Political Economy in the Eighteenth Century: Popular or Despotic? The Physiocrats against the Right to Existence

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Among the important works of Edward Palmer Thompson, “The Moral Economy of the English Crowd in the Eighteenth Century” published in 1971 occupies an especially important place. He severely critiqued the historiography of his era, because it no longer saw the “common people” as agents of history in the periods before the French Revolution, a period constituting the quasi totality of human history ! He emphasized the gap that separated the nuanced work of anthropologists that “allowed us to know all about the delicate tissue of social norms and reciprocities which regulates the life of Trobriand islanders” from the gross reductionism of the historiography that he qualified as “the spasmodic school” for whom the “eighteenth-century English collier who claps his hand spasmodically on to his stomach, and who responds to elementary economic stimuli”.

Posted for comments on 1 Aug 2014, 10:29 am.

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  • Jean Cartelier says:

    I am asked to discuss a paper by Florence Gauthier whose title is “Political Economy in the Eighteenth Century: Popular or Despotic?” with the following subtitle “The Physiocrats against the right to Existence”.

    Florence Gauthier is an historian specialist of the corn debates of eighteenth century and her main thesis is subsumed page 2 “To the historian who only has to note and explain the links between these two phenomena, the food riot appears as inseparable from the unlimited freedom of commerce in basic subsistence as, for example, the agrarian revolt was to the seigneurial regime or strike was to the large capitalist enterprise. In the modern area, we have seen the culmination of the effects of these three processes” (p. 2).

    I am neither a specialist of the corn debates nor ready to engage myself in such discussion (even if I feel mostly sympathetic with FG’s general contentions). As an economist familiar with Quesnay’s writings I will comment only on the subtitle of FG’s paper.

    If it is true that Physiocrats advocated a liberalization of corn trade, I don’t think that Quesnay’s position was motivated by the ideas or intentions that FG attributes to him.
    First of all, it seems to me that FG misunderstands what Quesnay’s theory is about. Probably tempted to assimilate Quesnay with the liberal strand of thought which will later submerge French economists, FG misses an important point: Quesnay does not at all pursue the same objectives. He by no means lingers about a capitalist society where the freedom of the corn trade will allow entrepreneurs to pay low wages and would get high profits. Quite the contrary. Quesnay’s norm is a Royaume agricole, that is a society where industry and commerce would be to their minimum, that is to only provide agriculture with their necessary inputs. The rest belongs to the “république mondiale du commerce”.

    In order to get that desired proportion between agriculture, which only gives a positive net product, and industry Quesnay demonstrates that a high price of corn is in order (in fact a price higher than the domestic price reflecting the implicit political subsistence contract between the king and the low classes). For him the good price (16 $ per setier) is the international one.
    Later in England, Ricardo will demonstrate that the English domestic price of corn was too high, as compared with the international one, so that freedom of corn trade was desirable in order to rise the rate of profit. or to lower the cost of (constant) real wages (which amounts to the same).

    I recall these basic points just to make clear that Quesnay’s fight is neither Ricardo’s one nor later liberal authors’s.

    First of all, and contrary to what FG affirms page 17 for Turgot, Quesnay does not consider an autonomous economic sphere. Gino Longhitano, Catherine Larrère and myself have shown many years ago that Quesnay’s view is about the French society as a whole. The proof is easy to assert. It is sufficient to compare the Tableau économique of the years 1758-1760, openly published and commented, with the Traité de la monarchie, written at he very same period but never published (until 1999!) by fear of the censure. The former gives the economic expression of Quesnay’s project whereas the latter presents the political one of the same project which is a re-foundation of the French monarchy.

    In Quesnay’s view, the rise of the corn price is not at all directed against the wage-earners. Contrary to later liberal economists, Quesnay does not think that low wages, hunger and bad treatments make people work harder. Quite the contrary!
    Qu’on ne croie pas que le bon marché des denrées est profitable au menu peuple ; car le bas prix des denrées fait baisser le salaire des gens du peuple, diminue leur aisance, leur procure moins de travail et d’occupations lucratives, et anéantit le revenu de la nation (Œuvres I, p. 570).

    Quesnay in a footnote makes the point clear::
    La véritable cause de la paresse du paysan opprimé est le bas prix du salaire et le peu d’emploi dans les pays où la gêne du commerce des productions fait tomber les denrées en non-valeur (Œuvres I, p. 592)

    Later on he writes :
    Pour autoriser les vexations sur les habitants de la campagne, les exacteurs ont avancé pour maxime, qu’il faut que les paysans soient pauvres, pour les empêcher d’être paresseux. Les bourgeois dédaigneux ont adopté volontiers cette maxime barbare, parce qu’ils sont moins attentifs à d’autres maximes plus décisives, qui sont que l’homme qui ne peut rien conserver ne travaille précisément que pour gagner de quoi se nourrir et qu’en général tout homme qui peut conserver est laborieux, parce que tout homme est avide de richesse (Œuvres I, p. 592, souligné par Quesnay.)

