade and all have a cycli­ cal view of enrichment. Montesquieu (1964, 193) wrote that “in Europe, prosperity cannot be permanent anywhere . . . there must be a continual variation in power.” Cantillon also thought that decline is inevitable, but he pointed out that large, welladministered States are more likely to regain their lost power than trading repub­ lics. Likewise, Forbonnais suggests that a large State that has achieved the highest level of prosperity has the means to delay its decline in the long term. The authors more or less share the idea that, in a world that has become com­ mercial, international markets have their own movement and their “altercations” (Cantillon [1755] 1931, 163), which the legislator must take into account if he wants to avoid his decisions being futile or disastrous and that the “legal con­ straint . . . only embarrasses trade” (Cantillon [1755] 1931, 221). Montesquieu describes these markets as so many forces capable of limiting the sovereign’s acts of authority and moderating his interventions. It follows that commerce is gener­ ally presented as a world where liberty should prevail, but a liberty accompanied by protection, because absolute liberty is impracticable when the degree of indus­ try is not equal in nations. For Forbonnais (1755b, 53), foreign trade is undoubtedly an expression of the rivalry of nations, but it can also be considered as a “union of governments”, namely as a conjunction of nations agreeing to trade without des­ potism. In the same spirit as Melon, who criticised the English claim to universal trade, Forbonnais (1755b, 68) supported the idea that, just as European nations

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have been able to gradually find a balance on land by rejecting the spirit of con­ quest, likewise they should find a “balance on the sea” (“équilibre maritime”), namely the balance between trading and seafaring nations, the proportions of each of which would have to be fixed. Each nation would have a share of trade, a “share of power” (“portion de force”) indicated by its “natural commerce”. References Alimento, Antonella. 2007. “Entre animosité nationale et rivalité d’émulation: la position de Véron de Forbonnais face à la compétition anglaise”. In Manuella Albertone (ed.), Governare il mondo. Milan: Feltrinelli editore, pp. 125–48. Alimento, Antonella. 2019. “Between mercantilism and physiocracy: Forbonnais’s ‘Est modus in Rebus’ Vision”. In Steven Kaplan and Sophus Reinert (eds), The Economic Turn. Recasting Political Economy in Enlightenment Europe. London and New York: Anthem Press, pp. 169–92. Blaug, Mark. [1962] 1968. Economic Theory in Retrospect. Homewood, IL: Richard D. Irwin. Bordo, Michael David. 1983. “Some aspects of the monetary economics of Cantillon”. Jour­ nal of Monetary Economics, 12 (2), 235–58. Cantillon, Richard. [1755] 1931. Essai sur la nature du commerce en général. London: Fletcher Gyles. English translation by Henry Higgs, in R. Cantillon. Essai sur la nature du commerce en général. London: Macmillan. Charles, Loïc. 2008. “French ‘new politics’ and the dissemination of David Hume’s Politi­ cal Discourses on the Continent”. In Carl Wennerlind and Margaret Schabas (eds), David Hume’s Political Economy. London and New York: Routledge, pp. 181–202. Charles, Loïc, Frédéric Lefebvre, and Christine Théré (eds). 2011. Le cercle de Vincent de Gournay. Savoirs économiques et pratiques administratives en France au milieu du xviii e siècle. Paris: INED. Child, Josiah. [1693] 1698. A New Discourse of Trade. London: T. Sowle. Demals, Thierry. 2016. “Mercantilism and the science of trade”. In Gilbert Faccarello and Heinz D. Kurz (eds), Handbook on the History of Economic Analysis, Vol. II, Schools of Thought in Economics. Cheltenham: Edward Elgar, pp. 52–74. Demals, Thierry. 2018. “A Tory outré? Le Blanc and Forbonnais readers of Hume?”. In José-Luis Cardoso, Heinz Kurz, and Philippe Steiner (eds), Economic Analysis in Histori­ cal Perspectives. London: Routledge, pp. 93–102. Demals, Thierry, and Alexandra Hyard. 2015. “Forbonnais, the two balances and the Écono­ mistes”. The European Journal of the History of Economic Thought, 22 (3), 445–72. Forbonnais: see Véron Duverger de Forbonnais. Gillard, Lucien. 2011. “Le statut de la monnaie dans le Traité de Montchrestien et dans l’Essai de Cantillon”. In Alain Guéry (ed.), Montchrestien et Cantillon et l’émergence d’une pensée économique. Lyon: ENS Éditions, pp. 333–70. Gournay: see Vincent de Gournay. Hont, Istvan. 2008. “ ‘The rich and poor country debate’ revisited: the Irish origins and French reception of the Hume paradox”. In Carl Wennerlind and Margaret Schabas (eds), David Hume’s Political Economy. London and New York: Routledge, pp. 243–323. Larrère, Catherine. 2003–2004. “Commerce et finances dans les Pensées. Questions de méthode”. Revue Montesquieu, 7, 41–56. Larrère, Catherine. 2011. “Système de l’intérêt et science du commerce: François Véron de Forbonnais, lecteur de Montesquieu”. In Loïc Charles, Frédéric Lefebvre, and Christine

Science of trade and “commerce politique” 85 Théré (eds), Le cercle de Vincent de Gournay. Savoirs économiques et pratiques adminis­ tratives en France au milieu du xviii e siècle. Paris: INED, pp. 259–80. Larrère, Catherine. 2019. “Le paradigme du doux commerce au XVIIIe siècle: le commerce et les commerçants”. The Tocqueville Review, 40 (2), 49–64. Law, John. [1705] 1934. “Money and trade considered”. In Paul Harsin (ed.), John Law. Œuvres complètes, vol. 1. Paris: Sirey, pp. 2–165. Le Maux, Laurent. 2014. “Cantillon and Hume on money and banking: The foundations of two theoretical traditions”. Journal of Economic Surveys, 28 (5), 956–70. Locke, John. [1692] 1991. “Some considerations of lowering of interest, and raising the value of money”. In Patrick Hyde Smith (ed.), Locke on Money, vol. 1. Oxford: Clarendon Press, pp. 207–342. Melon, Jean-François. 1736. Essai politique sur le commerce, 3rd ed., n.p. Melon, Jean-François. 1983. Opere, Onofrio Nicastro and Severina Perone (eds). Pisa: Libreria Testi Universitari. Montesquieu: see Secondat de Montesquieu. Murphy, Antoin E. 1986. Richard Cantillon, Entrepreneur and Economist. Oxford: Claren­ don Press. Murphy, Antoin E. 1987. “Le développement des idées économiques en France”. Revue d’histoire moderne et contemporaine, 33 (octobre-décembre), 521–41. Secondat de Montesquieu, Charles Louis de. 1964. Œuvres complètes, Daniel Oster (ed.). Paris: Éditions du Seuil. Sonenscher, Michael. 2007. Before the Deluge. Princeton, NJ: Princeton University Press. Steiner, Philippe. 2011. “Commerce, commerce politique”. In Loïc Charles, Frédéric Lefeb­ vre, and Christine Théré (eds), Le cercle de Vincent de Gournay. Savoirs économiques et pratiques administratives en France au milieu du XVIIIe siècle. Paris: INED, pp. 179–200. Van den Berg, Richard. 2019. “Circular Reasoning, Forbonnais and the Intricate History of Circular Flow Analysis in the 1750s”. The European Journal of the History of Economic Thought, 26 (6), 1107–52. Véron Duverger de Forbonnais, François. 1753. “Un extrait chapitre par chapitre du livre de l’Esprit des loix”. In Opuscules de M. F***, vol. 3. Amsterdam: Arkstée and Merkus. Véron Duverger de Forbonnais, François. 1754. Elémens du commerce, 1st ed. Paris: Brias­ son, David, Le Breton and Durand. Véron Duverger de Forbonnais, François. 1755a. Réfutation de quelques articles des Dis­ cours politiques de M. David Hume traduits de l’Anglois l’année dernière 1754. Paris: Bibliothèque de l’Arsenal, Ms. 4591, pp. 181–205. Véron Duverger de Forbonnais, François. 1755b. Réflexions sur la nécessité de comprendre l’étude du commerce et des finances dans celle de la politique. Dresde and Paris: Estienne. Véron Duverger de Forbonnais, François. 1767. Principes et observations économiques. Amsterdam: Marc Michel Rey. Vincent de Gournay, Jacques Claude Marie. [c.1752] 1983. Traités sur le commerce de Josiah Child avec les remarques inédites de Vincent de Gournay, Takumi Tsuda (ed.). Tokyo: Kinokuniya. Vincent de Gournay, Jacques Claude Marie. 1993. Mémoires et lettres, Takumi Tsuda (ed.). Tokyo: Kinokuniya. Voltaire [François-Marie Arouet, said]. [1738] 1836. “Observations sur MM. Jean Lass, Melon et Dutot sur le commerce, le luxe, les monnaies, et les impôts”. In Voltaire, Œuvres complètes, vol. 5. Paris: Furne, pp. 385–90.

5

François Quesnay and Physiocracy Thierry Demals and Philippe Steiner

The current of thought called physiocracy is closely tied to the name of François Quesnay (1694–1774), a former surgeon, then physician, who turned self-taught economist in the middle of the eighteenth century. However, physiocracy cannot be limited to Quesnay himself since many authors gathered around him from the 1750s and into the 1760s: this group of devotees and disciples developed the eco­ nomic and political ideas that were at the core of the physiocratic movement, in France and in many other European countries. At that time, these authors were known as the “économistes” or the “philosophes économistes”. 1.

Setting the stage

The classical account of this movement can still be found in Georges Weulersse’s series of books, covering the movement’s history from the first papers written by Quesnay in the Encyclopédie, ou Dictionnaire raisonné des sciences, des arts et des métiers, to the first phase of the French Revolution (Weulersse 1910, 1950, 1959, 1985). However, in this chapter, we focus on a shorter period of time: the two initial stages of the development of the school to which Loïc Charles and Christine Théré have recently drawn attention (2008, 2011, 2019). During the first stage, Quesnay was the key character in the sense that he personally encouraged other people to spread his own ideas, since as a member of the royal Court in Versailles – he was the personal physician of Madame de Pompadour, the favourite of King Louis XV – he thought it much better to pub­ lish his ideas under the name of other people. Quesnay created a “writing work­ shop” in which he explained his economic thinking to the members of his group and carefully supervised their writings. At this time, the group was small: Victor Riqueti (1715–1789), marquis de Mirabeau, Pierre Samuel Du Pont (1739–1817) and Louis-Paul Abeille (1719–1807); together with some contributors who were relatively minor, but important with regard to specific topics, such as husbandry (Henry Pattullo, 1725–1784) or calculation (Charles de Butré, 1724–1805). PierrePaul Le Mercier de la Rivière (1719–1801) joined this workshop after coming back from his Intendance in the French West Indies. During this first period, intel­ lectual activity was limited and only a few texts were produced, mainly theoreti­ cal works: besides Quesnay’s own works on the various versions of the Tableau DOI: 10.4324/9780429202414-5

François Quesnay and Physiocracy 87 Économique (1758–60), the workshop produced Mirabeau’s books (Théorie de l’impôt, 1760, and Philosophie rurale, 1763 with an important contribution by Quesnay); Du Pont’s essay on the international grain trade (De l’importation et de l’exportation des grains, 1764); and Le Mercier de la Rivière’s book (L’ordre naturel et essentiel des sociétés politiques, 1767). That these works had a clearly theoretical aspect is illustrated by the role Quesnay gave to calculations, and even if Mirabeau complained that he could not understand half of them, Quesnay maintained that these were key elements of his intellectual strategy. During this period, Quesnay was seen as an “homme de lettres”, organising philosophical din­ ners attended by many influential men of letters and administrators – but he was unknown to a larger public. In 1764, this mode of work ended, mainly because Quesnay lost his strong con­ nection with the King following the death of Madame de Pompadour. Visiting him in his Versailles apartment was no longer an advisable move for those looking for a position in line with their ambition. Quesnay was thus no longer able to attract new people, and the workshop was re-formed in Mirabeau’s Paris salon. The rate of book production accelerated to about a dozen texts a year (Charles and Théré 2008, 34). Publications were no longer submitted to Quesnay for his scrutiny, they were instead read and discussed during Mirabeau’s “mardis économiques”. It could even happen that some of these writings did not find favour with Quesnay, being designed for a larger public than the audience he intended to address – one example of this would be Mirabeau’s Leçons économiques (1770), which was published nonetheless. It was the time of the foundation of physiocracy, notably after the publication by Du Pont of a collection of essays by Quesnay under that very title (Physiocratie, 1768–69). New members were attracted, such as Nicolas Baudeau (1730–1792), J.-N.-M. Guérineau de Saint-Péravy (1732–1789) and GuillaumeFrançois Le Trosne (1728–1780). It was also the time for doctrinal diffusion. Mirabeau’s salon was suited to that purpose, and so were the journals edited by some of the group’s members: Le Journal d’agriculture, du commerce et des finances, edited by Du Pont from 1765 to 1766, and Les Éphémérides du citoyen, edited by Baudeau from 1765 to 1768 and by Du Pont from 1768 to 1772. In the following pages, we first explain the philosophical underpinnings of Quesnay’s thought and then the physiocratic conception of political economy – a part of what was then known as the “sciences morales et politiques” (moral and political sciences). We then deal with Quesnay’s first economic writings (mainly those which were published or intended to be published in the Encyclopédie), with the various versions of the “Tableau Économique” (“Economic Table”), and finally with physiocratic fiscal policy. We conclude with some aspects of the reception of the physiocratic view of political economy in the course of the nineteenth century. 2. Quesnay’s “philosophie économique”: sensationism, the legislator and “gouvernement économique” As with “philosophie économique”, political economy is a discourse involving a general view of man, society and politics, and it is not surprising to find Quesnay

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making explicit philosophical statements when he began his transition from medi­ cine to political economy. A sensationist theory of knowledge

The first constitutive part of Quesnay’s “philosophie économique” is straightfor­ ward, since he was a follower of Étienne Bonnot de Condillac’s sensationist phi­ losophy. Clear expressions of this philosophy are the second edition of Quesnay’s final medical text (Essai sur l’œconomie animale 1747) and the article “Évidence” (1756a), which was the first contribution he wrote for the Encyclopédie edited by Denis Diderot and Jean Le Rond d’Alembert. In his Essay Concerning Human Understanding (1690), John Locke opened the way to an empiricist conception of knowledge. An important aim of his book was to criticise the theory of innate ideas: his theory of knowledge altered the focus of enquiry, since the issue was now to understand the actual functioning of the human mind. Quesnay adopted this perspective, also expounded by Condillac in several important books published during the 1740s and 1750s. In 1747, Quesnay made clear that he rejected Nicolas Malebranche’s system (Quesnay 1747, III, 213–18) and endorsed instead the sensationist approach, according to which general ideas resulted from sensations (or perceptions) and attention, the active faculty of the human mind (Quesnay 1747, III, 211, 251). However, Quesnay thought that Locke’s theory of ideas was confusing and imprecise. Thus, while retaining a sensationist point of departure, he retained much of Malebranche’s theory of ideas. Ten years later, he developed his view in the entry “Évidence”: There is a full correspondence between the body and the sensations coming from it . . . out of which results an “évidence”1 or a certainty of our knowl­ edge that we cannot reject. . . . In the natural order, this correspondence deter­ mines the rules of our behaviour, our interests, our science, our happiness, our misfortune, and the motives that conduct our will. (Quesnay 1756a, 69, §24) However, if sensations provided by the body and the active faculties of the mind are the two basic elements for the understanding of human behaviour, Quesnay considered that the mind makes a significant distinction between humans and animals: between simple freedom or “liberté animale”, and enlightened freedom or “liberté d’intelligence” (Quesnay 1747, III, 278, 350–60; 1756a, 83, §52). Men are not machines, they are not passively driven by sensations (1747, III, 279). Since reason is defined as “the human capacity to reach truth in human judgment and to choose the best, thanks to the intellectual faculties of the mind” (1747, III, 312), and freedom as “the power to examine in order to determine, according to reason, whether to act or not” (1747, III, 350), enlightened freedom, or rational action, is the result of the active faculties of the mind when various 1 The French word “évidence” is best translated by “self-evidence” or “obviousness”.

François Quesnay and Physiocracy 89 motives are examined in order to determine the best action in a given context. What distinguishes a rational actor is the discovery of a best outcome thanks to his attention, his factual knowledge and his ability to grasp truth or “évidence”. The problem of a merchant who has to choose between two goods is an interest­ ing illustration of this point: at first sight, one commodity appears more profitable; though the fear to be mistaken brings him to examine the price of each commodity, and the extra expenses that they require, the possible loss attached to them, their saleabil­ ity, their selling prices; by calculation he evaluates all these items and after a comparison, he chooses the more advantageous commodity; this merchant is thus following his desire to enrich himself; then he deliberates in order to avoid a mistake; finally, he chooses the most profitable commodity and often not the one that initially attracted him. (1747, III, 350–51) We can thus find in Quesnay a theory of rational economic behaviour: enlight­ ened freedom calculates what is the best outcome from a given resource. However, Quesnay considers that men are often driven by their simple freedom or common sense: they do not always scrutinise their basic sensations, applying attention to determine what the best action would be – in many cases, however, common sense decisions are not only good but provide the same result as enlightened reason (1747, III, 266–7). Agency through interested behaviour

Quesnay’s sensationist approach to human knowledge thus offers a direct path to interested behaviour. However, this approach must be qualified by his belief in a “natural order”, including a “natural economic order” created by God, that men can understand. This means that, while human behaviour is driven by interest and more particularly by economic interest, people can also be governed through their inter­ est. On this basis, Quesnay and the Physiocrats advanced a view of the function­ ing and management of the economy in which the legislator’s task is to arrive at knowledge of the natural order through his command of the Tableau Économique, the functioning of the circular flow of wealth and the interested behaviour of the different classes of the kingdom. This part of Quesnay’s philosophie économique is rather more demanding since he never directly addressed it in a book or an article. Nevertheless, the importance given to interested behaviour is central to Quesnay’s “Maximes générales du gou­ vernement économique”, a major text written when he had fully developed his system of “gouvernement économique” (economic government). dividing societies into various orders of citizens, some of them having a sov­ ereign authority upon the others, destroys the general interest of the nation and introduces a conflict of interest between the different classes of citizens: such a division would turn upside down the order of the government of an

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Against Montesquieu’s views on a constitutional machinery in which distinct powers act as a check on each other, thus acknowledging the existence of differ­ ent interest groups within society, Quesnay emphasised the need to base political power on the general interest, which is also the particular interest of (enlightened) citizens. This means that economic government should be able to resist the demand of specific groups, and particularly commercial interests. This line of thought became central for Le Mercier de la Rivière when he empha­ sised that there is a common interest between the different parts of a society ruled by laws, in a “natural and essential order” (Le Mercier de la Rivière 1767, 214). Accordingly, he put great emphasis on competition and interested behaviour: he regarded these as the nuts and bolts of economic government which were, referring to Alexander Pope, directly connected to God’s providence, lending an elevated perspective upon interested behaviour and its management: As Pope said, . . . greed that separates the seller and the buyer in their expecta­ tions is precisely what reconciles and brings them together in practice: it is this greed, this desire for enjoyment, which becomes the soul of competition, and puts it in a position to rule despotically over both the sellers and the buyers. (Le Mercier de la Rivière 1767, 365) The legislator and the administration

The third constitutive dimension of Quesnay’s philosophie économique is the the­ ory of the legislator, expressed by Quesnay’s major linguistic innovation, “eco­ nomic government” – there are about 15 occurrences of this phrase in the entries he wrote for the Encyclopédie. It is first associated with the name of Sully2 and the core of physiocratic theory – agriculture: this great minister had grasped the true principles of economic government of the kingdom, establishing the wealth of the king, the strength of the State, the happiness of the people, on the revenue of the land, that is, on agriculture and on foreign trade in its products. (Quesnay 1757a, 183) He then refers to the management of real wealth, the net product generated by agriculture: “economic government must look to the growth and the perpetu­ ation of this revenue, all the other advantages that depend upon it will develop 2 Maximilien de Béthune, duke of Sully (1559–1641), was a minister of King Henri IV and for philoso­ phie économique symbolised a good statesman – and as such contrasted with the alleged bad policy of Jean-Baptiste Colbert (1619–1683), one of the principal ministers of King Louis XIV.

François Quesnay and Physiocracy 91 and sustain themselves” (Quesnay 1757b, 244; see also 220, 256). This is the reason why, in particular, taxes should not encroach on the capital of the farm­ ers: “The most important and inviolable rule of economic government is thus to make sure that taxes do not endanger the security and the progress of agriculture” (Quesnay 1757b, 232). Finally, economic government covers the entire field of political economy.3 The condition of the population and of the employment of men are thus the principal objects of economic government in any State, because it is from the work and industry of men that the fertility of the land stems, as well as the monetary value of its production, and the good use of monetary wealth. Here are the four sources of abundance; they each concur in their mutual growth, but they cannot do so without the general administration of men, of goods, of productions. (Quesnay 1757–1758, 259) The legislator, however, must not be involved with the administration, especially in a highly centralised monarchy (Steiner 2018, 68–74). Administration might seem to be a subordinate part of the machinery of government – when Quesnay wants to give more weight to the subject, it is described as “general” administration (Quesnay 1757–1758, 259) – but it is important in terms of consequences. This is the reason why “the government of the revenues of the nation must not be aban­ doned to the discretion or to the authority of a subaltern and particular administra­ tion” (Quesnay 1757a, 205). Among the reasons behind this lack of confidence in low-level administration is first of all the fear that bad decisions would result from civil servants and clerks being poorly prepared to resist particular interests (Quesnay 1757–1758, 297, 306), and notably the mercantile interest. There is addi­ tionally the substantial cost of administrative mismanagement. It is not so much the excessive gains of the financiers, but the immense amount of salaries paid to the clerks, the injustices and the hindrance in com­ merce, that prevent the beneficial progress that the author imagines. . . . This multitude of clerks employed in the levying of taxes upon goods is in itself a loss of men to the State: all these men paid by the nation do not produce by their work any wealth . . . this expenditure and these men are nothing but a sheer loss to the kingdom. (Quesnay 1757b, 230) However, Quesnay explains that the kingdom can improve if the administration does its proper job when associated with good or economic government: if “bad administration of the kingdom can excessively diminish the revenues of the King”, good administration “can increase these revenues prodigiously” (Quesnay 1757b,

3 Quesnay does not use the phrase political economy, except in the subtitle given to the entries written for the Encyclopédie.

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231). In that case, thanks to its contribution to economic government, the adminis­ tration belongs to the “productive class”, as is the case when landowners manage their property well: Landowners can be considered as men who produce through management and the improvement of their properties; the sovereign himself and his min­ isters contribute directly and generally to the growth of wealth, through the economic government of the State. Upon this depends the prosperity of the nation, but it is necessary that the administration does not lose sight of the true source of the revenues of the kingdom. (Quesnay 1757–1758, 305) Later on, economic government became a central concept, establishing the con­ nection between the economic and political fields. Quesnay made this clear in his “Maximes générales du gouvernement économique d’un royaume agricole”, the last important text that he wrote before turning to his (unsuccessful) essays on mathematics. 3.

Political economy as a moral and political science

Physiocracy thus deals with a large spectrum of topics, from economic theory to morals and politics, an aspect also often criticised by its opponents. When Quesnay and his disciples considered explicitly the way by which an agricultural kingdom should be governed, they relied on the idea that the various classes of the kingdom have the same interest, provided that the policy indicated by the Tableau Économ­ ique is implemented. Even the commercial class would have benefited from it, once the “système des commerçants” is abandoned. On this basis, Quesnay and Le Mercier de la Rivière were able to reject both Montesquieu’s and Rousseau’s views on government and society (Charles and Steiner 1999). On the one hand, Montesquieu proposed building a moderate government following the “checks and balances” system: but this was irrelevant, since this political architecture supposes a difference in the interests of the various classes of the kingdom. Furthermore, instead of relying on reason, Montesquieu’s views were based on the passions of the citizens. On the other hand, Rousseau was in favour of a government relying on the virtue of the citizens, something that was not necessary when, as Quesnay and Le Mercier de la Rivière argued, interested behaviour was the main driving force behind economic and political life. However, in the physiocratic literature, it is possible to find two views on how to conceive the working of a government based on the identity of interests. (i) There was first the “expert” version, endorsed by Quesnay in “Despotisme de la Chine” and by Le Mercier de la Rivière in L’ordre naturel et essentiel des sociétés politiques: according to this view, the King’s decisions should be examined by magistrates in full command of the laws of the natural order, assessing whether these decisions comply with the laws (Le Mercier de la Rivière 1767, 95–109). But the term “despotisme legal” that Quesnay and Le Mercier de la Rivière employed proved extremely counterproductive. As early as 1767, Friedrich Melchior Grimm

François Quesnay and Physiocracy 93 pointed out semantic excess as well as naivety: the belief that the method of “évi­ dence” was a sufficient guarantee for a perfect government in which the sovereign would have nothing more to do. An identical criticism was made in the same year by Rousseau, who compared the government of evidence to a utopia similar to that of the Abbé de Saint-Pierre; and in the following year (1768) in a more detailed way, by Gabriel Bonnot de Mably, who pointed out the limits of a government of reason due to the play of passions, questioning the idea of a social order deriving from the physical order and governed by immutable and natural laws, seeing in legal despotism a despotism of the net product. Béardé de l’Abbaye (1770) found the idea of a despot subject to laws contradictory. Finally, Turgot himself categori­ cally rejected the term and the idea of a tutelary authority which, according to him, dishonoured the physiocratic doctrine, since free men did not need tutors. (ii) For the second view, endorsed by Mirabeau, Du Pont and Le Trosne, the identity of interests was supposed to work at the level of local elected assemblies where land­ owners determine the level of taxes and the administration of the economy. These two approaches are not incompatible, since they both rely on the same hypothesis: the identity of interests. Accordingly, in De l’administration provin­ ciale et de la réforme des impôts (1779), Le Trosne offers a synthesis of the two dif­ ferent strands of the Physiocratic doctrine of taxation, administration and politics. In line with the Physiocratic theory of legal despotism, his solution emphatically proposes an enlightened government, and thus lends an active role to (economic) expertise. However, this top-down system of governance is associated with local administration, as strongly advocated by Mirabeau in his “Mémoire sur les États provinciaux” – published in 1758 the fourth part of L’ami des hommes, and so at the beginning of his intellectual career. The role of this administration would have been to distribute the tax burden among the landowners, whatever their social sta­ tus (nobility, clergy or the third estate). In both views, education, and notably economic education, is a key element of the new political and economic organisation of the nation: the nation should know the general laws of the natural order that evidently render the government clearly the most perfect. The study of human juris­ prudence is not enough for educating statesmen; it is necessary that those intending to work in the administration are obliged to study the natural order most advantageous to men living in society. (Quesnay 1767–1768b, 566) Quesnay expressed the same idea in “Despotisme de la Chine”, when he stressed the role of instruction in the effective functioning of this political system (Quesnay 1767, 1072). Thus instruction and public opinion on the one hand, and identity of interests on the other, were combined to build a political view that could regenerate the kingdom. During the second stage of the development of physiocracy, authors were aligned with this view and attempted to diffuse their broad understanding of politi­ cal economy. This is particularly the case with Baudeau when he converted to physiocracy, and put his journal – Les Éphémérides du citoyen, ou Chronique de

94 Thierry Demals and Philippe Steiner l’esprit national – at the service of the school. This important physiocratic journal for the first time brought together political economy and moral and political sci­ ences, as in the subtitle of the first volume in 1767: Les Éphémérides du citoyen ou bibliothèque raisonnée des sciences morales et politiques. In his introductory text, Baudeau puts forward a series of questions – on the rules of reasonable action, the laws of moral order, the rights and usefulness of the sovereign authority, the formation of the political order, the rules of state administration and the relations between states – before explaining that “the development of and solutions for these great and sublime questions form the moral and political sciences, the most useful and august part of philosophy” (Éphémérides du citoyen, 1767, vol. 1, 6). And it is remarkable to see that when it comes to evaluating the Tableau Économique, this major intellectual construction that modern historians consider to be the foundation of economics, he does so by linking it with the moral and political sciences: The Tableau Économique takes moral and political sciences a long way towards perfection, because it makes up all the rules of the order and all their consequences sensible and palpable. In its wonderful simplicity all the nec­ essarily effective causes of the power of sovereigns, the prosperity of States, the bliss of nations and the general good of humanity are presented openly and placed in their natural order. (Baudeau, Éphémérides du citoyen, 1767, vol. 1, 23–4) With Baudeau, Les Éphémérides du citoyen conveyed the idea of a general social science, of which political economy was a part. But afterwards the phrase lost some of its appeal within the school. Du Pont chose to name Quesnay’s principal texts Physiocratie when he reissued them in 1768. And in the Nouvelles éphémé­ rides du citoyen, published during the brief period when Turgot was Comptroller General of Louis XVI, the subtitle of the publication was changed: the journal was then presented as a “reasoned library of history, morality and politics” (Nouvelles éphémérides du citoyen, vol. 1, 1774), thus losing the more definitive and striking character of its former name. Nevertheless, this approach survived the hollowing out of the school. In 1795, during the French Revolution, a Class of Moral and Political Sciences was created within the new Institut National. This class was short-lived – it was suppressed in 1803 by Buonaparte – but it reappeared in 1832 as the Académie des sciences morales et politiques, under the aegis of François Guizot’s government. The con­ ception was diffused in the course of the nineteenth century to many European countries, including Spain, Belgium and Italy, when physiocracy was no longer an active element in political economy. 4. From the farm to the agricultural nation: the farmer as entrepreneur and the need for perfect freedom of trade It is now time to deal in detail with Quesnay’s theory of economic government. Quesnay wrote most of these economic texts between 1756 and 1768. First, these were articles intended for the Encyclopédie (1756–58), then writings inserted into

François Quesnay and Physiocracy 95 certain works by Mirabeau, such as the Théorie de l’impôt or Philosophie rurale (1760–63), then again, articles published in the Journal de l’agriculture, du com­ merce et des finances or in the work Physiocratie (1765–68). In addition, there are handwritten versions of the Tableau Économique (1758–59). In these various texts, Quesnay refers to few authors, his readings are exclusively in French, for the most part recent (Théré et al. 2005; Longhitano 2012). The following pages examine four themes that run through these texts: (i) the primacy of agriculture in an agricultural nation and the need to promote it; (ii) the critique of the “système des commerçants” and its conception of wealth; (iii) analysis of the “economic machine” (Quesnay 1760, 444) of an agricultural nation, illustrated by the Tableau Économique and (iv) tax theory. Let’s start with the first theme, that is, the primacy of agriculture. Quesnay’s first economic texts, the articles “Fermiers” and “Grains”, appear in Volumes 6 and 7 of the Encyclopédie, respectively, in 1756 and 1757. These articles are part of a set of texts intended for this publication, some of which – the articles “Hommes”, “Impôts” and “Intérêt de l’argent” – were withdrawn by Quesnay when he ceased his collaboration with this dictionary. Essentially, they link the prosperity of an agricultural nation to two priorities: (i) following Boisguilbert, freedom of trade, internal and external; (ii) productive agriculture oriented towards the market and associating two main actors, the landowner and the farmer, for their role, respectively, in the circulation of revenue and in that of productive capital or “advances”. The term “advance” is therefore quite widely used: it signifies a preparatory expenditure, a loaned fund or goods provided in advance, as defined in the Dictionnaire universel du commerce by Jacques Savary des Bruslons (1742). Quesnay gives it an essential role in his theory of economic government: first, because there is no possible recovery for agriculture without the expenditure of the advance fund held by the farmer, and second, because the necessary “protection” of these advances against erratic and arbitrary taxation leads to an original tax theory. The article “Fermiers” examines the accounting of an agricultural settlement according to two possible modes of cultivation: one, more modern, cultivation with horses, and the other, traditional, cultivation with oxen. Cultivation with horses, called “grande culture” (Quesnay 1756b, 139), more productive but also more expensive, is carried on by a farmer, that is to say an “entrepreneur” (Quesnay 1756b, 185), who possesses a fund of advances which he spends productively on seeds, horses and labour wages, in order to obtain a harvest of sufficient value to replenish the spent fund with a profit, and provide a revenue for the landowner and the sovereign. Cultivation with oxen, or “petite culture”, is that of the sharecrop­ per, a peasant with meagre funds, tilling the land thanks to the advances of the landowner who supplies him with seeds and oxen and receives in return a part of the harvest, including the rent and what Quesnay (1756b, 129) calls “intérêts du prix des bestiaux”.4 Quesnay then performs a series of calculations to enlighten

4 The term “intérêt” is here to be taken in one of its old meanings, that of compensation offsetting a cost caused by the use of a fund and aimed at repairing or restoring it. See the Dictionnaire de l’académie française (1694) and infra.

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the landowner on the choice that he should make between these two methods of cultivation, then extrapolates this to the entire territory. His conclusion is clear: it is necessary to extend “grande culture” to all good land. Quesnay thus becomes the apostle of a method of cultivation based on the use of a large fund of advances and hired labour. In this context, the amount of rent is determined by negotia­ tion between the landowner and the farmer. Each of them seeking to satisfy their interest, the farmer only commits on condition that the amount of rent does not encroach on his remuneration and the replenishment of his advances, but competi­ tion in this market ensures that the farmer pays the rent at the market rate. However, neither the farmers nor the “grande culture” that they carry on are sufficient to guarantee abundance: there still needs to be freedom of circulation of agricultural products, of corn in particular, and above all freedom of their foreign trade: It is not simply good or bad harvests that regulate the price of corn; it is mainly the freedom or constraint of the trade of this commodity that decides its value. . . . It would be ignoring the advantages of France to prevent the export of corn for fear of running out, in a kingdom that can produce much more than could be sold abroad. Quesnay 1756b, 149) The article “Fermiers” thus concludes with the need for a “bon prix” (Quesnay 1756b, 140) for corn – a price high enough to compensate the farmer for his operat­ ing expenses with a profit and pay the rent and the tax – and on the imperative of free foreign trade to reach this price level. The purpose of the articles “Grains” and “Hommes” is precisely to demon­ strate by calculation that the regime of free international competition only raises the price of corn moderately and stabilises it by eliminating its extreme variations. A few decades earlier, Boisguilbert had defended the idea that free internal and external trade made it possible to stabilise the price of corn and avoid food crises (Faccarello 1999). Quesnay returns to this question and intends to show that, in the case of “grande culture”, the “bon prix” of corn that is established under the effect of international competition allows the convergence of the interests of buyers and sellers, ensuring at the same time the prosperity of the country and sweeping away the traditional fear of the people, according to which freedom of circulation of agricultural products induces a repletion of their respective markets and an unsus­ tainable rise in prices. To this end, Quesnay draws up a comparative statement of the output and prof­ itability of “grande culture” in two different situations:5 first under a regime of regulation of corn trade (Table 5.1), then under a free regime (Table 5.2). For each regime, the results are examined in five different typical years: those where 5 We use the tables in the article “Hommes” in preference to those in the article “Grains”, because the latter complicate the matter by introducing a variation in output, in addition to the change in regulation of foreign trade. The results are the same but made more complicated by this double modification.

François Quesnay and Physiocracy 97 Table 5.1 Output and profitability in a regime of regulated corn trade Years

Setiers per arpent

Price per setier in £

Total per arpent in £

Cost, taxes and rent per arpent in £

Abundant Good Medium Low Bad Total

7 6 5 4 3 25

10 12 15 20 30 87

70 72 75 80 90 387

74 74 74 74 74 370

Table 5.2 Output and profitability in a regime of free corn trade Years

Setiers per arpent

Price per setier in £

Total per arpent in £

Cost, taxes and rent per arpent in £

Abundant Good Medium Low Bad Total

7 6 5 4 3 25

16 17 18 19 20 90

112 102 90 76 60 440

74 74 74 74 74 370

the physical output of the land (in setiers per acre)6 is bad, low, average, good or finally abundant. The farmer – considered as a producer selling his produc­ tion on the local market – is here in the position of the entrepreneur in the sense of Cantillon ([1755] 1931, 41, 47–9) “working at a risk”, since his costs are certain – capital is advanced – while his profit is uncertain depending on the quan­ tity produced and the market price. He is supposed to sell his entire crop, regard­ less of the quantity, at typical yearly prices, while the consumer is supposed to always ask for the same quantity. The regime of regulated markets is illustrated in Table 5.1. The variation in output over the years (from three to seven setiers per arpent) causes the price of the setier to fluctuate significantly: low in abundant years (£10), it favours the consumer; conversely, very high in a poor year (£30), it favours the farmer, producer and seller. As the cultivation costs are assumed to be fixed (£74 per arpent), the result of the cultivation of an arpent by the farmer is paradoxical: due to the price effects increased by restrictions imposed on foreign trade, the farmer suffers a loss in good and abundant years and he earns only when his harvest is low or bad. In total, over the five typical years, he only earns on average £17 for an investment of £370 (or 4.6%). The interests of the consumer and the producer are opposed, since the former is supplied at a very high price in years where the producer makes its biggest gains and at a low price in years where the producer 6 The setier is a measurement of capacity and the arpent is a measurement of area, measurements that vary depending on the location.

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suffers a loss. This conflict of interest arises from the fact that the market price follows what the literature has called a King-Davenant7 relationship, namely that a reduction in the corn harvest results in a larger proportional increase in its price (Steiner 1994, 1998, 51–6). Under a free trade regime, the situation is radically different (Table 5.2). Quesnay still assumes that the output fluctuates depending on the year, but the prices at which the harvests are sold now vary within much narrower limits (from £16 to £20). The first consequence of this price stabilisation is that the farmer earns more when the harvest is good and abundant: his interest as a producer then coin­ cides with the interest of the consumer. Over the five typical years, the farmer’s profit now amounts to £70 for an investment of £370 (18.9%, i.e. rate of profit four times higher than in the previous situation). Free trade and its corollary – the low price range – therefore have the effect of counteracting the King-Davenant rela­ tionship. Moreover, if the consumer obtains a slightly higher price on the market when the harvest is abundant, he only experiences a smaller increase during bad harvests (+ 25%), much lower than what he experiences in a regulated market regime. Thus, the interests of the consumer and the producer converge. Three questions remain: (i) does not freedom of trade, in spite of everything, favour the producer to the detriment of the consumer? (ii) why does it stabilise the price of corn? and (iii) what is the farmer’s remuneration? In response to the first question, it must be taken into account that Quesnay has no well-defined theory of price formation on the market beyond a few vague formulas, according to which “it is the very needs and quantity of production that decide its market value” (Quesnay 1766b, 958). Aware of this deficiency, he confided to the editors of the Journal de l’agriculture: “I ardently desire that you yourselves or someone else undertake the Essai sur les prix, which you have outlined in your reflections” (Quesnay 1766a, 833). Instead, Quesnay (1757a, 164) introduces two concepts: the “prix commun de l’acheteur” and the “prix commun du vendeur” to compare the situation of each of the two categories of agents over the set of five typical years. (i) The “prix commun de l’acheteur” is the simple average of prices over five years: it shows the average price of a unit of corn for the consumer. Equal to £17.4 in a regulated regime (87/5), it rises to £18 in a free regime (90/5), an increase of 3.4%. (ii) The “prix commun du ven­ deur” is an average of prices weighted by the quantities produced. It indicates the average price at which a unit of corn is sold by the farmer: this price increases from £15.5 in a regulated regime (387/25) to £17.6 in a free regime (440/25), an increase of 14%. The removal of regulations therefore results in only a small increase in the average price for the buyer, but one that is more noticeable for the seller, which allows the prosperity of agriculture and the kingdom. The interests of both are now converging. Hence, the maxim that forms one of the leitmotifs of

7 Named after Gregory King (1648–1712), author of Natural and Political Observations and Conclu­ sions upon the State and Condition of England (1696), an unpublished manuscript whose results are taken up by Charles Davenant (1656–1714) in his Essay on the Probable Methods of Making a People Gainers in the Balance of Trade (1699).

François Quesnay and Physiocracy 99 physiocracy: “Valuelessness [non-valeur] with abundance is not wealth. Dear­ ness with scarcity is poverty. Dearness with abundance is opulence” (Quesnay 1757a, 209). As for the second question, under a regime of free trade, it is the international price of corn that prevails, that is to say “a common price between us and abroad . . . regulated by competition from the trade in commodities of neighbouring nations” (Quesnay 1757a, 211): This general price is formed like the general level of the lakes and the seas that communicate with each other: if at different times the ocean does not receive water from the Mediterranean, and the Mediterranean does not receive any from the ocean, the general level of water from these seas is nonetheless equal; for this equality of level is always ensured by the commu­ nication that these seas have with each other. It is the same with the equality of the general price between trading nations. (Quesnay 1757–1758, 283) This international price is stable due to the size of this market, the constant demand for a commodity that has no real substitute and the fact that the natural phenomena of abundance or scarcity are unevenly distributed between nations, some being in excess and, simultaneously, others in need. In this mechanism, neither national farmers who sell their harvest nor the international traders who circulate this have set the level of this price by their sole will or their arbitrariness. The price was imposed on them showing, according to Quesnay, the existence of a natural order or a natural balance of international trade and of a price system guaranteeing the prosperity of agricultural nations. As for the farmer’s remuneration, if it is difficult to single it out in Quesnay’s first writings, it is quite clearly distinguished from the key notion of “produit net”. The “produit net” is what remains of the total agricultural product after the tithe and the cultivation cost have been paid (Quesnay 1757a, 177). What Quesnay calls the “prix commun fondamental” adds rent and tax to this cost (Quesnay 1757– 1758, 279–80, 302). The interest of the latter notion is to reveal the farmer’s profit or earnings as the difference between the value of agricultural production and the fundamental price and as the part of the net product that goes to the latter. This is the reason why some commentators rank Quesnay among classical economists (from Smith to Marx) since, like a “price of production”, the “prix commun fonda­ mental” contains part of the surplus or the net product (Cartelier 1991). In his later writings, Quesnay does not pursue the avenue leading to singling out the category of profit which he sees as an element of the production cost, thus reducing the net product to rent and tax. 5.

Critique of the “système des commerçants”

The defence of free international competition is obviously a plea pro patria and, more generally, in favour of large agricultural States. The article “Grains” takes up the common distinction between large and small States, the size of the territory

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specifying the type of commerce that can be sustained there. The interest of the large States is to promote their agriculture and the trade in its products and, on this basis, to establish manufacturing, transforming these products, but in no case to replace this necessary and useful manufacturing by luxury manufacturing, which transforms materials that they do not produce. The logic of small States is differ­ ent: condemned by their meagre territory to live at the expense of the territory of others, all that remains is to engage in the “commerce de traffic” [carriage trade] (1757a, 197). A large agricultural State must therefore avoid two dangers: that of transforming itself, like Holland, into a trading post, and that of consider­ ing that the luxury trade is the most appropriate to its political constitution, as Montesquieu maintained. It is therefore not surprising to find harsh criticism of what Quesnay calls the “système des commerçants” in the “Hommes” and “Impôts” articles. In these, Quesnay castigates the defenders of the English Navigation Act: Most of our authors who deal with trade, and especially with trade in denrées de notre crû [grown on the national soil], believe that in order to promote our navigation, the export of our commodities by sea must be exclusively reserved for the nation; but this monopoly could only be suggested by a par­ ticular interest of traders. (Quesnay 1757b, 269) When the Seven Years’ War began, Quesnay saw the link between wealth and power in another way: it was by relying on the agricultural net product that the kingdom could have the means for a politics of strength, especially vis-à-vis Great Britain (Steiner 2002). Indeed, criticism of the Navigation Act led to that of English domination of the seas and justified the imperative of having a French navy as powerful as that of its English rival. Quesnay argues here in terms of the balance of power. He accepts the idea that the balance of nations is in favour of England, which controls the seas militarily and commercially, and maintains that a return to equilibrium can only be achieved by setting against the English naval power a power that is a counterweight to it, like that of France. It is therefore necessary to strengthen the navy of this nation which, unlike England, would be a force for peace and balance, conceiving trade not as antagonism, but as a competition in which each nation would find an advantage through profitable reciprocal trade. France would thus re-establish an equality of competition, which would not, however, be an “equality of wealth between trading nations” (Quesnay 1757–1758, 291): Maritime forces ensure the establishment and advancement of foreign trade, which sustains revenues from land; because with the support of a military navy, formidable to other maritime powers, our trade and the population of the kingdom would expand everywhere. It would no longer accept the law of others in foreign trading posts, trade would be established unanimously and freely, between commercial and rival powers. Hindrances, prohibitions, the

François Quesnay and Physiocracy 101 exaction of costly and prejudicial rights, would disappear: navigation would be established universally in all ports, on both sides; and trade would return to the natural order to the advantage of all trading nations! (Quesnay 1757–1758, 269) Quesnay therefore continues to accept one of the commonplaces of the science of trade, the rivalry of nations, with the limit, however, that this rivalry remains a competition and does not turn into jealousy. He maintains that, by its foreign trade in agricultural commodities, a large territory “is always guaranteed to surpass oth­ ers” (Quesnay 1757–1758, 291) and to seize part of the revenue of other trading nations. He thus puts forward a dual proposition, that by which foreign trade must satisfy the respective interests of the buyer and the seller, and the other, that it is a means for an agricultural kingdom to derive part of its revenue from abroad. Quesnay is then led to consider the wealth extracted by foreign trade in agricultural commodities as “productive wealth”: Let us add to the ploughman [laboureur] the merchant, who transports our [agricultural] commodities to foreign nations, where they can be sold at a ‘bon prix’, and which increases their production by increasing their utterance and their value. This wealth, which removes that from abroad, is also the source of wealth for the nation. (Quesnay 1757b, 222) In contrast, works of industry “that are only worth the expenditure that they require” (1757b, 219), however useful they may be, are “sterile wealth” (1757b, 220). How­ ever, Quesnay (1757b, 221, 1757–1758, 291) recognises that, through its foreign trade in works, a trading nation “can attract to itself some part of the wealth from abroad” if the trade is not reciprocal, and achieve a “small net product”, small compared to the revenue of an agricultural nation (Steiner 1997). Here, we find again the distinc­ tion between the “agricultural kingdom”, whose wealth and power depend on the net product of agriculture, and the “trading republic”, which is only enriched by offering a service (maritime transport) at an advantageous price. Criticism of the “système des commerçants” is therefore essentially aimed at the error that consists in believing that what applies to a trading republic also applies to an agricultural kingdom. The distinction does not exclude the complementarity of these two types of soci­ eties if they are administered in accordance with their productive situation (Steiner 1997). Indeed, Quesnay (1767–1768b, 592–3) recognises that an agricultural nation may find it advantageous to entrust certain parts of its trade to a small trad­ ing nation rather than to exercise it entirely itself, since it participates in this trade without bearing all the costs of this. But beyond this complementarity, it should be noted that Quesnay introduced the concept of the “small net product” of trade, an idea that is understated in his work but present in central texts, such as the second and third versions of the Tableau Économique (Quesnay 1759a, 410n. and 1759b, 430n.) and the “Maximes générales d’un gouvernement économique” (Quesnay 1767–1768b, 579). This “small net product”, drawn from foreign trade, to which

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Quesnay hastens to add that free competition will make it disappear, occurs when manufacturers and traders can, thanks to the low price of labour and subsistence, “save”, namely offer their works and services at a lower price. 6.

The two circulations of the Tableau Économique

Quesnay produced his first Tableau Économique towards the end of 1758 or the beginning of 1759; he offered five successive versions of this, extending to 1768. These versions were illustrated by one or more figures, commonly called “Zig­ zags”, for the first five versions (1758–63), and “Formule Arithmétique du Tableau Économique” for the last one (1768). A third figure, the “Précis des résultats de la distribution représentées dans le Tableau”, accompanies the Zigzag of the fifth ver­ sion (1763). In the different versions of the Tableau Économique, Quesnay endeavours to clarify the concepts of “avances” and “reprises”. Advances are capital that an entre­ preneur commits previously in an activity with the intention of replenishing this with profit. In the second version of the Tableau Économique, Quesnay (1759a, 407) dis­ tinguishes between “avances primitives” and “avances annuelles” by the farmer. The first indicates what will subsequently be called fixed capital; the second circulating capital. In Quesnay’s mind, the first are the initial funds needed for the establishment of the farm (mainly the purchases of horses, ploughs, carts, seeds, maintenance of the horses and the wages of workers): this fund is recovered over several accounting cycles. The second is a fund that finances expenses of all kinds incurred over the accounting cycle, which is recovered in full at the end of the cycle – Quesnay (1759b, 417) mainly mentions the costs of animal feed and the subsistence of workers. These advances, especially the primitive ones, are subject to degradation, acci­ dents that require compensation (Quesnay 1760, 444, 469). Quesnay adds a special account to his accounting, the “intérêts des avances” (primitive and/or annual) rep­ resenting the amount that the farmer withdraws from the proceeds of his sales to maintain and renew his advances. Assimilated into an “honest profit that serves as revenue from funds used in machinery, animals, fertilisers, etc.”, these interests are distinguished from net product, here defined as the “only portion available, all the rest being necessarily committed to maintaining the wheel works of the economic machine” (Quesnay 1760, 444). The concept of “reprises” which appears in the third version of the Tableau (Quesnay 1759b, 424n.) groups together all the amounts that the farmer subtracts from his receipts at the end of the cycle to finance the next expenditure cycle, the other part of the receipts being the net product. “Reprises” are made up of two parts, the amounts replenishing the annual advances and the interest of the advances (primitive and/or annual). Sharecroppers in small-scale cultivation are too poor to have primitive advances, which are financed and partly replenished at the end of the cycle by the landowners in addition to their rent. Craftsmen, manu­ facturers and traders in manufactured commodities make annual advances, but not primitive advances, on the grounds that they have credit and do not need large funds to establish or sustain their activity (Quesnay 1756b, 148).

François Quesnay and Physiocracy 103 On this basis, Quesnay innovates by applying the concept of class to these two economic sectors (Piguet 1996), the “productive class” of farmers and the “sterile class” of craftsmen, manufacturers and traders in manufactured commodities, which he distinguishes from the “class of proprietors” (of land), which holds the net prod­ uct, reduced by simplification to rent. Indeed, according to Quesnay (1757a, 161, 202, 198), there are two types of wealth: on the one hand, the “renascent wealth” of agriculture, “primitive wealth, always renewed” or “real wealth”; on the other hand, the “pecuniary wealth” and “industrial wealth” which “do not multiply any revenue further”. The thesis by which only the agricultural sector is productive, that is, gen­ erates the net product, is a major characteristic of physiocracy: it will trigger a long and bitter debate, from which the movement will emerge discredited. The different versions of the Tableau Économique aim to show how the pro­ cesses of production and circulation are entangled and restored. This leads to a first proposition, namely that the wealth of an agricultural nation only increases if the land revenues increase and are spent on consumption. Quesnay (1757a, 184–5) bases this proposition on a passage in Cantillon’s Essai which explains that all activities are proportional to the number of landowners or the product of their land. A second proposition can also be deduced from these Tableaux: if through the cir­ culation of revenue landowners are the source of the process of enrichment of the nation, there is a second, equally essential circulation, that of the advances of the farmers which are spent to regenerate the wealth of the nation. The first representation of the Tableau Économique, called “Zigzag”,8 depicts an interweaving of expenditure made by three classes – the landowners, the productive class and the sterile class – during the same accounting period. Starting from the initial endowments held by these three classes, this expenditure, each time less than half, ends up replenishing the initial endowments spent. The purpose of the figure is to demonstrate that this orderly interweaving of expenditure allows the identi­ cal reproduction of the economic machine of an agricultural nation. By analogy, the figure has been compared to the physiological mechanism of blood circulation (Mirabeau [1763] 1764 I, 13–14, 66), the physical mechanism operating ball clocks and hydraulic machines (Wise 1993; Charles 2003, 2004), and to the geometric series. The first two analogies visually reinforce the idea of a mechanism that repro­ duces itself durably, even indefinitely, under certain conditions, once it has been set in motion. What illustrates the geometric series is the idea that the expenditure pro­ cess takes place for a regular and decreasing reason until it is cancelled, under the assumption, of course, of a simultaneous regeneration of the wealth spent, Quesnay only retraced the geometric series without putting it into an equation.9 The two other figurations, the “Précis des résultats de la distribution” and the “Formule Arithmétique du Tableau Économique”, condense the many expenditure

8 Zigzag is a word that entered the Dictionnaire de l’académie française in 1694, meaning a machine composed of several pieces of wood criss-crossed and connected to each other, that can be folded or unfolded. 9 On Quesnay’s relation to mathematics, see Steiner (1998, 20–2) and Charles (2003, 537, 2004, 464).

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transactions establishing the Zigzag into just a few, transforming them into annual transactions. These figures appear to be less prestigious, more compact, arguably more manageable and, in a way, less “imaginary”.10 The succession of three different figurations of the table, the coexistence of Zigzag and the Précis in Philosophie rurale, as well as their replacement by the Formula in the final sixth version have been interpreted in various ways. Most commentators have perceived in this succession the difficulties of construction and an attempt to conceal or overcome them, some have seen in it the sign of an evolu­ tion in Quesnay’s thinking, others the proposition of a visually clearer figure, and others finally search for a figure that would better grasp the dynamic problem of economic growth and decline. The Zigzags, 1758–63

The first version (late 1758–early 1759) gives little information about the expendi­ ture transactions that are not denominated: only their origin, allocation and their amount. However, it delivers four operating rules that Quesnay will try to maintain:11 (i) According to the principles of accounting, any transaction is both an expenditure and a receipt and can be inventoried by its origin and its allocation. The zigzag of transactions is supposed to respect this expenditure/receipt balance. Quesnay (1758, 1179) emphasises this requirement to avoid double counting. (ii) The landowning class immediately spends all its revenue, half on purchases of agricultural commodities and half on purchases of manufactured commod­ ities. This expenditure generates a series of successive expenditures between the productive class and the sterile class. (iii) Like the landowners, the productive and sterile classes spend their receipts, half on agricultural commodities and on manufactured commodities; unlike the former, they therefore spend their receipts half on internal purchases within each class and half on external purchases (from the other class). (iv) The reproduction rate of the net product is equal to 100% of the amount in value of annual productive advances. Annual sterile advances are half the size of annual productive advances. This circulation is based on a certain number of assumptions, such as the homo­ geneity of agricultural and manufacturing production, complete freedom of trade, large-scale cultivation, the “bon prix”, expenditure of the landowner’s revenue entirely on final consumption, or even the compensation of imports by exports. On the basis of a revenue (reduced by simplification to land rent) of £400, annual pro­ ductive advances of £400 and annual sterile advances of £200, an orderly series of expenses is incurred, initially, between the landowners and the two productive and 10 This was one of the very early criticisms levelled at Zigzag (Forbonnais, 1767, I, 177).

11 For a detailed examination of the different Tableaux Économiques, see inter alios Meek (1962),

Gilibert (1977), Delmas and Demals (1990), Herlitz (1996) and Trabucchi (2020).

François Quesnay and Physiocracy 105

Figure 5.1 First version of the Zigzag (in £)

sterile classes and, second, between these two classes of advances and within the productive class. At the end of this series, we obtain (i) an agricultural production in value (£800) that restores the advances spent and pays the revenue of the land­ owners and (ii) a manufacturing production (£400) that restores only its advances, the £200 that makes the difference having been spent on the subsistence of agents of this class. The expenditure transactions that make up the Zigzag can be expressed in the form of the aggregate money flows of the accounting period (Figure 5.2). This first version of the Zigzag reveals several grey areas. First, some transac­ tions are not represented by an expenditure line, in particular internal purchases by the productive and sterile classes. Likewise, no expenditure line starts from the initial amounts of productive and sterile annual advances. Then, Quesnay does not specify the nature of these advances (money or goods). Finally, as the income of

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Figure 5.2 The money flows between the three classes (in £)

each class of advances is being used in internal and external expenditure, the net product appears, not as an accounting balance between receipts and expenditure but as an unexplained surplus by the interweaving of expenditure. Successive Zigzags (1759–63) can be interpreted as the mark of a certain dis­ satisfaction by Quesnay and as so many attempts to resolve the difficulties encoun­ tered in the first version. The figurative representation is indeed imperfect. The Zigzag makes the expenditure of initial revenue of the landowners clearly vis­ ible, but much less so that of the initial, productive and sterile, annual advances. Likewise, it makes expenditure transactions between the three classes visible, but transactions within the two classes of advances invisible. Finally, the wording of certain transactions changing from one version to another suggests a difficulty in balancing receipts and expenditure. Successive Zigzags can also be interpreted as attempts to complicate an economic process presented initially in a simple form. Thus, in versions 2 and 3 (1759a, 1759b), Quesnay introduced foreign trade by presenting it as an internal expenditure of the manufacturing class. In version 4 (1760), he tries to show the impact on the reproduction of the net product of an increase in the share of the landowner’s expenditure on manufactured commodities (to the detriment of expenditure on agricultural commodities), or a tax levied on the receipts of the productive class. The Précis, 1763

In Philosophie rurale, Mirabeau and Quesnay associate the Zigzag with a more compact form, reduced to three annual transactions: (i) the expenditure of land­ owners’ revenue (£2,000) in agricultural commodities for £1,000 and manufac­ tured commodities for £1,000; (ii) the £1,000 received by the productive class is spent on manufactured commodities and (iii) the £1,000 received by the ster­ ile class is spent on agricultural commodities. In total, the receipts of the pro­ ductive and sterile classes are of the same amount and equal to their external sales (£2,000). Quesnay is imprecise about the internal expenditure of these two classes. He assures that the productive class spends all its annual advances, therefore partly in internal purchases, but the Précis (Figure 5.3) does not show any expenditure line starting from the initial allocations of annual advances or

François Quesnay and Physiocracy 107

Figure 5.3 The Précis (in £)

indicating internal expenditure. And, to obtain a revenue of £2,000 correspond­ ing to 100% of annual advances, Quesnay modifies the equation of agricultural production: whereas in the first version of the Tableau Économique, this produc­ tion was equivalent to the sum of the net product and annual productive advances (i.e. £800), now it is equivalent to the sum of the net product (£2,000), annual advances (£2,000) and the “intérêts des avances” (primitive and annual) of the productive class (£1,000). The Formule Arithmétique, 1767–68

Like the Précis, this final version removes the geometric series that characterises the Zigzag. Expenditure transactions are reduced to a few annual flows and, for the first time, the Tableau Économique makes visual the expenditure lines starting from the initial amounts of annual advances held by the productive and sterile classes, thus more clearly juxtaposing the two circulations of advances and revenue. Quesnay assumes an annual agricultural production – here called “reproduc­ tion totale” – of 5 billion livres, and an annual manufacturing production of 2 billion. Agricultural production is obtained through an annual advance fund of 2 billion – these advances are presumed to generate 100% of net product – and a fund of primitive advances of 10 billion that deteriorates each year by 10% and must be replenished. Of these 5 billion, the productive class pays a revenue of 2 billion to the landowning class. Manufacturing production is obtained from the 1 billion of annual advances of the sterile class. Quesnay thus endows the productive class with 2 billion of annual advances, the landowning class with 2 billion revenue or rent and the sterile class with 1 billion of annual advances. Circulation can then begin.

