Charles-Louis de Secondat, baron de la Brede et de Montesquieu (1689-1755) was born into an aristocratic family at La Brede near Bordeaux.
He was educated by the Oratorians at the famous College of Juilly and later at Bordeaux Faculty of Law. He became a lawyer in 1708 and, in 1716, inherited from his uncle the prominent position of president a mortier in the Bordeauxparlement - at that time a court of justice.
Apart from holding this venal office (which he sold in 1726), Montesquieu was also a landowner and a wine merchant. His fame in the Republic of Letters began in 1721 with the publication of the Lettrespersanes (Persian Letters), a critique of absolutism and religion in the form of an epistolary novel. He followed it in 1734 with Considerations sur les causes de la grandeur des Romains et de leur decadence (Considerations on the Causes of the Greatness of the Romans and of their Decline). Elected to the Academie de Bordeaux in 1716 and to the Academie franςaise in 1728, he travelled throughout Europe, and especially in England, between 1728 and 1731. It was, however, with the publication of De l’esprit des lois (The Spirit of the Laws) in 1748 that he achieved universal acclaim in the world of political science.Montesquieu’s economic thinking is concentrated in this work (especially in books VII, XIII, XX-XXIII) even if the Lettres persanes and the Considerations contain reflections on John Law’s financial experiment in France (1717-20), considerations on population, trade and luxury goods, and a “history of commerce”. Montesquieu does not develop a full-fledged system of economic ideas simply because it is not his intention to do so. His ideas on “commerce” belong to a broader reflection upon the “constitutions” of states and the “general spirit” of nations. In this respect, he reaches a relativistic view of economics embedded in politics and the social process generally. While he clearly supports the idea that individuals, in pursuing their own self-interest, produce goods and services, fulfil their needs, and ultimately increase the wealth of the nation (1748, in Montesquieu 1949-51, bk XX, chs 9-10), he looks to discuss this process within the different political regimes.
His method is well known. He considers a spectrum of causes that create a “spirit” in the nation and the laws, which are adapted (or not) to it. The first cause is “physical” (geography, climates), and the others are religious and related to the manners (les moeurs) of the peoples. He then analyses these causes in relation to ideal-types of government: republican, monarchic and despotic. But Montesquieu hones this rather classical threeway division into a contrast between “moderate” and “non-moderate” governments. Monarchies and aristocratic republics are moderate governments; despotic regimes and democratic republics non-moderate. England embodies moderate government. Thanks to its constitution which balances the two great forces (the executive and the legislative powers) and the passions reigning in these opposing camps, political freedom emerges (Montesquieu 1949-51, bk XX, ch. XIX). Not only does it ensure property rights - the citizen does not fear the state or other citizens - but this constitution also means that taxation is more readily accepted than under less moderate or non-moderate governments and that foreign trade flourishes. Indeed, taxes are mainly directed at financing England’s maritime superiority. In the “jalousy of trade” (Hume 1987, pt II, essay VI) between European nations, the fiscal-military state of England has a decisive advantage (see Larrere 2001). In contradistinction to the “colonies for conquest” model characterized by wars and the destruction and predation of precious metals (Ancient Rome, the Spaniards in modern times), England promotes “colonies for trade” (this does not preclude aggressive operations to invade warehouses or trading posts). Montesquieu views British foreign commerce as a peaceful relationship between peoples, with the transporting of goods and ideas having civilizing effects. This is the famous doux commerce thesis (1748, in Montesquieu 1949-51, bk XX, chs 1-2). Some might concur with Albert O. Hirschman (1977) that Montesquieu theorizes the shift from “passions” to “interests”, that is, from an outburst of destructive and bloody territorial conquests to a mutual sharing of the benefits of self-interest between nations.
But this way of conceptualizing international trade has been described as a “mantra of modernity” (Reinert 2011: 7), with the “jalousy of trade” leading eighteenth-century European powers to combine war, empires and commerce in a new way that was probably no less destructive than earlier conquests.However, it would be wrong to imagine Montesquieu as an enthralled worshipper of England and its constitution. He is no great admirer of English culture (especially the place assigned to women) and he judges that its political system is fragile. The liberty of Englishmen is not based on virtue, as in the Ancient Republic, but on self-interest and trade. It is both a strength and a weakness. The passion for money leads to corruption, to a decline of manners and virtues and finally to a possible subversion of the political system. So there should be no question of France adopting the English constitution. The French nation possesses its own “spirit” and its laws, institutions and trade obey their own logic (Cheney 2010: 73).
Montesquieu distinguishes between two kinds of trade. The “carrying trade” (“commerce d’economie”) is suited particularly to “republics” (that is, republican governments and moderate monarchies) where thrift, a bourgeois spirit of acquisition and a certain equality among citizens prevail. It consists of high volumes of relatively common commodities sold at low prices. By contrast, the “luxury trade” (“commerce de luxe”) is better suited to monarchic and despotic governments where vanity and pride are the dominant passions of the rich. Such a trade entails higher profits but fewer transactions. Montesquieu clearly states that the two are not exclusive in any nation, but that one or other of these trades dominates in each nation. As far as France is concerned, Montesquieu follows Bernard de Mandeville’s Fable of the Bees by explaining that monarchies have an absolute requirement for luxury because it is spending by the rich that provides work and income for the poor. Fashions and taste create demand for luxury goods, engendering a luxury industry and trade (1748, in Montesquieu 1949-51, bk XIX, ch.
