Anne-Robert-Jacques Turgot (1727-1781)

Full text

Anne-Robert-Jacques Turgot
(1727-1781)
Gilbert Faccarello∗
Anne-Robert-Jacques Turgot was born on 10 May 1727 in Paris, where he
died on 18 March 1781. He was the youngest son of Michel-Étienne Turgot,
Marquis of Sousmont, a magistrate and “Prévost des marchands” (Lord Mayor)
of Paris. While first destined by his family to an ecclesiastical estate – he stud-
ied theology and was admitted to the Maison de Sorbonne – Turgot devoted
his career to serving the State. Already during his lifetime he acquired the
status of an emblematic figure as the grand reforming civil servant of the
Ancien Régime, particularly through two important positions: first as
Intendant of the Généralité of Limoges (1761–74), that is, representative of
the King in some of the poorest provinces in France (Limousin, Marche and
Angoumois); and then as Contrôleur général des Finances (minister of the
economy and finance, August 1774–May 1776). In this last position, during
less than two years, he tried to progressively implement free trade; to put an
end to traditional structures limiting the establishment in trades – such as
“jurandes” (craft-guilds) – or regulating the labour force; and to abolish hurt-
ful and inefficient obligations like the “corvée royale” (royal chore). He was
∗Published in Gilbert Faccarello and Heinz D. Kurz (eds), Handbook on the History
of Economic Analysis, vol. 1, Great Economists since Petty and Boisguilbert, Cheltenham:
Edward Elgar, 2016, pp. 73–82.
1

Turgot 2
also aiming at reforming the political regime of France and had a project of
transferring some powers held by the King into the hands of a pyramid of
elected assemblies – municipal, provincial and national. (On all these points,
see the many developments by Gustave Schelle in Turgot 1913–23.)
Turgot had a serious philosophical training. He was a follower of the
sensationist approach proposed by John Locke and developed in France by
Étienne Bonnot de Condillac (1714–1780) and he approved of Rousseau’s
Contrat social. He also had an encyclopedic mind like many French philosophes
of the time. While he published relatively little during his lifetime – some of
his writings circulated and were known from various sources – his influence
proved to be huge and lasting.
Texts and Themes
Among his youthful works, his two 1750 discourses in Sorbonne – “Les avan-
tages que la religion chrétienne a procurés au genre humain”, and “Tableau
philosophique des progrès successifs de l’esprit humain” – are well known.
They introduced important themes like a philosophy of history based on a
development of societies in three stages, the unbounded perfectibility of the
human mind and the notion of progress. A 1749 letter to the abbé de Cicé
on paper-money and his “Plan d’un ouvrage sur le commerce, la circulation et
l’intérêt de l’argent, la richesse des États” (c. 1753–54) are also indicative of
his early interest in money and trade. During this period he also contributed
to volumes 6 (1756) and 7 (1757) of Diderot and d’Alembert’s Encyclopédie
ou dictionnaire raisonné des sciences, des arts et des métiers with the en-
tries “Étymologie”, “Existence”, “Expansibilité”, “Foire” and “Fondation”. He
was a member of the group of young intellectuals gathered around Jacques-
Claude-Marie Vincent, Marquis of Gournay (1712–1759), Indendant du com-
merce, who played an important role in the translation and/or circulation in
France of some significant writings by Richard Cantillon, David Hume, Josiah
Child, and so on, and in the “acclimatisation” of the British “science of trade”.
Turgot himself translated two writings by Josiah Tucker, one of which – the
1751 Reflections on the Expediency. . . – was published under the title
Questions importantes sur le commerce. . . (1755). Some developments in
this literature – for example on the importance of the level of the interest rate,
or on money – are to be found later in Turgot’s thought. He wrote his cele-
brated “Éloge de Vincent de Gournay” (1759) after the death of the Intendant

