Noch vor dreissig Jahren erfuhr es keinen Widerspruch, als Johann Baptist Say den Werth einer Geschichte der politischen Oekonomie mit den Worten läugnete: ‘Sie ist weiter nichts, als die Darstellung der mehr oder minder gelungenen, zu verschiedenen Zeiten und an verschiedenen Orten wiederholten Versuche, die Wahrheiten, woraus sie besteht, zu sammeln und festzustellen. Was würde es uns helfen, abgeschmackte Meinungen und mit Recht verrufene Lehren zusammen zu tragen? Dieselben zu Tage zu fördern, wäre ebenso unnütz als langweilig’. Dieser Ausspruch war die einfache Folge der damaligen Ansicht von der absoluten Wahrheit der neueren national-ökonomischen Theorie, welche man, losgerissen von allem geschichtlichen Boden, von allen Bedingungen des Raums, der Zeit und der Nationalität, als eine rein aus den Principien des Verstandes gefolgerte Summe von Wahrheiten betrachtete, deren Verständniss allen früheren Geschlechtern verschlossen, die aber einmal aufgestellt und entwickelt, für alle Zeiten und Völker wahr und in sich geschlossen sein sollten.

Die Reformation des 16. Jahrhunderts musste vorhergehen, ehe im 18. und 19ten die Dampfmaschine erfunden werden und die National-Oekonomie als selbstständige Wissenschaft erfasst werden konnte. Nicht nur für Kant und Hegel, auch für Adam Smith und die grossen Geister im Gebiete der technischen Erfindungen bildet – so paradox es klingen mag – die nothwendige Voraussetzung die deutsche Reformation.

[As recently as 30 years ago, no one would have objected when John Baptist Say denied a history of political economy its relevance by saying that it was ‘nothing more than a compilation with mixed success of past attempts during various times and locations at finding and collecting the eternal economic truths. What help would it be to collect old vulgar and tasteless opinions and theories that had rightly been refuted? Tracing them would be as useless as it would be boring’. This uttering was the expression of a simple consequence of the prevailing idea that current economic theory would have universal currency as an inherent truth, detached from its historical context and conditions of space, time and nationality; a sum of truths and laws derived purely from principles of reason, from which our ancestors had been precluded but which – once they had been discovered and fully developed – would attain universal truth for all times and peoples as a closed theory.

I

Unlike most of the great political battles of the Old Regime, the struggle over the liberal reforms did not find the government on one side and the parlements on the other. There were parlements on both sides of the question. Nor were the courts that took a stand against liberalization along with the Paris Parlement united in their views or bound by a sense of common interest. There is no evidence that the opposition companies of Dijon, Bordeaux, Rennes, Rouen, and Paris coordinated their attacks or corresponded, as they did on many other issues, to plan strategy and exchange ideas. Each parlement was concerned specifically about the fate of its own resort. The Breton magistrates appear to have calculated their policy without regard to the situation of the other courts. Liberalism had deep roots in the Rennes Parlement and it was vigorously seconded by the Estates of Brittany, which had close ties with the court and which remained committed to the reforms at least until 1770. The Parlement hesitated a long while before moving against liberalization, and then tried to take a position which would not foreclose the possibility of a return to liberty when conditions improved. The Bordeaux court oscillated between liberal and police positions, depending far less on a global conception of political economy and administration than on short-term factors which affected the supply situation of the territory. If the Paris Parlement struck a more universal pose, it was because it habitually pretended to speak for the whole nation, to the chagrin of its sister-parlements, and because the provisioning of Paris depended upon circumstances throughout the kingdom.

The case of Rouen best illustrates the contradictions and the brittle solidarities which characterized inter-parlementary relations and grain policies. In the course of the public debate, the courts at Rouen and Paris became allies in the struggle against liberalization. Indeed, the Rouen Parlement launched the early assault with its usual vivacity and in a sense prepared the ground for Parisian intervention. Yet there were important differences in outlook between the parlements which should not be obscured by their common hostility to the liberal reforms. While they assailed liberalization, the Rouennais also attacked the policy by which the ministry systematically favored Parisian provisioning as if no one else had to fear or suffer the consequences of scarcity and steep prices.

