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Bold ideas. French liberal economists
and the State: Say to Leroy-Beaulieu
Gilbert Faccarello∗
Abstract. In 19th-century France, the nature and functions of the State
were an almost constant subject of debate among liberal economists. The
aim of this paper is to analyse and restate some hitherto neglected dis-
cussions and to discover some bold ideas that could form the hallmarks
of a French approach to the question. The enquiry starts at the turn of
the century with the seminal work of J.-B. Say and writings by A. L. C.
Destutt de Tracy, who both shaped the liberal reflection on public eco-
nomics during this period. But the works of these authors suffered from
important ambiguities. It is shown how subsequent liberal economists
Ch. Dunoyer, V. de Broglie, G. de Molinari, É. de Girardin, P. Leroy-
Beaulieu tried to deal with some of the unresolved questions and, mainly
on the basis of Say’s work, developed original approaches focusing on
the productivity of public spending, the role of the State as a factor of
production, utopian views of the State as a private company, and finally
the inexorable political and administrative logic of the modern electoral
State.
∗Published in The European Journal of the History of Economic Thought, 17(4), 2010,
719–758.
1
Bold ideas 2
1Setting the stage
In 19th-century France, the questions of the nature and economic role of the
State were extensively discussed among the various currents of thought con-
cerned with the public sphere. This troubled period had no shortage of op-
portunities to debate about economic and political subjects, because of a long
series of dramatic events that often gave rise to changes of political regime.
Remember that the turmoil of the 1789 Revolution and the episode of the
First Empire were followed by two Bourbon Restorations (1814 and 1815), the
second of which lasted until the July Revolution of 1830. This was followed
by the July Monarchy of Louis-Philippe, the February Revolution of 1848, the
Second Republic, the coup d’État by Louis-Napoléon Bonaparte and the Sec-
ond Empire (1852–1870), a transitional and ambiguous regime (1870–1879)
after the fall of the Empire and eventually the official establishment of the
Third Republic in 1879.
The question of the State was thus permanently on the agenda. The contro-
versies of the time were lively, not only between opposing political camps, i.e.,
to put it briefly, liberals against associationnistes or socialists, but also within
each camp. On the associationnist side there was little agreement between the
ideas of the Saint-Simonians, Joseph Fourrier, Pierre Leroux, Pierre-Joseph
Proudhon or Constantin Pecqueur for example. And the debates were no
less heated within the liberal camp. The liberal strand of industrialism1for
instance was by no means homogeneous on the question of the State, and
moreover certainly often at odds with the more moderate doctrinaires.2The
heterogeneity of positions among the liberals is a first relevant observation for
our subject.
1Jean-Baptiste Say and his followers: first Charles Comte – Say’s son in law – and
Barthélemy-Charles Dunoyer de Segonzac, and then most of the economists who later gath-
ered around the Journal des économistes and the Société d’économie politique. This current
of thought also includes political thinkers like Madame de Staël and Benjamin Constant
(Faccarello and Steiner 2008).
2The doctrinaires formed another liberal current of thought of the time and held sway
during the July Monarchy. They recognised a positive and leading influence of the State and
some educated elites upon the organisation and evolution of society. Among the most well
known figures are François Guizot and Pellegrino Rossi. Say often took a polemical stance
against them. In Politique pratique, some pages attack their position, equating them to the
English Whigs (cf. for example Say nd: 362–3). We can also find an echo of his critique in
Cours complet: “the social body is a living body by itself, by nature . . . It does not receive
its impulsion from an extraneous force” i.e., the government (Say 1828–29, II: 536).
Bold ideas 3
But when analysing the evolution of public economics in France during the
19th century, we are faced with a second significant observation. Together
with a huge and well-known development of economic theory, the second half
of the French 18th century also witnessed some important advances in public
economics. Yet these were almost completely ignored in the 19th century. In
contrast with English Classical economics, the French sensationist approach
– Turgot, Condorcet and Rœderer, for example, and even Graslin (Faccarello
2006, 2009) – developed theories that were only to be rediscovered by Italian
and Swedish economists a century later. To put it briefly, we can find in their
writings (i) a strong link between the nature of public finance and the kind of
political regime examined, with the conviction that a proper theory of public
finance is only possible for a modern, democratic State; (ii) a reflection on the
nature of public goods, externalities – generally speaking the free rider prob-
lem – and merit goods following what was later termed the “market failures”
approach; (iii) the idea that it is impossible to analyse the income side of the
budget independently of the expenditure side; (iv) a quid pro quo theory of
taxation; (v) the determination, at the macro level, of the optimal amount of
public expenditure and taxation – and, in this context, of the first equilibrium
at the margin. At the turn of the 19th century, the development of public
economics along these lines apparently stopped in France. With the exception
of some developments by the ingénieurs économistes, it seems that most lib-
eral economists were easily satisfied with a vague reference to public or merit
goods, without any further precision.3
To illustrate these observations, one episode in the debates within the So-
ciété d’économie politique is of particular interest, for two reasons. Firstly
because these discussions arose just after the 1848 Revolution, during the trou-
bled years of the Second Republic: the dramatic events reminded economists
that they had to clarify and develop their position(s) on the question of the
State. And secondly because of the publication of provocative texts by two
important liberal figures of the century, namely Frédéric Bastiat’s pamphlet
“L’État” (Bastiat 1848) and two writings by Gustave de Molinari:4a paper,
“De la production de sécurité”, and his celebrated book, Les soirées de la rue
3The diffusion of the Wealth of Nations in France (see Faccarello and Steiner 2002, and
Béraud, Gislain and Steiner 2004) may have also played a part in this evolution – an issue
beyond the scope of this paper.
4A young Belgian economist who had joined Bastiat some years earlier in his fight for
free trade . . . and who was still publishing in 1911.
Bold ideas 4
Saint-Lazare (Molinari 1849a and b). While Bastiat’s assertions were obvi-
ously excessive,5the ideas put forth by Molinari (see below, section 3) brought
the analytical question of the State back to the fore, and prominent members
of the Société d’économie politique felt obliged to react. An extensive and crit-
ical review of Molinari’s book was published in the Journal des économistes
(November 1849: 364–72), and a footnote by the editor was added to Moli-
nari’s paper describing it as utopian but at the same time acknowledging the
necessity to discuss the subject:
As utopian as the conclusions of this paper may appear, we believe that
we must nevertheless publish it in order to draw the attention . . . to
a question which, until now, has only been dealt with incidentally and
which should now be broached more accurately. (in Molinari 1849a: 277)
Discussions were organised at the Société d’économie politique, reported
as usual in the “Chronique” of the Journal des économistes. “M. Say6. .
. proposed to discuss . . . , the question of the limits of the functions of
the State and of individual action; and to know whether these limits are well
defined . . . M. Say said that this subject was suggested to him by his reading
of the book just published by M. Molinari” (Journal des économistes, October
1849: 315). The discussions about “one of the most delicate questions one
could ever consider” (ibid., January 1850: 202) continued and were reported
in the 1850 January and February issues of the Journal. A paper by Ambroise
Clément, “Des attributions rationnelles de l’autorité publique” (February 1850)
was supposed provisionally to end the debates.7
All these debates produced no positive results. The only thing liberal
economists had in common seems to have been their hostility to all kinds
of socialism – but the definitions of socialism could greatly vary. The opinions
expressed are rather vague, no theoretical developments are advanced to deal
5For example: “The state is a great illusion by means of which everybody endeavours
to live at the expense of everybody” (Bastiat 1848: 332).
6Horace Émile Say, Jean-Baptiste’s son.
7The discussions, however, resumed some months later when Charles Dunoyer, at the
Académie des sciences morales et politiques, read the text of the entry “Government” he
had written for the first volume of Coquelin and Guillaumin’s Dictionnaire de l’économie
politique. A debate followed – especially with the philosopher Victor Cousin, a doctrinaire,
and the ex-Saint-Simonian economist Michel Chevalier – the content of which can be found
in a series of two articles by Dunoyer, with introductions by Joseph Garnier, on “Les limites
de l’économie politique” (Dunoyer 1852a, 1853a).
Bold ideas 5
with the question of public economics and only the general liberal position is
eventually restated. During the discussions, Antoine-Élisée Cherbuliez eventu-
ally tried to draw the attention of his colleagues to the necessity of a coherent
theoretical approach and to find out “the general and, so to speak, higher and
leading principles that could help to determine whether a given function should
be carried out by the government or left to the private industry.” (Chronique,
Journal des économistes, January 1850: 204) But his own solution is mainly
rhetorical (ibid.).
In spite of all this, however, certain French liberal economists of the time
cannot be accused of a lack of originality when dealing with the ‘raison d’être’
of the State – the point on which I concentrate here. My opinion is that
the ideas put forth by some of them are of high interest. Leaving aside the
best-known authors8(with the exception of Jean-Baptiste Say), and analysing
instead some allegedly “minor” figures, I think it is possible to uncover some
bold ideas that could form the hallmarks of a French liberal approach to the
question.
My enquiry inevitably starts (section 2) at the very turn of the century with
the seminal work of Say. Another author, however, was also of importance at
that time and must be taken into account: Antoine Louis Claude Destutt de
Tracy,9whose work constitutes the most direct and explicit continuation of
the sensationist approach of the previous century. Say and Destutt symbolise
the first generation of liberal thinkers under the Restoration, who tried to
deal with the question of the State in a coherent way in the perspective of
political economy and on the basis of a subjective theory of value. At different
levels, they shaped the reflection about public economics during this period.
Moreover, analysing them together allows for a clearer presentation of the more
complex ideas advanced by Say, and their diversity. One of the main ideas Say
and Destutt have in common with most of the liberal camp of the time is that
the State, while a useful institution, is nevertheless an unproductive entity.
However, their positions involve important and unresolved ambiguities.
I then examine some of the positions ensuing from these ambiguities. Sec-
tion 3 deals with two kinds of reactions expressed during the first part of the
8Dupuit, Cournot, Walras for example, whose positions are well-known.