Turgot 3
du commerce: he attributed to him however some of his own ideas on free
trade, thus distorting the perception that posterity had of Gournay (Tsuda
1983).
Having made the acquaintance of Quesnay, Turgot adopted some of his
views. This is probably the reason why his approach was for a long time either
confused with physiocracy or seen as a “dissenting” view of it. He developed in
fact a powerful approach of his own which can be termed “sensationist political
economy” (Faccarello 1992, 2006). His theoretical principles are presented in
five fundamental texts: (1) a short treatise, Réflexions sur la formation et la
distribution des richesses, written c. 1766 and published by instalments in
1769–70 by Pierre Samuel Dupont (1739–1817) in Éphémérides du citoyen;
(2) his 1767 comments on two memoirs on indirect taxation respectively writ-
ten by Jean-Joseph-Louis Graslin and Guérineau de Saint-Péravy; (3) the un-
completed entry “Valeurs et monnaies” (c. 1769) intended for André Morellet’s
Dictionnaire du commerce; (4) Mémoire sur les prêts d’argent (c. 1770) against
the Scholastic doctrine of usury; and (5) “Lettres au Contrôleur général sur le
commerce des grains” (1770) reassessing the necessity of a free grain trade –
which forms also an implicit critique of Ferdinando Galiani’s 1770 Dialogues
sur le commerce des blés (Faccarello 1998). Important aspects of his theories
are also to be found in his correspondence and in other writings.
Shortly after Turgot’s death, both Dupont and M.J.A.N. Caritat de
Condorcet (1743–1794) – his most outstanding disciple – published a life of
Turgot (Dupont 1782; Condorcet 1786). Condorcet’s Vie de M. Turgot greatly
contributed to maintain and develop Turgot’s legend in France and abroad.
It was translated into English as early as 1787 and appreciated by British
reformers. In his Autobiography John Stuart Mill noted how Condorcet’s book
– which he compared to Plutarch’s Lives – deeply impressed him and induced
him to abandon all sectarian attitude and spirit (Mill 1873: 115–17).
It is important to keep in mind the peculiar status of Turgot’s texts. First,
the greatest part of his writings are just first – and sometimes incomplete
– drafts. This is even the case for the 1766 Réflexions. This treatise was
published in the Éphémérides on the insistence of Dupont, but Turgot had
the intention to use a special offprint to thoroughly revise and expand the
piece – yet he did not find the time for this revision. This probably explains
some fluctuations in the vocabulary and in the presentation of some themes,
for example the rate of return on capital. Secondly, Dupont modified some

Turgot 4
texts to make them match better with the physiocratic doctrine. This is the
case for the Réflexions: Turgot had to demand him to print a separate edition
of the original manuscript. Thirdly, a great number of Turgot’s writings were
published after his death, from sometimes undated manuscripts – their dating
is thus occasionally uncertain.
A first edition of Turgot’s work, by Dupont, was published in 1808–10 but
this edition is unfaithful because of the changes made by the editor – in par-
ticular he reprinted his faulty version of the Réflexions. Three decades later
two volumes of the “Collection des principaux économistes”, published in 1844
with Guillaumin and edited by Eugène Daire and Hippolyte Dussard, are also
devoted to Turgot’s writings and correspondence, but they mainly reproduce
Dupont’s versions (Schelle, in Turgot 1913–23, I: 3–4). The most comprehen-
sive edition is, to date, the one prepared by Gustave Schelle (Turgot 1913–23)
– all the references hereafter refer to this edition. Whenever it was possible,
the texts were based on the manuscripts or some reliable documents – but
some manuscripts having disappeared, Dupont’s version remained occasion-
ally the only source. Yet even Schelle’s edition is not totally reliable (see, for
example, Meek 1973: 3–4; van den Berg 2014). A new edition of Turgot’s
works and correspondence is certainly needed, which at long last is possible
since the French Ministry of Culture bought Turgot’s manuscripts in February
2015 (the previous owners had denied access to them).
Turgot’s contribution to political economy is decisive. He powerfully de-
veloped Boisguilbert’s free-trade approach, reinforcing at the same time its
foundations. Elaborating upon the hitherto common – but rather vague –
supply and demand framework, he developed, on the supply side, a systematic
approach in terms of capital competition and, on the demand side, a subjective
theory of value and prices – what allowed him also to reconsider the doctrine
of usury and propose the first economic theory of the rate of interest. He also
proposed some views on the successive stages of development of societies and
on the origin and effect of the division of labour (Meek 1971, 1973); he put
forward the main themes of what was to be called public economics, based on
market failures and on the quid pro quo approach (Faccarello 2006); and he
engaged in a polemic with Galiani on how to efficiently reform a society and
implement a transition from a regulated to a free-trade economy (Faccarello
1998). The secondary literature is abundant. For the above-quoted and other
aspects of his work and some divergent interpretations, see, for example, Groe-
newegen (1970, 1971, 1983), Brewer (1987), Faccarello (1991, 1992), Ravix and