In considering, across the long run, the increasing success eighteenth-century society enjoyed in escaping or attenuating the effects of the deadly old-style subsistence crises—an incomplete triumph which we must be careful not to exaggerate—the role played by government in husbanding resources, containing disease, and organizing social services is often overlooked. If Paris was spared a serious “crisis of mortality” and violent sociopolitical disruptions in the late sixties, it was partly due to the efforts the government made—without enthusiasm, it must be noted—to keep the city adequately supplied in the midst of a grave and prolonged dearth. To be sure, it can be, and in fact was, argued that the methods used by authorities were prodigal and inefficient. The king was said to have spent as much as 10,000,000 livres in purchasing grain and flour, the bulk of which served the capital.1 But it remains extremely doubtful, given the harvest failures, the disorganization of the grain trade, the primitive state of communications, and the mood of consumers, that the city could have fared so relatively well without massive governmental assistance. In any case, no one, with the exception of a handful of ideologues and optimists, not even the ministers who fathered the radical program of liberalization, was prepared to court the risks that non-intervention implied.

This chapter examines certain aspects of the king's grain operation in the late sixties. Like the previous interventions of the government on the supply side, it must be seen first of all as an extraordinary measure devised to deal with a critical subsistence problem. Throughout this discussion, it is imperative to keep in mind that the provisioning situation of the capital was grave and that the grain provided by the government, though it could offer nothing more than stop-gap relief, was desperately needed if the bakers were to continue to offer bread for sale in sufficient quantity. Unlike earlier royal victualing enterprises, which did not come into being until after a crisis declared itself, the king's grain operation of the late sixties was prepared well in advance. This point, too, should not be overlooked. On the eve of liberalization, for the first time ever, the central government established an emergency reserve fund for the capital. Theoretically, the government was better equipped than it ever had been to deal with potential subsistence difficulties.

Monetary Shortage and Economic Crisis

One point which Luther touches upon rather in passing in the present sermon Von Kauffshandlung und Wucher, but which arguably represented a fundamental aspect of connection between his religious criticism, theology and his general economics, is the practice of hoarding money or, alternatively, putting it into unprofitable ventures such as indulgences or church interior for ritual purposes. Such practices seem to have become increasingly popular in Luther's age, as has been shown in chapter 1. And with his stance on indulgences, Luther also, wittingly or unwittingly, contributed something new to our modern knowledge in political economy regarding money and its speed in circulation – money's velocity of circulation.

The problem of velocity is important in at least two regards. First, it ties in with the hypothesis of, and the causal mechanisms triggering, a general depression as sketched in chapter 2. At times when profits and economic outlook are negative on balance, there will be fewer funds available for investment. People will be reluctant to spend or invest; they will hold back much more money for precautionary motives than is healthy for the economy. They will put it away for an indeterminate amount of time; not withdrawing it from circulation entirely or forever (which would make the amount of money go down), but rather withholding it from the market. This will decrease money's velocity. The Keynesian notion of holding cash for precautionary motives comes to mind; and as the mercantilist and cameralist authors before him (since about mid-seventeenth century), Keynes never tired of stressing the importance of spending money in the economy. Here he stood at the end of a long line of economic thought which had developed similar ideas since the early sixteenth century at the very latest, as the present chapter will show. This thought will be developed as an afterthought on Luther's economics as sketched in chapters 2 and 3; it adds some new light and context to Luther's theological and economic ideas.

