Gustave de Molinari on Economists as the Bookkkeepers of Politics: “Unfortunately, no one listens to economists"[1]

Date: 23 April, 2020

Introduction

This was the sad conclusion the French economist Gustave de Molinari (1819–1912)[2] reached at the end of 1852 as he was reflecting upon the momentous events of the February Revolution of 1848, the rise of organised socialism within the newly established Second Republic, and the coming to power of the despotic Louis Napoleon (soon to be self-crowned as “Emperor Napoleon III”.) For the previous seven years he and the other Paris-based free market economists[3] (which included Frédéric Bastiat) had been waging intellectual and political battles against protectionism, socialism, political authoritarianism, and economic interventionism in general.[4] By the end of 1852 when he wrote these lines he had become disillusioned about the prospects for liberty in France and had moved to Brussels. Nevertheless, he would regather his strength and continue fighting these battles for another 70 years during which time he wrote over 40 books,[5] which was an extraordinary achievement and marks Molinari as one of the most important classical liberals of the nineteenth, or indeed, of any century.[6]

The young twenty something Belgian Gustave de Molianri had come to Paris in the early 1840s to pursue a career as a journalist. [7] He quickly became interested in the question of tariff reform which had become a major issue in England with pressure for free trade coming from Richard Cobden’s Anti-Corn Law League and would soon be taken up in France with Frédéric Bastiat’s French Free Trade Association in which Molinari was very active. Molinari wrote many essays on tariffs for various magazines and wrote a significant two-volume history of tariffs which brought him to the attention of the group of free market economists around the Guillaumin publishing firm and the Political Economy Society.[8] He was recruited to work on the Guillaumin firm’s major publishing effort to revive interest in the history of economic thought, the 15 volume Collection des principaux économistes (1840–48) edited by Eugène Daire, for which GdM edited and introduced the volumes on a collection of lesser known 18thC writers.[9] Such was his rise to prominence as a budding economist he was encouraged by Guillaumin to give a series of lectures on economic theory in late 1847 which he was unable to complete because of the outbreak of the February 1848 Revolution but which he would compete later after his move to Brussels.

After the outbreak of the Revolution both Molinari and Bastiat gave up agitating for free trade and lecturing on economics, and became active in the Guillaumin group’s anti-socialist campaign by writing articles for their journal, the Journal des Économistes (henceforth “DEP”), and books and pamphlets which were published by the Guillaumin firm. The group’s attempt to reach a broader audience with their anti-socialist writings resulted in Bastiat’s famous series of twelve anti-socialist pamphlets written between 1848 and the end of 1850 (the most famous of which was his essay “The State”),[10] and Molinari’s collection of fictional debates between a “Socialist”, a “Conservative”, and an “Economist” which was published in September 1849.[11] During the four years of the Second Republic (1848–1852) the Guillaumin firm published a total of 204 books and pamphlets as part of their campaign against socialism and Bonapartist interventionism, with the peak year being 1848 with 67 titles.[12] The Guillaumin firm also wanted to reach a more educated group, such as journalists, politicians, government bureaucrats, and academics so they undertook a major publishing project, the Dictionnaire de l’Économie politique (1852–53), which was a massive compendium of the state of economic knowledge in the mid-nineteenth century and which became one of the premier works of the political economists in the 19th century with its 1,800 double columned pages and nearly 2 million words. [13] Molinari was promoted to the position of assistant editor for the project and was one of the major contributors with his 29 articles.[14] However, in spite of his rapid rise up the ranks of the Paris-based political economists, the increasingly authoritarian behaviour of Louis Napoleon made Molinari rethink his decision to live and work in Paris, so he decided to move to Brussels to take up a lecturing position at the Musée belge. From there he continued to give his lectures on economic theory and write his books attacking the policies of Louis Napoleon under the protection of the more liberal régime in Belgium where freedom of speech was better protected than in France.[15] One of the most important of these was a lecture he gave in October 1852 called “Les Révolutions et le despotisme envisagés au point de vue des intérêts matériel” (Revolutions and despotism considered from the point of view of material interests). It is this lecture which is the topic of this essay.

