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An ‘Exception culturelle’ ?
French Sensationist political economy and
the shaping of public economics
Gilbert Faccarello ∗
Abstract. This paper examines some ideas developed in the ﬁeld
of public economics by French Sensationist political economists,
from Turgot and Condorcet to the young Jean-Baptiste Say. An
ideal-typical account of their position is based on the fact that is-
sues raised by public expenditure and revenue are not dealt with
independently. Instead, a strong link between the two sides of the
budget is emphasised, an approach arising out of political consi-
derations concerning human rights and equity. Following on from
this they develop a theory of public expenditure based on public
goods — national and local — and externalities, and a theory of
taxation culminating in a justiﬁcation of progressive taxation. The
central section of the paper forms a kind of pivotal point in the
analysis, showing how the above political and ethical requirements
of the theory lead to the ﬁrst estimation of the optimal amount of
public expenditure and revenue — involving an equilibrium at the
∗Panthéon-Assas University, Paris. Email: firstname.lastname@example.org. Homepage:
http://ggjjﬀ.free.fr/. Published in The European Journal of the History of Economic
Thought,13 (1), 2006, pp. 1-38.
An ‘Exception culturelle’ ? 2
This paper examines some ideas developed in the ﬁeld of public economics
by authors who are, in my opinion, among the most innovative thinkers in
France in the ﬁeld of political economy and ‘public ﬁnance’ in the second half
of the eighteenth century, that is, from the end of the reign of Louis XV to
the Consulat. These authors all belong to what I call the école de Turgot, or
to French économie politique sensualiste proper. 1Turgot certainly sought, in
the most rigorous fashion, to develop a coherent set of economic and political
ideas based on Sensationist philosophy as developed by Locke and Condillac,
combining this with an assumption that the economic behaviour of people was
fundamentally self-interested. Building on the basic ideas of Boisguilbert as
subsequently elaborated by Quesnay, he systematically developed an analysis
based on the concepts of capital and free competition ; and a theory of value
and prices expressed in terms of utility, demand and supply — a practical fra-
mework for an understanding of the various aspects of public ﬁnance. Sharing
this theoretical ground were friends and/or more or less distant followers, ﬁrst
among whom was Marie-Jean-Antoine-Nicolas Caritat de Condorcet, but also
the abbé André Morellet, Pierre-Louis Rœderer and the young Jean-Baptiste
Say. 2They do not, of course, systematically agree on all points of doctrine.
Despite some disagreement, however, they do share the same perspective and
develop public economics in a similar direction.3
An ideal-typical account of their position qua public economics is developed
in the following pages. Section 2 outlines their basic problématique which — a
kind of ‘exception culturelle’ at that time ? — contrasts with that of the English
1. Faccarello 1991, 1992, 1998. I reconsider and develop here some ideas expressed in
these previous papers. For the period under consideration, Seligman (1894), Stourm (1895),
Vignes (1909) and Marion (1974-25) remain very useful.
2. Jean-Baptiste Say, following Alexandre Vandermonde (Faccarello 1989, 1993), genera-
lized an argument based on utility. We are only concerned here with his early writings —
his utopia Olbie (1800) and the ﬁrst edition of the Traité d’économie politique (1803) —
together with an article by his elder brother Horace (1796) to whom he was intellectually
3. It is of course tempting to add Jean-Joseph-Louis Graslin to this list : Turgot thought
that his 1767 Essai analytique sur la richesse et sur l’impôt was of interest, and parts of
Graslin’s analysis are indeed close to those of Sensationist economists. But his system is so
idiosyncratic (Faccarello 2005) that I prefer to concentrate on the above-mentioned authors.
The same can be said of Condillac, qua economist — in spite of the fundamental importance
of Condillac, qua philosopher (see for example Orain 2003).
An ‘Exception culturelle’ ? 3
Classical economists. 4The issues raised by public expenditure and revenue are
not dealt with independently ; instead, a strong link between the two sides of
the budget is emphasised, an approach arising out of political considerations
concerning human rights and equity. Following on from this sections 3 and 4
develop a theory of public expenditure based on public goods — national and
local — and externalities ; and sections 5 to 8 present a theory of taxation
culminating in a justiﬁcation of progressive taxation. Section 6 forms a kind
of pivotal point in the analysis, showing how the above political and ethical
requirements of the theory lead to the ﬁrst estimation of the optimal amount
of public expenditure and revenue — involving an equilibrium at the margin.
Section 9 concludes the paper, outlining a plausible sketch of the evolution of
public expenditure and taxation through time.
2Setting the stage : the link beween public expen-
diture and taxation
Like most political writers in France, one of Turgot’s main concerns was
public expenditure and revenue. The problem of equity was of course central.
The question of eﬃciency was very closely linked to it — collecting taxes should
be as economical as possible so that pointless additions to existing political
and ﬁnancial burdens be avoided. Proper analysis of these aspects, moreover,
required a clear view of another important point : the incidence of taxation. But
the story does not end here. Most of the time these aspects were not treated in
isolation, and they were linked to the question of public expenditure. Equity
in taxation was not just a problem of how to distribute the tax burden among
citizens in a ‘just’ manner : equity could not be determined independently of
the justiﬁcation for, or the purpose of, taxation — or government expenditure.
Thus the expenditure and the revenue sides of the budget were thought to be
There were of course some precedents. Montesquieu, for example, dedicated
4. ‘An essential feature of the classical approach, still widely followed, is that the econo-
mics of expenditure and taxation are pursued as separate issues : while beneﬁt taxation was
viewed as the ideal, the bulk of tax revenue and hence tax analysis had to be examined in a
context of ability to pay, with the required total set from the expenditure side’ (Musgrave
1985 : 3). See also Creedy 1984 : 88.
An ‘Exception culturelle’ ? 4
Book XIII of De l’Esprit des lois to taxation and also reminded his readers
of these connections, if in a very general manner. The revenue of the State,
he emphasised, is a portion of wealth that every citizen gives up for his own
security so that he might be able to enjoy the remainder of his wealth in peace.
An essential task of government is therefore to determine this portion in a ﬁt
manner. The State should only seek money to meet its real needs, and not to
ﬁnance ‘imaginary needs’ such as those dictated by the search of a futile glory
— needs arising from ‘vainglory’ are in fact the consequences of ambition or
whim on the part of those in power. Public revenue should not be ﬁxed in terms
of the amount that people can give, but according to what they have to give. 5
In Book XIII Montesquieu also revived a long tradition which considers that
the form and the amount of taxation depends on the nature of the political
regime. However, many of these ideas were expressed somewhat elliptically.
In any case, they were about to be transformed and developed in a totally
diﬀerent context : this was the task taken up by French Sensationist political
2.1 Public expenditure and ﬁnance in a modern State
The starting point of their analysis is a clear conception of a social organiza-
tion which should be the source of political authority and of the State. Political
organization should not only preserve and protect natural human rights in an
abstract legal way, but also secure their realization. These human rights — li-
berty, security, property — are inferred from Sensationist premises. And as far
as beneﬁcial political institutions are concerned, our authors almost all accept
that Jean-Jacques Rousseau’s conceptions of sovereignty and general will are
of fundamental importance — even if they do not all use these terms. This
point cannot be developed here but, since it is often overlooked, it should be
Turgot — like other members of the school — wrote very little on Rousseau ;
his views however can be found in his correspondence with David Hume at the
5. In the entry ‘Impôt’ of the Encyclopédie Louis de Jaucourt (Jaucourt 1765) reproduces
6. For some parallel developments concerning the links between the Physiocrats and
Rousseau, see Charles and Steiner 1999.
An ‘Exception culturelle’ ? 5
time of the Rousseau/Hume quarrel, and especially in a letter of 25 March
1767. Turgot was not personally acquainted with the Citoyen 7but, contrary
to most of the Philosophes, he consistently supported him and was full of praise
for his work. Of course, like most of his contemporaries he did not agree with
the 1751 Discours sur les sciences et les arts and with all the ‘paradoxes’ that
Rousseau, in his opinion, later felt obliged to pile up in an attempt to defend his
ﬁrst ‘paradoxical ideas’. Turgot was also suspicious of Rousseau’s Christianity
and, contrary to general opinion, did not like La Nouvelle Héloïse.8But he
thought highly of Émile, and of Du contrat social.9‘Unlike you’, he wrote to
I do not judge them [Rousseau’s writings] as injurious to the in-
terest of mankind ; on the contrary, I believe that he [Rousseau] is
one of those authors who best serve morals and humanity. Far from
criticizing him for diverging from common ideas on this topic, I be-
lieve instead that he remained respectful of too many prejudices ;
but we have to follow his road if we are to attain his goal, which
is to bring men closer to equality, justice and happiness. (Turgot
1913-23, II : 659-60)
He added (ibid. : 660) :
And should the Contrat social count for nothing? In fact, this
book distinguishes precisely between Sovereign and Government;
and this distinction presents a genuinely illuminating truth which,
in my opinion, resolves forever the idea of the inalienability of the
sovereignty of the people under any form of government.
This is also a reason why he never liked Physiocratic phrases such as despo-
tisme légal and autorité tutélaire as characterizations of political authority 10
7. He met him only once, at Baron d’Holbach’s salon at the time of the writing and
publication of Discours sur l’origine et les fondements de l’inégalité (Turgot to Hume, 25
mars 1767, in Turgot 1913-23 : II : 659).
8. In a letter to Dupont (24 October 1773) he wrote against ‘cette pédante de Julie’
(Turgot 1913-23 : III : 628).
9. In the entry ‘Économie politique’ of the Encyclopédie Rousseau wrote : ‘The power of
the laws depends even more on their own wisdom than on their ministers’ severity, and the
public will derive its greatest inﬂuence from the reason which dictated it : this is why Plato
considers it a most important precaution always to place at the head of all edicts a reasoned
preamble which shows their justice and utility’ (Rousseau 1755 : 11). This is exactly what
Turgot did in his celebrated 1774-6 ‘édits’.
10. See his letters to Pierre-Samuel Dupont : 10 May 1771, 14 and 25 March 1774 (Turgot
An ‘Exception culturelle’ ? 6
— and Morellet was even more critical.