I

At every level of administrative life, public officials expended enormous amounts of time, energy, and money in dealing with the subsistence question. Virtually everyone who practiced or wrote about public administration, or what was commonly called “police” in the Old Regime, considered provisioning to be among its paramount concerns. “The abundance of grain,” intoned Colbert, “is the thing to which we must pay the most attention in the police.” A hundred years later his eulogist, Necker, wrote that “the subsistence of the people is the most essential object which must occupy the administration.” Dupont, physiocracy's chief merchandiser and a mordant critic of what he believed to be the Colbert-Necker continuum of policy, remarked ironically on the “abundance” of the subsistence subject and deplored the fact that it dominated so much of public business: “nothing can better prove to you that this branch of Administration is truly the first of all [of them] than the multitude of Laws, Regulations, Arrêts of Parlements, Ordinances of Judges, Ordinances of Municipalities, Ordinances of intendants or royal agents which have come into place in all times on the matter of the provisioning of grain.”

Management of food supply was directly or indirectly connected with some of the policies we associate with the growth of the state. To sustain cities, huge supplies of food had to be wrenched from the countryside (and partly because of the difficulty of provisioning them, old-regime governments tried to limit the size of certain urban centers). To promote industrial development and enable France to compete internationally—so Colbert maintained—an easy and sure subsistence had to be provided for the working population. On a more general plane, without regard to particular economic or political doctrines, an easy subsistence seemed to serve the public interest. A sufficiently nourished people would produce more (goods and children), earn more, buy more, and pay more taxes, and thereby enhance national prosperity and strength. To support an army, the government had to marshal regular stocks of food. Food management was a bewilderingly complex business and it generated many conflicts of interest, between various public institutions such as the armed forces or hospitals and the society at large, between cities and hinterland, between competing regions, etc.

A few short years after the proclamation of liberalization, the government found itself faced with a burgeoning subsistence crisis and embroiled in a growing debate on the judiciousness of the reform. The reforms were meant to change the way in which the grain trade was conducted. The May Declaration radically altered the conditions of internal commerce and the July Edict opened the frontiers to exports. Taken together, these measures were supposed to build a stronger, more resilient, and more dependable commercial structure at the same time that they generated powerful incentives for agricultural expansion. In this chapter we shall consider the impact of the reforms on domestic and foreign trade and especially on the customary patterns of provisioning. In addition, we shall examine the way in which partisans and adversaries of the May and July laws explained the relationship between liberalization and dearth.

I

Contemporaries were never able to assess dispassionately the impact of liberalization upon the grain trade and the patterns of provisioning. The proliferation of scarcity, spiraling prices, and disorder polarized feelings toward the reform legislation. The parties to the debate were more interested in ascribing and denying political and moral responsibility for the crisis than in studying the processes of cause and effect. Resentful of the dearth that jarred their serenity, the liberals viewed it as an accident, ill-timed but banal, which bore no intrinsic relation to the implementation of liberalization. On the contrary, they claimed that it was a vindictive legacy of the old police system, for were the liberty perfect in its application, dearth by definition would be impossible. If prices were occasionally excessive, it was due to the persistence of the old prohibitions, to the inclemency of the weather, or to other traditional sources of fluctuation. The opponents of liberalization ridiculed the idea that the reforms and the scarcity were merely coincidental occurrences. After all, the avowed purpose of the laws was to open new markets for the grain trade and to raise prices. The dismantling of controls led directly to the flight of grain and the vertiginous increase in prices to which, in the eyes of the police party, the popular disturbances furnished eloquent testimony.

[1] The Holy Gospel, since it has come to light, rebukes and reveals all ‘the works of darkness,’ as St. Paul calls them, in Romans 13:13. For it is a brilliant light, which lightens all the world and teaches how evil are the world's works and shows the true works we ought to do for God and our neighbour. Therefore some of the merchants, too, have been awakened, and have become aware that in their business and commercial dealings many a wicked trick and hurtful financial practice is in use, and it must be feared that the word of Ecclesiasticus applies here, and that ‘merchants can hardly be without sin.’ Nay, I think St Paul's saying in the last chapter of 1 Timothy 6:10, fits the case, ‘Avarice is a root of all evil,’ and ‘Those that are minded to get rich fall into the devil's snare and into many profitless and hurtful lusts, which sink men in destruction and perdition.’