Economists as the “Bookkeepers" of Society

After Molinari had left Paris and relocated to Brussels he had a chance to think further about the previous tumultuous five years he had lived through. In a lecture he gave at the Musée royale de l’industrie belge on 4 October 1852 on “Les Révolutions et le despotisme envisagés au point de vue des intérêts matériel” (Revolutions and despotism considered from the point of view of material interests) he presented his ideas on where the Revolution of 1848 had taken France and what were the driving forces behind it. It should be noted that the lecture was given some ten months after President Louis Napoléon had disbanded the National Assembly and taken full control of the government in a coup d’état on Dec. 2, 1851 which brought an end to the Second Republic, and only two months before he was to declare himself Emperor of the French (2 Dec. 1852). Understandably, Molinari was very sharp in his criticism of both the economic and political chaos which the 1848 Revolution brought in its wake and the political despotism which resulted from the reactionary coup d’état of Louis Napoléon. He would return to the problem of revolution in a later book L’évolution politique et la Révolution (1884) where he discusses the French Revolution of 1789 in the context of his general theory of the evolution of society.[16]

One of the key ideas Molinari presented in this lecture was the idea that “les économistes … sont les teneurs de livres de la politique” (the economists are the bookkeepers of politics) and it was their task to draw up a balance sheet of the “profits and losses” or the “costs and benefits” of political activity. Whether it was internal policy making such as government regulation of the economy or protective tariffs for favored industries and agriculture, or whether it was politics on a much larger scale, such as war and revolution, it was the economists’ job he thought to assess the impact of these events on the prosperity of ordinary people and the state of economic and political liberty of the nation. In his mind, none of the events of the past half-century, war, government intervention in the economy, tariff policy, the overthrow of the government in a revolution, or socialist experiments passed the bookkeeper’s test, which explained why economists like him had opposed all of them so vehemently:

Or, comme les révolutions ne résistent pas à l’épreuve de la tenue des livres en partie double; comme les révolutions sont de grandes mangeuses, des dissipatrices effrénées qui engloutissent en quelques jours les épargnes accumulées pendant des siècles; comme elles n’ont le plus souvent à donner au peuple, en échange de son épargne et de la vie de ses enfants, que des paroles échauffantes et des utopies malsaines, les économistes, qui sont les teneurs de livres de la politique, ont crié haro sur les révolutions et déclaré une guerre mortelle aux révolutionnaires.

Now, since revolutions do not pass the double book-keeping test, since revolutions are the great eaters/consumers, the unrestrained spendthrifts who gobble up in a few days the savings which were accumulated over centuries; since they all too often give the people only stirring words and unsound utopian dreams in exchange for their savings and the lives of their children, the economists who are the bookkeepers of politics, raise an outcry against revolutions, declaring deadly war against the revolutionaries. (pp. 115–16)

His double-entry bookkeeping of the ledger of history showed him that on the “actif” or “profit” side the Revolution of 1789 had produced many benefits for liberty until the Jacobin Terror and Napoleon’s wars had erased them. Like the other political economists he greatly admired the events of August 4, 1789 when the Constituent Assembly “abolished” most of the regulations which had maintained the “feudalism” of the Old Regime and the remnants of medieval “serdom” which still lingered in France.

On the other hand the “passif” or loss side of the ledger were considerable. Among the dozen of so items he included the execution of political opponents (the Terror), the confiscation of property and heavy taxation to fund the wars, the conscription of young men which removed them from productive work and forced them into unproductive labour in the mass armies of the Revolution, the hyper inflation caused by paper money (the “assignats”), and the policy of the Continental Blocade which Napoleon introduced to ban the sale of British goods in Europe. His sad conclusion was that the revolution and the Napoleonic wars had set back the cause of free trade by at least a century (p. 107). In a lengthy Appendix to his lecture Molinari quotes at considerable length one of the few studies of the economic costs of the French revolution and wars by the Swiss lawyer Sir Francis d’Ivernois, Tableau historique et politique des pertes que la révolution ont causées au peuple français (An Historical and Political Picture of the Losses which the Revolution has caused the French People in their Population, Agriculture, Colonies, Manufacturing, and Commerce)(1799).[17]

However, the losses were not just economic but also “moral” or what we would now call cultural or intellectual, and this was also something the bookkeeping economics should take note of:

