The rise and decline of liberal political economy

The long nineteenth century is thus undoubtedly that of the rise and apogee of liberal political economy between the July Monarchy and the Second Empire, and its decline from the 1870s.

The first part of this volume naturally begins with Jean-Baptiste Say and Antoine-Louis-Claude Destutt de Tracy (1754-1836), that is to say, with the Ideologues. The transition from the eighteenth to the nineteenth century was cer­tainly accomplished through them; they were the bridge-builders between Turgot, Condillac, Condorcet and the Physiocrats, and the subsequent economists who were the architects of the institutionalisation of liberal political economy. Thus, both participated in a decisive way in the development of the French liberal tradi­tion. Say’s role was especially crucial, in two respects.

First, from an analytical viewpoint, he orientated classical French political economy in a particular way, focusing on the role of political economy to pro­mote the industrialisation and modernisation of the French economy, and on the imperious necessity of competition in this process. He insisted on interest “well- understood” as a way of reconciling economic efficiency and social justice, as we would say nowadays. His Traite d’economiepolitique remained the reference, the gospel of liberal political economy for a large part of the nineteenth century. Some other contemporary figures were also of some weight,^[7] but they never attained the aura of the founding fathers.

Say’s role, however, was not only intellectual. He also played a decisive part in the institutionalisation process, which took place from the 1820s onwards. He held the two first academic chairs of political economy (at the Conservatoire des Arts et Metiers and at the College de France), which were afterwards occupied by other liberals. After his death, his family and friends - in particular, his son Horace (1794-1860) and his disciple and friend Adolphe-Jerome Blanqui (1798-1854) - played an active part in the creation of the Journal des economistes (1841) and the Societe d’economie politique (1842), which both had a central role in the dissemi­nation of liberal economic ideas during the following decades.

The liberal group, to which the third chapter is devoted, was formed in the 1830s mainly by Say’s followers.^[8] It gradually expanded during the Second Empire to become what Le Van-Lemesle (2004) called a “liberal lobby” who defended free trade, freedom of labour and laissez-faire at different levels: some publicists taught courses with a strong liberal flavour and published numerous treatises and hand­books based on French classical political economy (Steiner 2012); others encour­aged public debate by publishing articles or pamphlets; and yet others delivered economic advice to the government. Despite some important nuances, which will be presented in due course, they shared a classical (following the principles of Smith and Say) and individualistic way of thinking; they also mostly relied on the doctrine of natural law defended by Benjamin Constant (1767-1830), which enabled them to justify private property, freedom of labour and freedom of trade. After having been long neglected, the interest in French liberal thought after Say increased in the wake of Yves Breton and Michel Lutfalla’s seminal works in the 1980s, in which its heterogeneity and multifaceted developments were largely demonstrated (Breton and Lutfalla 1991).

However, in the 1870s, important intellectual, societal and political changes took place, leading to a destabilisation of the liberal group and its gradual decline. For the liberal economists, the change was methodological and generational. It was the time when, in the whole of Europe, one could witness a progressive fading of classical ideas and deductivism, in parallel with a move towards more empirical economic studies. The influence of new methods, in particular historicism, mainly came from beyond the Rhine and denied the existence of universal laws capa­ble of explaining economic phenomena, advocating an analysis rooted in history and sociology. Other novel insights, those of the marginalists, came to undermine French liberal economists - even if their influence remained limited in France for a time.

As a result, the liberal group became rigid and reduced its sphere of influence. Thus, on the eve of World War I, liberal thought had been challenged by the new conceptions of the professors of economics in the law faculties, as well as by the development of mathematical economics and economic calculation.

3.