Peter D. Groenewegen. June 1994, 22p. The French Connection: Some Case Studies of French Influences on British Economics in the Eighteenth Century. University of Sydney – Department of Economics – Working Papers in Economics Series. Numéro 202 de Working papers in economics.
ABSTRACT
Towards the end of the first half of the century French influence was exerted on British economics from the remarkable group of financial economists France produced and more fundamentally from the work of the great Montesquieu, whose role in the development of political economy within a new secular social science was so extensive. The case studies presented help to capture both the changing pace, and the nature of, the substantial and varying influences French economics exerted on British political economists during the 18th century, the one century for part of which It can be said French economics dominated the subject.
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French contributions in the eighteenth century hold a unique place in the history of economics, in the sense that for substantial segments of that century they dominated thinking in the subject. Part of this dominance was associated with the Enlightenment, during which French thought reigned supreme over virtually every field of scientific endeavour. With special reference to economics, the leading position of French thought in the eighteenth century is explained by a number of factors. As shown by Hutchison, part of the explanation lies in the relative decline in importance of English economics from the end of the seventeenth century, a position not recovered until almost a century after the Scottish ascendancy which began in the middle of the eighteenth century. More importantly, especially during the 1750 and 1760, were the theoretical developments in French economics largely associated with physiocracy. These placed it in the forefront of economic theory over these two decades. The varying importance of French economics over the eighteenth century can be demonstrated statistically using data on the relative rate of publication and similar measures. It can also be illustrated by using case studies of selected British writers, as a device for assessing the degree of French economic influence on such writers in greater depth. The last is the method adopted in this chapter to highlight the influence of French economics on the English speaking writers in the eighteenth century.
The case studies have been selected to illustrate both the specific forms French influence took in the eighteenth century and the differing degrees of its importance. The first deals with Richard Cantillon, an economist of British birth but French nationality and writing on economics, probably in France and in French, in the late 1720. Cantillon’s case is interesting since despite his undoubted French connections, the major influences on his economics are English, reflecting the dominance of English thinking at the time. However, the identifiable French influences on his work are intriguing. The second case study concerns David Hume, another writer with very good French connections, having spent his initial period as writer (1734-7) in France. Hume’s economic essays, written approximately two decades after Cantillon’s Essai, reflect the type of French economic influence existing at this time. His main period of residence in France, as secretary to the British Embassy in Paris (1763-6), during which he became personally acquainted with many of the leading contemporary French economists was of course well after his economic writings had been completed and at best reveal a negative influence in some of his correspondence. In his case it is the French influences from the 1730s and 1740s and before which are the focus of the discussion. The last case study involves Steuart and Smith who started writing their respective treatises in the l750s and l760s publishing them in the subsequent decade. Both spent significant periods in France prior to producing their major economic work. The controversial nature of the decidedly French influence on their work. exerted on both during the decades of prime importance of French economics in the development of the subject make a particularly fitting finale to this chapter on French influence on British economics in the eighteenth century.
A methodological point should also be raised by way of introduction. This concerns what is meant by influence and the nature of the evidence deemed sufficient to suggest potential influence. Influence for this study entails the exerting of any effect on the writing of the person influenced, whether major or minor on a point likely to have been absent without the influence in question. Influence is tested by either citation of the relevant work or more circumstantially by evidence that the author was in fact acquainted with the work from which influence on him is suspected. Such acquaintance may be the presence of the book in question in that person’s library or access to the relevant source in some other clearly identifiable way. In short influence by one author on another is ascribed by impact from an identifiable source with which the influenced author is demonstrably acquainted.
ln what follows, the chapter is divided into four sections. The first three deal with the three case studies respectively, and a final section draws some general conclusions from the argument.
Cantillon and French economics
As has been frequently pointed out Cantillon’s Essai drew systematically on a number of theoretical writings from the previous cenniry of which English seventeenth-century writers were by far the more important. From a theoretical perspective as Aspromourgos in particular has highlighted. much of Cantillon’s analytical thrusr derived from Petty. whose work was explicitly cited on no less than three occasions in Cantillon’s Essai. Cantillon frequently critically analysed Petty‘s theoretical constructions, in order to either develop or reject them. Examples of the former are Cantillon’s elaboration of Petty’s analysis of velocity of circulation; of the latter. Cantillon’s rejection of Petty’s theory of the ‘par’. Locke’s economic writings are likewise used by Cantillon in a critical manner. while it was probably the statistical inquiries with special reference to demography and the social division of labour in which Cantillon gaine most from his access to work by Gregory King and Charles Davenant. In line with the relative paucity of English thinking on economics in the early decades of the eighteenth century particularly when compared with the ‘boom years’ of the 1690s. the only English work from that century Cantillon cited is Sir Isaac Newton’s 1717 report on the British Mint. John Law’s work not mentioned by Cantillon directly, for reasons explained by Antoin Murphy.7 was clearly an important influence as well particularly in a negative way with respect to Cantillon’s account of banking and credit.