Envisagé au point de vue des intérêts matériels, l’actif de la révolution française n’est pas lourd. Si l’on considérait la même révolution au point de vue moral, si l’on examinait l’influence que le papier-monnaie, les confiscations, la guerre, le despotisme et les autres fléaux qu’elle a engendrés, ont exercée sur la moralité des peuples. oh! alors le déficit monterait bien plus haut encore et la perte semblerait irréparable. On prétend, à la vérité, que la révolution française a jeté dans le monde une foule de germes admirables de liberté, d’égalité et de fraternité, et l’on répète, avec emphase, la phrase ronflante que vous savez sur les idées portées au bout des baïonnettes. Mais ne vous semble-t-il pas que ces fameux germes de liberté, d’égalité et de [111] fraternité que la révolution à l’épandus dans le monde, ont bien tardé à fructifier même en France? Ne vous semble-t-il pas aussi que les baïonnettes révolutionnaires ont été ne mauvais supports pour les idées libérales et progressives?

Je suis convaincu, pour ma part, que la révolution avec son funèbre cortége de luttes civiles et de guerres d’invasion, a été funeste à la propagation des idées françaises, bien loin de la servir. pp. 110–11

When viewed from the point of view of material interests “the profit” (actif) from the French Revolution is not very great. If one considers the same revolution from the point of view of morality, if one examines the impact that paper money, the confiscation of property, war, despotism, and the other scourges (fléaux) that it produced, have had on the morality of the people. Oh my goodness! Then then deficit (loss?) will climd even higher still and the loss will seem impossible to make up (irréparable). It is claimed, truly, that the French Revolution sowed in the world a large number (foule) of wonderful seeds such as liberty, equality, and fraternity, and one repeats with some emphasis the high-sounding expression which you all know about ideas being carried on the tip of bayonets. But doesn’t it seem to you that these famous seeds pop liberty, legality, and fraternity that the revolution has spread throughout the world have taken a long time to bear fruit even in France? Doesn’t it seem to you also that the revolutionary bayonets have been a bad kind of support for liberal and progressive ideas?

As far as I am concerned, I am convinced that revolution with its funeral procession of civl wars and wars of invasion, has been a disaster for the spread of French ideas, rather than being of any use to it. (pp. 110–11.)

Much the same could be said about the “passif” (loss) side of the ledger for the 1848 Revolution when “l’analyse économique" (the economic way of ananalysing things) was applied to it, but very little could be said about the “actif” (profit) side, in stark contrast to that of 1789. In fact, Molinari thought that the political “profits” were less than zero, i.e. negative. There had been no increase in freedoms (he perhaps is ignoring the abolition of slavery in the French colonies which was one of the first legislative acts of the Constituent Assembly) and the activities of the socialists like Louis Blanc and the conservative reaction they provoked meant that the movement towards liberty had gone backwards during the Second Republic: “Son actif n’est pas même nul, il est en moins. C’est une banqueroute politique, comme peut-être jamais le monde n’en avait vu.” (The profit side is not even zero, it is less than zero. It was a political bankruptcy perhaps unlike the world had ever seen.) (p. 114).

On the “passif” or “loss” side of the ledger he counted the serious economic depression which followed the events of February, the costs of suppressing the June Days riots by the army and the National Guard (he estimated that Fr. 70 million had been spent on this), and other similar revolts in Germany and Italy, the increase in military spending which the Revolution triggered throughout Europe, and so on. The impact of the Revolution on the economy of Paris was chronicled in considerable detail by Horace Say (1794–1860) who was the son of Jean-Baptiste Say and a successful businessman and president of the Chamber of Commerce of Paris under whose auspices an inquiry into the state of the economy of Paris was conducted and published in 1851.[18] It was too soon to tell when Molinari gave his lecture at the end of 1852 what the balance sheet would reveal about the coup d’état of Louis Napoléon, but if he was anything like his uncle the forecast would not be a good one.

Thus Molinari’s overall assessment of the balance sheet of revolution was that they were economic disasters for the people and described them pithily as “de grandes mangeuses” (the great eaters) of society’s accumulated savings.

