9. The Liberal Reaction Against Mercantilism in Seventeenth Century France (continuted)

0:007. Flourie, Fenelon, and the Burgundy Circle During the early 1670s, the devout Abbé Claude Flourie, 1640-1723, a young theologian, moralist and man of letters, launched an influential opposition to the absolutism and mercantilism of Louis XIV. In a small pamphlet, Pensée Politique, Fleury upheld the agrarian ideal and opposed the mercantilist forced subsidization of industry. Furthermore, in a companion work, Reflections on the Works of Machiavelli, Fleury attacked Montaigne-type skepticism, which resulted in endorsing an unrestrained exercise of power over depraved men who were virtually devoid of reason.

0:55He also denounced Machiavelli's view that politics should be divorced from ethics. Combining the latter themes, Fleury contended that man can use reason to take the path of justice and virtue, while Machiavelli's prince was a godless tyrant who had no desire to lead his subjects to happiness. In contrast to Machiavelli's view that men are bad, Fleury countered sensibly that they They are for the most part neither very bad nor very good, and that the ruler had the duty to improve their virtue and happiness. The outstanding clerical opponent of absolutism and mercantilism in late 17th century France, however, was not so much Fleury as his friend and student, François de Salignac de la Motte, Archbishop Fenelon of Cambrai, 1651-1715 Fenelon led a powerful cabal at court who were deeply opposed to the absolutist and mercantilist policies of the king and determined to reform them in the direction of free trade, limited government and laissez-faire.

2:12By means of his post as religious instructor to the king's mistress, Madame de Matinon, Fénelon got himself appointed in 1689 as preceptor to the royal children, in particular the young Duke of Burgundy, grandson of Louis XIV, who seemed destined one day to be king. Assisted by Fleury, Fénelon made the duke into a disciple, surrounding him with ardent In 1693, Fenelon, incensed at the continuing wars against the English and Dutch, wrote the King an impassioned and hard-hitting, though anonymous, letter, which he probably sent only to Madame de Matinon.

3:01Blaming the King's evil ministers, he declared, Sire, for the past thirty years your ministers have violated and overturned all the ancient maxims of state in order to raise your power, which was theirs because it was in their hands to the highest possible point. We no longer heard of the state nor of its rules. They only spoke of the king and his pleasure. They have increased your revenues and your expenditures to the infinite. They have elevated you to the heavens and impoverished all of France so as to introduce and maintain an incurable and monstrous luxury at court. They wanted to raise you on the ruins of all classes in the state, as if you could become great by oppressing your subjects.

3:56The king's ministers, Fenelon continued, only wish to crush all who resist. They have made the king's name odious, have wanted only slaves, and have caused bloody wars. The wars and their attendant taxes have crushed trade and the poor, driving the people to desperation by exacting from them for your wars the bread which they have endeavored to earn with the sweat from their brows. Fennelon's magnum opus was his political novel Teremach, written for the edification of the The Young Duke of Burgundy, on whom he and his confrères pinned all the hopes for the radical liberalization of France.

4:42Télémaque was written during 1695 and 1696 and published without his permission in 1699. Télémaque was a mythical young prince who traveled through the world of antiquity seeking instruction on the wisest forms of government. What Telemach learned were the lessons of pure laissez-faire. For example, young Telemach asked Mentor, a wise man among the Phoenicians, how that people was able to flourish so remarkably in world commerce. Mentor answered, laissez-faire. Above all, never do anything to interfere with trade in order to turn it to your views.

5:28The prince must not concern himself with trade for fear of hindering it. He must leave all profits to his subjects who earn them, otherwise they will become discouraged. Trade is like certain springs. If you turn them from their course, they will dry up. Profit and convenience can alone attract foreigners to your shores. If you make trade difficult and less useful for them, they will gradually withdraw and not return. Similarly, in the land of Salant, the liberty of commerce was entire, by which Fenellon explicitly meant the absence of state interference in domestic as well as foreign trade.

