The Lasting Effects of The French Enlightenment on Global Economics

The French Enlightenment was the beginning of a new age of intellectual and philosophical development in European societies. Beginning in the early 18th century and following the expansion of scientific knowledge during the Scientific Revolution of the 16th and 17th centuries, enlightenment philosophers devoted themselves to contemplating the nature of the societies they resided in, and then began advocating for more reasonable and morally rational behavior while challenging the philosophical status quos of the centuries prior. During this time thinkers like Locke, Rousseau, Voltaire, Montesquieu and other European philosophers began to critique and reject the moral fabric and longstanding normalities of western society that were long maintained and upheld by European monarchs and aristocrats, and then subsequently began forming new conclusions through philosophical reasoning. This ultimately helped better humanity’s collective social understandings, garnering more freedoms and rights and bringing more civilized economic, societal and political beliefs to society. Major ideas came forth into the realms of government, labor, education and general social thought leading to increased equality, opportunity and social cohesion within class relations. However in the realm of economics, other important figures took the reins on constructing frameworks that would guide how economies would develop in the ages following the enlightenment. These developments would depend heavily on the economic ideas of thinkers such as Adam Smith, Francios Quesnay, Anne Robert Jacques Turgot, and other thinkers of the time. Overall, the main goal of the these philosophies was to assert or contrarily break away and transition from the encapsulating ideas gripping European economies up to that point, such as the prevalence of agricultural labor requiring serfs and the laboring class to work lands overseen by their aristocratic and noble masters, which kept many locked into poor social class standings and unable to grow their wealth or pursue other self-interests; or the other main economic philosophy that prevailed during pre-enlightenment times, Mercantilism. Mercantilism was the idea that a country’s wealth was directly affected by a country's level of import and exporting of goods and was instrumental in the common determination that the world was an economic zero-sum game, with countries either accumulating masses of gold and silver for themselves through exportation to other countries and making a profit, or instead losing riches by importing too many goods and taking losses. Adam Smith in particular was key in debunking this theory and was thereafter hailed as the father of modern economics, as well as capitalism in its laissez-faire form. In this paper, I will be explaining and analysing the importance and relevance of enlightenment era economic philosophers and the roles that their thoughts and ideas play in modern political economics.

Adam Smith and the Beginning of Modern Economics

Adam Smith has been deemed by many to be the father of modern economics. He critiqued the old ways of labor and economic growth and suggested new ways of creating value for countries that weren’t solely based on farming or simply exporting more than a country’s foreign counterparts. Adam Smith saw the mercantilist system at the time and deemed it to be counterproductive. Many countries actually saw losses in their country’s overall wealth while their exports continued to rise and had no answer to this conundrum. Adam Smith sought out the solution to this problem in his famous book An Inquiry Into the Nature and Causes of The Wealth of Nations. In this book, Adam Smith perceives mercantilism to be a system predicated on dismissing the natural liberties that he believed were key to creating an economy and social order of vitality, growth, and further equality for those who participated in it. He recognizes that mercantilism was built on a system of economic single-track mindedness, only focused on minimizing imports to make sure of saving as much precious metals (gold and silver) in the country as possible and maximizing exports to make sure to gain as much as possible, in the form of payment. This type of hyperfocus on only one form of economic gain Smith knew would ultimately prove catastrophic for nations. While exports could go out and gold and silver could come in, where does the obtaining of other goods fall into this? How does a nation become wealthy with only the gains of precious metals? Adam Smith explained and extrapolated on these ideas further. He stated “it would be too ridiculous to go about seriously to prove, that wealth does not consist in money, or in gold and silver”[1] (WN IV.i.17) But he argued that this line of thinking is specially allocated towards the betterment of one single group, the nobility that reaps the rewards and gains of the profits of export, and that this idea impoverishes society instead of enriching it. Natural liberty, he argued, was superior to this in that it ensured a rational social order. Capitalism was an insurance to the people that self-interest, and the utilization of one’s own resources to engage in production was indeed a benefit for their nation and allowed theirs, as well as their country’s wealth to grow. He also argued that in the dismissal of only pursuing natural riches in the form of gold and silver and employing a paper credit currency, a country would also “render a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country”.[2] (WN II.ii.86) This essentially is Smith saying paper credit allows people within a country’s economy to obtain and use capital resources freely in order to engage in production rather than needing to interact with competitive and individualist banking systems. However, he saw the importance of having an exchange rate based on precious metals and saw the ideas of the value of gold and silver as being “arbitrary” as vain and imaginative.

Smith’s intellectual discoveries have had a huge effect on the world economy today. Countries like the United States, Great Britain and in recent years China have been practicing the free market economics of Smith’s suggestions for centuries and have garnered enormous amounts of economic success from their undertakings and implementations of Smith’s original lovechild. His suggestion for a paper credit in place of the gold and silver currency that was being used also revolutionized economies all around the world, providing more utilization and trades of resources allowing individuals to engage in production at a much higher rate. Adam Smith’s theorizing about the woes of the pre-18th century economic systems have led the world into an era of prosperity on the global stage.