Another issue facing the economists was to understand the relationship between revolution and political reaction, between the threat of revolution from the socialist left and the rise of despotism from the right which seemed to inevitably follow revolution, and what the economists might have done to prevent it. As Molinari had pointed out in his review of Charles Dunoyer’s book on the 1848 Revolution (Charles Dunoyer was the President of the Political Economy Society in Paris) both the left and the right shared a common view that society was theirs to make into whatever shape they liked: “l’idée erronée et vicieuse que notre nation se fait de l’objet même du gouvernement” (the erroneous and viscous idea that our nation can be (re)made by government).[19] In the case of Louis Napoléon (soon to become Emperor Napoleon III), Molinari would have classified him as one of the “socialistes en retard” (the socialist fellow travellers) who believed he could run the French economy from the massive government bureaucracies which he now controlled without supervision by an elected Assembly. Thus in his view, conservatives and socialists had a great deal in common and were both enemies of a free and productive economy and social order. As was typical of Molinari, he wrote a book about Napoleon III’s dirigiste economic ideas which had been influenced by Saint-Simonian theories nearly 10 years later in 1861.[20]

The State and the “Budget Eating Class"

In addition to his “cost-benefit” accounting of the succeses and failures of government policies, Molinari undertook another important analysis of the way in which the French state operated, namely a class analysis of the various economic interests and groups which controlled the French state in the 1790s and in 1848–49 and how this led to the rise to power of the two emperors named Napoléon. In both revolutions reformists were able to seize power in order to remake French society according to their own vision, Robespierre and the Jacobins in 1793, Louis Blanc in 1848. After the chaos which they unleashed came a conservative reaction which led to the rise to power of a so-called “party of order” led by a Napoleon. Molinari argued that this party of order had two components, an external component of elected Deputies and their supporters in the subsidised and protected industries and the large agricultural producers, and an internal component made up of a coalition of bureaucratic administrators and members of the military who had different but related intentions about how they wanted to use the power of the state which they now controlled. He described the latter as being part of the class of unproductive “des mangeurs de taxes” (tax-eaters) who lived parasitically off the class of productive “des payeurs de taxes” (tax-payers). Later, Molinari was to coin the colourful phrase “la classe budgétivore” (the budget eating class)[21] to describe this group of government bureaucrats and employees who lived off the tax-payers, an expression which he used in his writings for the next 60 years.

Que sont, en effet, les administrateurs? Des mangeurs de taxes. Ils vivent du produit des contributions levées sur le pays. Quel est en conséquence leur intérêt immédiat? C’est d’avoir de bonnes taxes à manger; c’est d’avoir un gros budget à faire. Plus les contribuables sont accablés d’impôts, plus l’administration est florissante. C’est un administrateur qui a émis cet axiome demeuré célèbre: l’impôt est le meilleur des [135] placements. Pour l’administration, oui il coup-sûr! Toute entreprise publique, qu’elle soit onéreuse ou productive pour la communauté, ne profite-t-elle pas, quand même, à l’administration? Si l’entreprise échoue, qu’importe aux administrateurs? N’ont-ils pas, en attendant, administré la dépense? Et alors même qu’une nation subit dans ses affaires industrielles et commerciales lc contre-coup des fausses spéculations de son gouvernement, voit-on baisser les salaires administratifs ? Que si, au contraire, l’entreprise réussit, l’administration n’en tire-t-elle pas le profit le plus clair? N’est-ce pas un nouveau débouché qui s’ouvre d’une manière permanente à son industrie?

What in fact are administrators? They are tax eaters. They live off the product of the taxes levied upon the country. As a result of this, what are their immediate interests? It is to have good taxes to eat; it is to have access to a big budget. The more the taxpayers are over burdened by taxes, the more the administration flourishes. It was an administrator who coined this celebrated phrase: tax is the best kind of government job. For the administration, this is for sure! All state owned enterprises, whether they are costly or productive for the community or not, don’t they still profit the administration? If the enterprise fails, what concern is this to the administrators? Weren’t they administering the expenditure all the same? And even though a nation’s industrial and commercial affairs suffer from the aftereffects of its government’s bad speculative activities, do we see administrative salaries reduced? But if on the other hand, a state-owned enterprise is successful, doesn’t the administration make a clear profit from it? Isn’t this a new market which has been permanently opened up for its activity (industrie)? (pp. 134–35.)

The administrative class wanted government to expand so there were more bureaucratic offices to staff and more opportunities for their career advancement. To them this was “un nouveau débouché qui s’ouvre d’une manière permanente à son industrie” (a new market which opens up for them new opportunities for their industry in a permanent way) (p. 135.). The military class sought war as they were paid not just in salaries but also in the form of glory, promotions, and military honors. The administrative class therefore had an incentive to form an alliance with the military “pour diriger le mécanisme primitif et grossier du despotisme” (in order to direct the primitive and rough mechanism of despotism) (p. 135.). Both groups benefited enormously from expanding war because for the administrative class it increased taxes on a massive scale, and for the military it was the fulfillment of their training and careers.