    As a matter of fact, Quesnay has in mind the following reasoning (see footnote 15 appended to maxim xix, Oeuvres, p. 591): the nominal wage varies is the price of the real wage,( i. e. 1/20 of a setier per day). When the price of a setier is 20 livres, the wage-earner would get 260 livres per year whose 200 would be spent for corn. 60 livres would be available for other expenditures. If the price f a setier is only 10 livres, the wage-earner would get 130 livres whose 100 would be spent for corn. Only 30 livres would be available for other expenditures.

    As a careful reading of Quesnay makes it clear: the apology of freedom in trade is not directed against low classes but against industry and traffick. Quesnay believes, rightly or wrongly, that monopolies and exemptions and privileges are at the root of profits of a class which otherwise would be sterile. Maybe FG is right when she maintains that freedom of corn trade is the cause and origin of dearth but the rise of corn price is not conceived of by Quesnay as a weapon against wage-earners and to make entrepreneurs richer (which is a great difference with Ricardo and modern advocates of liberalism).

    As far as Quesnay’s philosophical background is concerned I don’t agree with FG to make Quesnay sharing an “individualist notion of “absolute private property” (p. 5). I would not go as far as asserting that Quesnay adopts a holistic point of view. But, what is clear is that the individual is not at the top of his system of values.

    But more useful than discuss that obscure methodological point is a brief examination of what freedom means for Quesnay. Freedom does mean that people may do what they wish. Not even to balance between pain and pleasure. This last kind of freedom is just that for beasts. Human beings differ from animals because they are endowed with reason. Enlighted by God they are capable to discover the laws of the universe. The interesting point is the difference between natural laws(as in physics) and social ones. The former rule everything independently of the knowledge men have whereas the latter are nothing but the unavoidable consequence of the discovery men have got of them (enlighten certainly by Quesnay and his disciples). They govern society because (some) people know them thanks to the Tableau. As soon as human beings discover that these law are beneficial for everybody freedom is nothing but compliance with them. Rather than being individualistic I would suggest that Quesnay’s theory is totalitarian! I think tht FG misinteprets Le Mercier de la Rivière page 10. Despotism ought not be confused with tyranny. The former is nothing but compliance with the laws of natural order, the latter is the consequence of a collusion between a class (generally financiers or merchants) and the king (see Traité de la monarchie).

    I notice an anachronism (I am generally not disturbed by that, privilege of economists!) page 9. FG alludes to “social sciences” as if such disciplines were already known as such and have already their methodology.

  • Gianni Vaggi says:

    “Pauvres paysans, pauvre royaume” (Quesnay)

    Quesnay and the price of corn
    The quote above are the concluding words of a note to maxime XX of the Maximes générales du gouvernemente économique d’un royaume agricole published in the 1767 in the Physiocratie by Pierre Samuel Du Pont de Nemours, (INED 1958, vol. II, p. 973). A similar text is in the note to maxime XIV in the Extrait des économies royales de M. De Sully, in the third edition of the Tableau économique, in the first months of the 1759 (Kuzcynski – Meek 1972, p. 10). The heading to the note to maxime XX reads: (Qu’on ne diminue pas l’aisance du menu people), and that to note to maxime XIX is: (Le bon marché des denrées n’est pas avantageux au petit people).

    Whether or not Quesnay is opposing the small, poor, people of France for sure he wants to convince the rulers of the Kingdom that his system is not going to be detrimental to the poorest social groups.

    Just a rhetoric statement? I do not think so. The living standards of the poor are not Quesnay major political preoccupations, but he is convinced that the reforms advanced by Physiocracy would benefit all social groups. The Physiocrats advocate two major reforms: the single tax on rents and the so called laissez faire for corn trade.

    The former is advanced by the Marquis de Mirabeau in the 1760 Théorie de l’Impot, written under the supervision of Quesnay. The two Physiocrats try to convince the landlords that they will indeed benefit from accepting to pay taxes in place of farmers and peasants. Of course it was never implemented, but brought Mirabeau to the Bastille, from where he was released in a few days thanks to Madame de Pompadour.

    Free corn trade, as Gauthier says, was partially implemented between the end of 1763 and July 1764 thanks to the edicts of the Controlleurs Générals Bertin and de L’Averdy, but in 1770 the edicts were revoked by the new Controlleur Général Terray.