Turgot 5
Romani (1997). In this entry, the focus will be on competition, value and the
rate of interest.
Competition, Capital and Profit
Turgot shared many views with Quesnay, notably the belief in the efficiency
of free trade, the hypothesis of the exclusive productivity of agriculture and
the fundamental importance of the “avances” (capital) in production and trade.
However by systematically referring to the concepts of competition, he
distanced himself from the “sect”. As he wrote to Dupont, criticising the
Physiocrats: “I find that . . . you do not make sufficient use of this less ab-
stract principle, but . . . more enlightening, more fruitful or at least forceful
for its simplicity and without exception because of its generality: the principle
of competition and of free trade” (Turgot 1913–23, II: 507). In this respect
the 1766 Réflexions marked a watershed. The most important paragraphs are
those concerned with capital, its definition, forms, origin and logic.
While insisting there, like Quesnay, on the need to invest large sums of
capital in agriculture, Turgot generalises this idea and applies it to all kinds
of activities. He focuses on the word “capital” – defined as a quantity of value
which can be embodied in all sorts of objects and adopt any form. This is a first
polemical position against the Physiocrats since it establishes an equivalence
between all sorts of “accumulated value”: land ownership is only one of many
forms of capital, and the landowner a capitalist.
Quesnay and his disciples struggled with the question of the origin of capital.
While restating the usual Physiocratic arguments – savings by the landowners,
lack of competition which allows entrepreneurs to appropriate part of the “pro-
duit net” – Turgot, more importantly, emphasises an alternative explanation.
Breaking with the prevailing approach which, from Boisguilbert to Quesnay,
put a stress on the necessity of “expense” to maintain prosperity, he develops
a vibrant apology of savings and the “esprit d’économie” as the main source
of the accumulation of capital and wealth (see also his comments on Saint-
Péravy, Turgot 1913–23, II: 649 ff.). He insists on the fact that savings in no
way cause a decrease in global demand: while they are not a simple “expense”
– that is, a purchase of final goods for consumption – they are no hoarding
either but a formation of capital. Whether they are spent directly or indi-
rectly on the means of production, this produces beneficial effects for growth,

Turgot 6
productivity and employment. Furthermore, Turgot claims, savings are made
by entrepreneurs themselves, out of their profits, and profits are earned in all
activities.
The motive for investment and capital accumulation is “income or annual
profit”. Why would an individual invest in agricultural, industrial or commer-
cial enterprises if he did not in return receive his expenses and the amortisation
of fixed capital, a compensation for his effort and the risks incurred, and –
Turgot insists – a surplus equivalent to that which he would have received,
without work and risk, had his capital been used to buy land? The logic of the
argument is clear. The particular branch of production is of little importance:
individuals invest in it if the return is not less than the minimal expected re-
muneration. If this return is higher elsewhere, movements of capital take place:
capital leaves trades in which the rate of return is relatively low towards those
activities where it is more attractive. The mobility of capital, through its ac-
tion on relative supplies and demands, modifies relative prices and the rates
of return tend to be equalised throughout the economy, all things being equal:
“the products of the different employments limit themselves each other, and
are maintained .. . in a kind of equilibrium” (Turgot 1913–23, II: 591).
[A]s soon as profits which result from any employment of money, increase
or decrease, capitals are withdrawn from other employments and directed
to it – or withdrawn from it and directed to the other employments –
what necessarily changes, in each employment, the ratio between the
capital and the annual product . . . [B]ut regardless of how money is
employed, its return cannot increase or decrease without all the other
employments experiencing a proportionate increase or decrease. (ibid.:
592)
A situation of equilibrium is thus defined by this equalisation of the rates
of return, or, more precisely, by a stable hierarchy of global rates of return,
if we take into account the elements of risk proper of each activity, and the
contribution of the entrepreneur. The lowest rate is the rate on land that is,
the rent rate calculated on the value of the land – Turgot evidently thought
that he could thereby eliminate differences in land quality because the best
pieces of land are more expensive. The highest rates are the profit rates for
agricultural, industrial and commercial enterprises. The rate of interest lies in
between: as a result of the risk incurred by the lender, it is higher than the
rent rate; but it is lower than the rates related to employments which, apart
from risk, also include work. It is important to note here that the hierarchy