Rousseau’s name is also highly praised in the ninth epoch of Condorcet’s
Esquisse (1795 : 377). Indeed, Condorcet’s writings on election schemes and
what we today call ‘social choice’ can be thought of as a way of expressing and
clarifying Rousseau’s concept of general will. 11
Turgot developed his ideas on public expenses and revenue along these
lines. As regards taxation, he sought to analyse it in the context of a modern
State where the liberty and property of citizens is respected, and where the
realization of ‘happiness for all’ is the ultimate purpose of the government
(Turgot 1776b : 183). This is why, for him, questions of equity and eﬃciency
are linked, and why all forms of inquisitorial or harmful tax should be banished
(Turgot, 1763, 1777). He asked :
What is a tax ? Is it a burden imposed by the powerful upon the
weak? This idea would be like the idea of government based only
on the right of conquest. The Prince would then be considered to be
the common enemy of society; the strongest would protect them-
selves as they could, the weakest would let themselves be crushed.
The rich and powerful would shift the burden on to the weak and
the poor, and would be proud of this privilege. (Turgot 1776b :
Condorcet also stressed the fact that there is a strong link between the
nature of the political régime and the system of taxation : ‘not all forms of
taxation are suitable for a free Constitution, nor for the means that the respect
for human rights permits’ (Condorcet 1790b : 436). He also argued, like Turgot,
that if the purpose of the government is ‘happiness for all’ and the respect of
the liberty and property of citizens, then these two aspects are in fact two
sides of the same coin. In a system of civil laws, he writes in his Vie de M.
Turgot, ‘nothing should be arbitrary and all should aim, not at the greatest
utility for society — a vague principle, and a fertile source of bad laws — but
1913-23, III : 486, 662, 663). ‘The words tutélaire and protectrice are inappropriate, tend to
heresy and hurt free ears . . . ; whoever says tutor says minor, whoever says protector says
protégé . . ., a relation where one side submits to the other . . . whereas the real relation is
between principal and agent’ (III : 663). The idea of a despotisme légal ‘tarnishes the writings
of the économistes and ought only to be read in Linguet’ (III : 486-7).
11. See Baker 1975, chap. 4; Grofman and Scott 1988 and the subsequent debate : Estlund,
Waldron, Grofman and Scott 1989 ; Young 1988 ; McLean and Hewitt 1994.
An ‘Exception culturelle’ ? 7
at maintaining the enjoyment of natural rights’ (Condorcet 1786 : 186-7) i.e.,
liberty, security and property.
In a modern State, therefore, a good tax system should not antagonise
individuals against society or government ; it should respect the fundamental
rights of citizens; and citizens must understand for which purpose taxes are le-
vied. ‘Public expenditures are made in the interest of all, all should contribute.’
(Turgot 1776b : 183)
2.2 ‘L’institution des dépenses publiques’
This is the reason why, before dealing with the question of taxes in detail,
we need to address the question of what the State should do ‘in the interest of
all’ — and, quite possibly, how much should the State do. Sensationist political
economists were aware of the importance of this question, and Condorcet in
particular sought an answer. But the problem itself was stated most clearly
and explicitly by Rœderer in the ‘Prospectus’ of a book he was planning to
write on public ﬁnance. 12 Hitherto, he notes, authors who dealt with public
ﬁnance limited their attention to the revenue side of the question — taxes,
public debt — and neglected the expenditure side ; or, when they did take it
into account, it was only to state that : ‘One must economize on expenses’.
But, he went on, this principle is totally inadequate, and not even true for all
cases because it is impossible to reduce public expenditure beyond a certain
point (Rœderer 1791b : 3).
What Rœderer calls the ‘institution of public expenditure’ — ‘bound so
closely to the foundations of society and to the Constitution’ (ibid. : 2) —
should come ﬁrst : and from its knowledge ‘a large part of the principles of
a good system of public revenue’ will follow (ibid.). It is thus necessary to
establish the principles which will clearly show :
which properties must be in common or national, what works or
functions — if any — must be paid for by the nation and in what
proportion . . ., what are the eﬀects of such and such public expense
on the revenue of private individuals, etc. (ibid. : 3)
12. This announced book (see Rœderer 1791b) was never completed. A small part of it
was published as an article nine years later (see Rœderer 1791c). Ten years earlier he was
already projecting a treaty of the kind (Rœderer 1782).
An ‘Exception culturelle’ ? 8
What are the duties of the State ? At the end of the 17th century, Bois-
guilbert maintained that the State should not interfere with economic agents
in markets, and in substance limit its action to the minimum but fundamental
tasks of police, justice and defence (Faccarello 1986 : ch. 4). Turgot agrees with
this : the ﬁrst duty of the State is certainly to use public and military strength
‘in order to maintain the private property of people in the country and to
protect them against foreign attack’ (Turgot 1776b : 183). Consequently, he
wrote to Richard Price, criticizing the constitutions of the various American
States, of the necessity that one ‘reduce to a minimum the number of tasks
that a government should undertake’ (22 March 1778 ; in Turgot 1913-23, V :
535). These ideas were already expressed in the ‘Éloge de Vincent de Gournay’
which he wrote for Marmontel in 1759 (Turgot 1759 : 602-3).
3.1 Rivalry and exclusion
But the role of the State does not end here. While the public authority
should not do what people can do for themselves on a private basis — and
in a much more eﬃcient way (ibid.) — it has nevertheless to intervene each
time that markets fail to work properly, i.e. each time that there is, in modern
words, a ‘market failure’. These interventions also entail expenses made ‘in the
interest of all’ : the State has to ﬁnance the production of some public goods
other than police, justice and defence, or even limit the scope of property
This is also what Condorcet meant when, among the many deﬁnitions he
gave concerning the object of public ﬁnance, he always mentioned ‘public pros-
perity’. Taxation, as he writes for example in his Essai sur la constitution et
les fonctions des assemblées provinciales, ‘ceases to be legitimate if it exceeds
the amount necessary for the defence of the State, for the maintenance of the
peace and security of the citizens, and for those works and establishments really
useful to common prosperity’ (Condorcet 1788b : 279).
But what are these ‘works and establishments’ of which the State should
be in charge ? Under what circumstances should they be introduced ? Some
interesting pointers on these issues can be found.
An ‘Exception culturelle’ ? 9
A ﬁrst issue has to do with the nature of goods. In a discussion of the
usual deﬁnition of the right of property as the right to use and abuse, Turgot
describes the problem of rivalry or non-rivalry in consumption. ‘There are some
objects’, he writes,
that . . . all people can enjoy at the same time without harming one
another. There are also other objects which are destroyed in use
or, even if they are not destroyed, can only satisfy one man at a
time . . . such as food. (Turgot 1753-4a : 381)
And he adds : ‘All the objects in nature can be classiﬁed under these two
groups’, or ﬁnd themselves in an intermediary position; ‘from the sky that
everyone can see, to the food which can satisfy only the hunger of a single
individual, the endless variety of all beings surrounding us compose all possible
shades between these two extremes’ (ibid.).
The criterion of exclusion is not explicitly dealt with here by Turgot but
we must note that, of the two extreme points of the spectrum, the ﬁrst — the
sky — has no price and nobody can be excluded from its enjoyment; whereas
the second — food — is, according to Turgot, the best example of a good for
which private property and, at the origin of society, exclusive possession by the
‘ﬁrst occupier’ is most complete. Such a good can only be acquired through
work, or by paying a price to the owner. The context of this discussion is a
book on trade, money and wealth that Turgot intended to write and for which
he stressed the importance of the determination of prices in markets through
the free movement of supply and demand, the eﬃciency of free competition,
and the fundamental role of private property in all these processes.
By contrast, however, a criterion for exclusion is clearly stated by Condorcet
in Essai sur la constitution et les fonctions des assemblées provinciales where
he raises the problem of the free rider. He notes that if the principle of justice
is to be interpreted rigorously, an expense ﬁnanced by taxation on account of
its general utility should only be introduced if all the taxpayers agree to pay
for it ; otherwise some people can beneﬁt from it without giving anything in
exchange. But, he remarks, this may not always be the case :
if, at the same time, it is impossible or very diﬃcult to prevent
those who did not wish to contribute towards this expense from
beneﬁting from it, we can consider as legitimate the obligation to
An ‘Exception culturelle’ ? 10
contribute, even independently of unanimous consent. (Condorcet
1788b : 280)
It is true that in this text, when citing expenses having a common ‘utility’,
Condorcet only refers to public expenditure in respect of public works, and not
in respect of the fundamental duties of police, justice and defence — all items
for which, quite probably, the problem was thought obvious. Nevertheless the
general criterion is stated explicitly :
Two conditions are therefore necessary to legitimate the devotion
of tax to useful expenses : it is necessary that the utility of these
expenses be proved, and also that they not be at the sole expense
of those who consent voluntarily to them, if they are unable to
prevent others from also beneﬁtting from them. (ibid.)
This is the reason why Condorcet, in his Vie de M. Turgot, listed ‘public
works’ as an expense to be ﬁnanced by taxation. ‘The state of society’, he
writes, ‘necessarily requires public works useful to all citizens or to the inhabi-
tants of city, village, or district’ (Condorcet 1786 : 185). And, in fact, one of the
main examples of such works concerns the basic infrastructure of a country :
rivers, canals and especially a developed road network allowing easy commu-
nication between provinces, towns and villages. This is not only of importance
to the political and administrative organization of the kingdom. In the opinion
of Turgot and Condorcet, this is above all an essential condition for the reali-
zation of free trade and its eﬃciency — especially as regards the grain trade
and thus the uniformity and stability of agricultural prices.
Two problems, however, require discussion here. The ﬁrst concerns the pos-
sibility of the private construction and/or exploitation of roads ; the second,
the level — central or local — at which the expense should be determined and
also paid by the public authorities.
3.2 Against private concessions
As with many public goods, it is clear that ﬁnancing the construction
and/or maintenance of roads does not necessarily entail public expenditure ;
it can also be done privately in exchange for a concession such as a system of
tolls. But by the end of the Ancien Régime public opinion was overwhelmingly
against tolls which were regarded at the very least as arbitrary, unjust and
An ‘Exception culturelle’ ? 11
damaging to trade — they were considered to be naked privilèges. A Commit-
tee was established in 1724 to examine the legitimacy of these tolls; 13 and in
1738 the Contrôleur général Orry decided in favour of the corvée system for
the construction of the routes royales. But as criticisms of the corvée increased,
tolls were again proposed by some as a solution for roads as well as for canals.
The Contrôleur général Bertin was supposed to have begun plans for this at
the beginning of the 1760s. Later on, authors like the abbé Coyer (1779) and
Fer de la Nouerre (1786) wrote in favour of a reformed system of tolls, follo-
wing the English model of the ‘turnpike toll’ and ‘turnpike trusts’. However,
the great majority of authors always opposed tolls (Conchon 2002 : chap. X).