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Figure 5.4 The Formule Arithmétique (in £)

Quesnay’s illustration (Figure 5.4) can be specified as follows: (i) At the start of the period, owners spend all their income, half on purchases of manufactured goods from the sterile class (1 billion) and purchases of sub­ sistence goods from the productive class (1 billion). (ii) The sterile class spends 2 billion on the productive class: 1 billion in pur­ chases of subsistence goods, from the billion received from the landowners, and 1 billion in purchases of raw materials, from its initial fund of annual advances. The internal expenses of this class have disappeared. (iii) The productive class buys a billion in manufactured commodities from the sterile class in order to replenish its primitive advances and spends “two billion on [agricultural] products that it retains for its consumption” (1767– 1768a, 549), that is to say in internal expenses. To sum up: (1) the landowning class has spent all its revenue; (2) the sterile class received 2 billion and spent 2 billion during the period, so it only has the value of 1 billion in annual advances that allowed it to start production and that it can again replenish; (3) the productive class produced for a value of 5 billion but only received 3 billion from the landowners and the sterile class: the missing 2 billion are explained by the intra-consumption of the productive class (to be considered from an accounting point of view as an expenditure but also as a receipt); (4) agri­ cultural production is therefore equal to the sum of intra-consumption and external receipts of the productive class; (5) of these 5 billion, the productive class can carry out what Quesnay calls “reprises”, that is to say, replenish the 2 billion in annual advances and the 1 billion in “intérêts des avances primitives”, and pay the land­ owners a revenue of 2 billion: each class thus recovers its initial endowment, and the reproduction can take place in the following period (Figure 5.5).

François Quesnay and Physiocracy 109

Figure 5.5 The money flows in the Formule Arithmétique121

Like the previous versions of the Tableau, the Formule Arithmétique is pre­ sented as the illustration of a “regular order of the distribution of expenditure” cor­ responding to “the state of prosperity of a kingdom whose territory would be raised to its highest possible degree of culture, freedom, and ease of trading, and where, consequently, the revenue of proprietors could no longer increase” (1767–1768a, 551, 554). This assumes expenditure of all the money received by the different classes, otherwise leaks out of the circuit would lead to a decrease in the volume of capital and production. Later commentators have interpreted the imperfections of the Tableau Économique in various ways. The fact remains, however, that this representation of the circulation of wealth (revenue and advances) of a nation by means of three focuses (the three classes) and five expenditure lines constitutes a theoretical tour de force. 7.

Defend land ownership by taxing it

Physiocratic fiscal theory is often summed up in a radical proposition: as agricul­ ture is the only producer of net product, the tax must be levied entirely on it, more exactly on the revenue received by landowners, since it is the only revenue avail­ able in the physiocratic sense, farmers have to replenish their advances to revive agricultural production. The Physiocrats designate this class, not so much to ensure its military function as to support agriculture through taxation and the financing of the infrastructure needed for the circulation of agricultural commodities. They therefore advocate the establishment of a single territorial tax and reject the princi­ ple of indirect taxation. However, their position is not entirely inflexible, either on the justification for taxation or the abolition of indirect taxes, on which they oscil­ late between a radical measure and a more pragmatic approach. Physiocratic tax theory has a reforming aim (Delmas 2009). Two earlier works help to understand it, the Projet de dîme royale by Sébastien Le Prestre de Vauban (1707) and the Projet de taille tarifée by Charles-Irénée Castel de Saint-Pierre

12 The dotted line is added to Quesnay’s original presentation.

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(1723). These two projects advocated a reform of direct taxation, in particular of one of the main levies, the “taille”, a personal or property tax considered to be arbi­ trary, unequal and unfair, because it was a burden on the weakest (Vauban 1707, 767; Saint-Pierre 1723, 29). Vauban’s Projet (1633–1707) proposed transforming existing direct and indi­ rect taxes into a tithe on all income, whatever it may be. The tax collected on harvests and payable in kind, called the “dîme royale” and considered the most important resource fund for the State, made it possible to present the sovereign as a landowner holding a kind of “rent” with this new tax (Vauban 1707, 757). The Projet was innovative in that it claimed a certain universality of tax and a certain equality, or rather a certain proportionality, as the rate or tariff set by the State was known in advance by taxpaying subjects. However, its objective was not the transformation of society, the universality of the tax implying the abolition of fiscal privileges, not that of social privileges, that is to say orders. The tax was based on the necessary consent of the subjects and was justified by the reciprocal interest that bound the sovereign and the latter by contract: on the one hand the enrichment of the kingdom, on the other the need for protection. Saint-Pierre’s Projet (1653– 1743) advocated, with the same systemic approach as Vauban, a tax proportional to income, the rate of which was known in advance. Unlike Vauban, the abbot’s Projet only concerned the “taille” and its distribution, leaving indirect taxes intact, and made no reference to a contract justifying the tax; finally, it stipulated a levy in money, not in kind. In “Maximes générales”, Quesnay (1767–1768b, 574–5) criticised Vauban’s royal tithe on the grounds that this tax was levied in kind and that it was pro­ portional to the total product of the harvest, not to the net product. It was there­ fore also paid by the farmer and drastically reduced his future expenditure. As for Saint-Pierre’s “taille tarifée”, its flaw was that, as with any “taille”, those who were privileged were not subject to it; unprivileged owners were, but less than the farmers. This tax therefore weighed heavily on the latter. Hence, the physiocratic proposition of a territorial tax paid by all landowners, privileged or not, was pro­ portional to the amount of the net product. The article “Impôts” (1757b) delivered a certain number of important points in constructing the doctrine. Quesnay first points out that his fiscal thinking applies to agricultural nations, not to small trading nations that have little revenue from land. He then lays down the principle of the farmer’s tax immunity that he bases on the distinction between costs and revenue: cultivation costs (including the farmer’s profit) revive production but do not constitute a revenue in the physiocratic sense, cutting them off with a tax would be to cut off the reproduction itself. Following the same argument, Quesnay extends tax immunity to the grain merchant who, through his trade, indirectly enhances land and that of manufacturers and of mer­ chants in manufactures would come later. Finally, he criticises indirect taxes, on the grounds that they are all the more expensive as the circuit is long and parasitic, and as the collection costs multiply and fictitiously increase prices. However, he does not yet propose their abolition, but rather their gradual limitation: the aim is to make them less expensive, to simplify their distribution and their collection.

François Quesnay and Physiocracy 111 In Théorie de l’impôt (1760), Mirabeau presents tax as the result of a market contract concluded between free individuals, owners, essentially driven by their particular interests, seeking to guarantee their properties, and a superior force which offers them this guarantee in exchange for their consent to tax. This consent is therefore the subject of a transaction: Everyone feels the need for an active force that defends them inside against internal greed and outside against that of foreigners. Consequently, everyone consents to contribute to this public force. . . . It is his advantage that eve­ ryone considers in this contribution. Decrease the advantage, his offer will decrease: withdraw the advantage completely, he will withdraw his offer. In short, this is a market like all the others, nothing for nothing, that is the motto of men. (Mirabeau 1760, 7) Tax is therefore a contribution that is agreed and not forced. If the sovereign imposed it, he would infringe the freedom of his subjects and would break the contract of association. But, Mirabeau emphasises, we must not lose sight of the fact that this is a market, a tax that has as its object the common interest. However, in any market, everyone rigorously wants to find his point there . . . in a word, this all comes down to this rule: everyone seeks to give the least & get the most. (Mirabeau 1760, 8) The secret of taxation, he concludes, is that the people pay the most possible & that they think they are paying the least. . . . To pay as much as possible is to render [the people] as much service as possible; to think of paying the least is to expect more from one’s contri­ bution than is estimated in value. (Mirabeau 1760, 10–11) In Théorie de l’impôt, Mirabeau uses the term “co-ownership” only once (Mirabeau 1760, 293). This, widely used by Le Mercier de la Rivière (1767), pro­ vides another, complementary justification for tax. The starting point is the same: societies are conventions established essentially to protect land ownership against all forms of aggression, internal or external. This protection can only be effective through the establishment of a single tutelary authority, but the sovereign who is responsible for it is defined here as a landowner, the largest in the kingdom, taking part in the increase in agricultural production, providing the infrastructure neces­ sary for circulation and having the same interest as all the other landowners placed under his domination, that of giving the greatest possible value to their properties. In a way, he is the co-owner of the net product of the land of the kingdom and, as such, he has a right like all the other owners, that of receiving a revenue in the form

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of tax. This notion of co-ownership that equates tax with a right to a part of the net product is established from the point of view of the sovereign, not that of the individual taxpaying owner and consumer of public services. Here, the tax is not so much the result of a market transaction, a calculated consent, or the price to be paid to guarantee individual property, as a right to dispose, in the name of the general interest, of a part of the subjects’ income. This doctrine highlights the issue of tax incidence on economic development: on which sector and which class should the tax be imposed? For the Physiocrats, the incidence mechanism will always result in the burden of the tax, whatever form it takes, ultimately falling on the net product of land and thus on the landowners. It is therefore just as well to exempt farmers whose advances generate the net product. But by asking landowners to pay the tax instead of their farmers, it is still necessary to convince them that the land tax, once indirect forms of taxation they bear are eliminated, would be less costly for them: a real challenge. 8.

Concluding remarks12

Weulersse dated the decline of the “physiocratic movement”13 from the 1770s up to the French Revolution; Schumpeter set a similar milestone in the 1780s. This decline was marked by a drying up of intellectual creativity and a difficulty for the less numerous disciples to deepen or renew the master’s work – it could be pushed back to the beginning of the nineteenth century if we want to take into account the rear-guard battles led by Du Pont. Physiocracy had a noticeable intellectual impact in eighteenth-century Europe, where agriculture held a dominant position and where enlightened despotism appeared as a relevant form of political organisation (Delmas et al. 1995). However, much debated at the time of its appearance in France, this political doctrine very quickly faded from the intellectual horizon. Adam Smith did not mention it, only James Mill examined this point of physiocratic doctrine (Demals and Hyard 2007). At the beginning of the nineteenth century, the jurist Jean-Étienne Portalis (1808, 33–4) questioned this vision of the legal despotic sovereign, “superior and universal owner of the territory” who would have a right of eminent domain to dispose of private properties for the general good and to levy taxes on these properties. The reception of the physiocratic eco­ nomic theory brings to light two questions: that of the method and that of the Tableau Économique. Smith did not doubt that the Physiocrats were, like him, ardent defenders of complete freedom of trade, on the other hand, he doubted the method chosen by Quesnay – a “very speculative physician” (Smith 1776, 674) – to extend this 13 The expression “physiocratic movement” was recently taken up by Charles and Théré (2019). How­ ever, the authors disputed the idea that a group with a coherent doctrine was already constituted in 1756 and was transformed into a party around 1764 and emphasised the fact that, before 1767, neither those who would be called “economists” nor their opponents mentioned a structured school of thought.

François Quesnay and Physiocracy 113 freedom, that is to say, by the top of society, without thinking that this extension could be the result of the action of individuals themselves at the bottom of soci­ ety, whatever the form of the constitution. For Jean-Baptiste Say, the principal vice of physiocracy was methodological: he reproached the Physiocrats for con­ sidering economic facts from the point of view of the law, while he claimed a method that started from the facts themselves: “Instead of observing the nature of thing first, sorting their observations and deducing general truths from them, they [Physiocrats] begun with abstract general statements . . . and sought to subordinate all individual facts to these statements, and drew consequences from these, which engage them in the defence of maxims obviously opposed to good sense and the experience of centuries” (Say 1803, 29). Over the course of the different editions of his famous Traité d’économie politique, Say reaffirmed his preference for the doctrine and method of Smith and pushes the Physiocrats back into the past of a science that is gradually taking hold. During his heated exchanges with Ricardo and the Ricardians, he criticised the latter for going back to Quesnay’s methodo­ logical mistakes (Steiner 2019). What the nineteenth century will remember of physiocracy is a paradox: the promotion of economic freedom in a despotic regime sacrificing political free­ dom (Alexis de Tocqueville). It is for this reason that the reissue of L’ordre naturel et essentiel des sociétés politiques by Le Mercier de la Rivière in the collection of major economists published by Guillaumin in 1846 would be shortened, the politi­ cal part having been judged unworthy of this reissue. The second question is that of the reception for the Tableau Économique. The Tableau was little commented on and little understood. There was scarcely only François Véron de Forbonnais (1722–1800) – and Jean-Joseph Louis Graslin (1728–1790), to a lesser extent – who calls it the “hieroglyphic table” – who dis­ cussed it. When Forbonnais examined the Zigzag, it was to dispute the sterility hypothesis, show that the balance was not disturbed by a disproportionate expendi­ ture by the landowners in favour of luxuries or, more generally, dispute the very method of the Tableau, which does not describe the actual economy but an imagi­ nary one built on by unverified hypotheses. The disciples, except Baudeau, did not set out to decipher or improve it. Smith commented on it only briefly in his chapter on the agricultural system (Smith 1776, 672). Amongst the rare commentators of the nineteenth century, we find the SaintSimonian Prosper Enfantin (1796–1864), who saw in the Tableau an illustration of the philosophy of social organisation, of a natural and preconceived order, not resulting from the gradual progress of humanity, an illustration that was however defective since the social organisation was entrusted to the landowners, that is to say the idlers, not to the producers. Theodor Schmalz (1760–1831) was one of the few to examine the Tableau, showing, according to him, the superiority of the physiocratic system over the Mercantile and Smithian systems. He also carried out an analytical reading, applying the principles of double-entry accounting. Finally, we have to wait for Karl Marx (1818–1883), not to definitively clear up the mys­ teries of the Tableau but to give it a real scientific status by raising it to the rank of the first analytical illustration of surplus production in a capitalist economy, and to

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find inspiration in it to develop his celebrated simple and extended reproduction schemes of social capital. References Baudeau, Nicolas. 1767. “Avertissement de l’auteur”. Éphémérides du citoyen ou biblio­ thèque raisonnée des sciences morales et politiques, 1, 3–30. Béardé de l’Abbaye. 1770. Recherches sur les moyens de supprimer les impôts, précédées de l’examen de la nouvelle science. Amsterdam: Marc Michel Rey. Cantillon, Richard. [1755] 1931. Essai sur la nature du commerce en général. London: Fletcher Gyles. English translation by Henry Higgs in R. Cantillon. Essai sur la nature du commerce en général. London: Macmillan. Cartelier, Jean. 1991. “L’économie politique de François Quesnay ou l’Utopie du royaume agricole”. In François Quesnay (ed.), Physiocratie. Paris: Garnier-Flammarion, pp. 9–64. Castel de Saint-Pierre, Charles-Irénée. 1723. Projet de taille tarifée. Paris: Emery, Sau­ grain & Martin. Charles, Loïc. 2003. “The visual history of the Tableau économique”. The European Journal the History of Economic Thought, 10 (4), 527–50. Charles, Loïc. 2004. “The Tableau économique as a rational recreation”. History of Political Economy, 36 (3), 445–74. Charles, Loïc, and Philippe Steiner. 1999. “Entre Montesquieu et Rousseau. La Physiocratie parmi les origines intellectuelles de la Révolution française”. Études Jean-Jacques Rous­ seau, 11, 83–159. Charles, Loïc, and Christine Théré. 2008. “The writing workshop of François Quesnay and the making of physiocracy”. History of Political Economy, 40 (1), 1–42. Charles, Loïc, and Christine Théré. 2011. “From Versailles to Paris: The creative communi­ ties of the physiocratic movement”. History of Political Economy, 43 (1), 25–58. Charles, Loïc, and Christine Théré. 2019. “The physiocratic movement: A revision”. In Steven L. Kaplan and Sophus A. Reinert (eds), The Economic Turn. Recasting Political Economy in Enlightened Europe. London: Anthelm Press, pp. 35–70. Delmas, Bernard. 2009. “Les Physiocrates, Turgot et le ‘grand secret de la science fiscale’”. Revue d’histoire moderne et contemporaine, 56 (2), 79–103. Delmas, Bernard, and Thierry Demals. 1990. “Le Tableau économique, ombres et lumi­ ères”. Revue d’économie politique, 100 (1), 83–108. Delmas, Bernard, Thierry Demals, and Philippe Steiner (eds). 1995. La diffusion interna­ tionale de la Physiocratie (XVIIIe – XIXe). Grenoble: Presses Universitaires de Grenoble. Demals, Thierry, and Alexandra Hyard. 2007. “James Mill et les ‘Économistes’”. Revue française d’histoire des idées politiques, 25, 61–88. Faccarello, Gilbert. 1999. The Foundations of Laissez-Faire. The Economics of Pierre de Boisguilbert. London: Routledge. Forbonnais: see Véron Duverger de Forbonnais. Gilibert, Giorgio. 1977. Quesnay. La costruzione della “macchina della prosperità”. Milano: Etas Libri. Herlitz, Lars. 1996. “From spending and reproduction to circular flow and equilibrium: The two conceptions of Tableau économique”. The European Journal of the History of Economic Thought, 3 (1), 2–20. Le Mercier de la Rivière, Pierre-Paul. 1767. L’ordre naturel et essentiel des sociétés poli­ tiques, Paris: Fayard, 2001.

François Quesnay and Physiocracy 115 Le Prestre de Vauban, Sébastien. 1707. “Projet de dîme royale”. In Michèle Virol (ed.), Les oisivetés de Monsieur de Vauban. Seyssel: Champ Vallon, 2007, pp. 751–957. Le Trosne, Guillaume-François. 1779. De l’administration provinciale et la réforme de l’impôt. Bâle and Paris: Duplain. Longhitano, Gino. 2012. “The library of François Quesnay”. In J. Cartelier and G. Long­ hitano (eds), Quesnay and Physiocracy. Studies and Materials. Paris: L’Harmattan, pp. 193–240. Meek, Ronald. 1962. Economics of Physiocracy. London: Allen & Unwin. Mirabeau: see Riqueti de Mirabeau. Piguet, Marie-France. 1996. Classe. Histoire du mot et genèse du concept des Physiocrates aux Historiens de la Restauration. Lyon: Presses universitaires de Lyon. Portalis, Jean-Étienne-Marie. 1808. “Exposé des motifs relatifs à la propriété”. In Code Napoléon, vol. 4. Paris: Didot, pp. 25–48. Quesnay, François. 1747. Essai physique sur l’œconomie animale. Paris: Cavelier. Quesnay, François. 1756a. “Évidence (Métaphysique)”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 1. Paris: INED, 2005, pp. 61–90. Quesnay, François. 1756b. “Fermiers (Économie politique)”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 1. Paris: INED, 2005, pp. 128–59. Quesnay, François. 1757–58. “Hommes”. In François Quesnay, Œuvres économiques com­ plètes et autres textes, vol. 1. Paris: INED, 2005, pp. 259–323. Quesnay, François. 1757a. “Grains (Œconomie politique)”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 1. Paris: INED, 2005, pp. 161–212. Quesnay, François. 1757b. “Impôts (Œconomie politique)”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 1. Paris: INED, 2005, pp. 213–56. Quesnay, François. 1758. “Lettre à Forbonnais”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 2. Paris: INED, 2005, pp. 1177–80. Quesnay, François. 1759a. “Extrait des économies royales de M. de Sully (2nd version of the Tableau économique)”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 1. Paris: INED, 2005, pp. 407–11. Quesnay, François. 1759b. “Extrait des économies royales de M. de Sully (3rd version of the Tableau économique”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 1. Paris: INED, 2005, pp. 420–38. Quesnay, François. 1760. “Tableau économique avec ses explications”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 1. Paris: INED, 2005, pp. 439–526. Quesnay, François. 1766a. “Réponse au mémoire de Mr. H. sur les avantages de l’industrie et du commerce”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 2. Paris: INED, 2005, pp. 833–42. Quesnay, François. 1766b. “Second dialogue entre Mr. H. et Mr. N”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 2. Paris: INED, 2005, pp. 951–72. Quesnay, François. 1767. “Despotisme de la Chine”. In François Quesnay, Œuvres économ­ iques complètes et autres textes, vol. 2. Paris: INED, 2005, pp. 1005–114. Quesnay, François. 1767–68a. “Analyse de la formule arithmétique du Tableau économ­ ique”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 1. Paris: INED, 2005, pp. 545–63. Quesnay, François. 1767–68b. “Maximes générales du gouvernement économique d’un royaume agricole”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 1. Paris: INED, 2005, pp. 565–96. Riqueti de Mirabeau, Victor. 1760. Théorie de l’impôt. [no publisher nor place of publication].

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Riqueti de Mirabeau, Victor. [1763] 1764. Philosophie rurale ou économie générale et poli­ tique de l’agriculture. Amsterdam: Libraires associés. Saint-Pierre: see Castel de Saint-Pierre, Charles-Irénée. Savary des Bruslons, Jacques. 1742. Dictionnaire universel du commerce, nouvelle édition. Genève: Cramer & Philibert. Say, Jean-Baptiste. [1803] 2006. Traité d’économie politique ou simple exposition de la manière dont se forment, se distribuent et se consomment les richesses. In Œuvres com­ plètes de J.-B. Say, vol. 1. Paris: Economica. Smith, Adam. [1776] 1981. An Inquiry into the Nature and the Causes of the Wealth of Nations, in the Glasgow Edition of the Works and Correspondence of Adam Smith, re-edition. Indianapolis, IN: Liberty Classics. Steiner, Philippe. 1994. “Demand, price and net product in Quesnay first writings”. The European Journal of the History of Economic Thought, 1 (2), 231–51. Steiner, Philippe. 1997. “Quesnay et le commerce”. Revue d’économie politique, 107 (5), 695–713. Steiner, Philippe. 1998. La “science nouvelle” de l’économie politique. Paris: Presses uni­ versitaires de France. Steiner, Philippe. 2002. “Wealth and power: Quesnay’s political economy of the agricultural kingdom”. Journal of the History of Economic Thought, 24 (1), 91–110. Steiner, Philippe. 2018. “Philosophie économique: The case of the physiocrats”. In Ryuzo Kuroki and Yusuke Ando (eds), The Foundations of Political Economy and Social Reform. Economy and Society in Eighteenth Century France. London: Routledge, pp. 63–78. Steiner, Philippe. 2019. “No way back to Quesnay: Say’s opposition to physiocracy”. In Steven L. Kaplan and Sophus A. Reinert (eds), The Economic Turn. Recasting Political Economy in Enlightenment Europe. London: Anthem Press, pp. 677–97. Théré, Chritine, Loïc Charles, and Jean-Claude Perrot. 2005. “Bibliographie des ouvrages et articles cités par Quesnay”. In François Quesnay, Œuvres économiques complètes et autres textes, vol. 2. Paris: INED, pp. 1447–54. Trabucchi, Paolo. 2020. “Considerations on the development of Quesnay’s Tableau économ­ ique”. In Maria Cristina Marcuzzo et al. (eds), New Perspectives on Political Economy and Its History. London: Palgrave, pp. 129–48. Vauban: see Le Prestre de Vauban. Véron Duverger de Forbonnais, François. 1767. Principes et observations économiques, 2 vols. Amsterdam: Marc-Michel Rey. Weulersse, Georges. 1910. Le mouvement Physiocratique en France de 1756 à 1770. Paris: Alcan. Weulersse, Georges. 1950. La Physiocratie sous les ministères de Turgot et de Necker, 1774–1781. Paris: Presses Universitaires de France. Weulersse, Georges. 1959. La Physiocratie à la fin du règne de Louis XV, 1770–1774. Paris: Presses Universitaires de France. Weulersse, Georges. 1985. La Physiocratie à l’aube de la Révolution, 1781–1792. Paris: Éditions de l’EHESS. Wise, M. Norton. 1993. “Mediations: Enlightenment balancing acts, or the technologies of rationalism”. In Paul Horwich (ed.), World Changes. Thomas Kuhn and the Nature of Sci­ ence. Cambridge, MA: MIT Press, pp. 207–56.

6

Turgot, Graslin and sensationist political economy Gilbert Faccarello

Compared to the term “physiocracy”, “sensationist political economy”1 is a recent appellation (Faccarello 1990, 1992). “Sensationism” refers to the empirical phi­ losophy of John Locke, presented in his 1689 Essay Concerning Human Under­ standing, and his statement that there are no innate ideas: in a nutshell, our ideas and knowledge come from our senses in contact with the external world (experi­ ence) and by reflection (the operations of our mind, a kind of internal sense). This approach was well known in France in the eighteenth century2 and, in a sense, its acceptance had already been prepared by the Essay de logique (1678) of the physicist and philosopher Edme Mariotte (1620–1684). The first part of this Essay is composed of 100 propositions called “the first principles of Sciences”.3 There, Mariotte insists on the role of the senses in the elaboration of knowledge – “nothing is more certain than the knowledge based on our senses” (§ XV) – and of the sensa­ tions of pleasure and pain (or good and evil) in moral philosophy (§§ LIII–LVI). He finally lists a series of “first moral truths” or “maxims of politics”, a kind of accountancy of goods and evils showing how to maximise goods (or pleasures) and minimise evils (or pains) (§§ LXXXIII–C). Locke’s Essay, translated by Pierre Coste as early as 1700, had many edi­ tions, and its fundamental ideas were developed not only by one of the major French philosophers of the time, Étienne Bonnot de Condillac (1714–1780) in his Essai sur l’origine des connaissances humaines, 1746 and Traité des senta­ tions, 1754 but also, in various directions, by scientists like Pierre Louis Moreau de Maupertuis (1698–1759) in his Essai de philosophie morale (1749) and Lettres sur divers sujets (1753) or Charles Bonnet (1720–1793) in his Essai de psychologie (1755) and Essai analytique sur les facultés de l’âme (1760).

1 The present chapter deals with some of the main themes addressed by sensationist authors: addi­ tional developments will be found in Chapter 8, “The spirit of geometry. Quantification and formalisation”. 2 See, for example, Yolton (1991), Hutchison (1991) and Schøsler (1997, 2001). 3 Locke knew the French publications and controversies well – he even started to translate into English some of Pierre Nicole’s texts from his Essais de morale. He travelled extensively in France, where he bought Mariotte’s Essay de logique in 1678 (Lough 1953; Harrison and Laslett 1965). DOI: 10.4324/9780429202414-6

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1. Sensationist political economy defined This general approach pervaded the new “sciences morales et politiques” (moral and political sciences) in the second half of the eighteenth century, from François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1981) to M.-J.-A.­ N. Caritat de Condorcet (1743–1794), Claude-Adrien Helvétius (1715–1771) and Paul Henri Thiry d’Holbach (1723–1789). Turgot himself wrote an essay following this line of thought: the entry “Existence”, published in 1756 in Encyclopédie, ou Dictionnaire raisonné des sciences, des arts et des métiers, one of the flagships of the French Enlightenment edited by Denis Diderot and Jean Le Rond d’Alembert. Locke . . . the first, proved that all our ideas come from the senses, and that there is not any notion in the human mind at which we arrived but starting only from sensations, he showed us the real point from which men started, and from which we have to start again in order to follow the generation of all our ideas. (Turgot 1756, 518) In the economic field, this approach was most strikingly developed by a group of authors who, starting from sensationist premisses, based their statements on a calculus of pleasure/utility and pain/disutility, in which individuals seek to max­ imise the former and minimise the latter. Turgot was the “founding father” and most well-known author of this group, which also included his disciple Condorcet, a younger follower, Pierre-Louis Rœderer (1754–1835), and some friends like André Morellet (1727–1819). Echoes can also be found in a late work by Condillac himself, Le commerce et le gouvernement considérés relativement l’un à l’autre (1776).4 Helvétius and d’Holbach did not deal with political economy proper, and Quesnay’s developments followed a different route. This first group of authors was for a long time wrongly assimilated with the physiocrats. However, the notion of a sensationist political economy can also be understood in a broader sense. It not only encompasses Turgot and his followers but also a sec­ ond group of authors who rejected the entire physiocratic doctrine. Jean-Joseph-Louis Graslin (1727–1790) was certainly the most important of them. A fierce critic of the physiocrats – the “Tableau économique” is called by him the “Tableau hié­ roglyphique” (hieroglyphic table) (Graslin 1767, 82) – and a follower of JeanJacques Rousseau, he followed the sensationist approach of Maupertuis and Bonnet. Achilles-Nicolas Isnard (1748–1803),5 another critic of the physiocrats,

4 Turgot helped Condillac to publish some of his work, and Condillac’s last paragraph, in Le commerce et le gouvernment, expresses clear support for Turgot’s policy (Condillac 1776, 586). 5 It is unusual to see Isnard included in the sensationist movement. This is to forget that, four years after his Traité des richesses, he published a Catéchisme social, in which the analysis of the behav­ iour of individuals is based on their reactions to pleasure and pain: “pleasure and pain are the motives not only for instinct, sentiments and passions, but also for the will . . . [T]hese secondary motives themselves receive their first impetus from the sensations; their initial motives are thus pleasure and pain” (Isnard 1784, 80). “[T]he soul gets ideas only from the senses. Ideas are internal representa­ tions of sensations, that is, impressions received from the senses” (1784, 16).

Turgot, Graslin and sensationist political economy 119 followed the same route, although more discreetly. Charles François de Bicquilley (1738–1814) and Nicolas-François Canard (1750–1833), at the turn of the nineteenth century, tried to formalise and develop some basic propositions of this current of thought. Minor authors can also be added to the list, such as Alexan­ dre Vandermonde (1735–1796). It is finally interesting to note that Condorcet, Vandermonde and Canard were mathematicians, Isnard an engineer6 and Bicquil­ ley a soldier trained in mathematics. Sensationist political economy and physiocracy

What are the links between the first group of sensationist authors and Quesnay and his disciples, with whom they have usually been confused? Turgot and Condorcet were critical of the physiocrats. They rejected the notions of “tutelary authority” and “legal despotism”, adopted a natural human rights approach based on liberty, security and property (while stressing the concept of utility, they were not utilitar­ ians) and developed a distinct political economy mostly focused on the decisions of individuals. At the political level, they praised Rousseau’s 1762 Du contrat social, ou Principe du droit politique. Rousseau, Turgot wrote, is one of those authors who best serve morals and humanity. Far from criti­ cizing him for diverging from common ideas on this topic, I believe instead that he remained respectful of too many prejudices; but we have to follow his road if we are to attain his goal, which is to bring men closer to equality, justice and happiness. (Turgot 1913–23, II, 659–60) The Contrat social “distinguishes precisely between Sovereign and Government; and this distinction presents a genuinely illuminating truth which . . . resolves for­ ever the idea of the inalienability of the sovereignty of the people under any form of government” (1913–23, II, 660). Condorcet later endeavoured to give a precise meaning to Rousseau’s concept of “general will”, especially in his celebrated 1785 treatise, Essai sur l’application de l’analyse à la probabilité des décisions rendues à la pluralité des voix. However, at the same time, the most important sensationist economists, like Turgot, accepted the basis of the Tableau économique, that is, the theory of the exclusive productivity of agriculture, and this created some confusion. Turgot was usually depicted as a physiocrat or a “dissenting” or “heterodox” disciple of Quesnay, meaning with these epithets that the differences were ultimately of tri­ fling importance, which is certainly not the case. What also caused some confu­ sion was the attitude of Pierre-Samuel Dupont de Nemours (1739–1817). When he published Turgot’s main theoretical work (the 1766 Réflexions sur la formation et la

6 The tradition of engineer-economists, initiated during the Enlightenment, also characterised French classical political economy, with the prominent figure of Jules Dupuit, while the use of mathematics in economics was developed at the same time by the mathematician Antoine Augustin Cournot.

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distribution des richesses) in three instalments in the Éphémérides du citoyen,7 he “corrected” some passages to bring them more in line with the physiocratic dogmas and added some notes. Turgot protested and asked Dupont to publish offprints of the original text (to Dupont, 2 February 1770, in Turgot 1913–23, III, 373–4). This is what Dupont did in 1770, and there was also another edition of the text of the offprint in 1788.8 But when, in 1808–11, he published the Œuvres de M. Turgot, the text of the Réflexions that he included in this edition was, with minor differ­ ences, that of the Éphémérides and not that of the offprint. In 1844, when Eugène Daire and Hippolyte Dussard edited the Œuvres de Turgot in the “Collection des principaux économistes” published by Gilbert-Urbain Guillaumin, it was the text of the Dupont 1808–11 edition which was reprinted, not that of the offprint. Turgot’s original text was finally republished by Gustave Schelle in his 1913–23 edition of the Œuvres de Turgot et documents le concernant (II, 533–601),9 a five-volume publication which is still considered today as the most faithful and complete edition of Turgot’s writings.10 Finally, another reason for confusion was proposed by Jean-Baptiste Say. “One did Turgot a disservice in presenting him as a coryphaeus of the sect of the Écono­ mistes”, he stated in his Traité d’économie politique. Turgot was too good a citizen not to sincerely esteem such good citizens as the Économistes: and, when he was in power, he believed it useful to support them. The latter, in turn, benefitted from portraying such a knowledgeable man and a Ministre d’État as one of their disciples. (Say 1803–41, 31) 7 Éphémérides du citoyen, ou Bibliothèque raisonnée des sciences morales et politiques, November and December 1769 and January 1770. While the Réflexions were only published in 1769–70, they were written in 1766 and circulated as a manuscript that Turgot planned to expand. That is why it is usual to keep the date of 1766 as the reference for this work. The same convention applies for his other writings, for example his manuscripts “Valeurs et monnaies” (1769) and Mémoires sur les prêts d’argent (1770a). 8 Unfortunately, in the 1788 edition, there is a mistake in the numbering of the sections: there are two sections XLVI, and thus the numbering of the following sections is faulty. 9 As if there were not enough confusion about the Réflexions, another problem arose with the Schelle edition. Turgot’s manuscript had 101 sections. But, in the developments concerning the rate of interest, section LXXV, “Réponse à une objection” (Answer to an objection) was omitted in the Éphémérides edition, at Turgot’s request. But Dupont included it in the offprint. Schelle, considering that Turgot wanted this section to be removed from the text (its substance is to be found in the 1770 Mémoire sur les prêts d’argent), omitted it in his edition. This is the reason why Schelle’s version of the Réflexions, while being that of the offprint, only contains 100 sections instead of 101. 10 There is a misprint in the 1769 paper “Valeurs et monnaies”: in an example of an exchange of two commodities between two agents, Schelle inverted the terms of trade – this misprint does not exist in Dupont’s edition (Van den Berg 2014). In the following pages, however, the references refer to the Schelle edition. In English, the most comprehensive collection of Turgot’s writing is The Turgot Collection (Turgot 2011). The translations it presented are occasionally used here, with modifications.

Turgot, Graslin and sensationist political economy 121 The diffusion of sensationist political economy

A last point concerns the diffusion of sensationist economic writings. Most of them of course came out as books and pamphlets – two important manuscripts of Turgot being an exception: the 1769 article “Valeurs et monnaies” and the 1770 Mémoire sur les prêts d’argent, not to mention his “Lettres” to the Comptroller General Joseph Marie Terray on the grain trade. But, at that time, especially in the case of promi­ nent authors, the circulation and influence of writings did not necessarily depend on the fact that they were printed or not: copies of the manuscripts circulated within intellectual networks. Finally, the substance of some of Turgot’s manuscripts was published under other authors’ names. The article “Valeurs et monnaies”, for exam­ ple, was intended for a Dictionnaire du Commerce in five volumes that Morellet planned to publish and that he described in detail in his Prospectus d’un nouveau Dictionnaire de commerce (Morellet 1769). The Dictionnaire was never completed but Morellet made use of Turgot’s manuscript in the composition of a long “Digres­ sion pour servir à l’intelligence de la partie du plan du nouveau Dictionnaire, rela­ tive aux monnaies” (Morellet 1769, 98–183) included in the Prospectus – this may have been a source of inspiration for Condillac (who could also have known the manuscript) some years later and for Isnard’s 1781 Traité des Richesses (where the Prospectus is referred to). For his part, Pierre Rullié, in his Théorie de l’intérêt de l’argent, tirée des vrais principes du droit naturel, de la théologie et de la politique, contre l’abus de l’imputation d’usure (1780), drew on the 1766 Réflexions, but also and above all on Turgot’s Mémoire sur les prêts d’argent, from which he quoted extensively. The work prompted some polemical exchanges and a second enlarged edition was published in 1782. Finally, Turgot’s Mémoire was published in 1789, in Mémoires sur le prêt à intérêt et sur le commerce des fers (Turgot 1789). 2. Turgot and the development of a subjective theory of value and prices Human beings know the external world through sensations and the feelings of pleasure and pain: they consequently seek pleasure and try to avoid pain. The objects, whose distance and movements around our body we observe, are of interest to us . . . through the sensations of pleasure and pain that these movements are likely to give us. . . . The ease with which we can change the distance of our body to the other stationary objects . . . helps in seeking the objects whose approach gives us pleasure, and in avoiding those whose approach generates pain. The presence of these objects becomes the source of our desires and fears, and the cause of the movement of our body. (Turgot 1756, 522) This places the concept of need at the centre of the analysis. A need is a pain, and its satisfaction causes the cessation of the pain, that is, a pleasure. Moreover, this atti­ tude generates a maximising behaviour of the agents who try to minimise pain and

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maximise pleasure. This is an important point to note. Liberal political economy was founded by Boisguilbert, who placed the maximising behaviour of agents in markets at the centre of the analysis: but he based this selfish attitude on a Chris­ tian theological scheme – the doctrine of original sin and the Fall – as understood by the Jansenist tradition. Now, sensationist philosophy explains this attitude in a different and “empirical” way, thus getting rid of theology. Moreover, if all knowl­ edge derives from the sensations, this means that we cannot know any hypothetical ultimate “nature of things” but only the relationships existing between them: any science is a science of signs. The notion of “substance” of value, for example, is meaningless, only the proportions between different values can be dealt with, that is, relative values or prices. From this general framework, two different approaches to the determination of values and prices were proposed almost at the same time during the 1760s. The first, by Turgot, is connected to a long tradition followed by French authors from Jean Bodin to Pierre de Boisguilbert, who stressed the role of the interac­ tion of demand and supply in the determination of prices. This tradition was also lively in scholastic thought, old and new, especially when dealing with problems of justice – a tradition that Turgot knew very well: he studied at the Sorbonne and had serious theological training. The second approach to value and prices also came from a reflection on problems of justice, but from a different point of view. Graslin proposed it, referring to some statements and methods found in Rousseau’s Contrat social. The foundations of a subjective theory of value

A person is “merely a bundle of needs”, Turgot wrote in his “Plan d’un mémoire sur les impositions” (1763, 297). Satisfying these needs brings about utility and the effort spent in this direction generates pain. Individual agents act accordingly and try to minimise pain and maximise utility. In this respect, Turgot, like many other authors during the Enlightenment, thought that economic problems could be solved by a “maximis et minimis” approach – sometimes understood in a broad and metaphorical sense – proposed by the seventeenth-century French mathematician Pierre de Fermat and developed by Isaac Newton and Gottfried Wilhelm Leibniz (see Chapter 8, this volume). Some developments on value can be found in Turgot’s 1766 Reflexions, but an extensive analysis is presented in the 1769 draft “Valeurs et monnaies”. To uncover the nature of value, Turgot first imagines a man alone facing nature. This man is free and endowed with reason. As Locke stressed, he has the power to suspend his desires and to calculate the best way to achieve happiness. Whatever necessity determines to the pursuit of real bliss, the same necessity with the same force establishes suspense, deliberation, and scrutiny of each successive desire, whether the satisfaction of it does not interfere with our true happiness and mislead us from it. This . . . is the great privilege of finite intellectual beings; and I desire it may be well considered, whether the great

Turgot, Graslin and sensationist political economy 123 inlet and exercise of all the liberty men have . . . does not lie in this, that they can suspend their desires, and stop them from determining their wills to any action, till they have duly and fairly examined the good and evil of it. . . . For since the will supposes knowledge to guide its choice, all that we can do is to hold our wills undetermined, till we have examined the good and evil of what we desire. (Locke 1690, I, 220) In order to act, that is to say, to produce the goods necessary to satisfy his needs, Turgot’s Robinson first determines the value each of these goods has for him. This is what Turgot calls the “valeur estimative” (esteem value), that is, the subjective “degree of esteem which he attaches to the different objects of his desires” (1769, 87) – their “degree of utility” as Turgot puts it in Mémoire sur les prêts d’argent (1770a, 175). The isolated individual thus establishes a preference-ordering – a “ranking of utility” (1769, 86, 97) – on all of the goods, taking into account (1) the ability of each object to satisfy a kind of need, (2) the temporal element generated by foresight (some provisions are to be made for a bad season) and (3) the scarcity of the desired object. As a result of his calculation, he attributes a certain “esteem value” to the quantity of each object he needs: this expresses the proportion of his “faculties” which he is prepared to devote to obtaining it, all other things being equal. He also distributes his faculties in such a way as to procure the different goods “according to their importance for . . . his well-being” (1769, 87), that is, by searching for the greatest possible well-being. It should be noted that Turgot opts for a purely relative measure of values. The reason for this is that the unity – the “faculties” – to which the values refer cannot be evaluated.11 Turgot then supposes that there are two agents, two goods and no production. Each agent has an initial endowment of one good which exceeds his needs and requires some of the good owned by the other agent: the situation is thus a bilat­ eral monopoly in a pure exchange economy. The two agents engage in bargain­ ing under the following assumptions: (1) each agent determines for himself the “esteem values” he attributes to the different amounts of the endowment he wishes to exchange, as well as to the amounts of the other agent’s endowment which he could receive in exchange; (2) the agents do not reveal their preferences; (3) on this basis, each agent determines his state of indifference, in other words, the reserva­ tion price from which the exchange is possible; (4) each of them follows a max­ imising behaviour, that is, is animated by “the interest to keep the largest quantity possible of his own good and to acquire in exchange the largest quantity of the other’s good” (1769, 90). In order for a transaction to take place, each agent must attribute a higher esteem value (say λ) to the quantity of the object received than he attributes to the quantity of the good given in exchange (λ*), that is, λ > λ*: “each would stay as he is unless

11 However, despite this, the text sometimes presupposes this measurement, that is, cardinality, as it is the case in the determination of the equilibrium price.

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he finds an interest, a personal profit, to exchange; unless he values more what he receives than what he gives” (1769, 91). Or, as Turgot sums up in his Mémoire sur les prêts d’argent: The exchange, being free on both sides, can only be motivated by the prefer­ ence of each of the contracting parties for the thing he receives over the thing he gives. This preference presumes that each attributes a greater value to the thing he acquires than to the thing he gives up, relative to his personal utility and to the satisfaction of his needs and desires. . . . This value only depends on the opinion of the two contracting parties as regards the degree of utility of the things exchanged. (1770a, 174–5) The gains from exchange are clear: (1) the total utility of each agent increases; (2) whenever production is possible, exchange also allows a division of labour and results in an increase in the quantities of goods available to the agents (1769, 93). It is assumed that the bargaining process converges towards a price on which both agents agree, somewhere between the reservation prices of the two agents. This equilibrium price, which Turgot called “valeur appréciative” (appreciative value), is unique and determined simultaneously with the quantities exchanged. The final agreement is defined as a situation in which the difference between the esteem value of the good received and that of the good given in exchange is equal for both parties (1769, 92, 1770a, 174). This can be symbolised, for two agents i and j, by l i ­ l i* = l j ­ l j* This is the reason why this equilibrium price is termed “average esteem value” (1769, 92). This solution is not satisfactory because, as we know today, there is a priori no unique solution in the case of a bilateral monopoly. But this approach is nevertheless remarkable for the time and for its originality and rigour.12 However, the explana­ tion given by Turgot remains questionable: this “valeur appréciative” is necessarily attained because, he notes, should the differences ( l i ­ l i* ) and ( l j ­ l j* ) differ between agents, it would be in the interest of one of the two agents to continue the bargaining process. But how could the agents know each other’s differences when preferences are not revealed, and moreover utilities are not comparable? Some developments

Having established his argument for two contracting parties, Turgot intended to generalise it to a large number of agents and goods. Unfortunately, “Valeurs et

12 It was probably inspired by the celebrated pages on justice and exchange in Aristotle’s Nicoma­ chean Ethics (which can find an interpretation in terms of cooperative games: see Dos Santos Fer­ reira 2002).

Turgot, Graslin and sensationist political economy 125 monnaies” concludes after only considering a larger number of agents in a twogood context: Turgot assumes that, as a result of competitive arbitrages, a single price will be established. The general situation (many agents and many goods) is, however, mentioned incidentally in Mémoire sur les prêts d’argent (1770a) and his letters to Terray (1770b). Turgot simply asserts that a general equilibrium will materialise. Nevertheless, two remarks made on these occasions are of interest. (1) The process by which an equilibrium is achieved is described as a process of “tâtonnement”: an actual “tâtonnement”, however, since exchanges are made outside equilibrium. “The debate between each buyer and each seller is a kind of tâtonnement which lets each of them know with certainty the true price of things” (1770b, 326). No one’s interest, however, would really be dam­ aged – at least statistically – since, given that the price variations are made by “imperceptible degrees”, the “losses” and “gains” are supposed to compensate for each other in the end but, “if somebody were harmed, this damage being the unavoidable effect of the course of things, it would be accepted as we accept the evils that we can only ascribe to necessity” (1770b, 326). (2) In the second place, while prices are actually determined on a subjective basis, they acquire a misleadingly objective appearance in markets: “each seller and each buyer in particular plays so small a part in the formation of this general opinion and the resulting current evaluation, that this evaluation can be seen as an independent fact” (1770a, 175). It is this illusion, Turgot stresses, which has given rise to a belief in the existence of an “intrinsic value” or “real value”: a thing “strictly speaking, has no real and intrinsic value” and usage alone “allows us to call this current value the real value of a thing” (1770a, 176). [T]hrough comparison of the total supplies and the total demands, a cur­ rent value establishes itself, which only differs from that established in the exchange between two isolated men, in that it is the mean [“le milieu”] of the different values which would have resulted from the haggling between the contracting parties in each separated exchange. But this mean or cur­ rent value does not acquire any reality independent from the opinion and the comparison of the reciprocal needs and does not cease to be continuously variable. (1770a, 175) It will be seen how this line of reasoning is also implemented to deal with the concepts of money and interest rate and in public economics. After Turgot, the approach was developed in various directions. Condorcet (1793), for example, used it to determine the optimal amount of public expenditure and taxes for a given period (below). Some echoes are also to be found in Morellet’s Prospectus (1769) and Condillac’s Le commerce et le gouvernement (1776) and, later, in authors like Isnard, Canard and Bicquilley (see Chapter 8, this volume). This kind of approach is also to be found in the press. The Journal encyclopédique ou universel, for example, published on 1 and 15 October 1776 an anonymous review of Smith’s

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Wealth of Nations. The author notes that for Smith, “the word value has a dual meaning; it expresses both the quality of a particular object, and the faculty that enables this object to be used as a means for the purchase of others”, but remarks that this distinction “appears to us to have greater subtlety than importance, for it is always utility, the real merit or opinion, which makes this object the price of another” (1 October 1776, 8–9). 3.

Graslin and the foundation of the theory of natural prices

Another view of value and prices is presented by Graslin in his Essai analytique sur la richesse et sur l’impôt (1767) and Dissertation sur la Question proposée par la Société économique de St. Pétersbourg (1768),13 some points being clarified in the course of his controversy with Nicolas Baudeau (Graslin 1767–68).14 Graslin’s approach is not easy to understand because of the very peculiar theoretical vocabu­ lary he invented and was the only one to use: this certainly impeded the reception of his work. Supply and demand, free goods, complementary and substitutable goods

At first sight, it seems that Graslin’s developments on the subject are close to Turgot’s. Following the sensationist approach, he insisted on the role of needs, demand and supply in the determination of prices. A first kind of value is what he calls “relative value”: this is the relative price of a commodity in terms of another good. The “fundamental principle”, Graslin writes, is that “need is the only cause of the value of things, which is their quality as wealth” (1767, 115; see also 1767–68, 25). Relative values depend on the inter­ action of supply and demand. They result “from the comparison of the different degrees of need in themselves, and of the more or less important difficulty in meet­ ing them on account of the scarcity or abundance of the thing which is the object of each need” (1767, 13). Graslin, however, introduces a second concept: “absolute value”, because of the existence of “objects of needs” such as air, water and light, which are not pro­ duced, not scarce and consequently do not have any market or relative value. They are free goods: “these things . . . are always in excess quantity with respect to the extent of the general need: the value of any individual portion is so modest that it is almost nothing” (1767, 36n). The quality of being a free good also depends on the circumstances: “in a boat on the open sea, or in deserts”, water will have a rela­ tive value because it is then scarce (1767, 37). Nevertheless, free goods are also, by extension, elements of wealth (1767, 136) because they are useful: they have an “absolute value”, the “well-being” generated by the satisfaction of the need.

13 Graslin’s developments in the Dissertation have some similarities with the basic model of an econ­ omy presented by Auxiron (1766). On Auxiron, see van den Berg (2004). 14 See Faccarello (2008, 2009). For an alternative view, see Orain (2006).

Turgot, Graslin and sensationist political economy 127 The quality of having an absolute value is, however, not limited to non-produced objects: it is in fact a property of any element of wealth – this is what Graslin also calls “direct value” (1767, 37n). Beyond the definition of free goods, another theoretical innovation is worth not­ ing: the concepts of complementary and substitutable goods (1767, 42ff). We must distinguish things which are of different species, the collection of which makes one single object of need . . . (such as the stone, the lime, the wood and the slate, etc., which go into the building of a house; such are also . . . the raw material and the industry of the labourer); from the things which, although of different nature, are only related to one part of the need, since they have one and the same use in fulfilling the need: such as the slate, the tile, the thatch, etc. (1767, 42) Things “which are different but relate to the same portion of a need”, that is to say, which can satisfy the same need, are what are today called substitutable goods: “the value of the one necessarily influences that of the other, just as a part – great or small – that we subtract from the whole influences the size of the remaining part” (1767, 44). In the case of complementary goods, that is to say, things “which are the objects of different parts of the same need”, their quantities vary in the same way and “the value of the one cannot have any influence on the value of the other” (1767, 44). The foundation of the natural prices approach

Besides these innovations, some other striking theoretical developments are to be found in Graslin’s writings, especially in the Dissertation which forms an essential complement to the understanding of the Essai and was unfortunately neglected by commentators. In it, we realise that the interaction of supply and demand refers in fact to market prices, and what we call natural prices today are determined in a different way. Starting from a “state of nature” in which men are isolated from each other, form no kind of society and have to produce the objects of their needs, allocating their labour in consequence, Graslin develops a model which depicts three different stages of society proper: the “perfect order of society”, the “state of relationships” and the “inverted order of society”. Society emerges as soon as there is a division of labour, and the evolution from the first simple state, the “perfect state”, to the most developed, the “inverted order”, is irreversible. The “full and perfect order of society” (Graslin 1768, 118) is seen as the exten­ sion of the state of nature after the division of labour and results from a conscious collaboration between men. It is a kind of planned society in which “a general and unanimous convention” fixes the amount of the different goods that the members have to produce to satisfy the needs of all. In this context, Graslin defines what he calls a “class” of workers – production being directed to the satisfaction of final

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needs, each of them generates a class, which is nothing other than what we call today a vertically integrated sector: “one necessarily must gather in the same class men – either cultivators or labourers [craftsmen] – who are directly or indirectly involved in the production of the object of each need” (1768, 136). If the activity of a man directly or indirectly contributes to the production of several final con­ sumption goods, this activity is divided in proportion and each fraction is attributed accordingly to the different classes defined by these goods (1768, 140–41). This state of society is difficult to maintain as the population grows and needs and commodities multiply. It evolves into the second stage, the “state of relation­ ships between men” or “commercial universe”, that is, a market economy in which the social connection between men is indirect through exchanges in markets. Like the “perfect order”, this commercial society is, however, not a capitalist society but rather a society of independent producers, what Marx later called “simple com­ modity production”. In spite of some ambiguities, and contrary to Turgot’s devel­ opments (below), there is no space in Graslin’s schemes for a capital/wage labour relationship.15 But neither is the “commercial universe” an a priori harmonious society, because now the interests of the members are different and driven by a maximising attitude: “the interest of each in particular being that of receiving more and giving less, the interest of any one is certainly not the same as the interest of any other” (1768, 142). The nation . . . is the collection of many different and even opposed interests because he who is an owner has to give something to the other who needs it. The wealth of the former lying in a greater scarcity of this thing, and that of the latter in its greater abundance, the wealth of a State can only be in the equilibrium of these two sums of wealth, in other words in the conciliation of these two opposed interests. In order to have greater wealth in the State, the thing must be in a quantity exactly proportionate to the extent of the need. (1767, 64) The third stage of society is more complex: the “inverted order” is still a marketbased society, but it is characterised by the emergence of a leisure class of rent­ iers who do not work but nevertheless have a right to a share of the society’s production – hence the appellation “inverted” because the natural right of property based on labour is no longer respected. Therefore, contrary to the other kinds of society, it is not “just”. Now the main question is: what is the price mechanism that makes the last two systems efficient and ensures the emergence of an equilibrium? For the sake of 15 Wage earners are equated with craftsmen. As for entrepreneurs, Graslin sees them as a kind of inter­ mediary case between the rentiers, who do not work and only have “privileges”, and the “labour­ ers” who work and do not have any “privileges”. Only one portion of the revenue of entrepreneurs originates in their activity and, in this respect, they are “labourers” – the other portion results from “privileges” (Graslin 1767–68, 55).

Turgot, Graslin and sensationist political economy 129 simplicity, only the second stage of society – “the state of relationships” or “com­ mercial universe” – is examined here. Graslin’s reasoning is first made at the macro level, and the natural exchange ratios are determined on this basis. Suppose that, in the natural order, each iso­ lated cultivator devoted ¾ of his labour time to cultivation and ¼ to the produc­ tion of “ploughing implements”.16 After the division of labour between cultivators and craftsmen, the entire population is divided17 between the two activities: ¾ of them remain in agriculture and devote their time to cultivation and ¼ work in the craft industry; the two goods, corn and “ploughing implements”, are produced in the same total quantities as before – needs are the same – but the working time of each producer is now reduced owing to the beneficial effects of the division of labour. Exchanges between corn and implements are now necessary. In the planned society, that is, the “full and perfect order”, the question is irrelevant. But in the “commercial universe”? How is the exchange ratio fixed? Craftsmen do not have any use for the tools they make: their whole production is destined for the cul­ tivators. The latter, on the other hand, only give up ¼ of the production of corn in exchange, keeping ¾ of the corn produced. The equilibrium exchange ratio between activities is thus the following: the total production of ploughing imple­ ments = one-quarter of the production of corn. This ratio is an equilibrium price: all the needs are satisfied; there is no excess supply, neither of the final consump­ tion good nor of tools. This ratio is also just: it allows everyone to obtain the same quantity of corn as before, when each citizen was also a landowner and produced his own circulating capital (1768, 119). Equilibrium exchange ratios between commodities are thus determined by the global quantities of labour expended in their production: the same quantity of direct and indirect labour is needed for the production of the ploughing implements and the quantity of corn given in exchange. The ploughing implements are manufac­ tured by ¼ of the total labour force (the level of employment in the craft industry), with no means of production other than labour. The corn is produced by ¾ of the total labour force (the level of employment in agriculture) using the ploughing implements themselves produced by ¼ of the labour force. In terms of incorporated labour, the total quantity of corn is therefore worth four times the total quantity of ploughing implements – which gives the natural price noted earlier. What is valid for the exchange between global equilibrium quantities is also valid for the single elements: “the [proportional] parts of each [different] thing must exchange against each other in this same proportion” (1768, 127) – an asser­ tion which means that, once the natural ratios of exchange between total quantities are known, as well as these quantities, the natural (equilibrium) prices of the indi­ vidual commodities are also determined. 16 Strictly speaking, in modern terms, we have to suppose that these “ploughing implements” are a kind of circulating capital (absence of fixed capital). 17 Note that in this simple example, the two activities are subdivisions of a single vertically integrated sector.

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The analysis is then developed in more complex situations, for example, when the division of labour increases either by subdividing each process into further activities (1768, 134) or by multiplying the needs and thus dealing with classes proper (1768, 135ff) – the vertically integrated sectors. The calculation of natural prices leads to the same result as before: equilibrium relative prices are determined by the direct and indirect quantities of labour.18 If one wished to fix exactly the proportion in which these exchanges of labour, and of the fruits of labour, must take place between all classes it would be necessary to know the proportion of all the men who form a class to the total amount of men. . . . The share of the fruits of the labour of all others that each class must receive will be in proportion to the number of men that it includes with respect to all men taken together; and it would provide for each of the other classes a share of the fruits of its own labour in proportion to the portion that each class makes up of the mass of all men. (1768, 139) But what happens when the effective supply of a good differs from that which is necessary to fulfil needs? The effective individual value of the good, its market price determined by supply and demand, will differ from its natural price, while the value of the total amount produced remains the same. The market price will fluctuate but, for given needs and techniques, price and quantity are supposed to eventually return to their natural values. Why? Graslin describes a process of gravi­ tation ante litteram, operating through the mobility of the only factor of produc­ tion, labour. The principle underlying this process is once more the selfishness of the agents, who always move “towards the activity which procures the greatest right to the work of others, either because of the intensity of the need or because of the scarcity of the object” (1767, 98). Suppose that, for whatever reason, the production of various goods is disrupted. The market prices of the commodities in excess supply fall, while the reverse happens for those in excess demand. People engaged in producing the former see the purchasing power of their commodity diminished in terms of other commodities; while the opposite occurs for those pro­ ducing the latter. Some labourers therefore move from the first activities into the second, production changes and the excesses in supply and demand are reduced, thus prompting new and inverse movements in market prices. An equilibrium is eventually reached – a new natural equilibrium or the previous one, depending on whether anything has changed in needs and/or techniques. The order that I present here is not fictitious. . . . This enduring liberty for each individual to move from one class into another whenever he anticipates

18 Of course, work is of different kinds, but these differences, Gralin writes, can be dealt with: the different kinds of labour have to be weighted according to their more or less arduous nature (1768, 134).

Turgot, Graslin and sensationist political economy 131 therein a better situation; and the disadvantage that always results for a class of its too great increase; would tend perpetually to place these two classes in equilibrium. (1768, 121–2) Needless to say, very similar developments are to be found in Smith, Ricardo or Marx with the development of natural price theory – and in Turgot in another con­ text. The main difference is that these authors deal with a capitalist society and that the process of gravitation mainly involves the migration of capital. As for the physical approach implemented by Graslin in his examples, which gave rise to the concept of “class” (a vertically integrated sector or “subsystem” in Sraffian words, an approach particularly developed by Luigi L. Pasinetti), they possibly inspired Isnard in his Traité des richesses (where Graslin is mentioned), where an approach in physical terms is also presented – but in the nowadays more familiar perspective of branches of production (with examples recalling some clas­ sical and Sraffian schemes). 4.