Turgot 7
and levels of the rates of return is established at equilibrium – contrary to what
Eugen von Böhm-Bawerk asserts (1884: ch. 3), this is not an explanation of
the rent and profit rates through the interest rate and Turgot’s explanation is
not “an explanation in a circle” (ibid.: 65).
This approach will later form the core of classical political economy. But it
also seemingly undermines physiocratic theory: the emphasis on the existence
of profits in all activities poses the problem of the compatibility of this per-
spective with the dogma of the exclusive productivity of agriculture and the
assertion that all the “produit net” is appropriated by the landowners. Turgot
seems to be aware of the problem but his texts do not present a clear solu-
tion. The answer to this question however appears clearly in the work of one
of his followers, Pierre-Louis Rœderer (1754–1835), in 1787, and is developed
in Rœderer’s subsequent writings (Faccarello 1991). Rœderer (1787: 14–26)
explains that the net product of the economy, while generated in agriculture,
has to be distributed equitably among all the amounts of capital in the econ-
omy, whatever form they take and in proportion to the amounts invested.
This is what he calls “le droit des capitaux” or “la loi du niveau” – “the rights
of capitals” and “the law of the level”. The general profit rate is thus given
at the aggregate level by the value of the “produit net” divided by the total
value of the capital invested in all activities, including land. It is striking that
Marx later adopted a similar approach in book III of Capital for resolving the
problem of the transformation of values into production prices.
Some significant consequences are to be drawn from this analysis. A first
consequence is the modification of the class structure of the economy. While
Turgot first started from the physiocratic triad of a land-owning class, a pro-
ductive class and a sterile class, he ended with another threefold division based
on the ownership of land, capital and labour – because, while the land-owning
class is homogeneous, the productive and sterile classes are not: each of them is
divided “in two categories of men, that of the entrepreneurs or capitalists who
make all the advances, and that of the simple wage-earning workers” (Turgot
1913–23, II: 572). As Turgot insists in his comments on Graslin: “These are
. . . two very different categories of men who contribute in a very different
way to the grand work of the annual reproduction of wealth” (ibid.: 633). It
could be asserted, however, that Turgot could also have ended with only two
classes, the landowners being only, in his view, a sub-group among the owners
of capital. J.C.L. Simonde de Sismondi was later to draw this consequence.

Turgot 8
A second consequence is the determination of a sort of minimal price for
each commodity – a cost of production lato sensu – beneath which the agents
decrease their production or stop producing altogether. In his comments on
Saint-Péravy (Turgot 1913–23, II: 655–6) and in a letter to David Hume (25
March 1767; ibid.: 663) Turgot calls it “prix fondamental” (fundamental price).
Under the effect of the action of competition and the migrations of capital, the
“prix courant” or market price, directly determined by supply and demand,
tends towards this fundamental price – in the above-mentioned letter to Hume,
Turgot extends this analysis to the labour market (Turgot 1913–23, II: 663–4).
This theme was to be developed later in classical economics as the gravitation
of market prices around natural prices (for an interpretation of Turgot as a
classical economists, see Brewer 1987; Ravix and Romani 1997). However,
Turgot’s interest is almost exclusively directed to the determination of “prix
courant” which only exist in trade (Turgot 1913–23, III: 176). Moreover, the
elements of the “prix fondamental” are themselves determined by supply and
demand.
Another consequence was to be clearly stated by Condorcet and Rœderer:
the theory of capital helps explaining the hierarchy of wages. The minimum
wage is what is necessary to sustain the worker and his family. Any additional
amount is just the remuneration of the capital invested in the person, through
education, training, and so on.
Note finally that, in addition to this path-breaking approach, Turgot’s texts
include other innovative aspects. For example, in his 1767 comments on a
memoir by Saint-Péravy, and in searching for the optimal quantity of “avances”
– the number of units of labour – to be employed with a given quantity of a
fixed factor in agriculture – a certain quantity of seed employed on a given piece
of land – Turgot clearly states the law of non-proportional returns: the physical
marginal product of the variable factor is first increasing and then diminishing.
He clearly distinguishes between intensive and extensive diminishing returns
and also points out the fact that it is always advantageous, in physical terms,
to go beyond the point of maximal average product till the marginal product
becomes nil (Turgot 1913–23, II: 643–5).