[2] I think, to be sure, that this book of mine will be quite in vain, because the mischief has gone so far and has completely got the upper hand in all lands; and because those who understand the Gospel ought to be able in such easy, external things to let their own conscience be judge of what is proper and what is not. Nevertheless I have been urged and begged to touch upon these doubtful financial manipulations of late and to expose some of them, so that even though the majority may not want to do right, some, if only a few, may yet be delivered from the gaping jaws of avarice. For it must be that among the merchants, as among other people, there are some who belong to Christ and would rather be poor with God than rich with The Devil, as says Psalm 37:16, ‘Better is the little that the righteous hath than the great possessions of the godless.’ For their sake, then, we must speak out.

A Declaration of War

After invoking the gospel as a guideline to good deeds [1], Luther comes straight to the point by identifying the evils of his time. These may be captured under the catchall term avarice [1, 2 and passim]. As avarice (or greed, Latin avaritia) is one of the capital vices or cardinal sins, it is – in Luther's view – the main danger posed to contemporary society [1, 2]. Avarice can be generally defined as the desire to have more, but after that the story becomes tricky. What does more mean? It could mean, for instance ‘more than due’, as justified in terms of the just profit or reward to one's labour and effort spent on procuring a specific bundle of goods or making a just and honest living. Even though Luther disliked the medieval scholastic theologians, he is, at least implicitly, using the schoolmen's distributional concept of justice here; figuratively speaking the geometrical (as opposed to an arithmetical) mean as a benchmark for distributing capabilities, rewards and resources. Everyone should be rewarded a fair wage, profit and income, commensurate with one's occupation and status within society. Fair in this model does not mean equal as in the later communitarian and proto-communist utopias of the age, for instance, Thomas Muntzer's movement in Muhlhausen or the Anabaptists’ design of egalitarian communities in some other regions of contemporary Germany in the wake of the Reformation. It means, rather, ‘according to one's contribution and rank within society’. But more, in the theological notion of avaritia entertained by Luther, could also mean ‘more and more’, that is transforming the desire for a just reward or profit, which even honest Christian merchants were entitled to, into the desire for ‘profit for profit's sake’.

I

Modern times has invented its own brand of apocalypse. Famine is no longer one of the familiar outriders. The problems of material life, and their political and psychological implications, have changed drastically in the course of the past two hundred years. Perhaps nothing has more profoundly affected our institutions and our attitudes than the creation of a technology of abundance. Even the old tropes have given way: neither dollars nor calories can measure the distance which separates gagne-pain from gagne-bifteck.

Yet the concerns of this book seem much less remote today than they did when it was conceived in the late sixties. In the past few years we have begun to worry, with a sort of expiatory zeal, about the state of our environment, the size of our population, the political economy and the morality of the allocation of goods and jobs, and the future of our resources. While computer projections cast a Malthusian pall over our world, we have had a bitter, first-hand taste of shortages of all kinds. The sempiternal battle between producers and consumers rages with a new ferocity, as high prices provoke anger on the one side and celebration on the other. Even as famines continue to strike the Third World in the thermidor of the green revolution, so we have discovered hunger in our own midst. The historian of pre-industrial Europe has always been able to find analogies and metaphors in press reports from Asia and Africa about “famine plots,” crowds pillaging storehouses, governments promulgating draconian measures against food hoarders and speculators, and famished consumers obdurately rejecting unfamiliar staple substitutes. Now the historian experiences the same eerie feeling of déjà-vu when he reads front-page articles in the New York Times about monstrous international wheat deals. Now that scarcity looms as part of our future, it is easier to make the case that it is also a heritage of our past—a heritage worth knowing, if not commemorating. Though we are not terrified by the same fears that obsessed our ancestors, we now have a keener sense of the burdens of subsistence and survival.