    But how could the high price of corn benefit the poor people?
    The 1756-1757 articles written by Quesnay for the Encyclopédie tell the story. The starting points is that France is a much poorer country than England because her agriculture is much less productive and this is so because it employs older techniques of production. In the article Fermiers of 1756 there is the story of oxen and horses. In England rich farmers use horses which pull a plough with an iron spade, while in France the poor sharecroppers use oxen with a wooden spade to plough their fields. Hence the productivity per hectare is higher in England than in France, notwithstanding the more fertile soil of the latter.

    Old and modern technologies, but also férmage and métayage, to different ways to cultivate which end up in la grande culture in England as opposed to la pétite culture in France. Also, and with some simplification, two different social relationships of production, to use a Marxian terminology, a capitalistic one and a feudal one. Policies should allow the cultivators to become rich in order to accumulate capital, for Quesnay horses are a type of fixed capital, which is the decisive element for the adoption of the most advanced techniques.

    To exempt the cultivators from the taxes on corn should lead to higher productivity, and a higher produit net in the future. In the same way granting the French cultivators the possibility to sell their corn either at home or abroad at the most convenient price would increase the price of corn to the international levels and it would stabilize it. The French farmers may then regard this more remunerative price as a bon prix, that is to say a price which justifies more investments into cultivation. This is the decisive feature for the modernization of French agriculture and to have opulence for all the social groups of the Kingdom, but for one.

    What about the standard of living of the poorest people? Quesnay aims at increasing the price of corn for the cultivators, les prix de la première main, the farm price or wholesale price, not the retail price, or the price of bread in Paris. In the article Hommes he clearly distinguishes the two prices, therefore the corn merchants, not the poor people, will suffer the brunt of free corn trade. It looks like a trick but it is absolutely coherent with another of Quesnay’s major themes: resale trade is a sterile activity. Thus we see the social group which will not benefit from laissez faire. By eliminating the gains from intermediation of corn traders, which are due to the exclusive trading licenses (privileges) system of the ancient régime, there can be more profits and investments for the farmers without a negative impact on the subsistence of people. Moreover a more affluent France could escape famines and the workers could even experience wages increases.

    A nice piece of theoretical analysis, but it did not work. Gauthier is absolutely right to highlight that the corn merchants managed to pass the price rises on to the consumers(pages, 12-3, 15 and 21) and to the poor people of France. Perhaps more time was needed for the reforms to display their positive effects. Abstract theorizing had to come to terms with the concrete historical realities, a criticism that Galiani advanced to the Physiocrats in his 1770 Dialogues sur le commerce des bleds. The power of the French corn traders, themselves very much linked to landed aristocracy, could not be easily removed with more competition.

    However, it is not useful to put all the capitalist on one side and the people on the other as Gauthier seems to do on pages 20-21. The interests of the still week agricultural entrepreneurs and those of the corn merchants were not at all the same. Even today industrial and financial capitalists give value to their investments with different mechanisms, even if it is mainly, but not only, through market forces. All the more so in 1760 France, when the possibility to move capital across different sectors was almost non existing. Indeed the gain of corn traders was a version of the Mercantilistic notion of profit upon alienation, the difference between the selling and the buying prices.

    Quesnay and political economy

    Three points of clarification.
    First, the Physiocrats are not in favour of unlimited free trade, this is the position of Turgot, they oppose the imports of manufactured products; they just want to allow the French cultivators to sell their corn were it is more convenient, either at home or abroad. In a sense is a kind of export led model of accumulation, where exports come from the primary sector, thanks to the superior fertility of French soil.

    By the way, today there is a growing debate on how to transform incomes from the export of natural resources into sustained growth; an issue of extreme importance for many countries in Latin America and Africa. In many ways today policy recommendations follow the Physiocratic scheme, with the obvious exception that modernization is no longer limited to cultivation only.

    Second, the political horizon of Quesnay never moves further than that of an agricultural kingdom and Jean Cartelier is quite right in pointing out that he is not a supporter of individual action and freedom, but on the contrary policies have to be decided and implemented by the rulers, definitely top down.

    Third, of course private property must be secured, but what worries Quesnay is the possibility for the French cultivators to put more capital into cultivation, without the risk of losing it. Therefore he strongly advocates long land leases, as they are in England, in such a way that the farmers are induced to improve cultivation without the fear of being exploited.

