Thursday, April 13, 2006

New Book on the 'Infernal Couple'

France never did take to Adam Smith's vision of a market economy. This idea, the authors write, conflicted with ``French absolutist traditions of economic control, Catholic paternalism, republican patriotism and later the Bonapartist emphasis on state-directed modernization.''

Britain's ability to adapt was evident in 1720, when the bubble that was the South Sea Company burst, sending investors in both London and Paris reeling. The Bank of England introduced changes to make investments safer. In France, paper money became distrusted. "The crash ruined the French credit market for at least a century,'' the Tombs conclude

From a review of Celestine Bohlen,, 13 April, reviewing "That Sweet Enemy: The French and the British From the Sun King to the Present'' (William Heinemann, London)

The main thesis of the book by Robert and Isabelle Tombs, a husband-wife team, which Ms Bohlen reviews, is credible.

Indeed, I was at a dinner party this week for two Chinese visitors (sign of the times?) in the splendid Prestonfield House, an 17th-century restored house adjacent to the grounds of the Queen’s Holyrood Park, Edinburgh (at which people like Adam Smith, James Boswell, David Hume, assorted the literati, Reverends, High-Court Judges and members of the Scottish aristocracy, visited socially in the 18th century).

This very subject came up in the conversation, to which Professor Lumsden offered exactly the same thesis as Tombs’ book to explain to our guests why Britain and France have different views on the appropriate form of capitalism: basically, let markets work versus use the state to make markets work in the manner that politicians think they should (but are incapable of managing).

Hence, the Tombs' book is on my ‘to read’ list. However, the assertions about the French rejection of Adam Smith’s views on the market economy require clarification. It would be wrong to leave that assertion alone because it continues the misplacing of the economics – and social benefits – of markets entirely to the credit of Adam Smith, especially in respect of France in the 18th century.

The semi-mysterious figure of Richard Cantillon, a French banker wrote his Essay in France in 1734 and it was published in French in 1755: Essai sur La Nature du Commerce; translated into English by Henry Higgs, in 1931, reprinted in English and French by Augustus M. Kelly, New York 1964 and in 2001 by Transaction Publishers, New Brunswick. This Essai contains a clear case against the dirigiste French economic tradition of the 17th-18th century (long before Napoleon’s efforts and their continuation into the 20th century).

Another major French figure was Anne Robert Jaques Turgot’s Formation et Distribution des Riches (Formation and Distribution of Wealth) written in 1766 and published in Ephemerides du Citoyen (Paris) in 1769; translated into English in 1793. In addition there were substantial contributions from Marquis de Mirabeau and Francis Quesnay (the Tableau Economique, 1766) and many others.

The French Physiocrats, whatever their errors on ‘sterile’ manufacturing, etc., had no illusions about the perfidious role of French state regulations on commerce. These French economists preceded or were contemporary with Adam Smith and he met many of them during his visit to Paris in 1765-6. There is a side-debate as to how much he was influenced by them and by how much he influenced them (I tend to the view that this was a case of separate, independent discovery from them all working in the same field, but I am working currently on comparing their writings).

But to suggest that there is a British economic tradition a la Adam Smith plus a totally separate French tradition (as if it began with Napoleon and not with the predecessors of Louis XIV) is problematical when one studies the historical sequence. If France ‘did not take to Adam Smith’s vision of the market economy’ it was as a result of rejecting the consensus among those very French economists, whose works had a wider circulation in France than Smith’s ‘Wealth of Nations’ during this period.

PS: The South Sea Bubble in 1720 is stretching the case for later French economic beliefs. There were cases of serious financial fraud in France (and the UK) in the 18th and 19th centuries, of which the South Sea Company was hardly a unique event. France's largely agricultural economy had a peasant population highly prejudiced against any money not in the form of gold and silver right up to the 20th century; they didn't trust each other, let alone Parisian bankers. Peasants the world over - and recent peasants - are suspicious of paper written money, as are citizens of totalitarian states where not having the right 'papers' is dangerous.
[Readthe Read the Bohlen review at:]


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