The end of French classical school
In his Essai sur la repartition des richesses, Leroy-Beaulieu argued that what characterizes the economies in the late nineteenth century is a trend towards less inequality. The world has changed and we can no longer argue like Turgot, Malthus or Ricardo.
The Ricardian theory of rent is devoid of any practical significance because the advancement of knowledge and competition from new countries led to a decline in rents in France and England. The Malthusian theory of population does not find application in a largely uninhabited world where the production of food is increasing to the point where the price of the products of land is more likely to fall than to rise. The analyses of the classical economists, which highlighted that in wage bargaining, the employers were always in a strong position, are now obsolete in countries where the right of association is recognized for the workers. All this is not radically new because the French liberals, especially Bastiat, had often criticized the “pessimism” of the English classical economists. What is new is the conclusion that Leroy-Beaulieu (1881: vi) draws from this observation: “From a theoretical point of view, we are led to the conclusion that almost all accepted doctrines of political economy on the distribution of wealth are to be reworked or at least corrected.” He thus tried to put forward a new theory of distribution, seeking to understand the factors that determine the supply and demand of productive services. He explained, for example, that technical progress has reduced rents because its effects were greater on land that was initially less fertile. On the other hand, he argues that capital accumulation simultaneously has the effect of increasing the average productivity of labour and reducing that of capital; and that, for this reason, it tends to increase the wage rate and reduce the rate of profit. French classical political economy has come to an end. To explain the distribution of income, the French liberals no longer refer to Ricardo, Malthus and Say; instead, they seek to build a new theory.
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