Money and interest

The sensationist approach is groundbreaking not only on the subject of value and prices but also as regards the nature of money and interest. At first sight, however, sensationist authors just followed Boisguilbert’s statements that only the structure of relative prices matters: the quantity of money is unimportant and anyway cannot explain economic crises or prosperity. In addition to this, Turgot accepted Hume’s “quantity theory”. The question is therefore, in what sense was sensationist politi­ cal economy innovative in monetary theory and as regards the rate of interest? In developing a theory of value, Turgot emphasised the necessary monetary form of exchanges. Moreover, his theory of value allowed him to propose the first eco­ nomic theory of the rate of interest. The value form and money

Turgot’s theory of value shows that money is not the primary goal of exchanges: underlying these exchanges, there is something hidden that is much more fundamental – utility. But values and utilities cannot be expressed as such: money is their necessary expression. Turgot thus points out the difficulty that a theory of value has to face: the measure of value (1769, 88, 94–5). “It is . . . impossible to express value in itself” (1769, 94). Value is a relative value, and the value of a com­ modity can only be expressed in terms of a quantity of another commodity against which it is exchanged. The sole means of expressing value is therefore . . . to say that one thing is equal to another in value. . . . Value has . . . no other measure than value; and one measures values by comparing values, in the same way as one measures a length by applying another length to it; in either means of comparison there

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is no fundamental unit given by nature; there is only a conventional and arbitrary unit. (1769, 95) In this perspective, money is necessarily a commodity, and every commodity is money. And the “convention” Turgot mentions does not relate to some alleged “conventional” value of money, but exclusively to the choice of the commodity which will be considered, by all agents, as the most convenient expression of the value of their commodities. “One can only take as a common measure of value what has itself a value”, Turgot stresses. That is to say, an object “accepted in trade in exchange for other values”: “the only universal representative token of [a given] value is another equal value. – A purely conventional money is therefore impos­ sible” (Turgot 1766, 558; see also 1767a, 636). The analysis of the nature of money as the value form is developed in detail in the Réflexions (1766, 554–62). The “appreciative value” of a commodity is first of all expressed by each of the quantities of every other commodity against which it can be exchanged. Then Turgot deduces from this the money-form properly speaking. Thanks to its intrinsic qualities, related to the requirements of the func­ tions of measure of values and medium of exchange, one commodity detaches itself from the rest, and all the other commodities, by convention, express their value in terms of this good, which therefore becomes the unique expression of value. This analysis was to a great extent taken up and developed by Morellet in his “Digression” on money which he included in his 1769 Prospectus. Isnard accepted it. But another author later also benefited from Turgot’s analysis of the value and money forms: Karl Marx, whose analysis of the “forms of value” and the necessary monetary expression of value systematises Turgot’s and Morellet’s developments. Money as capital

The value form analysis deals with the functions of money as a measure of value and medium of exchange. But money is also a store of value. Far from seeing in that feature a potential source of crisis and an interruption in the circulation of commodities, as Boisguilbert (but also the physiocrats) did, Turgot saw instead this aspect of money as positive, linked to what he called “the true idea of the circula­ tion of money” (1766, 575). This “true idea” is the circulation of capital, that is, of the amount of money accumulated thanks to the “esprit d’économie” (thriftiness) and which, Turgot insisted against the physiocrats, does not possess any negative effect on the level of activity because it is always directly or indirectly spent in the economy. [T]he cultivation of land, manufactures of all kinds and all branches of com­ merce run on a mass of capitals or of accumulated moveable wealth which, having first been advanced by entrepreneurs in each of the different classes of work, must return to them each year with a constant profit. . . . It is this

Turgot, Graslin and sensationist political economy 133 continual advance and return of capitals which make up what one must call the circulation of money, this useful and fertile circulation which animates all the works of society, which maintains life and movement in the political body, and for which there is good reason to make a comparison with the cir­ culation of blood in the animal body. (Turgot 1766, 575)19 Dugald Stewart, in his lectures on political economy, insisted on the relationship between money and capital, and quoted Turgot quite extensively (1854–60, VIII, 396–7). In the manuscript of what is now known as Theories of Surplus Value (1861– 63, 29), Marx also appreciated Turgot’s statements on the circulation of money as capital,20 which he symbolised with the cycles M – C – M (Money – Commodity – Money) and M – C – M’ (M’ > M). This is a point he advised Friedrich Engels to note in his review of the first volume of Capital for the Fortnightly Review.21 All sorts of businessmen, says Turgot, “ont cela de commun qu’ils achètent pour vendre . . . leurs achats sont une avance qui leur rentre”. Buying to sell, this is in fact the transaction in which money functions as capital, and which conditions its reflux to its p oiNt of issuE, in distinction to selling to buy, where it need only function as currENcy. The differing sequence of the acts of sElliNg and buyiNg imposes upon money two different circulation movements. (Marx to Engels, 23 May 1868, in 1975–2004, vol. 43, 39) Finally, Turgot listed some additional requirements for the circulation of money as capital. As those who save and those who invest are not necessarily the same people, he wrote, the collection of savings and their distribution poses the question of the role of financial intermediaries. Turgot touched on this theme in Mémoire sur les prêts d’argent: he recognised the necessity of such intermediaries but opposed an institutional solution which would have conferred an official status, a monopoly, on this kind of transaction. As with every other form of activity, this intermediation has to remain free, and must assume any form that merchants and producers find most suited to their needs. One possible form is of course that of a bank. Turgot paid attention to the “transport of debts”, that is, to the circulation of “paper” (bills of exchange). Paper issued by a solvent agent, and endowed with confidence, could act as a medium of exchange. This paper, by definition “convertible”, could also be issued by a bank, but on condition that certain rules designed to assure the security of the enterprise 19 The second part of this passage is quoted by Marx in Volume 2 of Capital (1885, 416). 20 In the second volume of Capital, Marx also remarked that Turgot, much more often than the physio­ crats, tends to use the word “capital” instead of “avances”, “and more closely identified the avances or capitaux of the manufacturers with those of the farmers” (Marx 1885, 436 n.3). 21 This is what Engels did, with Marx’s own words, and quoting Turgot (in Marx and Engels 1975– 2004, vol. 20, 238).

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be respected: merely receiving deposits without borrowing, discounting bills as the prime activity, not exceeding the limits of its own activity – by not engaging in trade, for instance – and possessing no exclusive privilege, that is, remaining in a competitive situation. It was essential to avoid John Law’s mistakes. As a corollary to all that, the rate of interest is not for Turgot a monetary vari­ able. He insists that the usual phrase “price of money” is ambiguous and mislead­ ing. It has in fact two very different meanings, depending on whether money is bought and sold (in modern terms, its purchasing power) or is something which is loaned: the economic logic at work in these cases is not the same. In the first case, the quantity theory is relevant. In the second case, what is referred to is the price in a particular market, the market for loanable funds (see, for example, 1766, 581–8). Determined in this market and being a price like any other, the interest rate22 must be the result of free supply and demand between agents – “it is a current price, fixed in the same way as that of all other commodities” (1766, 581). The rate of interest

Turgot’s assertion that interest is a price like any other ran counter to a very long and heavy legal and scholastic tradition, the arguments of which had to be refuted. Interest is only an economic variable, and what is relevant here is not theology but the theory of value. Turgot’s ideas are outlined in some sections of the Réflexions (1766, 577–86) and developed more extensively in the 1770 Mémoire sur les prêts d’argent (Turgot 1770a), which is devoted to this subject. On the one hand, sum­ ming up the traditional arguments for and against usury, he shows the “frivolity” of the latter and the possibly correct but not truly decisive aspects of the former. On the other hand, he develops his own reasons, the most important of which displaces the controversy. One major traditional argument in favour of the prohibition of usury – founded in Roman law – was that of the fungible and consumable character of some objects, money included: destroyed by the use which is made of them, they cannot be lent at interest because their transfer to the borrower necessarily involves a transfer of property rights. This argument, Turgot stresses, supposes that the transaction is about the physical object – for example, a quantity of coins, or a given weight of a precious metal or corn. However, the transaction is about a quantity of value and involves the respective utilities of the contracting parties: “where have our reasoners seen that the only thing to be considered in the loan is the weight of the metal borrowed and returned, and not its value and its utility for the lender and the borrower?” (Turgot 1770a, 177). The interest rate is a price and its determination pertains to the theory of value. Two principles are essential here: (1) the general principle of exchanges, seen earlier: an exchange can only be implemented if the utility of the quantity of the commodity received is higher, for each agent, than

22 A low rate of interest is desirable. On this topic, Turgot follows the tradition initiated by Thomas Culpeper and Josiah Child (see, for example, Turgot 1766, 592–3).

Turgot, Graslin and sensationist political economy 135 the utility of the quantity of the commodity given up in exchange and (2) a second principle introduced by Turgot in this context: time preference, that is to say, the depreciation, in terms of “esteem value”, of a good available in the future com­ pared to the same good available now (1770a, 177). At the time of the transaction, the lender compares the utility of the sum of money he owns with the borrower’s promise of reimbursement in the future. As the lender estimates the promise to reimburse tomorrow to be worth less than the identical sum today, an agreement in these conditions is impossible if no interest is stipulated, because it would involve a loss of utility for the lender. In order for the transaction to take place, it is therefore necessary for the promise of reimburse­ ment in the future to be for a higher amount than the sum which is lent, so that the “esteem value” the lender attributes to it is higher than the value he attributes to the sum in question. If the elements of risk and disutility are reintroduced, then this difference – the interest – measures (1) the time preference, (2) the risks incurred and (3) the disutility experienced because of the momentary unavailability of the amount of money. This analysis is obviously novel and groundbreaking: the link with the theory of value is fundamental.23 Turgot, in his emphasis on time preference, could have drawn inspiration from two theoretical sources: Mariotte and Locke. The first, in his 1678 Essay de logique, had already noted that, because the future is uncertain, “if two goods [pleasures] are equal, one being present and the other to come, one must prefer the present” (1678, 48, § XCVIII). The second, in An Essay on Human Understanding (Book II, Chapter 21), examines what he calls wrong judgements “when we compare present pleasure or pain with future”: This is the way we usually impose on ourselves, in respect of bare pleasure and pain or the true degrees of happiness or misery: the future loses its just proportion, and what is present obtains the preference as the greater. (Locke 1690, I, 227) Turgot’s studies at the Sorbonne could also have been of some help because a similar development had been made, at the turn of the seventeenth century, by the Flemish Jesuit Leonard de Leys (Lessius in Latin): Lessius’s “carentia pecuniae” already referred to a kind of time preference. However, in Lessius’s writings, this element was just an empirical fact observed in the market (van Houdt 1998).24 Turgot instead linked it to his subjective theory of value. It is also to be noted that reasoning in terms of time preference seems to have been widespread among confessors and casuists during the seventeenth century because, in 1679, Pope 23 It should be obvious now that Marx’s assertion that “Turgot derived a justification of interest from the existence of ground-rent” (1894, 760; see also 1861–63, 356) is inaccurate. Condillac was also in favour of the legitimacy of a positive rate of interest, but with more traditional arguments (1776, Part I, Chapter 18). 24 It is also interesting to read Turgot’s analysis in contrast to the Jansenist controversies of the time about the legitimacy of interest-bearing loans. On these controversies, see Orain and Menuet (2017).

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Innocent XI had to condemn the proposition that since a present sum of money is “more precious” than the same sum available in the future, “the lender may demand from the debtor something more in addition to the loan, and on that title can be excused from usury” (quoted in Delumeau 1990, 118). All these aspects of Turgot’s analyses naturally drew the attention of liberal economists. The idea that the determination of the interest rate must be totally free later contrasted with Smith’s analysis in the Wealth of Nations, and the comparison with Jeremy Bentham’s Defence of Usury (1787) imposed itself: their views were judged to be essentially the same. Bentham’s pamphlet was translated into French twice in 1790,25 and a third time in 1828 by the Saint-Simonian Saint-Amand Bazard. In his edition, Bazard added Turgot’s Mémoire sur les prêts d’argent as an appendix to Bentham’s text (in Bentham 1828, 201–93):26 This work by Turgot is only known by the small number of people who deal with political economy: we put it again here under the eyes of the public, because, in our opinion, together with Bentham’s treatise, it contains all that was said in the clearest and conclusive way on usury until now. (Bazard in Bentham 1828, 7) 5.

Competition, capital and the distribution of income

Until now, it was supposed that economic activities were performed by free agents in the context of free trade. The concept of capital was also advanced. It is time to analyse these fundamental features of sensationist political economy. This side of the theory has many things in common with the physiocrats, but the differences are material on some central issues. The 1766 Réflexions marked a watershed. The most important paragraphs are those concerned with capital, its definition, forms, origin and logic: “I invite persons who love the science [of political economy] to read this little treatise. . . . They will have the satisfaction to find there that one of the best chapters in Smith’s book . . . is entirely due to the work of M. Turgot” (Rœderer 1800–1801, 78). Value and capital

In the line of thought initiated by Boisguilbert, Turgot shared many views with Quesnay, notably a belief in the efficiency of free trade. He also accepted the hypothesis of the exclusive productivity of agriculture and the fundamental impor­ tance of the “avances” (capital) in production and trade, and started his analysis with the usual physiocratic division of society into three classes: landowning, pro­ ductive and sterile (that he preferred to call “classe stipendiée”, that is, stipendiary class). However, by systematically referring to the concepts of free competition 25 Apologie de l’usure, rédigée en forme de lettres, adressées à un ami, Paris: Lejay, and Lettres sur la liberté du taux de l’intérêt de l’argent, Paris: Grégoire. 26 Bazard’s edition – his introduction and Turgot’s text – is republished in 1830 in the third volume of Œuvres de J. Bentham published in Brussels (Bentham 1830, 239–305).

Turgot, Graslin and sensationist political economy 137 and competition among capitals, he distanced himself from the “sect”. As he wrote to Dupont, criticising the physiocrats on this point: I find that . . . you do not make sufficient use of this less abstract principle, but . . . more enlightening, more fruitful or at least forceful for its simplicity and without exception because of its generality: the principle of competition and of free trade. (Turgot to Dupont, 20 February 1766, in 1913–23, II, 507) While insisting, like Quesnay, on the need to invest large sums of money in agricul­ ture, Turgot generalised this idea and applied it to all kinds of activities. He focused on the word “capital” – defined as a quantity of value which can be embodied in all sorts of objects and which can adopt any form (Turgot 1766, 567). This was a polemical statement against the physiocrats since it established an equivalence between all sorts of “accumulated value”: land ownership is only one of many forms of capital, and the landowner is a capitalist. Every landed estate is the equivalent of a capital; consequently every land­ owner is a capitalist, but not every capitalist is a landowner; and the owner of a moveable capital may choose whether to use it in acquiring a landed estate, or to invest it in the enterprises of the agricultural class, or the indus­ trial class. (Turgot 1766, 596) Quesnay and his disciples struggled with the question of the origin of capital. While restating the usual physiocratic arguments – its origin lies in savings by the landowners or in a lack of competition which allows entrepreneurs to appropriate part of the “produit net” – Turgot emphasised an alternative explanation. Breaking with the prevailing approach which, from Boisguilbert to Quesnay, emphasised the necessity of “expense” to maintain prosperity, he developed an apology of savings and the “esprit d’économie” as the main source of the accumulation of capital and wealth (1766, 567; see also 1767b, 649 ff.). He insisted on the fact that savings in no way cause a decrease in global demand: while they are not an “expense” – that is to say, a purchase of final goods for consumption – they are not hoarding either, but a formation of capital. Whether they are spent directly or indirectly in purchases of means of production, they produce beneficial effects for growth, productivity and employment. Furthermore, Turgot claimed, savings are for the greater part made by the entrepreneurs themselves, out of their profits, and profits are earned in all activities. Capital, the origin of profit and the uniformity of the profit rate

The motive for investment and capital accumulation is “income or annual profit”. Why would an individual invest in agricultural, industrial or commercial enter­ prises if he does not in return receive his expenses, the amortisation of fixed capi­ tal, a compensation for his effort and the risks incurred, and – Turgot insists – a

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surplus equivalent to that which he would have received, without work and risk, had his capital been used to buy land? The logic of the argument is clear. The par­ ticular branch of production is of little importance: individuals invest in it if the return is not less than the minimum expected remuneration. If this return is higher elsewhere, movements of capital take place: capital moves from trades in which the rate of return is relatively low towards those activities where it is more attractive. The mobility of capital, through its action on relative supply and demand, modifies relative prices and the rates of return tend to be equalised throughout the economy, all things being equal: “the products of these different employments limit each other, and are maintained . . . in a kind of equilibrium” (Turgot 1766, 591): as soon as the profits resulting from any employment of money increase or decrease, capitals are withdrawn from other employments and flow into it – or are withdrawn from it and flow to other employments – which necessarily changes, in each of these employments, the ratio between the capital and the annual product. (Turgot 1766, 592) A situation of equilibrium is thus defined by an equalisation of the rates of return, or, more precisely, by a stable hierarchy of global rates of return, if we take into account the elements of risk proper to each activity and the specific contribution of the entrepreneur. The lowest rate is the rate on land, that is, the rent rate calculated on the value of the land – Turgot evidently thought that he could thereby eliminate differences in land quality because the best pieces of land are more expensive. The highest rates are the profit rates for agricultural, industrial and commercial enterprises. The rate of interest lies in between: as a result of the risk incurred by the lender, it must be higher than the rent rate, but lower than the rates related to employments which, apart from risk, also include work for the capital owners. It is important to note here that the hierarchy and levels of the rates of return are estab­ lished at the equilibrium.27 This approach was later to form the core of classical political economy. But it also undermines physiocratic theory: the emphasis on the existence of profits in all activities poses the problem of the compatibility of this perspective with the dogma of the exclusive productivity of agriculture and the assertion that the whole “produit net” is appropriated by the landowners. Turgot’s texts do not present a clear solution. However, the answer to this question appears clearly in the work of Pierre-Louis Rœderer, in his 1787 book, Reculement des barrières – he repeated his analysis, first literally in his Cours d’organisation sociale (1793), then in a paper, “De la génération des richesses. Examen de cette question: d’où provien­ nent les différentes espèces de revenus et comment s’opère leur distribution dans

27 Contrary to what Eugen von Böhm-Bawerk (1884, 65) asserted, this is not an explanation of rent and profit rates in terms of the interest rate. Turgot’s explanation is not “an explanation in a circle”.

Turgot, Graslin and sensationist political economy 139 la société?” (1797) and finally in his Mémoires sur quelques points d’économie publique (1800–1801) (Faccarello 1991). Rœderer (1787, 14–26) explains that the net product of the economy, while generated in agriculture, also depends on the other sectors which, indirectly, contribute to its creation: the size of the agricul­ tural sector, and hence of the net product, depends in fact on the commodities that manufactures and commerce can offer to the landowners. Without these pos­ sibilities of consumption expenditure, the first landowners would certainly have cultivated their land (or had it cultivated) in a way just necessary for their own needs (and those of their servants), since any surplus would be useless. This is the reason why “agriculture [the farmers], manufactures and commerce have an equal, primitive and intimate right to the products of land, and . . . this right is at the origin of their income” (1787, 23–4). Consequently, the net product, while originating in agriculture, has to be distributed equitably (that is, in proportion to the amounts invested) among all the capitals in the economy, whatever form they take. This is what Rœderer calls “le droit des capitaux” (the right of capital) or “la loi du niveau” (the law of the level). The general profit rate is thus given at the aggregate level by the value of the “produit net” divided by the total value of the capitals invested in all activities, including land. It is striking that Marx later adopted a similar approach in Volume 3 of Capital for resolving the problem of the transformation of values into production prices: in the economy, the surplus value is produced by workers in all activities, and the amount of surplus value produced by each sector thus depends, all things being equal, on the amount of labour spent in this sector. The total amount of surplus value forms the total amount of profit, the uniform rate of profit is the ratio of this amount to the total sum of capitals invested in the economy: and this amount is redistributed in the different sectors, not in proportion to the labour alone (variable capital) but to the total capital invested therein. The class structure of society and the distribution of income

Some significant consequences must be drawn from this analysis. The first con­ sequence is the modification of the class structure of the economy. While Turgot first started from the physiocratic triad of a landowning class, a productive class and a sterile class, he ended with another threefold division based on the owner­ ship of factors of production: land, capital and labour. As a matter of fact, while the landowning class is homogeneous, the productive and sterile classes are not (Turgot 1766, 569–70 and 572): each of them is divided “into two categories of men, that of the entrepreneurs or capitalists, who make all the advances, and that of the simple wage-earning workers” (1766, 572). As Turgot insisted in his comments on Graslin: “These are . . . two very different categories of men who contribute in a very different way to the grand work of the annual reproduction of wealth” (1767a, 633). It could be asserted, however, that Turgot could also have ended with only two classes, the landowners being only, in his view, a subgroup of the owners of capital. J.C.L. Simonde de Sismondi was later to draw this conclusion.

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A second consequence is the determination of a sort of minimal price for each commodity – a cost of production lato sensu – beneath which the agents decrease their production or stop producing altogether. In his comments on Saint-Péravy (Turgot 1767b, 655–6) and in a letter to David Hume (25 March 1767, in 1913–23, II, 663), Turgot called it the “prix fondamental” (fundamental price). Under the effect of competition and the migrations of capital, the “prix courant” or market price, directly determined by supply and demand, tends towards this fundamental price. This theme, at the same time developed by Graslin in a similar context, was to be found later in classical economics as the gravitation of market prices around natural prices. However, as seen previously, Turgot’s interest is almost exclusively focused on the determination of the “prix courant” which only exists in trade (Tur­ got 1770a, 176). Moreover, the component parts of the “fundamental price” are themselves determined by supply and demand, and subject to perpetual variations (Turgot 1770a, 176). A further consequence of this approach must also be noted: what has just been said also applies to the labour market and the price of labour, that is, wages. “The price of wages” is “only determined by the relation of supply to demand” (Turgot to Hume, 25 March 1767, in 1913–23, II, 663). Section VI of the Réflexions shows how wages are contained by competition among workers who, not possessing any capital, are obliged to sell their “arms and industry”. The price a worker gets for his labour depends on the state of the labour market and the buyer pays him as little as possible whenever he can choose among a great number of suppliers of labour. With the result that “the wage of the worker is limited to what is necessary for his subsistence” (1766, 537). In his above-mentioned letter to Hume, Turgot is more precise, but the conclusion is the same. The “fundamental price” of wages, he writes, is the price of the subsistence of the worker, plus a “profit”, that is, what is necessary for him “to deal with accidents and raise a family”: this “profit” being fixed by competition at the lowest possible rate. When this fundamental price rises, for example, the market price of labour must adjust. “Needs are always the same. This kind of superfluity, from which it is always possible to cut out, is still a neces­ sary element for the subsistence of workers and their families” (Turgot 1913–23, II, 663). These developments on wages and the distinction between the two classes of workers and capitalists attracted Marx’s attention. He quoted Section VI of Turgot’s Réflexions in his “Unpublished Chapter 6” of Capital (Marx 1863–66, 1068n) and again in Theories of Surplus Value (1861–63, 46). On Turgot, he wrote further in Theories of Surplus Value: the pure gift of nature is presented as surplus labour, and on the other hand the necessity for the labourer to yield up what there is in excess of his neces­ sary wage [is explained] by the separation of the labourer from the conditions of labour, and their confronting him as the property of a class which uses them to trade with. (Marx 1861–63, 362)

Turgot, Graslin and sensationist political economy 141 Marx agreed with his son-in-law, Charles Longuet, on the fact that the so-called “iron law of wages” was stated by Turgot and Ricardo (Marx to his daughter Jenny, 6 April 1862, in 1975–2004, vol. 46, 230), not by Ferdinand Lassalle.28 A further and important development on wages was to be made by Condorcet and Rœderer: the theory of capital helps to explain the hierarchy of wages. The minimum wage is what is necessary to sustain the worker and his family in a given socio-economic environment. Any additional amount is just the remu­ neration of the capital invested in the person, through education and training for instance. According to Rœderer, this capital, which must yield profits like any other capital, is a “fonds d’industrie” (fund of industry, in the sense of economic activity in general), and the person in which it is invested is a “propriétaire d’industrie” (owner of industry). This was later to give rise to the concept of human capital. Finally, there is the question of rent. As seen earlier, rent is seen as the profit of capital invested in land. But plots of land are of unequal quality: is this compatible in the long run with the principle of the uniformity of the profit rate? One answer is that better plots of land are more expensive than less fertile ones, and thus, while more productive, the capital invested in purchasing them must also be greater. Turgot’s analysis does not go further. While acknowledging the possible different fertility of land, he did not develop a theory of differential rent. However, he did state for the first time the so-called law of non-proportional returns. This was in his 1767 comments on a memoir by Guérineau de Saint-Péravy – a physiocrat and the successful competitor of Graslin in the Limoges contest on indirect taxation for which Graslin wrote his Essai analytique. There, Turgot criticised the physiocrats’ habit of assuming constant returns in agriculture. He insisted on the great variety of possible physical returns, depending on the quality of land and the quantity of capital invested in a given plot of land. Production requires some advances; but equal advances on plots of land of unequal fertility yield very different products, and this is enough to show that the products cannot be proportional to the advances; they cannot even be proportional when [advances are] applied to a single plot of land, and we can never assume that doubling the advances doubles the product. (1767b, 644) He takes the example of a variable quantity of capital (a certain number of units of ploughing labour) employed on a given plot of land where a certain amount of seeds have been sown – this “land and seed” bundle being what would later be called a fixed factor of production. He then states that, as greater quantities of the

28 In the same letter, he also wrote that Lassalle’s phrase is borrowed from J.W. Goethe, who himself adapted Sophocles.

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variable factor are invested in the land, its physical additional product initially increases, then reaches a maximum and finally diminishes. Seed thrown on a soil which is naturally fertile, but has not been prepared at all, would be virtually a waste of expenditure. If the soil were tilled once, the produce would be greater; tilling it a second or a third time would not just double or triple, but quadruple or decuple the produce, which will thus increase in a much larger proportion than the expenditure, and this would be the case up to a certain point, at which the produce would be as large as pos­ sible relative to the advances. Past this point, if the advances are still further increased, the product will still increase, but less so, and continuously less and less until an addition to the advances would add nothing further to the produce, because the fertility of the soil is exhausted and art cannot increase the product any further. (1767b, 645) Turgot clearly distinguishes between intensive and extensive diminishing returns and also points out the fact that it is always advantageous, in physical terms, to go beyond the point of maximal average product until the additional product becomes nil (Turgot 1767b, 643–5). During the 1760s, other authors referred to the unequal fertility of land: Claude-François-Joseph d’Auxiron, for example, in his Principes de tout gou­ vernement (Auxiron 1766). Graslin too noted that the unequal fertility of land is one of the causes of the emergence of the “inverted order of society” (1767, 80). But what is certainly most interesting is the content of a critical review of Graslin’s Essai analytique, published anonymously29 in the Éphémérides du citoyen in the

29 According to Dupont (1769, 44), who took over direction of the Éphémérides in 1769 and was not the editor in 1768, the author was the physiocrat Saint-Péravy. However, there are several reasons for treating this statement with caution. One is advanced by van den Berg, who never­ theless accepts Dupont’s attribution: “It is . . . surprising that the writer [Saint-Péravy] whom Turgot criticised in 1767 for thoughtlessly assuming constant returns in agriculture, would the next year discuss the implications of the phenomenon of (extensive) diminishing returns for the theory of rent. Whether Turgot’s remarks inspired this change is a matter of speculation” (Van den Berg 2000, 191). The second reason results from the internal evidence offered by the 1768 and 1769 issues of the Éphémérides, which reveals some serious elements of confusion. (1) The anonymous review is signed with the letter N (a letter also attributed before to Quesnay for some of his contributions). In 1769, Dupont declares that, by mistake, this letter N was attributed to two different authors (Dupont 1769, 44–5 note). (2) In addition, the subtitle of the anonymous review is “Chapitre premier. Exa­ men des Principes généraux de l’Auteur sur les Richesses”: but no Chapter 2 was subsequently published. (3) After publication of the review, in issue 11 of 1768, on page 168, and issue 2 of 1769, on page 136, it is stated that a critique of Graslin was published in the second issue of 1768 – this critique is by Dupont, in the form of a letter to Saint-Péravy – and that Saint-Péravy also wrote a critique of his competitor, which was to be published soon: therefore our anonymous review of 1768, issue 10, cannot be by Saint-Péravy. (4) Finally, Saint-Péravy was an “orthodox” physiocrat: the solution proposed in the anonymous review (below) is in Turgot’s style, not really acceptable to a physiocrat.

Turgot, Graslin and sensationist political economy 143 tenth issue of 1768. The author of the review remarks that the different fertility of plots of land poses a problem for the determination of the price of an agricultural product, which must be unique. As it is preferable that all the land be cultivated, that the population live well and the net product and the resources of the State be at a significantly high level, it is necessary that the most unproductive land should also be cultivated: in consequence, the price “must be measured on the product of the least fertile lands, provided that they are devoted to the kind of cultivation most adapted to their quality” (Anonymous 1768, 195). Will the most fertile plots of land be favoured by this price, because their production could in principle be sold at a much lower price? No, because, while it is true that the first expenses for clearance, etc., are lower on them than on less fertile land, the price of these plots of land is well above the price of relatively unproductive land. In consequence, the capital invested in buying land of various qualities yields approximately the same rate of “rent” (1768, 196–7): the landowners “will only have an income proportional to the price of the capital which was spent for the acquisition of their estate” (1768, 197). All this is very much in Turgot’s line of thought. 6.

Public goods and the public good

Sensationist political economists did not limit their investigations to the behaviour of individuals, be they consumers or producers. The State had to be brought into the picture. Should the State interfere with private agents in the economy? Should it produce some goods or services? What should its resources be? How are public decisions taken? The nature of public goods and the problem of the free rider

The sensationist approach to the State is based on market failures and on the quid pro quo approach (Faccarello 2006). What are its main features? At the end of the seventeenth century, and against the current practice of the time, Boisguilbert had already maintained that the State should not interfere with economic agents in markets, and should limit its action to the fundamental tasks of police, justice and defence. Turgot agreed: one should “reduce to a minimum the number of tasks that a government should undertake” (to Richard Price, 22 March 1778, in Turgot 1913–23, V, 535). The first duty of the State is “to main­ tain the private property of people in the country and to protect them against for­ eign attack” (Turgot 1776, 183). But in fact the role of the State is wider, and the expenses of police, justice and defence are special cases of a more general class of expenditures. While the public authority should not do what people can do on a private basis and in a much more efficient way (Turgot 1759, 602–3), it should nevertheless intervene when markets fail to work properly – in modern words, when there is a “market failure”. These interventions entail expenses made “in the interests of all” and could even limit property rights. This is also what Condorcet meant when, among the definitions he gave of the object of public finance, he always mentioned “public prosperity”. Taxation, as he wrote, for example, in his Essai sur la constitution et les fonctions des assemblées provinciales, “ceases to

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be legitimate if it exceeds the amount necessary for the defence of the State, for the maintenance of the peace and security of the citizens, and for those works and establishments really useful to common prosperity” (Condorcet 1788, 279). But what are these “works and establishments” that the State should be in charge of? Basically, the main cause of market failures is the nature of some goods: goods whose consumption by an individual cannot be prevented because there is no rivalry in their consumption and no exclusion in markets if the individual does not want to pay for it. On the one hand comes the problem of the rivalry or non-rivalry in consump­ tion. “There are some objects”, Turgot wrote, “that . . . all people can enjoy at the same time without harming one another. There are also other objects which are destroyed in use or, even if they are not destroyed, can only satisfy one man at a time.” “All the objects in nature can be classified under these two groups”, he added, or find themselves in an intermediary position: “from the sky that everyone can see, to the food which can satisfy only the hunger of a single individual, the endless variety of all beings surrounding us compose all possible shades between these two extremes” (Turgot 1753–54, 381). On the other hand, a criterion for exclusion was clearly stated by Condorcet when he raised the problem of the free rider. He noted that if the principle of justice is to be interpreted rigorously, an expense financed by taxation on account of its general utility should only be introduced if all the taxpayers agree to pay for it. But, he remarked, this may not always be the case: if, at the same time, it is impossible or very difficult to prevent those who did not wish to contribute towards this expense from benefiting from it, we can consider as legitimate the obligation to contribute, even independently of unanimous consent. (Condorcet 1788, 280) A general criterion is stated explicitly: Two conditions are therefore necessary to legitimate the devotion of tax to useful expenses: it is necessary that the utility of these expenses be proved, and also that they not be at the sole expense of those who consent voluntarily to them, if they are unable to prevent others from also benefitting from them. (1788, 280) This is the reason why Condorcet, in his Vie de M. Turgot, listed “public works” as an expense to be financed by taxation. “The state of society”, he writes, “neces­ sarily requires public works useful to all citizens or to the inhabitants of a city, vil­ lage, or district” (Condorcet 1786, 185).30 One of the main examples of such works concerns the basic infrastructure of a country: rivers, canals and especially a 30 Public goods could be local, and thus decided by a local assembly.

Turgot, Graslin and sensationist political economy 145 developed road network allowing easy communication between provinces, towns and villages – for the creation and maintenance of which private activity was judged inefficient and inappropriate. This is not only of importance to the politi­ cal and administrative organisation of the country. In the opinion of Turgot and Condorcet, it is above all an essential condition for the realisation of free trade. Graslin also considered taxation as a price in the quid pro quo tradition: it is the equivalent paid for the services of the State (Graslin 1767, 25) – limited by Graslin to protection and justice. Why is this price imposed upon citizens? One reason, like for Turgot and Condorcet, is that protection is a good for which there is no rivalry in consumption, and no possible exclusion in markets: it is thus not possible to exclude from the benefit of protection those people who do not wish to pay the price but who at the same time feel the need for this public good. Graslin perfectly sums up the free rider problem. [T]his exchange cannot be free like the exchange between all other objects of needs. . .. From the moment society is formed, each member is not free to contribute or not, nor to fix what he wants to give in exchange for pro­ tection; because he is not free to either surrender this object of need, or be given less of it since all people enjoy it in common and indivisibly . . .; and because nobody can be deprived of it when all others are enjoying it. And, as each citizen would find it profitable to receive without giving anything, no-one would hurry to participate passively in the exchange, since they would always be certain to be included in it actively. As a consequence, a law must decide the amount that everyone has to give; and this law is taxation. (1767, 152–3) But there is an additional reason why the price for protection must be a tax: peo­ ple have a psychological propensity to underestimate the strength of their need for protection, and hence the price they should pay in order to fulfil it. This is (1) because people receive the services of the protection of the State without really knowing all the advantages they receive from such services (1767, 154–5) and (2) because citizens underestimate their need for protection: people “receive in advance the element of wealth they pay for through taxation” (1767, 173) – and this, in Graslin’s eyes, constitutes a significant difference with respect to an ordi­ nary exchange in markets where one has first to pay the price in order to get the object (1767, 173). These two reasons bring about an underestimation of the need for public goods, but also probably the temptation to be a free rider. People “believe that they give without receiving, they only feel the privation and they suffer from it” (1767, 155). The total amount of public expenditure and taxation

Turgot’s and Condorcet’s analyses, however, go beyond an analysis of the nature of public goods: some developments are also devoted to what public economics calls “merit goods” and “externalities”, for which an intervention of the State also

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proves necessary (Faccarello 2006). Needless to say, the question of taxation is essential for them. As a tax is the price paid for a public service for which there is no market, the resources of the State should therefore only consist of taxes: a modern democratic State should not have any property and must not manipulate money. As a consequence – notably stressed by Condorcet and Rœderer – an essen­ tial feature of this approach is that the resources and expenses of the State are not independent from each other but have necessarily to be determined simultaneously. A theory of public finance, however, cannot be limited to the affirmation that the State should not spend too much and that the normal financing of its expenditure should be made through taxation in a quid pro quo perspective. It is also important to determine which public goods and services should be produced and in what quantities, because the list of the goods and services useful to society could be long and it is generally impossible to provide them all at once. For Condorcet, the differ­ ent amounts of public expenses may be classified according to the decreasing util­ ity they produce: if the most useful expenses are made first, and so on, any increase in these expenses will produce a lower and lower utility and thus public expendi­ ture has a decreasing additional utility. But public expenses are financed by taxes, and a tax means a diminution of the disposable income, a disutility. As Condorcet accepted Daniel Bernoulli’s hypothesis of a diminishing additional (marginal) util­ ity of income or wealth – which he could also have found in Mariotte31 – successive increases in public expenditure necessarily entail an increasing additional disutility of taxation. For a given period, the optimal amount of the public expenditure and taxation can thus be determined: public expenses “have a limit: the point where the utility of the expense becomes equal to the evil generated by the tax” (Condorcet 1793, 629). In other words, following the logic of Condorcet’s paper, their volume is determined by the point at which their additional utility is equal to the additional disutility of the taxes. Moreover, in a modern state, the decisions about public expenses and taxation must be taken by elected representatives. Hence, Turgot’s plan for transforming the political regime in France and creating a system of municipal, provincial and national assemblies. Hence, also Condorcet’s attempt to fix rules for an optimal functioning of any kind of assembly. The complex decision-making process and the probability of reaching “just” and “true” decisions through a voting proce­ dure depending on the composition of the assembly and the degree of enlighten­ ment of the voters are examined at length in his 1785 Essai sur l’application

31 Mariotte (1678, 48, § XCVII) stated that, in choosing between goods and evils, one should not stick to the quantity of things but instead “to the magnitude of the pleasure and pain they cause to us”. In a few pages titled “Des principes des propositions morales”, he clarified his reasoning. Imagine there is a man with a wealth of 20,000 écus. He is given the option to bet them in a game of chance with the possibility of winning 100,000 écus: “but 20,000 écus are sufficient for a man to live comfort­ ably and the additional 100,000 écus would only slightly increase his happiness, like 3 to 2 or 3 to 1: but if he loses his 20,000 écus, he falls into destitution and total poverty, and the ratio between having sufficient wealth to live comfortably and having nothing is almost infinite, or like 100,000 to 1” (1678, 155).

Turgot, Graslin and sensationist political economy 147 de l’analyse à la probabilité des décisions rendues à la pluralité des voix (see Chapter 8, this volume). But how should the burden of taxation be shared between citizens? Because of the inequality of incomes, a proportional income tax would be unfair: the lower the income, the greater the disutility generated by the tax. Condorcet (1793), in what would later be called an “equal absolute sacrifice” perspective, provided a theoreti­ cal proof that only a progressive income tax complies with justice, generating an equal absolute disutility for each citizen. Graslin, too, with less theoretical argu­ ments, advanced a similar conclusion, his preference going however to progressive indirect taxes on consumption goods (Graslin 1767, 150 ff).32 The idea made its way. Progressive direct taxation was proposed by Say’s elder brother, Horace, in an article published in 1796 in the journal of the Idéologues, La décade philosophique, littéraire et politique. There, he stressed that a simple proportional income tax is unjust, because what the same given proportion takes from a modest income is “much more painful” than what it takes from a greater income. He then states the following rule for equitable taxation: “Taxation must be distributed in such a way that it generates in the different classes an equal inconvenience, an equal painful diminution” (Horace Say 1796, 315), which is nothing other than the equal abso­ lute sacrifice principle. Jean-Baptiste adopted this point of view in Olbie ou essai sur les moyens de réformer les mœurs d’une nation (Say 1800, 228). Finally, the doctrine of capitalist competition presented earlier, and especially the uniformity of the profit rate, implies a critique of the physiocratic doctrine of taxation. One point, much debated at that time, was the “single tax scheme”, that is to say, the proposal that the government levy a unique tax on landowners because they were supposed to be the sole owners of the net product. Condorcet empirically abandoned this idea during the Revolution. Rœderer could no longer accept it. As the net product is in fact shared by all the owners of capital, throughout the econ­ omy, all sectors included, there is no reason to levy the tax only on the landown­ ers, who share this net product with the other capitalists. The single tax, however, Rœderer stated, could be provisionally maintained for the sake of convenience, when it is difficult to tax these capitalists. But, in the end, the result would be the same: whenever free competition prevails, the “loi du niveau”, through migrations of capital between sectors and the consequent changes in the remuneration rates of capital, would automatically and proportionally divide the charge of the tax among all the co-owners of the net product (Rœderer 1791 and 1800–1801). Graslin’s alternative view

Many of these groundbreaking developments were unfortunately neglected or for­ gotten. During the Revolution and the Empire, the hectic political events showed that to think of the possibility of a rational and just organisation of the State and of its decision-making processes was perhaps a utopian dream, and prompted more 32 On these points, see Faccarello (2006, 2009) and Orain (2010).

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pragmatic developments or – the two trends are sometimes intertwined – even another utopian view: that of the State as a simple competitive firm like any other, producing and selling in markets a specific service: “security” – a view present in Say, which was to find its greatest developments in the writings of Gustave de Molinari (Faccarello 2010). It is interesting to note that this alternative utopian view was also in statu nascendi, some decades before, in Graslin’s Dissertation. For Graslin, all those who work for the State, directly or indirectly, form a class (as defined earlier) because they all contribute to the production of a specific good, protection, which corresponds to a need and is in demand. But, in this respect, the public sector is not different from any other activity and it also has its own private interest, like any other class of producers (1768, 142). Its aim is not therefore to achieve the general interest of society, even if it contributes to its realisation in the same way as any other class does. The protective power itself, while instituted for the safety and peacefulness of all, has its own private interest in the order of relationships. This interest is tied to the interest of all, in this sense it is essential for people that this power be in a condition to perform its function. But this can also be said of the interest of any class because, in the same way, it is essential for all other classes that each one in particular be in the condition to provide the object in its charge. (1768, 142) Similar ideas were developed by Say some decades later, when he stressed that the State was in the hands of politicians and civil servants who each have their own interests, which do not usually coincide with the public good. But the situation is not dramatic: these private interests have simply to be considered like the interests of any other profession. An opposition of interests is . . . no quarrel, does not break peace. Are not the individuals who form a nation in constant opposition of interests between each other, without being at war? . . . Each time we go into a shop and buy, do we not have an interest that is opposed to that of the merchant? . . . Does a war necessarily ensue between those in power and those who are governed? Not at all. These are interests to be amicably discussed, just as are the interests of two merchants who do business together and agree on sharing outlay and profits. (Say, n.d., 644–5) 7.

Concluding remarks

The intellectual legacy of sensationist political economy is essential on many points: the determination of value and prices, the conception of money and the theory of the rate of interest, capitalist competition and the distribution of income, public economics and the ethics of the public good. Sensationist economists do not

Turgot, Graslin and sensationist political economy 149 necessarily agree with each other,33 but the different paths they took are coherent – the main gap between them being, retrospectively, on the theory of value and the origin of the net product. However, with the exception of the theory of the exclusive productivity of agriculture and the related conception of the incidence of taxation, it is not clear that sensationist authors felt that the differences between them were material. Turgot, for example, appreciated Graslin’s Essai analytique, and some of its “ingenious views”: “this book is far from being devoid of any merit nor even of depth”, he wrote to Dupont (Turgot 1913–23, II, 665), happy to shake the physi­ ocrats’ dogmatism (see also Goutte and Klotz 2015). In interpreting this “early” lit­ erature, scholars must thus be very cautious and avoid retrospective views.34 None of these authors can be included in the subsequent British and French classical schools. However, it is certain that we find in them many important theoretical elements that were later used by classical authors as building blocks in their theoretical construc­ tions. As a conclusion, let us briefly focus on two additional but not minor points. Firstly, an important subject was how to organise the transition from a regulated economy to a free market one. It was heavily discussed among the reformers of the time, and Turgot and Condorcet, in particular, engaged in a polemical discussion with Ferdinando Galiani and Jacques Necker. In a nutshell, the main question was how to implement economic reforms to establish free trade, and to what extent was “abstract” economic theory a useful guide for action in those circumstances (Faccarello 1998). Secondly, the theme of the division of labour and the benefits it generates was well known in France. It was dealt with, as a rather obvious topic, in many writings. We find it, for example, in Turgot (especially in the Réflexions) and in Graslin: All men being obliged . . . to work personally in order to obtain the objects of their needs; and each of them seeking to obtain more with less labour; they soon understood . . . that, if each of them devoted himself to the produc­ tion of one object, he would acquire more aptitude and ability, to the advan­ tage of all. Hence the division of productive labour. . . . This order directly derives from natural and primitive law, because each only labours – and more profitably – for his own well-being. (Graslin 1767, 97) This theme is also linked to the theory of the evolution of societies in a certain number of stages – starting from a society of hunters and arriving at the commer­ cial society, with intermediary steps like the shepherding and agricultural stages. Turgot outlined such a theory very early, in 1751, in “Plan d’un ouvrage sur la 33 On the interesting case of Condillac, see Orain (2003). 34 For an interpretation of Turgot as a classical economist, see Cartelier (1976), Brewer (1987) and Ravix and Romani (1997). Groenewegen (1970, 1982) was in favour of a different interpretation, but his opinion changed over time. Both attitudes probably result from a too retrospective view. Groenewegen is certainly the scholar who, with Ronald L. Meek, studied Turgot’s writings with the greatest attention (see also Groenewegen 1969, 1971, 1983, 2018).

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géographie politique” (1751a) and “Plan de deux discours sur l’histoire univer­ selle” (1751b) – a scheme also later developed in France and in Scotland. But another author is worth mentioning: Emmanuel Joseph Sieyès, a political philosopher, who collaborated with Condorcet, and the author of the celebrated pre-revolutionary pamphlet Qu’est-ce que le Tiers-État? In the 1770s, especially in his Lettres aux économistes sur leur système de politique et de morale. Première lettre. Sur les richesses (1775), he developed some interesting economic and politi­ cal ideas. Insisting on the essential role of labour in the economy, he saw it as the basis of society, “the social order being nothing other than the best possible order of works”. This order is thus linked to the division of labour. Every man first acquires alone almost all the objects of his needs. Their num­ ber increases with the means [of production], and, as these means become more complicated, a division of tasks arises; the mutual benefit requires it because the workers, less disturbed by actions of the same nature than by tasks of different kinds, always tend to make the greatest efforts with least means. Divisions in labour always increase by virtue of this law . . .: to improve the effects, and to reduce the costs. (Sieyès 1775, 32–3) But Sieyès is also laying here the foundations of his theory of representative democracy and propelling the economic theme of the division of labour into politi­ cal philosophy – just as, in a totally different context, Plato did in Republic. Just as the division of labour has beneficial effects on productivity and wealth, Sieyès emphasised, the different political functions in a State are all the more efficiently performed when they are executed by men who specialise in these functions, even if they are exercised on a temporary basis. With these assertions, Sieyès was refut­ ing the arguments of the partisans of direct democracy and pleading in favour of representative democracy (see, for example, Sieyès 1789). References Anonymous. 1768. “Examen d’un Ouvrage intitulé Essai analytique sur la Richesse & sur l’Impôt”. Les Éphémérides du citoyen, ou Bibliothèque raisonnée des sciences morales et politiques, no. 10 (erroneously numbered as 9 on the title page of the issue), 165–206. Auxiron, Claude-François-Joseph d’. 1766. Principes de tout gouvernement, ou examen des causes de la splendeur ou de la foiblesse de tout État considéré en lui-même, & indépen­ damment des mœurs. Paris: Chez J. Th. Herissant Fils. Bentham, Jeremy. 1787. Defence of Usury, Shewing the Impolicy of the Present Legal Restraints on the Termes of Pecuniary Bargains. In a Series of Letters to a Friend, to Which Is Added a Letter to Adam Smith, Esq. LL. D. on the Discouragement Opposed by the Above Restraints to the Progress of Inventive Industry. London: T. Payne and Son. Bentham, Jeremy. 1828. Défense de l’usure, ou lettres sur les inconvénients des lois, qui fixent le taux de l’intérêt de l’argent . . . suivi d’un mémoire sur les prêts d’argent, par Turgot, et précédé d’une introduction contenant une dissertation sur le prêt à intérêt. Paris: Malher et compagnie. Bentham, Jeremy. 1830. Œuvres de J. Bentham, jurisconsulte anglais, vol. 3. Brussels: Louis Hauman et Compagnie.

Turgot, Graslin and sensationist political economy 151 Böhm-Bawerk, Eugen von. 1884. Kapital und Kapitalzins. Vol. I, Geschichte und Kritik der Kapitalzinstheorien. English translation, Capital and Interest. A Critical History of Economical Theory. London: Macmillan, 1890. Bonnet, Charles. 1755. Essai de psychologie, ou considérations sur les opérations de l’âme, sur l’habitude et l’éducation. Auxquelles on a ajouté des principes philosophiques sur la cause première et sur son effet. London. Bonnet, Charles. 1760. Essai analytique sur les facultés de l’âme. Copenhagen: Chez les frères Cl. et Ant. Philibert. Bonnot de Condillac, Étienne. 1776. Le commerce et le gouvernement considérés relative­ ment l’un à l’autre. Amsterdam and Paris: Jombert and Cellot. Brewer, Anthony. 1987. “Turgot: Founder of classical economics”. Economica (New Series), 54 (216), 417–28. Caritat de Condorcet, Marie-Jean-Antoine-Nicolas. 1785. Essai sur l’application de l’analyse à la probabilité des décisions rendues à la pluralité des voix. Paris: Imprimerie Royale. Caritat de Condorcet, Marie-Jean-Antoine-Nicolas. 1786. Vie de M. Turgot. London. Caritat de Condorcet, Marie-Jean-Antoine-Nicolas. 1788. Essai sur la constitution et les fonctions des assemblées provinciales. In Œuvres de Condorcet, edited by Arthur Condorcet-O’Connor and François Arago. Paris: Firmin Didot, 1847–1849, vol. VIII, pp. 115–659. Caritat de Condorcet, Marie-Jean-Antoine-Nicolas. 1793. “Sur l’impôt progressif”. Journal d’instruction sociale, no. 1, 11–24. In Œuvres de Condorcet, edited by Arthur CondorcetO’Connor and François Arago. Paris: Firmin Didot, 1847–1849, vol. XII, pp. 625–36. Cartelier, Jean. 1976. Surproduit et reproduction. La formation de l’économie politique clas­ sique. Grenoble: Presses Universitaires de Grenoble, and Paris: François Maspéro. Condillac: see Bonnot de Condillac. Condorcet: see Caritat de Condorcet. Delumeau, Jean. 1990. L’aveu et le pardon. Les difficultés de la confession, XIIIe-XVIIIe siècle. Paris: Fayard. Dos Santos Ferreira, R. 2002. “Aristotle’s analysis of bilateral exchange: An early formal approach to the bargaining problem”. The European Journal of the History of Economic Thought, 9 (4), 568–90. Dupont [de Nemours], P.-S. 1769. “Suite et fin de l’Avertissement, et de la Notice abrégée qui commencent les volumes précédents”. Éphémérides du citoyen, ou Bibliothèque rai­ sonnée des sciences morales et politiques, no. 9, 5–78. Faccarello, Gilbert. 1990. “Le legs de Turgot: Aspects de l’économie politique sensualiste de Condorcet à Roederer”. In Gilbert Faccarello and Philippe Steiner (eds), La pensée économique pendant la Révolution française. Grenoble: Presses Universitaires de Gre­ noble, pp. 67–107. Faccarello, Gilbert. 1992. “Turgot et l’économie politique sensualiste”. In Alain Béraud and Gilbert Faccarello (eds), Nouvelle histoire de la pensée économique, vol. I. Des scolas­ tiques aux classiques. Paris: La Découverte, pp. 254–88. Faccarello, Gilbert. 1998. “Galiani, Necker and Turgot: A debate on economic reform and policy in 18th century France”. In Gilbert Faccarello (ed.), Studies in the History of French Political Economy. From Bodin to Walras. London: Routledge, pp. 120–95. Faccarello, Gilbert. 2006. “An ‘exception culturelle’? French sensationist political economy and the shaping of public economics”. The European Journal of the History of Economic Thought, 13 (1), 1–38. Faccarello, Gilbert. 2008. “Galimatias simple ou galimatias double? Sur la problématique de Graslin”. In Philippe Le Pichon and Arnaud Orain (eds), Jean-Joseph-Louis Graslin

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Turgot, Graslin and sensationist political economy 153 Locke, John. 1690. An Essay Concerning Human Understanding, 5th ed., 1706. New ed. with an introduction by John W. Yolton, London: Dent, 1978. Lough, John. 1953. “Locke’s reading during his stay in France (1675–79)”. The Library, s5–VIII (4), 229–58. Mariotte, Edme. 1678. Essay de logique. Paris: Étienne Michallet. Marx, Karl. 1861–63. Economic Works 1861–1863. Economic Manuscript of 1861–63. A Contribution to the Critique of Political Economy [Theories of Surplus Value]. In Karl Marx and Friedrich Engels, Collected Works, vol. 30. London: Lawrence & Wishart, 1988. Marx, Karl. 1863–66. “Das Kapital. Erstes Buch, Der Produktionsprozeß des Kapitals. Sech­ stes Kapitel. Resultate des unmittelbaren Produktionsprozesses”. Arkhiv Marksa i Engelsa, II (VII) (Moscow, 1933), 4–266. English translation by Ben Fowkes in Capital, a Cri­ tique of Political Economy, vol. 1. London: Penguin Books and New Left Review, 1976, pp. 948–1084. Marx, Karl. 1885. Das Kapital. Kritik der politischen Ökonomie. Zweiter Band. Der Zirkula­ tionsprozess des Kapitals, Friedrich Engels (ed.). Hamburg: Meissner. English translation by David Fernbach. Capital, a Critique of Political Economy, vol. 2. London: Penguin Books and New Left Review, 1978. Marx, Karl. 1894. Das Kapital. Kritik der politischen Ökonomie. Dritter Band. Der Gesa­ mtprozess der kapitalistischen Produktion, Friedrich Engels (ed.). Hamburg: Meissner. English translation by David Fernbach. Capital, a Critique of Political Economy, vol. 3. London: Penguin Books and New Left Review, 1981. Marx, Karl, and Friedrich Engels. 1975–2004. Marx/Engels Collected Works, 50 vols. Lon­ don: Lawrence and Wishart. Maupertuis: see Moreau de Maupertuis. Moreau de Maupertuis, Pierre Louis. 1749. Essai de philosophie morale. In Pierre Louis Moreau de Maupertuis, Œuvres de Maupertuis. Nouvelle édition corrigée et augmentée, vol. I. Lyon: Bruyset, 1768, pp. 171–252. Moreau de Maupertuis, Pierre Louis. 1753. Lettres sur divers sujets. In Pierre Louis Moreau de Maupertuis, Œuvres de Maupertuis. Nouvelle édition corrigée et augmentée, vol. II. Lyon: Bruyset, 1768, pp. 217–372. Morellet, André. 1769. Prospectus d’un nouveau Dictionnaire de commerce. Paris: Chez les frères Estienne. Orain, Arnaud. 2003. “Decline and progress: The economic agent in Condillac’s theory of history”. The European Journal of the History of Economic Thought, 10 (3), 379–407. Orain, Arnaud. 2006. “ ‘Équilibre’ et fiscalité au Siècle des lumières. L’économie politique de Jean-Joseph Graslin”. Revue économique, 57 (5), 955–81. Orain, Arnaud. 2010. “Progressive indirect taxation and social justice in eighteenth-century France: Forbonnais and Graslin’s fiscal system”. The European Journal of the History of Economic Thought, 17 (4), 659–85. Orain, Arnaud, and Maxime Menuet. 2017. “Liberal Jansenism and interest-bearing loans in eighteenth-century France: A reappraisal”. The European Journal of the History of Economic Thought, 24 (4), 708–41. Ravix, Joël, and Paul-Marie Romani. 1997. “Le système économique de Turgot”. Introduc­ tion to Anne-Robert-Jacques Turgot, Formation et distribution des richesses. Paris: GF/ Flammarion, pp. 1–63. Rœderer, Pierre-Louis. 1787. Questions proposées par la commission intermédiaire de l’Assemblée provinciale de Lorraine, concernant le reculement des barrières, et observa­ tions pour servir de réponse à ces questions. [n.p.]

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Turgot, Graslin and sensationist political economy 155 Turgot, Anne-Robert-Jacques. 1759. “Éloge de Vincent de Gournay”. In Œuvres de Turgot et documents le concernant, avec biographie et notes par Gustave Schelle, vol. I. Paris: Félix Alcan, 1913–23, pp. 595–622. Turgot, Anne-Robert-Jacques. 1763. “Plan d’un mémoire sur les impositions”. In Œuvres de Turgot et documents le concernant, avec biographie et notes par Gustave Schelle, vol. II. Paris: Félix Alcan, 1913–23, pp. 293–308. Turgot, Anne-Robert-Jacques. 1766. Réflexions sur la formation et la distribution des rich­ esses. In Œuvres de Turgot et documents le concernant, avec biographie et notes par Gus­ tave Schelle, vol. II. Paris: Félix Alcan, 1913–23, pp. 533–601. Turgot, Anne-Robert-Jacques. 1767a. “Sur le mémoire de Graslin”. In Œuvres de Turgot et documents le concernant, avec biographie et notes par Gustave Schelle, vol. II. Paris: Félix Alcan, 1913–23, pp. 630–41. Turgot, Anne-Robert-Jacques. 1767b. “Sur le mémoire de Saint-Péravy”. In Œuvres de Turgot et documents le concernant, avec biographie et notes par Gustave Schelle, vol. II. Paris: Félix Alcan, 1913–23, pp. 641–58. Turgot, Anne-Robert-Jacques. 1769. “Valeurs et monnaies”. In Œuvres de Turgot et docu­ ments le concernant, avec biographie et notes par Gustave Schelle, vol. II. Paris: Félix Alcan, 1913–23, pp. 79–98. Turgot, Anne-Robert-Jacques. 1770a. Mémoire sur les prêts d’argent. In Œuvres de Turgot et documents le concernant, avec biographie et notes par Gustave Schelle, vol. III. Paris: Félix Alcan, 1913–23, pp. 154–202. Turgot, Anne-Robert-Jacques. 1770b. “Lettres au Contrôleur général, abbé Terray, sur le commerce des grains”. In Œuvres de Turgot et documents le concernant, avec biographie et notes par Gustave Schelle, vol. III. Paris: Félix Alcan, 1913–23, pp. 266–354. Turgot, Anne-Robert-Jacques. 1776. “La corvée des chemins. Observations du Garde des sceaux, Miromesnil, et réponses de Turgot”. In Œuvres de Turgot et documents le concer­ nant, avec biographie et notes par Gustave Schelle, vol. V. Paris: Félix Alcan, 1913–23, pp. 163–200. Turgot, Anne-Robert-Jacques. 1789. Mémoires sur le prêt à intérêt et sur le commerce des fers. Paris: Froullé. Turgot, Anne-Robert-Jacques. 1913–23. Œuvres de Turgot et documents le concernant, avec biographie et notes par Gustave Schelle. Paris: Félix Alcan. Turgot, Anne-Robert-Jacques. 2011. The Turgot Collection. Writings, Speeches, and Letters of Anne Robert Jacques Turgot, Baron de Laune [sic for “de L’Aulne”], David Gordon (ed.). Auburn: Mises Institute. Van den Berg, Richard. 2000. “Differential rent in the 1760s: Two neglected French con­ tributions”. The European Journal of the History of Economic Thought, 7 (2), 181–207. Van den Berg, Richard. 2004. “ ‘The equilibrium is never perfect’: The dynamic analysis of C.-F.-J. d’Auxiron”. History of Political Economy, 36 (1), 1–29. Van den Berg, Richard. 2014. “Turgot’s Valeurs et monnaies: our incomplete knowledge of an incomplete manuscript”. The European Journal of the History of Economic Thought, 21 (4), 549–82. Van Houdt, Toon. 1998. “ ‘Lack of money’: A reappraisal of Lessius’ contribution to the scholastic analysis of money-lending and interest-taking”. The European Journal of the History of Economic Thought, 5 (1), 1–35. Yolton, John W. 1991. Locke and French Materialism. Oxford: Clarendon Press.

