Jacques Turgot, 1727-1781.

Anne-Robert-Jacques Turgot (Baron de l'Aulne) was perhaps the leading economist of 18th Century France. Although often lumped together with Quesnay and the Physiocrats, his contributions were quite distinct and advanced considerably upon Physiocratic theories.  Turgot can be said to have formed a distinct school of his own, counting the Abbé Morellet and the Marquis de Condorcet as close friends and disciples.  More importantly, Turgot exercised a deep influence upon Adam Smith, who was living in France in the 1760s and was on intimate terms with Turgot.  Many of the concepts and ideas in Smith's Wealth of Nations are drawn directly from Turgot.  

Born to a prosperous merchant family in Paris, Jacques Turgot's father was the Michel Turgot to whom, apparently,  is owed the celebrated "Map of Paris" of 1739.  A brilliant student at the Sorbonne, Jacques Turgot was originally destined for a clerical-academic career.  He was made a prior of Sorbonne in 1749 and composed two discourses to be read in Latin.  

Turgot's second discourse, on the progrés successifs de l'ésprit humain (1750) outlined his famous philosophy of history.  Turgot argued that human societies pass through cycles of barbarism and civilization, the former attended by superstition, the latter the fruits of reason.  He discussed the transfer from one to the other and back again.  Human restlessness, a taste for liberty and a critical spirit elevates societies into civilization, but then these impulses become institutionalized and conservative and become the very impediments of further progress.  Reason morphs into superstition, and society is driven back into barbarism.  

So, for Turgot, human progress is not self-reinforcing but contains the seeds of its own demise. On the optimistic side, demise is never permanent.  Turgot was confident that the human spirit would always drive a society out of stagnation.  In many ways, Turgot's thesis has a rather prescient Comtian character.  Turgot hailed the France of Louis XV as very much in the upswing of the cycle.  It is interesting that he pointed out entrepreneurs were a progressive driving force and that the State would do well to permit great latitude. It also predicted the eventual revolt and independence of the American Colonies from the English Crown.  

Not long after delivering the discourse, Turgot decided against ordination in the Church and instead entered a career in the royal administration.  From 1751 to 1760, Turgot worked at the parlement in Paris. He hobnobbed with the philosophes and contributed several articles (two of them on linguistics) to the famous Encyclopèdie of Denis Diderot.  In 1753, Turgot wrote his Lettres urging toleration of Protestants in France.  In 1755-6,  Turgot accompanied the free-trade advocate Vincent de Gournay on his official tours of France and, on their travels, Gournay got him thinking about economic matters. Upon Gournay's death, Turgot penned a marvelous eulogy to his fallen mentor (1759). 

From 1761 to 1774, Turgot was chief administrator (intendant) for Limoges.  He immediately set himself to work -- fixing roads and drainage, improving tax collection, reducing internal tariffs, introducing a better relief system for the poor, etc. Limoges, hitherto one of the poorest areas of France, became a showpiece for what a determined and enlightened administrator could accomplish.   Many of the reforms he would later institute throughout France were first tested out here at a smaller scale.  

Intellectually, this was also Turgot's most productive period.  His masterpiece was undoubtedly his Reflections on the Formation and Distribution of Riches (1766).  Here, Turgot introduced the concept of capital into the Physiocratic system. He also clarified the meaning of "surplus" and provided the link between the "surplus" and "growth" and relating the profit rate to the rate of interest. He was also among the first to make clear the distinction between "market" price and "natural" price. As a result, Turgot differed from original Physiocrats on the nature of the produit net, i.e. that surplus could be generated by industry as well as agriculture.  All of these ideas were to be taken up by Adam Smith and the Classical School.  

Turgot  can also be considered a forerunner of the Marginalist Revolution. His Valeurs et Monnaies  (1769) contains a strikingly well-developed demand-based theory of price.  In that same work, he presents a remarkably prescient account of how large number of traders reduce the degree of indeterminacy of exchange, a topic later taken up Edgeworth.   Another notable economic contribution (in his 1768 Observations) was the introduction of variable input proportions in production.  Turgot was also  the first to conceive of the notion of diminishing marginal productivity to factor inputs. Finally, his 1766 discussion on money included the distinction (not made hitherto) between the real and nominal rates of interest. 

On account of his success as an administrator in Limoges and his impressive intellectual abilities, the Comte de Maurepas asked Turgot to join his new reformist cabinet.  Turgot was appointed as contrôleur général (the equivalent of a minister of finance) by King Louis XVI in August 1774.  As minister, Turgot was adamant about saving the finances of the decrepit Ancièn Regime.  He figured that if he could keep government spending in check and encourage private economic enterprise, tax revenues would rise and state finances would return to solvency.  However, he believed that the old Colbertiste strategy of state-sponsored corporations and protectionist measures kept industry uncompetitive and unproductive.  Inspired by Vincent de Gournay, Turgot intended to unleash the forces of competition and free markets.  To do so, not only would he have to reverse Colbertiste economic policies, he would also have to dismantle the Medieval institutions that kept the French economy in thrall.   

Turgot started slowly, propping up growth industries such as the Lyons silk manufactures, improving roads and transportation, simplifying the tax system, improving tax collection, abolishing some monopolies, paying back public debts, etc.  He also began reigning back the lavish spending of the French court and government.  His slogan "No bankruptcy, No new taxes, No loans" left little room for anything else.

In 1775, Turgot took one of his boldest moves and lifted the controls on the internal trade of grain.  This measure had been long advocated by Herbert, Gournay and Turgot himself (e.g.  1763, 1770).  Alas, the immediate beneficial impact of that policy was canceled by the crop failures of that same year.  Turgot dealt rather harshly with the ensuing riots -- the so-called "Flour Wars" -- earning him much notoriety among the populace.

In 1776, Turgot issued his famous "Six Edicts".  The first four were of little consequence.  The fifth dissolved the guild system, which had since the Middle Ages kept a stultifying hold over commerce and industry. The sixth eliminated the corvée (i.e. the yearly labor owed by peasants to the state) and implemented the Physiocrats' favorite policy -- l'impôt unique (the single tax on property).  The nobleman and the landed gentry rose up in protest against both these measures.  Turgot was unmoved and enforced his policies by royal decree -- itself an unpopular strategy.  

By now, Turgot had successfully made enemies with practically every class of person in France -- except the economistes, who cheered him on.  In the French court, his back was covered only by the king but, when Turgot crossed Queen Marie Antoinette by refusing favors to her protegès, the die were cast.  Turgot was dismissed in 1776. Before departing, Turgot presciently warned Louis XVI, "Do not forget, Sire, that it was feebleness that placed the head of Charles II on the block."  Condorcet (then at the royal mint) attempted to resign in protest.  Turgot was succeeded by Jacques Necker, who proceeded to reverse most of his edicts and policies.

Turgot did not live to see the 1789 Revolution created by the economic tensions which his policies purportedly sought to defuse. Given his record, it is an open question whether Turgot might have been driven to guillotine by the revolutionaries.  Unlike his disciple, Condorcet, Turgot was not a republican and was unpopular among the people.  He was a staunch royalist who believed in radical reform as a necessary step to avert an even more radical revolution.  His methods may have been heavy-handed at times, but he realized, like nobody else did, the absolute urgency of reform.  

Top

Top

Top

All rights reserved, Gonçalo L. Fonseca