Turgot 9
Utility, Value and Prices
A person is “merely a bundle of needs”, Turgot states in “Plan d’un mémoire sur
les impositions” (Turgot 1913–23, II: 293). Satisfying these needs brings about
utility; the effort spent on this goal involves a pain (disutility). On the basis
of this sensationist approach, Turgot developed a theory of subjective value,
which allows him to determine equilibrium prices, which, in the short period,
equilibrate supply and demand. This is a remarkable step, which also makes
him embark on two genuine tours de force. (1) In the first place, while retaining
the whole edifice of the free trade approach developed by Boisguilbert, he gave
it a different foundation. Sensationist philosophy now explains the selfish and
maximising behaviour of agents in markets, in place of the theological dogma
of the Original Sin and the Fall of Man. (2) In the second place, he showed that
the traditional debates about usury were misconceived and that the problem
of the nature and the determination of the rate of interest can easily be solved
on the basis of his theory of value and price.
The question of value is investigated at some length in the 1766 Réflexions
but a more extensive analysis is formulated in the c. 1769 uncompleted text
“Valeurs et monnaies”. What is value? To answer this question, Turgot, prob-
ably on the celebrated model of the statue Condillac developed in his 1754
Traité des sensations, first imagines a man alone facing nature. This “savage”
has to produce the goods he requires to satisfy his needs, but he must first
determine the value each of these goods has for him. This “valeur estimative”
or “esteem value” is the subjective “degree of esteem which he attaches to the
different objects of his desires” (Turgot 1913–23, II: 87) – the “degree of utility”
as Turgot puts it in the 1770 Mémoire sur les prêts d’argent (Turgot 1913–23,
III: 175). The isolated individual thus establishes a preference-ordering –
“order of utility” (ibid.: 86, 97) – on all of the goods, taking into account
(1) the ability of each object to satisfy a kind of need, (2) the temporal ele-
ment generated by foresight, and (3) the scarcity of the desired object. As a
result of this calculation, he attributes a certain “esteem value” to each quan-
tity of each object: this reflects the proportion of his “faculties” which he is
prepared to devote to obtaining it, all other things being the same. He also
distributes all of his faculties in such a way as to procure the different goods
“according to their importance for ... his well-being” (1913–23, III: 87), that
is, by searching for the greatest possible well-being. It should be noted that
Turgot poses the question of the measuring of values, and opts for a purely

Turgot 10
relative understanding of these. The reason for this is that the unity – the
“faculties” – to which the values refer cannot be evaluated. However, the text
sometimes presupposes this measurement, that is, cardinality, as it is the case
in the determination of the equilibrium price.
Turgot then supposes that there are two agents and two goods, in absence
of production. Each agent has an initial endowment of a good and needs part
of the quantity of the good owned by the other agent; the situation is thus of
a bilateral monopoly in a pure exchange economy. The two agents engage in a
bargain under the following assumptions: (1) each agent determines for him-
self the “esteem values” he attributes to the different parts of the endowment
he wishes to exchange, as well as to the parts of the other agent’s endowment
which he could receive in exchange; (2) the agents do not reveal their pref-
erences: these values are kept a secret by each individual; (3) on this basis,
each agent determines the states of indifference, in other words, the reserva-
tion price from which the exchange is possible; (4) each of them follows a
maximising behaviour, that is, is animated by “the interest to keep the largest
quantity possible of his own good and to acquire in exchange the largest quan-
tity of the other’s good” (Turgot 1913–23, II: 90) – a typical eighteenth-century
formulation of the mathematical problem of “maximis et minimis”.
In order for a transaction to take place, it is necessary for each agent to
attribute to the quantity of the object received a higher “esteem value” (say λ)
than that which he assigns to the quantity of the good given in exchange (λ∗):
λ > λ∗. As Turgot states: “each would stay as he is unless he finds an interest,
a personal profit, to exchange; unless he estimates more what he receives than
what he gives” (Turgot 1913–23, II: 91). The gains from exchange are clear: (1)
free exchange implies an increase in total utility for both parties; (2) moreover,
whenever production is possible, exchanges also allow a division of labour and
result in an increase of the quantities of goods available to the agents (ibid.:
93).
Turgot assumes that the bargaining process converges towards a price on
which both agents agree, in between the reservation prices of the two agents.
This equilibrium price – called by Turgot “valeur appréciative” – is unique
and is determined simultaneously with the quantities exchanged. The final
agreement is defined as a situation in which the difference of the “esteem values”
of the quantity of the received good over that of the quantity of the good given
in exchange is equal for both parties – which could be symbolised, for two