9Auguste Walras still writes of the “so imposing authority of M. de Tracy” (1850: 566),
and stresses that the economic science is greatly indebted “to the works of Quesnay, Turgot,
Adam Smith, Ricardo, J.-B. Say and Destutt de Tracy” (1849b: 537).
Bold ideas 6
century. Firstly, some liberals, responding to the allegations of Smith, Say
and Destutt, forcefully developed the idea of the productive character of the
State’s activities. Using different arguments, this thesis is put forward by both
the industrialist Charles Dunoyer and the doctrinaire Victor de Broglie.10 Sec-
ondly, and again with different arguments, Gustave de Molinari and Émile de
Girardin proposed the transformation of the political authority into a commer-
cial company. Their utopian position pushed the liberal logic of the market to
an extreme degree and formed two related answers to Say’s dream of a society
without a conventional State.
As a conclusion, I present in section 4 a third kind of position, expressed to-
wards the end of the century, at a time when a democratic parliamentary
regime seemed stabilised: namely, Paul Leroy-Beaulieu’s11 strong reaction
against any idealisation of the State and its functions. Elaborating upon some
ideas closely akin to those of Say when he noted how the State was functioning
in practice – focusing his attention on the real process of decision-making by
politicians and civil servants –, Leroy-Beaulieu stressed the inexorable logic
of the modern electoral State. His analysis, together with Say’s views on the
subject, forms one of the first coherent expressions of public choice analysis.12
10 V. de Broglie – Madame de Staël’s son in law – was a minister and prime minister
under the July Monarchy.
11 P. Leroy-Beaulieu was Michel Chevalier’s son in law. As a student, he spent the
academic year 1864–65 in Bonn and Berlin. He had a good knowledge of the German
economic literature.
12 In the following pages the words “government” and “State” will generally be considered as
synonyms. The vocabulary used by the authors is not fixed. At the beginning of the period,
Say makes a distinction between the government (the political structure of the country and
the men in charge of it) and the public or the nation (that represents the general interest).
He uses “State” most often for government, but sometimes also for nation. At the end of
the period, Leroy-Beaulieu most of the time speaks of the State. In the Dictionnaire de
l’économie politique, the entry “Gouvernement” (Dunoyer 1852), is substantial, while “État”
(Coquelin 1852) is rather brief. Coquelin’s text states that “the State is the political body,
the head of which is the government. To define and characterise it, we can thus refer to
the entry Government where its natural and legitimate attributions are clearly determined”
(ibid.: 733–4). Later, the Nouveau dictionnaire d’économie politique has only one entry,
“État” (Leroy-Beaulieu 1890) and no “Gouvernement”.
Bold ideas 7
2On some initial ambiguities: Say and Destutt
de Tracy
Say published the first edition of his Traité d’économie politique in 1803, but
because of imperial censorship, the second edition (1814) had to wait until
the fall of Napoléon. These first two editions, together with the subsequent
ones (1817, 1819, 1826 and the posthumous 6th edition: 1841) and some other
works like Cours complet d’économie politique pratique (1828–29), played a
fundamental role in French intellectual life, in continental Europe and even
in the United States of America, where the Traité was highly appreciated by
Thomas Jefferson and James Madison.13 Destutt de Tracy, for his part, was
a celebrated philosopher thanks to the publication of the first three parts of
his Éléments d’idéologie (1801–1805). Again, Napoleonic censorship prevented
publication of the fourth and fifth parts (namely the Traité de la volonté et
de ses effets, where economic matters are dealt with), until 1815. Of great
interest is also Destutt’s Commentaire de l’Esprit des lois de Montesquieu,
written more than 10 years before its publication in France in 1819, and before
the Traité de la volonté. Both books were very quickly published in America
thanks to Jefferson.14
2.1 The basic function of the State
In the eyes of Say and Destutt, the question of the nature of the State and its
effects on the economy should be dealt with, like any other question of political
economy, in relation with the first principles of the new science. These funda-
mental principles alone could generate the right analysis. In consequence, for
our authors the main problem was to determine whether the State is necessary
or useful in a free market society, and if it is, whether and to what extent it is
productive.
13 On the different editions of Say’s Traité, and their translations, see Steiner (2006) and
Potier (2006).
14 The Traité de la volonté was published in 1817 as A Treatise on Political Economy, the
translation being revised by Jefferson. As for the Commentaire, its American translation
by Jefferson – A Commetary and Review of Montesquieu’s Spirit of the Laws, 1811 – was
published long before the French original text. It is also to be noted that, in France, an
unauthorised and anonymous edition of the French version was published in 1817 and was
most favourably reviewed in Le Censeur Européen (Thierry 1818).
Bold ideas 8
On the first point, they are affirmative. The usefulness of a State lies in its
basic and traditional functions of police, justice and defence: “the advantages
we seek with the establishment of a government . . . boil down to a single
one: safety” (Say nd: 331). Safety means the defence of private property, but
also more fundamentally the achievement of liberty.
As the first condition of the state of society is property, because property
only encourages production which is the condition of our existence, any
infringement on property is an infringement on the entire social body. .
. . The defence of property thus not only includes the defence of goods
but also the defence of persons and faculties, which encompasses liberty
itself. I say that the main utility of governments lies in the defence of
the property of the citizens, as I define it. (Say 1819: 106)
Destutt is of course of the same opinion (Destutt 1815: 196). Besides this
fundamental task, however, the question arises of whether the government can
exercise additional activities such as education, some carefully designed public
relief, encouraging the arts and sciences, and of course financing public works
like the construction of roads, bridges and canals. A kind of rule, inherited from
Turgot and Smith, asserted that the State should not engage in any activity
that could be performed by private entrepreneurs. In a sense, Destutt and Say
agree: the State, dealing with money which is not its own and having to rely
on people who, unlike entrepreneurs, have no direct interest in the success of
the enterprise, is in fact too big and careless a competitor vis-à-vis the other
entrepreneurs (Say 1841a: 382 & sq, 932; 1828–29, II: 323 & sq). Negative
externalities will be imposed on the private sector and public expenditure will
necessarily be wasted. As Say declares repeatedly, “government is itself a poor
producer” (1841a: 385), “private individuals work with less expenses than the
government” (ibid.: 382). This statement was accepted as a kind of axiom by
Destutt and most of the liberals of the time.
But some situations are not so clear-cut and there is room for discussion.
What about the possible additional public activities just listed above, that
are not an essential part of the State’s mission? The position of Destutt on
this point is rather radical and close to the common understanding of Smith
in France. As far as public works are concerned, for example, he thinks that
whenever it is possible to sell their services to users in the market, and thus
recoup the expenses incurred in production, with a profit, they must also be
left to the private sector, which can carry them out “with more intelligence
and economy” (Destutt 1815: 234):
Bold ideas 9
. . . if, as it frequently happens, the government which defrays the
expense of construction, profits therefrom by establishing tolls, which,
besides the expense of repairs, produces the interest of its money, and
thus nothing is done which individuals would not have done with the same
conditions and the same funds, if they had been permitted to do so; it
may be said, that these individuals would almost always have attained
the same end, with less expense (Destutt 1811: 265).
Destutt is also doubtful of the utility of public encouragement of the arts and
sciences. While the sums devoted to them are not important, their usefulness
is questionable.
For it is very certain that in general the most powerful encouragement
that can be given to industry of every kind, is to let it alone, and not to
meddle with it. The human mind would advance very rapidly if only not
restrained; and it would be led, by the force of things to do always what
is most essential on every occurrence. To direct it artificially on one side
rather than on another, is commonly to lead it astray instead of guiding
it. (Destutt 1815: 234)
Say’s opinion is more balanced. Actions in favour of education and science,
for example, must be financed by the State – in a non-monopolistic manner
– but only at the extremes of the educational system. Government should
take care of primary education because it is a merit good that is necessary
to the formation of any citizen. It should also finance some higher education
and research (academies, encouragements to arts and sciences) because their
beneficial effects on production and welfare, while certain and of fundamental
importance,15 are not immediate and would therefore be neglected by private
business. Intermediate education is not a matter for public intervention: cit-
izens do not need to have encyclopaedic knowledge, but only to master the
science relative to their profession. And they are interested in acquiring this
knowledge by themselves.
As for public works, Say is very much in favour of them. In a way, unlike
Destutt, he continues the French tradition inherited from the previous cen-
tury. There are certain rules that must be respected, however, to ensure good
management. In the first place, as Turgot affirmed, the realisation of any such
15 Remember the role the scientist plays in Say’s approach, in conjunction with the en-
trepreneur and the worker.
Bold ideas 10
public work, while financed by the State – either at the national or local level
– must be entrusted to the private sector. Say is decisively hostile not only
to public companies but also to a public department of civil engineering like
the celebrated French Corps des ingénieurs des Ponts et Chaussées (see for
example Say 1828–29, II: 318–19).
In the second place, as for any production, the benefits generated by a
public work must at least be equal to the costs. “Establishments made at the
expense of the public”, Says writes, “must generate a good, for the public,
equivalent to the sacrifices imposed on them on this subject. While the costs
of first establishment are more an investment than an expense, the public
is entitled to require from those who impose this forced investment on them
that the advantage they will get from it be at least equivalent to the revenue
they would have obtained otherwise.” (1828–29, II: 298) But this rule is still
to be specified. When comparing the costs and the advantages of a public
intervention, the State must also take into account all the externalities resulting
from its implementation, at the different levels of the community considered
as a whole.
The entire society must pay for those establishments that generate ad-
vantages that are too divided in order for each consumer to be able to
appreciate them and to pay for them; but that at the same time are
so much multiplied that the possibility to enjoy them is of the greatest
benefit to the public. (ibid.: 319–20)
What does this mean? In brief, two kinds of works are considered. The first
and most important concerns communication routes and the immense advan-
tages the population can get from them in terms of production and welfare.
