Jeux de mots,narrative and economic writing: The rhetoric of anti-physiocracy in French economic periodicals (1764–1769)

Abstract

This article analyses the extensive debate that took place from 1764 to 1769 between, on the one hand, François Quesnay and the Physiocrats and, on the other hand, a group of authors led by François Véron de Forbonnais. In this article, we argue that these exchanges have, to a large extent, structured the anti-physiocratic rhetoric.     

‘Philosophie économique’ and money in France, 1750–1776: the stakes of a transformation

Abstract

The developments of political economy in France between 1750 and 1776 did not allocate a central place to the discussion of the nature and functions of money. The object of this paper is to account for this fact and what it denotes: the disappearance of money as a central object in the discourse on economy and society. We outline the context of this mutation in relation to the ideas of Montesquieu, Gournay and Forbonnais. The actors of this change will then be considered: the promoters throughout these years of ‘philosophie économique’ i.e. Quesnay, the Physiocrats and Turgot. An analysis of these authors, together with a founder of this perspective, Boisguilbert, will show how the status and role of money was modified and illuminate the issues involved. This transformation can be related to the affirmation of a new political discourse whose foundations are rooted in economic interest.     

Forbonnais,the two balances and the Économistes

Abstract

The link established by François Véron de Forbonnais (1722–1800) between two balances, the balance of trade and the balance of power, takes its full meaning in the context of the science of trade or “commerce politique” the author developed in his works. In polemical stance against the Économistes – the Physiocrats – and starting from the irremediable fact of the division of nations rather than their union, he intended to promote two goals: peace in Europe and the prosperity of nations through foreign trade. His approach was disputed by the Économistes who proposed instead a confraternal vision of nations in a free trade environment. This paper analyses Forbonnais' arguments, the answers of the Économistes and Forbonnais' final reply, and stresses the different views of politics this polemic denotes.     

Moral philosophy and economics: the formation of François Huet's doctrine of property rights

François Huet (1814–1869), Professor of Philosophy at the University of Ghent, is known for his attempt to reconcile Christianity with socialism in Le Règne Social du Christianisme (1853). The book clearly belongs to a distinctively Belgian tradition of ‘liberal socialism’. Drawing upon archival material, we try to clarify the origins of Huet's theory of property rights. We focus on two intimately related questions: (1) Have the core ideas formulated by Huet in Le Règne been expressed and discussed before the publication of the book? (2) In what sense have reflections upon the science of economics contributed to Huet's views?     

Nicolas Baudeau,an anti-physiocrat? Éphémérides du citoyen prior to “conversion” (1765–1766)

Abstract

Éphémérides du citoyen is often considered to be an anti-physiocratic periodical, up until Baudeau's adherence to Quesnay's theories in 1766. An analysis of the journal's main economic themes between 1765 and 1766 however shows that this interpretation is inaccurate. It is true that the theme of rurality, the issue of the colonies and Baudeau's needs analyses indicate an original line of thinking, in which the public powers played the role of primary investor via a “land clearing company” or a “threefold royal messengers service”. However, these contain no radical opposition to the liberal ideas developed by Quesnay.     

From the Encyclopédie to the Tableau économique : Quesnay on freedom of grain trade and economic growth

This paper investigates the evolution of Quesnay's economic thought between his Encyclopédie articles and the first edition of the Tableau économique. The rediscovery of a forgotten piece Quesnay included in an agricultural treatise — the Essai sur l'amélioration des terres — leads us to reconsider the origins of the first edition of the Tableau. This forgotten piece of writing is the missing link between Quesnay's first economic writings and the Tableau. It improves on the theory of grain trade liberalization Quesnay presented in his first writings on two levels. First, it reconstructs of his previous argument in order to give it a more coherent shape. Second, this text complements the Encyclopédie articles by a growth mechanism. Through a reconstruction of Quesnay's growth mechanism, we show that his argument is a significant analytical step toward the first edition of the Tableau.     

Quesnay's model of economic development

The article examines François Quesnay's ideas on economic growth and technical progress in agriculture. It formalizes these ideas as a dynamic model which describes the relationship between a shift to high yielding capital-intensive methods of production and growth and income distribution, taking into account Quesnay's understanding of the institutional aspects of land tenure in his days.     

