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cahnLast post, along with the usual 18th-century suspects, included the Ottonians; changing ideas of conception and women's sexual pleasure; Isabella of Parma (the one who fell in love, and vice versa, with her husband's sister); Henry IV and Bertha (and Henry's second wife divorcing him for "unspeakable sexual acts"). (Okay, Isabella of Parma was 18th century.)
18th century economic theories
Date: 2022-11-27 11:40 pm (UTC)Mercantilism: Mercantilism was the dominant economic theory in Europe in the 17th and first half of the 18th centuries. It goes like this.
Wealth consists in the amount of money (bullion) a state has. Because this is a finite and stable quantity, economics is a zero-sum game, and a state can only expand at the expense of its neighbors. The goal is to increase exports (other states give you money--good) and reduce imports (you give other states money--bad). This means protectionism, monopolies, and high tariffs.
Physiocracy: Physiocracy was a short-lived economic theory in the 18th century. It was developed in reaction to mercantilism and its shortcomings. It goes like this.
Wealth consists in agriculture. Only farmers are producing new wealth, industry and everything else is just working with what you have. In order for agriculture to flourish, you need to facilitate trade of grain by removing monopolies and tariffs, and let competition and the balance of supply and demand work things out.
Physiocracy is the precursor to classical economics, and yes, this is exactly when Adam Smith is writing.
Specific application of physiocracy: because only agriculture is productive, only land, or alternately its agricultural yield, should be taxed. Anything else comes from the land, so taxing it would just be taxing the same thing twice.
Cameralism: Cameralism is...I have seen a bunch of definitions and scholars arguing with each other, but for purposes of this oversimplified intro, you can think of it as basically mercantilism with more bureaucracy, as developed and practiced mostly by Germans, in the 18th and first half of the 19th century. Its practitioners are also called Antiphysiocrats: they believe in a strong government controlling a centralized economy. No points for guessing this one is popular in Prussia.
In the 1760s, the school of thought that's getting the most ink spilled on it, as far as I can tell, is physiocracy, but in practice, mercantilism and cameralism are going strong by governments that care less about theory.
With that as background, we have some more context for various figures from salon.
Leopold: Leopold's reforms have traditionally been called physiocratic. He and his advisors were well read in the works of the big physiocratic thinkers, they admired physiocractic thinkers, and one of the first things he did when taking over Tuscany was open up free trade on grain. He wrote a lot of things like "The state should only interfere with free trade when absolutely necessary," and he wiped out a lot of the mercantilist and even pre-mercantilist (a lot of Florentine laws went back to the days of the Republic) restrictions.
This was a big deal and gets a whole chapter in Peham, because when Leopold arrived, Tuscany was in the middle of its worst famine since the 14th century. As noted in the Leopold comment above, after Leopold's 1760s reforms, no more famines, not even in years of bad harvests. (Remember that in France, continuing bad harvests and famines/rising prices of bread were a proximate cause driving the Revolution.)
But! As gets pointed out a lot, including by Peham but also various other authors I'm reading, Leopold was not a doctrinaire. He did not subscribe wholesale to all of physiocracy's tenets, and especially the one where industry was inherently not productive.
His subjects like this, because even if Tuscany is now predominantly an agricultural state and its great industrial days are over, "Florentines were too well read in their own history to believe that manufacturing was really unproductive." So Leopold being flexible in his economic approach is popular.
It does, however, mean that when this one minister from Denmark sets off on an "economic Grand Tour" through Europe, hoping to see for himself how physiocracy works out in practice, he finds that of the two places where it was supposedly adopted, it wasn't really: Both in Tuscany and Baden, the implementers believed in the productivity of manufacturing and did not blindly follow what the French thinkers who'd developed physiocracy said.
Also, spoiler: attempts to implement something like physiocracy on top of the existing structures did not work in Baden and had to be abandoned.
Turgot: Famous minister of Louis XVI who tried and failed to fix the economy of France and prevent the French revolution was a physiocrat, or possibly an early classical economist (it gets fuzzy). Two of the big reforms he wanted to implement that came out of physiocracy were a single nationwide tax on land and free trade of grain.
If you look at the existing situation in France, you can see why he met with so much opposition. One, having a single tax on land means only landowners pay taxes. That means a lot of nobility suddenly has to bear the tax burden, and the whole point of being a noble was major tax exemptions. (This was not a thing in Tuscany and never had been, making Leopold's job easier.)