. . . although government is itself a poor producer, it can at any rate
give a powerful stimulus to private production, by well-planned, well-
conducted, and well-maintained public works, particularly roads, bridges,
canals, and harbours. (1841a: 385)
But why must the State worry about them? Could they not be profitably
undertaken by private initiative, as Smith and Destutt think? Say disagrees for
two reasons. Firstly because, as noted above, people are sometimes too short-
sighted to realise that works are capable of generating more advantages than
they cost. This happens either because they cannot properly judge the future
Bold ideas 11
advantages of an undertaking like a communication route, or because they
only take into account the monetary returns they can get from it, disregarding
all the potential positive externalities of the project. “It seems to me that in
England it is too easily thought that a public building, a bridge, a canal . . .
that does not yield the interest on the investment and the costs of maintenance
is not worth being constructed.” (Say 1828–29, II: 304)
But should we not, at least in many cases, put the communication routes
among those establishments of which Smith himself says . . . that, while
greatly beneficial to society in general, nobody in particular thinks to be
interested enough in their existence to pay their costs? (ibid.: 305n)
Whence a second argument in favour of the State financing of such public
works. Even if such works could generate profits and be done privately, this
would not be a good solution because many people who might have used a
route would refrain from doing so because they are unwilling or unable to
pay a toll. This is why Say is, in general, against tolls: they exclude many
people from using the route and prevent the realisation of important positive
externalities.
If – on the pretext that the interests on the investment and the costs
of maintenance of a public establishment must be reimbursed by those
who use it i.e., by means of tolls . . . – many people are deterred from
using it, they are deprived of this multitude of indirect benefits that
could have been enjoyed, and that, multiplied during centuries in the
case of a lasting establishment, defies any calculation. The entire nation
is deprived of the principal merit of the establishment. (ibid.: 305)
Say also examines a second type of public works. This concerns expenses
to do with some sort of redistribution of wealth resulting from the degree of
civilisation and increasing total welfare. Consider for example a bridge or a
town park, for the use of which you cannot decently ask any toll or entrance fee,
or the construction of underground sewers to remove the wastewater flowing
through the streets – work for which it is impossible to ask any direct payment.
There is here a source of enjoyment granted to those who could not pay for it:
. . . we must consider it as an increase of enjoyment equivalent to an
increase in the income of the least wealthy class of the nation. Estab-
lishments of public utility are thus a forced accumulation imposed on the
Bold ideas 12
wealth of the citizens in proportion to their faculties, and handed out
to the enjoyment of the least wealthy class, not in proportion to their
faculties but to the need they have of them. (ibid.: 298)
2.2 The State as an unproductive consumer
In spite of these – and other – differences between the positions of our authors,
however, and independently of any consideration of merit goods and external-
ities, an important problem remains. “The question is, to know what effects
these revenues, and these expenses [of the State], produce on the public riches
and national prosperity.” (Destutt 1815: 196) This is the central question of
the productivity of public spending. This relates, of course, first of all to a
fundamental aspect of Say’s doctrine: the meaning he attaches to production.
As Destutt reminds his readers,
. . . it is very important in political economy, to know what we ought
to understand by the word production . . . This question . . . has
been treated of by many able men, at the head of whom we should place
Turgot and Smith. But . . . no one has thrown so much light on it as
Mr. Say, the author of the best book I know on these matters. (Destutt
1815: 19)16
As we know – and this is a point Say and Destutt stress again and again
– production means the production of utility. “In this sense, then, the word
production must be understood in political economy . . . Production is the
creation, not of matter, but of utility.” (Say 1841a: 81) “This is what we should
understand by to produce: It is to give things an utility which they had not.
Whatever be our labour, if no utility results from it it is unfruitful. If any
results it is productive.” (Destutt 1815: 20)
. . . since the result of all our labours is never but the production of
utility, . . . we are all producers . . . because there is no person so
unfortunate as never to do any thing useful. (ibid.: 35)
16 The English translation goes on: “although he [Say] leaves still something to be desired”.
This qualification cannot be found in the French text, whatever the edition. Could it be
considered as an addition by Jefferson? It is also to be noted that Destutt refers to the
first edition of Say’s Traité because his own texts were written before the publication of the
second edition in 1814.
Bold ideas 13
But the notion of production also takes on another important aspect. While
to be productive is to generate some utility, whatever that might be – “In
general we may say that whatever is capable of procuring any advantage, even
a frivolous pleasure, is useful” (Destutt 1815: 27) –, this utility does not have to
be embodied in a material object. Although most products in markets assume
a material shape, many do not have this property: Say calls them produits
immatériels. In spite of the fact that immaterial products are consumed at
the very moment of their production, and that they cannot be accumulated
(see however below, section 3), their producers are obviously considered as
productive – this being stressed in opposition to Smith.
Besides these definitions of production and immaterial products, another
concept is relevant here: that of consumption.17 This is simply the oppo-
site of production, to consume a product meaning to destroy its utility. But
this destruction itself can be either “reproductive” or “unproductive”. The loss
of utility that results from consumption, Say stresses, always finds a kind of
compensation, i.e., a pleasure. “This pleasure can be of two different kinds. It
consists either in the immediate satisfaction of a need: this is the pleasure gen-
erated by unproductive consumption; or in the reproduction of another prod-
uct that can be considered as a postponed satisfaction: this is the reproductive
consumption.” (1841a: 863) Hence the definitions we find in the “Épitomé des
principes fondamentaux de l’économie politique”, included in the second and
subsequent editions of the Traité d’économie politique as an appendix:
There are thus two kinds of consumption: 1°The reproductive consump-
tion which destroys a value in order to replace it by another one; 2°The
unproductive consumption which destroys the consumed value without
replacement. The first is a destruction of values generating some other
values inferior, equal or superior in amount to that destroyed . . . Un-
productive consumption is a destruction of values with no other result
than the pleasure it gives to the consumer. (1841b: 1100)
Now, with these basic definitions in mind, how should one characterise the
activity of the State? As an unproductive consumer. This is very clear in
Destutt de Tracy: “In every society the government is the greatest of con-
sumers.” (Destutt 1815: 195). “Its expense does not re-produce itself in its
17 The words “consumption” and “expense” are used as synonyms on many occasions. Say
is aware they can have different meanings: see 1841b, seventh part, Chapter III: “Of the
words Expense and Consumption”. He admits however that he can follow the common usage
and identify the two (ibid.: 206; see also ibid, 249).
Bold ideas 14
hands . . . , as in those of industrious men. Its consumption is real and
definitive. Nothing remains from the labour it hires.” (ibid.: 233)
I conclude, that the whole of the public expenses ought to be ranged in the
class of expenses justly called sterile and unproductive, and consequently
that whatever is paid to the State . . . is a result of productive labour
previously executed, which ought to be considered as entirely consumed
and annihilated the day it enters the national treasury. (ibid.: 234–5)
J.-B. Say is no less affirmative. In Book III of his Traité, Chapter IV – “Of
the Effect of Unproductive Consumption in General” – he declares that “we
shall only deal, in this and the following chapters, with such consumptions as
are effected with no other end or object in view, than the mere satisfaction
of a want, or the enjoyment of some pleasurable sensation – consumptions
that are called unproductive or sterile.” (1841a: 881) Among the “following
chapters” alluded to are precisely the ones devoted to the public consumption
or expenses.18
If I have made myself understood in the commencement of this third
book, my readers will have no difficulty in comprehending, that public
consumption . . . is precisely analogous to that consumption, which goes
to satisfy the wants of individuals or families. In either case, there is a
destruction of values, and a loss of wealth. (ibid.: 921)
2.3 A fundamental ambiguity
It seems that there is a contradiction here. On the one hand, any activity
which produces any kind of utility is said to be productive. On the other
hand, the outcome of the activities of the State, which can be characterised as
immaterial products, are not subsumed in this category despite their utility to
society. Public consumptions are made “for the common utility”, Say admits
(1841a: 921; see also 930, 937). The loss which results from these consumptions
must be balanced “by the advantage that society gets from them” (ibid.: 920)
18 Chapter VI, “Of the Nature and general Effect of Public Consumption”, and VII, “Of
the principal Objects of National Expenditure”. Until and including the fourth edition of
the Traité in 1819, these two chapters were merged in a single chapter divided into two
sections, entitled “On Public Consumption”. This was changed in the fifth edition of 1826.
But the English and American editions – from 1821 on – are based on a translation by
Charles Robert Prinsep of the fourth edition and thus still retain the former division.
Bold ideas 15
even if, very often, this advantage cannot properly be evaluated, and not only
because there is no market for them (ibid.: 971). Referring to the various
activities of the State, Destutt declares for his part that “all this is very useful
without doubt . . . ; but nothing of all this is productive.” (Destutt 1815:
233) What is then the rationale for such a position? Two hypotheses can be
formulated which involve either a modification in the concept of productivity,
or a peculiar conception of “the public” and the State.
Let us first deal with the definition of productivity. If the State is only
considered as an unproductive consumer although it produces useful imma-
terial services, this could be because the production of some kind of utility,
while necessary, is no longer sufficient to describe it as productive. This is the
case in Destutt de Tracy, with two main complementary lines of reasoning.
A first argument refers to the fact that “almost the whole of the expense [of
the State], all that which is employed in paying soldiers, seamen, judges, the
public administration, priests and ministers . . . is absolutely lost; for none of
those people produce any thing, which replaces what they consume.” (Destutt
1811: 264) This implicitly emphasises the non-marketable nature of the public
immaterial products: they are not sold in market, the expenses cannot thus
be reimbursed and taxation is not seen in a quid pro quo perspective.
This is confirmed by the fact that the argument goes further, stressing that
the State does not generate any monetary profit in the way that private com-
mercial activities do. Consequently, “government cannot be ranked amongst
the consumers of the industrious class. The expenditure it makes does not
return into its hands with an increase of value. It does not support itself on
the profits it makes. I conclude, then, that its consumption is very real and
definitive; that nothing remains from the labour which it pays” (Destutt 1815:
196–7). Forgetting that he had asserted that “reproductive consumption . . . is
a destruction of values generating some other values inferior, equal or superior
in amount to that destroyed” (see above), Say also stresses the criterion of a
positive profit:
There are not two kinds of economy, any more than two kinds of honesty,
or of morality. If a government or an individual consume in such a way,
as to give birth to a production of value larger than the value consumed,
they have a productive activity. (1841a: 925)
Finally, another conception of productivity can be found in Say’s last work,
Cours complet d’économie politique pratique. There, on the occasion of the
Bold ideas 16
discussion of the public expenses, a new criterion for productivity is presented:
the production of a capital.