6:15Every good entered and left the country with complete freedom. was similar to the ebb and flow of the tide. In his treatise on the existence of God, Fenelon attacked mercantilist nationalism by stressing the unity of all peoples dispersed over the earth. Moreover, he stressed that human reason is independent and above man, and is the same in all countries. And just as God unites all peoples through a common and universal reason, so the sea and the earth unite mankind by providing communication and resources which can be exchanged for one another. Fennelon waxed eloquent on natural specialization and free trade uniting all peoples.

7:08It is the effect of a wise overruling providence that no land yields all that is useful to human life. For want invites men to commerce in order to supply one another's necessities. Want therefore is the natural tie of society between nations. Otherwise, all peoples would be reduced to one sort of food and clothing, and nothing would invite them to know and visit one another. Following his mentor Fleury, Fenallon stressed the importance and productivity of agriculture and attacked rulers for impoverishing the countryside through crippling taxation and for diverting resources from agriculture to luxury products.

7:58Fenallon was eloquent in his attack on tyranny and absolutism. Monarchs, he thundered, take all and ruin everything. They are sole possessors of the entire state, but the whole realm languishes. The countryside is uncultivated and almost deserted. Towns diminish every day. Trade stagnates. The king's absolute power creates as many slaves as he has subjects. This monstrous power, swollen to its most violent excess, cannot endure. It has no support in the heart of the people. At the first blow, the idol will fall, crack, and be crushed underfoot. Contempt, hate, vengeance, defiance, in a word, all passions will unite against so odious a rule.

8:54To Fenallon, war is the greatest of evils, and France's pernicious policy of constant wars was the result of her nationalist and mercantilist economic policies. Cursed be those rulers, declared Fenallon, who augment their power at the expense of other nations, and who seek a monstrous glory in the blood of their fellow men. To educate the young duke of Burgundy on the evils of war, Fenelon engaged a man who was called one of the cleverest men of the century. Francois Leblanc had published a massive treatise on money and coinage in 1690, an historical treatise on the moneys of France from the beginning of the monarchy until the present.

9:43Here LeBlanc had condemned kings for engaging in debasement for their monetary profit. Fenelon commissioned LeBlanc to write a tome for the young duke on all the treaties between the nations of Europe and the causes and consequences of all the wars that ensued, as well as the ways they might have been avoided. Unfortunately, LeBlanc died before he could finish this monumental task. One of the key figures in the Burgundy Circle was Charles de Saint-Maur, the Duke of Montossier. Montossier was governor of the Royal Dauphin, and Leblanc, before taking on the book, and Abbé Fleury, were both employees in the service of Montossier.

10:31Leblanc's place in teaching the Duke had been preceded by Pierre-Daniel Huey, bishop of Avranches. Wey, a friend of LeBlanc, denounced French mercantilist and protectionist policies in 1694, and praised the free trade that had brought prosperity to the Dutch. In 1711, the Grand Dauphin, son of Louis XIV, died, and the Burgundy Circle was overjoyed, since the Duke was now in line for the throne to succeed the aged Sun King. Banking. But tragedy struck the following year, when the duke, his wife, and his eldest son were all struck dead of measles. All the hopes, all the plans, were cruelly destroyed, and Fenelon wrote to a friend in despair, Men work by their education to form a subject full of courage and ornamented by knowledge. Then God comes along to destroy this house House of Cards.

11:37The tragic end of the Burgundy Circle illuminates a crucial strategic flaw in the plans, not only of the Burgundy Circle, but also of the physiocrats, Turgot, and other laissez-faire thinkers of the later 18th century. For their hopes and their strategic vision were invariably to work within the matrix of the monarchy and its virtually absolute rule. The idea, in short, was to get into court, influence the corridors of power, and induce the king to adopt libertarian ideas, and impose a laissez-faire revolution, so to speak, from the top. If the king could not be persuaded directly, then a new king's ideas and values would be formed from childhood by liberal preceptors and tutors.

12:31Reliance on the good will of the king, however, suffered from several inherent defects. One, as in the case of the Duke of Burgundy, was reliance on the existence and good health of one person. A second is a more systemic flaw. Even if one can convince the king that the interests of his subjects require liberty and laissez-faire, the standard argument that The way his own revenue will increase proportionately to their prosperity is a shaky one, for the king's revenue might well be maximized, certainly in the short run and even in the long run, by tyrannically sweating his subjects to attain the maximum possible revenue, and relying on the altruism of the monarch is a shaky read at best.