The subsistence problem dominated life in old-regime Europe in a merciless and unremitting way. No issue was more urgent, more pervasively felt, and more difficult to resolve than the matter of grain provisioning.

The explosion of joy and gratitude that followed the promulgation of the liberal measures seemed to confirm the royal claims. The May Declaration elated the Journal économique. In it the editors rediscovered the prince whose proud sobriquet had once been “the well-beloved”: they hailed “the august monarch that heaven gave for master to this great kingdom” and characterized him as “so justly cherished by all his people.” They regarded the declaration as a genuine triumph but they esteemed it more for what it portended than for what it actually was likely to achieve. It was “a first step,” the “forerunner” of an “unlimited” freedom which the king would not deny the nation. La Chalotais, the Procurator General of the Rennes Parlement, asked the councillors to view the Declaration not “as a simple law of interior police but as a Blessing of the Monarch,” as one of those momentous acts which provide for “the happiness of peoples.” More than the measure itself, it was the certainty that it “will undoubtedly be followed by a complete and general liberty to export” that enraptured the Breton magistrate.

The eagerly awaited July Edict, despite its limitations, generated a wave of exultation. While the laboureurs shed happy “tears” in the fields, the effusions of the journalists were no less lachrymose: “At last we see the dawn of the beautiful day for agriculture for which we have sighed for so long.” In the Toulouse area, proprietors, parlementaires and local administrators celebrated the victory. “The liberty to export our grain … has become an immutable law which will render dear the memory of the prince who issued it and the citizen-minister who inspired it,” declared a representative of the Toulouse Chamber of Commerce. La Chalotais, whom the Correspondance Littéraire considered to be the only magistrate in the kingdom with “the ideas and the tone of a statesman,” judged the edict to be “in conformity with the wish of the Nation which provoked it, with that of the Estates of the provinces, with experience which is the mistress of man, with the sentiment of Henry the Great and the illustrious Sully, with the opinion of all those who examined this question in an unprejudiced and disinterested manner.” Henceforth there would be no reason to fear either dearths, or “what was almost as terrifying,” the superabundance of harvests.

A dramatic innovation, liberalization, I shall argue, took shape directly from the needs and circumstances of the early 1760's. Yet insofar as it embodied a certain vision of public administration and economic life—a theory of political economy—it had an ample critical tradition upon which to draw. It is beyond the scope of this chapter to sketch a history of the development of political arithmetic or political economy in the Old Regime, though such a study, fully integrated into the context of political, economic, and social change, is sorely needed. Nor can it attempt to do for the idea of liberty what Mauzi did for “happiness” and Ehrard for “nature,” though such an undertaking, too, would be of great value. I wish only to suggest that liberalization had an important intellectual as well as political and economic preparation, leaving it to others to pursue these connections in detail. I have already discussed on several occasions the critics of the police. Most of them were part of what became the movement for liberalization. I refer to all persons who favored a fundamental reform of the police in the direction of greater liberty as liberals. By liberalism I mean to indicate nothing more than those political, economic, and social ideas that informed the attitude of the grain trade reformers and their allies. To others, too, I leave the task of charting out the links between this grain-centered liberalism of the Old Regime and the Liberalism which triumphed in the nineteenth century.

I

Like many of the notions that became preoccupations of the Enlightenment, the liberal idea crystallized during the reign of Louis XIV. It appeared in several versions in the anti-mercantilist, Christian-agrarian, and utilitarian currents which traversed the kingdom in the second half of the seventeenth century. Already the landowners were plotting the political resurgence and the revenge taken in prices and profits which the eighteenth century would allow them. A large part of the merchant community rejected Colbertism on grounds that would become familiar to eighteenth century reformers. Political dissenters criticized the methods of government for their arbitrariness and their oppressiveness—that is, for their excessive police in all domains of life: administration, religion, and foreign policy as well as the economy.