I. THE FOUNDERS To one who turns from reading a modern treatise on economics, whether it be Mill's Principles of Political Economy or the works of Wagner or Marshall, and takes up the various writings which have been dealt with in the foregoing pages, a great development is evident. Heretofore, economic thoughts have been gleaned mostly from books on religion, politics, or jurisprudence. At most, they have been rather sporadic pamphlets or essays, or treatises upon political and technical matters. Yet it would be misleading to say that these thoughts were unclassified or unsystematic. The writings of Aristotle, for illustration, were truly scientific. In the works of the Roman jurists and medieval scholastics, economic ideas were fitted into organized bodies of thought. The point is that they were not distinct. They formed no separate science, but lay inchoate within other bodies of doctrine, ethics, jurisprudence, and the like. To found the science of economics, then, it was necessary to sever these scattered economic ideas and bring them together in a separate system of thought. For this step the way has been somewhat prepared, especially by the Mercantilists and Kameralists who made considerable progress in giving economic ideas separate attention. It was not until the middle of the eighteenth century, however, that Economics was really founded as a science. To recount the circumstances under which this development was achieved and sketch the main features of the new science is the object of the two following chapters, which deal with The Founders. CHAPTER IX THE PHYSIOCRATS AND THE REVOLUTION IN SOCIAL PHILOSOPHY ABOUT the middle of the eighteenth century a group of French thinkers evolved a system of economic thought which forms one of the important roots of the modern science. One of their number styled that system "Physiocratie," and ever since these men have been known as the Physiocrats. The Greek words pois and κpáros signify the power of nature, the system of thought now under consideration being based upon a belief in the existence of natural laws which must be followed if men are to gain their highest well-being. This system was also known as the Agricultural System, and is so called by Adam Smith. The Physiocrats liked best to call themselves "The Economists" (Les Économistes). Taking the tillage of the soil as a starting point, and basing their reasoning on a concept of natural liberty, the Physiocrats constructed what may be called the first system of political economy. They endeavored to include all the social phenomena connected with the production of wealth, embracing in their economics laborers, manufacturers, merchants, farmers or agricultural entrepreneurs, owners of large estates, and the ruling classes. Thus the new system was very different from Mercantilism, which was rather inchoate, and emphasized foreign trade in a narrow fashion. Mercantilism I. The Forerunners of the Physiocrats. has been described as embracing the group of economic and political doctrines which prevailed among the statesmen and political writers of the sixteenth and seventeenth centuries. It held sway on into the eighteenth century; but toward the end of the seventeenth protests against the extreme doctrines of that system had begun to be uttered even in its stronghold, England.' It is little wonder, then, that in France, a country more easily led into revolt, the abuses which attended and followed Colbert's régime soon brought on a violently negative economics. Physiocracy, though it meant much more, might almost be defined as the revolt of the French against Mercantilism. This revolt, however, did not break out in any organized way until the middle of the eighteenth century, and a word should be said about the economic thought which intervened, about the forerunners of the Physiocrats. The first economic theorist of note to be produced by France was Pierre Boisguillebert. An unsystematic writer, Boisguillebert's thought in many points seems to foreshadow the later school. He was a contemporary of Colbert's, and his work was stimulated by the misery which followed the financial abuses of Louis XIV's reign. Tax reform, then, was the burden of his first book,2 equality in distribution and abolition of export duties on grain being the chief demands. Two more theoretical works were his Treatise on Grain and Dissertation upon the Nature of Wealth. They were written in the interest of the landed classes, containing arguments in favor of high prices for grain. In them he refers to Holland, Henry IV, and Sully, praising the latter at the expense of Colbert. Quite significant was his attack upon the overvaluation of precious metals: wealth to him consisted rather in the supply of necessary and convenient things which satisfy man's many different wants. Such wealth depended, not upon political policy, but upon a natural harmony of industry. Contemporaneously with Boisguillebert another Frenchman was driven by the same unhappy industrial state of his country to 1 By Barbon, Child, Locke, and others. See above, pp. 93, 95, 102. 2 Détail de la France sous le règne présent, 1697; Factum de la France, 1707. 3 Sully had said, "Labourage et pastuage sont les deux mamelles de l'état," — tillage and pasturage are the breasts of the state. think similar thoughts. In 1707 Marshall Vauban published his Project for a Royal Tythe. He described the wretched condition of the peasants, which he, too, attributed largely to inequality in taxation. His project concerned a single direct tax of one tenth of the product of agriculture. He would have permitted a few duties on consumption, but on the whole may be regarded as a pioneer of the single tax. Vauban considered labor as the foundation of wealth; and of all labor, that in agriculture seemed most important. Fénelon (Télémaque, 1699) in favoring freedom of trade and emphasizing the character of the people rather than their numbers, and Montesquieu (Esprit du lois, 1748-1749) in holding that "natural laws" obtained in the social world and arguing for liberty, are also worthy of mention in making the transition from Mercantilism. But most noteworthy of all is Richard Cantillon. Indeed, his Essay upon the Nature of Commerce in General,1 published in 1755, may justly be called the forerunner of the science of political economy, for it is a general treatise and inquires. into principles. Wealth he defines as being nothing other than the comforts and conveniences of life. The earth is the source or material whence wealth is drawn; labor is the form which produces it. The great merit of Cantillon's essay lies in its attempt to trace the circulation of wealth to its ends. He deals with internal trade between town and country, thus taking the sole emphasis away from foreign commerce. He argues that in a country where one half the population lives in towns, one half the agricultural produce must be consumed by the urban dwellers; and proceeds to discuss the distribution of that produce between landowners and farmers, and to analyze the expenses of the latter. Cantillon also discusses value and price, following Petty in basing them upon the amount of labor and land which contribute to produce the thing under consideration. His manuscript work was circulated in France 1 See reprint for Harvard University, G. H. Ellis, Boston, 1892. Originally written in English, the essay was translated by Cantillon for the use of a French friend. |