Turgot also rejected this conception. In a letter to Daniel Trudaine, then
director of the administration of Ponts et Chaussées, he argued against it.
This letter, dated 7 September 1762, seems unfortunately to have been lost.
But Vignon (1862 : 62) summed up Turgot’s arguments : a system of tolls is
troublesome for trade ; and it is moreover unable to yield suﬃcient money to
repay the invested capital and also make a proﬁt.
The ﬁrst argument relates to the basic hostility of Sensationist economists
to all kinds of impediment to the free circulation of commodities as well as of
persons. Naturally this was for economic reasons : 14 complete free trade was
needed in order to stabilize the economy and generate prosperity; and tolls
were considered to be a kind of indirect tax and as such damaging to the pro-
duit net. Moreover, the history of tolls in France showed — this was a usual
and important complaint — that those who beneﬁted from toll fees did not
properly maintain, if at all, the sections of road or canal they were supposed
to manage. In this respect private enterprise proved to be deﬁcient, proba-
bly because competition could not function properly in this area of economic
The second argument is rendered more clear if we note that the kind of road
necessary for agriculture and the implementation of free trade were not just the
highways linking big towns, but also, as Condorcet stresses (Condorcet 1788b :
13. The task was immense. The Committee was still active some decades later.
14. But the reasons could also be political : Condorcet, for example, was of the opinion that
roads and streets are by nature the property of all in general and of nobody in particular :
this is a just and necessary condition for the enjoyment of human rights (Condorcet 1788b :
An ‘Exception culturelle’ ? 12
408), a network of good roads linking up districts and villages. The provision of
such roads was probably not proﬁtable for private entrepreneurs, even if their
toll rates were very high — and therefore also economically damaging.
3.3 Local public goods and clubs
It should be noted however that although roads have to be ﬁnanced by
the State, such ﬁnance need not be centralized in the hands of the govern-
ment itself. This kind of public good is best ﬁnanced and produced by local
assemblies or authorities — Turgot’s assemblées municipales, Condorcet’s as-
semblées provinciales — naturally in coordination with each other and with
the central government. Contrasted with defence, for instance, they are a kind
of local public good. Turgot wrote to Price that it is necessary ‘to institute
local subordinate assemblies which, carrying out all the local tasks of govern-
ment, discharge the members of general assemblies from the duty of so doing’
— the authority of a general assembly being directed only to ‘general objects’
(22 March 1778, in Turgot 1913-23, V : 535-6). 15
The need to distinguish diﬀerent levels for the imputation of public ex-
penditure — and implicitly the distinction of diﬀerent kinds of public goods :
general or local — is also dealt with by Condorcet and Rœderer. Two interes-
ting suggestions can be noted brieﬂy here.
The ﬁrst came from Condorcet. His ideas on the constitution of diﬀerent
kinds of assemblies and their voting processes are well known. But it is often
forgotten that in the Lettres d’un bourgeois de New Haven à un citoyen de
Virginie (Condorcet 1788a) and the Essai sur la constitution et les fonctions
des assemblées provinciales (Condorcet 1788b), he also covered problems such
as the determination of the size of the budget, whether at national or pro-
vincial level — public ﬁnance belonging to those ‘general objects’ which, in
a free nation, political institutions should decide upon in a democratic way.
However this way of deciding public expenses and revenues does not gainsay
the rational and theoretical determination of what exactly the State should do.
According to Condorcet, the voting process should not only respect some basic
democratic rules ; it should also be organized in such a way that the outcome
15. Another echo of Rousseau may be seen here.
An ‘Exception culturelle’ ? 13
be in conformity with truth, i.e. with that which reason suggests. This point
is of course linked to the problem of expressing more precisely the meaning
of Rousseau’s general will. This aspect of the question is worth emphasizing
for modern readers, who might ﬁnd it unfamiliar. As Keith Baker rightly em-
phasised, 16 Condorcet’s aim, especially in another well known book of his, the
Essai sur l’application de l’analyse à la probabilité des décisions rendues à la
pluralité des voix (1785), was to address a major political question :
Under what conditions will the probability that the majority de-
cision of an assembly or tribunal is true be high enough to justify
the obligation of the rest of the society to accept that decision ? . . .
Condorcet saw the process of political decision-making, as did Tur-
got, not as a means of ascertaining the strongest among a number
of opposing parties — not, that is, as a mere expression of will —
but as a method for the collective discovery of truth. (Baker 1975 :
The problem is of course to determine what is the truth, i.e. what ‘reason’
has to say on this point of public economics.
The second proposal came from Rœderer. In his article ‘Des dépenses des
villes’ (1797b) — intended to oppose the re-establishment of city tolls — he
tries to state clearly how city expenses should be ﬁnanced. The just way to
determine who should pay for theses expenses, he writes, is to distinguish the
expenses which beneﬁt all society and which should therefore be charged to
the State from those which beneﬁt only the local landowners and which ‘like
the expenses of an association or a club’ (Rœderer 1797b : 568) should be paid
by them in the form of a local tax. We cannot here enter into the details of
the analysis. But the principle is clear enough (ibid.) :
If towns were only used by landowners for their pleasure, the ex-
penses of towns would only be the expenses of a club and should be
charged to those who ﬁnd in them pleasure or utility, and landow-
ners living in the countryside should not be asked to contribute.
But as towns are also the place where those who have public em-
ployment live, since public employments are established for general
interest, the expenses of towns seem in this respect to be due from
the whole society ; or, at least, society must pay a share proportio-
nal to the number of citizens carrying out public functions.
16. See also Granger 1956, Rashed 1974, Grofman and Feld 1988, Young 1988, 1997.
An ‘Exception culturelle’ ? 14
4Externalities and merit goods
As Sensationist political economists started their analysis from natural hu-
man rights, they were careful to suppress anything that might diminish these
rights and favour everything that might make them more eﬀective. No wonder,
then, that they paid great attention to what, today, we call externalities and
merit goods — from their point of view there was no doubt that this was a
second kind of market failure.
4.1 Coping with negative externalities
We ﬁrst have to confront the existence of negative externalities. In the eco-
nomic ﬁeld they are a consequence of the misuse of liberty and private property.
This is why, while necessary public expenditure on police, justice and defence
is made to assure the liberty and the security of citizens and their private pro-
perty, liberty and the right of property are not to be understood in an absolute
way. The latter can harm people and they therefore have limits of which the
legislator must be aware. The right of property is, admittedly, a natural right,
and it is useful to society so long as it possesses positive externalities with
respect to the incentive to work, to invent and hence generate prosperity and
growth. But this right must be regulated as soon as these positive consequences
are reduced, or checked, by negative eﬀects. Turgot clearly states this in an
early manuscript : 17
Natural right seems to allow everyone to use his landed property
as he wishes. This is a consequence of the right of property . . . but
there is no doubt that the legislator can regulate this use for the
general utility of society .. . The right of property is established on
general utility; it therefore depends on it, and the legislator has
the right to keep a watchful eye on the way in which each owner
uses his land (Turgot 1753-4b : 439).
With this qualiﬁcation, however : ‘public equity and interest’ also command
the legislator ‘to damage as little as possible the interests of the owner’ (ibid.).
Condorcet is of the same opinion. ‘Be careful not to give the right of property
17. See also, for example, Turgot’s Encyclopédie article ‘Fondation’ (Turgot 1757), and
Condorcet’s comments in his Vie de M. Turgot (Condorcet 1786 : 142, 180, 188 for example).
An ‘Exception culturelle’ ? 15
a scope it does not have’, he warns (Condorcet 1788b : 450). In the presence
of negative externalities and the unwillingness of some owners to alter their
property in order to suppress these eﬀects, the State is not only entitled, but
also obliged, to intervene. The right of public authorities here cuts across the
right of property. In what way, and to what extent ? ‘This right of the public
authorities does not consist . . . in taking away a property, it is a right only to
change its form’ (1788b : 509), i.e., the right ‘to replace it by another property
of an equal value; to require from the owner, not the sacriﬁce of his property
but that of the personal reasons which induced him to prefer this particular
property to any other of a similar value’ (ibid. : 428). 18
In the text quoted above, Turgot gives an example : in his opinion, the
legislator ‘can prevent a man from altering a useful fecundity into a sterile
magniﬁcence, from transforming a piece of land able to feed people into a pro-
menade for a few idle men’. This is of course rather radical and, as a matter
of fact, Turgot never advised public authorities to forbid the transformation of
cultivated land into ornamental gardens — probably because people were not
starving at the time. But he was seriously concerned about similar problems.
At that time, in France, a typical and important question of negative externa-
lities was raised by the existence of undrained marshes which were maintained
as such by their owners either out of ignorance, lack of money or, more often,
because these marshes were used by millers or blacksmiths for their activities,
or even considered to be places for ﬁshing and hunting. Sometimes, tempora-
rily stagnant and unhealthy water was even the consequence of road or canal
construction. These marshes obviously had a strong negative externality im-
pact upon their surroundings, damaging the health of people and animals and
bringing about an undercultivation of land.
Turgot’s concerns are reported by Condorcet in his Vie de M. Turgot
(Condorcet 1786 : 147-8) and he himself came back to the problem two years
later in his Essai sur la constitution et les fonctions des assemblées provinciales
(Condorcet 1788b : 421-8). In 1786, 19 he proposed that public authorities buy
the marshes and even the watermills or other workshops built on them, drain
18. The same idea will be expressed in the 1789 ‘Déclaration des droits de l’homme et du
citoyen’, Article 17.
19. In 1788 the details were somewhat diﬀerent and sometimes unclear.
An ‘Exception culturelle’ ? 16
them and transform them into agricultural land. The increase of the produit
net of these pieces of land makes them more valuable and permits the au-
thorities to be repaid for all expenses incurred in this process — a process
which also generates increased revenues for surrounding properties on account
of the suppression of former negative externalities. And last but not least : the
intervention of public authorities has to be made at the local level for three
reasons : an adequate knowledge of local details is required ; people must know
and trust the institution in control of the operation ; and the expense has to
be born locally because of the purely local expected beneﬁts.