Two, removing limitations on the trade of grain would take power out of the hands of the rich and powerful who were able to speculate on grain and make a killing in years of bad harvests. Yes, this can happen under a free trade system too, and was one of the major objections to it by the cameralists, who thought the government should disallow capitalists stockpile grain and instead use their strong centralized power to ensure affordable prices in all years, but, the point is that the people who might benefit under the free trade system might not be the same people who are currently benefitting under the existing system, and the latter don't want to lose their existing benefits. No one ever wants to lose their existing benefits.
Note that pre-revolutionary France, like Tuscany when Leopold took over, was made up of many provinces that all had customs duties with all the other provinces, because they'd historically been separate, and they'd only agreed to be united if they could keep their own ways of doing things. So free trade of grain inside the country, never mind lifting tariffs on imports and limitations on exports, would have been a *big* step. Big enough, in the end, that it took a revolution.
Also! One of the reasons Turgot opposes French sending money to support the American Revolution is that, while he generally agrees with the principles of said Revolution, he has some issues with it, and one is the Founding Fathers deciding to have a super complicated tax system (me: *sob*) instead of a simple land tax.
Voltaire: Our antihero, who has written a scathing satire on everything, has written a scathing satire on physiocracy. It's called "L'homme aux quarante écus," or "The Man of Forty Crowns." I have not read the whole thing, but I read enough to get the gist of it: a small farmer who owns a plot of land and barely gets by (he has forty crowns a year) gets taxed under this single land tax system, but a rich minister who speculates in industry gets off scot-free, because industry is "unproductive." The man of forty crowns keeps asking what he can do to get ahead, and he's told, "Get married and have kids!" By having the guy ask increasingly penetrating questions about exactly what economic benefit he will get out of this, Voltaire skewers the proposition.
Pfeiffer: Pfeiffer, the guy who got imprisoned for embezzlement in the Kiekemal affair, was a cameralist. And not just a cameralist but a voluminously writing one. He wrote so much, and ended up founding the professorship of cameralism at Mainz, that he's one of the best known antiphysiocrats of his time and has had books written on him, one of which is a collection of essays called Physiocracy, Antiphysiocracy, and Pfeiffer, which I got for my Kiekemal research but which is heavily informing this write-up.
Pfeiffer agrees with classical economists in that he agrees that individuals act in their own self-interest, but he believes that this is as likely to lead to bad things and diminished overall utility as anything good. Because people are unaware that other people want to act in their own self-interest, and thus they behave badly toward each other. Most people don't understand why vice is bad and thus they are not capable of making good use of liberty.
But he also doesn't want the state to grow and grow and get out of control, which he realizes an absolute monarchy is prone to doing, so he advocates for a mixed monarchy.
To quote from the author of this essay, Frambach, "What is missing from Pfeiffer's considerations, from the modern point of view, is the idea of the market as an instrument of control, although he definitely treats its elements (price, demand and supply, production and consumption)."
Bielfeld: Our Freemason friend of Fritz at Rheinsberg and tutor to and friend of the Divine Trio is also a cameralist (and his Wikipedia article cares more about his writings on this subject than about more human interest topics, like how he sensibly ran away when AW started setting trees on fire). His stance is unsurprising, as I don't think Fritz would have been a big fan of being told he couldn't control things. :P
Re: 18th century economic theories
Date: 2022-11-29 07:37 pm (UTC)Re: 18th century economic theories
Date: 2022-11-30 12:28 am (UTC)..the advocate James D. Steuart (died 1780)...becoming well known through his book “Inquiry into the principles of political economy,” 1767; it is regarded as one of the best works in mercantilistic literature.
That's the only mention of him in this book. Thank you for bringing this to my attention!
Re: 18th century economic theories
Date: 2022-12-04 05:07 am (UTC)And so it sounds like Tuscany was the only place where semi-physiocracy was applied in a workable way (as opposed to trying to build it on top of existing structures like you say was being done in Baden)?
Re: 18th century economic theories
Date: 2022-12-04 07:42 am (UTC)And so it sounds like Tuscany was the only place where semi-physiocracy was applied in a workable way (as opposed to trying to build it on top of existing structures like you say was being done in Baden)?
Yeah, the three places I've seen attempts at implementing physiocracy mentioned are:
France: Proposed physiocratic reforms blocked at the political level, never implemented.
Baden: Applied badly, ended badly.
Tuscany: Applied selectively but not dogmatically, arguable worked reasonably well as long as Leopold was on hand, serious revolts (not just because of physiocracy and the grain trade situation, but also because of that) as soon as he left.