Reproductive public expenses all amount to an accumulation of a rev-
enue in order to create a capital or to maintain a capital in its integrity.
Unproductive public expenses are aimed at the satisfaction of one of the
ordinary needs of the social body, and the value employed for this can
only be used once . . . Thus the expenses devoted to the construction
of a beautiful road, a bridge, are reproductive because the value is not
consumed immediately. (1828–29, II: 251)
All these definitions of productivity – an activity is productive when it
simply generates some utility, or when expenses return to the producer, or
when it generates a monetary profit or forms a capital – explain why Destutt’s
and Say’s analyses are ambiguous, and why they sometimes hesitate in their
classifications. Take, for example, Destutt’s judgment on public works. In
Commentaire they are supposed to “enhance the value of land, facilitate the
transportation of goods, and encourage industry. It is certain that expenses
of this kind, directly increase the national riches, and are, therefore, in real-
ity productive” (Destutt 1811: 265). Consequently, while “almost all public
expenditures” are unproductive (ibid.: 265–6), some are not. In Traité de la
volonté, however, the judgment is different. These expenses, he writes, while
contributing “powerfully to public prosperity”, “cannot be regarded as directly
productive in the hands of government, since they do not return to it with
profit and do not create for it a revenue which represents the interest of the
funds they have absorbed” (Destutt 1815: 233–4) – or otherwise they should
not have been undertaken by the State. Consequently, “the whole of the pub-
lic expenses” are now considered as unproductive (Destutt 1815: 234). Say’s
views evolve in the opposite direction. In the Traité, he implicitly thinks that
public works are unproductive. His opinion is modified in Cours complet (Say
1828–29, II: 251, as just quoted above).19
19 It is true that the Traité d’économie politique includes assertions such as: “The total
national consumption may be divided into the heads of public consumption, and private
consumption; the former is effected by the public, or in its service; the latter by individuals
or families. Either class may be productive or unproductive” (1841a: 860). But in this
book, public works are dealt with in the chapters devoted to unproductive public expenses.
Therefore, the possible productivity of public consumption probably refers here to the pos-
sibility for the State to engage in normal marketable activities of production, such as the
tapestry manufacturing of the Gobelins, or the porcelain manufacturing of Sèvres, which it
should not be allowed to do.
Bold ideas 17
Besides the fluctuations in the definition of productivity, the other possi-
ble explanation of the general characterisation of the public expenses as un-
productive concerns the meaning of what is called “the public” or the State.
Public consumptions, it is said, aim at satisfying “collective needs of a town,
a province, a nation” (Say 1821: 399). They are consumed “for the public”
(ibid.), just as private consumptions are made “by” or “for” the private indi-
viduals.
Is it the public itself that is consuming the service of the public servants?
It is; or at least it is in the interest of the public that this service is
consumed. (Say 1821: 408)
What does all this mean? Here again, we face some ambiguities in Say’s
texts. One possible interpretation is to conceive “the public” as a collective
body that at the same time buys material and immaterial products in the
market and itself consumes the services they generate.
Besides the needs of individuals and of families . . . , the collection of
the private individuals also possesses, as a society, its own needs which
give rise to public consumptions: it buys and consumes the service of the
administrator . . . , of the soldier, . . . of the civil or criminal judge.
(Say 1841a: 921)
When individuals buy clothes and food, they enjoy its consumption. When
these items are bought for the troops, “it is the State which enjoys them. It is
easy to apply the same reasoning to all kinds of public consumptions” (ibid.:
923). In this perspective, “the public” or the State is necessarily unproductive.
2.4 ‘Il mondo va da se’
Besides this general characterisation of public expenses and the role of the
State, it is possible to find in Say some interesting additional reflections sug-
gesting new perspectives for these topics, later developed, for example, by
Molinari or Leroy-Beaulieu. Many of these reflections can be found in his
manuscripts, either of his teachings at Athénée or at Collège de France, or of a
book he planned on Politique pratique. These manuscripts reveal a rather more
radical and utopian Say than readers of his published works might imagine.
They also reveal an aspect that is in fact true for almost all the economists
Bold ideas 18
and political philosophers of the century: the fundamental importance of a
reflection on the dramatic events of the French Revolution. Three main points
are of interest for our subject. According to Say, (i) a government, while use-
ful, is not a necessary institution; (ii) the activities of the government should
be understood within the context of a general theory of the division of labour;
and (iii) no reflection on public economics can avoid investigating and taking
into account the real decision processes at the level of the political power or
administration.
Say’s philosophy is best expressed by the Italian motto “Il mondo va da
se” (the world goes by itself), which he quotes both in the original language
and in French: “Le monde va tout seul”. The basic bond between citizens,
he stresses, is not political but economic, because “the main link in society is
the mutual need that all the productive classes have of each other” (Say 1819:
106). This is why it is possible to imagine a society without any government:
“government is no essential part of a social organisation. Note that I do not
say that government is useless; I say that it is not essential; that society can
do without it – provided that the associated men mind their own business and
let me mind my own one, society could possibly do without government” (Say
1819: 101).20 If government exists, this is only because of the “foolishness”
and “injustice” of men who cannot refrain from encroaching upon each others’
rights– hence the question of safety. But, while a “necessary evil” (Say nd: 348),
it is a mere “accident” (1819: 101) and its usefulness is in fact “in proportion to
our stupidity” (Say nd: 329). Il mondo va da se, “we are never better governed
than when there is no government” (ibid.: 325).
Say interpreted recent historical events as confirming his opinion – or dream.
On three or four occasions during the Revolution, he remarks, political author-
ity was nonexistent and there was no government. “Well, in no other period
the essential functions of the government were better achieved. All was work-
ing as usual, and better than usual. The greatest evils that we had to endure
happened when we were governed, too much governed” (Say 1819: 101). And
this is also true for safety, the main task of the political authority: (Say nd:
20 This point is (cautiously) repeated in Say’s last work, the Cours complet d’économie
politique pratique. An appendix to the book, the “Tableau général de l’économie des sociétés”,
in which Say sums up the most important results of his analyses, is divided into two parts:
the first deals with the “organes essentiels” to society, and the second with the “organes
accidentels”. Government is included among the latter (Say 1828–29, II: 528; see also ibid.:
267).
Bold ideas 19
331): “crimes have never been more severely repressed than at the time the
police found itself dissolved; everybody then did his own policing, and order
has never been better kept” (ibid.: 327–8). Just “leave the policing to society”:
Look at what happens in the streets of a town when a man beats a
woman, when a burglar breaks in a shop: everybody apprehends the
delinquent. Look what happens when two merchants have a dispute of
interest: both of them appeal to arbiters. The arbiters deliver a verdict
and the dispute comes to an end. (ibid.: 324)21
The defence of the country against foreign aggression should also be the
business of the people: a numerous and permanent army is not necessary. Say
knows that his opinion on this subject could seem paradoxical to his audi-
ence. “I would advise you to beware of my ideas on this point. They are not
very diplomatic.” (Say 1819: 108) He nevertheless insists that “a danger only
threatens those who look for it, that nothing is more risky for a country than
a permanent army and that a great nation which is not constituted in order to
disturb the peace of the others is never attacked” (ibid.) The best defence lies
in the will and courage of the citizens, the task of the government in this mat-
ter – “if it is really national and if its interests are fully identical with those
of the nation” – being to coordinate their efforts (ibid.). In Cours complet
(1828–29, II: 278–93), Say develops his ideas against permanent armies and in
favour of a system based on a militia.
The example of safety is all the more interesting since, in one passage,
Say gives his readers to understand that the functions of the State could be
performed by private entrepreneurs. In this perspective, these functions are
seen as specialised activities within the context of the division of labour. This
idea had already been put forth by Graslin, in 1768, in his Dissertation of
Saint Petersburg. In his opinion, the activities of the State were a result of
the process of the division of labour and should consequently be considered
like any other sector of production. The idea of the State as a neutral entity
aiming at the general or public interest was thus rejected. “The protective
power itself, while instituted for the safety and peacefulness of all, has its own
private interest . . . This interest is tied to the interest of all and in this
sense it is essential for people that this power be in a condition to perform its
21 In Cours complet, Say suggested extending the system of arbiters to cover all civil
justice (1828–29, II: 273 et seq.).
Bold ideas 20
function. But this can also be said of the interest of any class because; in the
same way, it is essential for all other classes that each one in particular be in
the condition to provide the object in its charge.” (Graslin 1768: 142) Say’s
assertions go along the same lines.
The world goes by itself. Society consists in different useful professions
which have various functions. One of these functions is to protect in-
dividuals, their safety, their rights. It is as just a profession as the one
entrusted with restoring health when one is sick. (Say nd: 327; see also
1828–29, II: 254)
Applied to safety, this means for example that the domestic protection
of citizens could be entrusted to private companies when the collective self-
policing described above is not sufficient. “Give to entrepreneurship the task
of guarding that you cannot accomplish yourself, and cancel the contract if
the entrepreneur does not protect you from some attack or at least does not
hand the perpetrators over” (Say nd: 325).
We are thus led to a final point which explains in part, also, Say’s hostility
towards any government – “government must be the object of a permanent
mistrust” (ibid.: 634). Look at the State that really exists. Who are the people
in power? Who are the civil servants, and how do they work? This questioning
is important if one is to learn how and by whom public decisions are made. The
French Enlightenment had an answer: at the different levels of the State, things
should be decided by politicians or civil servants whose only aim is the general
interest. Of course, 18th-century theoreticians were not so naïve and did not
think that this was always the case: but they believed that this behaviour was
possible and that the development of economic and political sciences could
help to improve both knowledge and the decision-making process. Hence, for
example, Condorcet’s constant endeavours to discover voting methods that
would be at the same time democratic and efficient in delivering the “true”
decisions. The experience of the French Revolution destroyed such hopes in
the eyes of most people. Say was one of them: the problem of public decision-
making had to be approached in a totally different way.