8-9; bk XXI, ch. 6). In this respect, monarchies such as France (the case of Spain is entirely different), with their hierarchical organization and the vanity and honour of the nobles, could also benefit from the rise of commerce, but in a different way from “republics” such as England or Holland. The path to wealth and the stability of the French “constitution” both depend on maintaining a balance among the constituent parts of the social hierarchy. Nobles should not be traders, but consumers. However, this elite must be open to the merchants (by the acquisition of offices) in order to stimulate trade and industry (ibid., bk XX, ch. 21-2) (see also Cheney 2010: 67-71).Having set out this framework, Montesquieu covers a few points about the role of the state in the economy. He is generally in favour of economic freedom and opposed to monopolies and compagnies exclusives (1748, in Montesquieu 1949-51, bk XX, ch. 10). Montesquieu explains that “monarchies” should not impede trade. Not only do they need the commodities of the carrying trade at low prices, but the enactment of sumptuary laws would tend to diminish spending on the luxury items they require (ibid., bk XX, ch. 4-8). However, he acknowledges that “republics” are entitled to impose restrictions on free trade (navigation acts, customs) in order to protect their carrying trade. As argued in his friend Jean-Franςois Melon’s Essai politique sur le commerce (1734), “liberty” should not be “licence”: trade falls under the sway of the law, and the latter might have to restrict certain lines of trade or trading practices (such as the agreements among traders) in order to protect the general interest of the nation (and its commerce) (1748, in Montesquieu 1949-51, bk XX, chs 7-12). On the question of finance and money, Montesquieu opposes the establishment of banks in “monarchies”. One cannot have power on one side and money on the other (ibid., bk XX, ch. 10), simply put, when the power is concentrated in the hands of a prince, he must possess all the money in the state (the “royal treasure”).
According to the philosopher, he would be without means otherwise. Montesquieu criticizes public debts in “republics” as well as in “monarchies” on several grounds. If foreigners hold annuity notes, they remove a substantial amount of money from the nation, the burden of taxation to pay the interest on the debt hurts the manufactures and, ultimately, it takes the true revenues from the industrious and transfers them to idle men (ibid., bk XXII, ch. 17). On the question of taxation Montesquieu is against the General-Farm system and for a state regie, which should bear mainly upon commodities. He praises the painless character of the English excise duty system. He also holds that any land or personal taxes should be progressive and not proportional (ibid., bk XIII).Montesquieu subscribes to a quantitative theory of money and remarks on the inflation caused by devaluations (due to the debasement of the coinage or, the most common in the eighteenth-century, the increasing of the value of the coinage in currency of account or numeraire currency, the livre tournois). In discussing these matters, he also explains how the rate of interest fell after the discovery of mines in the Americas, which he considered an excellent thing (Keynes was to praise Montesquieu on this), but equally he describes the terrible inflation engendered and finally the loss of gold from Spain to more industrious countries. To his mind, gold and silver are not real wealth, and money should be considered a mere “sign”. If the state is driven to manipulate money, it is due to its growing expenses arising from its appetite for war and expansion (ibid., bk XXII, chs 7-14) (see Larrere 2001). Lastly, for Montesquieu, agriculture is clearly a respectable and useful activity, but is not to be placed at the centre of commerce. However, when he comes to discuss the necessity of laws favourable to population growth in Modern Europe, Montesquieu puts forward a few ideas on farming. He is clearly concerned by demography - like many of his contemporaries, and in the absence of statistics, he thinks that population was strongly declining for centuries - and discusses how to increase the number of men and women.
Apart from the fact that a despotic government is unfavourable to population growth (1721, in Montesquieu 1949-51, let. CXX-CXXII), Montesquieu sees at least two ways: the state should distribute land to those who have none and facilitate the clearing of land (for example, by cutting taxes) (1748, in Montesquieu 1949-51, bk XXIII, chs 16-18).De l’esprit des lois made a considerable impact on France. Read by several generations, the work was to promote an interest in economic issues while also spreading a defence of moderate government. Friedrich Melchior Grimm went so far as to say the book caused a “revolution” in the national mind (Grimm 1756 [2007]: 187) and Pierre-Samuel Dupont judged that it was thanks to Montesquieu that France’s “finest minds” began to study political economy (Dupont 1769: xii). For the members of the Gournay circle in the 1750s, it became one of the main points of reference for discussion and further elaboration. But beyond their criticism - as in Forbonnais’ Observations sur l’esprit des loix (1753) and a number of issues (for example, the noblesse commerςante) on which the circle opposes the ideas of De l’esprit des lois - or their praise of Montesquieu’s ideas on the role of self-interest, the effect of trade on the balance of power, taxation, and so on, they made use of the book as a blueprint for developing new methods and a “political” understanding of commerce.
Arnaud Orain
See also:
Pierre Le Pesant de Boisguilbert (I); French Enlightenment (II); Francois Quesnay and Physiocracy (I); Anne-Robert-Jacques Turgot (I).