Turgot 11
agents iand j:λi−λi
∗
=λj−λj
∗. This is the reason why this equilibrium
price is termed “average esteem value”.
This solution, however, could not be satisfactory for those who note that
there is a priori no unique solution in the case of a bilateral monopoly. But this
approach is nevertheless remarkable for its originality and rigour: it was prob-
ably inspired by the celebrated pages on justice and exchange in Aristotle’s
Nicomachean Ethics and finds an interpretation in terms of cooperative games
(Dos Santos Ferreira 2002). The explanation given by Turgot remains how-
ever questionable: this “valeur appréciative” is necessarily attained because,
he notes, should the differences between the “esteem values” of the goods be
different between agents, it would be in the interest of one of the two agents to
continue the bargaining process. But how could the agents know each other’s
differences when preferences are not revealed – and moreover utilities are not
comparable?
Having established his argument for two contracting parties, Turgot
intended to generalise it to a large number of agents and goods. The article
“Valeurs et monnaies” unfortunately concludes after taking into consideration
a larger number of agents in a two goods context; Turgot assumes that as a re-
sult of competitive arbitrages a single price would be established. The general
situation (many agents and goods) is only dealt with incidentally in Mémoire
sur les prêts d’argent and the 1770 “Lettres” to Terray. Turgot simply reaf-
firms his conviction in the realisation of a general equilibrium. Nevertheless,
two remarks formulated on these occasions are of interest. First, the process
by which equilibrium is achieved is explicitly described in the “Lettres” as
a process of “tâtonnement” (Turgot 1913–23, III: 326). It is however a real
“tâtonnement” since exchanges are made outside equilibrium: but according
to Turgot, no one’s interest would really be damaged – at least statistically
– since, given that the variations are made by “imperceptible degrees”, the
“losses” and “gains” would compensate for each other in the end. Secondly,
Turgot stresses in the Mémoire, while prices are actually determined from a
subjective basis, they acquire in the end a misleading “objective” appearance
in markets. It is this illusion which has given rise to a belief in the existence
of an “intrinsic value”, “real value” or “natural price”: but nothing of the like
exists in reality (ibid.: 175–6).

Turgot 12
The Rate of Interest and the Problem of Usury
One important aspect of Turgot’s work relates to the rate of interest. In some
sections of the Réflexions (Turgot 1913–23, II: 577–86) and particularly in the
1770 Mémoire sur les prêts d’argent (Turgot 1913–23, III: 154–202) his line of
thought is double. On the one hand, taking up traditional arguments for and
against usury, he shows the “frivolity” of the latter and the possibly correct,
but not truly decisive, aspect of the former. On the other hand, he supplies
his own reasons, the most important of which displaces the controversy. The
question of usury, he stresses, is traditionally badly posed. Once the terms are
correctly defined, it becomes a simple problem of economic theory and more
specifically an application of the theory of value (ibid.: 174–80).
One of the traditional arguments in favour of the prohibition of usury was
that – founded in Roman law – of the fungible and consumable character of
some objects, money included: destroyed by the use which is made of them,
they cannot be lent at interest because their transfer to the borrower necessar-
ily involves a transfer of property. This argument, Turgot stresses, supposes
that the transaction is about the physical object – for example a quantity
of coins, or a given weight of a precious metal – and it cannot but lead to
the above-mentioned conclusion. However, the transaction relates instead to
a quantity of value and implies the utilities of the contracting parties: “where
have our quibblers seen that the only thing to be considered in the loan is the
weight of the metal borrowed and returned, and not its value and its utility
for the lender and the borrower?” (Turgot 1913–23, III: 177) The interest rate
is just a price like any other and its determination falls in the field of the the-
ory of value. Two principles are essential here: (1) an exchange can only be
implemented if the utility of the quantity of the commodity received is higher,
for each agent, than the utility of the quantity of the commodity given up in
exchange; (2) time preference: the depreciation, in terms of “esteem value”,
of a good available in the future compared to the same good available now
(ibid.).
At the time of the transaction the lender compares the utility of the sum of
money he owns with a promise of reimbursement in the future. If no interest
is stipulated, and as the lender estimates the promise to reimburse tomorrow
to be worth less than the identical sum today, an agreement in these condi-
tions is impossible because it would involve a loss of utility for the lender.
In order that the transaction takes place, it is therefore necessary that the