7

Political critiques of political economy Arnaud Orain

“Philosophie économique” did not remain unchallenged during the Enlightenment. Unlike the Gournay circle, which was not a school with a clear political agenda, the physiocratic movement and their allies such as Turgot or Condorcet produced during two decades (1756–76) a body of doctrine and a clear strategy for dissemi­ nating their ideas, with an eye to changing the policy of the Kingdom and even the shape of the French monarchy as a whole. In many ways, political economists suc­ ceeded in their enterprise. First, although they already had the ear of a few figures in the higher echelons of government, they put themselves across, through their books and journals, as new actors in the Republic of Letters in the 1760s. Second, they were behind the liberalisation of the grain trade during the same decade or during Turgot’s ministry (1774–76). Third, they had strokes of genius that were handed down to economic posterity, such as the invention of the Tableau économ­ ique, the use of figures and calculations in political economy, or a clear explanation of the competitive mechanism. But for their contemporaries, the picture was far more ambiguous. Their communication strategy and the invasion of the philosophical sphere were seen by many as a complete sham: their excesses, their posture of devotion, their despotic views and their monologic message seemed at odds with the spirit of the Enlightenment. As far as the grain trade was concerned, the experiments of the 1760s and 1770s were perceived by many to have been the cause of terrible catas­ trophes. The Promethean posture of the physiocrats, their confidence in a natu­ ral order, and their disregard for time and material contingencies were viewed as crude, culpable negligence, and even a negation of the sensitive body of individu­ als. Finally, their supposedly incredible discoveries in the new science of political economy were, if not incomprehensible, at least very difficult for the vast majority of their readers to understand. In this way, to eighteenth-century French society from top to bottom, the physiocratic movement remained sometimes strange and heroic, and sometimes suspicious and frightening avant-garde of writers in a new genre. It is therefore not surprising that a vast and protean antiphysiocratic literature emerged begin­ ning with the 1760s. Against the theoretical aspects of the doctrine, their rheto­ ric and their devotion up to the critique of their economic policies, the spectrum DOI: 10.4324/9780429202414-7

Political critiques of political economy 157 of opposition was large (see Orain 2015b; Klotz et al. 2017; Kaplan and Reinert 2019). Even their allies and prominent political economists, primarily Turgot and Condorcet, were clearly opposed to the sectarian spirit of physioc­ racy (Faccarello 1998; Menudo and Rieucau 2014). In complete agreement with Quesnay and Mirabeau as regards the good effects of competition, self-interest and market forces, they criticised some of the physiocrats’ political concepts, sharing ideas with political critiques of physiocracy. This chapter focuses on three important challengers to the latter: the philosophes Jean-Jacques Rousseau (1712–1778) and Gabriel Bonnot de Mably (1709–1785), and the lawyer, journalist and maverick Simon-Nicolas-Henri Linguet (1736–1794). These three men shared epistemological principles and have built political sys­ tems different and often opposed to that of Quesnay, his disciples and their allies. In the 1760–70 decades, they faced directly political economy doc­ trines and policies. If they were not opposed – quite the contrary – to societies based on agriculture, they combated grain trade liberalisation and the enrich­ ment of farmers and landowners. This chapter first reveals fundamental diver­ gences between the understandings of human behaviour and the social pact of Rousseau, Mably and Linguet, on the one hand, and of political economists on the other hand. It then turns to the opposing positions of these men concerning the main debate of the 1760s on the grain trade. Lastly, it considers the oppos­ ing ideals of a wealthy large-scale agricultural system governed by an absolute monarch, that of the physiocrats, versus the virtuous and democratic societies of their opponents. 1.

Epistemological divergences

In the entry “Évidence” published in Denis Diderot’s Encyclopédie, ou Diction­ naire raisonné des sciences, des arts et des métiers (1756), Quesnay argues that our knowledge comes from senses and that while we are looking for pleasant sensations we try to avoid painful ones. But the end of the article opens the door to another way of thinking when he links his sensationism with the Cartesian tradition. The moral behaviour of man has to comply with a natural order willed by the Creator. To summarise, sensations of pleasure and pain determine our interested behaviour but it has to be guided by the natural laws, known as “self­ evidence” (évidence), “a certainty to which it is as impossible for us to refuse assent as it is impossible for us to ignore our present sensations” (Quesnay 1756, 62). With his article “Le droit naturel”, Quesnay insists upon the natural laws that should be discovered and transposed into positive rights: an abso­ lute respect for property and a complete freedom of trade. Natural inequalities resulted “from the combination of these laws of nature” (Quesnay 1767, 115). Later on, he proposed an “agricultural government” of a hereditary and absolute monarch, subject to the laws of the natural order, in other words “legal despot­ ism” (despotisme légal), and ruling over a society organised around landlords and agricultural entrepreneurs.

158 Arnaud Orain These views were developed by Lemercier de la Rivière in L’ordre naturel et essentiel des sociétés politiques (1767). According to Lemercier, when societies began, we were feeble and isolated creatures, but pressed by the attraction of physical pleasure to satisfy needs essential to our existence, and being able to obtain only by means of society the things that relate to those very needs, it is evident that our gathering together in society is a natural and necessary consequence of the appetite for pleasures. (Lemercier de la Rivière 1767, I, 10) As a fair consequence of different physical and intellectual faculties and efforts, “great differences in the status of men joined in society must necessarily be introduced. Therefore the inequality of conditions must not be seen as an abuse” (I, 25–26). Despite these inequalities, the physiocrat put forward the hypothesis that there exists a common interest in the growth of the agricultural “net product” (the revenu disponible created by large farmers) for all classes of society: accord­ ingly, politics was no longer an issue of virtue or honour, but of material interest. Protecting properties and increasing (farmers’) wealth became the all and end all of politics. Turgot and Condorcet shared many of these principles. From an epistemological point of view, their “[s]entationism established fundamental natural rights which human beings can enjoy – liberty, security, property – and of which free trade is the main aspect” (Faccarello and Steiner 2008, 15). Competition and self-interest were for them driving forces to equilibrium and prosperity. Concerning grain, Turgot called for an indefinite freedom to import and export (Faccarello 1998) as the only means to increase agricultural incomes (Kaplan 2017, 489). Supporter of largescale farms and promoter of the growth of the “net product”, Turgot approved Quesnay’s exclusive productivity of agriculture theory. Allies of the physiocrats but not worshippers of the sect, Turgot and Condorcet were less willing to sanctify private property than Quesnay or Mirabeau, and they clearly rejected the very idea of “legal despotism” (Faccarello 1998). These two elements create interesting rela­ tionships with anti-physiocrats. Some of the assumptions and principles of political economists fit the epistemo­ logical positions of Rousseau, Mably and Linguet. All of them put forward, in vari­ ous versions, a sensationist theory of knowledge; moreover, the first two believe, together with the physiocrats, that at first societies were a coalition of weak indi­ viduals grouped in order to satisfy their needs and ensure their self-preservation (Rousseau 1762, I.6) (Mably 1776, 321) (Ferrand and Orain 2019). But neither Rousseau nor Mably supposes a natural order driven to prosperity by the forces of interested behaviours. Rousseau put forward that “pecuniary interest is the worst of all, the vilest, the most liable to corruption, and even, I confidently repeat and will always maintain, the least and weakest in the eyes of anyone who knows the human heart well” (Rousseau 1782, 226). According to Mably, it is only through the culti­ vation of virtues in the heart of citizens, and the promotion of a collective welfare as opposed to the hoarding of wealth, that men could find happiness. No individual

Political critiques of political economy 159 well-being is possible if everyone is only “occupied with their domestic fortunes” (Mably 1776, 309–10). Differences with the physiocrats went deeper on the issue of inequality. Accord­ ing to Rousseau and Mably, property was in common in the first ages, and problems began when some individuals decided to enclose lands. Private property led to a thirst for increasing possessions, and the inequalities that followed were viewed by both authors as the very beginning of all issues and conflicts among men. By establish­ ing laws, the rich tried to ensure their property rights and prevent a civil war. They “transformed adroit usurpation into irrevocable right, and for the benefit of a few ambitious men subjected the human race thenceforth to labour, servitude and mis­ ery” (Rousseau 1755a, 286). With this unequal distribution of fortune, “men who gathered in society in order to be happy, [were] driven by degrees deeper and deeper into misfortune” (Mably 1778, 50). However, if Rousseau and Mably challenged the idea of a peaceful and natural development of inequalities after the social pact, they were not favourable to the destruction of private property once it was established. “It is certain”, wrote Rousseau in 1755, “that the right of property is the most sacred of all the rights of citizens” (Rousseau 1755b [1997], 23) and he added in 1762 that “[w]hat man loses by the social contract is his natural freedom and an unlimited right to everything that tempts him and he can reach; what he gains is civil freedom and property in everything he possesses” (Rousseau 1762, 53–4). Mably on his own would be very upset if [one] could suspect me of jeopardising the citizen’s property. Once the community of property no longer subsists, and men agreed to a division, I know there is no law more sacred than that of property. (Mably 1775, 272) The true divergence between Rousseau and Mably on the one hand, and the physi­ ocrats on the other, lies in the naturalisation of the inequalities by the latter, and by consequence in the degree of respect due to private property. According to Quesnay or Lemercier de la Rivière, there are neither circumstances nor reasons that are able to justify a violation of property rights. Turgot and Condorcet were less categori­ cal. If they shared with physiocrats the idea that the right of property is a natural right – since public expenditure is necessary, especially with regard to what we now call market failures (such as externalities) and amenities – the legislator can regulate and even restrict ownership rights. When it is possible to increase the net product and the circulation of goods by changing misuses of land, draining infected marshes or building infrastructure, local authorities are entitled to regulate private property (Faccarello 2006, 11–12) (Moyer 2016). Rousseau and Mably criticise private ownership at another level. They put forward that since individuals gather in order to be better after their association than before, extreme inequalities, espe­ cially the misery of the poor, are in contradiction with the conditions of the social contract. Rousseau explains that the fundamental pact, rather than destroying natural equality, on the contrary substitutes a moral and legitimate equality for whatever physical inequality

160 Arnaud Orain nature may have placed between men . . . the social state is advantageous for men only insofar as all have something and none has too much of anything. (Rousseau 1762, 56) Not only the civil equality but also the equality of wealth, “the force of legislation ought always to tend to maintain it” against the usurpations and oppressions of the rich (1762, 79). According to Mably, the inequalities prevent the achievement of the promises of society and have to be corrected by a public authority. They are unnatural, whereas he sees equality as a law of nature: “I limit myself to prove that equality is necessary to men. Nature had made it a law for our first fathers” (Mably 1776, 52). Linguet shares the idea of a “primitive confederation” that resulted from the common need of “hunters”. They gathered in order to be more efficient during their hunts, but envious of the ease with which agriculturists fed themselves, they decided to organise in war bands and conquered the workers of the land. By creating pastoral and agricultural communities subjected to them, hunters began wanton appropriation of animals and foodstuffs. And to avoid the destruction of these “resources”, the ruling class of hunters decided to share them: private property was introduced (Linguet 1767, II:10). From this first act of usurpation, society was divided into two irreconcilable social classes: the rich, who had seized all possessions, and the poor, who were no more independent and free. This master–slave dichotomy and these inequalities resulting from force were a radicalisation of Rousseau’s perspective. However, Linguet did not want to destroy private property. He was a resigned theoretician for whom the poor must accept inequalities and submission, because seeking to modify such established order would lead to even worse chaos (Linguet 1767, I, 1; II, 10) (Orain 2019, 474–5). That does not mean that property rights cannot be subject to limitation or restriction during extreme circumstances, such as famine or shortage. And it is precisely when they deal with the grain trade that Rousseau, Linguet and Mably put forward different ideas from those of political economists concerning private ownership. 2.

The issues of grain trade liberalisation

Supported by Pierre Le Pesant de Boisguilbert at the turn of the seventeenth and eighteenth centuries as one of the greatest means for France’s economic recovery (Faccarello 1986), the evolution of State-controlled grain trade policy towards an internal and external liberalisation became a major issue of the 1750s. The Mar­ quis d’Argenson and some authors from the Gournay circle, especially ClaudeJacques Herbert with his Essai sur la police Générale des grains (1753), put into question the ban of exports, the absence of free trade within the kingdom and police controls towards merchants. The famous debate on grain trade began, with a timid step in 1754 (some exports were possible and the circulation of grain between provinces facilitated), a giant step in 1763–64 and again in 1774–76, with no more police regulations, internal free trade and free exports (with a ceiling

Political critiques of political economy 161 price). If the physiocrats and their allies were not part of the discussions before the end of the decade, they were regularly accused of being the main instigators of the 1760s–70s waves of liberalisation (Kaplan 1976). Now the years 1768–71 and 1775 turned into catastrophes: bad harvests, popular fears, riots and contestations led to a huge increase in prices, food shortages and repression. During these times, the physiocrats and Turgot had undertaken a systematic campaign for promoting and maintaining grain trade freedom through booklets, letters or articles. Con­ vinced by the advantages of liberalisation, they accused the people and the police of fickleness and ignorance. They explained price increases by a loose network of grain merchants in a lot of provinces and a weak application of the new policy by many local administrators. Even if he was obliged to relieve the poor by State supply management in the Limousin during the harsh years of 1768–69, Turgot remained confident in his principles and defended liberalisation in the next years (Kaplan 2017, 459–655). On the job, Turgot did not behave dogmatically, but with their uncompromising attitude in their writings, the physiocrats and their allies were under attack during these decades, presented as dangerous fanatics, responsible for starving the poor by many men of letters and pamphleteers (Orain 2015a). Linguet and Mably were, in line with the abbé Galiani (1770), part of this fight against supporters of grain trade liberalisation. They did so because they viewed the fetishising of private prop­ erty – the first condition of a complete freedom of trade – as a potential destruction of society through the explosion of inequalities. But here again, we should avoid caricature: under the condition that a nation would be largely made up of little land­ owners (with no or very few rich farmers and wage earners), Linguet and Mably could have given their assent to a liberalisation of grain trade. Rousseau had a stronger position. He expressed his ideas on the issue at the beginning of the debate, in the entry “Œconomie” (1755b) of Diderot’s Encyclo­ pédie. Listing the different duties of government and the rules of “public econom­ ics”, he pointed out that civil society has to secure “the goods, the life, and the freedom of each member through the protection of all”. This is the reason why [i]t is not enough to have citizens and to protect them; it is also necessary to give thought to their subsistence; and to provide for the public needs is a clear consequence of the general will, and the third essential duty of government. (Rousseau 1755b, 23) The idea was not to provide people with work but to allow all those who work to meet their needs easily. In this respect, Rousseau was against grain exports. Speak­ ing of the English policy of his time, he wrote ironically: One has to have seen with one’s own eyes a government subsidise, instead of taxing, the export of grain in years of plenty, and its import in years of scarcity, to believe it, and one would treat such facts as fictions if they had occurred in the distant past. (1755b, 27)

162 Arnaud Orain In order to prevent scarcity and high prices, he was in favour of public granaries – a heresy for the future physiocrats and for Turgot (see Kaplan 2017, 611–12) – as those of Geneva, established and maintained by a wise administration, which “are the public resource in bad years” (1755b, 28). In the Social contract, Rousseau supported a policy of autarky, because [a]ny branch of foreign trade . . . provides a kingdom in general with little more than a deceptive benefit; it may enrich a few individuals, even a few cities, but the nation as a whole gains nothing from it, and the people is no better off for it. (Rousseau 1762, 79) In Rousseau’s perspective, exports of foodstuffs or manufactured goods increase the quantity of money in the hands of a few landowners and powerful farmers, artisans and entrepreneurs. This wealth from foreign trade reserved for an elite has harmful consequences: it arouses envy, jealousy and luxury. The rich claim their power, subject the poor, and reinforce inequalities and injustice (Hurtado 2010, 77). In this respect, attempting to develop exports is for Rousseau simply a mis­ taken approach of economic policy. Rousseau did not evoke the liberalisations of the grain trade during the 1760s– 70s, contrary to Linguet and Mably. In his Histoire des révolutions de l’Empire Romain (1766), Linguet’s unrestrainedly praised this policy (Linguet 1766, 132–4) but four years later, the wind had turned: his books having been under physiocratic attack, the experiment of liberalisation being a dramatic failure, Linguet decided to change his position. Galiani’s Dialogues sur le commerce des bleds was published during the first days of 1770. The timing of the publication, the author’s personality and the vir­ tuosity of the book’s style came as a bombshell against the policy of liberalisation advocated by the physiocrats (Faccarello 1998; Kaplan 2017, 80–96). From July to December 1770, the new Comptroller General, abbé Terray, endorsed a de-liberal­ ising policy (Kaplan 1976, 510–26). It was in this context that Linguet’s Lettres sur la Théorie des loix civiles was published. After a violent diatribe against the new “sect”, which had “prided itself in governing the Princes and controlling the peo­ ple’s subsistence” (Linguet 1770, 12), Linguet wanted to believe that grain trade liberalisation “was not inherently bad: it is the circumstances under which it was issued that made it disastrous” (1770, 174–5). The problem is that he never gave any details about these “circumstances” and his Lettres were all but convincing. In 1771, he finally published a complete theoretical work on the issue, his Réponse aux docteurs modernes. The author studied Galiani as well as the physiocrats, this time in a serious way. In the first two parts of the Docteurs modernes, after recalling that the major­ ity of human beings never eat bread and that one can easily do without this food, Linguet argued that bread is both physically and morally lethal (Linguet 1771, II, 59). He suggests that the cultivation of grain puts people in cruel dependence, due to the tyranny of ownership, the slavery of the plough. Concerning liberalisation,

Political critiques of political economy 163 attributed to the physiocrats, Linguet was persuaded that it led to misery for “half the nation”. If farmers or owners had grown richer, this meant that the workers had not had any pay raise and, thus “their wealth is horrible; it sullies, it contami­ nates the cowardly hands which have taken it.” In addition, these higher revenues were lost for agriculture, because the farmer often hoarded the cash to buy some ennobling title (1771, III, 76–86). And if, after several years, the farmer decided to increase his workers’ wages, many of them had already died, and this raise would have been given to their ashes. But even farmers would not be able to enjoy higher grain prices for very long, because, when the lease was renewed, landowners would demand a higher rent. In the end, the latter would be the only ones to benefit from the effects of grain trade liberalisation. They would squander their wealth on luxury goods (1771, III, 84). Like Galiani (1770), Linguet was afraid that border­ ing provinces, often wheat baskets (i.e. the Languedoc), would find it advanta­ geous to export in times of surplus, to the detriment of other French regions, which would thus not be supplied. Now, on the contrary, during periods of grain scarcity in bordering provinces, foreign countries will not supply them, at least at first. In this case, bordering provinces will turn inwards, but inland provinces will not be able to feed the whole realm (1771, III, 134–5). Aside from these technical questions, Linguet intended to support the opposi­ tion between the right to property and the living body of human beings. Going back to Galiani’s starting point (see Kaplan and Reinert 2019, 221–303), Linguet maintained that grain was not just any kind of merchandise, it is the object of our most immediate and imperious primary needs: According to the law, any living being is entitled to demand food. . . . His first priority, and the most sacred one indeed, is to ensure his preservation, to look for means of subsistence. The right to seize anything that might satisfy him, derives from this duty. This is particularly true when his needs are so pressing that he even puts his life at risk. Society may have established the way to enforce such a right, or to provide an alternative and modify the exer­ cise thereof, but it has not been able to destroy this right. (Linguet 1771, III, 53–4) This extensive definition of the notion of preservation implies that “according to the law, there are thus circumstances under which the police are obviously author­ ised to require, even in a violent manner, that markets should be supplied” (1771, III, 56). If grain meets a basic natural need, private property becomes secondary. Naturally, by returning to his original fiction, Linguet justified this point of view even better: since the social pact was not the fruit of mutual consent, but the result of usurpation, it was all the more legitimate that these “so-called landowners” should yield “to an even more sacred right” (1771, III, 63), the right of those they had plundered to exist. And, as Linguet put it, it was not the honest farmer’s barns which have to be requisitioned, but “the dark receptacles of intrigue and crime”, the “mysterious dens” of these “beasts of prey”, namely, the grain merchants. Using a war-like rhetorical style, he even called for violence: “March on, fathers of the

164 Arnaud Orain people, protectors of the poor, fight the monster and grab its prey. Do not be moved by its screams as the hands of justice seize it” (1771, III, 69–70). At the beginning of the decade of the 1760s, Mably was not so violent. He even shared with the physiocrats the idea that freedom of the grain trade, both domestic and foreign, could be favourable to the nation as a whole: Foreign trade will be pernicious for the republic when it exports more mer­ chandise from its workshops than products of its fields, and the reason for this is simple. The products of this trade will be shared by a small number of men and will rapidly introduce luxury into the cities. . . . By exporting the mere foodstuffs of its lands, the benefits of this trade are divided between as many parts as there are citizens, and serve primarily to support farmers. They will have their conveniences, without having luxury, and lands, increasingly cultivated, will be more fertile. (Mably 1764, 531) Free exportation will make possible a comfortable rural life. But the terrible con­ sequences of the liberalisations were to lead Mably to revise his position on the question in his famous Du commerce des grains, written in 1775 during the episode of riots known as the “flour war”: M. Quesnay being marvellously ignorant about politics and perhaps in domestic administration, it is hardly surprising that he mistook the first trivi­ alities that presented themselves to him as admirable discoveries. . . . His first discovery was that if the products of the land rose in price, the revenues of his new domains would also increase, and he would find he had made an excellent acquisition. First success encourages. If the net product of land­ owners, said M. Quesnay, is doubled, the wealth of the state will be twice as great as it was. (Mably 1775, 296) Mably now saw himself constrained to propose a system of regulation for the grain trade. Since grain relates to the first promise of society, that of self-preservation, he henceforth considered that it “ought to be an object of economic conservation and not of trade” (1775, 264). In 1775, Mably was still favourable to the domestic free trade of grain, and although it can be said that he was against grain exports, this was mainly for economic reasons. He believed that external liberalisation led to an increase of gold and silver flows into the kingdom that produce upward pressure on the price of goods and a destruction of commerce as a whole: Even if you imagine a hundred ways to somehow invigorate the countryside, I will find them all bad as long as they provoke complaints and murmurs from the majority of the citizens. . . . You want to enrich landowners by ruin­ ing everyone; there is nothing more ridiculous. (Mably 1775, 257–8)

Political critiques of political economy 165 Having shamefully enriched a few landowners, farmers and grain merchants, the price increase that followed this freedom should finally have been abandoned because it had not produced the anticipated effect: the comfort of the most numer­ ous rural classes. The legislators should not “sacrifice to [the landowner’s] greed this countless multitude with only its manpower and its industry to subsist” (1775, 275). Close to Linguet’s ideas, Mably thought that the liberalisation of the grain market would allow that, but he admitted that he was wrong after the devastation caused by the experiments of liberalisation. However, he did not completely aban­ don his initial ideas on the issue: But I beg you, my dear Eudoxe, to pay close attention to one thing, which is that I would subject the grain trade to less strict rules in a country where there are many more landowners than in ours, and which was not inhabited almost entirely by men who live only from their work. (Mably 1775, 273) This is an important point, as it was not the external liberalisation of the grain trade in itself that was harmful, but the fact that it increased inequalities, enrich­ ing a small number of citizens who spent their wealth in the luxury of the cities, increased prices and then destroyed the purchasing power of the vast majority of citizens. The institution of free export could be a good policy for domestic com­ merce, as Mably initially thought, but only on condition that most inhabitants are landowners. Mably’s economic ideas did not imply freedom of external trade, and more broadly support for foreign trade, but neither do they exclude it in principle. By focusing on inequalities and the guarantee of the promise of the social pact, Mably and Rousseau proposed an ideal that was clearly different from the physi­ ocratic one. 3.

Competing economic and political ideals

At the end of a letter to Mirabeau written on 26 July 1767, Rousseau made this definitive statement: Your economic system is admirable. Nothing is more profound, more true, more perceptive, more useful. It is full of great and sublime truths which transport one. . . . [B]ut I am afraid that it will lead to countries quite different from those toward which you claim to go. (Rousseau 1767, 271) Mably, too, adhered unambiguously to many physiocratic developments in agricul­ ture, taxation and commerce (Mably 1768, 1–2; 256). Addressing abbé Baudeau, one of the greatest promoters of Quesnay’s school, he did not even hesitate to call himself “the disciple of the celebrated philosophes [Quesnay and Mirabeau] whom you call your masters” (1768, 1). But at the end of his book, he concludes, “I agree with you that, in order to create a happy State, agriculture must flourish;

166 Arnaud Orain but I believe that rural prosperity is due to principles other than those of the Econo­ mists [physiocrats]” (1768, 256–7). Linguet was less ambiguous: if he claimed to “respect” the physiocrats and if he believed in their “honesty” (Linguet 1771, III, 230), against them he used – compared to Rousseau and Mably – harsh and terrible language. Very little or none of their ideas found favour in his view. And in fact, for these three men, the flaw of the whole physiocratic project was crystal clear: they rejected a policy oriented exclusively towards the extension of the net product, generated by large-scale agriculture to the benefit of entrepreneurial farmers and landowners. And Rousseau and Mably went beyond this: they refused the idea that governments must increase the wealth of nations. If we are to believe Linguet, there is no worse policy than focusing on the rich. Now the physiocrats are “down on their knees before the wealthy”. If Lemercier wanted to multiply “wealth” and “delights” [jouissances], it was for “those who enjoy”, and any increase of well-being for farmers and landowners only “resulted from the gathering of many little parts removed to everyone else . . . the secret of increasing the wealth of a people, is that of raising the number of unfortunate” (Linguet 1771, III, 224–6). Against the grande culture of large farms promoted by the physiocrats, Linguet defended sharecropping [métayage] and small-scale agriculture: employees of prominent farms are usually badly paid, large estates employ less of a workforce than small ones (1771, III, 211–12). Moreover, what is important is to have many smallholders, cheap grain, a cheap workforce, few inequalities and no dependency on foreign countries (1771, III, 179–200). Mably and Rousseau shared this ideal of a flourishing countryside, free of luxury and inequalities. They imagined little Republics in which money and trade were not banned but limited. In his Considerations on the Government of Poland, Rousseau proposed: Encourage agriculture and the useful arts, not by enriching farmers, which would only incite them to give up farming, but by making it honourable and pleasant for them. Establish manufactures of the primary necessities; con­ stantly multiply your wheat and your men without worrying about the rest. The surplus produce of your soil, which will be in short supply in the rest of Europe because of growing monopolies, will necessarily bring you more money than you will need. (Rousseau 1782, 229) Mably’s ideal was that of Sparta after the legendary Lycurgus, with its so-called equal citizens, its laws preventing citizens from being too poor or too rich, its noble men with the plough in hands, its absence of luxury, banks, public debts and other paper currencies (Mably 1764, 528–33). But Mably knew that there was a gulf between an (Ancient) ideal and the realpolitik of Western Europe in the second half of eighteenth century. He did not believe in economic principles that were valid at all times and all places, and dealing with what would be desirable for his time, he spoke out against the destruction of private property and in favour of certain commercial activities (Ferrand and Orain 2017). In Du gouvernement et des lois

Political critiques of political economy 167 de Pologne (1770), he said to his interlocutor, who may have been surprised by Mably’s encouragement to improve commerce in Poland: “you are accustomed to hear me blaming commerce”, but “I will praise it when free of pomp and luxury it serves simple needs and is not irritating for our passions” (Mably 1770, 234). According to Rousseau and Mably, the policies could not consist in raising the net product of land. Human beings gather in society in order to be legislators, to improve their manners and virtue. “We must probably need good harvests”, said Mably, “but one has to start to have excellent citizens. A flourishing agriculture is ordinarily the result of good government, but it does not make it” (Mably 1768, 29) (see Rousseau 1755b). The physiocratic notions of “self-evidence” and of “legal despotism” were even more under attack. Fire came from physiocratic objective allies such as Turgot and Condorcet as well as from their adversaries, even when they claimed to be Quesnay’s admirers, such as Mably. This rocket barrage drew interesting and unexpected alliances among these theoreticians. Turgot had scant interest in “self­ evidence”, but praising Rousseau’s Contrat social as a text which has “resolved” the idea of inalienability of the sovereignty of the people under every government, he made no secret of his distaste for the concept of “legal despotism”. For Turgot, the latter, which implies a total submission to the will of a monarch, “tarnishes” the writing of the physiocrats (Faccarello 2006, 5–6). For his part, Condorcet could not accept the concept of “self-evidence”. His epistemology was probabilis­ tic, and proofs could only be established by the recurrence of observations. Trying to clarify Rousseau’s concept of “general will” through is social mathematics, Condorcet, favourable to an elected representative assembly, rejected also the physiocratic “legal despotism” (Menudo and Rieucau 2014, 661–2; Faccarello 2016, 88–90). If they did not refer to a probabilistic theory of knowledge, Rousseau, Mably and Linguet assimilated “self-evidence” to a vague and poorly defined geometric abstraction. Now they claimed that in policymaking everything depends on the circumstances. For these critics, passions and public opinion were other mistresses much more capricious and powerful than all the so-called mathematical truths of the physiocrats. “In any particular government, which is a composite of so many diverse elements, this self-evidence necessarily disappears. For the science of government is nothing but a science of combinations, applications and excep­ tions, according to times, places, circumstances” (Rousseau 1767, 269). Accord­ ing to Mably, self-evidence is “an empty word”, a “magic talisman”, “which is to serve as the undoing of all the truths that others will hold up against yours” (Mably1768, 45–6). The passions oppose all their strength to self-evidence: far from expecting that our reason has been able to come to certainty about things, they push us to act in a disordered manner. They always defy self-evidence. Dis­ tinguishing clearly what belongs to the physical or the moral sciences, Mably criticised the assimilation made by the physiocrats of the laws of geometry to the laws of politics. No political law can be considered an incontestable truth as can a mathematical law. Linguet qualifies the chapters of Lemercier’s Ordre naturel et essentiel regarding the notion of self-evidence as examples of delirium.

168 Arnaud Orain “The book takes into consideration neither passions (which influence, so forcibly, the manner of envisaging and appreciating things) nor interests (which do not any less alter and overpower judgement or the aptitude to understand the truth)” (Linguet 1771, III, 24–5). Gentlemen, allow me to say it to you; you attribute too much force to your calculations, and not enough to the inclinations of the human heart and the play of the passions. Your system is very good for the people of Utopia, it is worthless for the children of Adam. (Rousseau 1782, 270) Rousseau added, “I have never been able to understand just what the self-evidence is on which legal despotism is supposed to be based” (1782, 268–9). Nothing is less evident than being governed by a despot, even “legally”, and it is unlikely that a despot would rule his kingdom through “self-evidence”. A despot, recalls Rousseau, governs according to his passion, not along his own true inter­ ests. The sacred rights of property will be destroyed in a minute when decided by a despot, who cannot be restricted by any law. To Mirabeau, Rousseau concluded, “Sir, do not ever again speak to me about your legal despotism. I could not appre­ ciate or even understand it; and I see in it nothing but two contradictory words, which together signify nothing to me” (Rousseau 1767, 271). Mably addressed the usual criticisms to the same term of “despotism”, the “colours” of which “make humanity quake”. It carries with it all the horrors of indolence, debauchery and blood (Mably 1768, 106–7). The adjective that is put with it, legal, is laughable, nothing stands up to the will and passions of an all-powerful prince, and certainly not woolly self-evidence: Do you not see evidently yourself that I am surrounded by four hundred thousand men whom I pay to find evident that everything I like is just; and that the rest, after looking over the situation closely, judge that it is reason­ able to suffer my fantasies, because they evidently risk being impaled if they contradict me. (1768, 160–61) The heredity they claim is just a throw of the dice, for nothing guarantees that sovereign philosophers will be born who possess knowledge of natural laws (1768, 176). It is not the place here to discuss the profound and complex political theories of Rousseau and Mably. Suffice it to recall that according to the first, the “General will” was the product of a nation, the sovereign, gathered in one assembly in order to make fundamental laws. Bearing in his hands the legislative power, the sover­ eign delegated to a government the capacity to enforce its decisions (puissance exécutive). The latter could take varied forms from country to country (depending on the size of the population, number of cities, climate, etc.), but it was clear to Rousseau that hereditary monarchies or aristocracies were the worst of all possible

Political critiques of political economy 169 governments. When the best citizens were designated to govern by the sovereign, when they were not able to pass legislation and may be revoked by the nation at any time, and if population of a country increased, Rousseau thought that we approached the best government (Rousseau 1762, Book III). This ideal was quite far from the physiocratic legal despotism. If Rousseau was against representatives within small nations (deputies with imperative mandate could be considered in larger States, see Crignon 2007), Mably championed a “mixed government”, that is a clear-cut separation between the legislative authority, different elected bodies able to make laws, and the executive power, several magistrates who only have to enforce these laws (Mably 1768, 242). Contrary to Lemercier and in agree­ ment with Rousseau, he was to make of the separation of powers the key to every good government: the executive power must only see that the laws are obeyed and the legislative authority must alone have the ability to make laws (1768, 140–41). But he was not favourable to direct democracy, consequently, the responsibility of making the law must be entrusted to representatives. Mably was profoundly convinced that only a mixed government was the best, but he did not propose the institution of a republican one, but that of a moderate monarchy. His ideal was not so much to protect one social class against another as to compensate for – irreversible – inequalities of fortune and condition by a permanent search for better respect of the natural law of self-preservation. 4.

Conclusion

One finds a similar logic among the physiocrats and their allies on the one hand, and their adversaries on the other hand: men, destined to live in society, will join together to satisfy their first need, that of providing for their preservation. But Rousseau, Mably and Linguet questioned the ability of self-interest to produce harmony and, moreover, they opposed all institutions that violate or reinforce inequalities. The rise in grain prices that followed free exportation went, accord­ ing to them, against the happiness of the people and emphasised the inequalities between the class of owners and that of non-owners. The natural right to provide for one’s preservation was thus violated rather than sustained by this policy. For the physiocrats, the physical order was nothing other than the economic order. This assimilation expresses the idea of natural economic laws whereas Rousseau, Mably and Linguet distinguished clearly between what belongs to the physi­ cal sciences and the moral sciences. Moralists and politicians must reflect on much more complex questions than those that belong to the physical sciences. The critique of legal despotism, shared by political economists such as Turgot and Condorcet, thus can be read in terms of this conclusion. Since, according to most of their critics, the physiocrats’ political theories reinforce inequalities between the different social classes and do not create a public welfare, they must be rejected. Far from legal despotism, or from the so-called natural laws of politi­ cal economy, Rousseau and Mably imagined assemblies of citizens where the confrontation of self-interest in debates was the sole means of bringing common interests to the fore.

170 Arnaud Orain References Bonnot de Mably, Gabriel. 1764. “Le Droit public de l’Europe fondé sur les traitez conclus jusqu’en l’année 1740”. In Collection complète des Œuvres de l’Abbé de Mably, vol. 6. Paris: Desbrière, 1794–95. Bonnot de Mably, Gabriel. 1768. “Doutes proposés aux philosophes économistes sur l’ordre naturel et essentiel des sociétés politiques”. In Collection complète des œuvres de l’abbé de Mably, vol. 11. Paris: Desbrière, 1794–95. Bonnot de Mably, Gabriel. 1770. “Du gouvernement et des lois de Pologne”. In Collection complète des œuvres de l’abbé de Mably, vol. 8. Paris: Desbrière, 1794–95. Bonnot de Mably, Gabriel. 1775. Du Commerce des Grains, in Collection complète des Œuvres de l’Abbé de Mably, vol. 13. Paris: Desbrière, 1794–95. Bonnot de Mably, Gabriel. 1776. “De la législation ou principes des loix”. In Collection complète des Œuvres de l’Abbé de Mably, vol. 9. Paris: Desbrière, 1794–95. Bonnot de Mably, Gabriel. 1778. “Du développement, des progrès et des bornes de la rai­ son”. In Collection complète des Œuvres de l’Abbé de Mably, vol. 15. Paris: Desbrière, 1794–5, pp. 1–82. Crignon, Philippe. 2007. “La critique de la représentation politique chez Rousseau”. Les Études philosophiques, 83 (4), 481–97. Faccarello, Gilbert. 1986. The Foundations of Laissez-faire. The Economics of Pierre de Boisguilbert. London: Routledge, 1999. Faccarello, Gilbert. 1998. “Galiani, Necker and Turgot: A debate on economic reform and policy in 18th century France”. In Gilbert Faccarello (ed.), Studies in the History of French Political Economy: From Bodin to Walras. London: Routledge, pp. 120–95. Faccarello, Gilbert. 2006. “An ‘exception Culturelle?’ French Sensationist political econ­ omy and the shaping of public economics”. The European Journal of the History of Eco­ nomic Thought, 13 (1), 1–38. Faccarello, Gilbert. 2016. “Marie-Jean-Antoine-Nicolas Caritat de Condorcet (1743– 1794)”. In Gilbert Faccarello and Heinz D. Kurz (eds), Handbook on the History of Eco­ nomic Analysis. Volume I. Great Economists since Petty and Boisguilbert. Cheltenham: Edward Elgar, pp. 83–94. Faccarello, Gilbert, and Philippe Steiner. 2008. “Interests, Sensationism and the science of the legislator: French Philosophie économique, 1695–1830”. The European Journal of the History of Economic Thought, 15 (1), 1–23. Ferrand, Julie, and Arnaud Orain. 2017. “Abbé de Mably on commerce, luxury, and ‘classi­ cal republicanism’”. Journal of the History of Economic Thought, 39 (2), 199–221. Ferrand, Julie, and Arnaud Orain. 2019. “The natural law of equality at the heart of the con­ troversy between Mably and the physiocrats”. In Steven L. Kaplan and Sophus A. Reinert (eds), The Economic Turn: Recasting Political Economy in Eighteenth-Century Europe. London: Anthem Press, pp. 439–68. Galiani, Ferdinando. 1770. Dialogues sur le commerce des blés. New ed., Paris: Fayard, 1984. Hurtado, Jimena. 2010. “Jean-Jacques Rousseau: économie politique, philosophie économ­ ique et justice”. Revue de philosophie économique, 11 (2), 69–101. Kaplan, Steven 1976. Bread, Politics and Political Economy in the Reign of Louis XV, 2nd ed. London: Anthem Press, 2015. Kaplan, Steven. 2017. Raisonner sur les blés. Essais sur les Lumières économiques. Paris: Fayard. Kaplan, Steven, and Sophus Reinert (eds). 2019. The Economic Turn. Recasting Political Economy in Enlightenment Europe. London: Anthem Press.

Political critiques of political economy 171 Klotz, Gérard, Philippe Minard, and Arnaud Orain (eds). 2017. Les voies de la richesse? La physiocratie en question (1760–1850). Rennes: Presses Universitaires de Rennes. Lemercier de la Rivière, Pierre-Paul. 1767. L’ordre naturel et essentiel des sociétés poli­ tiques, 2 vols. Paris. Linguet, Simon-Nicolas-Henri. 1766. Histoire des révolutions de l’Empire romain, 2 vols. Paris: Desaint. Linguet, Simon-Nicolas-Henri. 1767. Théorie des lois civiles ou Principes fondamentaux de la société, 2 vols. Londres et Paris: Nourse et Desaint. Linguet, Simon-Nicolas-Henri. 1770. Lettres sur la théorie des loix civiles. Amsterdam. Linguet, Simon-Nicolas-Henri. 1771. Réponse aux docteurs modernes, 3 vols. Mably: see Bonnot de Mably. Menudo, José-Manuel, and Nicolas Rieucau. 2014. “Une apologie des physiocrates par Condorcet”. Dix-huitième siècle, 46 (1), 657–72. Moyer, Frédéric. 2016. Turgot et la navigation de la Charente: savoirs économiques et pra­ tiques administratives. MA Dissertation, University Paris 1. Orain, Arnaud (ed.). 2015a. Antiphysiocratic perspectives in eighteenth-century France. Special issue of The European Journal of the History of Economic Thought, 22 (3). Orain, Arnaud. 2015b. “Figures of mockery: The cultural disqualification of physiocracy (1760–1790)”. The European Journal of the History of Economic Thought, 22 (6), 383–419. Orain, Arnaud. 2019. “ ‘One must make war on the lunatics’. The physiocrats’ attacks on Linguet, the iconoclast (1767–1775)”. In Steven L. Kaplan and Sophus A. Reinert (eds), The Economic Turn: Recasting Political Economy in Eighteenth-Century Europe. Lon­ don: Anthem Press, pp. 469–504. Quesnay, François. 1756. “Évidence”. In François Quesnay, Œuvres économiques com­ plètes et autres textes, Ch. Théré, L. Charles, and J.-C. Perrot (eds). Paris: INED, 2005, pp. 61–90. Quesnay, François. 1767. “Le droit naturel”. In François Quesnay, Œuvres économiques complètes et autres textes, Ch. Théré, L. Charles, and J.-C. Perrot (eds). Paris: INED, 2005, pp. 111–23. Rousseau, Jean-Jacques. 1755a. A Discourse on Inequality. London: Penguin Books, 2006. Rousseau, Jean-Jacques. 1755b. “Discourse on political economy” [article “Œconomie” from Diderot’s Encyclopédie]. In Jean-Jacques Rousseau, The Social Contract and Other Later Political Writings, Victor Gourevitch (ed.). Cambridge: CUP, 1997, pp. 3–38. Rousseau, Jean-Jacques. 1762. “Of the social contract”. In Jean-Jacques Rousseau, The Social Contract and Other Later Political Writings, Victor Gourevitch (ed.). Cambridge: CUP, 1997, pp. 39–152. Rousseau, Jean-Jacques. 1767. “Letter to Mirabeau”. In Jean-Jacques Rousseau, The Social Contract and Other Later Political Writings, Victor Gourevitch (ed.). Cambridge: CUP, 1997, pp. 268–71. Rousseau, Jean-Jacques. 1782. “Considerations on the Government of Poland”. In JeanJacques Rousseau, The Social Contract and Other Later Political Writings, Victor Goure­ vitch (ed.). Cambridge: CUP, 1997, pp. 177–260.

8

The spirit of geometry Quantification and formalisation Gilbert Faccarello

Entre esprits égaux et toutes choses pareilles, celui qui a de la géométrie l’emporte et acquiert une vigueur toute nouvelle.1 Blaise Pascal

The huge economic, political and scientific transformations which took place in France as in various countries in Europe during the seventeenth and eight­ eenth centuries brought about their share of new problems, or at least the growing awareness that old questions were assuming a new and fundamental character that the new scientific spirit and the rise of knowledge could help solve. Some of these solutions were found in quantification, others in formalisation. This evolu­ tion was the result, on the one hand, of the needs of expanding economic activities and changing governmental practices and, on the other hand, of the new attitude towards the world induced by the development of sciences. A phrase drawn from the Bible (Wisdom of Solomon, XI, 20) – where, speaking of justice, it is stated that God “arranged all things in right order by proportion: by measure, by number, and by weight” – and transposed into the new context became the scientific motto of the time and is to be found in the writings of the period. Two expressions of it are celebrated examples of this attitude: one is by William Petty (1623–1687) in his Political Arithmetick – “instead of using only comparative and superla­ tive words, and intellectual arguments, I have taken the course . . . to express myself in terms of number, weight, or measure” ([1676] 1690, Preface) – and the other by Isaac Newton (1643–1727) in a notebook: “Numero pondere et men­ sura Deus omnia condidit”, that is, “God created everything by number, weight and measure.” The need for quantification, and then attempts at formalisation, slowly extended to “moral sciences” in general and to political economy in par­ ticular. It was diversely felt, depending on both the authors and the topics under examination. This need remained for a long time only programmatic, but partial

1 “Between equal minds and all things being equal, he who has geometry prevails and acquires a whole new vigour from it.”

DOI: 10.4324/9780429202414-8

The spirit of geometry 173 realisations were achieved. This chapter is an outline history of this evolution in the French context.2 1.

Thinking in terms of number, weight and measure

The needs of trade

Producers and merchants were the first concerned with the need for reliable data, quan­ titative but also qualitative: Le parfait Négociant, ou Instruction générale pour ce qui regarde le commerce de toute sorte de marchandises, tant de France que des pays estrangers, for example, by Jacques Savary (1622–1690), first published in 1675, was re-edited many times until 1800. This need included the resources to be found in dif­ ferent places, the practicability and safety of marine and overland routes, the states of the markets, or the knowledge of the different kinds of money circulating within and between countries. This led to the growth of technical knowledge in banking and financial operations – among them the significant emergence of life annuities and tontines – and the establishment of the first stock exchanges. At the same time, the need for some protection against risk was increasingly felt: hence the development of insur­ ance for different kinds of trade and personal property – marine insurance in particular, for cargoes and ships, or fire insurance – and the slow emergence of life insurance. All this implied, inter alia, collecting data on trades, evaluating different kinds of risk and determining the lifespans of various segments of the population and the life expectancy at different ages. The rise of statistical thinking and the emergence of probability calcu­ lus, in part due to these necessities, progressively provided solutions to these problems. However, these developments did not always happen smoothly and they encoun­ tered a number of social and political difficulties. Linked to the lasting controver­ sies about usury, for example, some contracts – especially life annuities – were suspected by the Church of concealing some form of usury. But one of the most striking facts was the reluctance of the clergy to accept insurance: gambling was condemned by the Church and insurance was equated with a game of chance. It is also possible to see in this reluctance the more or less conscious transposition of a strict spiritual attitude into the secular world.3 In France, the strongest opposition was against life insurance. Among the many contradictory verses from the Bible, a very few were retained by theologians and interpreted as a condemnation of this

2 In the secondary literature, there is sometimes a confusion between quantification, using simple sta­ tistics, and the use of probability theory and/or algebra and analysis in economic reasoning: they are sometimes all referred to as mathematisation. It is important to differentiate them carefully. 3 “The souls which belong to God should not have any assurance or foresight [ni assurance ni prévoy­ ance], they must act through faith, which has no clarity nor assurance in the permanence of good works [dans la suite des bonnes œuvres]. They look at God, follow him at all times and depend on the encounters that his providence creates” (J.-A. Duvergier de Hauranne, abbé of Saint-Cyran, quoted by Dom Charles Clémencet, 1655–57, II, 32). Saint-Cyran was one of the prominent Jansenist theo­ logians – but this attitude is not specific to Jansenist authors.

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new practice. Men’s lives, the Church insisted, belong solely to God, and God is supposed to take care of his people. Life insurance, which tries to calculate the duration of human lives and so speculate on time, is in fact gambling with God and thus immoral and impious. It implies a lack of faith, a mistrust in God. God is the sole and real “life insurance”, protecting the poor and the needy4 – God insures those who pray, while insurance companies only insure those who pay! This is the reason why, in France (as in Spain, Genoa or Holland, for example) life insur­ ance was prohibited. This prohibition was reasserted by the minister Jean-Baptiste Colbert in August 1681 in the celebrated Ordonnance de la marine: “We forbid any insurance on the life of persons” ([1681] 1714, 257), with this comment added by the editor of the 1714 republication ([1681] 1714, 257–8): In some nations, these kinds of insurances are permitted5 . . . but among us all these agreements are unlawful, condemned and against morality, from which an infinity of abuses and deception would ensue; for who can vouch for other people’s lives? There is no promise nor remedy for fate and death. Echoes of the prohibition were still to be found decades later. The lawyer BalthazardMarie Émérigon (1716–1784), for example, in his 1783 Traité des assurances et des contrats à la grosse, stressed that life insurance is not genuine insurance: it is only a bet on people’s lives. “Man is priceless. . . . The life of a man is not an object of trade; and it is odious that his death becomes the matter of a mercantile speculation. . . . And this kind of bet . . . can generate crimes” (1783, I, 198). But times were changing and, a few years later, in November 1787, the first life insurance company was finally authorised: the Compagnie royale d’assurance sur la vie.6 The needs of politics

The Government, too, felt a strong need for reliable data. To various degrees in history, princes have been eager to obtain precise knowledge of the resources of their countries, both for fiscal and for domestic and international political reasons. That need, together with the constant need to raise loans and manage a growing public debt, proved fundamental during the formation and expansion of modern States. The “number of inhabitants”7 – the word “population” only re-emerged in France in the mid-eighteenth century (Théré and Rohrbasser 2011) – their wealth 4 The question was still debated during the nineteenth and twentieth centuries (see, for example, Tracy 1966), with, however, an outcome more and more favourable to life insurance. On the Internet, the many results provided by the search for “God and life insurance”, for example, are a good indicator of these debates. 5 In England, the first life insurance company was established in 1706: the Amicable Society for a Perpetual Assurance Office. One co-founder was William Talbot . . . Bishop of Oxford. 6 To inform the public and explain in detail the novelty of this kind of establishment, the Compagnie published a 110-page prospectus (Compagnie royale d’assurances. Prospectus de l’établissement des assurances sur la vie, 1788). 7 For some aspects of these questions, see, for example, Esmonin (1964), Dupâquier and Dupâquier (1985, Chapter 3) and Dupâquier (1988).

The spirit of geometry 175 and income, the level of economic activity in different sectors and the techniques employed therein, the state of the balance of trade, and all other such data were essential for good economic policymaking but also, on the international stage, for expressing the political strength of the monarchy. This is the reason why the state of the public finances and the population size were supposed to be confidential data, in order to avoid disclosing the real forces of the country to foreign States, whether allies or, above all, enemies. With the development of economic activities and the problems posed by eco­ nomic policymaking, the prohibition on public discussion of these matters was, however, less and less respected. Authors of the growing literature on the sub­ ject had to produce their own data. At the end of the seventeenth century and the beginning of the eighteenth, some prominent authors like Pierre Le Pesant de Boisguilbert (1646–1714) and Sébastien Le Prestre de Vauban (1633–1707) used more (Vauban) or less (Boisguilbert) serious empirical investigation to support their views and proposals.8 After the death of Louis XIV in 1715 and the hectic monetary and fiscal events during the Regency of Philippe d’Orléans – John Law’s mon­ etary “experiment” – the search for economic and social information produced a rapidly expanding literature (Théré 1998). All fields were concerned – agriculture, taxation, money and banking, foreign trade, etc. Data collection and calculation often became part and parcel of the development of political economy. The quantitative aspect of the quest must not, however, conceal the qualitative side: François Quesnay (1694–1774) and A. R. J. Turgot (1727–1781) themselves paid due attention to it – the first with the Questions intéressantes sur la popu­ lation, l’agriculture et le commerce proposées aux Académies et autres Sociétés savantes des Provinces, which he published in 1758 with Étienne-Claude Marivetz (in Quesnay 2005, 334–87); and the second with the long series of detailed ques­ tions he asked two young Chinese visitors in 1766, in order to learn more about the state of the Chinese economy and society (in Turgot 1913–23, II, 523–33). But quantification predominated. For some, it was a kind of new Grail, initiated abroad by authors like John Graunt (1620–1674) and William Petty and called “Political Anatomy” and “Political Arithmetick” by the latter. Denis Diderot (1713–1784), in the Encyclopédie, ou Dictionnaire raisonné des sciences, des arts et des métiers, adapting the entry “Political arithmetic” of Ephraim Chambers’s Cyclopaedia, stressed the importance of this approach. Political arithmetic . . . aims at investigations useful to the art of governing peoples, such as those about the number of men who inhabit a country, the quantity of food they need, the work they can do, their lifespan, the fertility of land, the frequency of shipwrecks, etc. One easily understands that from these and many other similar discoveries, acquired by calculations based on some well ascertained experiences, a skilled minister would draw many consequences for the perfection of agriculture, for domestic as well as for

8 Contrary to Boisguilbert in this field, Vauban was a real innovator and developed a methodological reflection on data collecting and calculation – see, for example, Vilquin (1975) and Meusnier (2003).

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foreign trade, for the colonies, for the circulation and use of money, etc . . . . Sir Petty, English, was the first to publish essays under this title. (Diderot 1751, 678) Some years later, François Véron de Forbonnais (1722–1800), in a polemical stance against the physiocrats, insisted that the knowledge of such data is essential to avoid erroneous theoretical speculations and their damaging consequences for economic policy: “the false philosophy generalises everything; the observation of facts is neglected” and the public good, which is the aim, “is definitively lost” (1767, I, iii). But obtaining quantitative information was certainly no easy task. From the end of the seventeenth century to the First Empire, the history of data collecting (Gille 1980, Chapter 1) is a long enumeration of attempts implemented at various levels (local, provincial and, in the end, national), without really reliable results due to the great diversity of the provinces, the fragmentary character of the data and the bad or good will of those who were supposed to obtain and convey the requested information. Nor was it easy for the local collectors to obtain this information: peo­ ple were reluctant to disclose it, most of the time supposing that it was requested for fiscal or military purposes. Consequently, the administration, dealing with local data, tried to generalise the results to more extended areas in a more or less ques­ tionable way. Towards the end of the Ancien Régime and during the Revolution, however, more serious attempts were made, for example, to estimate the size of the population or the national income of the country. For the latter, the most relevant was made by the chemist and social scientist Antoine Laurent Lavoisier (1743– 1794) in his Résultats extraits d’un ouvrage intitulé: De la richesse territoriale du royaume de France, 1791 (Perrot 1988, 2003). But all this was only a first and very preliminary step in building and publishing official statistics. In the meantime, one of the main subjects of the time, public finances, had been under scrutiny and Jacques Necker (1732–1804), a Swiss banker, had caused a sensation when, as the Finance Minister of Louis XVI, he published his Compte-rendu au Roi on the state of the budget – one of the causes of his disgrace and which led him to publish in 1784 De l’administration des finances de la France, a detailed three-volume book on public finances, economic policy and plans for reform. Finally, a kind of cost–benefit calculation was used by many authors in different fields, from the construction of roads and canals by the Ingénieurs des Ponts et Chaus­ sées to the management of poverty relief and charity (Joël 1984; Etner 1987, Chap­ ters 2 and 3) and even slavery (Oudin-Bastide and Steiner 2015). For these subjects, however, the task was a lot easier because of the limited scope of the investigations. A strategic variable: population

Perhaps the field where calculations proved to be relatively less difficult – but widely discussed – was what was later to be called demography.9 It was considered

9 It seems that the first occurrence of the word demography in French happened in 1855 in a book by Achille Guillard, Éléments de statistique humaine ou démographie comparée (Paris: Guillaumin).

The spirit of geometry 177 of the utmost importance, and some authors held it to be the basis of political arithmetic itself. The chapter on political arithmetic that Jean-Étienne Montucla (1725–1799) added to the 1778 reissue of the successful Récréations mathéma­ tiques et physiques by Jacqes Ozanam (1640–1718) is entirely dedicated to ques­ tions of population, with some brief questions about life annuities – all in the form of problems to be solved by the reader. Since politics has been enlightened as to what constitutes the real strength of states, much research has been done on the number of men in each country, in order to determine their populations. Moreover, as nearly all governments have been obliged to borrow large sums of money, mainly in the form of life annuities, it has been natural to examine the progression of mortality in the human race, in order to proportion the interest on these loans to the prob­ ability of the annuity’s extinction. It is to these calculations that we give the name Political arithmetic. (Montucla 1778, 245) While a census of the population was conceivable, it was in fact unworkable, except at a local level. Fortunately, some data existed in the form of registers of births (baptised people), marriages and deaths (burials) managed by the clergy in the parishes, a copy of them being supposedly transmitted since 1736 to the royal administration. Supposing that they were reliable – this was not always the case – they could be used to calculate the total number of inhabitants of a town, a province or the whole country through the indirect method of a “universal multiplier” based, for example, on the number of “feux” (dwellings) but usually on the number of births. Once a census had been made in a carefully chosen sample of parishes or towns, the division of the number of inhabitants by the number of births in these places during the same period gave the value of this multiplier. It was then easy to approximate the size of the population of a province or of the realm by applying this multiplier to the number of births in these areas. The method was, however, far from perfect because of the inaccuracy of some data, the possible variations in the average lifespan in different places, the different local behaviours of people towards marriage and the size of the family or the local flows of emigration or immigration – the multiplier could thus have different values in different places. It is true that, at that time, there was a widespread belief in the uniformity of the laws of fecundity and mortality, and in any case, the universal multiplier method was the only practicable one. In this context, in August 1772, the Comptroller General Joseph Marie Terray launched the first national survey, the aim of which was to know, every year, the total number of baptisms, marriages and burials in the realm. The case of population provides us with a celebrated example of erroneous beliefs generated by a lack of reliable data. During the Ancien Régime, and in the eighteenth century in particular, a great number of authors were convinced that the population of France – but also of the world – was dramatically decreasing, espe­ cially if it was compared with the number of people who were supposed to have lived during Greco-Roman antiquity, inferred from ancient texts. Yet the popula­ tion was growing and the world had never been so populous! To various degrees,

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this depopulation thesis was shared by prominent authors like Quesnay and Victor Riqueti de Mirabeau (1715–1789), and it was also expressed in the Encyclopédie. There were, however, a few dissenting views, including that of Voltaire, for exam­ ple. The most striking statement of the thesis is certainly due to Charles-Louis de Secondat de Montesquieu (1689–1755) in his most celebrated books: Lettres persanes (1721, Letters 112 to 122) and De l’esprit des lois (1748, Book XXIII). Thou hast perhaps not considered a thing which is a continual subject of wonder to me. How comes the world to be so thinly peopled, in comparison to what it was formerly? How hath nature lost the prodigious fruitfulness of the first ages? . . . According to a calculation, as exact as can be made in mat­ ters of this nature, I find there is hardly upon the earth the tenth part of the people that there was in ancient times. And what is very astonishing, is, that it becomes every day less populous: and, if this continues, in ten ages it will be no other than a desert. This is . . . the most terrible catastrophe that ever happened in the world. (1721 [1964], 121) How could this supposed depopulation be explained? In France, some contemporary factors, advanced by Quesnay, were the incessant wars, and some major political events such as the 1685 Revocation of the Edict of Nantes (Quesnay [1757–58] 2005, 259–60). Another factor lay in the way of life, preferences and tastes of the people, especially the wealthy classes, which played a part in their attitude towards family (Montesquieu [1748] 1964, 687). But, Montesquieu asserted, among the most pow­ erful factors were the nature of the political regime and the religion prevailing in it (Faccarello 2020, 89–90). In this perspective, the conviction shared by many authors was that the decline of the population was the obvious sign of a bad government and of the necessity for reforms. It seems, however, that the origin of the depopulation the­ sis – in addition to the political conviction that it should necessarily be so because of the nature of the government – lies in books published some decades earlier (Ducreux 1977; Dupâquier and Dupâquier 1985, 108–9) by Iustus Lipsius10 (Joost Lips, 1547– 1606), Giovanni Battista Riccioli11 (1598–1671) and Isaac Vossius12 (1618–1689), in which, based on a misinterpretation of some texts from Roman antiquity, the popula­ tion of the Roman Empire and the city of Rome was tremendously overestimated (the population of Rome was 9.37 million according to Riccioli and 14 million accord­ ing to Vossius), and that of France sometimes hugely underestimated (5 million for Vossius, Riccioli being closer to the reality with 20 million). A century later, authors were still dealing with these sorts of numbers and the many sources drawn from antiquity and accounts of travels. Étienne Noël d’Amilaville (1723–1768), the author of the (long) entry “Population” in the 10 Admiranda, sive de Magnitudine Romana Libri Quattuor, 1597. 11 “De Verisimili Hominum Numero Superficiem Terræ Inhabitantium”, Appendix to Riccioli’s Geographiae et hydrographiae reformatae libri duodecim, 1661, pp. 630–4. 12 Variorum Observationum Liber, 1685.