For an author who became French by choice and lived in France for a substantial part of his life, Cantillon also drew on the far smaller number of French authors then writing on the subject. Jean Boizard (died c. 1705) the monetary authority whose Traité des Monnoies went through several expanded editions (I692; 1711; 1714; 1723) at the turn of the seventeenth century. Is cited on technical aspects of silver refining for monetary purposes. However, Boizard’s work contains little of theoretical interest from which Cantillon could have gained. A more important reference is to Vauban’s Dime Royale, a work published in I707 which obtained considerable fame for its proposals to reform national taxation. Cantillon criticised Vauban’s tax proposals in passing arguing proportional taxation of rent was fairer than Vaiiban’s proposal for a royal tithe to be levied on all income. However as Cantillon considered taxation to be outside his subject his criticism of Vauban was not developed.
The final reference to a French author in Cantillon is both the most important and most intriguing. This is the reference to the author of an Etat de la France who attributed the falls in the rents between 1660 and I700 of vineyards near Mantes to ‘defective consumption’. Again. Cantillon is critical of the author suggesting the defective consumption can only be attributed to the scarcity of money in France. while the author as quoted by him suggests that the amount of silver money in this period had increased in France.
Higgs attributed this Etat de la France to Boulainvilliers thereby making him the author to whom Cantillon probably referred. Jacqueline Hecht however more correctly argues that the type of argument to which Cantillon referred is more easily found in Boisguilbert’s work. Le Détail de la France. This is a ‘State of France’, to use the contemporary idiom, which covers the requisite period and more importantly frequently illustrates its argument by data drawn from vineyards in the election of Mantes. In addition. Boisguilbert was a noted early underconsumptionist. Hecht also points out that Cantillon may have learnt more from Boisgiiilbert’s work than the remarks he chose to quote from the Etat suggest. In particular. Cantillon may have absorbed aspects of the notion of circulation which plays an important part in Boisguilbert’s work to develop them into a more sophisticated form.
There are many subjects on which Cantillon’s knowledge of Boisguilb-ert’s economics would have enriched his understanding of an economic system by supplementing what he had learned from British sources. The European. And more specifically French, slant of many of Cantillon’s illustrations in all parts of the Essai heightens the plausibility of such influence. A few examples can be given. ln Boisguilbert°s work the importance of the growth of the social division of lab-oiir is quantitatively illustrated by a comparison between primitive and modern society. This indicated that the two different types of professions present in primitive society are multiplied into 200 in its modern counterpart.
Fundamental changes associated with this greatly expanded social division of labour are twofold. First, there is a tremendous increase in interdependence of economic agents. Second. it strengthens the tendency of a division of society into classes, in which one ‘does nothing while enjoying all the pleasures, while the other Class ‘worlts from morn till night only to be deprived of the overplus above its essential consumption’. Private property in land for the few. Obtained largely by violence, is Boisguilbert’s explanation of this social division. The owning, landlord class, comprising nobility and church, is therefore the dominant sector in Boisguilbert’s picture of contemporary France, a vision developed and elaborated on by Cantillon in the economic system he presented in Part I of the Essai. Growing interdependence between sections of the economy, with its geographic, intertemporal and social implications for the relationship between national and individual interest, is mediated through the marltet. The last is expressed by relating prices set in that market by competition with necessary costs for producing commodities, a process in which Boisguilbert distinguished real flows from their monetary counterparts. This is formalised by his development of a simple notion of an economic circuit of output. Income and consumption in which imbalances between the variables cause ruptures in these price relationships and between the monetary and real flows.
All in all, the French influence on Cantillon is therefore significant, contrary to the view presented by Brewer. This case study in addition supports Marx’s profound conjecture that classical political economy has a dual origin, from France as well as from England, with Boisguilbert and Petty the respective founders of these two streams.” Cantillon’s work is an early indication of the benefits to be derived from the merging of these two streams in the eighteenth century. However, despite the fact that French influence was not negligible in Cantillon’s work as so often surmised, it is dwarfed by the much greater theoretical heritage he derived from the rich seventeenth-century English literature and from its efforts in political arithmetic. An alteration in the balance of influence between these two streams becomes somewhat more important with the worlt of Hume.
David Hume and French economics
David Hume’s economic essays included with his ‘political discourses‘ were largely written from the end of the 1740s to the early 1750s, being first published, with one exception. in the 1752 edition of his Essays. Intended as a critical commentary on major issues in economic policy and economic debate, with special reference to monetary theory, interest theory, marltet regulation, international trade, taxation and public credit. it is not surprising that they drew on experience from both sides of the channel, especially because their author had resided for some time in France during a formative period in his life. This makes French influence on his economics very liltely. The last prospect is enhanced by the fact that during the 1730s and 1740s some important French contributions were published on the subjects in which Hume was particularly interested; partly to evaluate, and sometimes to defend, the famous financial system established by John Law during the Regency years of l7l5-Z0. Most prominent among these authors were Melon and his adversary Du Tot. Whose books were rapidly translated. Other, lesser lights in France likewise contributed to economic debate during these decades for which the evidence enables a judgement that France contributed more substantial work to the subject than the English-speaking world. In addition, and of substantial importance to Hume‘s economics, the late 1740s when he wrote the economic essays coincided with the publication in 1748 of Montesquieu’s great and influential l’Esprit des Lois.