Like people in any other profession, politicians and civil servants have their
own private interests that do not always match the general interest. Rulers, like
other people, have their own passions, their own prejudices and an education
often “a hundred times worse than ignorance” (Say 1819: 104). Moreover, they
Bold ideas 21
are members of a specific class or cast, and of a given family. “As interest is all
the more powerful as it is limited, it is to be feared that each of them sacrifice
the interests of the nation for those of his cast or family” (Say nd: 635). This is
the reason why “it is impossible to have an exact idea of public finance without
carefully distinguishing the interest of the government from that of the State”
(ibid.). In Politique pratique this is a leitmotiv.22 “The interest of the public
is what tends to achieve the greatest good for the greatest number of people.
The dismal interest is the interest of those in power” (ibid.: 637–8).23
Moreover, government has a natural tendency to increase its prerogatives
and domain of action. The same thing happens with civil servants. They tend
to widen their remit and their power: and most of the time “they do not have
any scruples for this spirit of invasion because, in general, they have upright
intentions and think to do good. They do not suspect that it is an evil to do
the good badly” (Say 1819: 114) – an echo of Condorcet’s motto: “Il ne suffit
pas de faire le bien, il faut le bien faire” (“It is not enough to do good; it must
be done well”) (Condorcet 1779: 373). And so the “administrative cancer” (Say
1819: 117) goes on.
Nevertheless, Say was a pragmatist.24 He believed that the development
of the social sciences could, in the future, open the eyes of the citizens and,
with the progress of representative government (Say nd: 408), lead to the
restriction of the State’s functions, carefully ensuring that only the strictly
necessary functions be fulfilled and at the lowest cost. The private interests of
the rulers and civil servants, while unavoidable, could thus in the end be made
less alarming: after all, they are also to be considered as the interests of any
other profession. We thus return to Graslin’s ideal view.
An opposition of interests is no division, is no quarrel, does not break
peace. Are not the individuals who form a nation in constant opposition
22 For example: “Interests of nations, interests of rulers always distinct and almost always
conflicting” (Say nd: 634). “The idea that the interest of rulers is the same as that of those
who are governed lies at the origin of repeated abuses” (ibid.: 635; see also ibid.: 637). “The
confidence we must have in the rulers is but nonsense, and the one who would put it forth
in a private business would be laughed at” (ibid.: 640).
23 Say also refers to Destutt de Tracy, who explains why particular interests are always
more powerful than the general interest, and especially successful when lobbying (Say nd:
640, Destutt 1815: 41–3).
24 For some other views and analyses of Say’s opinions in relation to politics, see Steiner
(1989, 1997) and Whatmore (2000).
Bold ideas 22
of interests between each other, without being at war? . . . Each time
we go into a shop and buy, do we not have an interest that is opposed to
that of the merchant? . . . Does a war necessarily ensue between those
in power and those who are governed? Not at all. These are interests to
be amicably discussed, just as are the interests of two merchants who do
business together and agree on sharing outlay and profits (ibid.: 644–5)
3From clearing up ambiguities to fighting for
utopian ideas: Dunoyer to Girardin
3.1 ‘Le gouvernement est le plus utile des producteurs’
When Say defined the act of production as the production of utility and pro-
posed the concept of immaterial product, he opened a kind of Pandora’s box.
Although they did solve some difficulties, these innovations25 created new the-
oretical problems, because Say seemed reluctant to draw all the consequences
of his own principles. This was the opinion of Charles Dunoyer. Together with
Charles Comte he played an important part in the battle for industrialism and
the liberties under the Restoration, especially with the publication of journals
like Le Censeur (1814–15) and Le Censeur européen (1817–19) and later with
a book entitled L’industrie et la morale considérées dans leurs rapports avec la
liberté (1825) and its developments: Nouveau traité d’économie sociale (1830)
and De la liberté du travail (1845). Dunoyer was a strong supporter of Say’s
political economy, and in Le Censeur and Le Censeur européen he always de-
voted a great deal of space to Say’s books. They were, in his opinion, of the
utmost importance in the search to find the new and only adequate way to
think about politics in the context of the modern industrial society. Over time,
however, he became increasingly critical of some of the fundamental points of
Say’s economic doctrine. He expressed his dissenting views in a long review of
the fifth edition of Say’s Traité d’économie politique that he published in 1827
in Revue Encyclopédique. Pointing out a number of flaws and inconsistencies
in Say’s analysis, he followed Say’s approach to its logical conclusions. He re-
peated this point of view in various later writings and especially in the entries
“Gouvernement” and “Production” (Dunoyer 1852b, 1853b) that he wrote for
25 Some essential elements had, however, already been advanced by Turgot, and also by
Alexandre Vandermonde during the Revolution (Faccarello 1989).
Bold ideas 23
the Dictionnaire de l’économie politique.
For what concerns our subject, Dunoyer’s critique is the following. He first
reminds Say and his followers of the importance of the definition of production
as the production of utility. He then contests Say’s three-way division of
the “agents of production” into labour, capital and land, affirming that there
is only one agent: labour (Dunoyer 1827: 75–8; 1853b: 445–6, 449–50). The
only original power in production lies in labour, in its quantity, quality, division
and freedom. “Land” and the collection of objects called “capital” are indeed
useful for the applications of the different kinds of industry (i.e., activities),
but their utility is not natural. It does not exist as an original fact but has
been previously created by labour itself. Hence Dunoyer attaches the greatest
importance to all the circumstances that can act on human beings, physically
and intellectually.
Dunoyer then contests Say’s famous distinction between material and imma-
terial products, which he finds inadequate and misleading. In fact, he stresses,
if production is simply the production of utility, then the only products human
beings can create are necessarily immaterial. Say himself noted that we never
create any fragment of matter. It is true that our industry can act on two
different orders of things, i.e., either on material things or on human beings.
In both cases, however, this industry is exerted with the sole aim of modifying
them, of conferring on them a utility they do not initially have. The product –
utility – is immaterial. The neglect of this point also led political economy to
focus its attention on the production of material things, disregarding industries
that act on human beings despite their fundamental importance.
But this is not the only inconsistency in Say. His definition of productivity is
flawed with ambiguities. “It is possible to criticise M. Say”, Dunoyer stresses,
“for having only considered as really productive the industries that act on
physical objects and the products of which are realised in something material.”
(1827: 68) Dunoyer knows of course that in Say’s opinion the producers of
immaterial products –physicians, lawyers, civil servants, etc. – perform a
productive activity. But, he asks, what kind of productivity is that? Is it
not Say’s opinion that these products cannot be accumulated, do not add
anything to the national wealth and moreover that the expenses incurred in
obtaining them are unproductive, like public expenses?
Now, I wonder what are these products which do not add anything to
the national wealth . . . and that confer on the expenses necessary to
Bold ideas 24
get them the character of unproductive consumption? Would it not be
better to say, with the author of the Wealth of Nations, that the creators
of such wealth are unproductive? The fact is that M. Say was aware of
Smith’s mistake but did not succeed in correcting it. He did not succeed
in stating clearly how the classes that produce what he calls immaterial
products are in fact productive. (ibid.: 68)
Say asserts that the distinctive character of immaterial products lies in the
fact that they are destroyed at the very moment of production. In Dunoyer’s
opinion, this statement is wrong. What is destroyed in production is labour,
but this happens in all kinds of activities. The very product of industry is
utility and this utility, far from being annihilated, remains.
It is because they do not distinguish labour from its results that Smith
and his followers made the above-mentioned mistake. All the useful pro-
fessions . . . exert a labour that vanishes when it is executed, and
all create some utility that is accumulated as it is obtained. One must
not say, with Smith, that wealth is accumulated labour, but that it is
accumulated utility. (ibid.: 68–9; see also 1853b: 442)
Like any other products, the so-called immaterial products can be kept,
increased and accumulated, for example in human beings: “we can acquire
more or less virtues or knowledge, just as we can accumulate more or less
corn, cloth, money and all these utilities that we can fix in things” (1827: 69).
Moreover, these “immaterial” products are even more durable and accumulable
than the so-called material products: “these latter cannot be used without
destruction nor handed on without being lost for their owners, while ideas and
sentiments are improved through usage and increased through communication”
(1827: 72).
For all these reasons, the so-called “immaterial” capital of a nation is as
important as – and even more important than (1852b: 838) – the “material”
accumulation of physical means of production. And those who, through their
industry, provide the various elements of this capital produce in fact a utility,
and a greater utility than what they consume – even if it is sometimes impos-
sible to evaluate this utility exactly, when markets are missing for instance.
They are productive.
A capital made of knowledge or of good habits is worth no less than a
capital made of money . . . In order to produce material wealth, it is
Bold ideas 25
not enough for a nation to possess workshops, tools, machines, food or
money. The nation needs safety, health, science, taste, imagination, good
moral habits; and those who work to the creation or improvement of these
products can rightly be considered as productive of the so-called material
wealth, just as much as those who directly and physically contribute to
their creation. (Dunoyer 1827: 71)
Now, the State is one of these producers. It is even the most important
among them because its role is to produce a basic utility without which nothing
would be possible: safety. This is the reason why, in this perspective, Say would
have been obliged to admit that “the government is the most useful of all the
producers whenever it creates in the population habits of respect for property
and persons” (ibid.: 72).
Government is essentially an art that acts on men . . . Its specific task
. . . is to teach men to live well together, to imbue their relationships .