4.2 Encouraging merit goods and positive externalities
Merit goods can also give rise to some public expenditure. Turgot, for
example, was aware of popular interest in plans for social and health insurance,
and of course for education. But for insurance (Turgot 1762) as well as for
education (Turgot 1757 : 590-1) he ﬁrst thought that such expenses should be
left to the private decisions of the people. Later, however, in the context of
his grand scheme aimed at the reform of French administrative and political
structure on the basis of a series of assemblées municipales (Turgot 1775), he
planned compulsory civic education.
Condorcet developed these ideas and included expenditure upon merit
goods as part of necessary public expenditure. In the ﬁrst of the two Mé-
moires sur la ﬁxation de l’impôt he stressed the importance of an institution
that could be of some assistance to citizens and their families in case of acci-
dent, death, or simply old age. According to him, ‘everybody is interested in
buying, sacriﬁcing a part of his present enjoyment, the certainty of protection
for himself or his family from falling on hard times’ (Condorcet 1790a : 430-1).
It is true that, in his view, subscription to a form of life insurance would not
have been compulsory. The implementation of the project would however have
required the creation of a public ﬁnancial institution which could repay to all
depositors, or his or her family, ‘either a proportionate amount of money, or a
life annuity the payment of which would start after some years’ (ibid. : 431).20
20. In his Esquisse d’un tableau historique des progrès de l’esprit humain Condorcet admits
that such an institution can also be established with private capital; but he still thinks that
public authorities have an important part to play in this ﬁeld (Condorcet 1795 : 439).
An ‘Exception culturelle’ ? 17
But with respect to merit goods, the main public concern should be instruc-
tion publique. Condorcet always insisted on this point, before and after 1789.
He put forth a scheme for public education in his Essai sur la constitution
et les fonctions des assemblées provinciales (1788b : 471-87) and extensively
developed his ideas in a series of ﬁve memoirs published in the Bibliothèque de
l’homme public (1791) and a report for the National Assembly (1792). In his
opinion, instruction publique is necessary for four main reasons : ﬁrstly as in
Adam Smith, as an antidote to the destructive personal eﬀects of the division
of labour ; secondly, as a powerful agent of social unity, so that growing diﬀe-
rences between rich and poor, the ignorant and the learned be avoided; thirdly,
permitting a high rate of scientiﬁc progress and economic growth, i.e. strong
positive externalities ; ﬁnally, and this is probably the main reason — as a po-
werful factor in the respect for and implementation of human rights. ‘Up until
the present’, he stresses in his Essai, ‘no nation had public education worthy of
the name : i.e., an education in which all individuals could acquire, in their ﬁrst
years, precise ideas of their rights and obligations; learn the main provisions of
the laws of their country; and acquire the elementary knowledge necessary for
the conduct of common life’ (Condorcet 1788b : 471). Some people, he notes,
would object that these establishments cost money. But :
few establishments are so useful; and we can even say that these
expenses are necessary, such as those devoted to the execution of
laws — for, without public instruction, one can only superﬁcially
fulﬁl the object of laws : the preservation of the rights of all citizens.
(ibid. : 481)
5The role and meaning of taxation
We will have to return to State expenditure in the next section, but, in
order to do so, we ﬁrst have to specify more exactly the nature of State revenue.
Suppose that the tasks to be assumed by the State are known : what is the
proper way of ﬁnancing them? And is there any link between this ‘proper way’
and the general theory of value and markets ?
An ‘Exception culturelle’ ? 18
5.1 Making the right choice among ‘ways and means’
As for the ﬁrst question, diﬀerent solutions are possible, to be implemen-
ted in isolation or in coordination. Money can originate in Crown property ;
it can also come from a monetary source, or be borrowed from the public ;
ﬁnally it can be obtained through taxation. In France, the ﬁrst possibility had
been considered for centuries to be the only just solution, and generations of
lawyers and political thinkers had supported the dictum : le roi doit vivre de
son domaine. But it had for a long time been more evident that great transfor-
mations in the role and functions of the State should be ﬁnanced in some other
way. Crown property only yielded a small part of public ﬁnancial means; it
was also seriously mismanaged. In addition, and more fundamentally, the very
existence of State property was seriously questioned : it was thought to be the
heritage of the dark ages. For all these reasons, said the Sensationist political
economists, a modern and rational State should dispose of it — the principle
that Crown or State properties are inalienable simply not being true. 21 Ac-
cording to Condorcet, this was Turgot’s opinion, and this sale was one of the
functions of the assemblées municipales which the minister was seeking to es-
tablish (Condorcet 1786 : 143-4). This is also what Condorcet himself proposed
(Condorcet 1788b : 451). As for Rœderer, he repeated in the ‘Prospectus’ of
his projected book on public ﬁnance that ‘a great nation should never obtain
revenue from common properties’ (Rœderer 1791b : 3).
The second possibility listed above — the monetary source — was discoun-
ted in a country like France which, unlike England, did not have a modern
banking system ; in which John Law’s ‘system’ and bankruptcy were still re-
membered ; in which, ﬁnally, ‘monetary’ State ﬁnance meant in fact monetary
manipulations. This point was again to be illustrated dramatically when the
assignats became money during the Revolution.
But the monetary solution actually also means public debt — the third
possibility — and State borrowing was strongly rejected by our authors. State
borrowing had been extensively used by the French Monarchy and the result
was disastrous : a huge public debt, high interest rates, and successive postpo-
nements of necessary ﬁnancial, administrative and political reforms. ‘No loans’
21. Such a sale, together with that of the clerical, would also have had the advantage of
paying back part of the public debt.
An ‘Exception culturelle’ ? 19
Turgot told the King when he accepted his nomination as Contrôleur général
des ﬁnances. Why? ‘because a loan always diminishes the available income ;
it requires after some time either a bankruptcy or an increase in taxation’ (24
August 1774, in Turgot 1913-23, IV : 110). This is not to say that loans should
never be taken out. But they must only be used in exceptional circumstances.
‘In peacetime one can borrow only in order to settle an old debt, or to repay
previous loans made at a higher interest rate’ (ibid.), i.e., for the management
of outstanding debt inherited from the past.
Symptomatically Rœderer did not even mention borrowing when he listed
the sources of public ﬁnance (Rœderer 1791b : 3). 22 And when Condorcet pro-
posed a resort to State borrowing in 1790, he did it in dramatic circumstances
— as part of the administrative, political and economic reorganization of the
country. ‘A loan is impolitic and even unjust’, he writes, ‘if, in order to spare
those in favour of whom expenses are made, the burden is placed upon their
descendants.’ But given the situation of France in 1790 and the scope of the
new policy — especially proper management of public ﬁnances, repayment of
debt and the sale of Crown properties — the situation of the country would in-
evitably have improved, wealth increased and future taxation diminished. This
is why borrowing in such circumstances was not unjust : future generations who
would have beneﬁted greatly from the Revolution, should also be required to
contribute to present and signiﬁcant eﬀorts on the part of the nation and thus
share its costs (Condorcet 1790a : 414-5).
Of all the possible solutions listed above there thus remains only the fourth :
taxation. And, according to Sensationist economists, this should be the normal
way of ﬁnancing public expenditure. Rœderer reminds his readers of this in the
introduction of the ﬁrst issue of the Journal d’économie publique, de morale et
de politique, following the political, economic and ﬁnancial turmoil of the ﬁrst
Revolutionary years which ended with the collapse of the assignats.
Incorrect ideas in ﬁnance disappeared with forged currency . . . All
now agree to make taxation the source of State resources, and to
22. Rœderer however did not reject loans entirely : see his comments on a question asked
by the Institut national for the prize of the Classe des sciences morales et politiques : ‘For
which objects and on what conditions can a Republican State issue a public loan ?’ The
question was oﬃcially asked four times but the Classe — and Rœderer himself who was a
member of the Institut — did not apparently receive any satisfactory contribution. See for
example Rœderer (1797c).
An ‘Exception culturelle’ ? 20
levy taxes through institutions favourably disposed towards pro-
perty and aware of its true interests. (Rœderer 1796 : 160)
This position also accords with the conception of the nature of the State in
a free nation where sovereignty lies with the people, citizens are responsible,
and public expenditure made for the common good.
5.2 Beneﬁt approach and/or ability-to-pay principle ?
The normal way to ﬁnance public expenditure was thus taxation. But how
should taxes be levied equitably ? It is certain that the (now) well-known clear-
cut distinction between two views — the beneﬁt approach and the ability-to-
pay principle — would have puzzled eighteenth-century authors who would
have thought rather in terms of the complementarity of these two views rather
than of their opposition. Nevertheless, is it possible to determine which of the
two approaches best describes the problématique of Sensationist economists?
Here equity, eﬃciency and incidence are intertwined.
There is no doubt that the position of Turgot and Condorcet is best des-
cribed as a ‘beneﬁt approach’. For them just taxation is where each pays in
proportion to the beneﬁt received from public expenditure. ‘The public expen-
ses’, Turgot writes, ‘are made in the interest of all, all should contribute ; and
the more one beneﬁts from the advantages of society, the more one should feel
honoured to share their charge.’ (Turgot 1776b : 183) And he adds :
One must return to the true principles, to justice, which charges
the expense to those who have an interest in it. (ibid. : 191)
Condorcet was of the same opinion. The duty of obeying public authorities
and paying taxes, he writes, is ‘the price of the beneﬁts that every citizen’
receives from political association (Condorcet 1788b : 280). Taxation, ‘in order
to be just, must be distributed proportionally to the advantages derived from
society’ (Condorcet 1786 : 186). At the end of the Revolution, Jean-Baptiste
Say wrote in a similar vein (Say 1803, II : 457).
Here we must again distinguish between two kinds of public expenditure :
for the general services of police, justice and defence — the ‘absolutely ne-
cessary expenses’ in the words of Condorcet — or for public works, or for
establishments of general utilities — the ‘useful expenses’.
An ‘Exception culturelle’ ? 21
That citizens must share the costs of the former seems evident to Turgot
and Condorcet and they do not emphasize the point. Problems arise however
when, as a consequence of the Physiocratic theory of the exclusive productivity
of agriculture, they impute the burden of the tax solely to landowners. There
seems to be a contradiction, for it seems that landowners, even if they get the
entire produit net, are not the only ones beneﬁting from this public expenditure.
All that it is possible to say is that landowners beneﬁt more from the general
services of the State : they are supposed to be in need of more protection
from the State, and to be more attached to their country, than the rest of the
population. This is what our authors try to prove, stressing for example the
fact that they cannot conceal their estate or leave the country — carrying with
them their wealth — in case of danger.