13:25All these reasons, appealing to a monarch to impose laissez-faire from above, can only be a losing strategy. A far better strategy would have been to organize a mass opposition from below among the ruled and exploited masses, an opposition that would have given laissez-faire a far more solid groundwork in adherence by the bulk of the population. In the long run, of course, mass opposition, even revolution, was precisely what happened to France—a revolution from below, that was partially, if not largely, inspired by laissez-faire ideals. The erudite and sophisticated laissez-faire thinkers of the seventeenth and eighteenth centuries, however, would have rebuffed such a suggested strategy as certainly inconvenient and probably lunatic, especially in the light of the failure of the various inchoate, peasant and other frond rebellions of the mid-seventeenth century.

14:30Not least of all, men of influential and privileged status themselves are rarely inclined to toss all their privileges aside to engage in the lonely and dangerous task of working outside The Inherited Political System 8. The Laissez-faire Utilitarian, the Seigneur de Beleba One of the influential anti-mercantilist and pro-laisez-faire thinkers of the last decades of Louis XIV was Charles-Paul Roule de l'Hôpital, Seigneur de Beleba, died 1706. The great-grandson As the son of a Chancellor of France, Belébat was an influential member during the 1690s of an oppositional political salon in the Luxembourg Palace, in the Luxembourg Gardens district of Paris.

15:28The salon met weekly at the home of Belébat's first cousin, François Témolion, the abbé de Choisi. In the autumn of 1692, Beleba presented six memoirs to Louis XIV, copies and extracts of which were reproduced throughout France. Beleba, too, focused on the wars with the Dutch as being the key to the economic problems of France. States became wealthy, advised Beleba, not by seizing or destroying the commerce of other Bellébat, too, emphasized that God had woven all peoples into an interdependent network of reciprocal advantage by means of trade and specialization.

16:32There is nothing that one country lacks which the others do not produce. God, having created men for society, has so well divided them that they cannot do without one another. Restrictions on trade by government only crippled this natural interdependence. Therefore, merchants should be free to pursue the commerce of their choice. The direction of economic activities in each country is usually determined by the natural resources and the type of capital investment in that area. It is not the case, concluded Beléba, that trade in one country benefits one party at the expense of others.

17:18Instead, the reverse is true. Moreover, freedom for merchants and domestic trade was as important as in foreign trade. The network of trade and exchange is internal as well as external. Furthermore, in a prefigurement of the Hayekian argument for the free market, Beliband noted, as Professor Rothkruge points out, that every transaction, either domestic or foreign, required complete freedom because it was carried out in special circumstances by merchants whose His fortunes depended partially upon the secret and unique procedures by which each conducted his business. State regulation, then, far from protecting the market, would cripple the liberty necessary to any prosperous trade.

18:12Natural resources, Belébá explained, are worthless without people to cultivate them and to engage in trade and commerce. Beleba then engaged in a sophisticated analysis of the elements necessary for successful market activity. We call commerce an exchange between men of the things they mutually need. In both domestic and foreign trade, the principles for success are the same. And despite the fact that there is an infinite number of ways in which to practice trade, all different, are different. They are founded on a great liberty, large capital investment, a lot of good faith, much application and a great secrecy.

19:00Each merchant, having his particular views in such a way that he who profits from a sale of his products does not prevent the one who buys them from profiting considerably by disposing Banking of them. Thus the entire success of commerce, consisting, as it does, in liberty, large capital investment, application and secrecy, prevents princes from ever intervening without destroying the principles. Thus belé-bas, in addition to a sensitive appreciation of the role of individual entrepreneurship and Energy by the Merchant, and of the Mutual Profitability of Exchange, sees, if only vaguely, that the great variety of individual trade can yet be analyzed correctly in a small number of formal laws, laws or truths which apply to all entrepreneurship and exchange.