Thus Molinari concluded that despotism which rules by means of a coalition between a charismatic and popular leader (like Napoleon III), government bureaucrats and administrators, and the military was just as a much a threat to liberty and prosperity as the socialists who wanted a revolution to rebuild the political and economic order along their own lines. The bookkeeping economist would show that the ledger of despotic governments like Napoleon’s showed a net loss compared to any profits which might be made. This was a not so veiled warning to some of the French political economists who went to work in Napoleon’s regime after the collapse of the Second Republic, thinking that the stability he promised was better for France than the chaos and disruption of the socialists of 1848. But Molinari’s advice was:

Vous devez comprendre, maintenant, pourquoi les économistes ne sont pas partisans du despotisme. C’est qu’ils appliquent aux résultats, aux produits du despotisme, la même méthode d’observation et d’analyse dont ils se servent pour apprécier les résultats, les produits des révolutions. C’est qu’en employant cette méthode d’observation et d’analyse, en examinant les gouvernements comme des machines, comme des instruments destinés à garantir, à sauvegarder les intérêts de la société, à procurer aux peuples la sécurité qui leur est indispensable pour croître en nombre, en richesse, en civilisation; ils acquièrent la conviction que les gouvernements représentatifs sont des machines infiniment supérieures aux gouvernements despotiques. (p. 150.)

Now you should understand why the economists are not supporters of despotism. It is because they apply to the results and the products of despotism the same methods of observation and analysis which they apply to evaluating the results and the products of revolutions. It is by employing this method of observation and analysis, by examining governments (as if they were) machines, or tools designed to guarantee and protect the interests of society, to get for the people the security which is indispensable for them to grow in number, in wealth, and in civilisation. (Thus), they (the economists) will become convinced that representative governments are machines which are infinitely superior to despotic governments. (p. 150.)

Molinari on class

Molinari was one of several French classical liberals who developed a liberal theory of class analysis to rival and even surpass that of the Marxists.[22] Karl Marx in fact wrote his first works on class during and immediately after the 1848 Revolution and seems to have been inspired by the events which were taking place then.[23] The revolution also inspired similar thinking by Frédéric Bastiat and Molinari. Bastiat unfortunately died before he could complete his planned book on “The History of Plunder” which would be based on his theory of the conflict between “the plundering class” and “the plundered classes”,[24] while Molinari would return to the ideas on class and revolution he first put forward in this lecture some thirty years later in his two volume work on the history of class, revolution, and economic progress.[25]

The Conclusion

The economists’ warning about the costs, inefficiencies, and destruction of life and property which wars, revolution, and despotism brought about fell on deaf ears. They could not compete with the dreams of the socialists to remake French society, nor with the conservative administrative and military classes who benefited from the reaction which inevitably followed.

L’économie politique a deux ennemis irréconciliables : l’esprit de révolution et l’esprit de réaction. Savez-vous pourquoi? Parce que l’un conduit à l’anarchie et l’autre au despotisme, et qu’au point de vue des intérêts généraux de la [84] société, l’anarchie et le despotisme sont presque également funestes. Aussi, chose digne d’attention, aux époques où la société s’est trouvée à la merci des partis extrêmes, où les garanties nécessaires et légitimes de la propriété ou de la liberté des citoyens ont été foulées aux pieds, on chercherait vainement un économiste au nombre des défenseurs et des courtisans du pouvoir.

Political economy has two irreconcilable enemies: the spirit of revolution and the spirit of reaction. Do you known why? Because one leads to chaos (anarchy) and the other to despotism, and from the point of view of the general interests of society, chaos and despotism are almost equally harmful. Also, and this point requires close attention, in the periods when society finds itself at the mercy of extremist parities, when the necessary and legitimate guarantees of the property and liberty of citizens have been trampled underfoot, one looks in vain for an economist among the defenders and courtisans (flatterers) of power. (pp. 83–84.)

But, as he ruefully concluded his lecture, “Malheureusement, on n’écoute guère les économistes”(Unfortunately, hardly anyone listens to the economists). (p. 151.) It was true in 1852 and the French public have remained deaf to the economists’ pleas ever since. The American public doesn’t seem to be much better by all accounts.

Endnotes