Who really beneﬁts from public expenses ? asks Turgot. He notes a point to
be dealt with in detail in a projected book on taxation, that landowners only
have an interest ‘in the preservation of all other properties, the maintenance
and the free disposal of which is necessarily of beneﬁt to them’ : seeking to re-
fute ‘all pretexts according to which it is alleged that people with only movable
properties have the same interest.’ (Turgot, 1763 : 295-6) And further :
I have said already that only the landowner should contribute to
taxation ; one reason is that he alone ﬁnds his interest in the pre-
servation of the permanent order of society. What does the future
of the government matter to the industrious man ? He will always
have the same resources in his hands : it is perfectly indiﬀerent to
him whether Pierre or Jacques puts him to work. The strongest
argument is that the landowner alone has a true income. (ibid. :
Just taxation, Condorcet writes, ‘must be proportional to the produit net
because the advantages generated by establishments ﬁnanced through taxes
are enjoyed more securely and are an improvement of this very product —
advantages that we can also consider as proportional to it’ (Condorcet 1788b :
In fact the contradiction stated above cannot be resolved in pure economic
terms. All such arguments are closely linked to political debate about who,
in society, is a member of the political community, i.e., who is a citizen, with
the capacity to vote. In 1788 Condorcet developed his position in Lettres d’un
An ‘Exception culturelle’ ? 22
bourgeois de New Haven à un citoyen de Virginie and in his Essai on the
assemblées provinciales.23 All the above arguments depend thus on a speciﬁc
conception of the nation, and on the deﬁnition of the droit de cité by the
possession of a piece of land. The problem is settled, but only formally : the
underlying question remains, and can only be answered more cogently with
the aid of the distinction, clearly made by Rœderer, between owners of the
produit net and landowners. Roederer still accepts the Physiocratic conception
of the exclusive productivity of agriculture which remains, in his opinion, the
true explanation of the origin of the produit net. But this produit net is not
entirely appropriated by the landowners. They must share it with all other
owners of capital, whatever the sector in which these capitals are invested and
whatever their type — productive, ﬁnancial or even human capital. And the
distribution of the produit net is eﬀected by competition, in proportion to the
amounts of capitals invested (Faccarello 1991 : 69-78). This is what Roederer
calls the ‘right of capitals’24 which, without modifying the Physiocratic view
of the incidence of taxation — the tax bears always ultimately on the produit
net — nevertheless explicitly makes the doctrine of the impôt unique on the
revenue of landowners unnecessary. 25
Turgot and Condorcet analyse in a more detailed way the other type of
public expenses — the ‘useful’ ones, like those for public works. The point is
well illustrated in the case of the construction of roads, about which Turgot
wrote for over 15 years.
The main roads in France were built under the supervision of the admi-
nistration of Ponts et Chaussée. This administration had ingénieurs in the
Généralités who worked as subordinates to the Intendants. But the roads were
made and repaired by unpaid peasants and workers — the régime of corvée
royale. For reformers like Turgot, this was of course an inequitable and inef-
ﬁcient way of organizing things. 26 It was ineﬃcient because the cost for the
23. He changed later his position.
24. A process similar to the one proposed later by Marx with his transformation scheme
of labour values into production prices.
25. Theoretically the tax can be levied on the revenue from any type of capital : capitalist
competition will facilitate the distribution of the tax burden between all capital owners
proportionally, i.e. on all those who have a right to share in the produit net (Faccarello
26. The case of Rousseau who was in favour of corvée, is the most important exception.
An ‘Exception culturelle’ ? 23
people and for the economy was very high — people were not paid, they wor-
ked unwillingly, had to neglect their own works in the ﬁelds, did not know how
to do the diﬀerent tasks in a proper way, and so forth. 27 It was inequitable
because those who paid such a high tax were by no means those who beneﬁted.
In Turgot’s writings, this is a persistent leitmotiv which induced him to abolish
the corvée and to replace it by public works supervised by professionals and
ﬁnanced by a special tax (Turgot 1776a-c). He wrote to the King :
The spirit of this operation is to consider the contribution for roads
as a local charge, supported by those who beneﬁt from this expense.
(Turgot 1776a : 151)
In Turgot’s opinion only landowners beneﬁt from the construction of roads,
through an increase in the value of their estates. This is what he repeated time
and again — for example to Trudaine de Montigny (20 September 1764, 1913-
23, II : 353). And the preamble of the edict abolishing the corvée stresses
the fact that ‘public roads are useful to landowners because of the value that
an increase in communications lends the product of their land . . . Only the
landowning class will beneﬁt from a rapid and immediate increase of wealth,
and this new wealth will diﬀuse to the people only in so far as these people
purchase it with new labour. It is thus the landowner class which beneﬁts from
the making of roads ; it alone should provide the avances because it gains in
so doing’ (Turgot 1776c : 204-5).
During the governmental discussion preceding the edict, the minister of
Justice Armand-Thomas Hue de Miromesnil raised the obvious objection that
landowners are not the sole beneﬁciaries of roads, but that travellers, hauliers
and peasants also beneﬁt. Turgot answered :
Travellers go faster thanks to the beauty of roads. The beauty of
roads attracts travellers, and multiply their number. These travel-
lers spend money, consume local goods, and this always turns to the
advantage of the landowners. As for hauliers, their expenses dimi-
nish as they spend less time on roads and use more sparingly their
carriage and their horses. From these reduced transportation costs
results an ease in transporting goods farther, and selling them for
Turgot alludes to him.
27. Arguments summed up in Turgot 1776c : 201-4.
An ‘Exception culturelle’ ? 24
a good price. All the advantage is thus on the part of the landow-
ner who sells his goods for a better price. As for the peasants, Mr
Keeper of Seals will allow me to think that the pleasure of walking
on a well-metalled road does not compensate them for the pain
they suﬀered in constructing it without any wage. (Turgot 1776b :
So far, only the ideas of Turgot — shared by Condorcet — have been sum-
marised, and they undoubtedly follow what was to be called later the beneﬁt
approach. 29 As for Morellet and Rœderer, it seems that, during the Revolu-
tion, they insisted on the ability-to-pay principle (Morellet 1790 : 118; Rœderer
1791a : 515-6). In this respect, they were more in line with predominant opinion
in the National Assembly. It is to this principle to which the celebrated 1789
‘Déclaration des droits de l’homme et du citoyen’ refers in its Article 13. But
this conception of taxation can lead to the same practical conclusion as that of
the beneﬁt approach. This is true for Morellet : the criterion of the ability-to-
pay is the annual revenue ; and as the produit net is paid to the landowners as
rent, they alone should be taxed. The case of Rœderer is a bit diﬀerent : in his
opinion, while the produit net is created in agriculture, while taxes are paid out
of this produit net, the landowners must not necessarily be the sole taxpayers.
Competition will in any event distribute the amount of taxes proportionally
towards those who share the produit net.
6The optimal amount of public expenditure and
If both sides of the budget — public expenditure and revenue — have
to be considered in connection with each other, the question naturally arises
of the determination of the total amount of expenditure and taxation. Some
expenditure is absolutely necessary, and has to be made : for justice, police
28. As for merchants, the case is similar. ‘If the merchant beneﬁts from the better condition
of the roads, this is good for the landowner. What is the function of a merchant? Is he not
the agent of the landowner for the sale of his goods and for the acquisition of commodities
for his enjoyment? Is the landowner not paying for all the expenses and costs supported by
the merchant?’ (Turgot to Fontette, 6 February 1775, in Turgot 1913-23, IV : 354).
29. It is interesting to note that Turgot argued against taxation according to the ‘faculties’
(Turgot 1763 : 297-8).
An ‘Exception culturelle’ ? 25
and defence. But what about the remainder ? Even if the State should only
spend for the beneﬁt of all, the list of the projects which could be realized
in this way could be long. ‘Some public expenses’, Rœderer writes (1791b :
3), ‘are absolutely sterile, such as expenditure for war, and for the navy; but
they are nevertheless necessary because they are protective. Some expenses
are also really productive, for example on roads and canals ; these must be
increased . . . ; and taxes which facilitate their construction must be considered
as savings, as capitals that taxpayers invest at the highest rate of interest.’ But
how is it to be decided what should be done ? Obviously the State cannot do
everything supposed ‘useful’, and it is necessary to determine a limit. Which
criterion should be adopted, so that a choice can be made ?
Condorcet (1786, 1793) sought an answer by relying precisely on the in-
terdependence of State expenditure and revenue. Once it is clear that, for any
citizen, a tax should be the counterpart of the utility generated by the pu-
blic expense it helps ﬁnance, it is necessary to recognise that paying a tax
also prompts a kind of pain : the sacriﬁce — and sometimes ‘painful hardship’
(Condorcet 1793 : 17) — which results from transferring money to the State —
a sum which therefore cannot be used for private expenditure. From this point
of view, argues Condorcet, a tax necessarily ceases to be equitable if the pain it
provokes is greater than the utility generated by the public expense. When he
examined the free rider problem and the criterion of price exclusion, he wrote
that ‘if . . . it is impossible or very diﬃcult to prevent those who did not want
to contribute towards this expense from beneﬁting from it, we can consider
as legitimate the obligation to contribute, even independently of unanimous
consent’ (Condorcet 1788b : 280). But he also stressed a dual condition : this
public expense is only legitimate :
if it is obviously useful to all and if it is proved that they [the
taxpayers] will gain from it a greater beneﬁt than the burden that
it generates for them. (ibid.)
This constitutes in fact a criterion for the determination of the amount
total of public expenditure. At which point should this expense stop ? In Vie
de M. Turgot, Condorcet gives us an initial answer : ‘The amount of taxation
[i.e. the volume of public expense] must not exceed what is strictly necessary
for the maintenance and prosperity of the people, or rather it should cease
at the point where it is in general more useful to each individual to pay the
An ‘Exception culturelle’ ? 26
tax than not to pay it’ (Condorcet 1786 : 185-6). How should this sentence
be understood ? Condorcet comes back to the problem in his 1793 article on
progressive taxation and provides a deﬁnition for this point :30
In the ﬁrst place, not all public expenses are absolutely necessary ;
some are only useful ; and, in this case, they have a limit : the point
where the utility of the expense becomes equal to the evil generated
by the tax. (Condorcet 1793 : 16)
In modern terms, the optimal amount of public expenditure is determined
when the marginal utility of this expenditure is equal to the marginal disutility
of the tax.
