A History of Economic Doctrines / from the time of the physiocrats to the present day

by Charles Gide; Charles Rist

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. Though inextricably bound up with the theory of the net product and with the conception of landed proprietorship, curiously enough, it has survived the rest of their doctrine, and quite recently has been given a new lease of life.

In the table showing the distribution of the national income three participators only are mentioned—the landed proprietor, the farmer, and the artisan. But there is also a fourth—the Physiocratic sovereign, who is none other than the State itself, and who thoroughly deserves a share. This benevolent despot, whose duties we have just mentioned, cannot be very exacting, for, having little to do, his demands must be moderate. In addition to his double mission of maintaining security and giving instruction, he must also contribute towards increasing the productivity of the land by establishing public works, making roads, etc.[93] Money is required for all this, and the Physiocrats argued that taxes ought to be paid liberally,[94] and not grudgingly, as is too often the case under a parliamentary régime. Where is this money to come from?

The reply is obvious if we have grasped their system. The only available fund is the net product, which is the only new wealth that is really dispensable—the rest is necessarily absorbed in the repayment of the advances made for the upkeep of the agricultural and industrial classes. Were taxation to absorb a proportion of the revenues that are devoted to production it would gradually drain away the source of all wealth. So long as it only takes the surplus—the true net product, which is a mere tributary of the main stream—no harm will be done to future production.

All this is quite clear. But if taxation is to absorb the net product the question arises as to who is to pay it. It is equally evident that it can only be taken from those who already possess it, namely, from the landed proprietors, who must bear the whole burden of taxation. Just now we were amazed at the privileges which the Physiocrats so light-heartedly granted them: this is the ransom, and it is no light one. The next problem is how to assess this tax.

The Physiocrats were extremely loth to rob the gentry of their incomes, and a number of pages in their writings are devoted to a justification of their claims upon them. Not only were they willing to leave them everything that was necessary to compensate them for the outlay of capital and labour, but also all that might be required to make the property thoroughly valuable and the position of the landowner a most enviable one.[95] The preference shown for the landowner is just the result of the social importance attributed to him by the Physiocrats. “If some other class were preferable,” says Dupont de Nemours, “people would turn their attention to that.” They would no longer spend their capital in clearing or improving the land. But if the possession of land be so desirable, is there not some danger lest everybody should become a landlord and neglect the other walks of life? The Physiocrats thought not, for, since Nature has set a limit to the amount of land in existence, there must also be a limit to the number of landowners.