Turgot 13
promise of reimbursement in the future be for a higher amount than the sum
which is lent, so that the “esteem value” the lender attributes to it be higher
than the value he attributes to the sum in question. If the elements of risk
and disutility are reintroduced, then this difference – the interest – measures
(1) time preference, (2) the risks incurred and (3) the disutility experienced
because of the momentary unavailability of the amount of money. This analy-
sis is obviously novel and path-breaking: the link with the theory of value, in
particular, is fundamental. Turgot’s studies at the Sorbonne could have been
of some help here, because a similar development had been made, more than a
century and a half before, by the Flemish Jesuit Leonard de Leys (Lessius): his
“carentia pecuniae” already referred to a kind of time preference. However in
Lessius’ writings this element was just an empirical fact observed in the market
(van Houdt 1998). Turgot instead linked it to his subjective theory of value.
It is also to be noted that the reasoning in terms of time preference seems to
have been widespread among confessors and casuists during the 17th century
because Pope Innocent XI, in 1679, had to condemn the proposition that a
present sum of money being “more precious” than the same sum available in
the future, “the lender may demand from the debtor something more in ad-
dition to the loan, and on that title can be excused from usury” (quoted in
Delumeau 1990: 118).
Two last points must be mentioned to conclude. The first regards the
interest rate: it is definitely not a monetary variable. While a type of mone-
tary quantitativism prevails – probably a legacy of Cantillon and Hume – the
interest rate is subject to the logic of the loanable funds market and, being a
price like any other, must be determined freely between agents. The second
point concerns money as a measure of value and a medium of exchange. As
noted above, values cannot be expressed as such. In particular the “valeur
appreciative” of a commodity is essentially relative. It is thus expressed, in
an isolated transaction, by the quantity of the good against which it is ex-
changed; or in general by each of the quantities of every other commodity
against which it can be exchanged. Turgot deduces from this the money form
properly speaking: thanks to its intrinsic qualities, related to the requirements
of the functions of measure of values and medium of exchange, one commod-
ity detaches itself from the rest, and all the other commodities, by conven-
tion, express their value in terms of this good, which therefore becomes the
unique form of expression of value, “gage universel” (Turgot 1913–23, II: 554).
This analysis is to a great extent taken up and developed by Morellet in his

Turgot 14
“Digression” on money which he included in his 1769 Prospectus d’un nouveau
dictionnaire de commerce, and from there probably handed over to Condillac
in his 1776 Le commerce et le gouvernement considérés relativement l’un à
l’autre. Above all, Karl Marx later adopted and developed it in his analysis of
the “forms of value” in book I of Capital.
Note
Translating Turgot is not an easy task. Modern English translations of some of
Turgot’s writings are by Ronald L. Meek (Precursors of Adam Smith, London:
Dent, 1973, and Turgot on Progress, Sociology and Economics, Cambridge:
Cambridge University Press, 1973) and Peter Groenewegen (The Economics of
A.R.J. Turgot, The Hague: Martinus Nijhoff, 1977). Some of them, completed
with older translations of other texts, are republished in The Turgot Collection
(David Gordon, ed., 2011, Auburn: Ludwig von Mises Institute). In this entry,
however, we use our own translations. The references are to the Schelle edition
(Turgot 1913–23).
See also:
Daniel Bernoulli; Pierre Le Pesant de Boisguilbert; Classical economics; Marie-
Jean-Antoine-Nicolas Caritat de Condorcet; French enlightenment; François
Quesnay.
References and further reading
Böhm-Bawerk, E. von (1884), Kapital und Kapitalzins: I. Geschichte und
Kritik der Kapitalzinstheorien; English trans. (1890), Capital and Interest.
A Critical History of Economical Theory, London: Macmillan.
Bordes, C. and J. Morange (eds) (1981), Turgot, économiste et administrateur,
Paris: Presses Universitaires de France.
Brewer, A. (1987), “Turgot: founder of classical economics”, Economica, vol.
54 (November), 417–28.
Caritat de Condorcet, M.-J.-A.-N. (1786), Vie de M. Turgot, [London].
Condorcet: see Caritat de Condorcet
Delumeau, J. (1990), L’aveu et le pardon. Les difficultés de la confession,
XIIIe-XVIIIe siècle, Paris: Fayard.
Dos Santos Ferreira, R. (2002), “Aristotle’s analysis of bilateral exchange: An
early formal approach to the bargaining problem”, The European Journal
of the History of Economic Thought, 9 (4), 568–90.