. . with measure and justice. . . . It is a producer of sociability, of good
civil habits. . . . It contributes to the general production through the
introduction, into this immense laboratory that constitutes the society, of
this precious ingredient of good relationships, of justice, without which
nothing would be possible and all would immediately stop, and which
makes the art which produces it probably the most important in the
economy of society. (1852b: 837)
Had Say drawn all the consequences of his own principles, he would not have
been of the opinion that public expenses are unproductive or sterile: “he would
only have called sterile, in this order of consumption as in all reproductive
consumption, the expenses that are not necessary to get the product” (1827:
73).
Dunoyer’s critique of Say is thus far-reaching (see also Augello 1979). But on
one point it is not totally fair. Probably because of previous discussions, Say’s
thinking on immaterial products changed somewhat over time. An evolution
was noticeable in the fifth edition of the Traité that Dunoyer was reviewing. In
the “Épitomé” of this edition, Say now asserts: “While immaterial products do
not seem susceptible to be accumulated because they are necessarily consumed
at the moment of production, they can however be accumulated to the extent
that they can be reproductively consumed and give rise to new value” (1841b:
1087). His typical example is a lecture attended by medical students: the
lesson itself is an immaterial product, but its consumption allows the increase
Bold ideas 26
of a human capital that will later yield a profit. Later, Say again put forward
his new ideas in his lectures at the College de France (Say 1831–32: 419).
Admittedly, Dunoyer had good reasons to overlook this evolution. For one
thing, this evolution is presented in a rather timid way, with no real impact
on the theoretical structure of the Traité: it is in fact confined to the field of
professional training. But there is a second, more powerful reason: although
some of the sentences in the “Épitomé” had been modified, the text of the
Traité itself remained curiously unchanged (see for example 1841a: 215).
3.2 The State as a factor of production
It is thus Dunoyer’s opinion that public expenses are productive because they
are spent to satisfy a basic final need of the citizens: safety. The more society
evolves towards the industrial model, he argues, the more this basic need will be
felt by the citizens and the more the actual State will concentrate on its genuine
mission. It is interesting to note, however, how this mission is very often
presented. Obviously, in modern terms, Dunoyer’s approach also focuses on the
role of the State as a factor of production. The terminology seems inadequate
here, of course, because he does not recognise any “agent of production” other
than labour: but the action of the State as a producer is apprehended as
providing essential elements for the implementation of production and the
wealth of the nation. “M. Say . . . must have considered as productive
consumptions all the private and public expenses that, while satisfying the
needs of men, maintain or increase their faculties, and as unproductive only
those that are made without necessity for a useful object, or those made in a
totally useless way” (1827: 89).
From another perspective, this role of the State as a factor of production is
unambiguously stressed by the doctrinaire Victor de Broglie. After the Rev-
olution of 1848, during the discussions on taxation at the National Assembly
– and specifically to counteract a proposal by Hippolyte Passy to establish an
income tax – he wrote a long text, “Les impôts et les emprunts” (Broglie 1849),
published posthumously by his son in 1879. This is a remarkably clear text
where the economic function of the State is addressed from the exclusive point
of view of production, focusing on the costs.
Say had already opened the way to such analysis when dealing with public
works like communication routes. In spite of some important ambiguity about
Bold ideas 27
the productive character of this kind of work, he noted that it has the same
beneficial effect as machinery and considerably lowers the costs of production.
It is a means of furnishing the same product at less expense, which has
exactly the same effect as raising a greater product with the same ex-
pense. If this kind of calculation could be done – and if we take into
account the immense quantity of goods conveyed upon the roads of a
rich and populous empire, from the commonest vegetables brought daily
to market, up to the products poured into its harbours from every part of
the globe, and thence diffused over the whole surface of a continent – we
could readily perceive the inestimable economy in the costs of production.
(Say 1841a: 385–7)
For his part, Pellegrino Rossi,26 in his lectures at the Collège de France,
spoke of the activity of the State as an “indirect means of production”.
Imagine that the government, social justice and the police are abolished,
and see what the labour of the civil societies would become . . . As a
consequence, all those who devote their labour, their time, their study
to the exercise of the public authorities or the administration of social
justice contribute to the national product. (Rossi 1836–38, I: 214)
Broglie pursued this analysis. Suppose, he writes, that the State does not
exist and thus cannot provide the country with any protection or roads. As
safety is essential to production, entrepreneurs will have to overcome the diffi-
culty, either by organising their own protection or by hiring the services of spe-
cialised companies: in both cases, the costs of production would be increased
(Broglie 1849: 14–15). The same is true for roads (ibid.: 15–16). Hence a
first conclusion: public expenses are productive. “All the expenses which are
necessary for production, all the expenses that directly or indirectly contribute
to production . . . , all the expenses without which any kind of production
cannot be initiated, carried on and completed, are productive expenses” (ibid.:
13). It would be illogical to describe them as either productive or unproduc-
tive according to whether they are made by entrepreneurs themselves or by
the State.
Public expenses, however, are not only productive: they are the most pro-
ductive of all the expenses incurred in production. In a firm, Broglie remarks,
26 Rossi was nominated to the Collège de France thanks to Broglie and Guizot.
Bold ideas 28
there are two kinds of costs: specific costs of production and overhead charges,
the burden of which becomes proportionately lighter as production increases.
The same happens in society, where the specific costs are incurred by the pro-
ducers while the overhead charges are supported by the State, to the great
benefit of all the entrepreneurs because the transfer of these charges from
private firms to society generates increasing returns to scale. “The overhead
charges, in any firm, are the lower, in proportion to specific costs, as the firm
acts on a greater scale. In a like manner, in this immense workshop of society,
the disproportion between overhead charges and specific costs is great: a given
expense, made by the State . . . , thus contributes to the global production
ten times, a hundred times, a thousand times . . . more than the same sum .
. . spent by a private producer” (ibid.: 17). The abolition of the State would
of course abolish taxes: but it would also generate an increase in the costs of
production far greater than the savings made on taxation.
All the works made by the State, all the expenses incurred in the interest
of the entire society are not only productive works, productive expenses,
but they are the most productive of all works and expenses, because they
are properly speaking the overhead costs of the social production. (ibid.:
16)
3.3 ‘Je demande des gouvernements libres’
At the same period, however, during the hectic discussions provoked by the
February Revolution, some liberal economists became bolder and proposed
systems that the great majority of their fellows in the Société d’économie
politique considered as pure utopian dreams. This was the case for Gustave de
Molinari in the above-mentioned texts (Molinari 1849a, 1849b). It was also the
case for Émile de Girardin, an entrepreneur and the influential founder of the
modern press in France – especially with the newspaper entitled La Presse. He
also took part in the general discussion on taxation during the Second Republic
and collected in one volume, Le socialisme et l’impôt (1849), the contributions
he had published on this subject in his own journal.27 Molinari and Girardin
27 According to Auguste Walras, Girardin “has a distinguished mind. While he is not an
economist but first and foremost a politician, he is fond of new ideas and he often seems to be
in search for them seriously . . . One always likes to fight with men who are not stagnating
in the most crude prejudices” (Auguste to Léon Walras, 31 July 1859, in A. Walras 1821–66:
355).
Bold ideas 29
proposed radically different theories: but both of them based their proposals
on the idea of a necessary disappearance or transformation of the State into a
new organisation designed on the model of a private company – thus extending
to the political level the logic of free market activity.
In the liberal tradition, some ideas in this direction had already been put
forth. The discourse on the division of labour and its powerful and beneficial
effects quite naturally induced some economists to think of government as
following the same model as any other activity. Some more or less ambiguous
phrases by Graslin and Say have already been reported above. A similar
position can also be found in Dunoyer. Under the regime of industry, he
stressed, the State “is in fact but a commercial company, financed by the
community and intended to preserve law and order” (Dunoyer 1825: 358).
But these statements are, in a way, just a metaphor, the expression of a liberal
dream that our authors well knew to be impossible. The same can be said of
Say’s assertion that a government is not essential to society – a view that is
also to be found in Dunoyer (Dunoyer 1818: 91–2). Molinari and Girardin, on
the other hand, took this idea literally.
Molinari’s position is an invitation to coherence. “For a long time”, he
writes, “economists not only refused to deal with government but also with
all purely immaterial functions. J.-B. Say was the first to include this kind of
service in the field of political economy” (1849b: 303). As a consequence, “he
did a far greater service” to this science “than is commonly supposed” (ibid.)
because now the function of the State can be rationally grasped and correctly
dealt with. Like Dunoyer, Molinari thought that economics would eventually
allow politics to be apprehended in a new manner, the only one adapted to a
free market society.
In this kind of society, where private industry efficiently provides for the
satisfaction of any need, it is simply illogical to make an exception with re-
gard to the need for safety and to consider that it can only be satisfied by
a monopolised activity or, worse, a communistic organisation. Even Dunoyer
is to be criticised on this point. “Among the economists who most greatly
extended the application of the principle of liberty, M. Dunoyer thinks that
‘the functions of government should not be left to private activity’.” Why
this “clear and obvious exception made to the principle of free competition”
(1849a: 279)? There is no rational ground for it. Economic theory, Molinari
asserts, shows how a monopoly is inefficient and dangerous, and historical ev-
Bold ideas 30
idence supports political economy: any monopoly or privileged organisation
in charge of safety always tends to neglect its duty, increases its ascendency
and power over populations and tries to extend the number of people it can
control – whence a permanent state of war and rebellion. “Just as war is the
consequence of monopoly, peace naturally results from liberty” (ibid.: 290).
In the name of efficiency, freedom and peace, then, it is necessary to accept
“the rigorous consequence of the principle of free competition” (ibid.: 279) and
leave the “production of safety” to private initiative.
It is the interest of the consumers of this immaterial product that the
production of safety be left to the law of free competition . . . No gov-
ernment should prevent another government from competing with it, nor
should it oblige the consumers of safety to obtain this product exclusively
from itself. (ibid.)
