I.3. The Administration of National Wealth Before Its Theory Became the Object of a Science

Ever since men formed social bodies they have had to concern themselves with the common interests their wealth gave them. From the very beginning of societies a part of the public fortune was set aside to provide for public needs. The collection and administration of this national revenue, which belongs no longer to each but to all, became an essential part of the science of statesmen. It is what we call finance.

Private fortunes, on the other hand, complicated the interests of each citizen. They were exposed to the attacks of greed and fraud, and they had to be defended by public authority, according to the fundamental contract of societies, which had united individual forces in order to protect each with the power of all. Rights over property, its division and the means of transmitting it became one of the most important branches of civil jurisprudence; and the application of justice to the distribution of the national fortune was one of the most essential functions of the legislator.

Need had stimulated industry, and industry had created various kinds of wealth with the help of a routine experience. As men acquired more knowledge they reflected more on the operations by which they provided for their needs; they reduced them to a body of science, and they enlightened their theory by observations on the general laws of nature. Agriculture had supplied the first needs of man long before it became a science; but at the time when it lavished its treasures on the inhabitants of Greece and Italy, ingenious men had already reduced to a body of doctrine the means of multiplying this part of the national wealth. The crafts and manufactures had been born within families; but industrious men soon borrowed from the naturalists, the physicists and the mathematicians the knowledge of the properties of various bodies and of the means of imitating those that nature produces, the knowledge of the dead forces that man can direct, and finally the calculations of dynamics; and the industry of the towns had its science, like that of the fields. Commerce, which compared the needs and the riches of different peoples and made the latter profitable to all by exchange, also had its own. It was founded on varied knowledge, and it presupposed at once the study of things, of numbers, of men and of laws.

But while each part of the public wealth had a theory, that wealth itself had none. The ancients had regarded public wealth as a fact whose nature or causes they never troubled to investigate. They had abandoned it entirely to the individual efforts of those who were engaged in creating it; and when the legislator was called upon in some way to limit those efforts, he still believed he was dealing only with individual interests, and never fixed his attention on the pecuniary interest of the whole. The sciences that had each branch of the national wealth for their object were not referred to a common trunk; they were not so many corollaries of a general science; they were treated in isolation, as though each contained its own principles within itself. Thus in laying taxes the financier considered only the greater or lesser resistance he met in the taxpayer, the equality of assessment and the certainty of collection, while he never examined what influence each kind of tax would have on the increase or decrease of the public fortune. The jurist took careful thought for every guarantee to be given to property, every means of perpetuating it in families, every dormant right he sought to reserve intact or to revive; but in inventing these mortgages, these entails, these ingenious distinctions between direct and beneficial ownership, he never thought of asking whether he was thereby helping to increase or diminish the value of the national property, and whether it served the growth of wealth that the interest of the man who works it should be divided or suspended. The agronomist never considered the cruel question of cultivation by slaves except from the standpoint of the master’s interest, never from that of the public interest; and rural, industrial and commercial legislation was never founded on an inquiry into what would bring about the greatest development of public wealth. In the vast collection of the Roman laws, where one finds by turns so much soundness of mind and so much subtle philosophy, and where the reasons for the legislation are set out with as much care as its rules, not one enactment is to be met with that is founded on a principle of political economy; and this defect has persisted in our laws to this day. As for the philosophers of antiquity, they were occupied in teaching their disciples that riches are useless to happiness, rather than in pointing out to governments the laws by which they promote the growth of wealth and those by which they check it.

Nevertheless the speculative spirit of the Greeks had set out to master all the human sciences. A small number of writings of their philosophers on economic studies remain to us, and it is fair to give them a moment’s attention, if only to judge how far the principles of the creation of wealth could remain unknown to peoples who nevertheless reached almost the highest known point of social development, and who gathered, for a numerous population, everything that can make life pleasant, everything that can develop man’s faculties, and everything that can form his mind.