Turgot 15
Dupont [de Nemours], P.-S. (1782), Mémoires sur la vie et les ouvrages de M.
Turgot, ministre d’Etat, [Philadelphia].
Faccarello, G. (1989), “L’évolution de la pensée économique pendant la
Révolution: Alexandre Vandermonde ou la croisée des chemins”, in
Französische Revolution und Politische Ökonomie, Trier: Schriften aus
dem Karl-Marx-Haus, pp. 75–121.
——— (1991), “Le legs de Turgot: aspects de l’économie politique
sensualiste de Condorcet à Roederer”, in G. Faccarello and P. Steiner (eds),
La pensée économique pendant la Révolution française, Grenoble: Presses
Universitaires de Grenoble, pp. 67–107.
——— (1992), “Turgot et l’économie politique sensualiste”, in A. Béraud and
G. Faccarello (eds), Nouvelle histoire de la pensée économique, vol. 1, Des
scolastiques aux classiques, Paris: La Découverte, pp. 254–88.
——— (1998), “Galiani, Necker and Turgot: a debate on economic reform and
policy in 18th century France”, in G. Faccarello (ed), Studies in the History
of French Political Economy, London: Routledge, pp. 120–95.
——— (2006), “An ‘exception culturelle’? French Sensationist political econ-
omy and the shaping of public economics”, The European Journal of the
History of Economic Thought, 13 (1), 1–38.
Grœnewegen, P. (1970), “A reappraisal of Turgot’s theory of value, exchange
and price determination”, History of Political Economy, 2 (1), 177–96.
——— (1971), “A reinterpretation of Turgot’s theory of capital and interest”,
The Economic Journal, 81 (2), 327–40.
——— (1983), “Turgot’s place in the history of economic thought: a bicente-
nary estimate”. History of Political Economy, 15 (4), 585–616.
Meek, R.L. (1971), “Smith, Turgot and the ‘four stages’ theory”, History of
Political Economy, 3 (1), 9-27. Also in R.L. Meek (1977), Smith, Marx
and After, London: Chapman and Hall, pp. 18–32.
——— (1973). “Introduction”, in R.L. Meek (ed.), Turgot on Progress, Soci-
ology and Economics, Cambridge: Cambridge University Press, pp. 1–40.
Mill, J.S. (1873). Autobiography, in Collected Works of John Stuart Mill, in
J.M. Robson and J. Stillinger (eds), vol. 1, Toronto: University of Toronto
Press, pp. 1–290.
Ravix, J.-T. and P.-M. Romani (1997), “Le système économique de Turgot”,
in A.R.J. Turgot, Formation et distribution des richesses, Paris: GF/
Flammarion, pp. 1–63.
Rœderer, P.-L. (1787), Questions proposées par la commission intermédiaire de
l’Assemblée provinciale de Lorraine, concernant le reculement des
barrières, et observations pour servir de réponse à ces questions, n.p.
Tsuda, T. (1983), “Un économiste trahi: Vincent de Gournay (1712-1759)”,
in T. Tsuda (ed), Traités sur le commerce de Josiah Child et remarques
inédites de Vincent de Gournay, Tokyo: Kinokuniya, pp. 445–85.

Turgot 16
Turgot, A.-R.-Jacques (1913–23). Œuvres de Turgot et documents le concer-
nant, avec biographie et notes par Gustave Schelle, Paris: Félix Alcan.
Van den Berg, R. (2014), “Turgot’s ‘Valeurs et monnaies’: our incomplete
knowledge of an incomplete manuscript”, The European Journal of the
History of Economic Thought, 21 (4), 549–82.
Van Houdt, T. (1998), “ ‘Lack of money’: a reappraisal of Lessius’ contribu-
tion to the scholastic analysis of money-lending and interest-taking”, The
European Journal of the History of Economic Thought, 5 (1), 1–35.