In the name of the principle of property, in the name of the right I have
to provide myself for my own safety, or to buy it from anybody as I think
fit, I call for free governments. (ibid.: 304)
These competing “governments” – “free governments” i.e., freely chosen by
consumers who thus get rid of any “political servitude”28 – are private compa-
nies, also described in Les soirées de la rue Saint-Lazare as “insurance compa-
nies”, whose task is to protect property (e.g., 1849b: 331).29 Before contract-
ing with a company, consumers must investigate whether the firm is powerful
enough to protect them, whether it will not use its power against them and
whether some other firm could provide them with the same service under bet-
ter conditions. Any provider of safety, for its part, must be in a position to
protect persons and properties and, if need be, to repay the consumers a sum
proportionate to any damage incurred:
1°The insurance companies must establish some form of punishment
for those who offend against people and property, and insured people
should accept to subject themselves to this punishment if they themselves
28 On the raison d’être of “political servitude” and its end, see for example Molinari 1884:
377–82.
29 Three years before, in a paper published in Le Courrier Français (23 July 1846),
Molinari wrote: “Men gather in a society in order to guarantee the safety of persons and
properties. A State is just a great company for mutual insurance.”
Bold ideas 31
create any damage to persons and property. 2°They should be able
to impose some trouble on insured people with the aim of discovering
the perpetrators of offences. 3°They should receive regularly . . . a
given premium that would vary with the situation of the insured people,
their specific activity, the nature, extent and value of the property to be
protected. (ibid.: 334)
Whenever these conditions suit the consumers, “the deal is concluded; oth-
erwise consumers would provide themselves for their own safety or look for
another company” (ibid.) The “producers of safety” companies, on the other
hand, would not be able to grow indefinitely: like any other firm, their size
is bounded by necessary upper and lower limits outside which they incur in-
creasing costs and therefore lower profits.
Some additional aspects of this question, as well as the consequences of this
approach for the franchise and the concept of nation for instance,30 can be
disregarded here: they do not alter Molinari’s basic position. Moreover, he did
not think it possible to enter into details that cannot be dealt with in advance.
“Political economy can say: if a given need exists, it will be satisfied, and in a
better way under a regime of entire freedom than under any other one. There
is no exception to this rule! But how this industry will organise itself, what
will be its technical processes – political economy cannot say anything on this
question” (1849b: 328–9). He nevertheless tried to specify his position in a
series of subsequent writings (Molinari 1854, 1884, 1887, 1899), with always
the same conclusion:31
The future belongs neither to the absorption of the society into the State,
as communists and collectivists claim, nor to the suppression of the State,
as anarchists and nihilists dream of, but to the diffusion of the State into
society. It is . . . a free State in a free Society. (Molinari 1884: 393–4)
Understandably enough, these ideas were received with scepticism or hos-
tility in the discussions of the Société d’économie politique. Even Bastiat
declared himself in favour of a State monopoly of the production of safety. As
30 See for example Molinari 1884: 394 et seq., “Individual sovereignty and political
sovereignty”, and “Nationality and patriotism”.
31 As soon as 1854, in his Cours d’économie politique, he presents the reader with an
extensive philosophical account of the nature and changing attributions of governments in
the different stages of history.
Bold ideas 32
reported in the Journal des économistes in a Chronique summing up one of
the debates, a governmental power was thought necessary for the efficiency of
free competition.
M. Coquelin remarked that M. de Molinari disregarded the fact that,
without any supreme authority, justice cannot be implemented, and that
competition – the sole remedy against fraud and violence . . . – could not
exist without this supreme authority, without the State. Below the level
of the State, competition is possible and fruitful; above, it is impossible to
implement and even to imagine. M. Bastiat spoke along the same lines as
M. Coquelin. (Journal des économistes, Chronique, October 1849: 315)
3.4 The State as an insurance company
Molinari was not the only economist to refer to the State as an insurance
company. Adolphe Thiers, in his book De la propriété (Thiers 1848), made a
comparison of the same kind: but in this case the aim was just to determine
the rate of taxation,32 with no implications for the organisation of the State.
Moreover, a vague parallel between the protection provided by the State and an
act of insurance was quite widespread among economists. The idea of literally
transforming the State into an insurance company was instead advocated by
Girardin, with, as a consequence, an increase in its attributions. “The State
must only be a national company for mutual insurance against all the risks
susceptible of being anticipated” (1849: 230).
Taxation is and must be nothing but an insurance premium paid by
all the members of a society called Nation, in order to assure a full
enjoyment of their rights, an efficient protection of their interests and
the free exercise of their faculties. (ibid.: 229)
First published in La Presse and then as a book with many editions, his pro-
posal is described in the following (puzzled and confused) way in a Chronique
of the Journal des économistes (October 1849: 319).
M. de Girardin published in La Presse a long work on taxation. After
having criticised all the systems of taxation, he adopts a tax on capi-
tal, of 1 per cent – in return for which the taxpayer will benefit from
32 This comparison was of course approved by Molinari. Thiers’s calculations were later
criticised by Gustave Fauveau (Fauveau 1864; see also Silvant 2010).
Bold ideas 33
protection, justice, religion, instruction, credit, sickness and old age pen-
sion, indemnification in case of blaze, flood, hail storm, epizootic disease,
bankruptcy, shipwreck; they will also be exempted from military service
and protected from falling into destitution. All these advantages are con-
signed on an insurance policy that also serves as record book, passport,
voting card, etc.
Unlike Molinari, however, Girardin did not open the field to competing
private companies, but simply proposed that the State be reformed and be-
have like a real insurance company. Hence the comment of the Journal des
économistes: “This is rather original, but essentially socialist, and far too
complex to be taken as a remedy to the present situation” (ibid.). Girardin’s
proposal was widely discussed. While some pamphleteers did indeed denounce
the project as socialist (Duverne 1851), some authors, like Auguste Walras
(1849a, 1850), discussed them seriously: “this system is far superior to any-
thing which exists. It is an eminently liberal conception” (A. Walras 1849a:
495).
To put it briefly, the existing taxation system must be abolished and re-
placed by a single tax, the insurance premium. As a premium, it should of
course be “in proportion to the extent and probability of the risk” (ibid.: 229).
A good base for the calculation of this premium being the “capital” possessed
by any citizen, this premium would be a “tax on capital” – actually a tax on
wealth. The rate would be uniform: one per cent (half of one per cent in
the 1852 edition). As an insurance company, the State would insure citizens
against all kind of risks, including wars. As for the other activities tradition-
ally included in the past in the public sphere, like education or religion,33 they
would have to be financed by specific private associations freely deciding to
produce these services.
. . . public education as well as the expenses for religion will be again
what they never should have ceased to be, and what they are in England
and in the United States: purely individual expenses made with receipts
centralised by corporations or associations. (ibid.: 247)
One distinctive character of the insurance premium as compared to a tra-
ditional tax is that it would be voluntarily subscribed, whereas taxation is
33 In 1849, education is still included among public activities, but logically excluded in
1852, not being subject to an insurance premium.
Bold ideas 34
compulsory. But, with a typical utopian discourse, Girardin asserted that this
would not be a problem for the new State. Owing to the great advantages
of such an insurance mechanism – the wealth a citizen declares, for example,
and the protection he or she receives, being a good basis for obtaining credit,
employment, etc. – every citizen would be immediately convinced of the need
to subscribe.34
Only a single tax must exist, the same everywhere, and so mathematically
just that it would be de facto compulsory while de jure voluntary. (ibid.:
161)
The tax being an insurance premium, the free rider problem is somewhat
alleviated, except of course for what concerns the value of the wealth declared
by the citizens. Girardin states that he is convinced that an immense majority
of citizens will not be induced to cheat but, as a protection against possible
evaders, specifies that the State would have a pre-emptive right on the goods
possessed by the subscribers, at the value he or she declared for the different
items.
Last but not least, in addition to the personal advantages that people could
get from such a system, the so-called “single tax on capital” is also supposed to
have a powerful positive macroeconomic effect – and this is in fact Girardin’s
main goal. Since the “tax” is applied to all elements of wealth but leaves
untouched any income that people may get from that wealth, Girardin is con-
vinced that there will be a general incentive to exploit each of these elements
productively and to develop them in the best possible way. Active capital will
be managed even better, to get a maximum of revenue, and any hitherto idle
capital will be put to productive use. This will lead to the disappearance of
idle capital and complete the work of the French Revolution.35
The cry of our first revolution was: equality of the citizens in the
34 Moreover, other countries would soon imitate France and reform their States along
similar lines. This typical utopian firm belief in the irresistible power of any alleged profitable
reform is also sometimes shared by Molinari.
35 After the fall of Napoléon III, another entrepreneur, Émile-Justin Ménier (1871 to
1874b), picked up Girardin’s ideas, although he gradually dropped the insurance side of the
project and ended up focusing only on the tax on “capital” – provoking lively discussions
at the Société d’économie politique. In 1874, his argument became close to that of Broglie:
taxes represent “the overhead costs of the exploitation of the capital of the nation” (Ménier
1874a: 10).
Bold ideas 35
eyes of the law; unity of the law. The cry of our last revolution
will be: equality of capitals in the eyes of taxation; unity
of taxation. (ibid.: 220)
4 From utopian dreams back to reality: Leroy-
Beaulieu
The fact that some French liberal economists proposed utopian models of the
transformation of the State does not mean that they were not aware of the way
the real State was actually functioning. Like Say before (see above, section
2), some of them noted the inexorable practical logic of the modern State.
During the 1849–50 debates at the Société d’économie politique, for example,
Dunoyer made an interesting intervention. “M. Dunoyer”, says the October
1849 Chronique of the Journal des économistes, “like M. Coquelin and M.
Bastiat, thinks that M. de Molinari went astray . . . ; and that a competition
between governmental companies is chimerical because it leads to violent fights.
Now these fights would only end through force, and it is wiser to leave force
where civilisation put it, with the State” (ibid.: 316). But Dunoyer recognised
that, within a modern electoral State, a form of competition nevertheless takes
place: a competition between political parties.
M. Dunoyer believes . . . that competition in fact works its way into
government through the interplay of the representative institutions. In
France for example all the parties really compete with each other, and
each of them offers its services to the public who actually chooses every
time it votes. (ibid.)