On the one hand, all public expenses do not have the same utility : it is thus
possible to rank them in descending order, from the greatest utility generated
to the lowest. Let us imagine a graphical representation : it would indicate,
on the abscissa, the successive volumes of these expenses — starting with the
most necessary and useful — and, on the ordinate, the utility generated by
each given volume of expense : an amount of utility which is, it is assumed,
smaller and smaller. We will thus obtain a decreasing marginal utility curve of
But, on the other hand, how should we determine the evolution of the mar-
ginal disutility of taxes and ﬁnd the corresponding graphical representation ?
A tax means a reduction in disposable income or wealth 31 — and the disuti-
lity of an amount of taxes is given by the diminution of utility generated by
the consequent lowering of disposable income. The hypothesis of a declining
marginal utility of income — or wealth — thus implies an increasing marginal
disutility of taxes. We obtain, in this way, an increasing marginal disutility
As all public expense must be ﬁnanced through taxation, each amount of
30. It is true that, in 1793, Condorcet, unlike in 1786, seems to limit this principle to the
determination of the ‘useful’ public expenses, i.e. those who are not ‘absolutely necessary’ —
for the latter, i.e. the expenses for justice, police and defence, the principle may have been
considered as applying in all cases, their usefulness being so great. Here we will disregard
31. Condorcet sometimes hesitates over which concept to use : ‘wealth’ or ‘income’. In
the manuscripts, he has the tendency to write ﬁrst ‘income’, and then to cancel and replace
it by ‘wealth’. For exemple : ‘suppose a man who has an income a wealth of two millions’
(Condorcet 1785-6 : 585).
An ‘Exception culturelle’ ? 27
such expense also represents an equal amount of tax. In the graphical represen-
tation imagined above, the decreasing marginal utility of public expenditure
can thus be confronted with the corresponding increasing marginal disutility
of taxation : the equilibrium amount of total public expenditure is thus deter-
mined — where the two curves cross.
What do we know of Condorcet’s opinion on marginal utility of income ?
As a mathematician, a disciple of D’Alembert and a member — actually the
‘secrétaire perpétuel’ — of the Paris Académie des sciences, he knew of course
the works and publications of the Bernoulli family, 32 and especially Daniel
Bernoulli’s celebrated essay published in the series of memoirs of the Saint
Petersburg Academy. Some of his manuscripts comment on Daniel Bernoulli’s
opinions. And it is of great interest to see that, while Condorcet disagrees with
the substance of Bernoulli’s essay, he nevertheless accepts the hypothesis of
a decreasing marginal utility of wealth. In his ‘Notes sur la thèse de Nicolas
Bernoulli’ (1785-6), he writes :
We are now going to discuss the principles established by Mr Daniel
Bernoulli in vol. V of the memoirs of the Petersburg Academy. This
renowned mathematician rightly notices that the value of the same
amount of money is not the same in all circumstances and for all
men ; that one hundred pounds, for example, are of greater value
for a man whose wealth is worth one thousand pound than for a
man who has one hundred thousand. (Condorcet 1785-6 : 582)
And he concludes : ‘any sum of money necessarily has a greater value for
a man with a smaller wealth’ (ibid. : 583). Of course this reasoning implicitly
assumes that a comparison of interpersonal utility is possible and that all
people have the same utility schedule. But in spite of these assumptions, later
explicitly made in economic theory and never totally abandoned, Condorcet’s
astonishing innovation is clearly evident here.
32. Daniel Bernoulli was ‘associated foreign member’ of the Paris Académie des sciences.
After his death in 1782 Condorcet read his ‘Éloge’ on 30 April 1783.
An ‘Exception culturelle’ ? 28
7‘Impôt de quotité’ or ‘impôt de répartition’ ?
Now that the Government knows whom to tax and by how much, what is
the best tax to be employed ? Are for example the diﬀerent kinds of income
tax equity-neutral, or must one form be preferred to any other?
7.1 The choice of a ‘direct’ tax : economic and political argu-
The ﬁrst thing to do is discard all kind of taxes not directly levied on
the produit net because they increase, in a damaging and unjust way, the tax
burden ; and their collection is harmful to human rights. This had been well
known since the Physiocrats, and even Rœderer shares this general sentiment.
The defects of ‘indirect’ taxes are summed up concisely by Condorcet :
All indirect tax is paid out of the produit net of land ; it is impos-
sible to set this kind of tax so that its incidence is proportionate to
this produit net. Collecting indirect taxes entails considerable addi-
tional costs [beyond those arising from a direct tax] which it is not
just to charge to the landowners. And indirect taxes can only be
productive by assailing the rights of the citizens with prohibitions
and humiliation. (Condorcet 1788b : 339-40)
But the question of the practical implementation of direct taxation has to
be answered. Two diﬀerent systems are possible, both of which were actually
used in France. One requires the payment of a given percentage of the revenue
of the taxpayer : it was known under the name of impôt de quotité ; in our
case, the landowner should pay, every year, this percentage out of the pro-
duit net of his land. A second system, known as impôt de répartition, consists
ﬁrst in determining the amount needed for public expenditure, and secondly in
distributing this amount across taxpayers according to their income — in the
present case, again, the produit net of land. With the ﬁrst system, the percen-
tage of the produit net paid as a public revenue is known in advance, but the
total amount of taxation is unknown; in the second system, the total amount
is known but the percentage of the produit net it represents is unknown. The
two systems, moreover, are by no means socially and politically equivalent.
In his ‘Plan d’un mémoire sur les impositions’ Turgot noted that the sys-
An ‘Exception culturelle’ ? 29
tem of impôt de quotité has many advantages (Turgot 1763 : 306-7). First of
all ‘a law could put an end to all the disagreements between the King and the
people, above all in ﬁxing a percentage for wartime and another one for pea-
ce’. Second, people, knowing these rates, would take them into account when
buying and selling land and would not count this percentage of produit net
while determining the price ; thus, ‘after some time, it is true to say that no-
body would pay the tax ; but the king would be the owner of a proportionate
share of the revenue of the land.’ Third, government revenue will vary with
the revenue of the nation; and since an increase in wealth also increases the
need for public services, these services can thus be automatically ﬁnanced. 33
Fourth, the variation of public revenue — reﬂecting that of the nation — would
indicate to the Administration whether its policy is good or bad for the coun-
try. Finally a ﬁfth advantage, Turgot stresses (ibid.), is to render the power of
King or government more independent of the people :
These advantages are important, above all in a monarchy ; because
in a republic, or in a limited monarchy such as in England, the
nation could not be content faced with the fact that the Prince
would have no need of conferring with it ; with such a law, the
Parliament of England would lose its greatest inﬂuence and the
King would soon be as absolute as that of France.
Turgot however thinks that this system of impôt de quotité to be unde-
sirable on account of two important negative aspects — political and social
— induced by the divergence of interests it creates between the government
and the taxpayers. ‘With this system’, he notes, ‘the King or government is
alone against all, and the interest of everybody is to conceal the value of his
estate’ (ibid. : 307). This is suﬃcient, in his opinion, to surrender any idea of
its implementation, and adopt instead the impôt de répartition.
He expressed his thought more precisely when, in 1777, having sent a me-
moir on taxation to Benjamin Franklin, 34 he answered some questions raised
33. This is, in Turgot’s text, a simple hypothesis that he did not develop. Morellet main-
tained the opposing supposition (see section 9).
34. Turgot would have liked to prevent some American States from adopting a system of
excise as in England and his purpose was thus to convince Franklin that the best tax is
a direct tax on the produit net. Ten years before, Turgot had had a discussion with David
Hume on the question of the supplementary burden generated by ‘indirect’ taxes (Turgot to
Hume, 7 September 1766 and 25 March 1767, in Turgot 1913-23, II : 502-3, 662-5).
An ‘Exception culturelle’ ? 30
by his correspondent. While the political element is still stressed,35 two other
aspects in favour of the impôt de répartition are also emphasized. In the ﬁrst
place, this kind of tax includes, so to speak, a built-in mechanism preven-
ting people from infringing the law — it obliges them to reveal their actual
income and, accordingly, to pay the appropriate tax amount. In the second
place, thanks to this mechanism, the impôt de répartition requires a less exten-
sive knowledge of the income and properties of the taxpayers — and, in 18th
century France, with no reliable cadastral survey, this was of course of great
With the ﬁrst system [impôt de quotité], the State . . . ﬁnds itself
alone against all the citizens who are all equally interested in disgui-
sing their income. With the second system [impôt de répartition],
the citizen who would like to hide his income ﬁnds himself alone
against all others who are interested in discovering it in order not to
be burdened with his share. The government, indiﬀerent spectator
to this dispute, can only act as an arbiter and impose distribu-
tive justice. With the ﬁrst system, the government must know the
absolute value of the income of each landowner, because it has to
receive a given percentage of this income. With the second system,
one is seeking less to know the absolute value of each estate than
its relative, or comparative, value. (Turgot 1913-23, V : 519-20)
7.2 The development of Turgot’s ideas
Condorcet, Morellet and Rœderer developed this viewpoint. The funda-
mental argument in favour of répartition is straightforward and follows from
all that has been said about the basic link between the expenditure and the
revenue sides of the budget. Taxation must pay for necessary public expendi-
ture, no more, no less : ‘it is thus a ﬁxed amount that it is always necessary to
levy’ (Condorcet 1788b : 303) and only the impôt de répartition can do the job.
‘The law demands a ﬁxed amount, because the needs of the State, and not the
revenue of the taxpayers, should determine the measure of the contributions’
(Rœderer 1791c : 179). Morellet approves of this point :
35. Condorcet also maintains that the impôt de quotité — contrary to the impôt de répar-
tition — creates a damaging divergence of interests between the government and the nation,
a divergence ‘from which disorder, inaccuracy and arbitrariness can only result’ (Condorcet
1788b : 304 ; see also 1790b : 440).