The spirit of geometry 179 Encyclopédie, is a good example. Examining many of the debates about the size of the population, he concluded that they are blind alleys: it was high time to drop calculations – “based on too fanciful assumptions” – and “to speak philosophi­ cally” (1765, 89). With the conclusion that, for him, the population of the world had always been . . . constant. From these principles it follows that the population in general must have been constant, and that it will be so to the end; that the sum of all men taken together is equal today to that of all the periods that we may choose in antiq­ uity . . . and to what it will be in the centuries to come; that finally, with the exception of those terrible events in which plagues have sometimes devas­ tated nations, if there have been times when more or less scarcity has been noted in the human race . . . it is not because its totality has diminished, but because the population has changed place, which makes the decreases local. (d’Amilaville 1765, 91) Advances in calculation

It was thus obvious that some serious investigations had to be undertaken. Many attempts were made, the most accurate and successful being those of Jean-Joseph Expilly (1719–1793), Louis Messance (1734–1796) and Jean-Baptiste Moheau (1745–1794). Expilly, in the six volumes of his Dictionnaire géographique, his­ torique et politique des Gaules et de la France, published between 1762 and 1770 (Expilly 1762–70), based his research on some partial official inquiries and used the method of the multiplier: first a multiplier calculated on the supposed number of “feux” in the country, then on the number of baptisms. With this latter and more accurate method, and with a birth multiplier of 25, he found that the population size was over 24 million. The depopulation thesis was thus radically contested – although without immediate effect, except that Expilly, criticised, lost the financial support of the government and could not publish the 7th and final volume of his Dictionnaire (see, however, Expilly 1780). With a more refined methodology, the works by Messance (1766, 1788) (with the collaboration of Jean-Baptiste-François de La Michodière) reached approximately the same conclusion. Moheau’s estima­ tions, in his 1778 Recherches et considérations sur la population de la France (with the collaboration of Antoine-Jean-Baptiste de Montyon), often considered as the first treatise of demography, were similar.13 Some other writings are not to be neglected either, like the “Mémoire sur la population de Paris et sur celle des provinces de la France. Avec des recherches qui établissent l’accroissement de la population de la capitale et du reste du royaume” by Jean-François Clément Morand (1726–1784) – a physician and scientist who was in charge of the question 13 See, for example, Dupâquier and Dupâquier (1985, 175–87) and Bru (1988a). More specifically: on Expilly, see Esmonin (1957); on Messance, Brian and Théré (1998) and on Moheau, Rohrbasser (2003).

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of population at the Académie royale des sciences – published in 1782 in the Histoire de l’Académie for 1779 (Morand 1782).14 Montesquieu and Wallace stated that the human species had decreased since the times that we call ancient. Hume and Voltaire argued the other side; and, against or in favour of the augmentation of the population in Europe since the beginning of this century, we find an almost equal number of authorities . . . M. Morand . . . believes he can conclude that the population of France has considerably increased over the past forty years . . .; after reading his work, it is difficult not to be of the same opinion. (Condorcet, report on Morand, in Condorcet 1994a, 143) But these developments in data collection and calculations still left several pend­ ing problems linked to the determination of the universal multiplier. In a polemical exchange with Moheau, published in 1778 in Mercure de France, M.J.A.N. Caritat de Condorcet (in Condorcet 1994, 131–4) pointed out two of them: (1) even if we believe that the ratio between the number of births and the population is a general law of nature, the way in which the partial census – on which the multiplier is based – is carried out deserves much more attention as to the number and quality of places used than it was possible to implement at that time; (2) in these circum­ stances, in all probability, the size of the population determined in this way deviates from reality: with the implicit suggestion to calculate this probability. On the first point, the prominent Swiss mathematician Leonhard Euler already had a radical attitude. In 1767, he published in French two short texts in the Histoire de l’Académie royale des sciences et belles-lettres of Berlin for the year 1760: “Recherches générales sur la mortalité et la multiplication du genre humain” and “Sur les rentes viagères”.15 Euler did not believe in universal laws of fecundity and mortality. Noting that, in different places, the registers of births and deaths at each age usually give different information, he proposed to follow a general approach independent of data, that is, to determine some mathematical formulas which could then be applied to local data to obtain answers to questions about population: these registers differ widely according to the diversity of the towns, villages and provinces . . . and for this same reason the solutions to all these questions differ widely according to the registers on which they are based. This is the reason why I intend to deal here in a general way with most of these ques­ tions without limiting myself to the results that the register of a certain place 14 The survey part of this report was published in the Histoire de l’Académie for 1779, but not the statistical part. 15 Euler had already dealt with questions of population in his 1748 book, Introductio in analysin infini­ torum, as examples of applications of exponentials and logarithms (Euler 1748, sections 110 and 111), with problems like: “If the number of men doubles every hundred years, what is the annual [rate of] growth?” or “If the number of men increases every year by its hundredth part, after how many years will their number be multiplied by ten?” (1748, I, 80–81).

The spirit of geometry 181 provides: it will then be easy to apply [the formulas found in the general investigation] to any place that we want. (Euler 1767a, 144) The analysis then proceeds in terms of simple algebra, and formulas are found to answer such questions as: “Given a number of men, all of the same age, find how many will still probably be alive after a number of years”, “find the probability that a man of a certain age will be still alive after a number of years” or “for given hypotheses of mortality and fecundity, together with the total number of people alive, find how many of them will be of each age.” The approach is further devel­ oped in the memoir on life annuities (1767b). But another notable development took place one decade after Terray launched his large-scale inquiry. In a memoir presented at the Académie royale des sciences, “Sur les naissances, les mariages et les morts” (1786),16 the mathematician and scientist Pierre-Simon Laplace (1749–1827)17 – a younger colleague of Condorcet at the Académie – tried to estimate the accuracy of the value of the universal births multiplier, the determination of which “is the most delicate point” in the calcula­ tion of the population size (Laplace 1786, 694). Obtaining a good approximation of “the true ratio of the population to the number of annual births” (1786, 694), and consequently of the population of the country, depends on the size of the census used to calculate it: the larger (smaller) the number of observations, the more the result will express the action of permanent (variable) causes. The population in France, deduced from the number of annual births, is thus only a probable result, and consequently potentially flawed. It is up to the analysis of chance to determine the probability of these errors and the size of the census so as to make it very likely that these errors be maintained within narrow limits. (1786, 695) The question was thus to determine, for a given value of the multiplier and with a high probability, the required number of observations in order that the error in the resulting size of the population be inferior to a given number – in other words, Laplace imagines what would be called later the confidence interval. In this

16 Laplace’s memoir is usually dated 1783 because it is included in the volume of the Histoire de l’Académie royale des sciences for the year 1783, published in 1786. However, the various vol­ umes of the series Histoire de l’Académie royale des sciences sometimes included memoirs not necessarily presented during the reference year. This is the case here with Laplace’s memoir, which could not have been written in 1783 because the data used in it include the number of births in Paris in 1784. Gillispie (1981, 393) notes that it was presented to the Académie on 30 November 1785, with the title: “Mémoire sur la population de la France” and then published the following year in the volume for 1783. Laplace summarised his results on population in the tenth and final lecture on mathematics he gave at the short-lived École normale (Laplace [1795] 1800). 17 On the impressive scientific work of Laplace, see Gillispie (1972, 1981).

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perspective, he used his former results in the theory of probability – especially on inverse probability – and in the approximation of mathematical formulas which are functions of large numbers. The model he used is the urn model, at that time almost universally accepted in probability theory.18 Suppose, Laplace writes, “an urn containing an infinity of white and black balls in an unknown ratio and suppose that a first drawing yields p white balls and q black ones; suppose further that a second drawing yields q ¢ black balls but that the number [ p ¢] of white balls pulled in this second drawing is unknown” (1786, 696). Using the first ratio i = p / q, we can approximate p ¢ by pq ¢ / q. The question is to determine the probability P that the (true) value of p ¢ lies between ( pq ¢ / q) (1­ w ) and ( pq ¢ / q) (1+ w ), w being an arbitrary small number: “or, what is equivalent”, that the error for pq ¢ / q be no greater than a = w pq ¢ / q (1786, 697). V being an auxiliary variable defined by V 2 = pqq ¢w 2 / 2 ( p + q ) ( q + q ¢ ) Laplace (1786, 697–701) shows that P = 1­ and

2

p

ò

¥

V

2

e ­t dt

p = 2i 2 ( i +1) q ¢2V 2 / ( a 2 ­ 2i ( i +1) q ¢V 2 ) these equations being of course approximations obtained by deleting negligible terms.19 Now let p and q be, respectively, the population and the number of births to be measured in some carefully chosen areas in order to determine the universal mul­ tiplier i = p / q , and let q ¢ be the total number of births in the country and p ¢ the true (but unknown) population of the realm. The question is: when approximating p ¢ by iq ¢ = pq ¢ / q, what is the necessary size of p to have a probability of 1,000 to 1 ( P = 1, 000 / 1, 001) of not being mistaken by more than a = 500, 000 in the value of p ¢?

18 As Condorcet wrote in 1781 in his assessment of another memoir by Laplace: “All the questions pertaining to the probability calculus can be reduced to a single hypothesis, namely that of a certain quantity of balls of different colours, mixed together, from which one is supposed to pick randomly some balls in a certain order or proportion. If one supposes the number of balls of each kind to be known, we have the ordinary probability calculus as the geometricians of last century considered it, but if we suppose the number of balls of each kind to be unknown and we want to estimate their proportion or their number . . . on the basis of the number of balls of each kind we have picked, we have a new class of problems” (Condorcet, “Sur les probabilités”, in Condorcet 1994a, 159). 19 For a modern presentation, see Dale (1999, 217–21) or Gorroochurn (2016, 79–83). Laplace’s approach was criticised, but 150 years later (Pearson 1928).

The spirit of geometry 183 For a value of the birth multiplier equal to 26 and given the average number of annual births for the years 1781 and 1782 (q ¢ = 973, 054.5), the number of inhabit­ ants would be 25,299,417. Now, my analysis shows that, to have a probability of 1,000 to 1 of not being mistaken by more than half a million in this estimation . . . the census which provided the basis for the determination of this factor 26 should have been of 771,469 inhabitants. If 26.5 is taken as the ratio of population to births, the num­ ber of inhabitants in France would be 25,785,944 and, to have the same prob­ ability of not being mistaken by more than half a million, the factor 26.5 should be determined after a census of 817,219 inhabitants. It follows that, if we want to have on this subject the accuracy that its importance requires, the census should be based on one million or one million and two hundred thousand inhabitants. (Laplace 1786, 696) Finally, during this period, decisive progress was made during the repeated attempts to establish tables of mortality. This was an important task because of the con­ stant need for public finances to raise money, often in the form of tontines or life annuities – and, at the end of the period, for the establishment of life insurance contracts. In the seventeenth century, several authors in Britain, the Netherlands, Germany, etc. tried to build such tables. The pioneering attempt by John Graunt was followed by many others (Behar 1976; Dupâquier and Dupâquier 1985, Chapter 6). Significant advances were made by the Huygens brothers – Lodewijk (1631–1699) and Christiaan (1629–1695) – in their mutual correspondence when Christiaan was at the Académie des sciences in Paris, and by Gottfried Wilhelm Leibniz (1646– 1716), with the distinction between the concepts of median life and life expectancy: but they remained unfortunately unknown for a long time (Leibniz’s manuscripts were published in 1866 and the correspondence between the Huygens in 1920). In this context, the main public progress was made by the mathematician Antoine Deparcieux (1703–1768)20 in his 1746 Essai sur les probabilités de la durée de la vie humaine (Deparcieux 1746a; see also 1746b and 1760), with the same distinction between median life and life expectancy, and significant methodological develop­ ments. Some decades later, a further step in the establishment of better tables was made by another mathematician, a former collaborator of Turgot and Condorcet and specialist in financial mathematics,21 Emmanuel-Étienne Duvillard de Durand (1755–1832). His calculations – first made during the Revolution in a (lost) memoir on the establishment of a National savings bank presented in 1796 at the first Class of the Institut national des sciences et des arts (the Republican successor to the Aca­ démie royale des sciences: see Chapter 9, this volume) – found their outcome in the 20 On Deparcieux, see, for example, Behar and Ducel (2003). Deparcieux became a member of the Académie royale des sciences in 1746. 21 Duvillard published a book on life annuities (Duvillard de Durand, 1787) and was involved in the management of the public debt. See Israel (1991, 1993, 1996) and Biondi (2003). An important manuscript was discovered by Dell’Aglio and Israel and published in 2010 (Duvillard de Durand [1813] 2010): see Dell’Aglio and Israel (2010).

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appendix to his book, Analyse et tableaux de l’influence de la petite vérole à chaque âge et de celle qu’un préservatif tel que la vaccine peut avoir sur la population et sa longévité (1806, 159–98) where Duvillard estimates the extension of life expectancy at each age due to the vaccination against smallpox. Moreover, in the same 1796 memoir, he proposed a mathematical expression of a law of mortality on which his tables are based22 – an analysis refined in the 1806 book. 2.

Old and new political arithmetic and “social mathematic”

As in the case of population – the field where the progress in techniques of analysis was the most striking – calculations in the commercial and financial fields also assumed a more theoretical flavour when they started to use the new probability theory. The probabilistic approach also quickly permeated other branches of the “moral sciences” and led to an ambitious programme: “social mathematic”. Probability theory and socio-economic themes

Reasoning on risk and uncertain statements already had a long history,23 but system­ atic reasoning was not developed until the second half of the seventeenth century with Blaise Pascal (1623–1662), Christiaan Huygens and Jakob Bernoulli (1654– 1705)24 in particular. It was developed during the eighteenth century by Abraham de Moivre (1667–1754) – a French protestant who fled to England after Louis XIV’s revocation of the Edict of Nantes in 1685 – Thomas Bayes (1702–1761) and Rich­ ard Price in England,25 and Pierre Rémond de Montmort (1678–1719), Condorcet and Laplace in France. These authors first dealt with calculations of the probability of winning in “games of chance” (“alea” being the Latin word for “game of dice”, or “chance”) or questions linked to these games: what is a fair stake to participate in a game, or how to divide the stakes in a fair way if the game is interrupted before its end, etc. Currently used today to cover the entire field, the word “probability” came in fact from the judicial field and referred, for example, to already widely discussed questions like the estimation of the veracity of a testimony, the guilt or innocence of a person, or commercial and inheritance problems. Jakob Bernoulli used the phrase “art of conjecturing” and proposed to call it “stochastics”. The first books to be pub­ lished were Jakob Bernoulli’s Ars Conjectandi (in Latin, published posthumously in 1713) and Montmort’s 1708 Essay d’analyse sur les jeux de hazard (second edition:

22 A positive review of the memoir, by three famous mathematicians (Joseph Louis Lagrange, PierreSimon Laplace and Adrien-Marie Legendre), is published as an appendix to the 1806 book (Duvil­ lard de Durand 1806, 205–10). 23 There is now an outstanding recent literature on the history of probability theory, from its begin­ nings to the end of the eighteenth century. See, for example, Coumet (1970), Hacking (1975), Stigler (1986), Daston (1988) and Hald (2003). 24 Jakob Bernoulli and his brother Johann, both foremost mathematicians and friends of Gottfired Wilhelm Leibniz (1646–1716), were associated members of the Académie royale des sciences, and so, later, was their nephew Daniel Bernoulli. 25 “Roughly half of Bayes’s famous essay was written by Richard Price, including the Appendix with all of the numerical examples” (Stigler 2018, 117).

The spirit of geometry 185 Montmort 1713). But because of its recent origin and the increasingly technical aspects of the subject, the diffusion of the theory was rather slow among men of letters and philosophes, as this statement by Montesquieu shows: The mathematician goes only from the true to the true or from the false to the true by ab absurdo arguments. They do not know that middle which is the probable, the more or less probable. In this respect, there is not more or less in mathematics. ([1720–55] 1964, 957; [1720–55] 2012, 54) As in the case of insurance, the fact that the developments of probability theory were initially linked to games of chance – an invention of the Devil according to some theologians, and therefore considered with hostility by the Church – did not at first favour its moral reputation. “Games of dice and of cards . . . where the gain principally depends on chance, are not only dangerous recreations”, François de Sales wrote in his influential Introduction à la vie dévote, they are “bad and blame­ worthy, and . . . prohibited by civil and ecclesiastical laws”. The gain made in this way is reprehensible: “The gain, which should be the price of industry, is made the price of luck, which does not deserve any price, because it does not depend on us” (Sales [1608] 1730, 362–3). Moreover, these kinds of game are more than simple “recreation”: they totally monopolise the attention of the players and are thus “vio­ lent occupations”; and the winner’s joy is unfair because it implies the loss and displeasure of somebody else ([1608] 1730, 363–4). It is significant that in 1738, in the dedication26 of the second edition of The Doctrine of Chance, Abraham de Moivre still had to rebut the presumption of amorality levelled at probability theory. There are many People in the World who are prepossessed with an Opinion, that the Doctrine of Chances has a Tendency to promote Play, but they soon will be undeceived, if they think fit to look into the general Design of this Book. . . . Your Lordship does easily perceive, that this Doctrine is so far from encour­ aging Play, that it is rather a Guard against it, by setting in a clear Light, the Advantages and Disadvantages of those Games wherein Chance is concerned. Later in the century, Condorcet felt obliged to stress that, if Pascal and Pierre de Fermat (1607–1665) chose games of chance for the application of the theory of combinations to contingent events, this is only because it was the easiest way to proceed, and not because they were frivolous people (Condorcet 1994a, 339). In his 1786 “Discours sur l’astronomie et le calcul des probabilités”,27 he insisted that the only utility of this first application was to prove how futile are all the expectations, of which those who give them­ selves over to these games are too often the dupes and the victims: perhaps a 26 To Lord Carpenter (the dedication of the first edition, 1718, was to Newton). 27 “Discours” which he gave in December 1786 at the Lycée, a private institution of public lectures for educated adults.

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mathematician, showing the ridiculousness of their speculations, would have a greater impact than a moralist stating their disastrous consequences. (1994a, 602–3) This kind of charge against probabilities, however, faded away as the theory became more and more complex on the mathematical level and showed its useful­ ness in practical life. Jakob Bernoulli’s intention – in the fourth and unfinished part of Ars Conjectandi titled “Usum & applicationem præcedentis doctrinæ in civilibus, moralibus & œconomicis” (“The use and application of the preceding doctrine in civil, moral and economic matters”) – was to apply the mathematical developments made for games of chance to social and economic matters, and he considered it as the main part of his work. In the same perspective, his nephew Nikolaus Bernoulli (1687–1759) wrote his 1709 thesis (Dissertatio inauguralis mathematico-juridica de usu artis conjectandi in jure) and published an abridged version of it (“Specimina artis conjectandis, ad quaestiones juris applicatae”, 1711) to show how probability theory could deal with legal and economic questions such as the reliability of witnesses and of suspicions, marine insurance, the probability of human life, life annuities or the problem of the “absent” (after how many years can an absent person be considered as dead?) – all fields where the logic of the probable was already present. Daniel Bernoulli himself – nephew of Jakob and cousin of Nikolaus – dealt with these matters in his celebrated paper on the meas­ ure of risk, “Specimen Theoriae Novae de Mensura Sortis” ([1738] 1954).28 He applied his new method of evaluating risk to questions of trade and insurance, for example, to state the conditions of profitable insurance on both sides, that is, both for the merchant who thinks about insuring his trade and the insurer who insures the merchant; or to show that the merchant can reduce his risk by dividing his mer­ chandise and sending it on several boats instead of one single ship, stating that this advice “will be equally serviceable for those who invest their fortunes in foreign bills of exchange and other hazardous enterprises” ([1738] 1954, 31). If some objections to the probabilistic approach still developed later in the cen­ tury, they had nothing to do with the former ones and were simply part of the usual scientific debate. The most interesting were expressed by the mathematician and philosopher Jean Le Rond d’Alembert (1717–1783),29 a dissenting voice who induced his disciples Condorcet and Laplace to find new solutions. But could probability theory play a role in the development of political economy proper, that is, go beyond calculations in specific fields of social and economic life dealing with a great number of data (population, mortality tables, insurances, quantification of risks, etc.)? Laplace was sceptical. In 1795, in his last lesson at 28 For a recent overview and some references, see Faccarello (2016). The role of Buffon in the dis­ cussion of the measure of risk and the so-called Saint Petersburg Paradox, recalled in his “Essai d’arithmétique morale”, deserves to be mentioned (Buffon 1777, 75 et seq.). On Buffon’s approach to political arithmetic, see, for example, Martin (1999a and 1999b). 29 See Daston (1979) and Paty (1988). An important aspect of d’Alembert’s approach was expressed in his controversy with Daniel Bernoulli on the debated question of smallpox inoculation (D. Bernoulli 1760, 1766; Le Rond d’Alembert 1761, 1767).

The spirit of geometry 187 the short-lived École normale, devoted to probability, he asked whether probability theory could also be applied to political economy “and improve it”. His answer was rather negative as far as a priori reasoning is concerned, and he subsequently remained vague and cautious about this subject.30 The questions raised by this science are so complicated and depend on so many unmeasurable or unknown elements that it is impossible to solve them a priori. One can only have glimpses of them, and calculation, in fields where it is possible, shows us how misleading they are. Let’s deal with [political] economy as we did with physics, through experience and analysis. On the one hand, consider the great number of truths about nature that this method allowed us to uncover and, on the other hand, the multitude of errors produced by the mania for systems; you will then realise the necessity to always consult experience. It is a slow guide, but always sound, and to drop it exposes us to the most dangerous errors. (Laplace 1795 [1800], 73) Condorcet, political arithmetic and “social mathematic”

With Condorcet, the question of the use of probability theory took on a new dimen­ sion and received an ambitious answer. For him, the use of probability theory in moral sciences is legitimate, as there is no difference in nature between these sciences and those which had been successfully developed since the seventeenth century. Tur­ got, Condorcet wrote approvingly in the introduction to his Essai sur l’application de l’analyse à la probabilité des décisions rendues à la pluralité des voix, “was con­ vinced that the truths of the moral and political sciences are likely to have the same certainty as those which form the system of the physical sciences” – astronomy being, for example, “close to mathematical certainty” (1785, i). This conviction, however, needs to be understood properly. While it implies that the nature of knowledge is basically the same in all fields of inquiry, it is such that nowhere it is possible to find propositions that are absolutely certain. Insisting on the importance of Turgot’s entry “Existence” in the Encyclopédie, Condorcet stressed that any knowledge of the exist­ ence and properties of objects comes from our senses and our ability to think about our sensations and combine them. The idea that there exist constant laws for the vari­ ous observable phenomena is only a hypothesis: by nature, this knowledge can never produce any absolute certainty, whatever the field of inquiry – mathematics included, because the hypothesis also concerns human understanding, and not only external phenomena. This approach only leads to a more or less strong confidence that these phenomena, in the same circumstances, will happen again in the future.

30 The allusion to political economy is still present in the 1812 republication of his lessons in the second volume of the Journal de l’École Polytechnique and in the first edition, 1814, of his Essai philosophique sur les probabilités – a development of his lecture on probabilities. But “political economy” was subsequently deleted and replaced by “moral” or “moral and political sciences”. On the Essai philosophique, see Bru (1986).

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This is the reason why, when he speaks of “certainty”, Condorcet does so only metaphorically to express a great degree of “assurance” – the word “assurance” was judged by him more suitable in this context (Condorcet 1785, xvi, 1994a, 523) and a better choice than the ambiguous phrase “certitude morale” (moral certainty). “The knowledge that we call certain is . . . nothing other than knowledge based on a very high probability” (1994a, 602) which is, moreover, meaningless to calculate in most cases (1785, xiv).31 Hence his statement that all propositions belong to this part of the calculus of probability “where one estimates the future order of events on the basis of their past order or, to be more precise, the future order of unknown events on the basis of . . . known events” (1994a, 291), and his reference to the classical urn model in probability theory: The reason to believe that, from ten million white balls and one black, it is not the black one that I will pick up at the first go, is of the same nature as the reason to believe that the sun will not fail to rise tomorrow, and these two opinions only differ as to their lower or higher probability. (Condorcet 1785, xi) However, Condorcet did not follow the sceptical tradition (Rieucau 2003). He believed in the progress and usefulness of knowledge, and he often denounced “the absurdity of absolute scepticism” (1994a, 602). The systematic collection of data and the organisation of accurate experiences permitted undisputable progress in the sciences, and what happened in physics or astronomy would also happen in the new sciences of society. Over time, politics or political econ­ omy were likely to approach the same degree of assurance in the truths they establish. The question then is how to use probability theory and mathematics in a legiti­ mate way. Calculation should be handled cautiously because it can be dangerous in the hands of “charlatans” (Condorcet 1994a, 337): in politics, it is so easy to impress people with the use of numbers in order to influence their opinions and choices. Some “ridiculous” applications of calculation to political questions have also been made, but “how many applications, just as ridiculous, have not been made in each part of physics?” (1785, clxxxix). All this notwithstanding, the use of probability could no longer be dispensed with. With its help, it is possible to reason

31 For accurate developments on Condorcet’s related concept of “motif de croire” (grounds for belief) and the distinction with the “sentiment de croire” (sentiment of belief) or “penchant à croire”, see Baker (1975, 185–9). “It is of the utmost importance to distinguish between the strength of the actual grounds for belief – the greater or lesser frequency of the experiences involved in any case – and the force of the sentiment of belief, which leads us to regard as constant any event that has often been repeated. This natural and habitual sentiment . . . automatically increases in strength with the fre­ quency of the experiences involved . . . But it is also affected . . . by the intensity or force of particular experiences (or impressions) upon the mind. As a result, since the intensity of impressions has no relation to the probability of their recurrence, a disparity develops between the strength of the senti­ ment of belief and the extent of the grounds for it” (1975, 187–8). See also Daston (1988, 213–18) and, on Condorcet’s general approach, Bru (1988b, 1994).

The spirit of geometry 189 in a more precise way and to avoid the negative influence of vague impressions due to imperfect knowledge, prejudices, interests or passions: Almost everywhere [in the Essai] one will find results which comply with what the simplest reason would dictate; but it is so easy to blur reason with sophisms and vain subtleties that I would nevertheless feel happy if all I have done is to support a single useful truth with the authority of a mathematical proof. (1785, ii) But it is possible to go beyond “what reason alone can do.”32 In this perspective, he planned to develop “political arithmetic” into a systematic science. The first attempts by Petty or Graunt were almost insignificant, he states, and serious things only started with the works of Jan De Witt – “the illustrious and unfortunate Jan De Witt sensed that political economy, as all science, must be subjected to the princi­ ples of philosophy and to the precision of calculation” ([1794] 2004, 380) – and, above all, Jakob and Nikolaus Bernoulli. Hence, the wide and ambitious defini­ tion Condorcet gave of political arithmetic in the supplement he wrote in 1784 to the Diderot entry “Arithmétique politique” on the occasion of its republication in the first volume of the series Mathématiques of the Encyclopédie méthodique: “Political arithmetic, in its wider sense, is the application of calculation to politi­ cal sciences” (1994a, 483). “The application of the calculation of combinations and probabilities to these sciences [the ‘social art’] . . . is the only means to confer upon their results an almost mathematical precision and to estimate their degree of certainty or likelihood” ([1794] 2004, 447). It is this same science that Condorcet called “social mathematic” in his 1793 “Tableau général de la science qui a pour objet l’application du calcul aux sciences politique et morales”: I prefer the word mathematic, although now no longer used in the singular, to arithmetic, geometry or analysis because these terms refer to particular areas of mathematics . . . whereas we are concerned . . . with the applications in which all these methods can be used. . . . I prefer the term social to moral or political because the sense of these words is less broad and less precise. (1994b, 93–4) Condorcet used probability theory in many fields, especially those where decisions are to be taken in the face of uncertainty and imperfect information, to estimate the outcomes of alternative choices. These applications, in line with those of the Bernoullis, first regard the traditional fields of insurance, life annuities, tontines or the problem of the “absent”, for example, (Crépel 1988, 1989) but also the activity 32 During the French Revolution, Condorcet insisted that calculation would permit to develop knowl­ edge even if reason alone reached its limits. “We might even be nearing the time when, in several branches of political sciences, everything that reason alone can do will be at an end, and the applica­ tion of calculus will be the sole means of progressing further” (Condorcet [1792] 1847, 464–5).

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of any entrepreneur who – as Richard Cantillon already insisted in his Essai sur la nature du commerce en général – always acts in an uncertain world. Generalising his analysis of the behaviour of both a merchant and his insurer facing uncertainty and risk in maritime trade, Condorcet conceived of any economic activity as an uncertain and risky undertaking – “undertakings in which men expose themselves to losses in view of a profit” (1994a, 396) – and used probability to describe the entrepreneur’s decisions to invest (Rieucau 1998). A parallel is made with the tradi­ tional analysis of “fair” games of chance, in which a fair stake is equal to the math­ ematical expectation of gain: Condorcet explains that, as additional constraints and calculations arise in economic activity, the analogy between a gambler and an entrepreneur is somewhat misleading. As he wrote in his posthumously published Éléments du calcul des probabilités: When a merchant makes a conjecture [fait une spéculation] implying a sig­ nificant risk, it is not enough that his profit be such that the mean value of his expectations be equal to his stake [sa mise] plus the interest that a riskless trade would have brought him. In addition, he must have . . . a very high probability that he would not suffer a loss in the long run. To submit this kind of project to calculation, one should thus determine, for the funds that each trader could successively employ in such a risky trade, what is the excess of profit that he must obtain in order either to have a sufficient probability not to lose his entire funds, or to lose only part of them, or to just get them back, or to get them back with a profit. (1805, 117) But this statement concerning entrepreneurs in general mainly remained program­ matic. By contrast, a second field for “social mathematic”, related to the collective level (public economics, social choice), is more developed.33 Of particular inter­ est are Condorcet’s ideas about decision-making processes, which originate in his discussions with Turgot, especially on juries and more generally on any assembly susceptible to making decisions through voting and some majority rule. At the Académie royale des sciences, the question of the organisation of votes had already been discussed by Jean-Charles de Borda (1733–1799) in a memoir presented on 16 June 1770 – of which we have no record unless it is the one presented and pub­ lished by the Académie in 1784 (Borda 1784) – on the occasion of a discussion of the rules to adopt for the election of academicians. Borda criticised the usual way of organising a vote. Suppose, he wrote, three candidates A, B and C, and 21 voters. A gets 8 votes, B 7 and C 6. With a simple relative majority rule, A is thus elected. But suppose further that the 13 electors who voted in favour of B and C also prefer, respectively, C and B to A: in this case, the former result contradicts the judgement based on these preferences (Borda 1784, 657–8). This is the reason why a good form of election “must give the electors the means of pronouncing on the merits of

33 For a general view, see, for example, Baker (1975) and McLean and Hewitt (1994). See also Guilbaud (1952).

The spirit of geometry 191 each candidate [‘sujet’] and to compare them successively with the merits of each of his competitors” (1784, 658–9). This criticism is “very important and absolutely novel”, Condorcet wrote in 1784 in his presentation of Borda’s memoir in Histoire de l’Académie royale des sciences (in Condorcet 1994a, 359; see also 1785, 119). But while accepting the criticism, he found Borda’s proposal of a new method unsatisfactory. In a nutshell, the Borda count consists in giving marks to candidates standing for an election or running for office. In the presence of n candidates, each voter gives a mark of n to the one arriving first in his or her preference, (n – 1) to the second, and so on, ending with a mark of 1 for the least preferred. The winner is the candidate who gets the highest mark once all voters’ choices have been added up.34 Condorcet’s opinion is that this method could sometimes suffer from the same defect as the usual method it is sup­ posed to correct (Condorcet 1785, clxxvii–clxxix, 1788, I, “Note première”). “Social mathematic” and social choices

In dealing with how to take decisions in any kind of assembly, be it a political assembly or a tribunal, Condorcet’s aim was to develop some ideas presented by Jean-Jacques Rousseau (1712–1778) in Du contrat social (1762) – a treatise Turgot himself had praised – and to clarify Rousseau’s concept of “general will” (see, for example, Baker 1975, 229–31; Grofman and Feld 1988; Estlund et al. 1989). It was not clear how this “general will” could be known, especially when voters could not distance themselves from their own interests and passions, from factions or lobbies. The “general will”, Rousseau stressed, must be distinguished from the “will of all”: [T]he general will is always right [droite] and always tends toward the public utility. But it does not follow that the deliberations of the people always have the same rectitude. . . . There is often a considerable difference between the will of all and the general will. The latter considers only the common interest, while the former considers private interest and is merely a sum of particular wills. (Rousseau [1762] 2012, II, iii, 182) Condorcet’s 1785 ambitious Essai sur l’application de l’analyse à la probabilité des décisions rendues à la pluralité des voix deals with the various ways to organ­ ise a vote, to fix the majority needed for the decision, and to estimate their relative advantages – building, as G.-G. Granger (1956, Chapter 3) called it, a model of “homo suffragans”. The cases studied are numerous, and here too, Condorcet’s pro­ ject was only partly achieved: starting with a set of strong simplifying hypotheses,

34 This rule was adopted by law in 1796 for the election of new members of the Institut national des sciences et des arts, an adoption reported in La décade philosophique, littériare et politique on 7 August of the same year. This is what prompted the Spanish mathematician José Isidoro Morales (1758–1818) to write his Memoria matemática sobre el cálculo de la opinion en las elecciones (Morales 1797, “Prólogo”) and to send the book to the Institut (McLean and Urken 1997, 155).

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the analysis becomes mainly programmatic when some of these hypotheses are relaxed. In the first part of the book (1785, xxi–xxii, 3), Condorcet supposes that voters (1) are equally enlightened, (2) try honestly to answer the question asked (nobody tries deliberately to influence others, there are no lobbies, no parties) and (3) have only the public good in mind, ignoring their own private interests. Rousseau had already set out these hypotheses in Contrat Social. Condorcet’s approach is, however, more detailed and systematic, with some significant differences: (1) the object of the vote can be any decision which needs to be taken in the public or private sphere, and not necessarily a “general object” (a law) as in Rousseau; (2) the outcome of the voting process must not only be “right” and honest because emanat­ ing from the assembly of virtuous citizens (nor must it deal with liberty and utility, as in the Ancient peoples whose concern, in assemblies, was only to counterbalance the passions and the interests of different groups in society): it must also comply with “truth” – the voting process is a collective quest for “truth”, on the model of a jury in a tribunal, what was called an epistemic approach to democracy; (3) in the political sphere, Condorcet was in favour of a representative assembly: the most important thing is the truth of the decision, and the size of the assembly should be adapted according to the degree of Enlightenment of its members; (4) in this perspective, Condorcet intro­ duced an additional and central variable, the probability for each voter of making the “true” choice, and an additional simplifying assumption: this probability is the same for all.35 Needless to say, he was conscious that all these hypotheses were strong theoretical assumptions and he progressively tried to relax some of them. On this basis, neverthe­ less, two results are particularly striking (1785, 3–11): in the literature, they are known as the “jury theorem” and the “Condorcet effect” or “paradox of voting”. The jury theorem

Let v (v for “vérité”, that is, truth) be the probability for each voter of making the right choice, and e (e for “erreur” or error) the probability of being mistaken: e = (1 – v). Suppose a dichotomous choice (for example, is a person guilty or not guilty of a crime?) in which the number of voters is n and q is the required major­ ity in terms of a number of votes. Condorcet asked two questions: (1) before the vote, what is the probability p of obtaining a decision complying with the truth? (2) once the decision is made, what is, for an external observer, the probability p* that this decision complies with the truth?36 In modern parlance (see, for exam­ ple, Granger 1956, 105–106), probability p is found using Bernoulli’s binomial n­ x distribution. It is the sum, for all x, q ≤ x ≤ n, of the probability v x (1­ v ) that

35 Condorcet also formulated the condition of independence of irrelevant alternatives (Young 1988; McLean 1995). 36 “One should not confuse the probability of having a decision which is true, with the probability that a decision which one supposes made complies with truth: the first is not only contrary to the prob­ ability of having a wrong decision, but also to that of having no decision; the second is only contrary to that of having a wrong decision” (Condorcet 1785, xix–xx).

The spirit of geometry 193 a decision is true when it obtains x votes, multiplied by the possible number of occurrences of this event: ænö n! ç ÷= x ! x n ( ­ x )! è ø that is, n ænö n­ x (1) p = å x = q ç ÷ v x (1­ v ) x è ø

Probability p* is found using the Bayes–Laplace theorem and is given by (2) p* =

vq v q + (1 ­ v )

q

From Equation (1), p → 1 when n → ∞ if v > 0.5; p → 0 if v < 0.5; and in case v = 0.5, p = 0.5 for all n. This is the “jury theorem”: in an assembly in which the probability for each voter of making the right choice is greater than 0.5, the prob­ ability of the outcome being true increases with the number of voters. Conversely, when v < 0.5, the probability of the outcome being true is a decreasing function of this number (1785, xxiii–xxiv, 6–9). From Equation (2) – in which the number of voters plays no role – and all other things being equal, p* is an increasing function of v and q. The positive side of the story is the proposition that – under the very restrictive conditions noted earlier – an assembly could collectively have a degree of wisdom superior to that of its individual members, and, if v > 0.5, this degree increases with the number of voters. This is the kind of statement already made by Aristotle when, examining the different possible political regimes, he declared that it is pos­ sible that many individuals, of whom no one is “virtuous”, are collectively better than the best ones among them when they are assembled (Politics, III, 11, 1281-a). Condorcet’s theorem could thus be understood as a powerful argument in favour of democracy. However, if v < 0.5, the opposite conclusion applies: it could be dangerous to give a democratic constitution to an unenlightened people: a pure democracy could even only suit a people much more enlight­ ened, much more free of prejudice than any of those we know in history. (1785, xxiv) A pure democracy would nevertheless be acceptable if decisions are “limited to that which regards the maintaining of safety, liberty and property, all objects on which a direct personal interest can enlighten everybody” (1785, xxiv; see also 135) – these topics belonging precisely to the “general” or “universal” objects in Rousseau’s approach. Alternatively, to decide on an issue, the assembly could des­ ignate a committee composed of its most enlightened members and then judge, not

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the decision itself, but whether the decision is detrimental to justice or to certain fundamental human rights (1785, 7). Condorcet, however, relativised the impor­ tance of the choice to be made between the different possible devices. For him, the key variable remains the probability for each voter of being right or wrong: hence his tireless action in favour of public instruction and science. [T]he happiness of men depends less on the form of assemblies that decide their fate than on the enlightenment of those who compose them, or, in other words, . . . the progress of reason affects their happiness more than the form of political constitutions does. (1785, 136; see also lxx) The Condorcet effect, or paradox of voting

The second main point which attracted attention in the 1785 Essai is the possible intransitivity of social choices resulting from the aggregation of individual choices made by rational voters. Suppose, Condorcet wrote, that voters have to rank three candidates or proposals A, B and C, through pairwise comparisons (1785, 120–21). For each voter, there are a priori eight possibilities (“XY” meaning “X is preferred to Y”): (1) AB, AC, BC; (2) AB, AC, CB; (3) AB, CA, BC; (4) AB, CA, CB; (5) BA, AC, BC; (6) BA, AC, CB; (7) BA, CA, BC and (8) BA, CA, CB. Choices (3) and (6) are not transitive and will not be chosen by a rational voter. But, at the aggregate level, outcomes (3) and (6) are possible. Imagine that, among 31 voters, nine vote for (1), two for (2), seven for (4), four for (5), six for (7) and three for (8). Eight­ een voters prefer AB against 13, 19 BC against 12, and 16 CA against 15, with the cyclic result ABCA. Of course, this outcome has significant consequences for any social choice theory based on the aggregation of individual choices, and Arrow’s so-called impossibility theorem is well known, stating that there is no procedure for the aggregation of individual choices guaranteeing a transitive social ranking, while at the same time respecting some seemingly mild axioms expressing “individual­ istic concerns” (social choice should reflect individual choices in some minimal way). But this is not Condorcet’s approach: he did not think that the paradox of voting was such an important problem, even when the numbers of alternatives and voters grow – and it has been shown that the probability of having a “Condorcet effect” quickly increases with them. He did not get locked in a logical dilemma, but proposed solutions to the impasse.37 In particular, in a three-alternative case, one simple solution (Condorcet 1785, 122) consists in referring to the total number of votes that each candidate or proposal obtains against the two others. In the earlier example, AB and AC obtain together 18 + 15 = 33 votes, BA and BC 13 + 19 = 32 votes and CA and CB 16 + 12 = 28 votes. The winner is A.

37 In modern terms, these solutions are the maximum likelihood estimation, Kemeny’s rule or the search for a median in a metric space. See Black (1958, Chapter 18), Young (1988, 1995) and Monjardet (2008).

The spirit of geometry 195 In this respect, it is important to emphasise that Condorcet’s approach is aimed at discovering “the truth”, even in decisions which do not deal with justice but with choosing the right proposal or candidate. He was convinced that on these occasions, thanks to reason and science, there exists a truth, never imposed from above but which can be known provided those who decide are enlightened enough and follow the right procedure. As Rousseau had already insisted, a member of an assembly, when voting, must not express his own preferences but decide whether the proposal under examination does or does not comply with the common good. The “will of all” can differ from the “general will” whenever individuals are unable to distance themselves from their private or partisan interests. The same is true with Condorcet. He is dealing with judgements. For him, contrary to Arrow later, the problem does not consist in aggregating individual preferences and obtain­ ing social choices respecting the “particular wills” or “private interests” of voters because in this case the result would be the “will of all”, not the “general will”. Two different conceptions of democracy and the role of the State are in play here. When he [a man] submits himself to a law which is contrary to his opinion, he must say to himself: It is not here a question of myself alone, but of all; I must therefore not behave according to what I believe to be reasonable, but according to what all, distancing themselves, like me, from their opinion, must consider as complying with reason and truth. (Condorcet 1785, cvii) Condorcet’s ideas were subsequently discussed by two authors before the theme sank into oblivion for decades: in 1794 by the Swiss mathematician Simon Antoine Jean Lhuillier (1750–1840), and by Pierre Claude François Daunou (1761–1840) who presented a memoir on this theme in 1800 at the Classe des sciences morales et poli­ tiques of the Institut national des sciences et des arts (Lhuilier 1794; Daunou 1803).38 3.

From calculation to calculus

The context

As has been shown, probability theory started to be applied to socio-economic ques­ tions. But mathematics proper, and not probability, became fashionable among the educated elite of the time. Mathematics and sciences, above all astronomy, fascinated learned people in an almost exclusive way before questions of political economy and political philosophy became the centre of attention in literary and philosophical circles: Voltaire, Émilie du Châtelet, Georges-Louis Leclerc de Buffon or the young Diderot, for example, at some point translated Newton or published in the field, and Rousseau himself was proud of his mathematical knowledge. Nor must we forget that, at that time, being involved in mathematics and science also had philosophi­ cal and even theological implications. Moreover, mathematical operations were 38 See, for example, McLean and Hewitt (1994) and McLean and Urken (1997).

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thought by prominent scientists and philosophers to reflect the operations of the human mind (Richards 2006). A version of this view is clearly stated in Condorcet. Mathematics deals with identities, which are combined in different ways – but they are not tautologies: “the various combinations of the same elements are not the same thing” (Condorcet [1786] 1847–49, 470). The object of mathematical analysis “is nothing other than the various combinations of a sole idea”: In the most difficult equations . . . one can always arrive at two equal terms, which . . . if one analyses them, will be the same combination of this idea but stated in a different way. A science where all results are only identical propo­ sitions, where all the terms are just arranged ideas of a sole idea . . . must be exempt of any ambiguity, error or uncertainty. A mind which is accustomed in this way to follow the truth on a sound basis . . . forms the happy habit of sorting out and grasping the truth, with whatever subject of science or con­ duct it is dealing. (in Condorcet 1994a, 238–9) Mathematical analysis also has another advantage “independently of the useful usages to which it could be applied”: that of “perfecting the mind” (1994a, 239). A revolution in mathematical thinking

The period saw a great change in mathematics itself. During the seventeenth and eighteenth centuries, it developed in a spectacular way in relation to astronomy and physics, with a decisive shift in focus and methods: the old Euclidian geometry was downgraded and algebra and analysis were put to the fore with the emergence of differential and integral calculus. However, the terms “géométrie” and “géomètre”39 continued to be used to refer to mathematics and mathematicians in general. Alge­ bra was also called “symbolic geometry, because of the symbols algebra uses in the solution of problems” or “metaphysical geometry . . . because what is specific to metaphysics is the generalisation of ideas, and not only does algebra express the objects of geometry in general characters, but it can facilitate the application of geometry to other objects” (D’Alembert, in Encyclopédie, vol. VII, 1757, 637). The system of Newton largely replaced that of Descartes and, among mathema­ ticians, the creation of infinitesimal calculus, especially by Leibniz, was developed by Jakob and Johann Bernoulli (the phrase “integral calculus” was coined by the Bernoullis who convinced Leibniz to adopt it) and the main mathematicians of the century like Euler and d’Alembert. Material advances in probability theory were also based on infinitesimal calculus. These innovations, however, were not accepted without difficulty. D’Alembert’s objections to probability theory have already been alluded to. Infinitesimal calculus was also challenged. A celebrated controversy was, for example, generated by George Berkeley with his 1734 The

39 A “géomètre” is “a person well-versed in geometry; but this name is also given in general to any mathematician . . . Thus one says that Newton was a great geometrician, to say that he was a great mathematician” (D’Alembert, in Encyclopédie, vol. VII, 1757, 627).

The spirit of geometry 197 Analyst, or A Discourse Addressed to an Infidel Mathematician, where he criticised both Newton and Leibniz and stated that infinitesimal magnitudes – let alone the system of higher-order infinitesimals – were incomprehensible and that some basic demonstrations were flawed. The controversy was known on the continent and an echo of it was still to be found in Alexandre Savérien’s 1766 Histoire des progrès de l’esprit humain dans les sciences exactes, et dans les arts qui en dépendent (where Berkeley is referred to as “a man of bad temper”). Despite some lively debates, the temptation emerged to use mathematical analy­ sis in “moral sciences”. Was analysis not already an essential element in astronomy or physics? This idea was at the very heart of Condorcet’s project of “social math­ ematic”, even if he mainly dealt with probabilities. But it also characterised some other programmatic discourses, such as that of Cesare Beccaria (1738–1794)40 in Italy. The same year (1764) that he published Dei delitti e delle pene – which brought him incredible fame in France and Europe – he also published a short mathematical article on a fiscal aspect of smuggling, “Tentativo analitico sui con­ trabbandi”, in Il Caffè, the journal of the Milanese Enlightenment, beginning with these words: Algebra being simply a precise and straightforward technique for reasoning about quantities, it can therefore be employed not only in geometry and in other mathematical sciences but also in the analysis of anything that in some manner is capable of increasing or decreasing. . . . Therefore, political sci­ ences can also make use of it, up to some point. They deal with the debts and assets of a nation, taxes, etc., all items which can be treated as quantities and subjected to calculation. ([1764] 1968, 149*)41 Beccaria, however, like Condorcet, thought that ridiculous misuses of mathematics had to be cautiously avoided. I said, “up to a point” because political principles are highly dependent on many isolated wills and a wide variety of passions which cannot be specified precisely: a policy composed of numbers and calculations would be ridicu­ lous and much more suitable to the inhabitants of the island of Laputa than to present-day Europeans. ([1764] 1968, 149*) Historical difficulties

Despite the novelty and difficulties of the task, various attempts to use mathematics – or at least symbols – in economy were made in the second half of the century.42 But

40 On Beccaria, see especially Bianchini ([1982] 2002).

41 An asterisked page number means that the translation has been modified.

42 Two classical surveys are still useful: Robertson (1949) and Theocharis (1961).

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in France as in other countries like England and above all Italy, a great difference with what happened in probability theory must be noted. While probabilities were used in their most recent and complex developments (for example, the Bayes– Laplace theorem on inverse probability), attempts at some formalisation of eco­ nomic theory used at best simple algebra and not the most recent achievements in mathematical analysis. Moreover, the authors who gave impetus to the application of probability theory to socio-economic subjects were the same who developed this theory. But this was not the case with those who used mathematical analysis to deal with political economy: even when they were engineers or mathematicians, they were not leading scientists and contented themselves with using simple tools, and this could explain some shortcomings. This last point is best illustrated by the new mathematical concept of function. With the development of infinitesimal calculus, mathematicians dealt with increas­ ingly complex functions: but, during most of the century, these functions were always specified, and not written in a general form like f(x). Still in 1758 in his Histoire des mathématiques, Montucla reported the definition of the new concept – for the first time stated by Johann Bernoulli in 1718 – where the examples43 were carefully specified: With the present-day mathematicians, we call here function any expres­ sion made in some way of constant and variable magnitudes; for example, aa ± xx , aa + xx, mx + mm ­1, xx etc., are functions of x. (1758, II, 301n) Yet the use of one letter to express a general functional form had already been proposed by Johann Bernoulli and made more precise by Alexis Claude Clairaut (1713–1765) and Euler in memoirs presented in 1734 – respectively, at the Aca­ démie royale des sciences in Paris and the Imperial Academy in Saint Peters­ burg (Clairaut 1736; Euler 1740). Clairaut used “different signs like Px, Fx, . . . to express different functions in general” (1736, 197) and Euler introduced the notation f(x) – in the present case f(x/a + c) – which is still used today (1740, 186–7). But these notations were only to impose themselves some decades later – they were not used (to our knowledge) by their authors in their didactic books like Clairaut’s Éléments d’algèbre (1746) or Euler’s Éléments d’algèbre (first pub­ lished in Russian in 1770, then in German, and translated into French in 1774 by Johann III Bernoulli44). Moreover, a clear distinction prevailed between pure or abstract mathematics and “mathématiques mixtes” or applied calculus: in applica­ tions (at that time almost exclusively to physics), functions had to be cautiously specified in order to find solutions to specific problems and calculate the value(s) of the relevant unknown(s). This practice had important consequences on attempts to formalise some propositions in political economy, as the use of mathematics in this field fell within the domain of mixed mathematics. 43 The notation aa meaning a2, etc. 44 Grandson of Johann and nephew of Daniel.

The spirit of geometry 199 Implicit formalisation

Before coming to technical aspects linked to the use of mathematics in political economy, it is worth noting that, even in the absence of any symbol or equation, the language of mathematics could also permeate social and economic discourse. Dur­ ing our period, this language was sometimes used without explicit formalisation and was not necessarily metaphorical: a simple literary explanation was thought sufficient to explain a theoretical point. Two outstanding examples of this prac­ tice are to be found in Turgot and Condorcet (Chapter 6, this volume). The first is the development Turgot gave to the theory of value and price, the equilibrium exchange ratio between two commodities (the “appreciative value” and, by exten­ sion, the interest rate) in a bilateral monopoly being determined by the “average esteem value”, that is, a situation in which the difference in the esteem values of the quantity of the received good over that of the quantity of the good given in exchange is equal for both parties. The second example is the determination by Condorcet of the equilibrium amount of public expenditure and taxation: referring to the idea of a decreasing marginal utility of income (or wealth), he stated that the equilibrium condition is that the utility brought by the additional amount of public expense be equal to the “pain” or disutility generated by the additional amount of taxes necessary to finance it. There are some other instances in which the use of mathematical language is more striking but somewhat metaphorical. The first and perhaps most intriguing is to be found in Rousseau’s Contrat social (1762), when the author is dealing with the concept of “general will” as distinct from the “will of all”. It has been suggested above that this concept needed to be more accurately explained, and that this was precisely Condorcet’s aim in his 1785 Essai. To state his views, Rousseau (1762, Book 2, Chapter 3: “Whether the General Will can Err”) had recourse to the math­ ematical image of the “plusses and minuses” of particular wills, which cancel each other out to give the general will. There is often a considerable difference between the will of all and the gen­ eral will. The latter considers only the common interest, while the former considers private interest and is merely a sum of particular wills. But take away from these same wills the pluses and minuses, which mutually cancel each other out, and the remaining sum of the differences is the general will. ([1762] 2012, 182) Commentators were puzzled by these sentences, until it was noticed that they refer to integral calculus: Rousseau’s thought is explained on this basis (Philonenko 1984, 1986; see Dobresco 2010 for some developments). But another, still more intriguing passage is to be found in Book III (Chapter 1, “On Government in Gen­ eral”), when Rousseau explains the relations existing between the government, the sovereign and the people. The relation between the sovereign and the people can be expressed as the relationship between the extreme terms of a continu­ ous proportion whose proportional mean is the government. The government

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receives from the sovereign the commands which it then gives to the people, and in order for the state [the people] to be in proper equilibrium it is nec­ essary, taking everything else into account, for the product or power of the government taken by itself to be equal to the product or power of the citizens, who are sovereigns from one perspective and subjects from another. ([1762] 2012, 206) Among other things, Rousseau was trying to show that many forms of government can exist, depending on the number of the citizens, but once the number is fixed, only one form suits. This passage was not understood until Marcel Françon (1949) showed that Rousseau’s sentences and language were perfectly correct according to the mathematical vocabulary used in his time to deal with proportions, and were designed to illustrate an important theoretical point. Allusive mathematics was also used by a central figure in the lively debate about free trade in grain: Ferdinando Galiani (1728–1787). He too refers to infini­ tesimal calculus (Faccarello 1998) and more especially to what was called at that time, after Leibniz, the calculus of “maximis et minimis”, that is, the extrema on a curve. The method of “maximis et minimis” was defined by d’Alembert, in volume X of the Encyclopédie, 1765, as the method to discover the point, the place or the moment at which a variable quantity becomes the greatest or the smallest possi­ ble, given its law of variation (its function). In his Dialogues sur le commerce des bleds, and in his polemical stance against the physiocrats, Galiani states that “all problems in political economy boil down to doing some good for the people” but also that “there is no good which is not mixed with some evil which often weakens or balances it” (1770, 228). How to solve “the equation of the problem”? When in a problem there are several unknowns, the equation becomes inde­ terminate or belongs to the class of problems we call maximis and minimis, and such in fact are all political problems. It is a question of doing the greatest possible good with the least possible evil. . . . There is a point, a limit before which the good is greater than the evil; if you exceed it, the evil becomes greater than the good. (1770, 229–30) Later on, Galiani returned several times to this question. In De’ doveri de’ principi neutrali verso i principe guerregianti, he generalised the approach to morals. Every moral question . . . is a composite problem always amounting to how, in a given case, one can obtain the greatest good for oneself at the cost of the smallest possible injury to others, or again how one can obtain the greatest good for other men at the cost of the least trouble to oneself. (1782, 16–17) This kind of problem, expressed by an “undefined” equation, cannot be solved in general but only when particular data are specified. It is thus impossible to deter­ mine whether, in general, total freedom of the external grain trade is to be granted.

The spirit of geometry 201 But this is possible if the place and time are known. Galiani thus describes what an economist today is tempted to see as a first expression of the reduced form of a model, with its constraints and parameters. It is not because a problem is indeterminate that it cannot be resolved. It is resolved by means of a general equation, itself also indeterminate, composed of several unknowns and comprising all cases. When the unknowns . . . are specified in the particular circumstances of cases, this equation adapts itself to each circumstance and resolves the cases. (1782, 35n) The language of “maximis et minimis” is also to be found later in other authors45 and finally forms another version of the maximising attitude already stressed in the literature, or an additional argument in favour of Boisguilbert’s theological basis or Turgot’s sensationist approach. It is also linked to Leibniz’s theological views and rehabilitation of the old and disparaged idea of the existence of final causes in nature, an approach developed by Pierre Louis Moreau de Maupertuis (1698–1759) with his (at that time) much-debated “principle of least action”. This principle stated that, in physics, for any change happening in nature, the quantity of “action” needed by this change is always as small as possible, that is, a minimum: in the production of its effects, nature does so always by the simplest means. It could be easily adapted to the moral world, where actions were taken by men precisely with a view (the final cause) of an efficient result. Hence, the many statements that can be found in certain authors: Achilles-Nicolas Isnard (1748–1803), for example, (more on him below) who, in his Traité des richesses, stated that the utilisation of productive resources must be such that “the costs are as small as possible relative to production” (1781, I, xv, 2006, 72)46 in all sectors, including agriculture (1781, I, 47, 2006, 130); that as man cannot enjoy anything without labour, “he has to aim to enjoy as much as possible with the least labour and at the lowest possible cost. This consequence is engraved in all the tables of the laws of human industry” (1781, I, 9, 2006, 90); and that, in exchanges, man is thus inclined to “give as little as possible in order to receive as much as possible” (1781, I, 19, 2006, 100). Early attempts

Attempts to use algebra and somewhat to formalise economic reasoning in France did not happen in a vacuum but in a European environment that it is important to mention, in order to put these developments into an appropriate historical per­ spective. The first attempt, in 1753–54, made by Forbonnais was rather timid and 45 A reference to this method was again made by Malthus in 1814: “Many of the questions both in morals and politics seem to be of the nature of the problems de maximis et minimis in Fluxions; in which there is always a point where a certain effect is the greatest, while on either side of this point it gradually diminishes” (1814, 30). 46 The reference “2006” refers to van den Berg (2006), where substantial excerpts of Isnard’s writings are translated.

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mainly characterised by the use of simple symbols in monetary matters. Moreover, it was not original: the use of symbols in “moral sciences”, while unusual, was not new. It had already been implemented in Italy, in the field of monetary theory, in the wake of the scientific impulse given by Galileo Galilei, by Giovanni Ceva (1647–1734), an administrator and mathematician, and Trojano Spinelli (1712– 1777), a man of letters (Ceva 1711, Spinelli 1750).47 Ceva, for example, in his De re numaria (1711), used letters – G, H, I, K, L for different periods of time, a and d for amounts of “population”, b and e for quantities of money and c, h and f for external values of money (that is, in terms of commodities) – and simple algebra to calculate, for example, c:f which shows the evolution of the value of money as a function of the other variables and is supposed to give some indications for the economic policy of the Prince.48 His reasoning, moreover, is presented in terms of definitions, axioms, scholia, theorems and corollaries. There is no reason to believe that Forbonnais knew the books by Ceva or Spinelli in adopting a similar approach in the monetary field. His purpose was, however, less ambitious and limited to an analysis of the exchange rates between currencies, at par or unbalanced. He first did so in his 1753 entry “Change” in the third volume of the Encyclopédie – republished as Chapter 8 of his 1754 Élé­ ments du commerce – and in a new text (Chapter 9 of Éléments), “De la circulation de l’argent”. Suppose, he wrote, the following bilateral exchange rates between three currencies: a = b, b = c and c = a. In this example, exchanges are at par and there is no incentive to exchange currencies with each other. But if, for example, c = a + d (d here being an increment of c and not a new currency) all other things being equal, arbitrages will be made until a new equilibrium at par will be reached (1754, II, 61–2). The analysis is then adapted to deal with the metallic contents of coins and their variations (II, 76–9). A much more interesting use of algebra in the field of monetary theory, and more in the spirit of Ceva, was made later by Henry Humphry Evans Lloyd (1718–1783) – a Welsh military officer who served several continental powers in Europe and was closely connected to the Milanese Enlightenment – in An Essay on the Theory of Money (1771). Mathematics had also been used in moral philosophy since the beginning of the eighteenth century by the Scottish philosopher Francis Hutcheson (1694–1746) in An Inquiry into the Original of Our Ideas of Beauty and Virtue. . . . With an attempt to introduce a Mathematical Calculation in Subjects of Morality (Hutcheson 1725)

47 For a thorough analysis, see Bianchini ([1982] 2002, Chapters 1 and 2). Ceva’s text is written in Latin. Moreover, the meaning of some terms he uses – for example, “population” – is peculiar and can generate misinterpretations. 48 A very simple use of symbols, but in a far less interesting way – the calculation of simple statisti­ cal means – was also made by the Venetian Giammaria Ortes in his 1757 Calcolo sopra il valore delle opinioni umane. Ortes wanted to express the “opinion” that a society has of some groups, of which it is composed, that is, the importance of each group in the social order and access to riches. This attempt simply boils down to expressing this “opinion” by the per-capita income of a group (for example, the “noble families”, or the “men of letters”, etc.), the global income of a group and the number of its members being expressed by letters, and then replaced by figures ([1757] 1804, 270–78).

