Shaping economic policy: the role of the legislator
How can the new policy be implemented? How can the legislator be influenced if, unlike Turgot in 1774-76, the “philosophes economistes” are not themselves in power? Starting our period with Boisguilbert, the “philosophe economiste” had to act by gaining access to the king or his ministers.
Boisguilbert had the traditional role that the monarchy offered the king’s advisers: informing the king and proposing solutions. By the middle of the eighteenth century this changed, especially in the case of the Physiocrats and Turgot, with the idea of reforming the monarchy. Here there was a clear movement towards the “public sphere” and an appeal to “public opinion” or “the tribunal of opinion”. Instead of papers and memoranda addressed to the royal authority, authors turned to printed works and even articles in journals intended for the public and for debate. As an ideal it functioned as a new way of thinking about politics and the legitimising of political action, seeking to convince the “reading and thinking public” - a good example of this can be found in the preliminary declarations of Turgot’s edicts. Additionally, Turgot and Baudeau began to define the social category that formed the basis of this new public opinion: the middle class. This can also be found in the writings of d’Holbach and PierreLouis Rmderer.“Philosophie economique” also treated politics as a pedagogic practice: clear explanations must be given so that the opinions of the reasonable members of the public might be guided - Turgot’s edicts are preceded with developed pedagogical preliminary declarations - thus defining the conditions of acceptability and legitimacy for the measures taken by the legislator. This pedagogical dimension is associated with various institutional structures. In some cases (Quesnay and Le Mercier de la Riviere for example) the importance assigned to public opinion, strongly associated with public education, went hand in hand with the role of the “philosophe economiste” as an expert.
In other cases (for example, Dupont, Turgot and Condorcet), projects for the representation of interests through a system of assemblies were developed so that the interests of the landowners might be discovered and channelled - these interests being considered identical to the interests of the nation. In all cases, the importance of education and teaching was recognised.However, what is the specific task of the legislator as regards markets and the economy? A first task concerns the functioning of markets in free competition. In this case the harmonisation of the self-interested behaviours of individuals was supposed to occur without any specific regulation - whether it be political like the regulation of the grain trade or religious like the ban on the lending at interest. In some cases, however, the legislator and the political power had to intervene, when the conditions for a smooth working of competition were not fulfilled. For example, according to Boisguilbert, when free foreign trade could not take place because of a war, the government was supposed to intervene in markets, and, through announcements of some sale or purchase of grain, according to the circumstances, influence agents’ expectations in order to stabilise them and, via them, prices.
In some cases also, in the opinions of the authors, the mechanism of competition can never work and the legislator must intervene accordingly. This is the domain of market failures and of the so-called artificial harmonisation of interests, the main example of which is the problem of the financing of public goods (justice, police, defence, and so on), and taxation. Turgot, Graslin, Condorcet, Rmderer were perfectly aware of this. Facing the central question of free riding, they developed theories of state intervention and, in the quid pro quo perspective, mainly considered taxes as the (compulsory) prices of the services provided by the State. In addition, the legislator has also to decide on merit goods, such as instruction and education, and questions related to externalities.
One aspect of the public service of protection is worth mentioning because it is particularly symptomatic of the mentalities of the time. A traditional and widespread idea was that the merchant was dangerous because he was motivated by greed, and that the population therefore needed protection, especially during periods of grain shortage (requisitioning of grains, regulated price of bread, and so on). “Philosophie economique” saw instead the merchant in competitive markets as equal to Providence in regard to food distribution: it was therefore the merchant who needed protection from the irrational passions and ignorance of the people. Turgot ordered such a protection.