An ‘Exception culturelle’ ? 31
It is an indisputable principle that taxation must be exactly what
is needed to satisfy the real needs of the nation . . .. But this is
. . . totally independent of the proportion of the tax relative to the
income of the landowner; in some circumstances, the amount suf-
ﬁcient to the needs of the nation will be one tenth of the income of
all taxpayers; in some other circumstances, these needs will require
two or three tenth of this same income. (Morellet 1790 : 102-3)
Morellet also emphasizes some important and contrasting consequences of
these two kinds of tax. The negative eﬀects belong to the impôt de quotité :
while, in his opinion, the real needs of the State do not grow in the same
proportion as national wealth, this kind of tax induces governments to spend
more in a wasteful manner, simply because they automatically receive more
(ibid. : 106). And, infringing upon the right of property, such a tax would have
the ‘disastrous eﬀect’ of halting the ‘progress of wealth’, (ibid. : 107) for the
industrious citizen would be discouraged and ﬁnd less and less incentive to work
hard and better his condition. If the State constantly seeks a portion of this
increment, ‘the active, industrious and thrifty citizen would feel partly deprived
of his work and less inclined to increase national wealth through augmenting
his own’ (ibid. : 105). By contrast the impôt de répartition — or ‘absolute tax’
— presents the important advantage of favouring economic growth :
if taxation is ﬁxed as an absolute amount induced by the real needs
of political society and invariably ﬁxed until these needs change,
. . . national wealth can safely make all the progress entailed by the
industry of men and time : and the tax department, with the tax
share already determined, cannot have any claim on it. (ibid. : 104)
Another important point is worth emphasizing. The equity/eﬃciency as-
pect most extensively dealt with by these authors concerns the possibility open
to taxpayers for tax evasion. In Condorcet’s opinion, the impôt de quotité is
likewise unjust and immoral because if a citizen wishes to pay less than his or
her share, he or she can do it easily ; and ‘it induces a desire to infringe the
law; and the way is neither long nor diﬃcult from the desire to infringe upon
a law and the actual infringement of this law and all other laws’ (Condorcet
1788b : 295). The basic problem with this kind of tax lies in an asymmetry
of information between taxpayers and the tax administration, and in the fact
that the interest of each individual taxpayer is apparently independent of the
interests of all other taxpayers.
An ‘Exception culturelle’ ? 32
This is the reason why only the impôt de répartition can be just and eﬃ-
cient. As already noted by Turgot, it entails an obvious interdependence bet-
ween taxpayers : whenever one of them evades taxation, the amount which is
not paid in this way will necessarily be added to the share of all others. Under
these circumstances, each taxpayer is, in a sense, competing with all others
because their interests are opposed ; and, through this rivalry of interests —
and through a process of complaints, discussions, veriﬁcations — each of them
is eventually obliged to reveal his real level of income. ‘Any particular interest
. . . will be fought and subordinated by the interest of all’ (Morellet, 1790 :
This process — which Condorcet calls the mechanism of ‘contradiction’
due to self-interest, and Rœderer the ‘mutual censorship among citizens’ or
euphemistically ‘la douce compression de l’opinion publique’ (Rœderer 1791c :
180) 36 — was supposed to work at all levels of the distribution of the impôt de
répartition i.e., not only between individuals, but between villages, districts and
provinces or départements. ‘This contradiction . . . is the only way to establish
justice at each stage of distribution’ (Morellet, 1790 : 111). It was also supposed
to converge, within a couple of years, towards a proper evaluation of the real
estates and incomes of the citizens (Condorcet 1792b : 442 ; Morellet 1790 :
116 ; Rœderer 1791c : 186). The land tax established by the National Assembly
in 1791 was inspired by this system.37
8Proportional or progressive taxation ?
An eﬀective and just tax system thus requires that an impôt de répartition
be levied on the produit net and be proportional to it. No portion of income
should be exempt : the tax on produit net, Condorcet reiterates, is a tax on
things, not a personal tax. The law concerns ‘property, not its owner’ writes
36. An obvious objection is that the process of ‘contradiction’ could have negative conse-
quences on relationships between citizens. Condorcet argued against it (Condorcet 1790b :
37. Actually the land tax was a mixture of impôt de quotité and impôt de répartition. It
was basically an impôt de répartition ; but it was speciﬁed that the distribution of the total
amount of the tax among citizens be such that each taxpayer should not pay more than a
given percentage of his or her income. Rœderer (1791c : 181-186) approves of this, but not
Condorcet (1790b : 439-41).
An ‘Exception culturelle’ ? 33
Rœderer (Rœderer 1791c : 179). And this is also the reason why the proportion
must be uniform : if the tax disregards the actual situation of the owner, why
should one piece of land pay proportionally more (or less) than another ?
In some exceptional circumstances however — such as a Revolution and a
general reorganization of State administration — it might be necessary to esta-
blish a personal tax. And this was the case in France after 1789. The old taxes
had to be abolished and a new system introduced (Condorcet 1790b, 1793 ;
Rœderer 1791c). But at the same time both people and State had to respect
former contracts and agreements made in totally diﬀerent circumstances ; im-
posing only a single tax on landowners would thus have been inequitable. For
example, taxes formerly paid by farmers would have been abolished and shif-
ted to landowners; but this would have been unjust as long as the old leases
— which took these former taxes into account — were not renewed. The si-
tuation was similar for money loans : those made before 1789 involved a high
interest rate because of the monarchy’s ﬁnancial policy and lack of conﬁdence
in the capacity of the State to honour its obligations, and also because of the
prevailing law on usury which restricted the number of lenders. The situa-
tion changed greatly with the Revolution, and it became just to tax abnormal
beneﬁts brought about by the old state of aﬀairs.
A personal tax, of course, if necessary, must not harm human rights : this is
the reason why Condorcet argued the importance of avoiding an inquisitorial
stance in determining the tax base, i.e., in ascertaining citizens’ incomes, and
basing taxation instead on a single and obvious criterion : the rent of houses. A
personal tax must above all respect justice. Accordingly, it must be progressive.
One argument advanced by Condorcet — but also stated by many authors
like Montesquieu, Smith, and accepted by Rœderer — is certainly not new :
a part of the personal income of the citizens must not be taxed because it
corresponds to a minimum wage, just enough to cover subsistence. In the case
of a direct tax on produit net, this circumstance does not arise because the
owner of this income always has the possibility of working and receiving a
wage (Condorcet 1788b : 292; 1793 : 14). But a personal tax must of course
respect this minimum. Thus, even if the rest of the income is taxed at a uniform
rate, taxation would be progressive on the whole revenue, and this progression
conforms with the dictate of justice.
An ‘Exception culturelle’ ? 34
8.1 Condorcet’s arguments
Condorcet however went further, and proposed an additional purpose. Much
public expenditure, ﬁnanced by taxation, is ‘employed .. . to ﬁnance commit-
ments from which the rich beneﬁt more’ (Condorcet 1790c : 473). This idea is
developed in 1793.
First of all, as we know, not all kinds of public expenditure are strictly
necessary, and their utility can vary ; all of it must be useful, but some expen-
ditures are more useful and some less. ‘In fact, the utility of some expenses
is greater than the sacriﬁce generated by taxation only for those from whom
taxation removes superﬂuities.’ (Condorcet 1793 : 16) As a logical consequence,
only those who beneﬁt from them should pay the tax.
Second, a given public expenditure can be seen as generating a dual utility :
in a sense, then, public expenditures give rise to public joint products. One kind
of utility is common to all citizens, but a second kind is peculiar to the rich.
Condorcet asks :
is it not true that the same expense can have for the rich a utility
that they alone beneﬁt from, without diminishing the utility com-
mon to all ? Such is, for example, the case of the expense laid out
for main roads, which enhance the ease with which the rich travel
from one place to another for pleasure ; while the utility of these
same roads — for the transportation of commodities, commercial
activities and business trips — is the same for all. (ibid.)
This kind of analysis is repeated for other State measures, for example when
useful skills and crafts are encouraged : the average quality of commodities will
be improved, and this will beneﬁt everybody in society ; but at the same time
more perfect luxuries are generated which only the rich enjoy. The same is
true for agriculture (ibid. : 16-7). All this is enough, in Condorcet’s opinion,
to justify a progressive income tax :
It would thus be just to say : all incomes will be taxed proportio-
nally ; but, above a certain level, a further, proportionate, contri-
bution will be paid from the surplus. This contribution will be de-
voted to these expenses which, though having real utility, cannot
compensate the individual for whom it would cause painful hard-
ship. It will be intended to oblige rich people to ﬁnance certain
exclusive advantages that they receive from expenses which are, it
An ‘Exception culturelle’ ? 35
is true, made for general use, but which necessarily also generate
enjoyments for them alone. (ibid. : 17)
This is a second reason why, Condorcet adds, ‘progressive taxation complies
with justice’ (ibid.). Of course a modern reader will not consider this enough to
prove the necessity of progression above the minimum wage — even if Condor-
cet agrees with the hypothesis of the diminishing marginal utility of income or
wealth. According to the beneﬁt principle, something more is needed : namely
that the income elasticity of the demand for public goods be greater than its
price elasticity. But we must also note, as Musgrave warns (Musgrave, 1985 :
17), that the beneﬁt principle can be interpreted in two diﬀerent ways, depen-
ding on whether the focus of the analysis ‘is on the cost of the service rendered
to a particular person, or whether it is on what a person (given his or her
income and preferences) would be willing to pay. In the latter case, the beneﬁt
tax . . . becomes a Lindahl price’ ; and ‘the issue of progressive taxation .. . .
hinges on the income and price elasticities of demand’ in this second case only
In spite of some similarities, Condorcet’s case falls into the ﬁrst category :
the amount of public goods, as we know, is determined by a vote in an assembly,
and the cost of the public goods represents the total amount of taxation. It
is thus quite natural, then, to shift to what, today, we call ability-to-pay —
especially because this principle could certainly have been thought, at that
time, as a complement to the beneﬁt approach, and not as a substitute. Here
things look better. We know that with the hypothesis of a diminishing marginal
utility of income or wealth, taxation has to be progressive. This hypothesis,
however, is only suﬃcient for what was called the ‘equal marginal sacriﬁce’
principle about which Condorcet, obviously, did not know.
I think we can resort to a more intuitive criterion of equity : ‘equal absolute
sacriﬁce’. The hypothesis of a diminishing marginal utility of wealth is likewise
here insuﬃcient to generate progressiveness : in addition, as has been long
known (Cohen Stuart 1889, Edgeworth 1897), the elasticity of the utility of
marginal income with respect to income must be greater than unity. As Pigou
(1928 : 86) put it simply and clearly :
All that the law of diminishing utility asserts is that the last £1
of a £1000 income carries less satisfaction than the last £1 of a
An ‘Exception culturelle’ ? 36
£100 income does. . . . In order to prove that the principle of equal
sacriﬁce necessarily involves progression we should need to know
that the last £10 of a £1000 income carry less satisfaction than the
last £1 of a £100 income ; and this the law of diminishing utility
does not assert.