The spirit of geometry 203 and to a lesser extent in An Essay on the Nature and Conduct of the Passions and Affections (1728).49 Hutcheson was looking for “a Universal Canon to compute the Morality of any actions, with all their Circumstances” (1725, 168) when judging some action. In this perspective, he stated several “axioms” like the following: The moral Importance of any Character, or the Quantity of publick Good produc’d by him, is in a compound Ratio of his Benevolence or Ability: or (by substituting the initial Letters for the Words, as M = Moment of Good, and μ = Moment of Evil), M = BxA. . . . The Virtue then of Agents, or their Benevolence, is always directly as the Moment of Good produc’d in like Cir­ cumstances, and inversly as their Abilitys: or B = M/A. (1725, 168–9) This kind of approach is important because it was to be adopted some decades later, first in Italy and then in France, to deal with the theory of value and prices. It is first characterised by an absence of reflection on the way symbols are taken for concepts and then concepts changed into variables and measured: in the ear­ lier quotation, for example, benevolence is simply noted by B and ability by A, as if they were measurable magnitudes or statistical data. It is also characterised by the use of the simplest functional relationships between these variables: the “moment of good” is defined as B multiplied by A – in other words, an increasing function is represented by a multiplication, and a decreasing function by a divi­ sion. For the reasons noted earlier, authors were still unable to deal with general functional forms: they specified the functions every time, and in these applications, they always chose the simplest form. Even Daniel Bernoulli partially followed this approach in his 1738 Saint Petersburg paper on risk: to express the hypothesis that the variation in the utility, dy, of a variation in income (or wealth) dx is a decreasing function of this income (or wealth) x, he wrote that dy is inversely proportional to x, multiplied by a constant b: æ1ö dy = b ç ÷ dx èxø

Condorcet criticised this kind of formalisation, for example, in his “Notes sur la thèse de Nicolas Bernoulli”, where he referred to Daniel’s paper, while at the same time accepting the idea of a decreasing additional utility of income or wealth (Condorcet 1994a, 582–4). But his reaction was more explicit in an exchange of letters with Pietro Verri (1728–1797) on the occasion of the publication of Verri’s Meditazioni sulla economia politica in 1771. In the fourth section of his book, Verri, probably inspired by some formulation found in Richard Cantillon’s Essai 49 See Brooks and Aalto (1981). Mathematics is used in the three first editions of the Inquiry, in “Trea­ tise II. Concerning Moral Good and Evil”, Subsections XI and XII of Section III (1725, 168–74; 1726, 182–90; and 1729, 186–93) and at the end of the book (1725, 267; 1726 and 1729, 290) – some similar formalisation also being used in Hutcheson (1728, 304–305). It disappears in the fourth edition, 1738, but the reasoning remains the same and literary sentences express the same mathematical relations. A French translation was published in 1749, but of the fourth edition.

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sur la nature du commerce en général (1755),50 adopted a mathematical language to describe how the prices of commodities are fixed. They depend, he wrote, on the confrontation of supply and demand in markets and, while admitting that his state­ ment is approximative, he symbolised the supply of a commodity by the number of sellers, and the demand for it by the number of buyers, and stated that the price varies like the ratio of the number of sellers to the number of buyers. Allow me to use the language of the science which deals with quantities. . . . The number of sellers being equal, prices are proportional to the number of buyers: the number of buyers being equal, prices rise in proportion of the diminution of the number of sellers; combining the two proportions and sup­ posing that the numbers of sellers and buyers are not equal . . . the prices of things are directly proportional to the number of buyers and inversely pro­ portional to the number of sellers. (Verri 1772, 33–4) In a letter dated 7 November 1771, Condorcet disagrees. You say that the price is inversely proportional to the number of sellers and proportional to that of buyers. I know that the price increases when the num­ ber of buyers increases, and that it decreases when the number of sellers rises; but is it in the same ratio? I do not think so. Thus it seems to me that, in this case . . . the language of mathematics, far from leading to more precise ideas, is misleading. (in Condorcet 1994a, 70–71) Several months later, Verri sent him the (already) sixth edition of his successful book, containing an important novelty: the (anonymous) intervention of the math­ ematician Paolo Frisi – a corresponding member of the Académie royale des sci­ ences – who added mathematical notes in various places, indicated by “N.D.E.” (that is, editor’s notes), and a 17-page appendix, “Estratto del libro intitolato An Essay on the Theory of Money”, in which he summed up the principal propositions of Henry Lloyd’s book, compared them to Verri’s and tried to show that they pro­ ceeded from the same spirit and were complementary. The variation of a price is formalised by comparing two situations: the first, where the price of a commodity is P, the number of sellers V (V for “venditori”) and the number of buyers C (C for “compratori”); the second where the same variables are p, v and c. The variation in price is written as (Frisi 1772, 37): P C c = : p V v

50 “It is clear that the quantity of Produce or of Merchandise offered for sale, in proportion to the demand or number of Buyers, is the basis on which is fixed or always supposed to be fixed the actual Market price” (Cantillon [1755] 1931, 119).

The spirit of geometry 205 In another note, Frisi simply writes P = C , up to a constant multiplier supposed to V be equal to 1 (Frisi 1772, 43). The price thus reaches a maximum or a minimum when dP =

VdC ­ CdV =0 V2

that is, dC C = dV V Frisi also admits (1772, 37–8 and 232–3) that some other function could in princi­ ple express P, like, for example, P=

M ( C + A)

(V + B )

m

n

where A, B, M, m, n are constants, M, m and n being positive. But he states that imposing realistic constraints on the variables – such as P = 0 when C = 0 – boils down to using the simplest formulation above. When Verri introduces money – the “universal commodity”, the value of which is U – Frisi applies his formula to the variation in its value (1772, 84), and he does the same with the interest rate I which is supposed to depend on the supply O (“offerta”) and demand R (“ricerca”, that is, search) of money (1772, 92). With the same conventions as before: P u C c U V v = = : Þ = : p U V v u C c I R r = : i O o It is also interesting to note that, in the context of Verri’s analysis of the beneficial effects of an increasing circulation of money, which is supposed to have real effects on the production of wealth, Frisi alludes to Maupertuis’s principle of least action in order to state, in a very loose analogy, a formula for the maximum wealth in a country.51 In a second letter to Verri, Condorcet’s reaction is still negative. The variations in the (relative) numbers of buyers and sellers are not the sole elements influencing prices, and even if this were true, “how could we prove that the price is equal to the 51 “Maupertuis measured the mechanical action of bodies [the quantity of action] by the product of the mass of a body times its velocity times the distance it moves; in the same way, the economic action and the wealth of a State could be measured by the population, the quantity of circulating metal and the quantity of the circulation [of commodities]. But the mechanical action is of a minimum in most natural phenomena. The object of political economy being the greatest possible wealth, and this being obtained when the quantity of circulation increases in proportion to the circulating quantity [of money]; the greatest wealth will be proportional to the population [‘in ragion composta della semplice popolazi­ one’] times the square [‘ragion duplicata’] of the circulating quantity [of money]” (Frisi 1772, 112).

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ratio of these two numbers multiplied by an invariable quantity?” (in 1994a, 72). As for Frisi’s formalisation, “the conditions with which he determines his func­ tion are not sufficient: an infinity of other functions could satisfy them” (1994a, 73).52 In the realm of mixed mathematics, things are not so simple and a good deal of empirical data is required, as was the case with astronomy. They are, however, extremely difficult to obtain when the number of variables is large or cannot be measured. The use of the language of geometry can lead to deal in an abstract way with questions which must only be dealt with on the basis of experience . . . and the most brilliant and truthful ideas . . . cease being so when you subject them to this analytical rigour and you seek to consider them as abstract numbers. The quantity of universal commodity, the quantity of a specific commodity, can be referred to as numbers; but the urge to buy and the urge to sell are not amenable to any calculation, and yet the variations in prices depend on this moral quantity which in turn depends on opinion and passions. . . . Thus, in all economic problems where quantity is involved, we should be very happy when we know that one is increasing and the other decreasing . . . one is positive and the other negative, large or small, and not attempt to measure them. (1994a, 73–4) As we know, Condorcet was not hostile to the application of mathematics to the moral sciences. He rather used probability theory, and also calculus, but the subject was carefully circumscribed and presented well-defined technical aspects, as in the case of life annuities, for example. This was also the case for the theory of taxa­ tion: in a long note to his 1786 Vie de M. Turgot, he developed mathematically the consequences of a tax reform which would replace all indirect taxes with a direct tax on the net product of land (Condorcet 1786, 129–37; 1994a, 629–34). On the eve of the nineteenth century, however, as we will see below, the same approach he had criticised in the 1770s was still prevailing. But before coming to this point, some physiocratic ambiguities must be addressed. Physiocratic ambiguities

Physiocrats are well known for their calculations, starting from the entries “Fer­ miers” and “Grains” Quesnay wrote for the Encyclopédie, with his tables show­ ing his strategic distinction between the “prix commun du vendeur” and the “prix commun de l’acheteur”, and the celebrated “Tableau économique” which, for the first time, gave a visual representation of the working of an economy (Chapter 5, this volume). But while they are sometimes (erroneously) associated with the use of mathematics and the formalisation of the economic discourse, nothing is further from the truth than the famous assertion by Georges Weul­ ersse, the historian of physiocracy, and some commentators after him, that the 52 Frisi’s mathematical notes generated a lively controversy in Italy (Theocharis 1961; Bianchini [1982] 2002). Together with the appendix, they were deleted from the subsequent editions of Meditazioni.

The spirit of geometry 207 physiocrats were the subjects of a mathematical daemon. It was only after a long period of neglect by economists that several authors drew inspiration from them, from the Tableau or its variant, the “Formule arithmétique du Tableau économique”, to present formalised relations between sectors – including Karl Marx with his schemes of reproduction of social capital – or a mathematical translation of the Quesnaysian schemes.53 However, with the Tableau, the meaning of the word “calculation” had some­ what changed. It was not only a question of collecting and calculating data, but of establishing theoretical relations between them and obtaining a global theoretical view of the economy. It is in this sense that Mirabeau’s eulogy of calculation in Philosophie rurale is to be understood: The Tableau Économique is the first rule of arithmetic invented to reduce to an exact and precise calculation . . . the perpetual implementation of this commandment of the Lord: In the sweat of thy face shalt thou eat bread. . . . For the economic science, calculations are just like bones for the human body. Nerves, blood vessels, muscles invigorate it and give it motion. . . . Economic science is developed in depth through observation and reasoning; but, without calculations, it would always be an uncertain science, confused and everywhere subject to mistake and prejudice. (Mirabeau 1763, xix–xx) This approach is further developed by Guillaume Grivel (1735–1810) in one of the two entries “Arithmétique politique” of the Encyclopédie méthodique,54 stress­ ing the political and philosophical role played by calculation: political arithmetic, Grivel writes, consists in expressing “the general interest of humanity” through principles “subjected to calculation, and confirmed by the results of calculation” (Grivel 1784, 241). Ultimately, however, all this refers to the computation and meaning of statistics and not yet the idea of using (simple) mathematics in political economy. As regards this use, three opinions present interesting variations: they are those of Quesnay himself, Pierre Samuel Dupont de Nemours (1739–1817) and Charles Richard de Butré (1725–1805). Quesnay against the apostasy of “évidence”

Quesnay was hostile to the use of mathematics. He preferred simple arithmetic and a visual representation of the physiocratic theory. It is true that he thought 53 In a way, the same happened to some other authors, who did not use formalisation (even implicitly), but whose ideas were formalised afterwards by commentators. See, for example, van den Berg’s (2004) interpretation of Claude-François-Joseph d’Auxiron’s 1766 Principes de tout gouvernement. 54 The Encyclopédie méthodique has two entries for “Arithmétique politique”. One is in the first vol­ ume of the series Mathématiques, and the other in the first volume of the series Économie politique et diplomatique. Both were published in 1784 and both republished Diderot’s 1751 entry from the original Encyclopédie, but with important additions: Condorcet, as already mentioned, wrote the additional text for the Mathématiques volume, and Grivel for the Économie politique et diploma­ tique series.

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he could convince a greater number of people with tables, pictures and figures. But his attitude is more interestingly the result of his epistemological position as regards the nature of geometry and the recent developments in mathematics. As a matter of fact, he was exclusively in favour of the old Euclidian geometry, the “géométrie démonstrative”, and against the new “géométrie métaphysique”, that is, algebra and infinitesimal calculus. His opinion was clearly stated in his last work,55 Recherches philosophiques sur l’évidence des vérités géométriques, avec un projet de nouveaux élémens de géométrie (1773), in which he endeavoured to develop traditional geometry: “I wholly adopt Euclid’s demonstrative geometry and that of Mr Clairaut as long as it is demonstrative” (1773, ix). “One speaks . . . of my geometry, as if I had another demonstrative geometry than that of Euclid. I declare that I do not have any other one” (1773, xi). The statements contained in this usually neglected book are not so surprising in Quesnay’s works: they are best understood when linked to the entry “Évidence” Quesnay published in 1756 in volume VI of the Encyclopédie, which lays the foun­ dations of his epistemology – a narrow Lockean interpretation of sensationist phi­ losophy. For him, “évidence”56 is one of the two bases of certainty – the other being faith – and the foundation of knowledge. It is defined as “a certitude which is so clear and manifest in itself that the mind cannot deny it” (1756, 146; 2005, 61), and is based on sensations: “Évidence” necessarily results from a personal observation of our own sensa­ tions. . . . I thus mean with “Évidence” a certainty to which it is as impossible not to be subjected as it is impossible for us to ignore our present sensations. (1756, 146; 2005, 61–2) But our sensations generate two kinds of truth: “real truths” and “ideal or purely speculative truths”. The first are “those which consist in exact and self-evident relations that the real objects have with the sensations they provide”, that is, which are generated by real objects. The latter, on the contrary, refer to “the relations that sensations have between them”, independently of real objects: such as, for exam­ ple, “the metaphysical, geometrical, logical or conjectural truths inferred from fac­ titious or general abstract ideas. Dreams, deliriums and insanity also produce ideal truths” (1756, 151; 2005, 74). Now the certainty of our knowledge only originates in real truths: ideal or speculative truths are deceiving and uncertain. It is in fact self-evident that factitious ideas do not have any relation to the objects, such as we perceived them through the use of senses: consequently, the truths they present cannot teach us anything about the reality and prop­ erties of objects, nor about the properties and functions of the sensitive 55 Steiner (1998, 20–21) draws attention to this generally disparaged book.

56 The French word “évidence” is best translated by “self-evidence” or “obviousness”. As Meek

(1962, 40) rightly notes, “Quesnay uses the word ‘évidence’ in a special sense . . . I have used words like ‘self-evident’ and ‘self-evidently’ . . . to translate what Quesnay seems to have in mind here.” The meaning is “special” for an English reader, not really for a French one.

The spirit of geometry 209 being – contrary to what we can only get when we grasp the real and exact relations between these objects and our sensations, and between our sensa­ tions and our sensitive being. The certainty of our natural knowledge thus only consists in the “évidence” of real truths. (1756, 151; 2005, 74) It is on this basis that Quesnay opposes algebra and “the geometry of the imper­ ceptibles”, that is, infinitesimal calculus, which are simply ideal or speculative truths. In a nutshell, metaphysical geometry loses touch with reality and can­ not help us to understand it, when it does not simply create confusion. It only deals with abstractions which do not correspond to any real magnitude that our senses can grasp and measure because “these abstractions rule out any measur­ able object” (1773, 32).57 Exceeding the limits set by nature, it cannot produce any certain knowledge, adds errors to our ignorance (1773, ii) and is just “un badinage d’esprit” (“banter of the mind”) (1773, 26). Simple calculations are sometimes useful, but calculations in themselves “are neither causes nor effects”, as Quesnay stressed in a note to his first “Problème économique”: “In all sci­ ences, the certainty consists in the ‘évidence’ of objects. If we do not reach this ‘évidence’ which supplies calculation with facts and data likely to be counted and measured, calculation will not correct our errors” (in Quesnay 2005, I, 614). The unavoidable and essential role of the senses in connection with real objects is again stressed: “If we go beyond the testimony of the senses, we leave the sphere of ‘évidence’” (1773, vi) and thus of knowledge. There is for us no other “evidence” than that which is decided by the senses. . . . Senses are allegedly deceiving: yes; but senses themselves disabuse us, and only they can disabuse us: only they can assure us of the accuracy of geo­ metrical demonstrations or uncover the errors which lead us to reject them. (1773, v–vi) The true geometry is thus “the science of visible magnitudes” (1773, vii) and must only deal with them: “démontrer c’est montrer”, Quesnay forcefully stresses, play­ ing with the words “montrer” (to show) and “démontrer” (to demonstrate) – to demonstrate is to show (1773, v). There is no other geometrical “évidence” than that which compares given limited magnitudes to other given limited magnitudes (1773, xxx). In dealing with pure abstractions, metaphysical geometricians “attack the certainty of all physical knowledge on which men base their conduct and actions for their safety and preservation” and are like those sophists who “through abstract reasoning denied the existence of [external] bodies, of motion, etc.” (1773, 24–5). This leads to “the apostasy of the very ‘évidence’ of realities, which is the last excess of delusion of the human intellect” (1773, 64).

57 To measure real objects, ordinary arithmetic is sufficient (1773, iv–v): Quesnay refers positively to physicists, who are supposed to deal with real objects and simple arithmetic – but his view of phys­ ics was obviously decades out of date.

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Quesnay’s position was probably not isolated, but it was nevertheless never taken seriously, all the more so since the results of his investigations in geometry (such as the problems of trisecting an angle or squaring the circle) were judged puzzling, if not ridiculous. In his “Éloge de M. Quesnay” published in Mercure de France, d’Alembert was ironic as regards Quesnay’s “lucubrations géométriques”, and rather perfidious. A “too scathing mathematician”, he wrote, said that the leader of a sect should not get involved in writing on geometry while not knowing it; because this damned science is the measure of the accuracy of the mind; and who talks nonsense in mathematics – where a good mind never errs – is more than suspect of not perfectly reasoning about other fields, where it is easier to err. It would have been too harsh and unjust to severely apply this apopththegm to an illustrious old man, consumed by his work. So nobody spoke in this way. (D’Alembert 1778, 155–6) Condorcet’s (1786) “Discours sur les sciences mathématiques” can well be seen as an answer to Quesnay and those who rejected the “new geometry”. Abstraction is for him a necessary step for achieving exact analysis. Mathematics removes all indi­ vidual properties from the object it considers, which becomes “an abstract relation of numbers or magnitudes” and is referred to “by a letter or a line”. The real object is forgotten, “it ceases to exist for the mathematician. These signs, which are appar­ ently arbitrary, are the sole object of his meditations” and it is only after completing his operations that he can apply his result to the real object under examination. The indisputable truths found through this method seem at first sight to be only intellectual and abstract truths. . . . One could be tempted to believe that they do not belong to physical nature. But this would be a mistake, since they are real truths when the phenomenon to which you applied them exists in the universe just as you supposed it; and if your hypothesis is not rigor­ ously accurate, the same methods will let you know to what extent the result of your calculations could diverge from nature, within which limits the real truth is included, and what is the degree of probability that it does or does not lie within narrower limits. ([1786] 1847–49, 469–70) Despite Quesnay’s position, however, some appeals to mathematics and formalisa­ tion, while extremely rare, were not completely absent from the physiocratic literature. Dupont on political curves

Dupont de Nemours tried to go a step further and admitted that mathematics could have a useful role to play. Since the 1760s, his ambition was to provide a theory of prices – he was impressed by Quesnay’s distinction between the “prix commun du vendeur” and the “prix commun de l’acheteur” – but he had never been able to develop it. However, he expressed some views on the evolution of agricultural prices

The spirit of geometry 211 in a memoir titled “Des courbes politiques” (Dupont de Nemours [1774] 1892)58 which remained unpublished: the only manuscript we know can be found in a letter Dupont sent in 1774 to a son of Carl Friedrich von Baden. In this text, Dupont exam­ ines the impact of the establishment of an excise tax on the price of some commodi­ ties or services. According to the physiocratic doctrine, this tax falls in last resort on the “produit net”, diminishes the gross returns of the farmers and affects agriculture in a negative way. Suppose an excise tax on corn, finally paid by the producer. The before-tax price of corn, its “prix naturel” (say, £1,500), is the maximum price for the farmer, and the after-tax price (£1,000) the minimum – note that what Dupont calls “price” here is rather the total revenue of the farmer. If the tax is removed, the price received by the farmer returns to its former level. As for consumers, they always pay in the end the same price for the final commodity (say, £1,600) – this “price” being in fact their total expense for the farmer’s production. This price is a bit higher than the natural price for the farmer, depending on the number of necessary craftsmen, mer­ chants or retailers who intervene between the first producer and the final consumer. However, Dupont stresses, things are complicated to analyse in detail. (1) While the lowest and highest prices for the farmer are known, it is of interest to analyse step by step the progressive impact that the establishment or removal of the excise tax has on the price of corn, that is, the succession of market prices which pre­ vail after the initial (negative or positive) shock took place, until the final price is reached. (2) The final consumer also has to face a fluctuating price because it is initially impacted by the disequilibrating fiscal shock, but this price fluctuates around the usual natural final price, £1,600. (3) The establishment or removal of the excise tax does not impact one sector only, but also progressively all other branches of production, through the use of the commodity as a means of produc­ tion or of consumption for the workers – thus temporarily impacting their pro­ duction costs, disturbing their prices and incomes and interacting with each other. (4) These movements of prices and incomes depend on the way the tax or its removal is passed on to buyers each time, which in turn depends on the many pos­ sible commercial strategies of the agents. On this basis, reasoning on the removal of the excise tax and with the hypothesis of a single specific and general commercial strategy in all sectors, Dupont draws a curve (on the left, Figure 8.1) showing how the price for the farmer (his total rev­ enue) progressively rises from its minimum (£1,000) to its maximum (£1,500), the successive periods of time being indicated along the x-axis. A symmetrical curve (on the right on the same graph) roughly symbolises the related increasing pur­ chasing power of the farmers and landowners – it is just the duplication of the first curve and does not add anything to the analysis – and finally a “serpentine” (above on the right) expresses the fluctuations in the price for the final consumer, around its normal level (£1,600). Even disregarding the ambiguities of the text, Dupont’s result is puzzling and purely illustrative: the material difficulty he had to face is that of dealing with a

58 The English translation of this text (P. S. Du Pont de Nemours, On Economic curves, Baltimore: The Johns Hopkins Press, 1955) is in places unfaithful, starting with the title.

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Figure 8.1 Stylised representation of Dupont’s political curves

representation of a partial equilibrium, all other things not being equal, that is to say, taking into account the general interdependence of markets at the same time. He was convinced, however, that such a curve could be rigorously obtained and that it should be possible to find its equation – with a view to a future “general theory of prices”. Hence his plea in favour of mathematics: “To state that higher geometry [mathematics] is not applicable to politics would be as absurd as . . . to claim that one could not apply it to mechanics or hydraulics” when these sci­ ences were in their infancy (Dupont de Nemours [1774] 1892, 290). But being unable to achieve this task by himself, he wrote that he spoke to “the great Daniel Bernoulli”, trying to involve him in this adventure. Bernoulli probably only gave a polite answer. Dupont again presented his memoir on 1 May 1796 at the Classe des sciences morales et politiques of the Institut national des sciences et des arts. An echo of this session is to be found in the report of the discussion, kept in the archives of the institution. The positive role of mathematics was again stressed. The citoyen Dupont (de Nemours) . . . in a memoir titled Des courbes poli­ tiques . . . intended to show the utility of calculation – even that of the most advanced geometry [mathematics] – applied to problems of political economy for which, with the simple use of ordinary logic, we only obtain a moral and vague result. He endeavours to prove that the greatest part of these problems, like those regarding the motion of the [celestial] bod­ ies, gather a mass of data which influence each other, the effects of which can be submitted to geometric analysis, the results only being liable to be expressed by curves. (Report quoted by Israel 1991) However, this insistence on the role of “higher geometry” must be treated with serious reservations. As a matter of fact, Dupont did not think that the use of math­ ematics was likely to bring new results: the draft of the curves, he stated in 1774,

The spirit of geometry 213 shows that “I am close to the solution. I am speaking of the geometrical [math­ ematical] solution, because we have known the political one for a long time and the geometricians will not teach us anything in this respect” ([1774] 1892, 299). Formalisation is only useful as a tool to convince people of the accuracy of the theory: if they find some pleasure and interest in finding the equation of the curves, mathematicians will provide physiocratic theory with the support of the great num­ ber of people who care about their opinion ([1774] 1892, 300). Butré’s manuscripts

Another physiocrat, Butré, felt the need to use mathematics in questions of political economy, but this time in a more interesting way: in order to develop theoretical insights on the basis of a reformulation of the views Quesnay had stated in “Ana­ lyse de la Formule arithmétique du Tableau économique” and the first “Problème économique”. Butré was a former collaborator of Quesnay and Mirabeau and made statistical and economic calculations for them. He was a military man by profes­ sion, trained in usual mathematics, became a specialist in agriculture and agricul­ tural accounting and published articles on this subject in Éphémérides du citoyen. He used algebra in 1766–67 in two unpublished works: his contribution to the Turgot prize competition about the effects of indirect taxes and a short treatise, Élémens d’œconomie politique, the manuscripts of which were recently discov­ ered by Loïc Charles and Christine Théré (Charles and Théré 2016a, 2016b). His approach thus broke with that of Quesnay, and it is symptomatic that Butré drew inspiration from Clairaut’s Élémens d’algèbre (Charles and Théré 2016b, 314–15 and Appendix)59 while Quesnay, as noted earlier, instead praised Clairaut’s Élé­ mens de géométrie (“as long as it is demonstrative”). This is not, however, the only difference between them: with the view of more rigorously developing Quesnay’s system, Butré made changes to its theoretical structure, modifying the number of classes from three to four, specifying their intrasectoral expenditures and introduc­ ing international trade (Charles and Théré 2016a, 141–5). The way in which he applied mathematics to uncover new theoretical results – and not just to confirm what was already known, as Dupont was ultimately to propose later – was novel in France but presents obvious similarities to Beccaria’s 1764 approach in his essay on smuggling.60 Like mathematicians – Euler, as noted

59 Clairaut clearly states his method in the “Préface” of his Élémens d’algèbre: “I take the opportu­ nity and explain here the way to resolve problems in general, which consists in using letters which express all kinds of magnitudes instead of the figures given by the conditions: and I then show how to deduce the specific solutions from the general solutions by substituting numbers for letters” (1746, iii). 60 In a nutshell, the problem is to show that a high level of customs duty encourages smuggling and is counterproductive. When a smuggler is caught, his goods are seized. He thus faces two opposite outcomes: (a) in case of success, his profit is the amount of the duty which is not paid, but (b) in case of failure, he loses the value of his goods. Suppose that the smuggler only succeeds in smuggling part of his goods, the rest being seized. Let u be the total value of the smuggler’s goods, x the value of the successfully smuggled goods, (u – x) that of the seized goods and t the amount of duty to be paid on u. (This footnote continues on p. 215.)

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Figure 8.2 Dupont’s political curves (reproduced with permission of Landesarchiv BadenWürttemberg, Karlsruhe, Germany)

The spirit of geometry 215 earlier, applied this method to questions of population in 1760 – Butré lists ques­ tions and provides answers (both being sometimes rather unclear). His “Problème 1er fondamental” is a good illustration thereof. Given “the total value of annual productions of a nation, the costs and gains of the food trade . . . and those of industry, and the . . . ratio between the spending on food and on manufactured goods”, the problem is to find “what the ratio between the [value of] raw subsist­ ence goods and the [value] of raw materials should be to have an equal balance in food, primary goods and industry” (in Charles and Théré 2016b, 323), that is, an equilibrium between supply and demand in each sector. Butré’s development is not really an answer to this question but shows how simple algebra is used. Let a be the value of the production of the productive sector (agriculture). This production, according to Butré, is not yet ready for consumption and must be trans­ formed by the sterile sectors (food industry, craftsmen and manufactures) into consumption goods. If x is the value of agricultural products used by craftsmen and manufacturers, a – x is consequently the value of them used in the food indus­ try. Let g be the “cost and gains” of the food sector (the “cost” is the additional cost over the used raw agricultural products) and f those of manufacturing. Hence, (a – x + g) is the value of the production of food and (x + f) the value of industrial goods produced and consumed by the nation. Finally, n is “the ratio of expenses in food to expenses in manufactured goods”. Hence, we will have the following proportion: the [value of the production of] food is to industry, as n is to 1, which we can express as such: (a ­ x + g ) / ( x + f ) = n / 1. That in turn gives the equation a ­ x + g = nx + nf , so nx + x = a + g ­ nf and, by isolating the unknown, we have x = ( a + g ­ nf ) / ( n +1) , a general formula that gives the value of the unknown in all possible cases. (Butré, in Charles and Théré 2016b, 323) The age of ambition

During the last quarter of the eighteenth century, and parallel to Condorcet’s devel­ opments in probability theory and “social mathematic”, three ambitious attempts æxö The smuggler’s profit is thus ç ÷ t and his loss (u – x). The value of x for which the profit is èuø u2 . If t = 100%, that is, t = u, equal to the loss (the point of indifference of the smuggler) is x = (u + t ) u u2 u < . Finally, if t < 100%, or then x = . If t > 100%, that is, t = (u + d), d > 0, then x = 2 + 2u 2 d u2 u t = (u – d), d > 0, then x = > . 2u ­ d 2 Conclusion: the higher the level of the duty t, the lower is x and the more smuggling is encouraged (the point of indifference is easier to reach). There were intellectual relationships between the French and the Milanese Enlightenment, especially through the brothers Alessandro and Pietro Verri and Paolo Frisi. The periodical of the Milanese intel­ lectuals, Il Caffè, was known, and Beccaria himself send a copy of a reprint of it to Morellet in early 1766. Beccaria’s masterwork, Dei delitti e delle pene, was widely discussed in France in 1765–66.

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were made to introduce symbols and algebra into political economy. They deal with the core of the theory and mark the real beginning of formalised economic reasoning. Two different approaches were implemented. The first was adopted by Achilles-Nicolas Isnard, an engineer, who investigated the structural relationships in a multi-sectoral economic system and the relative price system: his develop­ ments are to be found in his 1781 Traité des richesses. The second route was taken by Charles-François de Bicquilley (1738–1814), a soldier, and Nicolas-François Canard (1754–1833), a teacher, in order to determine, inter alia, the equilibrium prices of commodities. This was done in Canard’s Princi­ pes d’économie politique (1801) and Bicquilley’s Théorie élémentaire du commerce (1804). Bicquilley’s Théorie was published three years after Canard’s Principes, but it was written at approximately the same time. The manuscripts of the first versions of these two books were in fact submitted the same year, 1799, to the Institut national des sciences et des arts, but not to the same Classe. Bicquilley submitted his manu­ script to the first Classe of the Institut (mathematics and physics: the new Academy of Sciences) on 28 August, and Canard to the second Classe, that of moral and politi­ cal sciences (a new academy which included political economy: see Chapter 9, this volume), after the Classe launched a competition on 4 October about the impact of taxation. While Canard’s work was occasionally discussed during the nineteenth and twentieth centuries, Bicquilley’s Théorie élémentaire du commerce went unnoticed and was only rescued from oblivion by Pierre Crépel during the 1990s – it seems that the book was printed but never put on sale (Crépel 1998c).61 Isnard and the intersectoral structure of the economy

Achilles-Nicolas Isnard was a Ponts et Chaussées civil engineer trained in alge­ bra and analysis – a competence he also used in the more classical field of the management of the public debt (Isnard 1801) when he was a member of the Tribunat – but he was also interested in moral and political philosophy: his Traité des richesses was in fact followed by Catéchisme social (1784), a sensationist­ based pamphlet, and Observations sur le principe qui a produit les révolutions de France, de Genève et d’Amérique dans le dix-huitième siècle (1789), the purpose of which was to refute Rousseau’s “fatal principle” that “the law is the act or expres­ sion of the general will” (1789, 5). In his Traité, he intended to fight the physi­ ocrats, their theory of the exclusive productivity of agriculture and their related view of the economy: in his opinion, they were confusing production with crea­ tion62 and, in the Tableau économique, they wrongly represented the landowners 61 The secondary literature on Isnard is relatively abundant compared to that on Canard and Bicquil­ ley. (1) On Isnard, see Robertson (1949), Theocharis (1961), Jaffé (1969), Klotz (1994), Kurz and Salvadori (2000), Steenge and van den Berg (2001), van den Berg (2006) and Van den Berg and Steenge (2016). (2) On Canard, see Allix (1920), Theocharis (1961), Larson (1989, 1999), Tortajada (1990), Israel (1991, 1996) and Crépel (1995a, 1998a, 1998b). (3) On Bicquilley, see Crépel (1995b, 1998a, 1998b). 62 “There are people who say that only God produces and that man does not produce. They confuse production with creation. Every particular action produces an effect; it is in that sense that man and natural agents produce . . . It is principally against the Economists that we prove that human

The spirit of geometry 217 “as being seated on a throne and distributing on both sides salaries to the other classes” (1781, I, 41n; 2006, 124n*).63 To this end, he represented the economy as a physical and interconnected system of branches. Each branch uses several commodities as means of production in order to produce a given amount of a particular commodity. This amount should at least replace the total quantity of this good used as means of production in the various branches. There is usually a “surplus” over this quantity, which forms the “richesse disponible” (“available” or “disposable wealth”) that can be used for final consump­ tion and to increase the level of production. As an example, Isnard supposed a system formed of two branches and two commodities M and M’ and reasoned in terms of “mesures” (“measures”) of M or M’, that is, in terms of (physical) units. Let 40M and 60M’ be two kinds of production: one supposes that to produce 40M, a consumption of 10M + 10M’ is necessary, and to produce 60M’ one must consume 5M +10M’; to produce the sum of these two productions, a consumption of 15M + 20M’ is thus required. (1781, I, 36; 2006, 118*) In modern terms,

(10M , 10M ¢ ) ® 40M ( 5M , 10M ¢ ) ® 60M ¢ The surplus produced in the economy is thus 25M + 40M’. It is important to note that, despite some clumsy expressions like the sign + used here or the phrase “value of the disposable wealth” to refer to 25M + 40M’, Isnard is perfectly aware that M and M’ are heterogeneous commodities that cannot be added or compared: “to compare heterogeneous things, one has to find between them some relation of homogeneity, that is to say, to find some homogeneous qualities” (1781, I, 16; 2006, 96). This task is performed by the introduction of money or, at least, with the choice of a numeraire. The system of relative prices allows the comparisons: and, as a result, it will simultaneously determine the distribution of the global surplus in the economy, that is, the share of the value of the surplus that the producers receive in each branch. Let M” be “a common measure” and suppose that M = M” and M’ = 2M”, so that M = 0.5M’. The producers of 40M would have to spend, for the costs, the value of 30M or 30M” and could freely dispose of 10M or 10M”. The producers of 60M’ would have to spend, for the costs, the value of 12.5M’ or 25M” and could freely dispose of 47.5M’ or 95M”. (1781, I, 36; 2006, 118*) activity is productive and that the industry of men increases and multiplies wealth by giving new qualities to products of nature” (1781, I, 15n, 2006, 96n). 63 As before, an asterisked page number means that the translation has been modified.

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Now suppose that the relative prices change because M’ = 3M” instead of 2M”. As a result, the distribution of the surplus is modified: “the disposable revenue of the own­ ers or producers of 40M will be equal to zero, and that of the producers of 60M’ will be equal to the total mass of disposable wealth” (1781, I, 36; 2006, 118*). As a con­ sequence, it is clear that the physiocratic exclusive productivity of agriculture is only a special case of the distribution of the surplus, depending on given relative prices. The total sum of the disposable products depends absolutely upon the needs of nature. She requires a certain portion of the general mass of wealth; she leaves the rest to the enjoyment and the needs of man. The part each producer draws from that portion which is destined for enjoyment, is relative to the particular values of the products. (1781, I, 37; 2006, 118) But how are prices determined? Isnard alludes to the competition of capitals and the resulting uniformity of their equilibrium rates of remuneration – a condition that, if considered as a constraint for the determination of prices, would have led to the Ricardian and Marxian system of “prices of production”. But Isnard focuses instead on the equality of supply and demand in markets. In a barter economy, the supply of any commodity must be equal to the demand for it, expressed by the quantities of other commodities offered in exchange. However, since the offers are composed of several heterogeneous commodi­ ties, it is not possible to deduce from the equality . . . the relation between two particular commodities. To find the relation between commodities taken two by two, one would have to formulate as many equations as there are commodities. The first member of those equations would contain the quan­ tity of commodities, and the second the sum of offers. (1781, I, 19; 2006, 100) Suppose three commodities M, M’ and M”, of which the respective quantities a, b and c are offered for sale – noted by Isnard aM (that is, a units of M), bM’ and cM”. The owners of M offer the quantities maM and naM, respectively, for some units of M’ and M”; the owners of M’ offer pbM’ and qbM’, respectively, for some units of M and M”; and the owners of M” offer rcM” and scM”, respectively, for some units of M and M’ (m, n, p, q, r, s being proportions, with m + n = p + q = r + s = 1). Equilibrium in markets entails that aM = pbM ¢ + rcM ¢¢ bM ¢ = maM + scM ¢¢ cM ¢¢ = naM + qbM ¢ Hence the equilibrium relative prices (1781, I, 20, 2006, 100): M : M ¢ : M ¢¢ =

r + p ­ pr s + m ­ sm n + q ­ nq : : a b c

The spirit of geometry 219 Now, to see how relative prices change, “one only has to assume various numbers in place of the algebraic quantities we have just used, assuming always, as we have done up to now, that the quantities of commodities remain constant” (I, 21; 2006, 102). As for Boisguilbert or Turgot, only relative prices matter: the word “value”, Isnard writes, when applied to wealth, must not be taken in an absolute sense and just refers to the exchange ratios between units of commodities. If we want to speak of absolute value, we should speak of utility: “The word which properly expresses the absolute meaning that can be given to it is utility” (1781, I, 17n; 2006, 98n). Isnard further complexified the analysis, detailing the various components of the costs of production, analysing the labour market, introducing taxation, etc. His developments are not always free from ambiguity, but his basic achievement remains remarkable. No wonder that William Stanley Jevons and Léon Walras regarded him as one of their “precursors”, and that he could also be listed later as a “forerunner” of input–output analysis. Canard and the “latitude”

Nicolas-François Canard taught various disciplines (rhetoric, philosophy, grammar and his favourite field: mathematics64) before being appointed in 1795 professor of mathematics in the newly founded École centrale, then Lycée, of Moulins in the Département of Allier. He was not one of those prominent figures who illuminated French intellectual life from the end of the reign of Louis XVI to the Restoration. Nevertheless, he was in contact with some of them – Joseph Lakanal (1762–1845) in particular, a “founding father” of the Institut national des sciences et des arts – who were influential in political circles and, after 1795, at the newly founded Insti­ tut. A letter by Lakanal, written in the very first days of January 1801, testifies that Canard was his friend and mentions their common intellectual interests. They taught philosophy and mathematics together before the Revolution and subscribed to the new philosophical ideas: Perhaps it would be well to note that, at this time, we were often running the risk of losing our position for having substituted the doctrine of Condillac for the mess of words without ideas with which, in our schools, everything except reason was satisfied. (Lakanal, quoted in Israel 1996) As regards formalisation, Canard published two books which are the result of two competitions launched by the Classe des sciences morales et politiques of the Insti­ tut. The first competition, in October 1799, asked the following question: “Is it true that, in an agricultural country, any kind of tax falls in last resort on the landowners and, if this is the case, do indirect taxes fall on these same landowners with an addi­ tional burden?”. The second, in 1801, asked “What are the means to improve the institution of the jury in France?”. In both competitions, Canard was distinguished. 64 He published a mathematical treatise in 1821, Traité élémentaire du calcul des inéquations (Paris: Bachelier), which does not, however, contains any novelty.

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In the first, he won the prize in January 1801 with a manuscript, Essai sur la cir­ culation de l’impôt, which, substantially enlarged, was published the same year as Principes d’économie politique. In the second, in April 1802, he had to share the prize with a magistrate; his manuscript was published some months later with the title Moyens de perfectionner le jury. In both books, he made use of some formali­ sation – the second to a much lesser extent: it is moreover on criminal justice and deals with some (very simple) probabilities. The Principes were a criticism of some central aspects of the then moribund physiocratic doctrines, especially the exclusive productivity of agriculture, and were intended to prove that the impact of taxation affects not only the landown­ ers. In order to advance his argument on a sound basis, Canard first developed his views on the origin of wealth, income distribution, the working of markets and the determination of prices along a sensationist line akin to Turgot’s and Condillac’s. In a nutshell – we only focus here on Canard’s use of formalisation – in a regime of free trade, prices depend on supply and demand, and more specifically on the strength of the respective needs to sell or buy, on the degree of competition within sellers and within buyers and on a general maximising attitude of agents: “all indi­ viduals are inclined to get the greatest possible number of enjoyments and conse­ quently to obtain the greatest quantity . . . of wealth” (Canard 1801, 27). Each seller tries to fix the highest possible price for his commodity, and each buyer, instead, endeavours to obtain the commodity he wants at the lowest possible price. Suppose a market with a certain number of sellers and of buyers: “there will necessarily be a difference between the price asked by the former and the price offered by the latter. This difference between the highest and lowest prices forms a latitude” (1801, 28). Sellers and buyers are thus led to bargain and fight to get the greatest share of this “latitude”. It is in this context that Canard uses symbols and simple algebra in the same vein as Hutcheson and Frisi did before, with the same shortcomings – no reflection is made about measurement, increasing and decreas­ ing functions are represented by multiplications and divisions, and when there is more than one variable, they are simply multiplied together. Let L be the latitude, x the share of it that the sellers try to add to the lowest price (that is, their share of the latitude), (L – x) the share that the buyers try to subtract from the highest price, B the need of the buyers and b that of the sellers, N the number of buyers (“their competition”) and n that of the sellers. Focusing on the buyers, Canard states that the share x they have to pay to the sellers increases with their need B and their competition N, while the share (L – x) they would like to subtract from the sellers’ highest price increases with the sellers’ need to sell b and their competition n. A similar reasoning could be made from the sellers’ side. He then writes (1801, 29): x / BN = ( L ­ x ) ¤ bn Þ bnx = BN ( L ­ x ) How can these equations, which are usually misinterpreted, be understood? The first, which Canard does not explain, could intuitively represent the balance of opposite forces. But what he says of the second is more interesting and precise: he

The spirit of geometry 221 states that this equation65 “expresses the equality of the moments of two opposite forces which equilibrate”. And he adds, “The entire theory of political economy refers to the principle of the equilibrium of these two forces, just as the entire stat­ ics refers to the principle of equilibrium of the lever” (1801, 30–31). Reference is thus made to physics and more specifically to the moment of a force, and this helps us understand the equilibrium condition.66 In a nutshell, the moment of a force measures the capacity of a force to generate some movement around an axis. It is the product of the force and the “moment arm” (in French “bras de levier”, “levier” meaning lever) which is the distance between the moment centre and the perpen­ dicular of this centre to the line of action of the force. Two forces equilibrate when they have the same moment around the same axis, with opposite algebraic signs. Canard simply applies the same definition to political economy. The buyers’ situ­ ation is symbolised by x / BN : the share of the latitude they have to give up is a decreasing function of BN (the product BN representing “the need and competition of the buyers”), x being the “distance” between the lowest price and the point of agreement, that is, the moment arm of the buyers. The sellers’ situation is represented by ( L ­ x ) / bn (the product bn represents “the need and the competition of the sell­ ers”): the share they have to surrender to the buyers is a decreasing function of bn, (L – x) being the “distance” between their highest price and the same point of agree­ ment, that is, the moment arm of the sellers. Moreover, Canard calls bn “the force of the buyers” in the bargaining process and BN “the force of the sellers” (1801, 29). Hence the equilibrium condition, where each force is multiplied by its moment arm: bnx = BN ( L ­ x ). If it is not satisfied, there is still an incentive to move and the bargaining continues until a balance is reached. The equilibrium value of x then is x=

BN L BN + bn

The extreme values of x are x = L if bn = 0, and x = 0 if BN = 0. In the first case, the need to sell is “as small as possible” and/or competition between sellers is nil: this is the case of “the sellers’ monopoly”. In the second, “the competition or the need of buy­ ers is as small as possible”: this is “the opposite monopoly of the buyers” (1801, 31). Now what are the lowest and highest possible prices for a commodity? The low­ est is simply the “necessary” or “natural” wage S of the producer, that is, a subsist­ ence wage. The highest depends on whether the commodity is of absolute necessity 65 This equation is called “equation of the determinations” (1801, 30). “Each of these two products expresses the determination of each contracting party” (1801, 29–30). 66 In Moyens de perfectionner le jury, Canard refers even more explicitly to physics. “In mechanics, we call moment the product of a force and the distance of its direction to a fixed point” (1802, 24n). The products of opposite forces and their probabilities – “Probabilities are the lever of all moral forces” (1802, 25) – “determine the principle of the static morals, just as in mechanics equal moments of two opposite forces determine the principle of statics or the equilibrium of physical forces. In all circumstances of life, it is the force of our inclinations multiplied by the probability of obtaining the object of our desires which induces us to act: the effort which deters us from acting is again a similar product, and it is in function of the excess of these two forces that we act” (1802, 24–5).

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to the buyers: if it is not, any price increase will diminish the number of purchases until an equilibrium is reached where the gain generated by the increase is equal to the loss due to the reduction of demand; if it is a necessary good, the price will be limited by the necessary wage, or otherwise wages will have to rise or riots will hap­ pen. The general formula for the price P is thus P=S+

BN L BN + bn

Canard then develops his analysis, introducing in particular the structure of the production system, that is, the many branches necessary to produce a commod­ ity, and thus the markets for intermediate products and means of production. But, like Dupont and contrary to Isnard, he does not succeed in taking the intersectoral structure of the economy into account and ends up with complicated and rather meaningless formulas. As for the question asked by the Institut for the competition, it is answered in Chapter VIII of the book (1801, 153–202), where Canard shows that the burden of a tax is shared by all kinds of income (apart from the subsistence wage) according to the respective “forces” of the agents. Canard’s memoir triggered a discussion in the second Classe of the Institut, probably because of its use of mathematics and some questionable developments. In his report, Pierre-Louis Rœderer (1754–1835) – an economist and politician who played an important role in intellectual and political life during the revolutionary and Napoleonic periods – was rather reluctant and expressed the hope that the memoir would provoke new publications which could “confirm what is right in it, correct what is inaccurate and compensate for what is incomplete” (15 January 1801, in Rœderer 1857, 601). As for the long analysis of the memoir published in Mémoires de l’Institut national des sciences et arts, it is just an uncomfortable paraphrase of some aspects of Canard’s ideas, its author declaring that a proper analysis is very difficult to do (Institut national des sciences et des arts 1802, 16–25). After the dis­ cussion, Lakanal sent a letter to the Classe to protest against Rœderer’s criticisms and against the reservations expressed in the statement of the award: he stressed instead the novelty of Canard’s analysis based on the fundamental equation of the equilibrium of opposing forces (Lakanal, in Israel 1996). Finally, Joachim Lebreton (1760–1819), another member of the Classe, published a long review of the Princi­ pes in La décade philosophique, littéraire et politique, the journal of the Idéologues (Lebreton 1802): it forms a laudatory summary of Canard’s propositions, but with­ out any reference to their mathematical expression.67 Despite reticence, Canard’s Principes circulated and quickly benefited from sev­ eral translations,68 which was exceptional at that time. Francis Horner (1778–1817) 67 Two other critiques of Canard’s Principes are reprinted in Crépel (1995a): the first published anony­ mously in the Journal de Paris, February 1802, and the second, unpublished, from a manuscript of André Morellet (on which more below). 68 “The Spanish translation dates from 1804, there was three editions in German (1806, 1814 and 1824) and the Italian translation was published in 1809 . . . The French edition was also widespread” (Tortajada 1990, 151).

The spirit of geometry 223 published a detailed and critical review of the French edition in the second issue of the Edinburgh Review (Horner 1803). He was especially critical of Canard’s use of algebra, which formed in his view an “injudicious and unskilful pedantry . . . which diverts an instrument from its proper use, and attempts to remove those landmarks by which the sciences are bounded from each other”. Canard, he states, “has only trans­ lated, into a language less readily understood, truths, of which the ordinary enuncia­ tion is intelligible and familiar to all” (1803, 439). Horner is not hostile to the use of algebra in political economy but, he stresses, a subject may also possess a mathemat­ ical precision “without requiring, or even admitting, the symbolic representations of algebra” (1803, 440). Analogies borrowed from mathematics can be used, but only as illustrations or ornaments. In this respect, “the frugal and classic taste, with which Beccaria has interspersed allusions of this nature, forms a contrast to the pedantry and profusion with which M. Canard has overloaded his composition” (1803, 440). Bicquilley, mathematics and probability theory

One can easily guess what Horner would have said, had he known Charles-François de Bicquilley’s Théorie élémentaire du commerce, which is certainly the most ambitious attempt to formalise the economic discourse during the Enlightenment. His Théorie élémentaire is full of symbols and calculations and looks a bit like a mathematics book with his definitions, theorems and corollaries – a vocabulary already present in Ceva’s 1711 De re numaria. More importantly, he uses both algebra and probability theory, but with the same shortcomings as those already noted in various writings from Hutcheson’s Inquiry onwards. Bicquilley was not unknown in scientific circles (Crépel 1998a). In 1783, he published a successful didactic book on probability theory, Du calcul des proba­ bilités (Toul: Joseph Carez), not devoid of insights, which was translated into Ger­ man five years later and reprinted in 1805 (Paris: Courcier). Condorcet presented the book at a meeting of the Académie royale des sciences in April 1783 and cer­ tainly drew some inspiration from it for his own research (Condorcet 1994a, 203– 209). In 1786, with a memoir titled Théorie des assurances relatives au commerce de mer, which remained unpublished, Bicquilley shared with the mathematician Sylvestre-François Lacroix (1765–1843) a prize in the competition launched by the Académie about the theory of marine insurance. Théorie élémentaire du commerce was written and submitted to the first Classe of the Institut in 1799. Its purpose was clear: “we still do not have an elementary theory of commerce treated as a mathematical science and in the generality of its principles. Yet no subject seems more liable to be dealt with in this way . . . and worthy of being a part of public education” ([1804] 1995, 62). After a positive report written by three celebrated mathematicians – Charles Bossut, Jean-Baptiste Delambre and Joseph-Louis Lagrange – its author was encouraged to publish his work, which he did after some revisions. The report, inserted into the publication, does not express any reserva­ tions, contrary to what happened to Canard in the second Classe. The subjects pertaining to commerce have been dealt with until now with simple reasonings drawn from their relationships with morals, politics, the

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respective interests of the contracting parties, and supported by arithmeti­ cal calculations. . . . The citoyen Bicquilley intended to apply in general the analytical science to this subject. . . . With this method, the language of commerce is freed from a good many loose, obscure and uncertain phrases; it acquires the precision and accuracy of mathematics. ([1804] 1995, 64–5) The Théorie is dense and rather short (128 pages). The greatest part of the 239 sections, spread out over seven chapters, is devoted to the central themes of value, price, money and the working of markets (including the concept of “quantité dou­ teuse”, or uncertain quantity), the last two chapters being devoted to basic consid­ erations on insurance and the “direction of trade” (that is, an analysis of the causes of an easy or difficult circulation of such or such commodity, including monopoly or what we now call monopsony and the multifaceted interventions of the State). The fundamental part of the book, however, typical of Bicquilley’s use of for­ malisation, is the determination of the prices of commodities, on which most of the developments are based:69 “the analysis of commerce, either general or particular, of one or several traders or of an entire people, must be based on the same princi­ ples as that of a single market” ([1804] 1995, 73). Let us thus take the simplest case and suppose a bilateral exchange. The buyer’s “search” for a commodity, noted R (“recherche”), expresses “the desire he has to possess it”; and the “abundance” Q he faces in the market is the supply of it (§ LXXIII). For an individual, the value of a commodity, noted U, is “the quantity of esteem” that is attached to it (§ XXI). To signify that this value is an increasing function of the search and a decreasing function of the supply, and following a device already met in other authors, the value of the commodity is defined as “the ratio of its search to its abundance” (Theorem 1, § LXXIV), that is, U = R / Q. Money is analysed in the same way, but more as an analogy: for an individual, S being his search for money and N the abundance of it, the value of a unit of money is defined as S / N (§ LXXVIII). Now let D be the quantity this individual wants to buy and P the total price of this quantity. The value for him of the quantity D is D ( R / Q ) . But, in exchange, he must give the sum P of money, the value of which is for him, in a similar way, P ( S / N ). He will be willing to buy if there is a positive difference between the esteem value of what he gets and the esteem value of what he gives: this difference is what Bicquilley calls “convenance” (convenience) (§ XX). The “convenance” of the buyer is thus D ( R / Q ) ­ P ( S / N ). Now let r, q, s, n be the analogous variables for the seller who offers his commodity for sale and is thus in search of money. The “convenance” of the seller is P ( s / n ) ­ D ( r / q ) (§ LXXXIII, Theorem 3).

69 For the probability aspects of the book and the analysis of Bicquilley’s concept of “quantité dou­ teuse”, see Crépel (1998a, 93–9).

The spirit of geometry 225 The exchange takes place if the two conveniences are positive. What will be the unit price of the commodity, that is P/D, called “cherté” (dearness)? We must have simultaneously: D ( R / Q ) ­ P ( S / N ) > 0 and P ( s / n ) ­ D ( r / q ) > 0 hence D ( R / Q ) > P ( S / N ) Þ RN / QS > P / D and P ( s / n ) > D ( r / q ) Þ P / D > rn / sq The value of P / D must thus lie within the following interval: rn P RN < < sq D SQ Bicquilley sees perfectly well that in this case, the equilibrium price is still not totally defined, and he discusses some special cases. He then introduces two other key variables: (1) H and h, respectively, the “habileté” (ability or skill) of the buyer and the seller in the bargaining process; and (2) dropping the hypothesis of a bilat­ eral monopoly, A and V, the number of buyers (“acheteurs”) and of sellers (“ven­ deurs”), which express, as for Verri and Frisi, the degree of competition within these groups. “The relation of the convenience of the buyer and that of the seller in the markets is directly related to their skill, and inversely to their competition” (§ XCV, Theorem 5). With the introduction of these additional variables, the equi­ librium price is now defined as (§ XCVI, Theorem 6) P RqAh + rQVH Nn = × D SnAh + sNVH Qq The demonstration is of course basically flawed for the reasons already stated, but it nevertheless remains fascinating. And what is particularly remarkable is that, in fact, Bicquilley is formalising Turgot’s theory of value and price. What is called here “convenance” is exactly what Turgot dealt with in “Valeurs et monnaies”, and the condition for an exchange is the same in both authors. However, Bicquilley’s final solution is different, because of the introduction of the additional variable “habileté” into a bilateral exchange and because of the kind of formalisation. It is impossible to know whether he had knowledge of Turgot’s essay, which was not yet officially published but which, like some of his other writings, circulated in certain circles. 4.

Opposition and dissent

In the previous pages, the multifaceted history of the rise of quantification and for­ malisation in political economy – as one branch of the moral sciences – has been outlined, from the second half of the seventeenth century to the Revolution. In this

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history, the Académie royale des sciences, with its network of correspondents, and the Institut national des sciences et des arts played an active part, especially as regards probabilities. At the Institut, moreover, a “Classe des sciences morales et politiques” was created – which did not exist in the former Académie des sciences – where politi­ cal economy could be discussed. In the preceding pages, it has also been important to distinguish carefully between quantification and formalisation and, in the latter, between the use of probability theory and that of calculus, even if these different trends necessarily interacted with each other. The idea that the new mathematics and the emerging probability theory – which were still not totally accepted – could be of some help in the field, just as they had been in a spectacular way in other sciences like astronomy or physics, gradually made its way. Yet, apart from some technical achievements, this history was still in its early initial stages at that time and made a decisive new start some decades later only with the development and spread of a general reasoning about functions and the work of Antoine-Augustin Cournot (1801– 1877). To conclude this chapter briefly, an important aspect of this history must still be mentioned: a theme topical in France during the nineteenth century – in JeanBaptiste Say (1767–1832) and his disciples, for example (see vol. 2, Chapter 3) – and still alive today, namely, the rejection of the use of mathematics in economic theory.70 Not surprisingly, during our period, there was reluctance to accept the extension of calculus and probability theory to the “moral sciences” from some quarters, even amongst the scientists of the Académie royale des sciences. One aspect of this refusal was perhaps due to opposition to “metaphysical geometry”, as in the case of Quesnay. Dissenters, however, were not necessarily nostalgic for Euclid­ ian geometry or for the declining traditional intellectual order: some were instead members of the new elite and rejected the hegemony of mathematics in the name of the complexity of the moral and political sciences. Positions crystallised towards the end of the century. Germaine de Staël (1766–1817),71 for example, a prominent novelist and political philosopher, expressed this reluctance well when she stated in her Réflexions sur la paix intérieure: No science (except geometry) is amenable to this mathematical metaphysics, which can only be applied to lifeless and unchanging things. Mathematicians are obliged to suppose a triangle, a square, in an abstract way because the forms given by nature are still too irregular to be the object of calculation. And one would like to apply political calculus to the large association of men, the com­ ponents of which are so different because of so many different circumstances! (Staël-Holstein [1795] 1820, 150) 70 This was an aspect of the emergence of a sentiment against mathematics – and also scientific educa­ tion – at the turn of the nineteenth century (Chappey 2002; Kocik 2020). 71 Germaine de Staël-Holstein was the daughter of Jacques Necker, and the centre of the liberal group gathered around her in her residence of Coppet, in Switzerland, of which the political philosopher Benjamin Constant (1767–1830) was also a prominent member, and which also included the young Jean-Charles Léonard Simonde de Sismondi (1773–1842).