20:01In one vital area, Belébat advanced significantly beyond the laissez-faire views of Fenelon and others, who were so opposed to the luxury of the absolutist court and the nouveau riche bureaucracy that they wished the government to restrict luxury production and trade. Belébat swept away such inconsistent exceptions to laissez-faire. The natural laws of trade, which which, for him, encompassed considerations of utility, applied to luxury as well as to all other branches of production and trade. Bellé-Bas eloquently concluded from his analysis that it must be taken as a principle that liberty is the soul of commerce, without which good harbors, great rivers and fertile lands are of no use.

20:54When liberty is absent, nothing is of any avail. In short, the government should let commerce go where it wishes. Les en faire le commerce que l'on voudra. The Seigneur de Beleba made it clear that he grounded his hope of applying libertarianism in an extreme form of early utilitarianism, a utilitarianism that he expected would be applied by the king. The King was urged to channel people's self-interest into free and harmonious activities by seeing to it that virtue is rewarded and evil, theft and other interference with trade, is punished. In that way, men would become accustomed to pursue virtue.

21:44Belébá went very far in utilitarianism by maintaining that justice was always and only A Fatal Weakness in his theory was the confident view that the self-interest of the king, who was supposed to put all this into effect, was always identical to the harmonious self-interest of his subjects. Bellé-Bas also anticipated the later view that Montaigne-type skepticism about reason, Rather than providing support for going along with state absolutism, teaches men humility so that they will accept liberty and the free market. Reason, however, is not the sole and not even the main motive for the drive for the exercise of power.

22:36Acquisition of wealth and privilege would seem to be motive enough. And since there will always be people and groups who will seek to seize and aggrandize 9. Bois-Gilbert and laissez-faire The best known of the late 17th century French advocates of laissez-faire is Pierre Lepesson, Sur de Bois-Gilbert, 1646 to 1714.

23:24Born in Rouen into a highborn Norman family of judicial officers and a cousin of the poet-dramatist Cornet brothers, Bois-Gilbert was educated by the Jesuits and eventually purchased two judicial offices at Rouen. He served there as Lieutenant General of the Court from 1690 until his death. Bois-Gilbert was also a large landowner, businessman, literatur, translator, attorney and historian. Bois-Gilbert was a combination of genius and crank. His first and most important work, Le Detail de de la France, a detailed account of France, published in 1695, was revealingly subtitled France Ruined under the Rule of Louis XIV.

24:17Bois-Gilbert penned innumerable letters to successive Controllers General of France on the virtues of free trade and laissez-faire, and on the evils of government intervention. After 1699, Bois-Gilbert kept hammering away at Comptroller General Michel Chamillard for years but to no effect. Chamillard kept refusing him permission to print his tomes, but Bois-Gilbert published them anyway, finally printing his collected works under the title Le Detail de la France in 1707. In that year, the same year that Vauban's Diem Royale was censored, Bois-Gilbert's work was also outlawed and its author sent into brief exile.

25:05He returned under promise of silence but promptly reprinted his book four times between 1708 and 1712. Arguing for laissez-faire, Bois-Gilbert denounced the mercantilist preoccupation with amassing in DC, pointing out that the essence of wealth is in goods, not coin. Money, Bois-Gilbert explained, is just a convenience. Thus, the influx of bullion from the New World in the 16th century only served to raise prices. If nature were left to herself, all men would enjoy plenty, and the government's attempts to improve upon nature only caused havoc.

25:51The simple remedy for the manifold evils under which France was suffering was, as Professor Kyoan puts it, for the government to stop interfering with natural patterns of trade and commerce, and laissez-faire la nature. No superhuman effort for reform was needed, only the cessation of ill-considered effort. Constructive or social harmony, Bois-Gilbert wrote, arises from the efforts of innumerable individuals to advance their self-interest and their happiness. If the government removed all artificial restrictions upon trade, all participants would have incentive to produce and exchange, and self-interest would then be free to do its constructive work.

26:41Only the use of coercion or state privilege pits one's self-interest against another, whereas submission to the wise natural order would ensure harmony between individual greed and universal benefit. As Keoughan summarizes Bois-Gilbert, so long as we do not interfere with her, nature's workings, our attempts to get as much as we can for ourselves will maximize everybody's is happiness in the long run. It is not, then, that individuals aim at the general good while pursuing their own self-interest. On the contrary, it is the glory of the natural order that, while individuals aim at their own private utility, they will also promote the interests of all.

