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Sunday, August 11, 2013

Bastiat and the French laissez-faire tradition

John Stuart Mill's conquest of British economics by his 1848 treatise, The Principles of Political Economy, succeeded in imposing a miasma upon British economics for at least a quarter-century. In some respects, indeed, the subjectivist (or, in its trivialized label, the ‘marginalist’) revolution against Mill, led abortively by Jevons in the 1870s, never really took hold in Great Britain. The Millian miasma imposed a vague and incoherent adhesion to the labour theory, or at best the cost-of-production theory, of value; to the methodology of positivism, tempered by a confused inductivism; to individualism, muddled by organicism; to a vague, tentative preference for the free market easily overridden by almost any objection, in particular the alleged ability of labour unions to win general wage increases as well as the supposed moral superiority of socialism. Politically, in short, Mill was cleverly positioned to be the patron saint of laissez-faire as well of virtually any and all attacks against it – in short, to be the philosopher of the British status quo as it existed or as it might become. At the same time, Mill became the modern liberal intellectual's favourite straw-man champion of laissez-faire, ever ready to make the most damaging concessions to his modern liberal opponents. In that way, the modern liberal intellectual can sound the triumphal note: ‘But even Mill admits...’ and thus expect to win the day by the invocation of authority alone.
In monetary and banking affairs, indeed, Mill was the guru for precisely the status quo as imposed by the Peel Act of 1844 and continuing until World War I: that is, a broad commitment to hard money in the form of the gold standard, but cleverly and fundamentally vitiated by a Bank of England monopoly control of a fractional-reserve banking system that could readily inflate money and credit within that allegedly sound system.
Although of all countries, British economics in the nineteenth century (and down through World War II) managed to accrue the greatest prestige, it was not able to exercise total hegemony over economics abroad. In France, in particular, the legacy of J.B. Say led, in dramatic contrast, to a subjective utility and consistent laissez-faire tradition that managed to retain dominance over French economics for nearly a century. We have seen that French laissez-faire economics was established in the Restoration period after 1815 by a brilliant group of young economists and social theorists inspired by J.B. Say, and headed by Charles Dunoyer and by Say's son-in-law Charles Comte. Although Comte died in middle age, Dunoyer lived long enough to write his three-volume magnum opus, De la liberté du Travail {On the Freedom of Labour), (1845), and to preside over the founding, in 1842, of the leading Société d'Économie Politique (The Society of Political Economy), which would meet monthly for decades, as well as its scholarly journal, the Journal des Économistes, which had been launched a few months before the society. From then until World War I, an admirable and productive cadre of economists staffed the main French academic posts, edited and wrote for numerous scholarly journals, formed associations and conferences, and wrote and lectured indefatigably on behalf of harmony of interests and general prosperity through free markets, free trade, and laissez-faire. It is remarkable that at least three generations of French economists were schooled in, and carried on and developed, this laissez-faire tradition. Despite generations of changing fashions and enormous temptations from the side of statism and special privilege, French economists, for nearly a century, stuck to their guns and remained stalwart champions of laissez-faire and enemies of state intervention and special privilege.
Here we might pay special attention to the men who collaborated on the first encyclopedia of economics, an excellent two-volume work, Dictionnaire d'Économie Politique (Paris: Guillaumin, 1852–53), co-edited and published by Gilbert Guillaumin (1801–64), an indefatigable publisher of countless French economic and laissez-faire works during the nineteenth century. The co-editor Charles Coquelin (1805–52), himself a major contributor to the dictionary, unfortunately died shortly before publication. The dictionary went through four printings. Another leading light of the dictionary, and founding secretary of the Société d'Économie Politique, was Joseph Garnier (Clément Joseph Garnier, 1813–81), for some years editor-in-chief of the Journal des Économistes, and author of several highly successful textbook treatises in economics including: Élements d'économie politique (1845 – many editions), and Éléments des Finances (1858 – many editions).
French laissez-faire economists pioneered, not only encyclopedias of economics, but also the study of the history of the discipline. The first history of economic thought was the Histoire de l'économie politique en Europe (1837, 4th edition, 1860, English translation, History of Political Economy in Europe 1880), by Jérome-Adolphe Blanqui (1798–1854), who studied political economy under Say, and succeeded him as professor. Blanqui was also for many years editor-in-chief of the Journal des Économistes. Joseph Garnier had been Blanqui's student. Blanqui, in turn, was the son-in-law of Michel Chevalier (1806–79). An engineer and Saint-Simonian socialist in his youth, Chevalier became a laissez-faire liberal, becoming professor of political economy at the Collège de France, and publishing the three-volume Cours d'Économie Politique (1842–50). Chevalier was also a statesman, negotiating the famous fee trade treaty with England (England being represented by the great Richard Cobden) in 1860, a high-water mark of the free trade and free market movement in nineteenth century Europe. Another prominent student of Chevalier was Henri (Joseph Léon) Baudrillart (1821–92), who went on to teach political economy at the Collège de France, and whose Manuel d'Économie Politique was published in 1857, and went into numerous editions.