It is thus not without interest to see that the additional hypothesis is also to
be found in Condorcet’s writings — like the principle of a diminishing marginal
utility of wealth, it is stated in the manuscript on Nicolas and Daniel Bernoulli
noted above (Condorcet 1785-6).
While Condorcet agrees with Daniel Bernoulli on marginal utility, he does
however criticize another important hypothesis advanced in the Petersburg
paper : namely that ‘the utility resulting from any small increase in wealth
will be inversely proportionate to the quantity of goods previously possessed’
(Bernoulli, 1738 : 25) i.e., that the elasticity of this marginal utility with respect
to wealth is equal to unity. 38 As Bernoulli emphasised, assuming two persons
with diﬀerent amounts of wealth, respectively 100.000 and 50.000 ducats, this
means that ‘to the former a ducat has exactly the same signiﬁcance as a semi-
ducat to the latter’ (ibid.).
This is an arbitrary hypothesis (Condorcet 1785-6 : 584). Taking the example
of a game for which a gambler has to pay half of his wealth in order to have a
chance of 1
2to win the exact amount of his original wealth, Condorcet points
out that, for diﬀerent persons with diﬀerent amounts of wealth, the same pro-
portion of wealth has very diﬀerent subjective values.
If I have wealth [just] suﬃcient to my needs, I would act in a very
unwise manner if I were to halve it and become destitute, having
just the probability of 1
2of doubling my wealth; and I would act
less unwisely if, having signiﬁcant wealth, I risk losing half of it
in order to double it, for this half would still be suﬃcient for my
needs. (Condorcet 1785-6 : 584-5)
All the theoretical components in support of a progressive income tax were
thus formulated by Condorcet. One question remains however at this point : is
it legitimate to attribute to Sensationist political economists the idea of ‘equal
absolute sacriﬁce’ as a criterion of equity? In fact, this principle was explicitly
38. In the context of the equal absolute sacriﬁce principle, this hypothesis entails a pro-
portional rate of income tax (see for example Musgrave 1959 : 99-100).
An ‘Exception culturelle’ ? 37
formulated in the same period, during endless debates on revolutionary public
8.2 From Condorcet to Horace and Jean-Baptiste Say
During and after the Convention, the idea of a progressive income tax
was discussed with great passion, all the greater because it was not just a
proposition coming from some ‘levellers’ : Montesquieu himself wrote in favour
of it in De l’Esprit des lois (Book XIII, chap. 7). 39 The National Assembly
voted for the introduction of such a tax on 18 March 1793.
Alarming statements were made : Jean-Paul Rabaut Saint-Étienne, for
example, declared that society could make use of citizens’ wealth, or at least
that part of it which was ‘superﬂuous’. Many authors — like Morellet and
Rœderer — reacted against this. Rœderer published in January an article in
the Journal de Paris (Rœderer 1793) critical of Rabaut and declared himself
against a law imposing a maximum level of wealth that a citizen might be
allowed to possess. This would perhaps generate more equality in the country,
but — supposing that the law could be enforced — it would be an ‘equality
in misery’. A book by Jean-Baptiste-Moïse Jollivet, De l’impôt progressif et
du morcellement des patrimoines (Jollivet 1793), arguing strongly against pro-
gression, was published40 during the same year and it was in circulation during
1795, after Thermidor, when discussion was renewed in Parliament. 41 The aim
of the book was to show how destructive this tax was, both for property and for
the prosperity of the country. It even includes some graphs which purport to
show that progression will tend, after a point, to take away the entire income
and even part of the wealth of taxpayers.
In all such responses, arguments are formulated which point out the disin-
centive eﬀects of this tax for work, investment and economic activity, in the
same way that Morellet had three years previously with respect to the impôt
39. Montesquieu’s ideas on taxation were well known and could also be read about in
Jaucourt’s article ‘Impôt’ in the Encyclopédie (Jaucourt 1765). Graslin (1767 : 149-50) also
quotes Montesquieu in support of progressive taxation.
40. The publisher was Dupont de Nemours.
41. See for example the book review signed J.M. in the 11 October 1796 (20 vendémiaire
an 5) issue of Rœderer’s Journal d’économie publique, de morale et de politique : 216-26.
An ‘Exception culturelle’ ? 38
de quotité. In fact Condorcet himself devotes half of his 1793 article to a war-
ning against the disincentive and negative eﬀects of too severe a progression :
‘nature herself put limits to this kind of tax’ (Condorcet 1793 : 17). But some
other arguments are obviously exaggerated and rely, for example, on idiosyn-
cratic formulations of the progression principle and on the choice of very severe
and unrealistic marginal rates. This point was stressed by J.-B. Say.
Following Thermidor the idea of progressive taxation did gain the support
of Horace and Jean-Baptiste Say. The position of Jean-Baptiste on this is not
obvious in the ﬁrst edition of his Traité d’économie politique (1803) but it was
however formulated three years earlier, in an appendix — ‘Note G’ — to his
utopia, Olbie (Say, 1800 : 228). Here he stresses two points. The ﬁrst is that
progressive taxation forms a strong disincentive to economic activity and is an
expropriation only for some versions of a geometric progression. The choice of
diﬀerent progressions would not entail such a consequence at all. The second
point states that progressivity is in accordance with justice. One argument is of
interest : it refers to the diﬃculty or painfulness of earning a particular revenue,
and to the fact that the wealthier a person is, the easier it is for her or him to
earn an additional income. It is therefore just to take away proportionally more
from the rich than from the poor — provided, of course, that the progression
be moderate. A moderate progressive tax, Says writes,
is . . . equitable for this reason : in a condition of civilization, an
increase of income is all the more diﬃcult if the income is low. Ac-
cording to a popular saying, the ﬁrst hundred crowns are harder to
get than the last hundred thousand francs; i.e., once wealth reaches
a certain amount, the ease of gain is augmented by a proportion of
333 to 1. I am far from counselling that the progression in taxation
should increase in this proportion which, if the saying were correct,
would still comply with equity. (ibid.)
To understand this statement we must of course revert again to the equal
absolute sacriﬁce principle — even if Say seems also to propose the beneﬁt
principle in the ﬁrst edition of his Traité. And we have to link Say’s position
in 1800 with that of his elder brother Horace to whom he was very close.
Like Jean-Baptiste, Horace collaborated with the journal of the Idéologues,
La Décade philosophique, littéraire et politique. In May 1796 he published42
42. The article is not signed, but attributed to Horace Say (Kitchin 1966).
An ‘Exception culturelle’ ? 39
an article, ‘Sur les impositions’, coinciding with the resumption of debate on
taxation in the new Assembly, the Conseil des Cinq-Cents. Writing in favour of
a moderate rate of progression, he stresses that a simple proportional income
tax is unjust, because what the same given proportion takes from a modest
income is ‘much more painful’ than when demanded of a greater one (Horace
Say 1796 : 315). And he states the following rule for equitable taxation (ibid.),
which is nothing other than the equal absolute sacriﬁce principle :
Taxation must be distributed in such a way that it generates in the
diﬀerent classes an equal inconvenience, an equal painful diminu-
It is also supposed that the elasticity of the marginal income utility with
respect to income is greater than unity. 43
In the preceding pages I hope to have shown how idiosyncratic and innova-
tive the approach of French Sensationist economists was to public economics,
and how their views on many points of theoretical importance were, to use a
customary phrase, ‘far in advance’ of the development of the discipline. Be it
in the deﬁnition of public goods, in negative and positive externalities, in the
theory of taxation — including progressive taxation — and in the determina-
tion of the optimal amount of public expenditure and revenue, most of their
analyses were potentially quite novel. And it is also of great interest to see
how, at each stage of the analysis, their arguments are closely connected to an
ethical and political foundation : namely, the vision of a democratic political
organisation for a society based on free trade, where justice and equity could
go hand in hand with eﬃciency.
To conclude, let us consider the natural evolution of public expenditure
— and thus taxation — from this perspective. Can we detect any signiﬁcant
43. ‘However, it is obvious that a charge on a revenue that produces only ease is much
more painful than a proportional charge on a revenue which produces superﬂuity. Take 100
francs from someone who only has 1200, and you will force him to remove one dish from
his table. Take 10 thousand francs from someone who has an income of 120 thousand from
rents, and he will still have 110 thousand and you will only make him supervise his steward
more closely’ (Horace Say, 1796 : 315).
An ‘Exception culturelle’ ? 40
trend ? Linking economic analysis and political reﬂections on the nature of
the political regime once more, Morellet addressed this problem in a paper
read in 1790 before the Comité des contributions of the National Assembly. Is
it true, he asks, that public expenditure must increase together with national
wealth? His answer is in the negative. In his opinion there should be an inverse
relationship between the magnitude of national wealth and the relative weight
of public expenditure — a kind of anti-Wagner’s law ante litteram.
In fact, the proﬁle of the trend depends on the nature of the political
regime of the country. The law of a decreasing burden of public expenditure
is only valid in a democratic State where public needs and public expenditure
are well deﬁned. The burden of public expenditure can grow, of course, but
only under a despotic government : ‘it is the misfortune of nations which do
not possess in their constitutions forces capable of redressing abuses, that,
as they grow richer, governments give surrender themselves to ever greater
expenses. Useless ventures, senseless wars, domestic splendour and all kind of
extravagance consume the increment of national wealth’ (Morellet, 1790 : 105).
However these abuses are eradicated in a free nation and public expenditure is
there limited to what is strictly necessary : taxation is required, but for ‘real
public need’, in order to ﬁnance ‘genuinely public or national expenditure’,
i.e. ‘implemented for the public and the nation and devoted entirely to their
advantage’ (ibid. : 106). And this ‘genuinely public or national expenditure’
does not increase together with wealth : ‘on the contrary, it decreases — at
least after society has endured for some time — for the simple reason that, the
more things that are done in this ﬁeld, the less there remains to be done’ (ibid.).
The kind of expenditure Morellet had in mind is investment in infrastructure
and, generally speaking, in all kinds of indivisibilities.
When in a country there are roads, canals, bridges, harbours, public
buildings, the nation endowed with these objects of need can grow
wealthier without an increase of these needs; and it is at least
certain that they do not increase in proportion with wealth. (ibid. :
This is the reason why ‘there is certainly less public expenditure to be laid
out in Holland than in Hungary, and in England than in America’ (ibid.).
An ‘Exception culturelle’ ? 41
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