The visual history of the Tableau Économique

This article looks at the history of the Tableau Économique from a visual point of view. It shows that Quesnay invented the Tableau to formalize visually his economic theory, and that he used different versions of the Tableau (‘Zigzag’, ‘Précis’ and ‘Formule’) for reasons of visual rhetorics. Accordingly, the visual history of the Tableau clarifies several problems identified by previous ‘ecommentors’. The paper concludes that the history of the Tableau as an image cannot be equated with that of Quesnay's abstract economic model without missing the Tableau Économique's raison d'être.     

Durkheim's sociology,Simiand's positive political economy and the German historical school

During the nineteenth century, French political economy eluded the historical method. In the light of such context, the way Emile Durkheim and François Simiand interpreted the contribution of the German historical school is worth considering. Following Durkheim's sociological approach, Simiand occupies center stage when it comes to examining how much this historical method has to offer to ‘positive political economy’ considered as an alternative to ‘orthodox political economy’ and to the new conception of economic history which was finding its way through the Annales' school.     

James Steuart and the making of Karl Marx’s monetary thought

Abstract

This paper analyses the influence of James Steuart on Karl Marx’s monetary thought. It deals more specifically with Marx’s rejection of an automatic mechanism that links variations in the quantity of money to their direct impact on prices. Steuart’s pioneering discoveries in economics inaugurate an anti-quantity theory tradition that Marx supported and which fed his own conception of money and credit. Here, we deal with the criticism of the assumptions of the quantity theory of money (QTM), the specifically social character of labour which creates exchange value, the distinction between the functions of money, the difference between income spending and capital advances, and the difference between simple circulation and reflux of money credit.     

Keynes,Sraffa and the labour market ∗

The paper argues that input–output analysis existed long before it received its name and Wassily Leontief made it popular as a tool of empirical analysis and a foundation of economic policy. It grew out of an attempt to ascertain the capacity of an economic system to reproduce itself and generate a surplus that can be used for various purposes. Primitive pronouncements are encountered in early civilizations, for example Mesopotamia, in terms of the ratio of the amount of grain produced and the amount of it used up, directly and indirectly. These ideas reappeared in a more sophisticated form at the time of the inception of systematic economic analysis in the 17th and 18th centuries in Europe and found a two-sector expression in François Quesnay's Tableau économique. The material input–output structure was then considered the core of the economic system that contained one of the keys to basically all other important economic phenomena and magnitudes. The way in which the potentialities embodied in the input–output structure, conceived as a system of production, have, or have not, been exploited over time define both the problems and perspectives of contemporary input–output analysis. Three aspects will be scrutinized more closely: the problem of value added, the treatment of fixed capital and the problem of technical change. Happily enough, while the problems are huge, the prospects are encouraging. There is no fear that input–output analysts will soon have to look for new fields of research because the old ones have been exhausted.     

Productive activities and the wealth of nations: some reasons for Quesnay's failure and Smith's success

The opposition between productive activity (agriculture) and unproductive ones (the others) underlies the Tableau économique. Smith borrows Quesnay's theory of production but deeply transforms it into a distinction between productive and unproductive labour. In any case, it seems quite natural to relate the increase of the wealth of a nation to the relative importance of productive activities vis-à-vis unproductive ones. Quesnay and Smith both share this view. However, if Smith is perfectly right in doing so, Quesnay has failed to prove a definite relation between the fraction of the revenue spent with respect to the productive sector, on the one hand, and the level or growth of the revenue, on the other. Differences in political philosophy may account for this unequal analytical performance.     

Cantillon and Ricardo effects: Hayek's contributions to business cycle theory

The distinctive line of argument in Hayek' business cycle theory can be characterized as a combination of the Cantillon effect monetary expansion on the price structure and the Ricardo effect of a shortage of consumption goods on the production of investment goods. This paper compares the original ideas of Cantillon and Ricardo with their adaptation and combination by Hayek. The differences help to expose fundamental problems in Hayek' theory and, more generally, in projects of integrating money and the business-cycle phenomenon with Walrasian general equilibrium theory.     

Alfred Marshall and François Perroux: the neglected liaison*

The richness François Perroux's economic theories have allowed the literature to highlight several connections between him and other authors. Among the names mentioned in the literature, one economist is conspicuous by his absence: Alfred Marshall. However, the relations between Marshall and Perroux are manifold and are far from accidental: not only because Perroux was a careful reader of Marshall but also and moreover because they both have an important common ground, which affected their perspectives. The main aim of this paper is to inquire into the aspects that characterise Marshall's and Perroux's approaches, stressing their affinities and underlining their common roots.     

