Turgot[77] is the only one of them who frankly justifies taking interest. The reason that he gives is not the usual Physiocratic argument, but rather that the owner of capital may either invest it in the land or undertake some other productive work—capital being the indispensable basis of all enterprise[78]—and that, consequently, the capital will never be given to anyone who will offer less than what might have been made out of it did the owner himself employ it. This argument implies that every undertaking is essentially a productive one, and indeed one of the traits which distinguishes Turgot from the other Physiocrats is the fact that he did not think that industry and commerce were entirely unproductive.
II: THE FUNCTIONS OF THE STATE
Seeing that the Physiocrats believed that human society was pervaded by the principle of “natural order,” which required no adventitious aid from any written law, and since Nature’s voice, without any artificial restraint, was sufficient guide for mankind, it might have been expected that the trend of Physiocracy would have been toward the negation of all legislation, of all authority—in a word, toward the subversion of the State.
It is certain that the Physiocrats wished to reduce legislative activity to a minimum, and they expressed the belief—which has often been repeated since by every advocate of laissez-faire—that the most useful work any legislative body can do is to abolish useless laws.[79] If any new laws are required they ought simply to be copies of the unwritten laws of Nature. Neither men nor Governments can make laws, for they have not the necessary ability. Every law should be an expression of that Divine wisdom which rules the universe. Hence the true title of lawgiver, not law-maker.[80] It is in this connexion that we meet with those anecdotes—some of more than doubtful authenticity it is true—that have gathered round their names. Of these the best known is that which tells of Mercier de la Rivière’s visit to St. Petersburg, and his laconic reply to Catherine the Great. He had been invited there to advise the Empress about a new constitution for the country. After dilating upon the great difficulties of the undertaking and the responsibilities it involved, he gave it as his opinion that the best way of achieving her object was just to let things take their course. Whereupon the Empress promptly wished him good-bye.
But it would be a great mistake to think of the Physiocrats as anarchists. What they wanted to see was the minimum of legislation with a maximum of authority. The two things are by no means incompatible. The liberal policy of limitation and control would have found scant favour with them. Their ideal was neither democratic self-government, as we have it in the Greek republics, nor a parliamentary régime such as we find in England. Both were detested.[81]
On the other hand, great respect was shown for the social hierarchy, and they were strong in their condemnation of every doctrine that aimed at attacking either the throne or the nobility. What they desired was to have sovereign authority in the guise of a hereditary monarchy. In short, what they really wanted—and they were not frightened by the name—was despotism.[82]
“The sovereign authority should be one, and supreme above all individual or private enterprise. The object of sovereignty is to secure obedience, to defend every just right, on the one hand, and to secure personal security on the other. A government that is based upon the idea of a balance of power is useless.”[83]
This should help us to realise the distance separating the Physiocrats from the Montesquieuian idea of the distribution of the sovereign authority, and from the other idea of local or regional control. There is no mention of representation as a corollary of taxation. This form of guarantee, which marks the beginnings of parliamentary government, could have no real significance for the Physiocrats. Taxation was just a right inherent in the conception of proprietary sovereignty, a territorial revenue, which was in no way dependent upon the people’s will.
It seems strange that such should be the opinion of a future President of the Constituent Assembly. How can we explain this apparent contradiction and such love of despotism among the apostles of laissez-faire?
Despotism, in the eyes of the Physiocrats, had a peculiar significance of its own. It was the work of freedom, not of bondage. It did not signify the rule of the benevolent despot, prepared to make men happy, even against their own will. It was just the sovereignty of the “natural order”[84]—nothing more. Every reasonable person felt himself bound to obey it, and realised that only through such obedience could the truth be possibly known.
It is quite different from the despotism of the ancient maxim, Sicut principi placuit legis habet vigorem.[85] They would never have subscribed to the doctrine that the king’s word is law, but they were equally energetic in rejecting the claim of the popular will.[86] They are as far from modern democracy as they are from monarchical absolutism.
This despotism was incarnate in the person of the sovereign or king. But he is simply an organ for the transmission of those higher laws which are given to him. They would compare him with the leader of an orchestra, his sceptre being the baton that keeps time. The conductor’s despotism is greater than the Tsar’s, for every musician has to obey the movement of the hand, and that immediately. But this is not tyranny, and whoever strikes a false note in a spirit of revenge is not simply a revolter, but also an idiot.
Sovereignty appealed to the Physiocrats in the guise of hereditary monarchy, because of its associations with property under the feudal régime, and since hereditary rights were connected with landed property so must royalty be. The sovereign who best represents the Physiocratic ideal is perhaps the Emperor of China.[87] As the Son of Heaven he represents the “natural order,” which is also the “divine order.” As an agricultural monarch he solemnly puts his hand to the plough once a year. His people really govern themselves; that is, he rules them according to custom and the practice of sacred rites.[88]
In practice there will be nothing of great importance for the despot to do. “As kings and governors you will find how easy it is to exercise your sacred functions, which simply consist in not interfering with the good that is already being done, and in punishing those few persons who occasionally attack private property.”[89] In short, the preservation of the “natural order” and the defending of its basis—private property—against the attacks of the ignorant and the sacrilegious is the first and most important duty of the sovereign. “No order of any kind is possible in society unless the right of possession is guaranteed to the members of that society by the force of a sovereign authority.”[90]
Instruction is the second duty upon which the Physiocrats lay special stress. “Universal education,” says Baudeau, “is the first and only social tie.” Quesnay is specially anxious for instruction on the “natural order,” and the means of becoming acquainted with it. Further, the only guarantee against personal despotism lies in well-diffused instruction and an educated public opinion. If public opinion, as Quesnay said, is to lead, it should be enlightened.
Public works are also mentioned. A wise landlord has good roads on his property, for good roads and canals improve it. These represent a species of avances foncières, similar to those undertaken by proprietors.
This is by no means all.[91] There are a number of duties recognised as belonging to the State, of which every economist of the Liberal school up to Bastiat and M. de Molinari approves.
We will add one other trait. Like the Liberal school, the Physiocrats were whole-hearted “internationalists.” In this respect they differ from their prototypes, the Chinese. They believed that all class distinctions and all international barriers ought to be removed in the interest of political development, as well as in that of scientific study.[92] The peace advocates of to-day would do well to make the acquaintance of their illustrious predecessors.
III: TAXATION
The bulk of the Physiocratic system is taken up with the exposition of a theory of taxation, which really forms one of the most characteristic portions of their work.