The spirit of geometry 227 Pierre-Louis Rœderer, who was critical of Canard’s memoir, wrote along the same lines and opposed the view that mathematics reflects the operations of the human mind. In the late 1790s or early 1800s, in a short text, “Sur l’esprit mathématicien et l’esprit logicien”, he denounced a fatal preconception: that the study of math­ ematics is the best way to learn logic, that mathematics is a reliable and safe guide for the mind in any kind of research towards any kind of truth. This is a big mistake, and a little bit of thought is enough to convince that moral and political truths and mathematical truths do not have anything in common, and that the devices which lead to the ones cannot lead to the oth­ ers. Mathematical truths are proved through operations: one does not discuss in mathematics. Moral and political truths can only emerge from discussion: one does not carry out any operation in moral and political sciences. (in Rœderer 1857, 313) Mathematical operations and formulas are of no help in these discussions: “they can help to give some precision to a consequence but they are never able to deduce it. In a moral or political discussion, one must always bear in mind both the starting point and the point of arrival” (1857, 313). Outside mathematics, mathematicians are lost and unable to deal with the many complex elements and ideas which exist in the world. “Newton, outside mathematics, commented the Apocalypse” (1857, 314). Finally, another prominent figure of the Enlightenment was of the same opinion: André Morellet (1727–1819), a friend of Turgot, whose argument was fairly akin to that of Dupont. His negative opinion was expressed in an unpublished draft where he criticised Canard’s Principes (in Crépel 1995a, 239–45). The language of math­ ematics, he wrote, could be a useful tool but it “corrupts . . . the hand which uses it and makes it unable to use other tools” (1995a, 239). It is surely possible to obtain the solution to a mathematical problem when it is put in equations; but to put a problem of political economy in a state of being solved with an algebraic formula . . . is often impossible; and, when it is possible, the purely metaphysical work that was necessary to reach this goal must have already supplied the solution to the question and does not leave anything to do for algebra and its calculations. (1995a, 240) Morellet’s critique is also directed at Condorcet and his 1785 Essai sur l’application de l’analyse. Condorcet himself, he wrote, stated that almost everywhere in the Essai one would find results which comply with what the simplest reason would dictate. So why should we resort to mathematics where the use of reason is suf­ ficient? Condorcet’s main argument, according to Morellet, was that mathematics helps to fight sophisms and illusions. But, Morellet insisted, Condorcet forgot “the previous work he was obliged to do before using his mathematical tool”. If this work is done, the question is already solved; and whenever this step is neglected, one would be “as grossly mistaken as [are] the wrong-minded man and the most

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The spirit of geometry 235 Martin, Thierry. 1999b. “Buffon et l’arithmétique politique”. Mathématiques, informatique et sciences humaines, 37 (148), 5–30. McLean, Iain. 1995. “Independence of irrelevant alternatives before Arrow”. Mathematical Social Sciences, 30 (2), 107–26. McLean, Iain, and Fiona Hewitt. 1994. “Introduction”. In Condorcet. Foundations of Social Choice and Political Theory, texts translated and edited by Iain McLean and Fiona Hewitt. Aldershot: Edward Elgar, pp. 1–90. McLean, Iain, and Arnold B. Urken. 1997. “La réception des œuvres de Condorcet sur le choix social (1794–1803): Lhuilier, Morales et Daunou”. In Anne-Marie Chouillet and Pierre Crépel (eds), Condorcet. Homme des Lumières et de la Révolution. Fontenay-aux-Roses: ENS Éditions, pp. 147–60. Meek, Ronald L. 1962. The Economics of Physiocracy. London: George Allen and Unwin. Messance, Louis. 1766. Recherches sur la population des généralités d’Auvergne, de Lyon, de Rouen et quelques provinces et villes du royaume, avec des réflexions sur la valeur du bled tant en France qu’en Angleterre depuis 1674 jusqu’en 1764. Paris: Durand. Messance, Louis. 1788. Nouvelles recherches sur la population de la France, avec des remarques importantes sur divers objets d’administration. Paris: Durand. Meusnier, Norbert. 2003. “Vauban: arithmétique politique, Ragot et autre Cochonnerie”. In Thierry Martin (ed.), Arithmétique politique dans la France du XVIIIe siècle. Paris: INED, pp. 91–132. Mirabeau: see Riqueti de Mirabeau. Moheau, Jean-Baptiste. 1778. Recherches et considérations sur la population de la France. Paris: Moutard. Monjardet, Bernard. 2008. “Mathématique sociale and mathematics. A case study: Con­ dorcet’s effect and medians”. Journ@l électronique d’histoire des probabilités et de la statistique, 4 (1). www.jehps.net (accessed March 2020). Montesquieu: see Secondat de Montesquieu. Montmort: see Rémond de Montmort. Montucla, Jean-Étienne. 1758. Histoire des mathématiques, dans laquelle on rend compte de leurs progrès depuis leur origine jusqu’à nos jours; où l’on expose le tableau et le développement des principales découvertes, les contestations qu’elles ont fait naître, et les principaux traits de la vie des mathématiciens les plus célèbres. Paris: Claude-Antoine Jombert. Montucla, Jean-Étienne. 1778. “De l’arithmétique politique”. In Jacques Ozanam, Récréa­ tions mathématiques et physiques, qui contiennent les problèmes et les questions les plus remarquables, et les plus propres à piquer la curiosité, tant des mathématiques que de la physique; le tout traité d’une manière à la portée des lecteurs qui ont seule­ ment quelques connaissances légères de ces sciences. Paris: Claude-Antoine Jombert fils aîné. Morales, José Isidoro. 1797. Memoria matemática sobre el cálculo de la opinion en las elec­ ciones. Madrid: En la Imprenta Real. Morand, Jean-François Clément. 1782. “Mémoire sur la population de Paris et sur celle des provinces de la France. Avec des recherches qui établissent l’accroissement de la population de la capitale et du reste du royaume”. In Histoire de l’Académie royale des sciences. Année 1779. Avec les mémoires de mathématiques et de Physique pour la même année, tirés des Registres de cette Académie. Paris: Imprimerie Royale, Part II (Mémoires), pp. 459–78. Ortes, Giammaria. [1757] 1804. Calcolo sopra il valore delle opinioni, e sopra i piaceri e i dolori della vita umana. In Pietro Custodi (ed.), Scrittori Classici Italiani di Economia Politica, Parte Moderna, vol. XXIV. Milan: G. G. Destefanis, pp. 257–318.

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Oudin-Bastide, Caroline, and Philippe Steiner. 2015. Calcul et morale. Coûts de l’esclavage et valeur de l’émancipation (XVIIIe-XIXe siècle). Paris: Albin Michel. English transla­ tion, Calculation and Morality. The Costs of Slavery and the Value of Emancipation in the French Antilles. Oxford: Oxford University Press, 2019. Paty, Michel. 1988. “D’Alembert et les probabilités”. In Roshdi Rashed (ed.), Sciences à l’époque de la Révolution française. Recherches historiques. Paris: Librairie scientifique et technique Albert Blanchard, pp. 203–65. Pearson, Karl. 1928. “On a method of ascertaining limits to the actual number of marked members in a population of given size from a sample”. Biometrika, 20A (1/2), 149–74. Perrot, Jean-Claude. 1988. “Introduction”. In Antoine Laurent Lavoisier, De la richesse ter­ ritoriale du royaume de France. Paris: Éditions du Comité des travaux historiques et scientifiques, pp. 5–109. Perrot, Jean-Claude. 2003. “Les comptabilités économiques de Lavoisier”. In Thierry Martin (ed.), Arithmétique politique dans la France du XVIIIe siècle. Paris: INED, pp. 325–43. Petty, William. [1676] 1690. Political Arithmetick. London: Robert Clavel and Henry Mortlock. Philonenko, Alexis. 1984. Jean-Jacques Rousseau et la pensée du malheur. Paris: Vrin. Philonenko, Alexis. 1986. “Jean-Jacques Rousseau, 1712–1778. Contrat social, 1762”. In François Châtelet, Olivier Duhamel and Évelyne Pisier (eds), Dictionnaire des œuvres politiques. Paris: Presses Universitaires de France, pp. 983–99. Quesnay, François. 1756. “Évidence”. In Encyclopédie, ou Dictionnaire raisonné des sciences, des arts et des métiers, vol. VI. Paris: Briasson, David l’aîné, Le Breton and Durand, pp. 146–57. Quesnay, François. [1757–58] 2005. “Hommes”. In Œuvres économiques complètes de François Quesnay et autres textes, Christine Théré, Loïc Charles and Jean-Claude Perrot (eds). Paris: INED, pp. 259–323. Quesnay, François. 1773. Recherches philosophiques sur l’évidence des vérités géométriques, avec un projet de nouveaux élémens de géométrie. Amsterdam and Paris: Knapen and Delaguette. Quesnay, François. 2005. Œuvres économiques complètes de François Quesnay et autres textes, Christine Théré, Loïc Charles and Jean-Claude Perrot (eds). Paris: INED. Rémond de Montmort, Pierre. 1713. Essay d’analyse sur les jeux de hazard. Seconde édition revue et augmentée de plusieurs lettres. Paris: Jacque Quillau. Richards, Joan L. 2006. “Historical Mathematics in the French Eighteenth Century”. Isis, 97 (4), 700–13. Rieucau, Jean-Nicolas. 1998. “ ‘Les entreprises où les hommes s’exposent à une perte dans la vue d’un profit’: Condorcet et l’héritage de d’Alembert”. Revue économique, 49 (5), 1365–405. Rieucau, Jean-Nicolas. 2003. “Les origines de la philosophie probabiliste de Condorcet. Une tentative d’interprétation”. Studies on Voltaire and the Eighteenth Century, no. 12, 245–82. Riqueti de Mirabeau, Victor. 1763. Philosophie rurale, ou Économie générale et politique de l’agriculture, réduite à l’ordre immuable des Lois physiques et morales, qui assurent la prospérité des Empires. Amsterdam: Les Libraires Associés. Robertson, Ross M. 1949. “Mathematical economics before Cournot”. Journal of Political Economy, 57 (6), 523–36. Rœderer, Pierre-Louis. 1857. Œuvres du comte P. L. Rœderer . . . publiées par son fils le baron A. M. Rœderer, vol. V. Paris: Firmin Didot frères.

The spirit of geometry 237 Rohrbasser, Jean-Marc. 2003. “Les Recherches et considérations sur la population de la France: arithmétique politique et démographie”. In Thierry Martin (ed.), Arithmétique politique dans la France du XVIIIe siècle. Paris: INED, pp. 309–23. Rousseau, Jean-Jacques. [1762] 2012. Du contract social, ou principes du droit politique. Amsterdam: Marc Michel Rey. English translation, “On the Social Contract”. In John T. Scott (ed.), The Major Political Writings of Jean-Jacques Rousseau. Chicago and Lon­ don: Chicago University Press, pp. 153–272. Sales, François de. [1608] 1730. Introduction à la vie dévote. Nouvelle édition revue, cor­ rigée, et mise en meilleur français. Paris: Chez Louis Genneau. Secondat de Montesquieu, Charles-Louis de. [1720–55] 1964. Mes pensées. In Montes­ quieu, Œuvres complètes. Paris: Le Seuil, pp. 853–1082. Secondat de Montesquieu, Charles-Louis de. [1720–55] 2012. Mes pensées. English trans­ lation (with a different numbering) by Henry C. Clark, My Thoughts. Indianapolis, IN: Liberty Fund, 2012. Secondat de Montesquieu, Charles-Louis de. [1721] 1964. Lettres persanes. In Montes­ quieu, Œuvres complètes. Paris: Le Seuil, pp. 61–151. Secondat de Montesquieu, Charles-Louis de. [1748] 1964. De l’Esprit des lois. In Montes­ quieu, Œuvres complètes. Paris: Le Seuil, pp. 527–831. Spinelli, Trojano. ca 1750. Riflessioni politiche sopra alcuni punti della scienza della mon­ eta. [No place nor date of publication.] Staël-Holstein, Germaine de. [1795] 1820. Réflexions sur la paix intérieure. Printed in 1795 but published only in 1820 in Œuvres complètes de Mme la baronne de Staël, vol. II, pp. 95–172. Steenge, Albert E., and Richard van den Berg. 2001. “Generalising the Tableau Économ­ ique: Isnard’s Système des richesses”. International Journal of Applied Economics and Econometrics, 9 (2), 121–46. Steiner, Philippe. 1998. La “science nouvelle” de l’économie politique. Paris: Presses Uni­ versitaires de France. Stigler, Stephen M. 1986. The History of Statistics. The Measurement of Uncertainty Before 1900. Cambridge: The Belknap Press of Harvard University Press. Stigler, Stephen M. 2018. “Richard Price, the first Bayesian”. Statistical Science, 33 (1), 117–25. Theocharis, Reghinos D. 1961. Early Developments in Mathematical Economics. London: Macmillan and New York: St Martin’s Press. Théré, Christine. 1998. “Economic Publishing and Authors: 1566–1789”. In Gilbert Fac­ carello (ed.), Studies in the History of French Political Economy. From Bodin to Walras. London: Routledge, pp. 1–56. Théré, Christine, and Jean-Marc Rohrbasser. 2011. “L’entrée en usage du mot ‘population’ au milieu du XVIIIe siècle”. In Loïc Charles, Frédéric Lebebvre and Christine Théré (eds), Le cercle de Vincent de Gournay. Savoirs économiques et pratiques administratives en France au milieu du XVIIIe siècle. Paris: INED, pp. 133–59. Tortajada, Ramon. 1990. “Produit net et latitude: Nicolas-François Canard”. In Gilbert Fac­ carello et Philippe Steiner (eds), La pensée économique pendant la Révolution française. Grenoble: Presses Universitaires de Grenoble, pp. 151–72. Tracy, Myles A. 1966. “Insurance and theology: The background and the issues”. The Jour­ nal of Risk and Insurance, 33 (1), 85–93. Turgot, Anne-Robert-Jacques. 1913–23. Œuvres de Turgot et documents le concernant, avec biographie et notes par Gustave Schelle. Paris: Félix Alcan.

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Van den Berg, Richard. 2004. “ ‘The equilibrium is never perfect’: The dynamic analysis of C.-F.-J. d’Auxiron”. History of Political Economy, 36 (1), 1–29. Van den Berg, Richard. 2006. At the Origin of Mathematical Economics. The Economics of A.N. Isnard (1748–1803). Abingdon: Routledge. Van den Berg, Richard, and Albert Steenge. 2016. “Tableaux and Systèmes. Early French contributions to linear production models”. Cahiers d’économie politique/Papers in Political Economy, 71, 11–30. Véron de Forbonnais, François. 1754. Éléments du commerce. Leiden and Paris: Briasson, David, Le Breton and Durand. Véron de Forbonnais, François. 1767. Principes et observations économiques. Amsterdam: Marc-Michel Rey. Verri, Pietro. 1772. Meditazioni sulla economia politica. Edizione sesta accresciuta dall’Autore. Livorno: Nella Stamperia dell’Enciclopedia. Vilquin, Éric. 1975. “Vauban, inventeur des recensements”. Annales de démographie his­ torique, 207–57. Young, Hobart Peyton. 1988. “Condorcet’s theory of voting”. American Political Science Review, 82 (4), 1231–44. Young, Hobart Peyton. 1995. “Optimal voting rules”. Journal of Economic Perspectives, 9 (1), 51–64.

9

Postlude Intellectual exchanges and last developments Gilbert Faccarello

The key stages of the development of economic thought in France during the Enlightenment have been outlined so far – a period very rich in theoretical perspec­ tives and lively debates. By contrast, the last decade or so of the eighteenth century looked a bit lacklustre, especially because of the dramatic events of the French Revolution. This is not to say, however, that nothing novel happened, and some notable developments have already been mentioned (Chapters 6 and 8) – as regards public economics and formalisation, for example. But novelties sometimes happen discreetly among the writings of authors that the history of economic thought con­ sider as rather minor. They are also indirectly to be found in events which proved important to the spread of political economy as a new discipline. In this perspec­ tive, a few points are worth examining as concluding remarks to this volume. First, a usually neglected theme must be addressed in order to better understand the envi­ ronment of the development of economic ideas in the French language during the second half of the eighteenth century: that of the translations of works originally written in foreign languages. Second, during the Revolution, while the novelty of political economy as a distinct science was highlighted and seen as one symbol of modernity, the impression prevailed that the new discipline was in the end more developed in Great Britain and that its partial disregard by the authorities was a source of the difficulties of the time: hence, during the Revolution, an incentive to react at the institutional level. Third, a brief analysis of some additional theoretical advances during the 1780s and 1790s is in order: they were part of the legacy of the Enlightenment for the next century. 1.

Translations

One notable feature of the second half of our period is the start of a growing flow of translations from foreign languages. It accompanied the development of economic ideas and publications from the 1750s onwards and was often provoked by the very people who participated in the French debates, thus being part and parcel of this development. The flow was also influential because the works could be read not only by the French public but more generally in Europe by a learned public who most of the time understood the French language – a sign of the dissemination of DOI: 10.4324/9780429202414-9

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economic ideas among countries.1 We deal here of course with effective transla­ tions – which are sometimes “free” translations, or adaptations, according to the usages of the time – and not with books officially presented as translations but which were in fact written by French authors who wanted to escape censorship or give more weight to their arguments: Louis-Joseph Plumard de Dangeul (1722– 1777), for example, published a book under the pen name of John Nickolls, and Jean-Bernard Le Blanc (1707–1781) under that of John Tell Truth.2 Around Vincent de Gournay and “commerce politique”

This flow of translations started in the 1750s when economic literature was blos­ soming. Some works, of course, had been translated before. This was the case, for example, of Thomas Mun’s England’s Treasure by Forraign Trade, published in French in 1674 (Traité du commerce. Dans lequel tous les marchands trouveront les moyens dont ils se peuvent légitimement servir pour s’enrichir) probably in the wake of Jean-Baptiste Colbert’s economic policy. A new revised edition came out in 1700 (Trésor du commerce dans lequel on trouvera les moyens dont on se peut légitimement servir pour s’enrichir). Two decades later, John Law’s Money and Trade considered was translated during the final step in Law’s controversial mon­ etary policy (Considérations sur le commerce et sur l’argent, 1720): a new transla­ tion, by Étienne-François de Sénovert (1753–1831), was also published later, during another crucial monetary episode, that of the assignats during the French Revolution (Considérations sur le numéraire et le commerce, in Œuvres de Law, 1790). The 1750s, however, witnessed a decisive change. The flow of translations became significant and characterised the heyday of “commerce politique”. It was the doing of J. C. M. Vincent de Gournay and his group and took place during the growing rivalry between France and Great Britain, just before the outbreak in 1756 of the Seven Years’ War. If the atypical case of Richard Cantillon’s Essai sur la nature du commerce en général, posthumously published in 1755, is set aside,3 many titles were published between 1753 and 1757. Gournay translated Josiah Child’s A New Discourse of Trade (Traités sur le commerce, 1754), François Véron de Forbonnais Charles King’s The British Merchant, Or Commerce Preserv’d (Le négociant anglois, 1755), Georges-Marie Bûtel-Dumont John Cary’s An Essay on 1 It should be noted, however, that a similar flow of translations of French works into foreign languages took place and was even stronger. See, for example, the impressive number of books or booklets translated into English (Carpenter 2017) or other European languages (Delmas et al. 1995; see also Sabbagh 2022). 2 John Nickolls, Remarques sur les avantages et les désavantages de la France et de la GrandeBretagne par rapport au commerce et aux autres sources de la puissance des États, 1754 – this book was even translated into English the same year. John Tell Truth, Le Patriote Anglois, ou réflexions sur les hostilités que la France reproche à l’Angleterre, et sur la réponse de nos Ministres au dernier mémoire de S.M.T.C., 1756. Similarly, during the Enlightenment, some books were allegedly pub­ lished in London or Amsterdam, for example, while in fact printed in France. 3 The book was most probably originally written in French. It seems that Gournay was at the origin of its publication.

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the state of England, in relation to its trade, its poor and its taxes (Essai sur l’état du commerce d’Angleterre, 1755), and Anne-Robert-Jacques Turgot translated the sec­ ond part of Josiah Tucker’s Reflections on the Expediency of a Law for the Naturali­ sation of Foreign Protestants (Questions importantes sur le commerce, à l’occasion des oppositions au dernier Bill de Naturalisation, 1755). Finally, Sir Matthew Decker’s Essay on the causes of the decline of foreign trade was translated by JeanPaul de Gua de Malves (Essai sur les causes du déclin du commerce étranger de la Grande-Bretagne, 1757). Spanish literature was not forgotten, with translations from Jerónimo de Ustáriz (Théorie et pratique du commerce et de la marine, 1753, by Forbonnais) or Bernardo de Ulloa (Rétablissement des manufactures et du com­ merce d’Espagne, 1753, by Forbonnais’s cousin, Plumard de Dangeul). A remark­ able feature is that, during this short but intense period, the translators also published many books of their own. “Such a considerable number of useful books, which were published almost all at the same time, is, for those who write the history of the mind, an undeniable epoch of progress” (Le Blanc 1754, I, xxviii). Apart from these discussions, some works, referring to other themes, were also translated – on population, for example, a much debated issue analysed in Chap­ ter 8, with the translation by Elias de Joncourt of Robert Wallace’s 1753 A dis­ sertation on the numbers of mankind in Ancient and Modern Times (Essai sur la différence du nombre des hommes dans les tems anciens et modernes, dans lequel on établit qu’il étoit plus considérable dans l’antiquité, 1754). David Hume

Associated with the active trend of “commerce politique” was Le Blanc’s trans­ lation of David Hume’s Political Discourses (Discours politiques de Monsieur Hume, 1754, a revised edition following in 1755),4 with a long preface and notes by the translator and two appendices on the related economic literature of the time, focusing on English authors but also praising Jean-François Melon (an alleged source of Hume’s Discours), Forbonnais and Dangeul. Le Blanc also appended to the first volume of the Discours his translation of Bolingbroke’s Testament poli­ tique sur l’état présent de l’Angleterre, principalement à l’égard de ses Taxes & de ses Dettes nationales, & sur leurs Causes & leurs Conséquences (another transla­ tion was published independently the same year: Testament politique de milord Bolingbroke, translator unknown). English economic literature, and Hume’s Dis­ cours in particular, Le Blanc wrote, “are starting to be a school of politics for the other European countries” (Le Blanc 1754, I, viii). “It is only from the English authors that we can henceforth learn to improve the knowledge of commerce; even if their advantage over us is simply that they have preceded us in this science, it would be enough to lead us to choose them as our masters” (I, xxiv).

4 The first edition of Essays, Moral and Political appeared in 1741, and that of Political Discourses in 1752. From 1758 onwards, these two works formed Parts I and II, respectively, of Essays, Moral, Political and Literary.

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The Discours politiques were successful in France and Europe and played an important role in the French context.5 Echoes are to be found in periodicals: for example, a new journal, the Journal étranger, which set out to inform the French public of works published in other languages – chose the Political Discourses as the first British book to review, and published extensive commented excerpts of the essays on commerce and luxury in its first two issues (April and May 1754). The Journal œconomique published the translation of the essay on the balance of trade in its issues of September and November 1754. The same year, as a book, another (partial) translation of Hume’s work was published by Éléazar Mauvillon (Discours politiques de Mr David Hume), which was completed and republished in 1767 with the same title. Two other partial editions followed, occasionally mixed with some other essays or excerpts: (a) the first in 1767, Essais sur le commerce; le luxe; l’argent; l’intérêt de l’argent; les impôts; le crédit public, et la balance du commerce (by Louise-Hortense de Lavau, with four long “Réflexions du traduc­ teur” after the essays on money, interest, taxes and public credit, respectively);6 (b) and the second in 1770, Le génie de M. Hume, ou analyse de ses ouvrages (translator unknown). The first, moreover, received an extensive echo in Journal de l’Agriculture, du commerce et des finances, with five long “excerpts” (which are rather paraphrases mixed with some comments).7 Translations of some of Hume’s philosophical works were made in parallel,8 and the history of Hume’s quarrel with Jean-Jacques Rousseau, with the translation of Hume’s related letters, was pub­ lished in 1766 (Exposé succinct de la contestation qui s’est élevée entre M. Hume et M. J.-J. Rousseau, avec les pièces justificatives). This flow, however, stopped before the Revolution, with certain other authors being favoured at that time. Pietro Verri and James Steuart

One of these authors was Pietro Verri, who situated himself in the wake of Locke and Cantillon. His philosophical essay Meditazioni sulla felicità, developing sensa­ tionist ideas, was translated by Gabriel Mingard (Pensée sur le bonheur, Yverdon, 1766), and his Meditazioni sulla economia politica, again translated by Mingard, was published in Lausanne in 1773 (Réflexions sur l’économie politique) and republished in The Hague in 1779. Verri’s Réflexions was probably received as an antidote to the physiocrats who were often accused of being “fanatics” and “enthu­ siasts”: in his prefatory text, speaking of the Milanese authors, Mingard stressed 5 On this reception, see Malherbe (2005), Charles (2008), Shovlin (2008), Hont (2008), Robel (2012), Demals (2018) and Kawade (2018). 6 Also best known under the fictitious name that Denis Diderot gave her: Mademoiselle de la Chaux. It seems that she started translating Hume earlier than Le Blanc, in collaboration with Diderot, but the book was published posthumously. 7 Issues of February to May and July 1767 (nothing in June). The excerpt on the balance of trade, announced in February, was not published. 8 They were, however, less enthusiastically received because of their atheistic flavour. See, for exam­ ple, the preface by Jean-Auguste Jullien to his Pensées philosophiques, morales, critiques, littéraires et politiques de M. Hume (1767).

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that “fanaticism does not blind these estimable authors; a wise and cautious spirit lightens them . . . neither enthusiasm nor pride lead their pen” (1773, xxxviii). A new translation of Verri’s Meditazioni was made by the “citoyen Chardin” dur­ ing the revolutionary period (Économie politique du comte de Verri, Paris, 1799), probably because, the book being relatively short compared to the works of Adam Smith and James Steuart, it could be used as a textbook in the new teaching institu­ tions (Chardin was professor at the Prytanée français). The revolutionary period also saw the publication, on the initiative of Alexandre Théophile Vandermonde (1735–1796, on whom more below), of James Steuart’s An Inquiry into the Principles of Political Economy by “an Irishman who knew no French”, the translation being “reviewed by a man of high intellect” (Vandermonde [1795a] 1800–1801, II, 448), Sénovert (Recherche des principes de l’économie politique, ou Essai sur la science de la police intérieure des nations libres, Paris, 1789–90). Smith’s Wealth of Nations, Vandermonde admitted, is an excellent book. But “there is another one, less known, that I would particularly recommend.” “I do not know of any exhaustive treatise on political economy”, he adds, “but the most comprehensive . . . which, I think, is the most worthy to be studied, is the book titled Essais sur les principes de l’économie politique [sic], by James Steuart” (Vandermonde [1795b] 1800–1801, t. II, 447–8).9 This work was praised by both Vandermonde and Sénovert (who, as mentioned before, translated Law’s Money and Trade at the same time) especially because it could have presented an alterna­ tive to strict laissez-faire and a plea for pragmatism, a rehabilitation of John Law and, for Vandermonde, a implicit plea in favour of the assignats. Adam Smith

At the end of our period, however, the real success story was that of the multiple translations of Adam Smith’s works. Smith was already well known in France (where he travelled extensively in the 1760s) as a philosopher, after the publica­ tion in 1759 of the first edition of The Theory of Moral Sentiments – a lauda­ tory review of it was published as soon as 1760 in the Journal encyclopédique. Like Hume, Smith had many contacts with French intellectual circles, and the work was translated twice in ten years. The first but rather poor translation was made by Marc-Antoine Eidous (ca 1724–1790) under the title Métaphysique de l’âme, ou Théorie des sentimens moraux published in The Hague in 1764, and the second by Jean-Louis Blavet (1719–1809) (Théorie des sentimens moraux. Traduction nouvelle, Paris, 1774–75, reprinted in 1782)10 – still to Smith’s dissatisfaction.

9 It was not uncommon during these years to read that Smith was in fact inspired by Steuart’s Recherches and adopted some of his ideas. See, for example, La décade philosophique, littéraire et politique, 10 Prairial Year III (29 May 1795), 408–409. 10 Louis-Alexandre de La Rochefoucauld (1743–1792), a friend of Turgot and Condorcet, prepared an incomplete manuscript translation in 1774 (La Rochefoucauld to Smith, 3 March 1778 and 6 August 1779).

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Finally, during the Revolution, a new and relatively more faithful translation was published in 1798 by Sophie de Grouchy (1764–1822), Condorcet’s widow: Théorie des sentimens moraux – with the subtitle Essai analytique sur les Princi­ pes des Jugements que portent naturellement les Hommes, d’abord sur les Actions des autres, et ensuite sur leurs propres Actions. To her translation, she appended her own Lettres à C*** sur la Théorie des sentimens moraux, later known as Let­ tres sur la sympathie, the letter C*** most probably referring to Cabanis (on whom more below). Grouchy’s choice of how to translate some of Smith’s terms, her preface and the appended Lettres show how Smith’s work was received in France: “Some of Smith’s opinions are examined, revised, and even confronted. The let­ ters seemed an appropriate way of tracing the line separating the Scottish from the French school of philosophy” (Grouchy 1798, viii). Although Smith’s book was appreciated, it was generally critically received because it was read in the context of a rational foundation of morals and sensationist philosophy: “beware of this dangerous tendency to suppose the existence of an intimate sense, a faculty, a prin­ ciple, every time we encounter a fact whose explanation escapes us” (1798, 465). In a nutshell, the Lettres state that morals cannot be based on sentiments. “[T]he first causes of sympathy derive from the nature of the sensations that pleasure and pain make us feel” (1798, 368) and sympathy cannot lead to moral judgements unless helped by reason. A sentiment is necessarily modified by reflection, and these modifications alone “lead us to the idea of moral good or evil” (1798, 440), and then to the notion of just or unjust. Moreover, the tendency of most men to adopt moral and just behaviour depends on the system of laws and values proper to a given social organisation. The interpretation was significant in the context of the political debates of the time11 and the much-discussed possibility of creating virtu­ ous citizens through appropriate institutions. The Wealth of Nations, however, broke all publication records (Carpenter 2002; Faccarello and Steiner 2002). Of the book, which came out in 1776,12 two reviews were rapidly published in 1776 and 1777, in Journal encyclopédique ou universel and Journal des sçavans, respectively. After almost two decades of controversies over economic subjects and at a time when the physiocratic doctrine started to be discredited in public opinion, Smith’s work seemed to some to be a welcome alter­ native to the writings of the “sect” – or else an interesting development of Turgot’s ideas, as M.-J.-A.-N. Caritat de Condorcet stressed.13 It was also taken as a criti­ cism of “commerce politique”, the strict followers of which grew scarcer as time

11 For more extended analyses of the translations and reception of The Theory of Moral Sentiments in France, see Faccarello and Steiner (2002). Biziou (2013) and Tegos (2013) are detailed analyses of the meaning and importance of Grouchy’s Lettres sur la sympathie in the French intellectual and political context. See also Bréban and Dellemotte (2017). 12 It seems that at least an extract of the book reached Turgot well before publication (Sabbagh 2012). 13 Smith was thus used against the physiocrats, but the physiocrats claimed instead that Smith appreci­ ated their developments, even if there were some points of disagreement. See, for example, Nicolas Baudeau’s article in the Nouvelles éphémérides économiques, February 1788, Part II, pp. 26–51, titled “Explication amiable entre M. Smith, célèbre écrivain Anglais, et les Auteurs économiques de France”, written on the occasion of the 1788 edition of the Blavet translation.

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went by.14 The beginning and the end of the Wealth of Nations generally attracted the attention of the readers: Book I for its developments on the division of labour,15 Book IV on systems of political economy and the critique of the physiocrats and Book V for the discussions about taxation and public debt. Smith’s views on value and prices, on the other hand, were neglected, or interpreted according to the sub­ jective sensationist approach. As noted in Chapter 6, in the anonymous review published in Journal encyclopédique (1 and 15 October 1776), Smith’s distinction between use value and exchange value “appears to us to have greater subtlety than importance, for it is always utility, the real merit or opinion, which makes this object the price of another” (1 October 1776, 8–9). A very partial translation was published in 1778: Élie Salomon François Reverdil published a translation, with modifications, of Book IV, Ch. VII “Of Colo­ nies” (Fragment sur les colonies en général, et sur celles des anglais en particulier, Lausanne). A complete (anonymous) translation came out almost at the same time in The Hague (Recherches sur la nature et les causes de la richesse des nations, 1778– 79, reprinted 1789). It was followed, with the same title, by Blavet’s translation, first published in 1779–80, in 23 instalments, in Journal d’agriculture, du commerce, des arts et des finances and then in 1781 as a book in Paris (three volumes) and Yverdon (six volumes, presumably a pirate edition). The translation was reprinted in 1786 and 1788 and, revised on Smith’s third edition, in 1800–1801. In his preface, Blavet briefly alludes to a possible link between the 1759 and 1776 works. The object [of the Wealth of Nations] was so important that it deserved to be dealt with by the author of the theory of moral sentiments. When he gave this excellent treatise to the public, Mr. Smith . . . seemed to announce (see the 4th Section of the 6th Part) the profound and enlightening inquiry on the nature and causes of the wealth of nations. Perhaps it should be seen as the continuation thereof. At least, it is not unlikely that the first work gave birth to the second, and that the philosopher inspired the politician [le politique]. (1781, v–vi) Less than two decades later, however, the relevance of The Theory of Moral Senti­ ments was questioned in La décade philosophique and Mercure de France and the book was judged well inferior to the Wealth of Nations (Carpenter 2002, 138, 165–6). The quality of the anonymous and Blavet’s translations of the latter work was also rapidly questioned. Two other translations were made at that time but remained unpublished.16 14 One of the last open defences of it was Étienne Clavière and Jacques Pierre Brissot de Warville’s De la France et des États-Unis (1787). 15 “What seems to be most applauded in France in Smith’s work is his first chapter on the division of labour. There is, however, nothing in his ideas which had not become commonplace among all those of our fel­ low citizens who were dealing with economic matters”, Sieyès noted in the 1780s (in Sieyès 1985, 62). 16 These were the almost complete translation by André Morellet and that by the comte du Nort, mentioned by Adam Smith in a letter of 1782 to Blavet, but for which no manuscript has ever been found.

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At the end of the 1780s, the French economic, social and political situation was critical, and fiscal and economic problems were more than ever topical. This is probably the reason why the 1789 reissue of the anonymous 1778–79 edition was titled Recherches très-utiles sur les affaires présentes, et les causes de la richesse des nations. During the Revolution, however, two new translations were published. The first, based on the fourth edition of the Wealth of Nations, was made by JeanAntoine Roucher (1745–1794) – a poet who used to be close to Turgot and was still close to Condorcet. It appeared in Paris in 1790–91 (two pirate editions were published in 1791 and 1792, in Avignon and Neuchâtel, respectively). A revised edition was soon published in 1794 and reprinted in 1806.17 The 1790–91 publica­ tion was supposed to include a volume of comments by Condorcet, which never came out and probably never existed (Faccarello 1989b). A series of excerpts from Roucher’s and Blavet’s translations were also published in 1790 in Bibliothèque de l’homme public, a journal co-edited by Condorcet, Isaac Le Chapelier and CharlesClaude de Peyssonel. In his “Avertissement du traducteur”, Roucher stressed both the fact that Smith’s reflection was more developed and comprehensive than the French publications made during the previous decades, and the topicality of the book at a time when any citizen could be elected to parliament and participate in public affairs. Anyone yearning for the happiness to live under a government respecting the sacred rights of liberty and property, will find in these Recherches the immutable principles which must guide the heads of nations. France has pro­ duced . . . works which have shed some light on the different aspects of polit­ ical economy. It would be the greatest ingratitude to forget those services rendered to the country by the Écrivains Économistes [the physiocrats]. . . . But England has over us the advantage of having given to the world a com­ plete system of social economy. This part of the whole human knowledge, the most beautiful and useful, is to be found in Smith’s book . . . developed with a prodigious sagacity. (Roucher 1790, vii–ix) However, Roucher’s translation was also contested, despite some favourable reviews in the press. Moreover, Blavet accused Roucher of plagiarism. This led to the second new translation during the Revolutionary period, by Germain Garnier (1754–1821). Started in 1794 during his exile in Switzerland, it was published in 1802. Unlike the previous translators – who were not economists, with the excep­ tion of Morellet whose translation remained unpublished – and while being an admirer of Smith, Garnier was above all a disciple of Cantillon and Quesnay and endeavoured to show all that Smith owed to the latter. With some other commenta­ tors, he was also critical of the plan of the Wealth of Nations. Smith’s arguments, he stressed, were sometimes difficult to follow, with too many digressions, and some 17 Roucher was sentenced to death during the Terror and guillotined on 25 July 1794, two days before the fall of Robespierre on 9 Thermidor (27 July).

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theoretical ideas were not clearly stated. Although Smith’s work was “the most perfect and complete” in political economy, Garnier claimed, in his 1796 Abrégé élémentaire des principes de l’économie politique, that it “lacks order and method” (Garnier 1796, v) – a criticism that was repeated for decades in France. “Most of the interesting elements of his work are thrown up as if by chance and placed under titles that seem alien to them” (1796, vii). In this perspective, the remarkable fea­ ture of Garnier’s translation is a 112-page “Préface du traducteur” which critically explains how to read and understand the Wealth of Nations, and a 588-page fifth volume entirely devoted to notes and comments by the translator. The translation was reprinted in 1822, with a 142-page “Préface”, the notes and comments having been extended to form the fifth and sixth volumes of this edition. Garnier’s opin­ ions had evolved in the meantime in favour of Smith – only a few of the 1802 notes are to be found again in the 1822 edition – without totally breaking with Quesnay’s legacy, however (Allix 1912a; Breton 1990). With Grouchy’s translation of The Theory of Moral Sentiments, Garnier’s trans­ lation of the Wealth of Nations formed for almost two centuries the vehicle of dif­ fusion of Smith’s ideas in the French language. But the latter work largely eclipsed the former, and Garnier’s attachment to Quesnay almost immediately looked oldfashioned. “When one reads this work [the Wealth of Nations]”, Jean-Baptiste Say wrote in the “Discours préliminaire” of his 1803 Traité d’économie politique, “one realises that there was no political economy before Smith. . . . Between the doc­ trine of the Économistes [the physiocrats] and his own, there is the same distance as that which separates Tycho Brahé’s system and Newton’s physics” (Say 1803, I, xx). The Wealth of Nations became an unavoidable point of reference, giving rise to what was called French neo-Smithian political economy (Béraud et al. 2004). The Swiss connection

Finally, it is worth noting that some other works by Smith were also translated, all during the Revolutionary period. Grouchy’s 1798 publication of Théorie des sentiments moraux included Smith’s essay on the first formation of languages (Considérations sur l’origine et la formation des langues), an essay also trans­ lated by Antoine-Marie-Henri Boulard two years earlier.18 Lastly, Smith’s Essays on Philosophical Subjects, posthumously published in 1795 – which includes (with minor changes) Dugald Stewart’s 1794 “Account of the Life and Writings of Adam Smith” – were immediately translated by Pierre Prevost (1751–1839) as Essais philosophiques, 1797. To his translation, Prevost added Smith’s 1755 letter to the authors of the first Edinburgh Review, ten “Notes du traducteur” on some specific points dealt with in Smith’s essays (Prevost 1797b) and a more extended essay, “Réflexions sur les œuvres posthumes d’Adam Smith, par le Traducteur” (Prevost 1797a). 18 Considérations sur la première formation des langues, et le différent génie des langues originales et composées, 1796. A third translation, by Jacques-Louis Manget, was published a few years later in Geneva (Essai sur la première formation des langues, 1809).

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The Prevost edition is important because it marked a change of direction and a new dynamics in the flow of translations of British – and especially Scottish – works into French. Pierre Prevost was a Swiss citizen from Geneva – a district annexed to France in 1798 and the administrative centre of the new French depart­ ment of Léman – and a corresponding member of the new Institut national.19 He was above all an active member of the Pictet group20 around the periodical Biblio­ thèque britannique, which was published in reaction to the excesses of the French Revolution, with a clear programme referring to the Scottish philosophy as an anti­ dote to what they considered the foolish and dangerous ideas of the time. There is a science, the principles of which we particularly wish to propagate: the books of the English and Scottish moralists contain its precious lessons. No one, better than these philosophers, ever knew how to develop and culti­ vate this instinct of justice and guide this passionate and blind desire for hap­ piness to which all the secret workings of the human heart tend. The moral doctrine of these writers is luminous and pure. . . . The mistakes of a wrong philosophy and the evils that are overwhelming mankind have never made this antidote more necessary than now. (Bibliothèque Britannique 1796, 1, 6–7) Not only did the journal publish translations of excerpts from British works – and sometimes entire papers – during more than two decades, but it also prompted the separate publication of books: in 1803, for example, Charles Pictet published a trans­ lation of Henry Thornton’s 1802 Enquiry into the Nature and Effects of the Paper Credit of Great Britain21 and in 1804, Prevost published a work on food shortage by Benjamin Bell and, later, works by Dugald Stewart22 and Hugh Blair.23 Prevost also published in 1805, in Bibliothèque britannique, the translation of long excerpts24 from the second edition of Thomas Robert Malthus’s Essay on the Principle of Popu­ lation and became, so to speak, Malthus’s official translator for this work. Later, he was also the first to spread Ricardo’s Principles of Political Economy and Taxation in the French language with excerpts of the first edition published in Bibliothèque uni­ verselle (the new name of Bibliothèque britannique after 1816) the same year of its publication, 1817. His son Guillaume Prevost also translated works by John Ramsey McCulloch and his aunt Jane Marcet. Finally, in 1791, the lawyer Étienne Dumont

19 He had taught philosophy at the Prussian Academy of Sciences in Berlin, and then literature, phi­ losophy and physics in Geneva. He was a correspondent of Dugald Stewart (who dedicated his 1810 Philosophical Essays to him) and a member of the Royal Society of Edinburgh from 1796. He was also Mrs Jane Marcet’s brother-in-law. 20 A group of intellectuals around the Pictet brothers, Marc-Auguste Pictet and Charles Pictet de Rochemont, who were philosophers and scientists. 21 Recherches sur la nature et les effets du crédit du papier dans la Grande-Bretagne, Geneva, 1803. 22 For example, Éléments de la philosophie de l’esprit humain, Geneva, 1808. 23 Cours de rhétorique et de Belles lettres, Geneva, 1808. 24 Eleven instalments, approximately 330 printed pages.

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(1759–1829) started to publish French translations of works by Jeremy Bentham. He also published in 1797 a “Lettre aux rédacteurs de la Bibliothèque britannique sur les ouvrages de Bentham”, followed in the same volume of Bibliothèque britannique and the two following ones (1797–98) by three articles presenting Bentham’s ideas for a penal code and two articles on his Manual of Political Economy. 2.

Ancients and moderns

New and old politics

As mentioned previously, the field described as the “new science of political econ­ omy” looked novel, and authors were conscious of this novelty: most of them wel­ comed it because of its central relevance to the “happiness of humankind”. In 1766, during what could be called the golden sixties, the physiocrat Guillaume-François Le Trosne (1728–1780) published an article – titled by the editor “De l’utilité des discussions économiques” – in the Journal de l’Agriculture, du commerce et des finances, where he emphatically stated that “economic science is a field that we must clear. . . . The first preparation is done; but how much rubble is still to be removed before the ground be perfectly levelled, how many thorns and bushes are still to be dug out” (Le Trosne 1766, 11). Economic science, undoubtedly the first science for the importance of its object, is the last one in the chronological order of human knowledge: it is a misfortune that must be corrected. . . Let us do today what it would have been so fortunate for us if our fathers had done . . . and we will leave to our descendants this rich legacy. . . . When, through discussions, we agree on principles and, in the light of these principles, we improve our understanding of all the subjects, this work will permanently ensure men’s happiness. (1766, 16) Some authors, however, did not assess the development of “philosophie économ­ ique” positively, claiming that it turned the traditional view of politics upside down. Gabriel Bonnot de Mably (1709–1785), for example, in his Doutes propo­ sés aux philosophes économistes sur l’ordre naturel et essentiel des sociétés poli­ tiques, rejected the primacy given to economic matters over the traditional political and moral values of honour, virtue, etc., in the government of a State. What led Quesnay into error, he wrote, “is that he began his political studies with agriculture, the nature of tax and commerce, and consequently considered these quite second­ ary objects of administration to be the fundamental principles for society” (Mably 1768, 143–4). This cannot work, nor can it bring prosperity. Private and public interests conflict with each other; it is not true that their opposition is spontane­ ously regulated in free markets (Mably 1768, [1776] 1794). These positions clashed during the last decade of the eighteenth century. The political, social and economic structures of the country underwent deep changes during the French Revolution and its long periods of political instability, turmoil

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and wars, thus intensifying the different approaches to social and economic poli­ cies. Understandably, this period might not have been favourable to calm reflec­ tion and theoretical advances. It was, in a sense, a battlefield between the various approaches developed earlier in the century,25 especially between those in favour of free trade, who wanted to remove all regulation, and interventionists who, particu­ larly in wartime, wanted to strengthen them instead. All subjects were discussed, from the regulation of the grain market and the fixation of prices (the so-called “maximum”), to taxation and alternative financial and monetary policies – the con­ troversy over the “assignats” being, with that over the “maximum”, one of the most striking aspects of the period.26 In parliament and in the press, the debates between the two main approaches rapidly assumed the form of a radical opposition between Ancients and Moderns. Those in favour of strong market regulation, making use of certain works by Rousseau or Mably (sometimes rather misunderstood), referred to idealised ancient economic and political organisations – especially from GrecoRoman antiquity – to justify their point of view and made constant appeals to the virtuous and civic behaviour of the citizens, which alone was supposed to achieve the general interest and lead to happiness. This discourse was particularly appreci­ ated during the Terror. By contrast, their opponents – who, during the Terror, ran the risk of being sentenced to death – stressed the fact that modern societies had nothing to do with these antique models and were organised on a radically dif­ ferent basis. Jacques-Antoine Creuzé-Latouche (1749–1800), for example, a mem­ ber of the Convention nationale (the Parliament) who was in favour of free trade, denounced in his “Discours sur la nécessité d’ajouter à l’École normale un profes­ seur d’économie politique” those who “solemnly refer to the laws and policy of the Romans as regards food supplies, without thinking that Romans never had any notion of commerce and industry; that they had their land cultivated by slaves” (Creuzé-Latouche 1795, 6). “Citizens, in the present state of nations, the advantage of strength and independence will always be, all things being equal, where there is the better government of industry and arts” (1795, 8). Politics must study the present state of things – a market-based society – its reference must not be virtue or honour, Sparta or Rome, but political economy, the real expression and symbol of modernity, based on interest. As Vandermonde told his students a few weeks later, “it is a misfortune to make wrong analogies. I would like to persuade you all that the present state must be studied without any reference to the past one; it is too difficult and dangerous to compare them” (Vandermonde [1795a] 1800–1801, II, 449). But what kind of political economy was referred to? At the start of the Revolu­ tion, prominent figures like Dupont de Nemours and Condorcet were still alive and very active,27 and they had their own preferences – Dupont for Quesnay and Turgot, 25 Authors such as Dupont de Nemours, Condorcet, Forbonnais and Rœderer played a role in the debates. 26 For analyses concerning these debates, see, for example, Weulersse (1985), Servet (1989) and Faccarello and Steiner (1990). 27 Condorcet and Dupont were sentenced to death during the Terror. Condorcet hid for some time but died in jail on 29 March 1794. Dupont also hid but was eventually imprisoned: he was, however, released after the end of the Terror on 27 July 1794.

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and Condorcet (as well as the younger Pierre-Louis Rœderer) for Turgot and Smith. A characteristic feature of the period, however, is the impression that, especially after the publication of Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations and its first translations in France, political economy was more developed in Great Britain than in France. This country, it was stressed, contrary to France, had been able to produce comprehensive treatises such as Smith’s book or, less often mentioned because it was far less well known, James Steuart’s Inquiry into the Principles of Political Economy. The main reasons for this situation were ascribed to the former regime of absolute monarchy and to the physiocrats them­ selves, because of their “sectarian bias” and “mystical jargon”.28 The dogmatic tone and the mistakes of some économistes [the physiocrats] were considered with legitimate disfavour and seemed to dampen the French people’s interest for this science, which did not appear to them to present any urgent relevance. As a matter of fact, under a regime where the most useful arts were blackened, where the laws were only the will of a blind despot, and administration was the inheritance of a few privileged people, what kind of taste could the public have for abstract speculations for which there was no probability of a happy implementation? (Creuzé-Latouche 1795, 2) In addition, contrary to some foreign places (Naples, Milan and Edinburgh), there had been no (institutionalised) teaching of political economy in France – a disci­ pline which had allegedly been judged dangerous by the monarchy. Yet such teach­ ing was more than ever necessary. Contrary to some assertions, the implementation of free trade did not make it superfluous in a nation where most people were unedu­ cated and could at any moment demand damaging economic policies. As to those who claimed that such teaching was unnecessary because the existing books were sufficient to instruct people, Rœderer’s Journal d’économie publique, de morale et de politique (11 October 1796, 214) answered in a clear-cut manner: The objection would be admissible if there were only one book and it was good. But there are many of them and, in that number, how many bad ones both in form and content? Will you run the risk that the citizens, called by the constitution to the direction of public affairs, may come to the legislature with discordant principles, and that those who are imbued with a false doc­ trine may compose the majority, that they may make laws which . . . diminish instead of increasing the national wealth? No, we need a sound and uni­ form teaching. . . . [A] false doctrine, worse than absolute ignorance, leads to destruction.

28 By contrast, while Quesnay and the physiocrats were generally mocked and depreciated, Turgot was always positively considered: politically, he was the figure of the honest and enlightened reformer, victim of the Ancient Regime; and theoretically, his 1766 Réflexions sur la formation et la distribu­ tion des richesses were seen as the “germ” of Smith’s Wealth of Nations.

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Institutional arrangements: teaching political economy

It was thus urgent to instruct the people and to lead them to understand the major propositions of political economy. The new discipline should be a “sentinel” placed in public opinion (Creuzé-Latouche 1795, 10). In this perspective, just after the Terror, the Thermidorean Convention tried to tackle the question of public instruc­ tion head-on. The task was not easy:29 as an Ancient Regime institution, the Acadé­ mies had been suppressed on 8 August 1793 (the Académie des sciences included) and many teaching institutions had disappeared because they were in the hands of the clergy. New scientific institutions had therefore to be created, and the entire educational system newly organised – part of a vast plan for the regeneration of the country and the formation of free and responsible citizens. Starting with education, a first step had been, on 25 February 1795, to establish the “Écoles centrales”, the new network of intermediate schools. But the professors who were supposed to teach in these institutions had to be appointed and trained: this is the reason why a network of “Écoles normales” was also decided, in which the main disciplines should be taught to the future teachers. The latter were chosen among educated men over 21 years old with “provable patriotism” and “morals beyond reproach”. In fact, only one École normale, in Paris, was created, on 30 October 1794. The lectures, which were subsequently printed and distributed to the students, and then published as books, started on 20 January 1795 – but the school, faced with difficulties, had to close its doors on 19 May of the same year. At the École normale, the courses covered a vast range of disciplines, from mathemat­ ics and physics to geography and morals. Almost all professors were prestigious, renowned authors in their respective specialities,30 and some of them were emi­ nent members of the former Académie royale des sciences. However, no course of political economy had originally been planned: it was eventually established later, after the above-mentioned intervention of Creuzé-Latouche in Parliament on 31 January 1795 in favour of the creation of such a chair. Vandermonde was appointed as the professor and started his lectures on 21 February. He was a mathematician, had worked with Jacques Vaucanson and Antoine-Laurent Lavoisier and was still working with other scientists such as Claude-Louis Berthollet. He had been a mem­ ber of the Académie royale des sciences and had been very active as a specialist in the assessment of mechanical inventions and technical innovations – an activity that he continued during the Revolution. He also had strong political connections (he was close to some members of the Comité de salut public, that is, the govern­ ment, and was commissioned for certain missions) and he had also shown some interest in political economy – but he was not a specialist in the field. Contrary to his colleagues, he was not prepared for the task: his lectures are rather confused,

29 It was, however, prepared by reports on the subjects, made a few years earlier, by Condorcet in particular. 30 Joseph-Louis Lagrange, Pierre-Simon Laplace, Louis-Jean-Marie Daubenton, Claude-Louis Berthollet, Bernardin de Saint-Pierre, etc.

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and his students complained.31 He was in favour of cautious free trade but also of the assignats – for him the best money that had ever been issued and the solution for the future – and he appreciated Smith, Ferdinando Galiani, Jean-Joseph-Louis Graslin and above all Steuart (as noted before, the translation of Steuart’s Inquiry in 1789 was made at his suggestion). The establishment of this short-lived chair at the École normale had neverthe­ less been important: it was the first public chair of political economy in France; some of Vandermonde’s ideas (below) proved to be seminal for the French classi­ cal tradition; and the lectures had some immediate influence because his lessons and the discussions with his students were printed and some of these students later taught in various Écoles centrales – where, it is true, there was no course of politi­ cal economy proper, but the field was nevertheless included in the course on “leg­ islation”. A few years later, however, on 2 August 1799, professors were officially encouraged to open additional courses, especially one on political economy. We have the testimony of Jacques Berriat Saint-Prix, professor at the École centrale of Grenoble, who immediately opened such a course: his opening discourse, in which we find many themes advanced by Creuzé-Latouche and Vandermonde, was pub­ lished by Rœderer in his Mémoires d’économie publique, de morale et de politique (Berriat Saint-Prix 1799). Political economy was also welcome in Limoges, and the professor could declare: If the economic truths had been more generally spread among us, hideous vandalism would not have made its ravages on the French territory; paper money would have never exceeded the sum of one billion. We would also never have heard of the “law of maximum”, a disastrous law, a masterwork of inanity, more worthy of a drunk savage than of the representatives of the French people! (quoted by Coirault 1940, 32) However, the situation differed greatly according to the tastes and inclinations of the teachers: in Saintes, for example, the professor of legislation only wanted to teach political economy (Coirault 1940, 331–2), while the discipline was probably neglected elsewhere.32 Finally, it must be noted that the professors of legislation in Écoles centrales could also have been recognised people well-trained in political economy. In April 1795, for example, the Magasin encyclopédique announced the appointment of André Morellet, Dupont de Nemours and Rœderer to the chairs of “political economy and legislation” in various Écoles centrales in Paris.33 31 See Hecht (1971, 1986) and Faccarello (1989a, 1993).

32 In Paris, Dieudonné Thiébault, the director of the École centrale of the rue Saint-Antoine, did not

include political economy in the course on legislation: legislation was instead linked to morals and public law (Thiebault, De l’enseignement dans les Écoles centrales, Strasbourg: Year V [1796 or 1797]). 33 Magasin encyclopédique (Magazine encyclopédique from volume II onwards), 1795, vol. I, 284.

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However, to instruct people in general and to use in schools in particular, the need for elementary books was felt, books which could clearly present the different aspects of the new economic science – the former attempts by Victor Riqueti de Mirabeau (for example, his 1769 Les économiques and 1770 Leçons œconomiques) were obviously no longer topical because of their physiocratic approach. This need was felt before Thermidor, in the wake of the projects for the reorganisation of pub­ lic education. The Convention, for example, on 28 January 1794, organised a con­ test for the production of such elementary texts in certain fundamental disciplines. Authors had to deposit their manuscripts before 19 May, a date which was postponed because of the poor quality of the manuscripts received. Vandermonde was one of the members of the committee in charge of the selection: but political economy was not on the list of the chosen fields of knowledge. Afterwards, it was also hoped that the lectures at the École normale could have been the occasion to produce such textbooks, but this was not the case, at least for political economy. Attempts were, however, made independently. Together with Smith’s and Steuart’s treatises, some professors recommended reading Jean-Daniel Herrenschwand’s De l’économie politique moderne. Discours fondamental sur la population. The book had been published in 1786 (London: T. Hookhan) but reprinted in 1795 (Paris: Maradan),34 and excerpts were also published in the issues of 31 October and 10 November of Rœderer’s Journal d’économie publique, de morale et de politique (by order of the Minister of the Interior, moreover, copies of the book were bought by the Comité d’instruction publique, to be circulated for instruction). In 1796, Germain Garnier published his Abrégé élémentaire des principes de l’économie politique (also ana­ lysed in Rœderer’s Journal on 1 and 11 October), a textbook which was also sup­ plemented in 1799 by a new translation of Pietro Verri’s Meditazioni sulla economia politica (see above). Later on, as seen in Chapter 8, Nicolas-François Canard’s 1802 Principes d’économie politique and Charles-François de Bicquilley’s 1804 Théorie élémentaire du commerce were published, but they were not textbooks, despite their titles. Finally, in 1803, Jean-Baptiste Say’s Traité d’économie politique, ou simple exposition de la manière dont se forment, se distribuent, et se consomment les rich­ esses was published in Paris, and Jean-Charles-Léonard Simonde de Sismondi’s De la richesse commerciale, ou principes d’économie politique appliqués à la législation du commerce in Geneva – two comprehensive treatises, but not really elementary texts. Finally, public institutions were not the only place where political economy started to be taught. As during the last decade of the Ancien Régime, private insti­ tutions proposed lectures on various subjects (Dejob 1889; Guénot 1986; Lynn 34 The publisher presented the book as a complement to Vandermonde’s lectures at Ecole normale. The reprint was followed by a series of books in which Herrenschwand developed his principles: De L’économie politique et morale de l’espèce humaine (1796), Du vrai principe actif de l’économie politique ou Du vrai crédit public (1797), Du vrai gouvernement des peuples de la terre (1802) and a revised edition of the latter in 1803, Du vrai gouvernement de l’espèce humaine. Herrenschwand was a Swiss citizen. He lived in France and spent some time in England. In the literature, he is unfortunately often confused with his cousin, the physician Jean-Frédéric Herrenschwand.