    All this said, I am not completely sure that in the twenty years, 1748-1768, which go from Montesquieu’s L’esprit des lois to Quesnay last economic articles the problem is that of a distinction between despotic and popular political economy. In a sense there is a problem of establishing “the independence of the economic sphere” as Gautier writes(p. 16), but for Quesnay this is part of the aim to enlighten that “invisible chain of events” (Adam Smith) which can lead to unexpected outcomes. Show the King and the rulers how market forces, if supported by appropriate policies, can lead to prosperity in a way which is not part of that traditional organization society which has characterized France for almost one thousand years: namely feudalism.

    One of the main features of classical political economy is the construction of theories, arguments of reasoning, which show what is not immediately obvious and indeed it could even be counter-intuitive. This is what Quesnay does, probably the first one (the admirers of Petty might disagree), and his theory is meant to highlight the mechanisms through which the increase of the price of corn will bring opulence for all social classes.

    The Physiocrats need to identify economic laws and also to establish economics as an independent discipline, but not separate from polity and history. “Le fondement de la société est la subsistance des hommes”, writes Quesnay in the 1765 Le Droit Naturel (INED 1958, vol. II, p. 741). The full title of the article is Observations sur le droit naturel des hommes réunis en société; Quesnay refers to organised human societies and not to some ideal ‘state of nature’. His policy problem is not to use ‘nature’ against the poorest social groups, but to show the King and the rulers the road for the prosperity of the kingdom.

    However, it is not just a matter of rhetoric, in their works Smith, Ricardo, Marx and Quesnay are first of all moved by what they consider the main problems of their day; for the French doctor this is the backwardness of France. In similar ways the four men want to understand the ways in which the economic side of society works and how that should guide economic policies. This is a fundamental approach of Classical Political Economy.

    Quesnay’s answers to the issue of the price of corn and indeed all his economic works contribute to present a new theory of wealth. Towards the end of the Extrait, there is a very long footnote, the last one, where Quesnay deals with the problem of wars and of the military power of the states. He explains that the decisive element of a nation power is the ability of her citizens to finance the army through taxation; in the end power depends on the economic strength of a country. As opposed to the Mercantilism in order for a nation to become powerful there is no need to conquer foreign territories.

    The new principle of wealth is linked to productivity and technical progress, which in Smith will more clearly become that profit-investment-productivity-competitiveness nexus which still explains the rise and fall of nations. Think of the economic mechanisms and policies behind the East Asian miracle.

    This economic tradition goes under the name of ‘surplus approach’, because the size of surplus relatively to the capital invested becomes the decisive indicator of past successes and of future potentialities.

    Despotic versus popular interpretation; natural versus human rights
    As Jean Cartelier I am not an historian, and my knowledge and understanding of the last thirty years of the eighteen century is for sure more limited than his. I feel it may be hazardous to bring together the debates of the sixties and those of the eighties and nineties, even if the issue at stake is still the price of subsistence. In the late fifties-early sixties Victor Riqueti Marquis de Mirabeau is L’Amis des hommes, thirty years later his son Gabriel is to become the “voice of people”, or at least of the Third Estate. No such a voice is really there at the time of the Physiocrats.

    However, Gauthier has point when she addresses the issue of the use of economics and I do agree that the major problem is whether or not we take economic laws as being completely separated and in some sense superior to polity and history. A process of abstraction from the complexities of history is unavoidable, but it is risky to try to interpret history with a single tool. Even worse is to apply to concrete historical societies policies and rules which are derived from a highly simplified part of the whole. Abstraction implies a process of mediation and the same should apply to policies when we move back from an abstract model to reality.

    Twenty four years separate Quesnay’s Le Droit Naturel from the Déclaration des Droits de l’Homme et du Citoyen. Since then the notion of human rights has always been part of social political and economic debates, but it is really after World War II that it has acquired a scientific status at least in the contentions on development and on justice. Now we talk of a ‘human right approach’ to development, of rights of first and second generation, meaning the economic and social rights and not only the personal, civil and political ones.

    The debate on the post-2015 Millenium and Sustainable Goals, which will be approved by the UN General assembly next year, includes many possible aspects which are consistent with human development and human rights: from subsistence, to gender, to health, to education, to freedom. However this widespread consensus has not eliminated the separation between these rights and the working of economic laws and markets, or on how they are supposed to work.

    We still have an almost general consensus on what efficiency is, even without the recourse to natural laws, and how the two realms of human rights and economic laws should coexist it is still a matter of intellectual contest.

    I am more indulgent than Gauthier towards the Physiocrats; but today the need to bring together different perspectives and interpretations of society is more urgent than ever. The same is true for the consideration of the empowerment of each human being as the ultimate purpose of knowledge.

    By Gianni Vaggi, University of Pavia