Hume mentions Melon’s work on no less than three occasions in his Essays, while a fourth indirect reference to Melon can also be identified. The first reference occurs in the essay ‘Of Commerce’ in which Melon’s estimate of the social division of labour in France is queried. Melon suggested that if French society is subdivided into twenty parts, sixteen would be husbandmen, two artisans and of the remaining two parts one belonged to law, church and nobility, the other to merchants, financiers and ‘masters’. Hume rejected such a division on the ground that in ‘France, England and indeed most parts of Europe. half of the inhabitants lived in cities; and even of those who lived in the country a great number are artizans. perhaps above a third’. » ln criticising these remarks. Hume missed the significance Melon attached to such calculations. They were required for maintaining the requisite balance between classes in society, an implicit emphasis on the implications of interdependence for social equilibrium. in the style of Boisguilbert. Melon is next mentioned in Hume‘s ‘Of Money’. In the company of Du Tot and Paris du Verney. two other important commentators on Law’s ‘system’. Again. the context is critical. since Hume disparages the three French writers for their failure to notice the benefits. in terms of stimulating levels of economic activity. of a mild inflation from ‘a gradual and universal encrease of the denomination of money’. » Although Melon himself was critical of such reductions in the ‘value of money’ through debasing the currency. because they conferred benefits largely to debtors. he deplored the effects of deflation even more as a discouragement to pI‘0ducli0n.l(’ This blanket reference to Melon’s work sits in any case rather uneasily with Hume’s later reference to Melon and Du Tot. now in the company of John Law himself. on their frequent references to the benefits of ‘circulation’ without further explanation.” Once again. this seems a little misplaced. Melon’s succinct exposition of Law’s system alludes to the favourable and unfavourable consequences of good and bad ‘circulation’ respectively. on the basis of experience in particular countries.’5 A final. albeit indirect reference to Melon’s work is made in Hume‘s essay ‘Of Public Credit‘, »’ with its allusion that some writers treat this as unimportant when the debt is held internally. because then it involves but a transfer from the left to the right hand.
The critical tone Hume adopted to Melon’s work in the four cases just documented suggests a wider type of influence Melon’s work may have exerted on the composition of Homes essays. The overall thrust of Melon‘s work possibly provided the inspiration for the issues on which Hume concentrated when designing his project of economic essays as general criticism of contemporary economic debate. Melon’s well known study can be described as the perfect foil to set off the contents of Hume’s critical essays on economic issues. No other single writer of the l730 and 1740 meets such qualifications. even though Hume’s essays are. in part at least. also directed at specific English authors. Of whom Gee’s well known Trade and Navigation of Great Britain Considered is perhaps the best example.
Two of the references Home made to Du Tot’s Réflexions Poliriques Sm‘ les Finances er le Commerce, were mentioned above. There is no doubt that. as in the case of Melon, Hume is correct in argtting that Du Tot presents little by way of explaining the benefits of a good circulation. except by his explicit association of this with improved consumption. He simply takes these benefits for granted. and does not even take the trouble to clarify what he means by ‘circulation’, for example, by distinguishing monetary circulation from that of commodities.“ Similar to his treatment of Melon. Hume is wrong in suggesting that Du Tot failed to appreciate the benefits for trade and activity from a gradual increase in the quantity of money. In fact. Du Tot’s defence of Law’s ‘system’ provides clear support for the contrary view.” Finally. it is difficult to substantiate Hume’s claim of factual indebtedness to Du Tot with respect to price effects from debasement of the coinage during the last year of the reign of Louis XIV. Hume seems, however, more correct in being generally sceptical of Du Tot’s presentation of facts and. in his recognition of the value of Du Tot’s general observation. ‘that the augmenting of the money in France does not at first proportionably augment the pn’ces’.3’l Taken with his use of Melon. Hume’s comments on Du Tot suggest that his acknowledgement of the dual consequences of monetary increase, an aspect of his argument Keynes stressed in the General Theory. may well have been inspired by his detailed study of the consequences of Law’s system. as reported by Melon and Du Tot. where these dual effects could be observed in its successive phases.
Hume’s reference to Law is too general. and his indebtedness to Montesquieu too well known, to warrant further comment.“ However. his references to two French authorities from the first decade of the eighteenth century require some further notice. lt is interesting that Hume had to ‘learn from L’Abbé du Bos [the common English fear] that Scotland would soon drain them [the English] of their treasure‘ after the Union with Scotland had been effected in 1705. Home denied such a supposition since the ‘money’ in a nation was invariably relative to its ‘commodities, labour. and industry’.37 The same applies to the fact that Hume illustrated the detrimental consequences of internal tariffs by citing Vauban’s discussion of the import duties imposed by Brittany and Normandy on wine from southem provinces like Languedoc and Couienne.25 lt is also interesting to note that Hume fails to refer to Vauban‘s work in the essay ‘Of Taxes’.
Hume’s ‘Of Taxes’ was later seen as an attack on the taxation doctrines of the physiocrats and as such criticised by Turgot. The latter protested against
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