Xenophon, in his Oeconomicus, after defining economy as the art of improving one’s house, and declaring that by house he meant all our possessions, everything we turn to our use, considers this economy from the point of view of the philosopher rather than the legislator. He insists on the importance of order, both in the arrangement of things and in that of tasks; he is concerned with forming the character of the wife, who must preside over this domestic order; he follows her in the management of the slaves, and while recalling that their upbringing brought them nearer to the animals than to men, he recommends directing them by gentleness, emulation and rewards. He then compares the two careers that can lead to fortune, the mechanical arts and agriculture. He justifies the contempt, then universal, for the former on the ground that they weaken the body, impair the health, brutalise the soul and sap courage; while he paints a charming picture of agriculture, a source of happiness for the families who follow it, and shows its close alliance with bodily strength, courage, hospitality, generosity and all the virtues. This work breathes a love of the beautiful and the honourable, a gentle philanthropy and a sincere and tender piety, which make it very attractive reading; but this is not the political economy we are looking for.

Aristotle, in the first book of his treatise on the Republic, devoted four or five chapters (8 to 13) to the science that concerns us. He even gives it a name better suited to designate it than the one we have adopted: Chrematistics (χρηματιστική), the science of riches. His definition of riches, “the abundance of wrought things, domestic and public”, is very just. His account of the invention of money is no less so. His mind, rich in definitions and distinctions, classifies with fair precision the various ways of acquiring: by agriculture, by the mechanical arts and by the interest of capitals. Like all the ancients he gives a decided preference to agriculture; then he casts his whole chrematistics out of politics proper. It is, he says, the matter on which the laws operate, and not their object.

After this decision one would expect to find more precise matter in his two books on Economics. But the Greek text of the greater part of them has perished, and the work now rests only on the doubtful authority of a Latin translation by Leonardo Aretino. The first book is devoted to the persons who make up the family, the second to things. The latter begins with a division of the economic administration of kings, satraps, cities and private persons, which seems to promise curious observations on public wealth; yet it consists only of an odd catalogue of all the expedients used by tyrants, governors or free cities to raise money in times of distress. There is probably no modern invention of the tax-farmer of which some example could not be found in this book; but the strange thing is that Aristotle, or the pseudonymous author, reports them without order, good and bad alike, down to the most violent and the most extravagant, without blaming them or pointing out their danger.

Finally Plato, in the second book of the Republic, setting out to explain the origin of the city or of human society, develops his economic system with a clarity and precision that no disciple of Adam Smith could surpass. Mutual interest, according to him, draws men together and forces them to unite their efforts. Plato shows how this principle alone must bring about the division of trades, how each man did better the one thing he did alone, and how all thus produced more. Commerce for him is the result of the progress of manufactures and agriculture, and the first encouragement he asks for this commerce is liberty. He distinguishes from this active and enterprising commerce the sedentary routine of the shopkeeper, who confines himself to retailing the goods the merchant brings together. From the mere progress of society he derives the opulence of some of its members, who give themselves up to idleness, to pleasures or to study, precisely because the others work. The inequality of goods, the impairment of health and of justice, and the growing needs of rival cities lead him at last to conclude that there must be a population of guardians, maintained at the expense of the rest of the people and by a share in their labour.

It is not without some astonishment that one sees the philosopher who, in his republic, will establish the community of goods and of women, at least for his population of guardians, analyse so justly the origin of pecuniary interests and the formation of society. The ancients sometimes let themselves be led astray by the liveliness of their imagination, and they were too inclined to substitute trials of wholly speculative theories for the lessons of an experience they lacked. But at least they never lost sight of the fact that wealth had value only in so far as it contributed to national happiness; and precisely because they never considered it in the abstract, their point of view was sometimes truer than ours.

The Romans have left us some books on rural economy, but none on the science that concerns us.

Besides, self-interest does not wait for philosophers to trace it a theory of wealth before pursuing wealth; and the ruins of the ancient civilisation of the Greeks and Romans, which we still see standing, bear witness that the opulence of nations can reach almost the highest point without the science that teaches how to hasten its development having been cultivated.