27:34Although individuals may try to subvert the laws and gain at the expense of their neighbors, The natural order of liberty and laissez-faire will maintain peace, harmony and universal benefit, as Bois-Gilbert declares, but nature alone can introduce that order and maintain the peace. Any other authority spoils everything by trying to interfere, no matter how well-intentioned it may be. In the free market established by the natural order, the pure desire for profit will be the soul of every market for buyer and seller alike. And it is with the aid of that equilibrium or balance that each partner to the transaction is equally required to listen to reason and submit to it.

28:27The natural order of the free market prevents any exploitation from taking place. Thus, Nature or Providence had so ordered the business of life that, provided it is left alone, en laissez-faire, it is not within the power of the most powerful in buying goods from some poor wretch to prevent the sale from providing the subsistence of the latter. Everything works out all right, provided that Nature is left alone, en laissez-faire la Bois-Gilbert also specifically demonstrated the counterproductive results of government intervention.

29:21Thus, when the French government tried to alleviate hunger by lowering grain prices and Controlling Trade, all it accomplished was to diminish the cultivation and production of grain, and hence to intensify the very hunker that the government was trying to relieve. Such intervention, in the summary of Professor Keown, would make sense only if grain, like manna or mushrooms, sprang up without human effort, since it ignores the effects of low Low prices on the habits of cultivators. If governments simply ceased tampering, the French economy, like a city from which a siege is lifted, would regain its health. Free to set their own price for grain, and to import grain freely throughout the land, Frenchmen would be plentifully supplied with bread.

30:19In illustrating the nature and advantages of specialization and trade, Bois-Gilbert is one of the first economists to begin with the simplest hypothetical exchange. Two workers, one producing wheat and the other wool, and then to extend the analysis to a small town and, finally, to the entire world. This method of successive approximation, of beginning with the simplest and then extending Studying the analysis step by step would eventually prove to be the most fruitful way of developing an economic theory to analyze the economic world. Graphically illustrating the respective workings of power and market, Bois-Gilbert supposes a tyrant who tortures his subjects by tying them up within sight of each other, each surrounded by an abundance of the particular good that he produces, food, clothing, liquor, water, etc.

31:22They would be made instantly happy if the tyrant were to remove their chains and allow them to exchange their surplus goods for those of one another. But if the tyrant says no, he can only remove the chains of his people when some war or is settled, or at some future time, he is only adding ridicule and mockery to their grievous torture. Here, Bois-Gilbert was bitterly mocking the reply that Louis XIV and his ministers habitually made to the pleas of reformers and oppositionists. We must wait for the peace. Again, like the other oppositionists, war was exposed as the standard excuse for maintaining the crippling interventions of government.

32:12Like Bélibat, Bois-Gilbert had no patience with inconsistent reformers who tried to make an exception to laissez-faire in luxury products. To Bois-Gilbert, natural wealth was not just biological necessities. Rather, true wealth consists of a full enjoyment not only of the necessaries of life, but even of all the superfluities and all that which can give pleasure to the senses. In addition, Bois-Gilbert was perhaps the first to integrate discussion of fiscal policy with his general economic doctrines. Adopting Vauban's proposal for the elimination of all taxes and their substitution by a A Single Direct Tax of Ten Percent on All Incomes Bois-Gilbert analyzed and bitterly denounced the effects of indirect taxes on agriculture.

33:10Heavy taxes on grain, he pointed out, have raised costs and crippled grain production and trade. For four decades, he argued, the French government had virtually declared war on consumption and Trade by its monstrous taxation, resulting in severe depression in every area of the economy. On the free market, in contrast, everyone benefits, for trade is nothing but reciprocal utility, and all parties, buyers and sellers must have an equal interest or necessity to buy or to sell. Hence, with Bélibat and Bois-Gilbert, the focus of the classical liberal attack on statism shifted from moralistic denunciation of luxury or pernicious Machiavellianism to meeting mercantilist doctrine on its own utilitarian grounds.

