3 Physiocracy - 5 Physiocracy and French Pre-Classical Political Economy Philippe Steiner Subject Economics History of Thought Place Western Europe

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5. Physiocracy and French Pre-Classical Political Economy Philippe Steiner Subject Economics » History of Thought Place Western Europe » France Key-Topics political economy DOI: 10.1111/b.9780631225737.2003.00006.x 5.1 Introduction The final part of Louis XIV's reign saw the development of major economic works with the contributions of Pierre de Boisguilbert (1646–1714) and Sébastien le Prestre, Marshall Vauban (1633–1707). A member of the local administration, the former wrote several pamphlets and booklets on economic administration (taxation, grain trade, and money) in which several market mechanisms were studied with great insight ( Boisguilbert, 1966 ). Following the Jansenist approach - according to which a good society may work well without virtuous behavior, since self-love is enough - Boisguilbert explained that wealth did not result from benevolence and charity, but from self-interest ( Faccarello, 1986 ). Since corn does not grow like mushrooms, the price paid to the farmer should be high enough to cover the cost of production. With the concept of proportionate prices ( prix de proportion ), Boisguilbert pointed out that markets were connected by money flows: an expense for the buyer of grain is a revenue for the farmer. Thus, lowering the price of corn - a usual claim in periods of grain shortage - was a dangerous economic policy, since farmers would stop producing corn. More generally, Boisguilbert warned the government that any active policy on the grain market (for example, buying corn abroad) would give birth to anticipations (a likely shortage) and would prevent the policy from being effective (buyers eager to obtain a stock of grain would increase their demands, prices would rise, and a shortage would be created). Free trade thus appeared to be a sound policy. In line with English political arithmetic, Marshall Vauban, a great military engineer, grounded his proposal for a new fiscal system, known as La dîme royale ( Vauban, 1992 [1707] ), on calculations. He suggested that an increase in the military and economic power of the king could be achieved together with an increase in the well-being of the population through an appropriate taxation system: the state would collect a moderate percentage (from 5 to 10 percent) of the agricultural produce, whereas commerce and industry would contribute a very small amount to the royal revenues. These reflections on economic affairs likely were related, on the one hand, to the poor situation of the realm (with a series of bad weather conditions in 1693–4, 1698–9, and 1709– 10, accompanied by famines and a huge mortality - up to one-tenth of the population) and, on the other, to continuous warfare with the continental power (the Austrian Empire) or with the maritime power (The Netherlands). The situation in the 1750s was again marked by military conflict - the Seven Years' War (1756–63) between France and England - but, as recent French historiography has demonstrated ( Perrot, 1992 ; Théré, 1998 ), economic affairs were then a public concern.
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This note was uploaded on 03/31/2010 for the course ECONOMICS 321 taught by Professor H during the Spring '10 term at Kadir Has Üniversitesi.

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3 Physiocracy - 5 Physiocracy and French Pre-Classical Political Economy Philippe Steiner Subject Economics History of Thought Place Western Europe

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