Francois Quesnay and the Physiocrats

Francois Quesnay came from the economic school of thought known as the physiocrats. Their main economic idea was that land and agricultural production should be the main source of wealth in a nation’s economy and that the market should be interdependent and harmonious with itself. Quesnay saw government intervention in the production of agricultural goods as an impediment on the natural order of things, as he was an advocate of “laissez faire” style markets. But this was only limited to agricultural work as Quesnay himself was against the class struggle that prevailed during his time especially with what he labeled as the productive class which worked the lands overseen by aristocrats and authorities. He believed that the “Law of Nature” was the most important social truth of economics asserting that each man tries to “increase his economic gain by doing the least work possible”[3] and that laws are not to be implemented to divert this truth but to enforce it by ensuring the proper “natural order” to all people. His ideas on laissez-faire economics were meant to uphold the standing order of the aristocrats and ruling class as his sentiments did not mirror his contemporaries on challenging the existing social order of absolutism and serfdom.

Quesnay wrote his Tableau Economique explaining physiocracy further. In it he lays out the “first ever method of conveying an explicit conception of the economic equilibrium”[4], and thereafter organized it into a systematic table that shows how a productive flow creates a gross domestic product that is distributed throughout the classes of France's agricultural economy. This was an astonishing discovery by Quesnay that was heralded by many to be “the most penetrating piece of economic thinking to date”[5]. Throughout the years the table, while criticized for presenting many ambiguities, has been gradually incorporated into macroeconomic theory and has been praised for simplifying a large economy with many interworking facets into a “readily revealed system.”[6]

Anne Roberts Jacques Turgot

Turgot was a French economist who was pivotal in the freeing and liberalizing of the French economy. Turgot served as France’s Financial Minister for two years where he worked towards these objectives. He shared many views with Quesnay, especially in the efficiency of free trade but Turgot takes the physiocracy idea and turns into the more wide-ranging philosophy that is applied to all kinds of economic activity, not just agriculture. This, in his mind made things less complicated stating, “I find that . . . you do not make sufficient use of this less abstract principle, but . . . more enlightening, more fruitful or at least forceful for its simplicity and without exception because of its generality: the principle of competition and of free trade”[7] He brings up the importance of the idea of the “the origin of capital”[8] which was one that the physiocrats had always had traditional answers to, including savings by landowners, and lack of competition. Turgot on the other hand stresses the importance of expense as part of maintaining capital and wealth and savings as a means to grow the economy as when they are spent, it helps employment, growth, and productivity.

Turgot was a pioneer as one of the economists that inspired Adam Smith, as well as the liberal economic thought that prevailed in France and later in more modern and industrialized nations of the 19th and 20th centuries. Turgot's ideas on competition and the importance of expenditures as well as saving and their potential beneficial effects on the economies is key to our understanding of economics today. His influence spans well into the modern and developed world economy and continues to inform our new ideas today.

Conclusion

The Enlightenment was a period of challenge, of experimentation, and of triumph. The new ideas that came out of this period has influenced the world positively in more ways than is measurable, ensuring greater economic productivity and making the world richer, ensuring a larger array of freedoms for individuals and for the markets, ensuring greater mobility for the transfer, trade, and utilization of resources, and ultimately making the world more equal due to ideas that challenge the traditional notions of serfdom and servitude for the laboring class. Adam Smith’s conception of capitalism which was highly influenced by Turgot’s ideas of free trade and free taxes, we have seen the effects of all over the world and especially in modernized economies. Their ideas continue to inform the important economic decisions many individuals make every day.

Works Cited

Schachter, Gustav. “Francois Quesnay: Interpreters and Critics Revisited.” The American Journal of Economics and Sociology, vol. 50, no. 3, 1991, pp. 313–322. JSTOR, www.jstor.org/stable/3487273. Accessed 24 May 2021.

Smith, Adam. The Wealth of Nations . Oxford, England: Bibliomania.com Ltd, 2002.

Faccarrello, Gilbert. “(PDF) Anne-Robert-Jacques Turgot (1727-1781).” File:///C:/Users/Mackenzie%20Labar/Downloads/Turgot_Faccarello.Pdf, 2016, www.researchgate.net/publication/292720828_Anne-Robert-Jacques_Turgot_1727-1781.

[1] Smith, An Inquiry Into the Nature and Causes of The Wealth Of Nations, IV.i.17 [2] Smith, An Inquiry Into the Nature and Causes of The Wealth Of Nations, II.ii.86 [3] Gustav. “Francois Quesnay: Interpreters and Critics Revisited.” The American Journal of Economics and Sociology, 315 [4] Gustav. “Francois Quesnay: Interpreters and Critics Revisited.” The American Journal of Economics and Sociology, 317 [5] Gustav. “Francois Quesnay: Interpreters and Critics Revisited.” The American Journal of Economics and Sociology, [6] Gustav. “Francois Quesnay: Interpreters and Critics Revisited.” The American Journal of Economics and Sociology, [7] Turgot, Reflexions, 507 [8] Faccarello, Anne-Robert-Jacques Turgot, 7