On Marx's Analysis of Money Hoarding in the Turnover of Capital

The formation of money hoards, which underpins the demand for money, is typically treated by mainstream monetary theory as originating in the motives of the rational individual. In contrast, Marx's discussion of money hoarding treats hoard formation as a necessary tendency of capitalist production and circulation rather than as a result of the individual's predilections. Based on Marx's analysis, this article identifies several structural reasons for money hoard formation in the circuit of capital. It is also shown that Marx's discussion, despite its insight, suffers from a technical error in analysing the overlapping of production and circulation time in the circuit, and in drawing the implications for hoarding. Finally, it is argued that the broader significance of capitalist money hoarding lies in the foundations it provides for the emergence of the credit system.     

Alienation and the Soviet Economy,toward a General Theory of Marxian Alienation,Organizational Principles,and the Soviet Economy

The work of the French economist François Perroux has not given rise to a strong consensus in the academic world of economists. Thus, to appreciate the scope of Perrouxian thought, it is necessary to defuse the intellectual debate by exploring the ideas that are part of the current institutional issues. I seek to demonstrate the theoretical interest of the conceptualizations proposed by Perroux in terms of power analysis to understand the political, human, and social dimensions of the institutions of capitalism. In this view, I endeavor to shed light on the Perrouxian institutional legacy regarding the social cooperation/resistance issue, the institutional structure of production, firm theory, agonism theory, economic pluralism, and modern formalization techniques.     

On some ‘Austrian’ misreadings of Cantillon's notions of intrinsic value and market price

The article clarifies some aspects of the Cantillonian notions of intrinsic value and of market prices. Furthermore, the major flaws of the ‘Austrian’ interpretations put forward in recent years by Rothbard and Thornton are highlighted. This criticism provides an additional dimension to the view already expressed by Groenewegen against the new edition of Cantillon's Essai by Thornton. Finally, the connection between the Essai and mature classical economics is highlighted and the proposed ‘Austrian’ interpretation of Cantillon is strongly rejected.     

From bounties on exportation to the natural and market price of labour: Smith versus Ricardo

Abstract

The scope of this article is to examine the foundations of Smith's arguments and of Ricardo's criticisms on the issue of bounties on exportation. These criticisms are examined in the light of the counter-criticisms provided by a fictitious subject called Smith redivivus. These counter-criticisms highlight Ricardo's neglect of the differences between vérité de raison and vérité de fait and between the points of view of an individual and of society behind Smith's treatment of money vs. real, temporary vs. permanent and natural vs. market price of labour as labour and of commodities as products of labour.     

Interdependence and independence in Cantillon's Essai

Abstract

Cantillon's contribution to economic thought is widely understood to lie in his systematic examination of economic interconnectedness. The model developed here brings profits fully into price determination, casts additional light on Cantillon's treatment of distribution, and provides the first extended analysis of the policy recommendations found in part one of his Essai. These anti-urban policies are examined in relation to French urbanization and William Petty's analysis of Irish economic development.

Entrepreneurial risk-bearing is central to the Essai and this model, yet for Cantillon landlord tastes determine the economy's equilibrium position. This view is mirrored in his treatment of class mobility: only by becoming landed proprietors can entrepreneurs escape dependence and become independent or autonomous determiners of society. Indeed, social mobility actually accounts for the ‘independence’ of the landed proprietors as a group. Rent's special role stems not so much from the nature of land or agriculture – as Physiocracy would emphasize – as from the nature of the social forces determining its ownership.     

The Monetization of Profits in a Monetary Circuit Framework

Abstract

This paper offers an explanation of the realization of profits in money. Following Edward Nell's lead, we place Marx's spheres of production and circulation at the centre of the analysis. Production is represented à la Sraffa–von Neumann while circulation is analysed following the basic insights of the Franco-Italian theory of the monetary circuit. Once production has taken place, money is created by banks ex nihilo and then circulates through certain channels allowing the reproduction of the system and monetizing profits plus the payment of interest on long-term debts within one single circuit. The novelty of our approach lies in the treatment of the financing of investment in fixed capacity.