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2006). One such was the Musée de Monsieur, which took the name of Lycée after the death of its founder, Jean-François Pilâtre de Rozier (1754–1785), and, on 2 December 1793, Lycée républicain. There Condorcet taught mathematics and prob­ ability theory prior to the Revolution, and Rœderer taught “organisation sociale” in 1793 and “économie publique” in 1800–1801. Rœderer’s lectures were interrupted quite abruptly in 1793, when he had to hide during the Terror, and in 1801 because he was too busy with his official functions in Bonaparte’s regime of Consulat. Some fragments of the 1793 lectures were published a few years later in his Jour­ nal d’économie publique, de morale et de politique,35 and the 1800–1801 lectures were published posthumously, in 1840, with the title Mémoires sur quelques points d’économie publique. In 1802, the Écoles centrales were suppressed and most of them replaced by “lycées”, with an administrative and teaching reorganisation more in line with the authoritarian regime of Bonaparte: the Lycée républicain decided to change name in 1803 and, dropping the word “républicain”, became Athénée (then Athénée royal under the Restoration) – an institution where JeanBaptiste Say and Benjamin Constant were later to teach. Institutional arrangements: the Institut national des sciences et des arts

The Thermidorean Convention voted the new Constitution on 22 August 1795, a few weeks before being replaced by the new regime of the Directoire. In its tenth section, devoted to public instruction, Article 298 created the Institut national “in charge of collecting discoveries and of improving sciences and arts”. The new institution was meant to replace the former Académies, but with a view to consoli­ dating the republican regime. On 25 October 1795 – on its last day – the Conven­ tion adopted an organisation of the “Institut national des sciences et des arts” in three classes: Physical and Mathematical Sciences, Moral and Political Sciences, and Literature and Fine Arts. Compared to the prior Académies, the Second Class, Moral and Political Sciences, was novel.36 It included six sections: 1. Analysis of sensations and ideas, 2. Morals, 3. Social science and legislation, 4. Political econ­ omy, 5. History and 6. Geography. The Class was thus devoted to social sciences, and this time political economy was not forgotten – it was in fact already planned in a first project of a “Société nationale des sciences et des arts”, devised by Condorcet in 1792, of which the new scheme was a less ambitious adaptation. Initially, the seven members of the Political Economy Section were Creuzé-Latouche, Dupont de Nemours, Jean-Gérard Lacuée de Cessac, Charles-François Lebrun, Rœderer, Emmanuel Joseph Sieyès and Charles Maurice de Talleyrand-Périgord. They did not form a homogeneous group and some were certainly included for political 35 The full text is included in 1859 in Volume VIII of his Œuvres published by his son Antoine Marie Rœderer (Paris: Firmin Didot). 36 See Simon (1885) and Staum (1985–86, 1996). Staum (1996) certainly gives the best analysis of the activities of the second class, but his assertions as regards economic theory are questionable (for example, in ascribing a labour theory of value to certain authors or as regards Rœderer’s alleged theoretical evolution).

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reasons. Moreover, only four of these members could be considered, lato sensu, as economists: Sieyès (who wrote against the physiocrats), Creuzé-Latouche, Dupont and Rœderer – Lacuée was a general, Talleyrand and Lebrun politicians. The sec­ tion also had six Associates, including Forbonnais, Garnier, Emmanuel-Étienne Duvillard de Durand and Antoine Diannyère. Vandermonde also became a member of the Institut, but of the First Class (mathematics and physics), although he died shortly after his appointment. Prevost became an associate of the first section of the second class (analysis of sensations and ideas). The second class was short-lived. Because it was sometimes critical of Bonaparte’s policies, it was suppressed on 23 January 1803 and its members rede­ ployed in the other classes of the new structure of the Institut. Echoes of its activity are to be found in the five volumes of Mémoires de l’Institut national des sciences et arts. Sciences morales et politiques, published between 1798 and 1804, and in the press. The section of political economy, however, had not been a place for theoreti­ cal innovations because of its composition, and also because it had no time to do so. Its main achievement was to launch three prize competitions linked to the discus­ sions of the time. The questions asked were (Staum 1996, Appendix 6) (1) “For what objects and under what conditions is it suitable for a republic to open public loans? To give credit to citizens in savings banks? To give public assistance? Consider the question in all respects – political, economic, and ethical”; (2) “Is it true that in an agricultural country any kind of tax falls in the last analysis on the landowners, and, if so, do indirect taxes fall on these same proprietors with a surcharge?” – this was the contest won by Canard (see Chapter 8, this volume); (3) “How has the progres­ sive abolition of slavery in Europe influenced the development of enlightenment and the wealth of nations?” The first subject was proposed four times (1796, 1797, 1798 and 1800), the second once (1799), and the third twice (1802 and 1803), the first and third subjects being redefined when proposed again. Nevertheless, the crea­ tion in 1795 of the second class and, within it, the section of political economy was an important innovation: the class was re-established in 1832 by the July Monarchy with the name of Académie des sciences morales et politiques and played a signifi­ cant role in the debates of the time, for example, about poverty and pauperism. Despite its short existence, the second class of the Institut also played a substan­ tial role in French intellectual life because it was linked to the group of the Idéo­ logues. To put it briefly,37 critically assuming the philosophical legacy of authors like Étienne Bonnot de Condillac, Charles Bonnet, Claude-Adrien Helvétius and Condorcet (a source of inspiration reinforced by the posthumous publication in 1795 of his Esquisse d’un tableau historique des progrès de l’esprit humain), this group wanted to establish a science of ideas (hence the name of the first section of the class and that given to the group) and of man based on the analysis of sensations.

37 The literature on the Idéologues is abundant (but not always in agreement). See in particular Picavet (1891), Moravia (1964, 1968, 1974), Gusdorf (1978), Welch (1984), Quantin (1987), Azouvi (1992), Staum (1980, 1996), Colman (2003) and Sonenscher (2009a, 2009b). On the Décade philosophique, the reference is Regaldo (1976).

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Against the old metaphysics and politics, this method of “analysis” was supposed to give morals a firm scientific foundation and, through a vast reorganisation of public instruction, to give citizens a new rationality which could override passions and thus stabilise the French Revolution in a moderate Republican regime.38 Most members of the group used to meet at the salons of Anne-Catherine de Ligniville (Helvetius’s widow) or Sophie de Grouchy. In April 1794, they started publishing a journal, La décade philosophique, littéraire et politique and, in 1795, a few of them taught at the École normale. Moreover, almost all of them had political responsi­ bilities at some point. The main figures of the group were members of the second class, especially the section of analysis of sensations and ideas.39 In the section of political economy, only Sieyès could be said to be a member of the group, Rœderer being only briefly associated with it. For our purpose, three members are of par­ ticular interest: Pierre-Jean-Georges Cabanis (1757–1808), Antoine-Louis-Claude Destutt de Tracy (1754–1836) and Jean-Baptiste Say (1767–1832). Cabanis, a physician, philosopher and member of the first section, was Con­ dorcet’s and Grouchy’s brother-in-law.40 In his opinion, expressed in some memoirs read at the Institut, then expanded and published in 1802 as Rapports du physique et du moral de l’homme, the science of man should be based on physiology. For Cabanis, in a development of the sensationist approach, physical sensitivity (“sen­ sibilité organique”) directs the activity of our organs and explains psychological phenomena, sympathy included – thus contesting any dualism between body and soul. Grouchy’s Lettres sur la sympathie are supposedly addressed to him, and he approved of her interpretation. The inclinations due to sympathy could have easily deceived the most care­ ful and exact observers. The great difficulty in relating their effects to their true cause could have led one to think that unknown faculties were necessary to explain such phenomena. These inclinations are then what we call moral sympathy: a famous principle in the writings of the Scottish philosophers . . . which Smith analysed with great but notwithstanding incomplete sagacity because he was unable to relate it to physical laws; and that Madame Con­ dorcet, through simple rational considerations, was able to rescue to a large extent from the vagueness where the Theory of Moral Sentiments had left it. (Cabanis 1802, II, 497–8) Destutt de Tracy, a philosopher and politician, was associated with the first sec­ tion and developed the ambitious project of a science of ideas. The sequel of some memoirs he presented at the Institut was published in 1801 as Projet d’éléments

38 Initially favourable to Bonaparte, some of them gradually came to oppose him. See, for example, Chappey (2001). 39 While forming a majority group in this first section, they were only a (vocal) minority in the class: only one-sixth of the members approximately. 40 On Cabanis, see Picavet (1891, Chapters 3–4), Moravia (1974, Part I) and Staum (1980).

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d’idéologie designed for the Écoles centrales, which, with some additions, became in 1804 the first part – Idéologie proprement dite – of his Élémens d’idéologie. The second part, Grammaire, was published in 1803 and the third, Logique, in 1805. But what is most interesting here is the publication, in 1815, of the fourth and fifth parts, titled Traité de la volonté et de ses effets, the fourth (and by far the longest) part of the book being devoted to political economy. The delayed publication of this last volume was due to imperial censorship. The part dealing with political economy was republished in 1823 with the title Traité d’économie politique: this modification followed the publication of an English version of the text in the United States of America (Georgetown, 1817) as A Treatise on Political Economy – the translation having been supervised by Thomas Jefferson (who first thought that the book was by Dupont). Destutt de Tracy was to become, with Say (whose ideas he shared for the main part), one of the founding fathers of the French classical school of political economy. In line with Turgot’s and Condillac’s developments, he devel­ oped a subjective theory of value, one major difference with Say being that he accepted only one factor of production: the physical and moral faculties of men.41 As for young Say,42 he made his debut in Décade philosophique, of which he was the editor for a time: he published extensively there, but little on political economy. He participated in a prize competition launched by the third section of the second class, that of morals, on the question: “What are the most suitable institutions to give man in society habits capable of making him happy? Discuss the nature of habit.” In 1799, he won an honourable mention with his utopia, published in 1800: Olbie, ou Essai sur les moyens de réformer les mœurs d’une nation. In this essay, the best of all books on morals is nothing other than a good treatise of political economy which can spread the principles of this science in all classes of society – a good system of political economy allowing a growing number of people to live honestly from their activity and reducing the two extremes, enemies of morals, namely great opulence and destitution. Destutt de Tracy also published on the same theme (Quels sont les moyens de fonder la morale chez un peuple? 1798) but from a different point of view. Finally, two last points are worth mentioning. The first regards research and the spread of economic knowledge. The second half of the eighteenth century saw the publication of specialised journals on economic matters (Steiner 1996), the most well known being the physiocratic Éphémérides du citoyen. During the Revolution, Rœderer (whose journalistic activity was extensive) published a journal, where economic and political discourses were naturally intertwined: the above-mentioned Journal d’économie publique, de morale et de politique, of which 42 issues were published between August 1796 and October 1797 and which was followed by a second series with almost the same title: Mémoires d’économie publique, de

41 On Destutt de Tracy, see Picavet (1891, Chapters 5–6), Moravia (1964; 1974, Part II, Chap­ ters 2–3) and Head (1985). On his political economy, see more specifically Béraud and Facca­ rello (2014, 25–7) and below, Volume 2, Chapter 2, “The ‘founding fathers’ of the French liberal thought: A-L-C. Destutt de Tracy and Jean-Baptiste Say”. See also Allix (1912b), Magnan de Bornier (2013) and Staum (1980). 42 On this period of Say’s intellectual life, see Steiner (1990) and Whatmore (2000).

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morale et de politique (11 issues between December 1799 and 1801). The sec­ ond point concerns the variations in the vocabulary used in relation to political economy. As already mentioned, political economy was included in the broader set of the “moral and political sciences”. This appellation essentially dates from the physiocrats, and more specifically from the moment when, in 1767, the subtitle of the Éphémérides du citoyen, “Chronique de l’esprit national” was replaced by “Bibliothèque raisonnée des sciences morales et politiques”. The idea was that political economy or economic science was an essential field which, together with other developments dealing with morals and politics, was supposed to uncover the natural order “obviously” the most advantageous to humankind. But there was an ambiguity from the start, because “moral and political sciences” was sometimes used by the physiocrats in the singular (“moral and political science”) and moreo­ ver seemingly confused with economic science – this was the case, for example, in the “Avertissement de l’auteur” to the first 1767 issue of the Éphémérides which explained why the subtitle of the journal had been changed. The phrase was none­ theless adopted outside physiocratic circles and gave its name to the second class of the Institut. However, the idea of the existence of a unitary science, which would include political economy, made its way from the start of the Revolution, and was called “science sociale”, although its content differed according to authors and was most of the time programmatic and sometimes confused. Both “sciences morales et politiques” and “science sociale”, however, played an important role in the philo­ sophical and political strategy of the Idéologues.43 3.

New developments and criticisms

Finally, in addition to what has been said in the previous chapters, some devel­ opments are worth noting: they bring theoretical refinements to the previous approaches, but they also level some new criticisms at (liberal) political economy. Utility and productive labour

Towards the end of the century, the utility approach allowed certain authors to get rid of the physiocratic distinction between productive and unproductive sectors, and of the Smithian distinction between productive and unproductive labour. The movement had already started with critics of physiocracy before the publication of the Wealth of Nations. A potential criticism was already present in Turgot’s devel­ opments on capitalist competition and the definition of an equilibrium in terms of the uniformity of the rate of profit, all things being equal. With Turgot, however, and Rœderer after him, the link was maintained with the theory of the exclusive productivity of agriculture. Graslin could not accept the physiocratic distinction. And Sieyès developed his own point of view in his 1775 unpublished Lettres aux 43 See Baker (1964, 1975), Head (1982), Damamme (1995), Colman (2003), Steiner (2006), Wokler (2006) and Sonenscher (2009a, 2009b). The concept of “science sociale” evolved some decades later with, in particular, Claude-Henri de Saint-Simon and Auguste Comte.

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Économistes sur leur système de politique et de morale. Première lettre. Sur les richesses. The ultimate aim of the production of goods and services, he wrote, is their enjoyment by the consumers. Leaving aside free goods, the sole productive factor is labour and its division in society. As for work which does not directly produce exchangeable goods and services, it is “co-productive” because its nature is to promote and facilitate productive activities: I must stress the great division between productive and co-productive labour in order to avoid certain readers being at a loss as regards political and public work. It will be asked: How does it produce wealth? In securing the fruit of labour, and in diminishing the need of means. It is co-productive, just as the merchants, the carriers, the citizens dealing with useful sciences, and the teachers are. (1775, in Sieyès 1985, 33) Vandermonde, however, in his 1795 lessons at the École normale, took a decisive step forward (Faccarello 1989a, 1993): any kind of labour is productive as long as it provides a service that is useful to others. Referring to the political transforma­ tions that happened during the Revolution and especially the fact that any legal and political distinction between citizens had been abolished, and transposing this political equality into the economic field, he claimed that all activities must be put on an equal footing. The only criterion is to be useful to society in providing a ser­ vice, a utility, to citizens. All incomes “come from equivalents obtained by services that have been supplied” (Vandermonde [1795a] 1800–1801, II, 458). I am a cultivator; a landowner rents me his land; I pay him the price of the lease; what is this? He lends me his right to cultivate; this is a service that he provides me, and I give him the equivalent thereof. I am a singer; you love music; I allow you to spend a pleasant hour; you pay me: this is an equivalent for the service I provided you. ([1795a] 1800–1801, II, 459) This analogy between the cultivator and the singer, Vandermonde added, “must be noted by republicans who established equality”.44 During the same period, Ger­ main Garnier – who sometimes objected to Quesnay’s differentiation between the productive and sterile classes – unambiguously contested Smith’s distinction between productive and unproductive labour: any kind of labour which finds a reward produces utility and is thus productive (Garnier 1796, 39). Garnier 44 This is an example of direct feedback from political discourse into economic analysis. The reverse is also true: Sieyès, as seen in a previous chapter, used the positive aspects of the division of labour as an argument for his theory of representative government. During the Revolution, some points of eco­ nomic theory were also advanced in favour of specific definitions of “active citizenship”, that is, the entitlement to vote or to stand as a candidate in a political election: Garnier was in favour of limiting it to landowners, while Rœderer thought it appertained to all capital owners (see Allix 1913). It should also be noted that the modern concept of property emerged during the Revolution (Blaufarb 2016).

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developed his idea in “Note XX” to his translation of the Wealth of Nations (Garnier 1802, 169–201). It is incorrect, he claimed, to distinguish between those who produce material things and those who produce final services: All work is productive. . . . The work of either of these two classes is equally productive of some enjoyment, commodity [commodité] or utility for the person who pays for it, or otherwise this work would not find any salary. . . . The enjoyment, the commodity, the utility of any consumer is the goal all work intends to achieve. (1802, 171) Shortly afterwards, Say also interpreted production as the production of utility, util­ ity generated not only by material objects – whether produced in the agricultural or industrial sectors – but also by “immaterial products”, that is, services. Some authors, like Charles Dunoyer (1786–1862) and Victor de Broglie (1785–1870), went beyond Say’s reluctance as regards the productivity of the State (the State remained for him an unproductive consumer). They argued that public services are a major production of utility and that the State participates in an important way in the creation of wealth.45 The instability of a market economy based on manufactures

Some other interesting developments refer to what has been called “commerce politique” and more generally the division of labour between agriculture and man­ ufactures in a growing economy. One question was how to manage a smooth pro­ cess of growth if the blind market forces are not to be totally trusted and the State must ensure the harmonious development of the country? Towards the end of our period, authors might differ on such or such an aspect of the measures to be taken, but overall, they agreed on four points, the first being the basic one from which the others follow: (i) for political or economic reasons, the main aim of policy is to have the greatest possible population; (ii) productivity in agriculture is funda­ mental in this respect; (iii) manufactures are also essential in this context because they can absorb the fraction of the population that is not needed in agriculture; (iv) foreign trade is no less essential, and forms the top of the economic pyramid: its structure must be such as to export domestic manufactured products (the more labour in their production, the better) and import agricultural products to main­ tain the growing population. This is the reason why the government cannot leave foreign trade totally free and must keep a close eye on it. This approach is well stated by Ferdinando Galiani in his 1770 Dialogues sur le commerce des bleds. Foreign trade in manufactured products “increases with the number of hands” in a country, while that of agricultural products “decreases with that number” because the growing population must eat and land is limited. Because “the aim of all good 45 See Faccarello (2010) for a detailed analysis.

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government is to increase the population”, the task of economic policy is therefore “to increase the number of manufactures, which grows in proportion to the number of men and which tends, so to speak, to infinity” (Galiani 1770, 150). In this per­ spective, a reduction in the export of agricultural products, and even its end, must be considered positively: thanks to the trade in manufactured products, it is always possible to have a growing population, beyond the level allowed by the limited agricultural capacity of the country. One can even go beyond this limit, and force the population to such a con­ siderable level as to be obliged to go to under-populated countries and, with manufactured products, buy the food necessary for the excess of people that should be fed. Then the art of government would have realised its master­ piece, since the masterpiece in art is to force Nature and oblige her to make a miracle such as that of having, on limited land, more human beings than her forces and her means can feed. (Galiani 1770, 150–51) Such a model of growth based on the development of manufactures and for­ eign trade was, however, liable not to work as smoothly as expected and, in the end, to suffer from serious shortcomings or instability compared to a more traditional economy solely based on agriculture. This is what Jean-Daniel Herrenschwand (1728–1812) stressed in his above-mentioned De l’économie politique moderne, published in 1786 and reprinted in 1795, and in his other texts published during the Revolution. In a nutshell, two serious problems were raised. The first problem, Herrenschwand stated, can arise when a country cannot trade enough with other countries and thus cannot maintain a growing population: the solution, in this case, is the emigration of citizens to establish a colony abroad. If this is not possible – or if, in the long run, the entire world is in a state of full cultivation of land and cannot trade with another planet (1786, 496) – then nature will regulate the number of inhabitants through starvation and death, and “nothing could rescue it [the nation] from such a dreadful situ­ ation” (1786, 476).46 The second problem is more serious, because it deals with harmful events which can happen at any time in the short run. In a market economy based on manufac­ tures and foreign trade, a source of instability comes from the heart of the model: the economy is likely to behave in an unpredictable way and generate unemploy­ ment. Montesquieu, in De l’esprit des loix, had already alluded to this problem: “In commercial countries . . . many people have only their art. . . . Amidst the numerous branches of trade, it is impossible for some of them not to suffer and consequently for its labourers not to be in a momentary necessity” (Montesquieu 1748, II, 170). Herrenschwand, who lived for some time in England and saw the first important crises in the manufacturing sector, developed the theme systematically, particularly 46 This perspective on population was rather uncommon at that time. See Faccarello (2020).

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emphasising the role of foreign trade in the instability of the system – even if he also stressed the responsibility of a mistaken, interventionist, domestic economic policy. To put it shortly, unlike the ordinary demand for agriculture, the demand for manufactured products is erratic, especially if it comes from abroad, because it is highly subject to changing economic conditions in foreign countries and politi­ cal events like wars. Demand for one or another kind of manufactured product can thus be ruined all of a sudden, and thousands of workers put out of work – Herrenschwand had been struck by the troubles caused by the fall in demand for English commodities due to the independence of the American colonies. And this is all the more damaging for these workers because, unlike what happens in agri­ culture, they cannot find food whenever they have no money left: a cultivator who cannot sell his corn can eat it, whereas a craftsman or a worker in a manufacture does not have this possibility with his products. In the new economic system based on manufactures – “the most reckless system of political economy that humankind has imagined for its conservation” (Herrenschwand 1786, 72) – Herrenschwand claimed, “half of the nation is left, for its existence, in an entirely precarious situ­ ation, without any appropriate subsistence, without any certainty of getting it by means of its labour, eating one day and starving the next day” (1786: 72–3). As already noted, De l’économie politique moderne was used as a textbook in some Écoles centrales – Berriat Saint-Prix (1799) approved of its developments. Its approach can be found again in certain writings of the nineteenth century where it is used to explain modern economic crises or to characterise the precarious situa­ tion of modern entrepreneurs – in the works, for example, of such different authors as Jean-Paul Alban de Villeneuve-Bargemont (1784–1850) and Alexis de Toc­ queville (1805–1859). Negative aspects of the division of labour

The negative aspects of the division of labour between and within trades were also taken seriously by some authors. Smith already referred to these aspects in the Wealth of Nations ([1776] 1976, 781–8): The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. ([1776] 1976, 782) But French authors went a step further in this criticism or advanced other aspects of it. The first author was Sieyès, who, despite having described the benefi­ cial aspects of the division of labour, was aware of some of its shortcomings. Smith had written that “It is the great multiplication of the productions of all

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the different arts, in consequence of the division of labour, which occasions . . . that universal opulence which extends itself to the lowest ranks of the people” ([1776] 1976, 22) and that, while compared with “the more extravagant luxury of the great”, the accommodation of “the very meanest person in a civilised country” seems extremely simple, “yet it may be true . . . that the accommoda­ tion of an European prince does not always so much exceed that of an industri­ ous and frugal peasant, as the accommodation of the latter exceeds that of many an African king” ([1776] 1976, 23–4). In notes written during the late 1770s or early 1780s, Sieyès disagreed. In the modern commercial society, he claimed, the significant increase of productivity due to the division of labour does not mean an improvement in the condition of workers in terms of utility and welfare. It is not true that “our workers are in a better situation compared to an African king than a European king compared to a worker” (in Sieyès 1985, 64). The modern workers – “degenerated through excessive working hours” (1985, 73) or even “forced labour” (1985, 70) – are subject to many harmful circumstances which were unknown before and, though their consumption seems greater than before and is the result of a more complex division of labour, it does not give them more enjoyment, because they have more pressing needs: “you praise the quality of their subsistence but it is acquired with a life you would not want even for a throne” (1985, 73). For the immense increase in productivity to be synonymous with an improvement of the condition of the poorest labourers, society must evolve towards a “moral civilisation”, that is, a greater equality in the distribution of wealth. Whatever form a worker’s consumption takes, it is always the simplest that nature provides. If he is wearing today a jacket worked, coloured, etc., by a million hands, this is not for him to be better dressed, it is not because it is more convenient, it is because this piece of work . . . is cheaper than the one that it replaces. The lower class of the people is neither better fed, nor better clothed, it does not live better, it makes use of advanced arts without benefit­ ing from this perfection. . . . [T]he increase in needs does not add to its hap­ piness. He [the worker] works more than in the past because the competition between workers is greater, nor does he benefit from a wage that is always reduced to a minimum. (Sieyès 1985, 64) The negative aspects of the division of labour, as developed by Smith, were stressed by Condorcet, especially in the five Mémoires on public instruction he presented in 1791 to the Comité d’instruction publique of the Assemblée nationale and published the same year in Bibliothèque de l’homme public. As Smith noted, the fact that men subjected to the division of labour could become “as stupid and ignorant as it is possible for a human creature to become” raised important prob­ lems in the new political regime where the mass of the people could thus, through ignorance, follow any hypocritical and corrupt leader and destroy the foundations

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of democracy and justice. Hence the emphasis placed on the need for an efficient and ambitious system of public instruction. A more developed criticism was expressed at the end of the period. It was made by Pierre-Édouart Lémontey (1762–1826), a lawyer and politician who, like Garnier, had to go into exile in Switzerland during the Terror. He too was wor­ ried by the danger that the negative consequences of the division of labour could have on the political regime, and, in 1801, he published an essay, “Influence morale de la division du travail, considérée sous le rapport de la conservation du gouvernement et de la stabilité des institutions sociales” which was supposed to be part of a forthcoming book on Des moyens conservateurs en politique. Three points are developed. In the first, Lémontey emphasised, like Condorcet, the potential negative political consequences of the “stupidity” of men resulting from the division of labour – their “ignorant, credulous and superstitious” sides (Lémontey 1801, 163). Government would be wrong to be satisfied with such “docile, patient and easy-to-rule” men, because they can easily be manipulated and pushed out into the streets. The second point deals with the technological improvements linked to the divi­ sion of labour and their consequences for employment. What should one do with the invention of machines, which increase productivity and reduce the demand for labour? Montesquieu had already mentioned the “pernicious” effects of technical inventions on employment and their possible negative externalities on economic activities. “The machines designed to abridge art, are not always useful”, he wrote in De l’esprit des loix. “[T]hose machines which . . . diminish the number of work­ men, are pernicious. And if watermills were not everywhere established, I should not have believed them so useful as is pretended, because they have deprived an infinite multitude of their employment, a vast number of persons of the use of water, and a great part of the land of its fertility” (Montesquieu 1748, II, 142). Lémontey’s opinion is more balanced but in the end rather pessimistic: while, he stated, the labour liberated by the invention of machines can be employed else­ where (some people must build the machines), the overall result would neverthe­ less be negative. What is to become of the countless hands that the skill of a mechanic put out of work? . . . The greatest number will remain idle. In vain might one imagine that a greater mass of products, strong trade, low prices unobtain­ able by competitors, could create wealth, work and welfare in a nation; this theory, so plausible in theory, so full of promise, is painfully disproved by experience. (Lémontey 1801, 166) Finally, the third point considers the effects of the division of labour on competi­ tion. Technological progress allows the use by some manufacturers of ever cheaper production techniques, which gives them an advantage in markets in terms of price. Some competitors are eliminated, the size of the production units increases, capital

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concentrates and competition is reduced or fades away. The middle classes vanish and inequality in the distribution of income increases sharply. The unavoidable consequence of the division of labour . . . is always to replace the great number of factories by the hugeness of some establish­ ments. Ordinary manufacturers cannot compete with these giants that more cost-efficient processes really put beyond any competition; and the latter, requiring huge advances, can only be the property of the extremely wealthy. (Lémontey 1801, 171) These consequences, Lémontey admits, are only likely: “I have just depicted, not what exists, but what is possible.” However, one must be aware of the situation. “It cannot be overemphasised that, in politics, the most dangerous solvents are those which penetrate by imperceptible routes: there are deceptive prosperities and a stoutness might be a precursor to disease” (1801, 174). The last point, stating that the unavoidable working of competition leads to monopolies, had also been critically stressed, a few years earlier, by François-Noël Babeuf (1760–1797) – who changed his first name to Gracchus in 1794 as a tribute to the Gracchi, as he explained in his journal, Le tribun du peuple. This approach, stated in particular in a letter to Charles Germain on 28 July 1795 (Babeuf [1786–97] 2020, 332–44), was part of his mature reflections on establishing an equalitarian society, the “société des égaux”, the final stage of an evolution first based on his reading of Rousseau, Mably and Étienne Gabriel Morelly (ca1717–ca1778).47 Competition is, for Babeuf, an aspect of “the barbaric law dictated by capital”. It degrades the know­ how of the worker, starves him and degrades his morality by obliging him to produce cheap and poor-quality products. Competition “gives victory only to the one who has the most money” and “after the struggle, only leads to a monopoly in the hands of the winner” and to the end of low prices. It produces at random, “at the risk of not finding buyers and destroying a large quantity of raw material which could have been usefully employed but which will no longer be of any use” ([1786–97] 2020, 337). Hence the project of an association based on the pooling of resources, the planning of the production and consumption of the community, and a productive environment in which technical innovation would not be synonymous with unemployment and destitution but would instead benefit all citizens. As the leader of the Conjuration des Égaux (Conspiracy of Equals) aimed at overthrowing the Republic and replacing it with such an equalitarian and planned society, Babeuf was arrested, sentenced to death and guillotined on 27 May 1797. However, his intellectual legacy developed during the nineteenth century after the publication, by his friend Philippe Buonarroti (who escaped the death penalty), of Conspiration pour l’égalité, dite de Babeuf (Brussels: A la Librairie Roman­ tique, 1828): the book was a source of inspiration and debates among socialists 47 At that time, Morelly’s 1755 Code de la nature was wrongly attributed to Denis Diderot and Babeuf made the same mistake as his contemporaries. On Babeuf, see, for example, Sonenscher (2006), Mazauric (2020) and Schiappa (2023).

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Sonenscher, Michael. 2006. “Property, community, and citizenship”. In Mark Goldie and Robert Wokler (eds), The Cambridge History of Eighteenth-Century Political Thought. Cambridge: Cambridge University Press, pp. 465–94. Sonenscher, Michael. 2009a. “Ideology, social science and general facts in late eighteenthcentury French political thought”. History of European Ideas, 35 (1), 24–37. Sonenscher, Michael. 2009b. “ ‘The moment of social science’: The Décade philos­ ophique and late eighteenth-century French thought”. Modern Intellectual History, 6 (1), 121–46. Staum, Martin S. 1980. Cabanis. Enlightenment and Medical Philosophy in the French Revolution. Princeton: Princeton University Press. Staum, Martin S. 1985–86. “The Enlightenment transformed. The Institute prize contests”. Eighteenth-Century Studies, 19 (2), 153–79. Staum, Martin S. 1996. Minerva’s Message. Stabilizing the French Revolution. Montreal and Kingston: McGill-Queen’s University Press. Steiner, Philippe. 1990. “Comment stabiliser l’ordre social moderne? J.-B. Say, l’économie politique et la Révolution”. In Gilbert Faccarello and Philippe Steiner (eds), La pensée économique pendant la Révolution française. Grenoble: Presses Universitaires de Greno­ ble, pp. 173–93. Steiner, Philippe. 1996. “Les revues économiques de langue française au XVIIIe siècle”. In Luc Marco (ed.), Les revues d’économie en France (1751–1994). Paris: L’Harmattan, pp. 33–78. Steiner, Philippe. 2006. “La science de l’économie politique et les sciences sociales en France, 1750–1830)”. Revue d’histoire des sciences humaines, no. 15, 15–42. Tegos, Spiros. 2013. “Sympathie morale et tragédie sociale: Sophie de Grouchy lectrice d’Adam Smith”. Noesis, no. 21, 265–92. Vandermonde, Alexandre Théophile. [1795a] 1800–1801. “Économie politique” [Lectures]. In Séances des Écoles normales, recueillies par des sténographes et revues par les pro­ fesseurs. Nouvelle édition. Leçons. Paris: Imprimerie du Cercle Social, 10 volumes. Van­ dermonde’s lectures on political economy are to be found in vol. 2 (pp. 233–45; 290–302 and 447–63), vol. 3 (pp. 145–61 and 437–45), vol. 4 (pp. 168–80 and 452–71) and vol. 5 (pp. 89–109). Vandermonde, Alexandre Théophile. [1795b] 1800–1801. “Économie politique” [Discus­ sions]. In Séances des Écoles normales, recueillies par des sténographes et revues par les professeurs. Nouvelle édition. Débats. Paris: Imprimerie du Cercle Social, vol. 1, pp. 303–17, 350–62 and 398–410. (The dating of the debates is erroneous, as results from the order of the subjects dealt with in the lectures compared to that of the debates, and from allusions to the lectures made in the debates.) Welch, Cheryl B. 1984. Liberty and Utility. The French Idéologues and the Transformation of Liberalism. New York: Columbia University Press. Weulersse, Georges. 1985. La physiocratie à l’aube de la Révolution, 1781–1792. Paris: Éditions de l’École des hautes études en sciences sociales. Whatmore, Richard. 2000. Republicanism and the French Revolution. An Intellectual His­ tory of Jean-Baptiste Say’s Political Economy. Oxford: Oxford University Press. Wokler, Robert. 2006. “Ideology and the origins of social science”. In Mark Goldie and Robert Wokler (eds), The Cambridge History of Eighteenth-Century Political Thought. Cambridge: Cambridge University Press, pp. 688–709.

Index

Belesbat see Hurault de l’Hôpital de Beslesbat

Bénichou, Paul 32n2

Bentham, Jeremy 136, 249

Benveniste, Émile 12

Béraud, Alain 247

Berkeley, George 196–7

Bernoulli, Daniel 146, 184n24, 186, 203,

212

Bernoulli, Jakob 184, 189, 196

Bernoulli, Johann (said Johann I Bernoulli)

184n24, 196, 198

Bernoulli, Johann (said Johann III

Bernoulli) 198

Bernoulli, Nikolaus 186, 189, 203

Berriat Saint-Prix, Jacques 253, 263

Berthollet, Claude-Louis 252

Berthoud, Arnaud 15n23

Bianchini, Marco 197n40, 202n47, 206n52

Bicquilley, Charles-François de 119, 125,

216, 223–5, 254

Biondi, Yuri 183n21

Babeuf, François-Noël (Gracchus Babeuf)

Biziou, Michaël 244n11

266

Black, Duncan 194n37

Bach, Reinhard 8n11 Blair, Hugh 248

Baden, Karl Friedrich von 211

Blanc, Jérôme 22n33

Baker, Keith Michael 188n31, 190n33, 191, Blaufarb, Rafe 260n44

259n43

Blaug, Mark 69n7

Balch, Thomas Willing 25n39

Blavet, Jean-Louis 243–6

Baldwin, John W. 12

Bodin, Jean 9, 22–4, 122

Barbon, Nicholas 71n10

Böhm-Bawerk, Eugen von 138n27

Baudeau, Nicolas 5, 87, 93–4, 113, 126,

Boisguilbert see Le Pesant de Boisguilbert

165, 244n13

Bolingbroke, Henry St John, viscount 241

Bayes, Thomas 184, 193, 198

Bonaparte, Napoléon 94, 255–6, 257n38

Bayle, Pierre 2, 34

Bonnet, Charles 117, 256

Bazard, Saint-Amand 136

Bonnot de Condillac, Étienne 2, 6, 9,

Béardé de l’Abbaye (no known first name)

88, 117, 118, 121, 125, 135n24,

93

149n33, 256, 258

Beccaria, Cesare 197, 213, 215n60, 223

Bonnot de Mably, Gabriel 2, 5, 7, 93,

Behar, Cem Lazare 183

157–62, 164–6, 249–50, 266

Aalto, Sergei K. 203n49 Abeille, Louis-Paul 86

Accursius, Franciscus 11, 13

Aguesseau, François d’ 24

Albert the Great 13–15 Alembert see Le Rond d’Alembert Alimento, Antonella 79n19 Allix, Edgard 216n61, 247, 258n41,

260n44

Amilaville, Étienne Noël d’ 178–9

Ando, Yusuke 8n11

Aquinas, Thomas 11–14, 16–18

Argenson see Voyer de Paulmy d’Argenson

Aristotle 1, 8, 11, 14–15, 18, 20, 35,

124n12

Armenteros, Carolina 2n4 Augustus 36

Auxiron, Charles-François-Joseph d’ 126n13, 142, 207n53 Azouvi, François 256n37

Index Borda, Jean-Charles de 190–1

Bordo, Michael 69n7

Bossut, Charles 223

Boulanger, Nicolas-Antoine 10n17

Boulard, Antoine-Marie-Henri 247

Bourbon, Louis IV Henri de 58

Bove, Laurent 2n4

Bréban, Laurie 244n11

Breton, Yves 247

Brewer, Anthony 149n34

Brian, Éric 179n13

Brissot de Warville, Jacques Pierre 245n14

Broglie, Victor de 261

Brooks, Garland P. 203n49

Bru, Bernard 179n13, 187n30, 188n31

Buat, Nicolas 51

Buchan, James 46

Buffon see Leclerc de Buffon

Buonarroti, Philippe 266

Bûtel-Dumont, Georges-Marie 3, 240

Butré, Charles Richard de 86, 207, 213, 215

Cabanis, Pierre-Jean-Georges 244, 257

Caillemer, Robert 31

Campagnolo, Gilles 15n23

Canard, Nicolas-François 119, 125, 216,

219–23, 227, 254, 256

Cantillon, Richard 3–4, 9, 35, 46, 48, 50,

65–70, 73, 78, 80, 82–3, 96, 103,

190, 203, 204n50, 240, 242, 246

Caritat de Condorcet, Marie-Jean-Antoine-

Nicolas de 2–3, 5–6, 118, 119,

125, 144, 145, 146, 147, 149, 150,

156–8, 167, 169, 180–97, 199,

203–6, 207n54, 210, 223, 227,

243n10, 244, 246, 250–1, 252n29,

255–6, 264–5

Carpenter, Kenneth 240n1, 244–5

Carpenter, Lord 185n26

Cartelier, Jean 99, 149n34

Cary, John 240

Castel de Saint Pierre, Charles Irénée 93,

109–10

Ceva, Giovanni 202, 223

Chambers, Ephraim 175

Chaplygina, Irina 11n19

Chappey, Jean-Luc 226n70, 257n38

Charles V (Charles the Wise) 19

Charles, Loïc 75n14, 81n21, 86–7, 92, 103,

112n13, 213, 215, 242n5

Châtelet see Le Tonnelier de Breteuil du

Châtelet Chaux, Mademoiselle de la 242n6 Cherruyt de Malestroict, Jehan 22–3

273

Child, Josiah 3, 64, 75, 78, 134n22, 240

Clairaut, Alexis Claude 198, 208, 213

Clavière, Étienne 245n14

Clémencet, Charles 173n3

Cliquot de Blervache, Simon 3

Clower, Robert 49

Cochrane, John 53

Coirault, Gaston 253

Colbert, Jean-Baptiste 90n2, 174, 240

Cole, Charles Woolsey 24n37

Colman, Daniel H. 256n37

Comte, Auguste 259n43

Condillac see Bonnot de Condillac

Condorcet see Caritat de Condorcet

Constant de Rebecque, Benjamin 226n71, 255

Constant see Constant de Rebecque

Coste, Pierre 6, 117

Coumet, Ernest 184n23

Cournot, Antoine-Augustin 119n6, 226

Coyer, Gabriel-François 25

Crépel, Pierre 189, 216, 222n67, 223,

224n69, 227

Creuzé-Latouche, Jacques-Antoine 250–3,

255–6

Crignon, Philippe 169

Crozat, Antoine 52

Crucé, Émeric (Émeric de la Croix) 24–5

Culpeper, Thomas 134n22

Daire, Eugène 120

Dale, Andrew 182n19

Damamme, Dominique 259n43

Daston, Lorraine 184n23, 186n29, 188n31

Daubenton, Louis-Jean-Marie 252n30

Daunou, Pierre Claude François 195

Davenant, Charles 3

Davenant, Charles 98

Decker, Matthew 241

De Dijn, Annelien 2n4

Dejob, Charles 254

Delambre, Jean-Baptiste 223

Dell’Aglio, Luca 183n21

Dellemotte, Jean 244n11

Delmas, Bernard 104n11, 109, 112, 240n1

Delumeau, Jean 136

Demals, Thierry 4, 71n10, 79n19, 81n21,

104n11, 112, 242n5

De Moivre, Abraham 184–5

Deparcieux, Antoine 183

Depître, Edgard 25n40

Descartes, René 32, 37n5, 196

Destutt de Tracy, Antoine-Louis-Claude

257–8 De Witt, Jan 189

274

Index

Diannyère, Antoine 256

Diderot, Denis 2, 5, 7, 10n17, 77n18, 88,

118, 157, 161, 175–6, 189, 195,

207n54, 242n6, 266n47

Dobresco, Radu 199

Domat, Jean 33–4, 40

Dos Santos Ferreira, Rodolphe 124n12

Ducel, Yves 183n20

Ducreux, Marie-Élisabeth 178

Dumont, Étienne 248

Dunoyer de Segonzac, Charles Barthélemy

261

Dunoyer see Dunoyer de Segonzac

Duns Scotus, John 13

Dupâquier, Jacques 174n7, 178, 179n13, 183

Dupâquier, Michel 174n7, 178, 179n13,

183

Dupont de Nemours, Pierre-Samuel 10,

86–7, 93–4, 119, 120, 137, 142n29,

149, 207, 210–14, 222, 227, 250,

253, 255–6, 258

Dupuit, Jules 119n6

Dussard, Hippolyte 120

Dutot (also spelled Du Tot), Nicolas 3–4,

45, 56–7, 59–60, 73–4 Du Tot see Dutot Duvergier de Hauranne, Jean-Ambroise (abbé de Saint-Cyran) 173n3

Duvillard de Durand, Emmanuel-Étienne

183–4, 256

Eidous, Marc-Antoine 243

Einaudi, Luigi 22n33

Émérigon, Balthazard-Marie 174

Enfantin, Barthélemy Prosper 113

Engels, Friedrich 133

Esmonin, Edmond 174n7, 179n13

Esprit, Jacques 33

Estlund, David M. 191

Etner, François 176

Euler, Leonhard 180–1, 196, 198, 213

Evangelisti, Paolo 12n 20, 14n22

Expilly, Jean-Joseph 179

Faccarello, Gilbert 5n10, 8n11, 8n12, 32,

34, 96, 117, 126n13, 139, 143, 146,

147n32, 148, 149, 157–60, 162,

167, 178, 186n28, 200, 244, 246,

253n31, 258n41, 260, 261n45,

262n46

Faure, Edgar 46, 51

Feld, Scott L. 191

Fermat, Pierre de 185

Ferrand, Julie 158, 166

Filmer, Robert 8n14

Fleischacker 2n5

Forbonnais see Véron Duverger de

Forbonnais

Françon, Marcel 200

Friedman, Milton 48

Frisi, Paolo 204–6, 215n60, 220, 225

Galiani, Ferdinando 7, 149, 161–3, 200–1, 253, 261–2 Galileo (Galileo di Vincenzo Bonaiuti de’ Galilei) 202

Garnier, Germain 246–7, 254, 256, 260

George I 58

Gilibert, Giorgio 104n11

Gillard, Lucien 69n7

Gille, Bertrand 176

Gillispie, Charles Coulston 181n16–17

Godolphin, Lord 47

Goethe, Johann Wolfgang von 141n28

Gorroochurn, Prakash 182n19

Gournay see Vincent de Gournay

Goutte, Pierre Henri 149

Gramont, Scipion de 23

Granger, Gilles-Gaston 191–2

Graslin, Jean-Joseph-Louis 5–6, 10, 113,

118, 122, 126–31, 139, 141, 142,

145, 147, 148, 149, 253, 259

Graunt, John 175, 183, 189

Grimm, Friedrich Melchior 92

Grivel, Guillaume 207

Groenewegen, Peter 149n34

Grofman, Bernard 191

Grosseteste, Robert 11

Grotius, Hugo 71n10

Grouchy, Sophie de 244, 247, 257

Gua de Malves, Jean-Paul de 241

Guénot, Hervé 254

Guérineau de Saint-Péravy, Jean-Nicolas-

Marcellin 87, 140, 141, 142n29

Guilbaud, Georges-Théodule 190n33

Guillard, Achille 176n9

Guillaumin, Gilbert-Urbain 113, 120

Guizot, François 94

Gusdorf, Georges 256n37

Hacking, Ian 184n23

Hald, Anders 184n23

Harrison, John 117n3

Harsin, Paul 47

Hecht, Jacqueline 25n40, 31–2, 253n31

Helvétius, Claude-Adrien 2, 118, 256–7

Index Henri IV 90n2

Henry of Ghent 14

Herbert, Claude-Jacques 160

Herlitz, Lars 104n11

Herrenschwand, Jean-Daniel 254, 262–3

Herrenschwand, Jean-Frédéric 254n34

Hewitt, Fiona 190n33, 195n38

Holbach see Thiry d’Holbach

Hont, Istvan 81n21, 242n5

Horner, Francis 222–3

Hume, David 3, 46, 49, 81, 131, 140,

241–3 Hurault de l’Hôpital de Beslesbat, Charles 31

Hurtado, Jimena 162

Hutcheson, Francis 202–3, 220, 223

Hutchison, Ross 117n2

Huygens, Christiaan 183, 184

Huygens, Lodewijk 183

Hyard, Alexandra 4, 79n19, 112

Innocent XI 136

Isnard, Achilles-Nicolas 118, 121, 132,

201, 216–19, 222

Israel, Giorgio 183n21, 212, 216n61, 219,

222

Israel, Jonathan 2n4

Jacob, Margaret C. 2n4

Jaffé, William 216n61

Jansen, Cornelius (Jansenius) 32

Jansenius see Jansen

Jaucourt, Louis de 3

Jefferson, Thomas 258

Jevons, William Stanley 219

Joël, Marie-Ève 176

Johnson, Charles 20n30

Joncourt, Elias de 241

Jullien, Jean-Auguste 242n8

Kant, Immanuel 2

Kaplan, Steven L. 8n11, 157–8, 161–3

Kawade, Yoshie 242n5

Kaye, Joel 11–12

Kemeny, John 194n37

King, Charles 3, 240

King, Gregory 98

Klotz, Gérard 8n11, 149, 157, 216n61

Kurz, Heinz D. 216n61

La Boétie, Étienne de 8

Lacroix, Sylvestre-François 223

Lacuée de Cessac, Jean-Gérard 255–6

275

Laffemas, Barthélemy de 24

Lagrange, Joseph-Louis 184n22, 223,

252n30

Lagueux, Maurice 15n23 Lakanal, Joseph 219, 222

La Michodière, Jean-Baptiste François de

179

Langholm, Odd 11

Lapidus, André 11n19 Laplace, Pierre-Simon 2, 181–4, 186–7,

193, 198, 252n30

La Rochefoucauld, François VI de 33

La Rochefoucauld, Louis-Alexandre de 243n10 Larrère, Catherine 60n1, 71n9 Larson, Bruce 216n61 Laslett, Peter 117n3 Lassalle, Ferdinand 141

Lavau, Louise-Hortense de 242

Lavoisier, Antoine-Laurent 176, 252

La Vopa, Anthony 2n4 Law, John 3, 7, 19n29, 23–4, 45–59, 62n4,

74, 134, 175, 240, 243

Le Blanc, Jean-Bernard 240–1, 242n6 Le Bovier de Fontenelle, Bernard 2

Lebreton, Joachim 222

Le Brun, Charles 32

Lebrun, Charles-François 255–6 Le Chapelier, Isaac 246

Leclerc de Buffon, Georges-Louis 2,

186n28, 195

Lefebvre, Frédéric 75n14 Lefèvre d’Étaples, Jacques (Jacobus Faber

Stapulensis) 9

Legendre, Adrien-Marie 184n22 Leibniz, Gottfried Wilhelm 122, 183,

184n24, 196–7, 200–1

Le Maux, Laurent 69n7 Le Mercier de la Rivière see Lemercier de la Rivière Lemercier de la Rivière, Pierre-Paul 5,

86–7, 90, 92, 111–13, 158–9,

166–7, 169

Lémontey, Pierre-Édouard 265–6 Lenoble, Clément 12

Le Pesant de Boisguilbert, Pierre 3, 5–7,

31–43, 77, 95–6, 122, 131, 132,

137, 160, 175, 201, 219

Le Prestre de Vauban, Sébastien 31,

109–10, 175

Le Rond d’Alembert, Jean 2, 77n18, 88,

118, 186, 196, 200, 210

Lessius see Leys

276

Index

Le Tonnelier de Breteuil du Châtelet, Gabrielle Émilie 195

Le Trosne, Guillaume François 87, 93, 249

Leys, Leonard de (Lessius) 135

Lhuillier, Simon Antoine Jean 195

Ligniville, Anne-Catherine de 257

Lilti, Antoine 2n4

Linguet, Simon-Nicolas-Henri 7, 157–8,

160–7

Lips, Joost (Iustus Lipsius) 178

Lipsius see Lips

Lloyd, Henry Humphry Evans 202, 204

Lloyd, Howell A. 22n33

Locke, John 6, 8n14, 68–9, 88, 117, 118,

122, 135, 242

Lombard, Peter 11

Longhitano, Gino 95

Longuet, Charles 141

Lough, John 117n3

Louis XIV 24, 31, 45, 90n2, 175, 184

Louis XV 86

Louis XVI 10n17, 94, 176, 219

Lynn, Michael R. 254

Mably see Bonnot de Mably

Magnan de Bornier, Jean 258n41

Magnusson, Lars 24n37

Malebranche, Nicolas 88

Malestroict see Cherruyt de Malestroict

Malherbe, Michel 242

Malthus, Thomas Robert 201n45, 248

Mandeville, Bernard de 34

Manget, Jacques-Louis 247n18

Marcet, Jane 248

Mariotte, Edme 117, 135, 146

Marivetz, Claude 175

Marshall, Alfred 46, 48

Martin, Thierry 186n28

Marx, Karl 35, 38, 46, 99, 113, 131–3,

135n23, 140–41, 207

Masseau, Didier 2n2

Maupertuis see Moreau de Maupertuis

Mauvillon, Eléazar 242

Mazauric, Claude 266n47

McCulloch, John Ramsay 248

McLean, Iain 190n33, 191n34, 192n35,

195n38

McMahon, Darrin 2n2

Meek, Ronald L. 104n11, 149n34, 208n56

Melon, Jean-François 3–5, 60–6, 73–4, 79,

82–3, 241

Ménard, Pierre 52

Menudo, Jose-Manuel 157, 167

Menuet, Maxime 135n24

Messance, Louis 179

Meusnier, Norbert 175n8

Miklaszewska, Justyna 2n4

Mill, James 112

Mingard, Gabriel 242

Mirabeau see Riqueti de Mirabeau

Moheau, Jean-Baptiste 179–80

Molinari, Gustave de 148

Monjardet, Bernard 194n37

Monod, Albert 2n2

Montaigne, Michel de 8n13

Montchrestien, Antoine de 9, 24

Montesquieu see Secondat de Montesquieu

Montmort see Rémond de Montmort

Montucla, Jean-Étienne 177, 198

Montyon, Antoine-Jean-Baptiste de 179

Morales, José Isidoro 191n34

Morand, Jean-François Clément 179–80

Moravia, Sergio 256n37, 257n40, 258n41

Moreau de Maupertuis, Pierre-Louis 2, 10,

117, 118, 201, 205

Morellet, André 118, 121, 125, 132,

215n60, 222n67, 227, 245n16, 246,

253

Morelly, Étienne Gabriel 266

Moyer, Frédéric 159

Mun, Thomas 240

Murphy, Antoin E. 46, 51, 66n7, 75n14

Necker, Jacques 7, 149, 176, 226n71

Newton, Isaac 122, 172, 185n26, 195–7,

227

Nicastro, Onofrio 61n2

Nickolls, John 240

Nicole, Pierre 33–4, 37n5, 39–40, 117n3

Nort, comte du 245n16

Norton, Rictor 46

Oki, Sayaka 8n12

Olivi, Pierre de Jean 12–13, 16, 18

Orain, Arnaud 8n11, 126n13, 135n24,

147n32, 149n33, 157–8, 160–1, 166

Oresme, Nicole (or Nicolas) 12, 19–23

Orléans, Philippe d’ 24, 45, 50, 175

Ortes, Giammaria 202n48

Oudin-Bastide, Caroline 176

Ozanam, Jacques 177

Parsons, Jotham 22n33

Pascal, Blaise 2, 32–3, 172, 184–5

Pasinetti, Luigi L. 131

Index Patullo, Henry 86

Paty, Michel 186n29

Pearson, Karl 182n19

Perone, Severina 61n2

Perrot, Jean-Claude 176

Peter the Great 58

Petty, William 49, 64–5, 172, 175–6, 189

Peyssonel, Charles-Claude de 246

Philonenko, Alexis 199

Picavet, François 256n37, 257n40

Pictet de Rochemont, Charles 248

Pictet, Marc-Auguste 248

Piguet, Marie-France 8n12, 103

Pilâtre de Rozier, Jean-François 255

Piron, Sylvain 11–12, 15n23

Plato 150

Plumard de Dangeul, Louis-Joseph 3,

240–1 Poisson de Pompadour, Jeanne-Antoinette 86–7

Pompadour see Poisson de Pompadour

Pope, Alexander 90

Portalis, Jean Étienne Marie 112

Pottier de la Hestroye, Jean 47

Poullain, Henry 23

Prevost, Guillaume 248

Prevost, Pierre 247–8, 256

Price, Jacob 47

Price, Richard 143, 184

Pseudo-Aristotle 8

Pseudo-Xénophon 71n10

Quantin, Patrick 256n37 Quesnay, François 3, 5–6, 9–10, 35–6,

50, 86–96, 98–110, 118, 119,

137, 149, 157–9, 164–5, 167,

175, 178, 206–10, 246–7, 250,

251n28, 260

Ravix, Joël 149n34

Regaldo, Marc 256n37

Reinert, Sophus 8n11, 163

Rémond de Montmort, Pierre 184–5

Ricardo, David 35, 113, 131, 141, 248

Riccioli, Giovanni Battista 178

Richard of Mediavilla 13

Richards, Joan L. 196

Rieucau, Jean-Nicolas 157, 167, 188, 190

Riqueti de Mirabeau, Victor 10, 86–7, 93,

95, 103, 106, 111, 157–8, 165, 168,

178, 207, 213, 254

Robel, Gilles 242n5

Robert of Courçon 18n27

277

Robertson, Ross M. 197n42, 216n61

Robespierre, Maximilien de 246n17

Rœderer, Antoine-Marie 255n35

Rœderer, Pierre-Louis 118, 136, 138–9,

141, 147, 222, 227, 250n25, 251,

253–9, 260n44

Rohrbasser, Jean-Marc 174, 179n13

Romani, Paul-Marie 149n34

Rothkrug, Lionel 47

Roucher, Jean-Antoine 246

Rousseau, Jean-Jacques 2–3, 8n14, 9n17,

92–3, 118, 119, 122, 158–62,

165–8, 191–3, 195, 199–200, 216,

242, 250, 266

Rullié, Pierre 121

Sabbagh, Gabriel 240n1, 244n12 Saint-Cyran see Duvergier de Hauranne Saint-Péravy see Guérineau de Saint-Péravy Saint-Pierre, Henri Bernardin de 252n30 Saint-Simon, Claude-Henri de (Henri Saint-Simon) 259n43

Sales, François de 185

Salvadori, Neri 216n61

Salvat, Christophe 8n12

Savary des Bruslons, Jacques 95

Savary, Jacques 173

Savérien, Alexandre 197

Say, Horace 147

Say, Jean-Baptiste 6, 113, 120, 147,

148, 226, 247, 254–5, 257–8,

261

Schatz, Albert 31

Schelle, Gustave 120

Schmalz, Theodor 113

Schmidt, James 2n5

Schøsler, Jørn 117n2

Schumpeter, Joseph Alois 46, 112

Secondat de Montesquieu, Charles Louis

de 2–5, 10, 23n35, 24, 60, 70–5,

77–9, 83, 90, 92, 100, 178, 180,

185, 262, 265

Senault, Jean-François 32

Sénovert, Étienne de 240, 243

Servet, Jean-Michel 250n26

Shiappa, Jean-Marc 266n47

Shovlin, John 8n11, 242n5

Sieyès, Emmanuel Joseph 150, 245n15,

255–7, 259–60, 263–4 Simon, Jules 255n36 Simonde de Sismondi, Jean-CharlesLéonard 139, 226n71, 254

278

Index

Sismondi see Simonde de Sismondi Smith, Adam 34n4, 35, 39n6, 46, 99,

112–13, 125, 131, 136, 243–7, 251,

253–4, 257, 259–60, 263–4

Sonenscher, Michael 8n11, 81n21, 256n37, 259n43, 266n47 Spencer, Charles 46

Spinelli, Trojano 202

Staël-Holstein, Germaine de 226

Staël see Staël-Holstein Staum, Martin S. 255n36, 256, 257n40, 258n41 Steenge, Albert 216n61 Steiner, Philippe 5n10, 8n12, 60n1,

91–2, 98, 100–1, 103n9, 113,

158, 176, 208n55, 244, 250n26,

258, 259n43

Sternhell, Zeev 2n2 Steuart, James 242–3, 251, 253–4 Stewart, Dugald 247–8 Stigler, Stephen 184n23, 184n25 Sully, Maximilien de Béthune de 90

Talbot, William 174n5 Talleyrand-Périgord, Charles Maurice de 255–6 Taveneaux, René 34

Tegos, Spiros 244n11 Tell Truth, John 240

Terray, Joseph-Marie 121, 124, 162, 177,

181

Theocharis, Reghinos 197n42, 206n52, 216n61 Théré, Christine 3, 75n14, 86–7, 95,

112n13, 174–5, 179n13, 213, 215

Thiébault, Dieudonné 253n32 Thiry d’Holbach, Paul-Henri 2, 118

Thornton, Henry 248

Tocqueville, Alexis de 113, 263

Todeschini, Giacomo 11–13, 14n22, 17

Tomaszewska, Anna 2n4 Tortajada, Ramon 216n61, 222n68 Trabucchi, Paolo 104n11 Trudaine, Daniel-Charles 75

Tsuda, Takumi 8n11, 75n16 Tucker, Josiah 241

Turgot, Anne-Robert-Jacques 3, 5–7, 10,

35–6, 77, 93–4, 117–26, 131–46,

149, 156, 158–9, 161–2, 167, 169,

175, 183, 187, 190–1, 199, 201,

206, 213, 219–20, 225, 227, 241,

243n10, 244, 246, 250–1, 258–9

Turquet de Mayerne, Louis 9

Ulloa, Bernardo de 241

Urken, Arnold B. 191n34, 195n38

Ustáriz, Jerónimo de 241

Van den Berg, Richard 75n16, 80n20, 120n10, 126n13, 142n29, 201n46, 207n53, 216n61 Vandermonde, Alexandre Théophile 119,

243, 250, 252–4, 256, 260

Van Houdt, Toon 135

Vauban see Le Prestre de Vauban

Vaucanson, Jacques 252

Velde, François 51

Venturi, Franco 2n5

Véron Duverger de Forbonnais, François

3–5, 7, 9, 60, 77–83, 104n10, 113,

176, 201–2, 240–1, 250n25, 256

Verri, Alessandro 215n60

Verri, Pietro 203–5, 215n60, 225, 242–3, 254

Villeneuve-Bargemont, Jean-Paul Alban

de 263

Vilquin, Éric 175n8

Vincent de Gournay, Jacques Claude Marie

3–5, 8, 60, 75–7, 83, 156, 160, 240

Viner, Jacob 34

Voltaire (François-Marie Arouet, known as

Voltaire) 2, 4, 60, 178, 180, 195

Vossius, Isaac 178

Voyer de Paulmy d’Argenson, René-Louis

de 160

Wallace, Robert 241

Walras, Marie-Esprit-Léon 46, 219

Welch, Cheryl B. 256n37

Weulersse, Georges 86, 112, 206, 250n26

Whatmore, Richard 258n42

William of Moerbecke 11

Wilson, Edward 46, 58

Wise, M. Norton 103

Wokler, Robert 259n43

Xenophon 8

Yolton, John W. 117n2 Young, Hobart Peyton 192n35, 194n37