34:09Even setting aside classical morality, then, utility and general happiness required the and the private property and laissez-faire of the natural order. In a sense, old-fashioned natural law had been extended to the economic sphere and to the meshing of individual utility and self-interest through the working of the free market. In contrast to devout mystics like Fenellon, Belébat and Bois-Gilbert were in harmony with the new mechanistic cosmologies of Isaac Newton and others of the late 17th century. God had created a set of natural laws of the world and of society. It was the task of man's reason, a reason universal to all, regardless of nation or custom, to understand those laws and to achieve their self-interest and happiness within them.

35:07In the economy, free trade and free markets, through the harmony of reciprocal benefits, advance the interest and happiness of all by each seeking his own personal utility and self-interest. The golden rule and absence of violence was the natural moral law that uncovered the key to social harmony and economic prosperity. While such analysis was not in itself anti-Christian, it certainly replaced the ascetic aspects of Christianity with an optimistic, more man-centered creed. And also, it was consistent with the rising religion of deism, in which God was the creator or clock-winder who created the mechanism of the universe and its self-subsistent natural laws and then retired from the scene.

36:03As Professor Spengler has pointed out, the eighteenth century conceptualized the economic or social universe. It made the hidden processes of the social order visible even as the seventeenth had become aware of those of the physical order and made them visible. It generalized to the realm of man the notion of the frame hidden behind the most common and Phenomena, and the invisible hand by which nature works in all things. As for Bois-Gilbert, his contribution was to be among the first, if not the first, to conceive, albeit imperfectly, of the system of relations that underlies the economic order.

36:50His contribution consisted in his sequestering, however imperfectly, the economic order from and the Total Societal System, in becoming aware of the comparatively autonomous character of this order, in discovering the essentially mechanical and psychological connections binding men together in an economic order, and in drawing attention to the manner in which the economic order was subject to disturbances by impulses originating in the political order. It should also be mentioned that it surely seemed easier to convince the king and his ruling elite of the general utility of private property and the free market than to convince them that they were behaving as the heads of an immoral and criminal system of organized theft, so that the basic strategy of trying to convert the king led inexorably to at least A Broadly Utilitarian Approach to the Problems of Freedom and Government Intervention 10. Optimistic Handbook at the Turn of the Century The rapid spread and even social dominance of these new ideas of laissez-faire, cryptodeism and the morality of utility and the golden rule may be seen in The Dialogues, a virtual

38:18A wonderful handbook of fashionable manners and ideas for the social climber, published in 1701 by the young littérature Nicolas Baudot de Jouilly. In dialogues, Baudot, son of a tax farmer in Vendôme, after lauding the manners taught in fashionable salons, proceeds to the ruling ideas of the day, where he vulgarizes the The laissez-faire doctrine into one grounded in a frank and candid hedonism. The desire for pleasure and for the avoidance of pain was grounded in the natural drive for self-preservation. Furthermore, the God of Christianity in the hands of Bodeaux became a quasi-deistic God who has provided all nature as a great feast where, in his inexhaustible goodness, God has convened us.

39:13The Garden of Eden had been a realm of enjoyment and sensate pleasure. The purpose of Jesus' arrival on earth was to recall mankind to that original enjoyment. Asceticism, furthermore, causes economic misery. Specialization, trade and the pursuit of wealth in the marketplace were the truest and therefore the God-given forms of charity. As Baudot put it, God had purposefully permitted us to multiply our needs in order to cause money to circulate among all men, passing from the purses of the rich to those of the poor. Trade then is the genuine charity. All this regional specialization and communication has been so admirably accomplished in order are to bind men to one another, who in effect should form only one single family, so that the need they would have for one another would accomplish among them what charity alone ought to do.

40:19It is for this reason that men, however different in mores, language and religion, are becoming united from one end of the world to another by reciprocal trade. It is also, for this reason, that they exchange equally things which are agreeable and those which are necessary, so that they can not only sustain life as in a pasture like beasts, but also to render it sweeter, more humane, and more polished by pleasures.