A History of Economic Doctrines

Chapter I: the Physiocrats

Political Economy as the name of a special science is the invention of one Antoine de Montchrétien, who first employed the term about the beginning of the seventeenth century. Not until the middle of the eighteenth century, however, does the connotation of the word in any way approach to modern usage. A perusal of the article on Political Economy which appeared in the Grande Encyclopédie of 1755 will help us to appreciate the difference. That article was contributed by no less a person than Jean Jacques Rousseau, but its medley of politics and economics seems utterly strange to us. Nowadays it is customary to regard the adjective “political” as unnecessary, and an attempt is made to dispense with it by employing the terms “economic science” or “social economics,” but this article clearly proves that it was not always devoid of significance. It also reveals the interesting fact that the science has always been chiefly concerned with the business side of the State, especially with the material welfare of the citizens—“with the fowl in the pot,” as Henry IV put it. Even Smith never succeeded in getting quite beyond this point of view, for he declares that “the object of the political economy of every nation is to increase the riches and the power of that country.”

But the counsels given and the recipes offered for attaining the desired end were as diverse as they were uncertain. One school, known as the Mercantilist, believed that a State, like an individual, must secure the maximum of silver and gold before it could become wealthy. Happy indeed was a country like Spain that had discovered a Peru, or Holland, which, in default of mines, could procure gold from the foreigner in exchange for its spices. Foreign trade really seemed a quite inexhaustible mine. Other writers, who were socialists in fact though not in name—for that term is of later invention—thought that happiness could only be found in a more equal distribution of wealth, in the abolition or limitation of the rights of private property, or in the creation of a new society on the basis of a new social contract—in short, in the foundation of the Utopian commonwealth.

It was at this juncture that Quesnay appeared. Quesnay was a doctor by profession, who now, when on the verge of old age, had turned his attention to the study of “rural economy”—the problem of the land and the means of subsistence. Boldly declaring that the solution of the problem had always lain ready to hand, needing neither inventing nor discovering, he further maintained that all social relations into which men enter, far from being haphazard, are, on the contrary, admirably regulated and controlled. To those who took the trouble to think, the laws governing human associations seemed almost self-evident, and the difficulties they involved no greater than the difficulties presented by the laws of geometry. So admirable were these laws in every respect that once they were thoroughly known they were certain to command allegiance. Dupont de Nemours cannot be said to have exaggerated when, in referring to this doctrine, he spoke of it as “very novel indeed.”

It is not too much to say that this marks the beginning of a new science—the science of Political Economy. The age of forerunners is past. Quesnay and his disciples must be considered the real founders of the science. It is true that their direct descendants, the French economists, very inconsiderately allowed the title to pass to Adam Smith, but foreign economists have again restored it to France, to remain in all probability definitely hers. But, as is the case with most sciences, there is not very much to mark the date of its birth or to determine the stock from which it sprang; all that we can confidently say is that the Physiocrats were certainly the first to grasp the conception of a unified science of society. In other words, they were the first to realise that all social facts are linked together in the bonds of inevitable laws, which individuals and Governments would obey if they were once made known to them. It may, of course, be pointed out that such a providential conception of economic laws has little in common with the ordinary naturalistic or deterministic standpoint of the science, and that several of the generalisations are simply the product of their own imaginations. It must also be admitted that Smith had far greater powers of observation, as well as a superior gift of lucid exposition, and altogether made a more notable contribution to the science. Still, it was the Physiocrats who constructed the way along which Smith and the writers of the hundred years which follow have all marched. Moreover, we know that but for the death of Quesnay in 1774—two years before the publication of the Wealth of Nations—Smith would have dedicated his masterpiece to him.

The Physiocrats must also be credited with the foundation of the earliest “school” of economists in the fullest sense of the term. The entrance of this small group of men into the arena of history is a most touching and significant spectacle. So complete was the unanimity of doctrine among them that their very names and even their personal characteristics are for ever enshrouded by the anonymity of a collective name.

Their publications follow each other pretty closely for a period of twenty years, from 1756 to 1778.

Turgot was the only literary person among them, but like his confrères he was devoid of wit, though the age was noted for its humorists. On the whole they were a sad and solemn sect, and their curious habit of insisting upon logical consistency—as if they were the sole depositaries of eternal truth—must often have been very tiresome. They soon fell an easy prey to the caustic sarcasm of Voltaire. But despite all this they enjoyed a great reputation among their more eminent contemporaries. Statesmen, ambassadors, and a whole galaxy of royal personages, including the Margrave of Baden, who attempted to apply their doctrines in his own realm, the Grand Duke Leopold of Tuscany, the Emperor Joseph II of Austria, Catherine, the famous Empress of Russia, Stanislaus, King of Poland, and Gustavus III of Sweden, were numbered among their auditors. Lastly, and most unexpectedly of all, they were well received by the Court ladies at Versailles. In a word, Physiocracy became the rage. All this may seem strange to us, but there are several considerations which may well be kept in view. The society of the period, raffiné and licentious as it was, took the same delight in the “rural economy” of the Physiocrats as it did in the pastorals of Trianon or Watteau. Perhaps it gleaned some comfort from the thought of an unchangeable “natural order,” just when the political and social edifice was giving way beneath its feet. It may be that its curiosity was roused by that terse saying which Quesnay wrote at the head of the Tableau economique: “Pauvres paysans, pauvre royaume! Pauvre royaume, pauvre roi!” or that it felt in those words the sough of a new breeze, not very threatening as yet, but a forerunner of the coming storm.

An examination of the doctrine, or the essential principles as they called them, must precede a consideration of the system or the proposed application of those principles.

I: THE NATURAL ORDER

The essence of the Physiocratic system lay in their conception of the “natural order.” L’Ordre naturel et essential des Societés politiques is the title of Mercier de la Rivière’s book, and Dupont de Nemours defined Physiocracy as “the science of the natural order.”

What are we to understand by these terms?

It is hardly necessary to say that the term “natural order” is meant to emphasise the contrast between it and the artificial social order voluntarily created upon the basis of a social contract. But a purely negative definition is open to many different interpretations.

In the first place, this “natural order” may be conceived as a state of nature in opposition to a civilised state regarded as an artificial creation. To discover what such a “natural order” really was like man must have recourse to his origins.

Quotations from the Physiocrats in support of this view might easily be cited. This interpretation has the further distinction of being in accord with the spirit of the age. The worship of the “noble savage” was a feature of the end of the eighteenth century. It pervades the literature of the period, and the cult which began with the tales of Voltaire, Diderot, and Marmontel reappears in the anarchist writers of to-day. As an interpretation of the Physiocratic position, however, it must be unhesitatingly rejected, for no one bore less resemblance to a savage than a Physiocrat. They all of them lived highly respectable lives as magistrates, intendants, priests, and royal physicians, and were completely captivated by ideas of orderliness, authority, sovereignty, and property—none of them conceptions compatible with a savage state. “Property, security, and liberty constitutes the whole of the social order.” They never acquiesced in the view that mankind suffered loss in passing from the state of nature into the social state; neither did they hold to Rousseau’s belief that there was greater freedom in the natural state, although its dangers were such that men were willing to sacrifice something in order to be rid of them, but that nevertheless in entering upon the new state something had been lost which could never be recovered. All this was a mere illusion in the opinion of the Physiocrats. Nothing was lost, everything was to be gained, by passing from a state of nature into the civilised state.

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