In a way, this fact was also acknowledged by Molinari, who stressed its
negative consequences for the actual action of the State. After the French
Revolution, the formation of governments was either based on an electoral
system or simply resulted from coups d’État, provoking the changeover of
power between “political associations”. With what result? Molinari asks:
The exploitation of the State is left to an association that, enjoying only
a temporary possession, is interested to get from it, during this limited
period of time, the maximum of benefits and advantages – even at the
price of sacrificing the future, which does not belong to this association,
Bold ideas 36
for the present, which is its own. Hence the irresistible trend of growth
in the attributions of the State, with all the benefits attached to their
exploitation, a tendency enhanced by the necessities of the competition
between the associations organised with the aim of conquering the State
or having its exploitation granted to them. Moreover, the temporary
administrators, whatever can be the errors, mistakes and even crimes of
their administration, do not have to suffer thereof: the only risk they
run is, at the end of their administration, to see the State granted to
somebody else. (Molinari 1884: 361–2; see also 388)
This line of thought was taken up and powerfully developed by Paul Leroy-
Beaulieu. This author is usually remembered in public economics for his cele-
brated Traité de la science des finances, first published in 1876 (see for example
Musgrave and Peacock 1958). Contrary to what happened in Germany and
Italy, the use of the phrase “science des finances” was a kind of innovation in
France, where the expression had a rather bad reputation, probably because
the term “finance”, at the level of the State, reminded people of the awful
mismanagement of public finances during the Absolute Monarchy. For differ-
ent reasons, the judgments of such different authors as Cherbuliez and Léon
Walras for instance – who both symptomatically refer to the German term “Fi-
nanzwissenschaft” – are final and negative.36 The success of Leroy-Beaulieu’s
Traité, on the other hand, established the term in the Faculties of Law.37 The
field of the “science des finances” is accurately defined and restricted. It only
concerns the determination of the optimal management rules for all kinds of
public revenues – this being said in opposition to Karl Heinrich Rau, Adolf
Wagner or Lorenz von Stein.
It would have been easy to speak of the essential and secondary attribu-
tions of the State, of the functions it has to be in charge of and those it
must leave to the citizens and free associations. But in our opinion this
36 In the German literature, under the heading of “science des finances”, one only finds
“an administrative empiricism to which it is impossible to apply the method and rigorous
language of political economy” (Cherbuliez 1848: 387n). “Finanzwissenschaft” is just “a kind
of fiscal law that will be shown by the side of Canon law in the future museums of social
archaeology” (L. Walras 1896: 408).
37 Until then only a very few books were entitled “science of finance”: Charles Ganilh’s
1825 De la science des finances et du ministère de M. le comte de Villèle, René Gandillot’s
(a lawyer) 1840 Essai sur la science des finances and the latter’s 1875 Principes de la science
des finances. In 1841, a translation of Ludwig Heinrich von Jacob’s Staatsfinanzwissenschaft
was published: Science des finances, exposée théoriquement et pratiquement.
Bold ideas 37
kind of research does not belong to the science of finance; it belongs to
political economy or even to politics. (Leroy-Beaulieu 1876, I: 2)
Everything that concerns public expenditure thus constitutes a distinct field
of inquiry: it deals with the functions of the State and is held to be a special
chapter of a treatise of political economy. But a look at Leroy-Beaulieu’s suc-
cessful Traité théorique et pratique d’économie politique (first edition: 1896) is
disappointing: his approach to the State and its functions is mainly traditional
and non-innovative. In fact, Leroy-Beaulieu is convinced that to list a priori
the functions of the State is an almost impossible task, because there is nothing
that the State can do that cannot also be done by private associations. The
opposing view results from the wrong belief that, except for the State, “nothing
could be created that is not inspired by a selfish interest in the form of pecu-
niary interest” (Leroy-Beaulieu 1890: 946) and that, consequently, no strictly
non-profitable undertaking could be carried out by any private individual or
organisation. The analysis is also historical:
. . . each of these functions has been fulfilled, in some country and
at a given period, by private persons at the same time as by the State.
For instance, we know that in Spain, a private association, the Santa
Hermandad, was formed to keep law and order; in England, today, the
association of Special Constables i.e., voluntary, temporary and non-paid
policemen, has not totally disappeared. (Leroy-Beaulieu 1876, I: 3; see
also 1890: 948–9)
The spreading of the phrase “science des finances” would be a very poor
achievement indeed, were not the name of Leroy-Beaulieu worth remembering
for another – unfortunately hitherto neglected – reason. In 1889 he published
an important study, L’État moderne et ses fonctions – the outcome of his
lectures at the Collège de France in 1883–84 – and, one year later, the en-
try “État” in the Nouveau dictionnaire d’économie politique edited by Joseph
Chailley and Léon Say. There, far from any theoretical “dream”, he described
accurately the logic and implications of the actual modern electoral State.
His real interest lies not at all in what the State should be and how it should
behave according to political economy, but in what it actually is. There is
nothing like an ideal State, or a “State in itself”, just as there is nothing like
a “man in himself”. “Some questions cannot be confined to the absolute, and
necessarily entail a relative and contingent aspect” (Leroy-Beaulieu 1889: 4).
Bold ideas 38
“It seems to me that philosophers do not return to earth sufficiently” (ibid.:
2). In this perspective, Leroy-Beaulieu heavily criticises the German authors
(Rau, Stein, Wagner, Schäffle, Bluntschli) who tried to develop a theory of an
ideal State, and only produced “an idolatry for the State” (ibid.: 14).
Not only do we not kneel before the idol, but we analyse the metal it is
made of, and the structural defects it suffers from. May it be possible to
reduce the number of its worshippers and save Western civilisation from
the threat of a new servitude. (ibid.: x)
A closer look at the idol reveals a creature made of poor alloy. The “modern
State” as it actually exists is a specific political structure with two basic char-
acteristics (1889: v–vi): it is a democratic State based on regular elections; and
it confers substantial power to the government because of the disappearance
of almost all the traditional intermediary links between the citizens and itself,
such as the nobility, the Church, etc. More specifically, four major general
consequences are stressed throughout L’État moderne.
In the first place, the State – being no abstract entity – does not think or
speak by itself: it is the men in power who think and speak for the State. Now,
who are they? Ordinary men – as Say already stressed. They do not show
any specific difference or superior capacity compared to other ordinary men in
society.
Experience proves that the State is a body left in the hands of certain
people, that the State . . . thinks and wants only through the thought
and will of the men in charge of the body. . . . Those people who
succeed one another and eliminate each other more or less rapidly . . . do
not have a different physical and mental structure than all other people.
They do not enjoy any natural superiority, be it innate or instilled by the
profession itself. The functions of the State do not necessarily enlighten
the mind nor refine the hearts. The Church can teach that a weak man,
when assuming priesthood, is transformed and enjoys the divine grace.
A democratic society cannot claim that men in power . . . benefit from
any kind of special grace and would not dare to maintain that the Holy
Spirit descends upon them. (Leroy-Beaulieu 1889: 29)
In the second place, the State is not impartial. The government is always in
the hands of the party that won the last election. The modern electoral State
is not an expression of a dispassionate reason or will. Rather, it amplifies all
Bold ideas 39
the passions and fashions prevailing in the society when elections take place.
No democracy, Leroy-Beaulieu stresses, “can arrive at a conception of a general
and permanent interest and give it preference over the private and transitory
interests” (Leroy-Beaulieu 1889: vii; see also ibid.: 426). Moreover, the time-
horizon of a government is short – four or five years. Consequently, politicians
try to implement the programme for which they have been elected as fast as
possible, using the law, regulations and of course public finance.
While public finance forms, at the theoretical level, an independent sci-
ence, it is unfortunately, in practice, the humble servant and almost the
slave of an arbitrary . . . master: politics (Leroy-Beaulieu 1876: xx)
Thirdly, civil servants and politicians are not under the pressure of com-
petition – this being said in opposition to Dunoyer’s suggestion that political
elections could be considered as a kind of competition. They are therefore
often inefficient. They tend moreover to increase their field of action – as
Say noted – and, in addition, they systematically choose the most expensive
policies because these are likely to win them consideration and votes from the
electorate.
Finally, Leroy-Beaulieu asserted, the democratic electoral State is most of-
ten against any novel policy. Politicians, being under the pressure of all kinds
of lobbies, are induced to protect old and established interests against innova-
tions. Such a State can only be a factor of conservatism (Leroy-Beaulieu 1889:
431–2; 1890: 951–3). In the same way, under the pressure of uneducated vot-
ers and self-interested lobbies, there is a strong incentive to protectionism and
chauvinism, a marked hostility to foreign workers, and even, as a consequence,
a propensity towards antisemitism (Leroy-Beaulieu 1889: 424 & sq.).
These are only some of the consequences resulting from the constitution
of the modern State. Throughout L’État moderne et ses fonctions, Leroy-
Beaulieu carefully analyses the various actual policies of the modern State,
from the interventions in public works and colonisation to those directed at
public relief, education and religion. No doubt, the book deserves a more
detailed analysis. But our tour d’horizon of the attitudes of these 19th-century
liberal economists in France would have been incomplete without mentioning
it. It marks an obvious break with the main traditions of thought in public
economics of the time, while at the same time representing a continuation
and powerful development of a trend of thought already present in the French
literature since Jean-Baptiste Say at the turn of the century.
Bold ideas 40
While not always strictly rigorous and analytically coherent – but then who
else could claim to be exempt from such shortcomings at that time? – the work
of Say constituted a matrix from which much of 19th-century French political
economy ensued. As this paper has tried to show, this is also true in the
field of public economics. In very different and sometimes incompatible ways,
the liberal economists analysed here – Destutt de Tracy, Dunoyer, Broglie,
Molinari, Girardin, Leroy-Beaulieu – each developed certain aspects of Say’s
thought. With an interesting result: a variety of theoretical approaches to the
nature and functions of the State – from the most utopian to the more realist
– now, for the most part, part and parcel of the various current theories of the
public economy.
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