Another prominent economist was the Pole Louis Wolowski (1810–76), a brother-in-law of Michel Chevalier. Born in Warsaw, Wolowski emigrated to France in 1834, founding and editing for many years the Revue de législation et jurisprudence. Possessor of a doctorate of law and another in political economy, Wolowski was to become a banker, statesman and professor as well as being associated for many years with the Journal des Économistes. Wolowski's nephew, Émile Levasseur (1828–1911) became a prominent economic historian and successor to Baudrillart at the Collège de France. Levasseur published a well-known work on the Histoire des classes ouvrières en France (History of the Working Classes in France) (1859) and, in 1867, published a Précis d'Économie Politique, which went into many editions. Wolowski and Levasseur, it should be noted, wrote a scintillating joint article in defence of property rights, on ‘Property’, for Lalor's three-volume Cyclopedia of Political Science, published in the United States in 1884.

A worthy successor to Jérome-Adolphe Blanqui as historian of economic thought in the French laissez-faire school was Maurice Block (1816–1901). Born in Berlin but emigrating to France, Block worked in the statistical department of the ministry of agriculture, industry and trade. By his 40s, Block was a full-time editor and writer in economics. For 44 years, from 1856 virtually until his death, Block served as editor of the Annuaire d'économie politique et de la statistique (Annual of Economics and Statistics), as well as editor of the Dictionnaire générale de la Politique (from 1862 and later years), and the Dictionnaire de I'Administration Française (1855 and later years), and also wrote several important books on the theory of statistics, on socialism, on French finances, and a Petit manuel d'économie politique, published in 1873 and going into many editions. An erudite and indefatigable scholar, Maurice Block served for over 40 years as a reporter on all economic writings in Europe for the Journal des Économistes, capping his career with a great two-volume history of economic thought, Le progrès de la science économique depuis Adam Smith (1890). In his Progrès, Block praised the new Austrian school, and denounced the historicism and opposition to economic law of the German historical school.
Three generations of Says also took a prominent part in the French movement of laissez-faire economics. Jean-Baptiste's only son Horace-Émile Say (1794–1860) was merchant for a time in the United States and especially in Brazil, and served as a commercial judge and a councillor of state during the period of the Second Republic, 1859–61. Horace Say wrote a book on the history of commercial relations between France and Brazil. Horace's son, Jean-Baptiste Léon Say (1826–96), became a prominent statesman devoted to free trade and laissez-faire. Léon Say wrote many articles for the Journal des Économistes, he was the owner of the laissez-faire-oriented Journal des Debats, and he was the minister of finance from 1872 to 1879, and again in 1882. He was also president of the French Senate in 1882. Léon Say concluded a preliminary free trade treaty with England in 1880, and successfully opposed the introduction of an income tax.

One of the last of the fiery and uncompromising free market and anti-interventionists of the French school was Yves Guyot (1843–1928), a prolific writer who also served as city councillor of Paris (1876–85) and minister of public works (1889–92). Guyot succeeded the venerable Gustave de Molinari after he stepped down as editor of the Journal des Économistes in 1909.

So dominant was the laissez-faire school in France during the nineteenth century that its teaching permeated the popular culture. Popular writers, journalists and novelists expounded on the harmony of interests, and on the mutual benefit and the general prosperity brought about by the free market. Thus no more lucid and inspiring an economic primer and paean to the workings of the free market has ever been written than the lectures to French workers, formed into the Handbook of Social Economy: Or the Workers' ABC, written by the popular novelist Edmond About (1828–85).

Indeed, the very lucidity and popularity of the French writers was turned against them by the British classical economists, generally dense and obscure writers, who could turn their very elegance of style against the French, and denounce them for superficiality of thought and scholarship. This tradition has been redoubled by modern historians, whose intense hostility to the French writers' political conclusions reinforces their brusque dismissal. In particular, modern historians unfairly dismiss the French writers as mere popularizers, lacking theoretical depth.
Austrian Perspective on the History of Economic Thought (2 volume set)

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